Transcript: Sebelius, Pawlenty

Transcript with Sebelius, Sen. Rockefeller, Gov. Pawlenty and Sen. Landrieu.


STEPHANOPOULOS: Good morning and welcome to "This Week."


PRESIDENT BARACK OBAMA: The time for bickering is over. The time for games has passed.


STEPHANOPOULOS: President Obama presents his plan.


OBAMA: Now is the time to deliver on health care.


STEPHANOPOULOS: Are Democrats on board? Will Republicans bend? Bottom line, will Obama get his plan? And what will it mean for you? Questions this morning for our exclusive headliners from every side of this debate. The president's health secretary, Kathleen Sebelius. Democrats senators Jay Rockefeller -- he wants a public option -- and Mary Landrieu. She doesn't. For the Republicans, the Minnesota governor with his eye on the White House, Tim Pawlenty. Our "This Week" debate.



REP. JOE WILSON, R-S.C.: You lie!


STEPHANOPOULOS: The heckler that rocked the hall.



REP. JOHN A. BOEHNER, R-OHIO: His behavior was inappropriate.

WILSON: I will not be muzzled.


STEPHANOPOULOS: That and the rest of the week's politics on our roundtable, with George Will, Sam Donaldson, Cokie Roberts and David Brooks of the New York Times.

Then, as always, the Sunday Funnies.


(UNKNOWN): President Obama said that he will not send a health care plan that adds one dime to the federal deficit. And then he interrupted himself and said, "you lie."


STEPHANOPOULOS: It was back to the campaign trail today, with dueling rallies and loud partisan crowds. Here in Washington, tens of thousands of conservative activists marched on the Capitol to block Obamacare.


REP. MIKE PENCE, R-IND.: We the people do not consent to government-run insurance that will cost millions of Americans to lose the insurance they have!

SEN. JIM DEMINT, R-S.C.: Ladies and gentlemen! Welcome to Waterloo!


STEPHANOPOULOS: In Minneapolis, some 15,000 Obama supporters hear a stem-winder from their man.


OBAMA: Are you fired up? Ready to go? Fired up! Ready to go! Fired up! Ready to go!

They can't stop us! Let's go get this done.


STEPHANOPOULOS: And let's begin our own debate here in the studio. I'm joined by Kathleen Sebelius, the secretary of health and human services in Kansas. She's joined here in the studio by Democratic Senator Jay Rockefeller, Democratic Senator Mary Landrieu, and Republican Governor Tim Pawlenty of Minnesota.

And Governor Pawlenty, let me begin with you, because after the speech on Thursday night, the president says he's going to get this done. After the speech on Thursday night, you suggested perhaps invoking the Tenth Amendment, which reserves powers to the states, if indeed this does pass. What exactly are you saying? There is a movement to actually nullify health care if it passes?

PAWLENTY: Well, George, in the legal sense, I think the courts have addressed these Tenth Amendment issues, but more in the political sense, in the common sense arena, we need to have a clear understanding of what the federal government does well and what should be reserved to the states.

We have essentially Obamacare that's been deployed in two states in major ways. One is in Tennessee. We have a Democratic governor, Phil Bredesen, said hey, look, we tried this cost savings as a way to fund a major overhaul of health care; it didn't work. He's in the news this morning saying, you know, don't go down that path.

We have another state, Massachusetts, who tried essentially the same thing. They have the most expensive health care in the country. They have increasing waiting lines, and it's not working.

STEPHANOPOULOS: So just to be clear, are you suggesting that any parts of the plan as the president has laid it out are unconstitutional?

PAWLENTY: Well, I wouldn't go so far as to say it's a legal issue. I was raising it as much as a practical matter, that there are some things that the federal government shouldn't do, doesn't do well, and should leave to the states.

STEPHANOPOULOS: Secretary Sebelius, what about that? The governor says there's two places that a form of what the president is calling for has been tried, Tennessee and Massachusetts. He says they haven't worked.

SEBELIUS: Well, I think that -- first, good morning, Governor Pawlenty and senators. I -- Tim and I were elected in 2002 and reelected in 2006, and I haven't seen him in a while.

As he well knows, the Tennessee experiment is really different from anything that's been talked about here. It's something that really was an attempt to make a vastly over-expensive Medicaid system work. It did crash and burn. It's different than any place in the country, I would suggest, that has done a much better job at expanding care and holding their costs.

