'This Week' Transcript: Sens Lieberman, Conrad and Hutchison

KRUGMAN: I think that's all symbolism. The reality is -- the strategy is to hope that the natural forces of recovery finally start to kick in on the job market, as well as on industrial production and profits, which has been happening for a while, and then to try and get some longer-term things that will help the economy. There really isn't a job strategy here at all.

DOWD: Well, and I don't think we can underestimate the power and the need of the president to focus and to resonate on symbols. Symbols are important. It's what he talked about big time in Tucson. It wasn't just about, "Here's what I want to do" or "This is what happened, this tragedy that happened." It was symbolic. It was American values.

And I think today -- we've lowered the tax rates as far as they probably can be lowered. He's done -- he's put as much money as he can -- I know Paul would like him to put more money -- I think that he can reasonably with the deficit in order. And now it's time to focus on the symbols and the confidence in the American public.

AMANPOUR: But beyond symbols, isn't -- aren't American corporations sitting on something like $2 trillion of cash? Doesn't -- doesn't he need to coax that out of them? And won't that create hiring?

KRUGMAN: They're sitting on no more cash than you would expect them to, given weak demand. I mean, consumers aren't spending. Corporations are not saying -- you know, if you actually look at what they really say when you ask them about their prospects as opposed to when they're lobbying, they're not sitting on that cash because they're afraid of government regulations or because they're afraid of taxes. They're saying, why should I expand my plant when I can't even sell the capacity, you know, that I've got right now? So it's not...

AMANPOUR: So what's the solution, then? KRUGMAN: Well, the solution would have been a new New Deal or would have been a really big -- or quantitative easing from the Fed or all these various things or, you know, stuff turns up. And basically the solution right now is, we're waiting for this gradual natural healing process to take place.

WILL: Twenty-four months ago, they thought there was going to be a New Deal. The assumption going in was that there had been a crisis of confidence in capitalism that would open the way for government to have much more latitude for activism. It turns out what happened was a crisis of confidence in government, which was in no small measure blamed for the recession, so that...

(CROSSTALK)

KRUGMAN: I agree. That's how it played out. It's not clear...

(CROSSTALK)

KRUGMAN: ... was right, but that's how it played out.

BRAZILE: But without that public investment, without simulating the economy, more Americans would have been in poverty, more state and local governments would have had to lay off teachers, and firefighters, and policemen.

So I think the president and the Democrats, who once controlled half that Capitol, they had the right priorities at the right time, but this is a different era and the president has to show he has a plan to create jobs for the future.

DOWD: Well, what I think is interesting is, the presidencies are founded on the idea that you have the power and the ability to communicate to the vast majority of the American public. When your numbers drop, you no longer have that power, and you no longer have the ability to fashion policy when you don't.

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