'This Week' Transcript: Tax Deal

I think the one thing that has -- always happens when you have divided government is that people no longer see principled compromise as weakness.


AMANPOUR: President Obama hands over the podium to President Bill Clinton at the White House briefing room on Friday.

Joining me now on our roundtable, George Will, Paul Krugman of the New York Times, ABC's Cokie Roberts, and political strategist Matthew Dowd.

Thank you all for being here. And we are going to talk about this tax compromise. It's all going to go and be voted on, at least first round (ph), in the Senate tomorrow.

Paul, you are not a fan. In fact, you wrote very, very stringently against it, even though you admit he got more than you expected.

KRUGMAN: Yeah, I mean, this was a hostage deal. It was -- clearly, the Republicans were holding middle-class tax cuts, unemployment insurance hostage for getting those upper-end tax cuts. The president negotiated a release of the hostages, but he did so in part by giving more hostages. He set up another crisis.

We keep on talking about what happens two years from now, but it's what happens one year from now, when the payroll tax extension and the unemployment insurance extension run out that worry me. And now the president is trying to sell that by saying, look, I got the release of some hostages. Yeah, well, we know that. That wasn't the question.

AMANPOUR: But are you saying he should have just let them expire?

KRUGMAN: I think he had to be prepared to do that. I mean, this is agonizing. I understand how tough it is. But this is -- basically, you have a situation where you're bargaining with people who are prepared to let the -- the -- the roof cave in. And if you make it clear from the start, as he did, that he was not prepared to let it go, then, of course, he's going to get a deal that's not very good, and there are ways he could have negotiated more that would have been better.

AMANPOUR: Your partner here is calling you and your like "delusional" and living in fantasy land.

ROBERTS: Well, it is a fantasy land, because the fact is that, you know, 20 percent of the people in the last election identify themselves as liberal, and it's the liberals who are screaming and yelling about this. And the rest of the country is pretty happy.

And I think that, really, what we're look at here, though, is the administration terrified about the economy. With the unemployment numbers ticking back up, the fact is, is that they are -- this is a stimulus plan. That's what this is. And it's, you know, trying to get some money pumping into the economy so that the unemployment rate comes down in time for the 2012 election.

KRUGMAN: Ah, but that's -- sorry, if I could just break in, if you actually look at it, it's a one-year stimulus plan, so it's actually going to help -- no question it'll bring the unemployment rate down by the end of next year and then send it rising, at least relative to what it otherwise have been, in 2012. So it's actually not even a good political deal.

ROBERTS: Well, we'll see, won't we?

AMANPOUR: George, Paul and others are saying that the president got snookered, but in that virally distributed column by Charles Krauthammer, he's saying that the Republicans got snookered and the president got a much better deal. Do you think that's true?

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