In Massachusetts, they readily admit that they expanded care and didn't look at the cost side of the puzzle, which is why I think the president continues to suggest that anything we do, it has to bend the cost curve. And as he said to Congress the other day, even if you bring down the rising health care costs .1 of a percent, you save $4 trillion over the first 10 years of the plan. So bending the cost curve has always been part of what Congress is talking about, and it's impossible to do a state at a time. We need a national strategy.

STEPHANOPOULOS: And I want to get to that in a second. But first, let me bring in the two senators on the issue that has divided Democrats so far, this whole issue of the public health insurance option.

Now, Senator Rockefeller, I know you have said that this is a critical component of the health care plan. You heard the president on Wednesday night. He says he supports it, but you can't sacrifice the entire bill for the sake of this public option. Can you vote for a bill without a robust public health option?

ROCKEFELLER: If there were a good alternative, I would certainly have to look at it.

STEPHANOPOULOS: What's a good alternative?

ROCKEFELLER: I haven't found one. See, that's the whole point. People talk about a cooperative plan, health co-ops. And I called the head of the national association really early, and he said it's great on water, it's great on farm, it's great on electricity, et cetera, but it really doesn't work for health care. There's fewer than 20 in the country, and there are only two that really work, and one of them is in Washington, the other is in Minneapolis, in Minnesota. And both these senators from Washington are voting for a public option.

So it doesn't -- it hasn't had a future. It goes back to the '30s and '40s. And I just don't think you can take the chance. You have to start a national thing, all of the way up, or would you do it state-by-state, which would be harder.

STEPHANOPOULOS: So what's the problem with the public health option?

LANDRIEU: Well, many of us believe, George, that it will undermine the private insurance system. And that's one of the criticism of the direction that the House of Representatives took. Because 55 percent of those covered with insurance today are covered through a private insurance model, 45 percent are covered through a public model.

So, many of us would like to take the president at his word, which is, let's not completely revise the whole system. Let's build on the strengths.

Now I'm with Jay in the sense that if we can find a middle ground here, where we can keep insurance honest, regulate insurance companies, no American supports unregulated insurance companies, so that there is competition in the market, we can maybe achieve the goal through a different way.

STEPHANOPOULOS: One of the different ways that has been talked about, and then I want to move on to other subjects, is this proposal put forward by Senator Olympia Snowe of Maine, which would say, let's give some time to see if the president's health insurance reforms work to bring down costs, increase competition, if not, then we'll have a trigger which will set the public option a few years down the road.

LANDRIEU: And I have to say, I think both Jay and I can agree that what Democrats want -- and I'm hoping that some Republicans will join us in this effort and not just leave Americans out there with a too-expensive system that they have and a system that's going to crash and burn shortly if we don't do anything.

I hope that we can agree that we've got to have a reformed market where individuals can buy insurance that's affordable. Where small businesses get a chance. These small businesses, 27 million of them, George, are basically out on their own.

STEPHANOPOULOS: So can you support the Snowe trigger?

LANDRIEU: I can support potentially a fallback, but only if the private sector is allowed and given a great opportunity to get this right. I believe they can.

STEPHANOPOULOS: How about you?

ROCKEFELLER: I think that's too easy an answer with all...


ROCKEFELLER: Lots of love.


ROCKEFELLER: I mean, I said I didn't think there were any good alternatives. And if you're not going to vote for something, then you have to do something about insurance, because they have been very rapacious about ripping off consumers. We have done a lot of work on that to show that, and had whistleblowers come forward.

But I'm not dispassionate on the public option.

STEPHANOPOULOS: You're going to keep fighting?

ROCKEFELLER: Yes, I am going to keep fighting, because it's probably not going to attract more than -- it will probably attract less than 5 percent of the American population. And, you know, Tim -- the governor will say, it's going to track over 100 million. It won't. It won't.

But it's an option. And the very fact that it is there says to the other insurance companies, hey, if we don't bring our costs down, because the public option doesn't have -- they just live on their own premiums...

STEPHANOPOULOS: Another controversy -- let me bring in -- go on to another subject, another controversy the president brought up the other night was he said that no federal dollars will be used to fund abortions.

And this is connected to the public option, Governor Pawlenty, because many supporters of the pro-life movement, anti-abortion activists have said, no, that's not true. That the public option that is being considered so far in the House will actually fund abortions.

PAWLENTY: Well, there's an easy way to resolve this. There's a dispute. So just be clear in the bill. If the president is embracing the idea that public monies and public systems won't be used to fund abortions, then we should say that.

