Oct. 4, 2009 -- ABC NEWS, THIS WEEK WITH GEORGE STEPHANOPOULOS INTERVIEW WITH FORMER CHAIRMAN OF THE FEDERAL RESERVE ALAN GREENSPAN AND SENATOR CHARLES SCHUMER AND SENATOR JOHN CORNYN.
SPEAKERS: GEORGE STEPHANOPOULOS, HOST STEPHANOPOULOS (voice-over): Good morning, and welcome to THIS WEEK. Jobs, jobs, jobs. UNIDENTIFIED FEMALE: We're not going to be able to pay our bills
STEPHANOPOULOS: Almost two straight years of cuts.
UNIDENTIFIED MALE: But we are in a tremendous hole that's going to take a number of years to dig our way out of.
UNIDENTIFIED MALE: For most Americans, the way they judge the economy is, what is the unemployment rate?
STEPHANOPOULOS: Fifteen million Americans out of work.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We're going to need to grind out this recovery step-by-step. STEPHANOPOULOS: When will the jobs return? Should government do more or get out of the way? Will health care reform help or hurt?
Questions for our exclusive headliners, former Fed Chair Alan Greenspan, plus Finance Committee senators Chuck Schumer and John Cornyn, our THIS WEEK debate.
Then Olympic letdown. Did Obama overreach? That and the rest of the week's politics on our "Roundtable" with George Will, Cokie Roberts, former Bush strategist Matthew Dowd, and Katrina Vanden Heuvel of The Nation.
And as always, the "Sunday Funnies."
JAY LENO, HOST, "THE JAY LENO SHOW": The International Olympic Committee voted and Chicago didn't win, which, hey, I can understand that, it's October, Chicago never wins in October.
ANNOUNCER: From the heart of the nation's capital, THIS WEEK with ABC News chief Washington correspondent, George Stephanopoulos, live from the Newseum on Pennsylvania Avenue.
STEPHANOPOULOS: Think back to December 2007, George Bush was in the White House. Hillary Clinton was the favorite to replace him. Unemployment was 4.9 percent. Today it's double that. America's economy has lost jobs for 21 straight months, the longest stretch in 70 years, more than 7 million jobs gone. There are six Americans competing for every open job. Yesterday, President Obama promised to make that problem his top priority. (BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm working closing with my economic team to explore additional options to promote job creation. And I won't let up until those who seek jobs can find them, until businesses that seek capital and credit can thrive, and until all responsible homeowners can stay in their homes. (END VIDEO CLIP)
STEPHANOPOULOS: And with that, let me bring in the man who has known more about the American economy for more time than just about anybody in the country, former Fed Chair Alan Greenspan. Welcome back. ALAN GREENSPAN, FORMER CHAIRMAN, FEDERAL RESERVE BOARD: Thank you.
STEPHANOPOULOS: You know, for most Americans, this jobs issues is the one that hits home the hardest. And that report on Friday was a surprise, much worse than people expected. What should Americans expect right now? How much worse is this job situation going to get for how long?
GREENSPAN: Well, it's very difficult to make judgments at a time like this, largely because we don't have so many incidents in history to be able to compare it to. But basically I think the issue is this. The job report was pretty awful, no matter how you looked at it. Indeed, not only, of course, did the unemployment rate go up, but I was particularly concerned about the number of Americans who have been unemployed for six months or longer. And that went up...
STEPHANOPOULOS: Five million Americans.
GREENSPAN: But that went up sharply in September. And remember, the reason that is a problem, obviously, other than the obvious personal difficulties that families have in such a context, is that the economy loses skills. And people who are out of work for very protracted periods of time, lose their skills eventually.
And remember that what makes an economy great is a combination of the capital assets of the economy and the people who run it. And if you erode the human skills that are involved there, there is a real and in one sense an irretrievable loss. STEPHANOPOULOS: So what do we do about it? GREENSPAN: Well, the issue is essentially economic activity. And the reason I say that is that there is a silver lining in that particular report. And it's difficult to find one. It's that American business after Lehman Brothers collapsed and the whole financial system imploded, business expected that the economy would go down far more sharply than it in fact did. The result was they laid off a very substantial number of people to the point that the actual hours worked fell even more than the economy. So that what we're getting is artificial numbers which give us productivity gains of horrendous amounts, meaning the amount of labor input per unit of output has been going down and down. And that can't continue. So that silver lining is at some point we're going to start to see an improvement in employment. But remember that unless there is a monthly increase of more than 100,000 a month, you've still got the unemployment rate continuing to rise.
STEPHANOPOULOS: And that's why the administration's projections show more than 8 percent unemployment through 2011. You saw the president yesterday say now he's going to look at new ideas to spur job creation. What should he be doing now? What would you advise him to do?
GREENSPAN: Well, I think the focus has got to be on trying to get the economy going, but you also have to be careful that in trying to do too much you can actually be counterproductive. And we are in a recovery, and I think it would be a mistake to say the September numbers alter that significantly.
It is true, the last couple of weeks that some of the numbers that are coming in have been a little bit soft. But this is what a recovery looks like. In retrospect we always look back and we see the ups and the downs and the ups and the downs, and we just visually (ph) go right through it.
It's premature to act on this type of information.
STEPHANOPOULOS: No new stimulus?
