'This Week' Transcript: Tax Deal

WILL: No one got snookered. They made a deal with the cards they were dealt by an election, which changed the calculus here in town. The New York Times described this tax deal as "odious." What adjective is left for ethnic cleansing? I mean, this is a -- they split the difference on this.

The president wanted on the estate tax, for example, which, by the way, was bipartisan -- it was worked out with Jon Kyl, Republican of Arizona, Blanche Lincoln, Democrat of Arkansas -- the president wanted a 45 percent rate on estates beginning at $3.5 million. The Republicans -- most of them -- wanted zero, frankly. They don't think there should be a death tax, but they settled for 35 percent on estates at $5 million. What is the big deal?

DOWD: Well, but to me -- to me, we -- we can debate -- and there's going to be some question in my mind whether or not this can have any effect on the economy. But what I think is unfortunate about this is we have an election, and the country basically says, Barack Obama, you went the wrong way, you didn't do bipartisanship, you didn't solve the problems of this country, and then we have both political parties come together in a bipartisan agreement, which doesn't deal with the problems, really, that exist in the country, that doesn't ask for the hard solutions, that doesn't call the American public to any sense of leadership in this country and shared sense of sacrifice.

Basically, they come up with a bipartisan solution that gives everything away and doesn't answer the hard questions.

ROBERTS: Well, but I think -- I think that is -- I think that is the temporary answer. And it is because there's a deadline, which is, of course, where you get things done, as you well know, a deadline of tax cuts running out, but the -- but the fact is, is that that the bigger, sort of harder piece of it...

(CROSSTALK)

DOWD: One sec, Paul. Wait a second. To me, it's a lot like saying, "OK, I'm going to give you a bunch of cake, and I'm going to give you a bunch of ice cream, but in six months, I'm going to ask you to go on a diet. But right now, go ahead and eat your cake and eat your ice cream."

KRUGMAN: The question is, what happened to -- what happened to the deficit hawks?

(CROSSTALK)

KRUGMAN: Right? The week before this compromise, the -- all we we're hearing was "deficit, deficit, deficit. We must suffer." And then, all of a sudden, we get something that blows up the deficit by $850 billion for starters, and probably much more than that, because it is setting the stage for making a lot of this stuff permanent, and everyone goes silent, and I think this is a teachable moment. This is telling you that all of the deficit hawkery was entirely hypocritical.

ROBERTS: Hypocrisy is hardly new.

AMANPOUR: But, Paul, you've been calling for more stimulus...

KRUGMAN: That's right.

AMANPOUR: ... and not so much attention to the deficit and the debt.

KRUGMAN: Right. The trouble is, there is not a lot of -- there is some real stimulus in here, but not much. The -- the unemployment insurance extension, for sure. The payroll tax cut, maybe. The rest of the stuff is not really stimulus.

And the cost -- I mean, if you think about cost and benefit, this is a very low benefit per cost. This is a really bad deal compared with...

(CROSSTALK)

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