And the pro-life perspective on this has been viewed by both and the AP as having merit. So this is not something that people are just making up. There's legitimate concern about it. But it can and should be clarified.

STEPHANOPOULOS: Secretary Sebelius, what's wrong with that, making it explicit in the bill that no public funding should go toward abortions?

SEBELIUS: Well, I think that's what the president intends to do. There's no intent to change the language that's in the current Medicaid statute, which has been there for years and provides insurance to millions of Americans.

And in fact, recently the Catholic bishops came out, after the president's statement, saying that his statement about what he intends in the plan, that no public funds would go to fund abortions, and the fact that he has come out firmly for insuring all Americans and saying it's a moral issue as well as an economic issue, and they endorse moving forward.

So I think that, you know, the legislative language will reflect what the president has just said.

STEPHANOPOULOS: So you're saying it will go beyond what we have seen so far in the House and explicitly rule out any public funding for abortion?

SEBELIUS: Well, that's exactly what the president said and I think that's what he intends. That the bill he signs will do.

STEPHANOPOULOS: I see you nodding your head here, Senator Landrieu, I know this has been a concern of yours.

LANDRIEU: It is a concern of mine. And it's a very important issue. But the bigger issue -- and I agree with the secretary that the president will make this clear...


STEPHANOPOULOS: So that language has to be made clear? It's not there now.

STEPHANOPOULOS: I think there was a piece of cake in the Taiwanassembly. (LAUGHTER)

Great moments in legislative incivility, coming off of Wednesdaynight's heckle.

We bring in our roundtable. I'm joined, as always, by GeorgeWill, David Brooks of the New York Times, Sam Donaldson, and CokeRoberts.

So, George, a little context, there, some other legislaturesaround the world. But the heckle did get so much attention Wednesdaynight because it was -- we've never really seen it before, somethingthat blunt during a presidential speech.

Is it a sign of the times? WILL: I don't -- I hope so, because what it makes it news is howrare it is.

May 27, 1856, a South Carolina congressman named Preston Brooks-- no relation...

(LAUGHTER) ... offended three days earlier by something Senator Sumner ofMassachusetts had said, went on the floor of the Senate, holding acane and accompanied by a man with a pistol, whose job it was to holdat bay the other senators while he beat Sumner so severely, he was outof the Senate for three years. STEPHANOPOULOS: So you're saying we've got progress now?

WILL: I'm saying that's right.


ROBERTS: And that was progress from earlier times. You know,Burr-Hamilton was just the most famous of duels over political speech.I mean, the sitting vice president of the United States murdered hispolitical enemy over what was said in a political campaign.


But they used to call each other out on the floor of the House ofRepresentatives all the time, go out to Bladensburg and shoot eachother.


DONALDSON: That sounds to me civility and disrespect has beenwith us always. But it very seldom, as in the case of Senator Sumner,wins. In other words, as I recall, the North won that battle,eventually.

And I think, in this case, Joe Wilson, who was part of thatskein; Joe McCarthy did it to destroy people with his (inaudible)

They called Lincoln a baboon. In the Jefferson-Adams-Jacksonera, you should see those things. I agree. My only question is, how much did Rahm Emanuel pay Joe Wilson todo that?



Because it plays into the hands of the other side. STEPHANOPOULOS: It definitely helped the president on Wednesday.

And one of the other things we've seen, David Brooks, is, sincethen, both Congressman Wilson has raised -- he's raised more than a $1million from 15,000 contributors over the Internet; his opponent, RobMiller, over $1 million from 10,000 contributors

BROOKS: We've got small minorities in this country who love thatstuff. They watch Glenn Beck. They watch MSNBC. They love it, andthey'll give money to it. But most people, I think, were appalled. Because the -- this isnot a parliamentary system like Gordon Brown, that we just saw. This-- the guy's the head of state. And it's not about what you think atthat moment. It's about the institution. Ryne Sandberg, George's friend, second baseman of the ChicagoCubs, went to the Hall of Fame.



BROOKS: He said you respect the game. You will respect youropponents. When you get a nice hit, you find the coach or you run tosecond base. You don't celebrate. It's not about you; it's about theinstitution. And Joe Wilson doesn't know that.