GREENSPAN: Oh, no new stimulus for two reasons. One, only 40 percent of the first stimulus has been in place. And there is a considerable debate going on in the economics profession about how effective this stimulus package is. And so mainly because of the fact that as broad as it is and as effective as it will turn out to be, it still has got 60 percent left to go. So in my judgment it's far better to wait and see how this momentum that has already begun to develop in the economy carries forward. STEPHANOPOULOS: Back in August, you thought you would see about 2.5 percent growth in this quarter. Do you still hold to that or do these numbers make you change that view?
GREENSPAN: No. The numbers are coming in higher than that.
STEPHANOPOULOS: Higher than that?
GREENSPAN: Oh yes. It looks as though it's going to be 3 percent, maybe even possibly even higher. The problem with knowing what the third quarter is going to look like is we won't get all of the data for several months. So a lot of -- there is a lot guesswork involved. But it's on-track, at this stage, for more than 2.5 percent.
STEPHANOPOULOS: So more than 2.5. So does that mean we're heading towards a situation where you could actually see an end to the job loss or not quite yet?
GREENSPAN: Well, no, I think we're getting close to that. But remember, the end of the job loss is not the same thing as if the unemployment rate is going to start down. My own suspicion is that we're going to penetrate the 10 percent barrier and stay there for a while before we start down.
STEPHANOPOULOS: Given that, even though you're not for any major new stimulus, what about extending unemployment benefits for people who are out of work? We're going to have more than a million people lose their benefits by the end of the year. Also the idea that there should be some tax credits to make sure that unemployed people are able to maintain their health insurance?
GREENSPAN: Oh, this is an extraordinary period and temporary actions must be taken, especially to assuage the angst of a very substantial part of our population. So I don't actually consider those types of actions stimulus programs. I think that they are essentially programs which support people -- essentially their living standards in part. I grant you it has a stimulus effect, but that would be my primary focus.
STEPHANOPOULOS: How about one other idea. One of the things that I saw in the employment report that surprised me is that how many of the cuts are coming from state and local government. We know they've really been crunched. Would it make sense given that for the federal government to step in with more aid for state and local governments?
GREENSPAN: Well, basically there is a good deal of that in there. What has happened, unfortunately, is that over the last 10, 15 years, state and local governments have picked up their budgets very considerably, and they, having fiscal difficulties, which the federal government itself can't really resolve, I have no view one way or the other, but I do think that will happen.
If you're asking me as a forecaster as distinct from whether it's desirable or not, I think the pressures to do that will be there. But it's a very tricky political (inaudible).
STEPHANOPOULOS: How about on health care? We see the Senate Finance Committee about to pass, we think, their health care reform. And there is a big debate, it has now become a partisan debate of whether or not this is going to help or hurt the economy, help or hurt the deficit, help or hurt on job creation. From what you see the Senate doing right now, what's your view?
GREENSPAN: Well, I've always had the view that the real problem that we have existed before these reform proposals came in. In other words, we have a huge fiscal hole out there which is best measured by the fact that Medicare benefits are only 50 percent funded going all the way out. And what that implies is a very significant issuance of Treasury securities to meet the ever-growing and very indeterminately large federal deficit. You cannot continue to increase the federal debt. Of course, remember, over the generations, we have been very careful to keep the total level of debt well below the borrowing capacity of our economy so far as federal issuance is concerned. That cushion is now being tested. And I'm getting a little concerned and I don't want to find out where the upper levels are.
And the reason it's important is it will affect long-term interest rates. And long-term interest rates are very critical.
STEPHANOPOULOS: But are these proposals going to make that problem -- are they going to help it or hurt it?
GREENSPAN: Well, it depends on what the CBO writes on the Senate Finance Committee bill. We don't know what those numbers are going to look like yet. But I would say revenue neutral is not adequate. In other words, we have to not only have a revenue neutral reform program, but simultaneously recognize that we have to address the longer term. STEPHANOPOULOS: Mr. Greenspan, thanks very much. GREENSPAN: My pleasure.
STEPHANOPOULOS: We're going to go straight to our debate as the senators take their seats. Take a look at a long week on health care from the Senate Finance Committee.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: The insurance companies, in my judgment, are determined to protect their profits. The government is not a fair competitor. It's not even a competitor.
UNIDENTIFIED MALE: So you don't want Medicare?
UNIDENTIFIED MALE: It's a predator.
UNIDENTIFIED MALE: We have to settle down and find ways of living within the promises that have been made.
UNIDENTIFIED MALE: No one has been able to show me how they can count up to 60 votes with the public option in the bill.
UNIDENTIFIED MALE: Aye.
UNIDENTIFIED MALE: No.
UNIDENTIFIED MALE: Aye. UNIDENTIFIED MALE: No.
UNIDENTIFIED MALE: I'm looking around, and there's some pretty tired senators here.
(END VIDEO CLIP)
STEPHANOPOULOS: The final vote was supposed to be on Tuesday, and we had deliberations all week long in Washington. We'll bring you two of the senators who were there: Democrat Chuck Schumer of New York, John Cornyn, Republican of Texas. I want to get to health care, but let's begin with the economy. You heard Chairman Greenspan there: no long-term stimulus, but he thinks that unemployment benefits have to be extended. The House's passed a bill. Will the Senate act this week?
SCHUMER: Yes. We're going to pass a bill this week, put it on the floor. I believe it will pass. It will extend unemployment benefits for four weeks for all states and another 12 or 13 weeks for all states above 8 percent...
STEPHANOPOULOS: Around where the House was?
SCHUMER: It will go beyond what the House was. We think that, you know, eight -- you have 8.5 percent unemployment, that's pretty bad, and you ought to get some help.
STEPHANOPOULOS: Will Republicans support that?
SEN. JOHN CORNYN, R-TEXAS: I think so. I don't know where the 8.5 percent cut off comes from, because people are comprised at 8 percent or whatever it is. For example, in Texas, now about 8 percent. And they need some help, too. So I hope we can work on that.
SEN. CHARLES E. SCHUMER, D-N.Y.: We'd be happy to work on that, too.
STEPHANOPOULOS: Well, it sounds like it's going to pass the Senate this week, so can (inaudible) that are more contentious.
CORNYN: I think if Texas was below 8.5, we need to have some (inaudible).
STEPHANOPOULOS: How about the broader issue, Senator Cornyn? Chairman Greenspan says no other stimulus, but the president said yesterday he's going to have his team look at more job creation measures. Good idea?
CORNYN: Well, I think the stimulus so far has been unsuccessful in achieving the goals the president set out for it. He said, with the stimulus, we'd seen 8 percent -- no higher than 8 percent unemployment. And we now see, with 60 percent of the stimulus unspent, that that has not been successful. We're going to see unemployment over 10 percent.
Forty-three cents out of every dollar spent in Washington today is borrowed. And the American people are justifiably concerned, even scared, that the spending and the debt that's being racked up. And unfortunately, the health care issue threatens to make matters worse, not -- not better.
STEPHANOPOULOS: So still in pat (ph) is your position?
CORNYN: Well, no. I think there are things we need to do to help people who need help, like unemployment benefits and the like. But I think throwing more money at the problem and racking up more and more debt for children and grandchildren is not the answer.
SCHUMER: Bottom line, we -- we have to deal with the pain of people's unemployment now, so prolong (ph) unemployment benefits. I'd be for extending COBRA benefits, so...
STEPHANOPOULOS: And health care?
SCHUMER: Health care, as well.
STEPHANOPOULOS: Are you for that?
CORNYN: I'm for health-care reform, which means that in part what we do is we don't -- you don't have to get it from your employer to establish parity, where people get affordable health coverage...
STEPHANOPOULOS: You haven't (ph) extended it to the very people who are unemployed to buy...
CORNYN: Sure, but COBRA's not really a great solution for a lot of people, because it costs so much money. So that's part of the overall problem about making it more affordable.
SCHUMER (?): That's true.
SCHUMER (?): ... a longer (inaudible), and then we can do a couple of things. I'd be for extending the housing tax credit, which has helped get the housing market out of the severe depression it was in. It's getting a little better, has to go more. But...
STEPHANOPOULOS: You're ahead on that, too. So we have a lot of agreement there.
CORNYN: Senator -- well, Chuck and I agree on a lot of things, but -- well, some things. Let me put it that...
CORNYN: Johnny Isakson -- Johnny Isakson of Georgia has been championing the -- the tax credit for home purchases. Now it's getting ready to expire, and it's limited to $8,000 for first-time purchasers. His argument is, and I think he's right, is that the housing inventories, or excess housing inventories are what are dampening the recovery.
And I think he's right. So that's something we are...
STEPHANOPOULOS: So we have agreement: extend unemployment benefits, extend health care benefits for people who are unemployed, and extend the housing tax credit.
SCHUMER: And let me just say one other thing here, broader-term. The stimulus is working. The American people see it. Forty percent has been spent. Before the stimulus, we were losing 700,000, 800,000 jobs a month, a huge amount. It's going down. The number now is about 300,000. And Alan Greenspan said, it should turn around soon.
So, before doing a second stimulus, let's see how the rest of the 60 percent works and try to deal with the pain of some people in terms of the job front, where John and I agree, and in certain targeted areas of the economy such as housing.
STEPHANOPOULOS: OK, then, let's get to health care, where I expect you're going to see some bigger differences right now. Probably the most contentious debate you all had all week long was on this amendment by Senator Crapo, where he was saying he wanted to put forward an amendment that would basically implement the president's policy not to have any tax increases for anyone earning under $250,000.
(BEGIN VIDEO CLIP)
SEN. MICHAEL D. CRAPO, R-IDAHO: It simply provides that no tax, no fee or penalty imposed by this legislation shall be applied to any individual earning less than $200,000 per year or any couple earning less than $250,000 per year.
STEPHANOPOULOS: All but one Democrat voted against that. Why?
SCHUMER: Well, because it's the way that "tax" was defined. They're defining "tax" -- you tax the insurance companies. They made huge amounts of profit. It went from $2 billion to $12 billion in 10 years.
STEPHANOPOULOS: He left that out of his amendment, I think.
SCHUMER: No, his amendment was so broad, it could include just about anything.
They're calling the requirement that people have to buy health insurance a tax.
Now, you may like it; you may not like it. But it's never been a tax. We don't -- we've never called the requirement that you have to have auto insurance a tax.
So if it were narrowly defined and said, really, a direct tax on people $250,000 or lower, I think that's going to be in the bill. We're trying to avoid that in every possible way. That's the president's promise and that's what the bill does.