STEPHANOPOULOS: I guess the question is, are the Democratspushing this too far? They're saying that, tomorrow, if Congressman Wilson doesn't goto the floor, in respect to the institution, and apologize on thefloor of the House, they're going to move some kind of resolution tocensure him. ROBERTS: And make him a hero.

WILL: They're saying pass health care because Ted Kennedy was asplendid fellow. Pass health care because Congressman Wilson was rude-- won't work.

Wednesday night was the 122nd presidential public utterance onhealth care. Fourteen hours later, Thursday morning, he gave the123rd; yesterday, in Minnesota, the 124th.

Incessant talk by him cannot cure what incessant talk by him hascaused, which is a yawning credibility gap.

Mitch McConnell told me on Friday -- he's been in the Senate 25years -- never have Republicans polled close to Democrats on whichparty to trust most on health care until now, and it's...


DONALDSON: George, you're wrong. It's not incessant talk by himthat has caused this. It is a lack of talk by him when it might havecounted. The speech the other night should have been given in May.He should have gotten started early, making the case against peoplewho said, well, there are death panels and this, that and the other.He didn't. He wasted the summer, in my view. And so, now, he'spaying the piper. BROOKS: But it's not the talk; it's the substance that I thinkwas the most important thing of the week. He actually did move a fewthings. He made the firm promise, no new dime to the deficits -- probablyan unkeepable promise, but a very firm promise.

He basically killed the public plan without really saying so. Heraised the possibility of creating a -- of capping the tax exemptionon employee health benefits, which moderates like. He raised the issue of tort reform, which people are...


BROOKS: And he hinted more -- it's an invitation to amendments. ROBERTS: Right.

BROOKS: And so the Blue Dogs I talked to Thursday morning wereecstatic. The liberals were ecstatic Thursday morning until theyrealized, by Thursday, he'd stuck the knife...


STEPHANOPOULOS: Except that, Cokie, I think -- you know, one ofthe points -- I think David's right about the substance, but one ofthe things the progressives, the liberals took away from this -- hispassion made them feel good and made it so they could get somethingdone.

ROBERTS: Well, that something would get done, period. And, ofcourse, that's where we are is just getting something done. Hispresidency is on the line if he doesn't get something done. And as hesaid, or apparently will say tonight, "If this bill passes, I own it."So, it's very important...

STEPHANOPOULOS: Since you brought it up, let's show it. Becausewe have the president here. He's going to be on "60 Minutes" tonight.


OBAMA: I intend to be president for a while. And once this billpasses, I own it. And if people look and say, you know what, thishasn't reduced my costs; my premiums are still going up 25 percent;insurance companies are still jerking me around, I'm the one who'sgoing to be held responsible. So I have every incentive to get thisright. (END VIDEO CLIP)

DONALDSON: But, George, the good part would click inimmediately. The tough part wouldn't come until after his re-electioncampaign. STEPHANOPOULOS: But...


STEPHANOPOULOS: ... changes don't start until 2013.

DONALDSON: That's it. STEPHANOPOULOS: Some insurance reforms come out immediately. DONALDSON: So, if he says, judge me by all of this, we can'tjudge him, assuming this get passed in some form that we think isgoing to be passed, until after he is either re-elected or defeated inother matters. ROBERTS: But I do think, getting back to the question of whatpeople took away from this, the liberals do feel like he's going to doa bill; he's going to get behind it. And he is out there now doingthis campaign stuff. STEPHANOPOULOS: And because of that, they'll be willing to giveup the public option?

ROBERTS: Some of them will and some won't. But they're going tohave to do. I mean, it's just a dead issue as far as the Senate isconcerned. I mean, Senator Landrieu is representative of 15Democratic senators. (CROSSTALK)

STEPHANOPOULOS: ... says he's going to keep fighting. ROBERTS: But, you know, do the math. I mean, if you have 15Democratic senators who say that...


ROBERTS: But, no, but even 15 Democratic senators, you don't getto 50 votes.

WILL: Cokie says do the math. The electoral vote map in theCongress is one thing...


WILL: There's another math. The president says, and SecretarySebelius just echoed him. She said Medicare's a rousing success.Medicare has a $37 trillion unfunded liability over the next 75 years.