CORNYN: Middle-class families are going to see higher health insurance premiums. They're going to see more taxes, more penalties under this bill.
The president can't keep his promise under the bill that's currently pending in the Finance Committee or any of the other bills that are currently in front of us.
One thing that we need to focus on is, you know, affordability is the single most important issue, bringing down the cost, bring the cost curve, making it more affordable so more people can get coverage.
Unfortunately, this bill makes things worse rather than better by imposing federal government mandates on coverage that, for example, in the Whole Foods in Austin, Texas, headquartered in Austin, Texas, they won't be able to keep their current health coverage now because it doesn't meet the minimum -- minimum actuarial value because it's a health high-deductible plan with wellness accounts that people like, but they won't be able to keep it.
Millions of people won't be able to keep what they have.
STEPHANOPOULOS: Are you sure you're going to be able to hold the line on this on the floor? I mean, that was a very close vote in committee.
SCHUMER: Yes, I think we will because, again, we are sticking to the president's promise. And here's the nub of this, George. It's difficult. The costs -- John and I agree with this -- are out of control. So it makes it very hard for middle-class families to afford health insurance, or for their employer to afford health insurance for them.
The clear thing is, if we do nothing, tens of millions of people are going to lose coverage in the next decade. Your employer will call you in and say, "Jim, Mary, you're doing a great job. I want you to stay with my company forever. Btu I can't afford health care for you."
So we have to get the costs down. Until we do, there's a push and pull here. Do you put the burden on the average middle-class person because, for -- when they're not covered; when some people are not covered, we all pay -- the average person pays $1,200 to give health insurance -- to pay for the costs of people who are not covered -- or do you wait a while?
And Olympia Snowe and I had an amendment that would both reduce the penalties significantly -- no penalties in 2013. The amount went down. And there's another idea we're doing to look at the penalties I'm going to propose on the floor, which is, instead of it being a penalty, it goes into an account like an IRA but should just go for health insurance.
And then, when you buy health insurance, that money will be used for it so it won't be a penalty at all.
STEPHANOPOULOS: ... you mentioned Senator Snowe. She appears to be the only Republican who's in play on the Senate Finance Committee to vote for this bill.
And you've had your former leader, Bill Frist, come out and say he would vote for the bill. He says that's what leadership is about. So does the former leader Howard Baker, former leader Bob Dole. And may I make the argument that the Republican Party can't afford to be seen as doing nothing on this issue. How do you respond?
CORNYN: Well, we're for health care reform, but we're not for a government takeover of the health care system, which is going to do nothing but increase health care costs and basically cannibalize Medicare to the tune of $500 billion in order to pay for a new government entitlement program. And a lot of the best ideas we've had, like medical liability reform, to eliminate or reduce defensive medicine, and giving people more choices, have been rejected along party line votes in the Finance Committee. So we all, I think, want to see health reform. We want to make it more affordable. We want to have targeted solutions that deal with people who can't -- who don't have coverage now. But I think what has been proposed will literally make things worse, not better.
SCHUMER: I -- let me just say, Senator Frist and others have a point. Ninety percent of the amendments that were offered by my colleagues on the other side of the aisle were negative, were sort of little gotcha amendments. Senator Hatch had an amendment, states with the letter "U" shall be exempt. They don't have a plan. It's very hard to do this. This is the hardest thing I've ever seen attempted to be accomplished in a legislative context in the 35 years I've been a legislator. We are coming together as Democrats. And we welcome Republicans. We hope Olympia Snowe will vote with us, and maybe a few others. But the Republican Party is a party of "just say no." And this is not 1980. This doesn't work anymore. CORNYN: George, the first amendment that was offered by Senator Jim Bunning was that this product, whatever it is, would be posted on the Internet at least 72 hours and we would know what it cost by the Congressional Budget Office at least 72 hours before there would be a vote in committee and on the floor. Our Democratic friends voted against that. Senator Snowe has been really a champion of more transparency and accountability. And frankly I get the impression that now that our Democratic friends would rather the American people not know what is in the bill because of the more they find out about...
STEPHANOPOULOS: ... there are secret deals in it, though. What did you mean by that?
CORNYN: Well, for example, the deal that we found out there was an $11 billion mistake by the Congressional Budget Office because the conceptual language that we voted on in the Finance Committee did not include a "hold harmless" agreement with the American Hospital Association, that they would not have to kick in anymore than $150 million toward this deal.
So those are side deals made behind closed doors, secret deals that not all of us know about. Pharma is another example. And...
SCHUMER: Let me just say, on the Bunning amendment, he wanted a two-week wait, we thought it was dilatory. Olympia Snowe reasonably said, let's get a CBO estimate, let's put the bill online for three days so that everyone can read it and see it and go over it. And that is what has happened. It went online Friday. We're not voting until Tuesday. There is no attempt to rush this bill through. We've been at it for six or eight months. It's just that our colleagues on the other side of the aisle want nothing. STEPHANOPOULOS: We're just about out of time. You said the Democrats are coming together. The Democrats still divided over this issue of a public option. Senator Reid says there will be a public option on the floor. You just heard Senator Baucus say the votes just aren't there. And you didn't have the votes to get it out of the Senate Finance Committee.
So what are you talking about here? Are you talking something that is more of a fallback plan like Olympia Snowe -- I don't see how you have the votes for your proposal?
SCHUMER: The more the public looks at the public option, the more they like it, because they see that it is an option. You want to keep your own insurance or go into the exchange? Do it. If you don't like it, you have an option. That's a good thing. Sixty-five percent support it.
My colleagues, to get -- we are going to come together on a public option. It will have some modifications. Senators like Tom Carper, one of the leaders of the moderate group, had made some proposals. Others are...
STEPHANOPOULOS: Allowing the states to create their own (ph).
SCHUMER: There are lots of different alternatives. But...
SCHUMER: ... we need a public option simply for this reason. There is no competition in the insurance industry now -- or very little. In 94 percent of the markets, a public option will bring costs down by providing competition...
CORNYN: The public options is basically a pathway to a single-payer system...
SCHUMER: No, it isn't.
CORNYN: ... because the Congressional Budget Office points out that people will not be able to buy insurance commercially because the government will undercut that. And many people who now have what they like will not be able to get it. This is the elevation of ideology over trying to find a practical solution to problems, which we agree with.
STEPHANOPOULOS: See that debate on the floor. Gentlemen, thank you both very much. The "Roundtable" is next with George Will, Cokie Roberts, Matthew Dowd, and Katrina Vanden Heuvel. And later, the "Sunday Funnies."
(BEGIN VIDEO CLIP)
JACQUES ROGGE, PRESIDENT, INTERNATIONAL OLYMPIC COMMITTEE: The city of Chicago, having obtained the least number of votes, will not participate in the next round. TONY HARRIS, CNN ANCHOR: Madrid is still in. Tokyo is still in. Chicago is out? JUAN WILLIAMS, FOX NEWS CONTRIBUTOR: Let me just quickly ask you, Karl, is this a humiliation for the president?
KARL ROVE, FOX NEWS ANALYST: Absolutely. And he got exactly what he deserved by personalizing this. RUSH LIMBAUGH, RADIO TALK SHOW HOST: The worst day of Obama's presidency, folks. The eagle has landed.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: One of the things that I think is most valuable about sports is that you can play a great game and still not win. (END VIDEO CLIP)
STEPHANOPOULOS: Did the White House play a great game? The president came home empty handed, of course. Let's talk about it on the roundtable. We're going to bring in, as always, George Will, Matthew Dowd, Katrina Vanden Heuvel of "The Nation" and Cokie Roberts. And George, I guess this is the question. I mean, you saw some overheated criticism, perhaps, there of the president. But a real question, was it the right thing to do to put the prestige of the White House on the line? The White House says, "Hey, you never go wrong fighting for your country." GEORGE WILL, ABC NEWS CONTRIBUTOR: Well, they were fighting for a city, and a city divided about whether or not this will be a good thing to have the Olympics there. What's alarming is whether it indicates a belief on the part of the president, which is that there's no problem that will not melt before the sunshine of his charm. And this is evidence again that it's not so.
The president and first lady went to Copenhagen and gave little speeches about themselves. She, Mrs. Obama, used the first person singular pronoun, in some form or other, "I" or "me," 16 -- 34 times in 16 paragraphs. He used it 23 times in 13 paragraphs It was all about them. And the danger is, an adjective sooner or later attaches to presidents. Honest Abe, Tricky Dick Nixon. All kind of adjectives. The danger to the president is that vain is going to attach to him. COKIE ROBERTS, ABC NEWS ANALYST: Well, I mean, he was going for Chicago. And I just thought of this. But the truth is, he should have used some Chicago smarts before he went. You know, you don't go into an election that you don't know the outcome of in Chicago. And he should have never...
UNIDENTIFIED MALE: A damning indictment of Chicago, but go ahead.
ROBERTS: I'm in Louisiana. We have similar sorts of things. And the -- the idea that he would, as the president of the United States, go to Copenhagen without knowing that the IOC was going to -- didn't -- he didn't have the votes. And not only did he not have the votes; he had the fewest votes of anybody. I mean, that is a bad political...
STEPHANOPOULOS: I mean, that's a surprise, that they were last.
ROBERTS: ... just a terrible political judgment to make. KATRINA VANDEN HEUVEL, "THE NATION": Those guys lived (inaudible) the roads (ph). They would have blamed if he -- blamed President Obama if he hadn't gone. You know, three contrarian points. One, I think this -- the Olympics have come graft and corruption. Ordinary majority of Chicagoans were opposed to the Olympics coming to their city. They saw it as a boondoggle for Mayor Daley or for the elite of Chicago.
And I think in the end, Obama's lucky. Because if Chicago had gotten the Olympics, every scandal, every overrun, every sign of corruption would have been Obama's fault. It would have stuck to him. And third, the larger point, one George will disagree with, is the big trip he needs to take to Copenhagen, and he needs to go now, is the one that starts at the beginning of December, the U.N. summit on climate change, the highest environmental stakes we're...
VANDEN HEUVEL: ... for Obama to go to in Copenhagen. MATTHEW DOWD, ABC NEWS CONTRIBUTOR: To me, and I don't agree with the Republicans who said he couldn't do his job and fly over to Copenhagen. STEPHANOPOULOS: ... President Obama.