The president says it's an exemplary -- it's a paragon of aprogram, but so shot full of waste, fraud and abuse, that we canlargely fund his new program out of that. And furthermore, Congress will -- it's not true -- Congress willcut $500 billion in benefits from Medicare without affectingtreatments. Can anyone believe any of this stuff? STEPHANOPOULOS: I want to get to the reverse of the point thatSam was making, David Brooks. It seems like, if these cuts -- if somekind of bill passes, these cuts are going to start to bite relativelyquickly, maybe before millions of Americans actually feel the benefitsof this plan? BROOKS: Well, the revenue part kicks in immediately. Thebenefits part kicks in 2013. There happens to be an election in 2012,right in the middle there, and I've heard some Democrats greatlyconcerned about that.

The basic -- this is a health extension plan. This is not healthreform. He's extending the current system. He is not touching thefundamental incentives of the current system, which are all screwed upand which are a fee for service. ROBERTS: And a fortune.

BROOKS: And costing a fortune. So the idea that, as he said --as he's going to say in "60 Minutes," that he's going to reduce therate of health care inflation, well, I don't know any health economistthat thinks he's going to substantially do that.

STEPHANOPOULOS: Well, except, don't they believe -- the argumentthey make, I believe, is that the Congressional Budget Office justdoesn't do a good enough job of counting the savings that come fromprevention. And they are going to have some incentives for preventivecare here. It doesn't a good...

ROBERTS: Except prevention costs more before it costs less. Imean, when you start with prevention, you're starting, talking aboutscreening. And when you start talking about screening people, itcosts more initially. Eventually it pays off. STEPHANOPOULOS: So you might see some more savings in the second10 years, but not in the first?

ROBERTS: Right. And the first will cost you money.

BROOKS: This is the political puzzle that -- he made the firmpromise, not a dime of deficits. The CBO is going to come out, beforethey vote on this, and say, yes, there will be a dime of deficit. I don't see how he gets out of that pickle.

STEPHANOPOULOS: Well, wait, they've said that about the Housebill. I mean, I think one of the things that everyone is waiting foris CBO has become the most powerful institution on earth...

BROOKS: Exactly.

STEPHANOPOULOS: ... is that they have to say something. BROOKS: And they are really good. They can reach balance in thefirst 10 years. But he didn't promise the first 10 years. Hepromised forever. STEPHANOPOULOS: But, David, if that's true, the bill's not goingto pass.

DONALDSON: No, but here's the way he gets out of it, but it'sgoing to cost him if he does. He's going to have to give up some ofhis idea of who gets taxed and who doesn't get taxed. I mean, middleAmerica is going to get taxed, one way or the other, to pay for thishealth care. ROBERTS: Well, and -- and Cadillac plans will probably gettaxed. And that's going to make the unions very...


STEPHANOPOULOS: They're going to tax the insurance companiesthat provide the care...

ROBERTS: And unions will not like it. WILL: Watch his rhetoric, which is becoming increasinglyslippery. No one who is satisfied with their current plan will berequired to give it up. No, but he's putting in place a structure ofincentives to get people to drop private insurance. He says, we've started -- talking about 47 million uninsured.Wednesday night, it was 30 million...


... American citizens who cannot get health care. Well, 10million are not citizens, so the 47 million. The other 7 milliondon't want health care. They have chosen not to have it.

STEPHANOPOULOS: These are the young, healthy people who arechoosing not to buy it. WILL: That's right. And the president of the party of pro-choice plans to tax and fine them into giving up that choice.

DONALDSON: Well, let's say it's only 30 million. That's badenough. I mean, oh, if it's not 47 million, let's forget it and gohome, kum-ba-ya? No.

WILL: I'm just saying, watch the...


BROOKS: Well, this gets me to my bottom line, which is, he isvery strategic. He's very flexible. And he will get somethingpassed. I think the speech makes it clear. He will get somethingpassed.

Will it fundamentally...

STEPHANOPOULOS: Democrats alone.

BROOKS: Yes, because he'll move. He'll -- he will move. Hewill do what it takes to win. He's proven that. ROBERTS: And he's doing that.

BROOKS: Will it fundamentally address the incentives that drivethe costs? Probably not.

ROBERTS: And that's the problem, really, because that's wherebusinesses are in trouble, states are in trouble, the federalgovernment is in trouble, is the cost. And so at some point, they'regoing to have to come back and fix that. But it makes a whole lot ofsense to just get a bill passed now and then worry about it. That'swhat we've done with all of these big central programs.