DOWD: A president can do that anywhere. Any president can do that from Air Force One. My feeling about this is, is that political capital is limited. It's like a cup of water, a cup of coffee. And every time you take a sip out of it and use it, there's less of it there. And at a time when needs the political capital he can get to do health-care reform, to try to fix the economy, to deal with Afghanistan, all of those things, he takes a trip, which in the end, it turns out to be a folly of a trip. I don't think he's humiliated. But it raises serious questions in my mind, whether they really understand the limits on political capital. Or whether, as George says, they think they can just throw pixie dust of President Obama on anything and fix it.
ROBERTS: And the problem is, it comes just at the same time that everybody was already criticizing him of being too diffuse, being all over the place, not concentrating, not following through. And you know, to just sort of go winging off to Copenhagen in the middle of that, I think it's just a bad judgment. STEPHANOPOULOS: It's true that he probably would have gotten blamed if he didn't go. Because all the other foreign leaders were -- but to get to these points, George, we have seen the White House face a fair amount of this lately. Look on the political front. They tried to get Dave Paterson out of the race in New York. He says no. They tried to get Andrew Romanoff out of the race for Senate in Colorado; he says no. They tried to get Joe Sestak out of the race in Pennsylvania for Senate. He says no.
The argument is, again, no harm in trying; that's the job of the White House. WILL: That's just at home. Abroad he has said to Israel, "Stop the settlements." They didn't. He said to the Palestinians, "Engage Israelis." They didn't. He said to Saudi Arabia, "Some gesture, please, toward Israel." They didn't.
He said to Iran, "Do this, that, and the other thing." They obviously haven't. To Honduras, he said, "Please restore your president." They didn't.
India and China, "Please restrain your greenhouse gases." They won't. NATO, "Please take some of our Gitmo terrorists." They won't. NATO, "Please send troops to Afghanistan." They won't. It's -- saying no to the president is a habit. VANDEN HEUVEL: But George, that -- you can't conflate, it seems to me, a White House going into domestic races. I think that's antidemocratic, what they're trying to do. I believe in the primary system in our country. But going and saying to Israel, "Halt settlements," that is the right and role and prerogative of a U.S. president. That is called international relations, diplomacy, speaking out to the world and engaging a world that was repulsed in these last eight years. WILL: All I'm saying is the world adores him and ignores him. VANDEN HEUVEL: Well, no, but the world is marching on its own terms. America is no longer a superpower. And I think this administration does understand the limits of U.S. power but needs to demonstrate it more wisely. I would agree with that.
But I think, you know, what President Obama is trying to do and yesterday, when he spoke about the national emergency in our country...
VANDEN HEUVEL: ... which is the jobs crisis, that is where you begin to see a president who does need to limit his focus. Now, I do respect the boldness and ambition of a president who's come out and done all of this. And I think he's been forced to by the nature of our times. But he now needs to step up on the jobs crisis. Because that's not just political; it's moral. You had on secretary -- Federal Reserve Secretary Alan Greenspan. I mean, our man, William Greider of "The Nation" called him a one-eyed chair, because he adverted his eyes from financial chaos and destruction. But to say we don't need a second jobs stimulus is wrong. ROBERTS: The -- the political stuff at home, the big mistake is that they let people know about it. You know, you do those kind of deals, where you're trying to get Paterson out of the race, you don't tell the world that you're trying to get Paterson out of the race. That's something...
STEPHANOPOULOS: They probably would have preferred it didn't get out, but some things are hard to control.
ROBERTS: But the -- well, except you know, some White Houses do a much better job of that than others. And what we're learning about this White House is that they are not able to keep these things quiet. DOWD: At some point -- at some point, he has to win something. ROBERTS: That's right.
DOWD: And accomplish something. And the economy has failed. We've lost three million jobs in the first eight months of this administration, in spite of $800 billion stimulus package.
STEPHANOPOULOS: There are a lot of independent analysts who say it would have been a lot worse. DOWD: That's arguing a negative, and no person that's unemployed out there, that can't find a job, sits there and says, "Oh, I'm benefited, because my next-door neighbor didn't lose my -- lose their job, but I still don't have a job."
He hasn't done -- he hasn't, obviously, accomplished health-care reform. The Afghanistan situation has only gotten worse since he's been president of the United States. And so all of these things, he has to -- whether or not he's truly a leader that people respond to, he has to accomplish something. (CROSSTALK)
ROBERTS: The advantage to that -- the advantage to that is that everybody now knows that he has to accomplish something. And that means that the Democrats in Congress will give him a health-care bill, because it is so important. He has raised the stakes for accomplishing something. VANDEN HEUVEL: Yes.
ROBERTS: They cannot defeat it now.
WILL: We're talking about the wrong numbers. The numbers are bad. The September jobs numbers were worse than August. Fourteen states now have double-digit unemployment. Look at the Cash for Clunkers, what we now know about that. General Motors shares -- sales down 45 percent. Chrysler, 42 percent. Ford...
ROBERTS: Ford, just 5 percent.
WILL: Ford is fine, because people know it's a patriotic duty to support the last non-government automotive company. But that's another matter.
The interesting thing is all we did with Cash for Clunkers was cannibalize future sales. And what is about to happen now? How many of you know we're about to have a dollars for dishwashers? You're laughing.
ROBERTS: I know.