DONALDSON: David has pointed out why it will pass. TheDemocrats, if they learned one lesson, which I think is true, from'93-'94, is don't go into the next election cycle having done nothing,or your president and your party is going to suffer. (CROSSTALK)

ROBERTS: They're seeing that in polling in various congressionaldistricts. They're looking at -- they are looking at a 2010 mapthat's not looking great for them right now. STEPHANOPOULOS: And the argument that is probably going to workbest for the White House is remember what happened in 1994. ROBERTS: Right.


STEPHANOPOULOS: Democrats failed, and they lost the House thenext year. It's all going to be against the backdrop of an economy still ina lot of trouble on the anniversary of a financial collapse -- Iremember that weekend a year ago -- Lehman Brothers on the verge ofcollapsing. We had Secretary Greenspan on the show that Sunday sayingthis was the worst crisis he had seen since the Great Depression.

Let's look at some of the numbers a year out. The Dow inSeptember 2008, 11,421, down about 2,000 points. Interestingly, theDow is now at exactly the same point it was on September 10th, 2001,right before 9/11. A year ago, unemployment was at 6.2 percent. Today, at 9.7percent and probably climbing. Larry Summers saying on Friday thatwe're going to have unacceptable unemployment for a long time to come.

And then two other numbers. Gross domestic product, down about3.9 percent over the last year. Existing home values down 15.1percent. George, those are some of the big changes we have seen over thislast year. What else have we seen? WILL: A year ago today, New York City, as it had been for all ofthe 20th century, was the financial capital of the world. Today, it'snot the financial capital of the United States. This town is, becausewe increasingly treat capital as a public utility. The allocation ofit and the cost of it is being determined by the government. The two largest decisions the average family makes is themortgage you get for your house and the loan you get to send a childto college. That's now government business. DONALDSON: The great trigger seemed to be letting Lehman fail.And now I noticed there was some revisionist history going on aboutthat...

STEPHANOPOULOS: That it was OK to let them fail.

DONALDSON: I'm not sure -- it was OK because if a bigger companyhad failed before Lehman, then we really would have gone over thecliff. It's better to have that medicine right then. I don't know ifthat's correct or not, but I do know what it cost the country, becauseof the excesses from Wall Street. I see now Wall Street beginning tothink they could do it again. Have they not learned a lesson? Weneed regulation and we need to do it big time. STEPHANOPOULOS: Well, it is true, it is true, David Brooks, thatpay is going to be back -- it seems like pay at the biggest banks,especially at Goldman Sachs, is going to be back to the pre-crisislevels. But the big banks are holding a lot more capital in reserveand using a lot less leverage than they used to. BROOKS: There's been a psychological shift. First, let's givecredit to Geithner, Bernanke and Paulson. They didn't know what theywere doing, but they kept talking and they kept working at it, andthey did stabilize the system. ROBERTS: And internationally. (CROSSTALK)

BROOKS: And internationally, at the European banks...

ROBERTS: All the smart boys and girls came together and kept usfrom having a depression. (CROSSTALK)

BROOKS: People are still human. There's a guy at MIT namedAndrew Lowe (ph). When you have three up days in the market, thetraders have so much dopamine in their brains, they think they can'tlose. That's just human nature. We're going to have ups and downs. STEPHANOPOULOS: (inaudible) traders, but that's not most of theAmerican people. BROOKS: Oh, yeah? Subprime mortgages? Who took those out? Whotook personal consumption debt from about 100 percent of GDP to 360percent? That was the American people.

STEPHANOPOULOS: But I'm saying one of the things we've seen overthe last year is the savings rate by individual Americans has gone wayup. BROOKS: Right, as people are beginning...

STEPHANOPOULOS: Above 5 percent...


BROOKS: Right, and that's going to slow the economy. Listen, ifyou take personal spending, personal debt, it's gone around 100percent or whatever of GDP. Then in the '70s, '80s, 90s, it shootsup. That's decadence for the American people. That's not a WallStreet problem. And it's slowly, very slowly coming down. ROBERTS: That's a thing that I'm going to be really curious towatch play out, because, you know, my generation was a wholegeneration raised by the depression generation, and we are thrifty.And you know...

STEPHANOPOULOS: Not those boomers? ROBERTS: No, not those boomers. And we pay things off and allof that. And I'm very curious to see whether that whole mind-set nowsets in, where people become thrifty again. What we do know is thatthe luxury stores are suffering terribly and the low-end stores aredoing just fine. DONALDSON: People complain about the debt that's been incurred,and rightly so. I think it's something to worry about. But, whatthose gentlemen did, beginning in the Bush administration, extendingto the Obama administration, was necessary. In the perfect world, wecan go back and say, well, this was a waste, we didn't need thatamount of money, but we had to doing do something to stabilize thesystem. And that's happened. So the debt we incurred here that thepeople here in Washington yesterday complained about with bitter signsand words, was necessary, unfortunately. Now we have to find a way topay for it. ROBERTS: A lot of those people had signs -- I was on the Mallyesterday -- had signs saying...

DONALDSON: Were you a protester?

ROBERTS: ... no, I was taking the kids to the museums. Theysaid, keep government out of my health care. And I'm looking at thesepeople and thinking, you're on Medicare, honey.


STEPHANOPOULOS: Well, one of the things we learned is that thisdidn't cost as much as we feared and we're actually starting to getmoney back from the bailouts.

WILL: That's true. And before we say this caused this, thisproduced the recovery -- that's -- no, I'm prepared for Time magazineright now to name Bernanke person of the year. They won't, but theyshould. Beyond that, we're still arguing and will forever argue aboutwhat did and did not work during the Great Depression. Furthermore,will someone here remind me of the last recession that lasted forever?Oh, that's right. There weren't any. There's a kind of a naturalcure. One of your graphics a moment ago, George, said housing valuesdown 15 percent. That's an excellent thing. We had all known that wewere putting far too much of the nation's capital into housing stocks.

STEPHANOPOULOS: Recessions don't last forever, David Brooks, butI think one of the things the administration is counting on, that, inpart because unemployment is going to stay high for a while, becausegrowth is not likely to bounce back to a high level, that will put offsome of the pressure in the short term to deal with the deficit in abig way. BROOKS: But they're fully seized with the need to deal with thedeficit. If you go out to 2019, if you want a second term, that willbe the final year. You'd have public debt up to 83 percent of GDP.That's unprecedented in peace time and headed in the wrong direction.One of things I find talking to the people in the administration is,they are fully seized with this. After we get done with health care,they're going to take a shot at cap-and-trade, and then they are goingto go on to tax reform. And tax reform will not be revenue-neutral.It will be about raising revenue. I don't know how they're going todo it without raising revenue on the middle class, but they're goingto raise revenue. (CROSSTALK)

DONALDSON: ... raising revenue from the middle class. That'swhere the money is.

ROBERTS: ... is the deficit, and this week we had new numbersshowing the deficit being the highest ever in history. And that hasgotten the attention of the voters, definitely. I mean, it is theissue that the president is...

STEPHANOPOULOS: Highest disapproval.

ROBERTS: That's right, scoring the worst on. STEPHANOPOULOS: I mean, I think that's exactly right. There'sgoing to be a big fight, Sam, coming up in October, where Congress isgoing to have to increase the debt limit again. This is always afight that somehow gets resolved. But I think you can see a lot ofgamesmanship ...

DONALDSON: But it gets resolved, George, because you have to doit. If you didn't do it, we couldn't pay our bills. I mean, it won'twork around the world. I mean, people who finance our debt will startpulling their money back. So it will happen, but it will be a talkingpoint. I said earlier and I meant it, we have to find some way to payfor the money that we've expended and the national debt that we arerunning up. And David is quite right with his figures. But, my point was, it was necessary to spend that money. Andhaving done it, now we have to pay for it. And people who are on thestreets here, I come back to it, a broken record, who complained aboutspending that money, would they rather be in a barrel, would theyrather have lost everything? Maybe so. STEPHANOPOULOS: Are you as confident that the administration isgoing to go after tax reform in a big way, with a relatively radicalchange? WILL: No, I don't think they will. I think our tax code is nowso complicated, four million words, something like it, seven millionto explicate the four million words. It's so complicated, andeveryone has a stake in every complexity -- it's there because amuscular interest group put it in there or a muscular interest groupwas created by it and now will die in the last ditch to defend it,that it is now systematically unreformable. DONALDSON: You're right. Reagan reformed taxes, and the nextday, the next day after that, the loopholes began right back. WILL: Rostenkowski and Reagan and Bradley and the restsimplified the tax code. Since then, 1986, it has been recomplicated15,000 times. That's more than...


STEPHANOPOULOS: Ten seconds for a rebuttal (ph).

BROOKS: We had a series of legislative leaders in those days whoare much better than the ones we have now. And that affects taxes andit affects health care.

STEPHANOPOULOS: That's the last word today. You guys continuethis all in the green room. END