WILL: This is federal policy. Beginning very soon, at the states' discretion, there's $300 million to subsidize, again, cannibalize future sales of, appliances. (CROSSTALK)
VANDEN HEUVEL: I think -- I think Matt made the wrong point. And in the absence of this weak stimulus program, the economic situation would be much worse. But where the political will is lacking in this town is for a targeted jobs creation program. Former treasury secretary Robert Reich has spoken very clearly: we are fixed in this city on debt. This is a fetishism about debt. What we need to fix on is the human...
STEPHANOPOULOS: Not just the city; it's the country.
VANDEN HEUVEL: In the country, but, at a time when government, when private businesses and spending, when consumers aren't buying, when exports aren't working, government is the last resort. We need to spend to stand to rebuild this country... ROBERTS: But it's not like...
VANDEN HEUVEL: ... to put people back to work. But to put people back to work, not to spend on wars we don't need. ROBERTS: Well, we just -- you just heard two senators agree on extending unemployment, extending health care under COBRA and extending the tax credit for housing.
VANDEN HEUVEL: And that is great.
ROBERTS: So that's all stimulus money that would be more debt.
VANDEN HEUVEL: But we -- this is a national emergency in this country, and we need to -- we need to think about this, not just dance around the good edges of extending unemployment benefits. STEPHANOPOULOS: Let's press that point, because that brings up a strategic question that the White House answered at the beginning of this year, saying, no, the way to address it is to do everything at once. The president said yesterday, Matthew, that his principal focus is going to be jobs. He opens the door to looking at other ideas, although White House officials say that doesn't mean anything, is imminent. The question is, how -- does he pursue that now or wait for health care? I think they've answered it, but is that the right decision?
DOWD: Well, they keep saying what -- the president and the administration does, they keep saying what their priority is. And it seems to change every other week what their current priority is. And you have to maintain a priority for at least some period of time, maybe a couple of months for all of the people to believe it is a priority. So if it is a priority, then we're going to have to see that reflected in how he acts with Congress and how he doesn't. My thing about the stimulus package, which I think goes back to what FDR did, in my view, is when he accomplished it -- when he pushed a jobs package, people actually saw things done, they saw bridges getting built, they saw farms getting mowed over, they saw roads getting built. Nobody sees any activity done by the stimulus package that actually is producing jobs. Nobody can see it. (CROSSTALK)
ROBERTS: Yes, but also, it's the dog that didn't bark. You know, there are jobs. I mean, you're quite right that it doesn't convince people to say, well, that job wouldn't be there if we didn't do this. But particularly at the state and local government level, there were all kind of cutbacks that were headed to happen, particularly with police and teachers and all of that, that didn't happen. STEPHANOPOULOS: And it's so bad, but again, it would have been far worse. VANDEN HEUVEL: Far worse.
DOWD: Well, I don't know, OK, I'm going to go back to that point, they said that if we pass a stimulus package, unemployment would never go above 9 percent. They said X would -- Y and Z would happen. All that has happened in spite of the stimulus package, so that's an argument that we're making in some sort of fiction fantasy land, that "but for this."
STEPHANOPOULOS: No, but that could show that just the economy was in far worse shape before. (CROSSTALK)
VANDEN HEUVEL: You know, John Kenneth Galbraith once said that astrology -- that economic forecasting exists to make astrology look good. In these conditions, Matt, it's very hard to have predicted what we would see. And don't forget, the danger of the health care reform is that is it weakened and diluted in the way that the recovery package was so as to address Republicans' concerns. That could have been a stronger recovery -- but not strong enough to do what you rightly suggest, which is, parks, bridges, tunnels, an industrial policy, which may make George go berserk because it sounds like socialism, which it isn't, every advanced industrialized country has an industrial policy which would address the auto industry. Build light rail, buses. WILL: Yes, the jobs numbers were the worst since the summer of 1983, 17 months later, Ronald Reagan came within 3,800 votes in Minnesota of carrying all 50 states. So this is not necessarily a political disaster, except the differences. What Reagan was doing was lightening the burden on the economy, cutting taxes, cutting regulations. This comes with the president trying to increase the burdens, with higher taxes, with more regulations, with cap and trade. ROBERTS: You know, right now, 40 percent, 40 percent of GDP is state, local, or federal money. I mean, that's an incredible number. So that, you know, adding more to that, I think, is going to just make the -- distort things even more. And the public is so concerned about it... (CROSSTALK)
VANDEN HEUVEL: But, Cokie, last point, and at the moment, when George said earlier, one out of six are unemployed or underemployed, I think the focus is on putting people back to work, and not on debt. I continue to resist this belief that debt is this animating feature of our political system. (CROSSTALK)
STEPHANOPOULOS: ... have that debate with Alan Greenspan. But meanwhile, let me turn it back to the issue of Afghanistan, because we did have some news this morning, probably the worst firefight of the year in Afghanistan, eight Americans killed in a major firefight with 700 Taliban. Of course, it comes in the midst of the president doing his review of policy. And the commanding general on the ground, General McChrystal, actually weighed in on this debate publicly this week. He gave a speech in London where he was asked about Vice President Biden's policy of trying to address the problem of terrorism in Afghanistan with drones and missiles the way we do in Pakistan. Here was his answer. Will it work? (BEGIN VIDEO CLIP)
GEN. STANLEY MCCHRYSTAL, COMMANDER, ISAF: The short glib answer is no. And the first reason is I believe you have to navigate from where you are, not from where you wish you were. We're in Afghanistan, and we have established relationships, expectations both with the Afghan people, the Afghan government. (END VIDEO CLIP)
STEPHANOPOULOS: This debate has become extraordinary public. George, the White House has had two meetings last week. Two more meetings coming up this week. You've got Vice President Biden, probably General Jones, the national security adviser, the political staff in the White House arguing for a policy much like we see in Pakistan. The military, McChrystal, Mullen, Petraeus, all saying no. WILL: McChrystal was asked, could you support it? And he said no. Now, some people are likening this, mistakenly, to the MacArthur/Truman dispute that led to the sacking of MacArthur. This is very different and in a sense worse. It's different in the sense that Truman had a clear policy, reiterated. And MacArthur didn't like it and went against it. And he was fired for insubordination. Here, McChrystal is not differing with a policy because the administration seems to be backing away from its own policy. So into this vacuum, he has asked questions. Not surprisingly, a week ago, with my customary mistake, I said that he would be up there testifying very soon. Evidently not. Instead, he's talking in London and answering questions that are making life difficult for the White House. (CROSSTALK)
STEPHANOPOULOS: ... says he will not testify until after the president makes his decision.
ROBERTS: Well, that's because, you know, that could affect the decision, politically, and they don't want that happening, obviously. But his point there, that you just heard, about not breaking promises to -- or having a situation on the ground that exists, I think is a very important one. You know, we -- abandoning Afghanistan again could have a tremendous impact on our -- the view of us in the world, but also abandoning Afghan women. I mean, this is a really very serious thing that we would be doing here... (CROSSTALK)
VANDEN HEUVEL: No one is talking about abandoning. We're talking about non-military, smarter alternatives. ROBERTS: Well, but if the military is not there to protect these people, then the possibility of the Taliban taking back over and this whole argument is going, well, is the Taliban really the same thing as al Qaeda? Well, not...
STEPHANOPOULOS: That's a big question they're addressing. ROBERTS: That is a big question they're addressing. So what that then says, though, the implication of that, is to say so the Taliban, we'll just let them happen. And then they'll happen inside the country, once again, we're pressing the people inside the country who are mostly women. VANDEN HEUVEL: Women have never fared well in a militarized, occupied situation. There are alternatives to the development and modernization of Afghanistan other than the military footprint of the United States.
I respect President Obama for what he is doing with this review process. I think it shows good judgment. He knows it's the defining decision of his administration. I think what General McChrystal has done forces us to think very tough -- in a hard way in this country about civilian control of the military. And he might go back and read the Constitution, Article II, the president is the commander in chief. I think we're at a dangerous moment in the civilian-military relationship. And finally, I would urge anybody watching the show to get Representative McGovern's resolution which simply demands the Pentagon craft an exit strategy and call your representatives, because there are smart, effective alternatives to what may be a military escalation... (CROSSTALK)
VANDEN HEUVEL: ... disastrous to this country and the world.
DOWD: I think one of the things that I think we have a problem with is that this is like the sunk costs fallacy, that we have all of this investment that we've made in Afghanistan, and because now we have all of this investment made in Afghanistan, with the loss of precious life, with the loss of resources, therefore we can't back away from it even though nobody has really an understanding about what the exit strategy is and what we want to accomplish. In the end, they put this broad aura over it, is that we're in Afghanistan to solve the terrorism problem. That we don't want another attack on the United States. In my view, what I think we ought to be doing is we're spending billions of dollars, at some point, we need to prioritize our spending on money related to terrorism. If Afghanistan is truly and centrally a point in that, then we should deal with it. If it is not a point in that on the priority list of homeland security problems, then we should move the resources and spend them on something else. WILL: It is not, Katrina, a constitutional crisis, for a theater commander, when asked in public a question about a policy the president himself is questioning, to give his opinion. VANDEN HEUVEL: I think it does demand of General McChrystal to go back and read the Constitution. I think -- I didn't say a crisis. ROBERTS: But I think McChrystal understands that the president is in charge, and he is -- he will accept the president's decision. He's trying to influence the president's decision, just like everybody else is. VANDEN HEUVEL: Well, I think he could have simply said, refer this question to the Defense Department or the White House. But I do think we have a broader problem, and you, as someone who studies the Constitution, the erosion of civilian control over the military did not begin yesterday. I think President Bush's ongoing deferral to the generals on the ground erodes presidential prerogatives. And the whole issue of...
STEPHANOPOULOS: ... the generals were divided over Iraq. The president said no to several of the generals. He said yes to others. VANDEN HEUVEL: I think McChrystal crossed the line. And the leaks, the leaks, you know, the Bob Woodward leak, boxing in a president. DOWD: I think anybody who would say that President Bush was weak in the Iraq policy and Donald Rumsfeld was weak in the Iraq policy didn't say that the generals made those decisions. They say that the secretary of defense, Donald Rumsfeld, made those decisions and the president of the United States and Dick Cheney made those decisions. STEPHANOPOULOS: And my guess is that even General McChrystal agrees that he's not going to -- that it was probably a mistake to go out there and give the speech and go to the Q&A. We probably will not be seeing any more speeches before the president makes a decision.
You guys continue this in the green room. You can all follow it later on abcnews.com and get political updates all week long from our daily newsletter, which is also on abcnews.com. END