Transcript: Sens. Chuck Schumer and John Cornyn

Senate Judiciary Committee members on Sotomayor's Supreme Court nomination.

ByABC News
May 10, 2009, 7:08 AM


MAY 31, 2009





STEPHANOPOULOS (voice-over): Good morning and welcome to THISWEEK.

Supreme Court history.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: What you've shownis that no dream is beyond reach in the United States of America.

STEPHANOPOULOS: President Obama nominates the first Hispanicjustice.

JUDGE SONIA SOTOMAYOR, SUPREME COURT NOMINEE: I am an ordinaryperson who has been blessed.

STEPHANOPOULOS: And the confirmation battle begins.

RUSH LIMBAUGH, HOST, "THE RUSH LIMBAUGH SHOW": She's a bigot.She's a racist.

OBAMA: She is fair, unbiased, and dedicated to the rule of law.

STEPHANOPOULOS: Should Judge Sotomayor be confirmed? What kindof justice will she be? That debate this morning with Democrat ChuckSchumer, the judge's guide through the Senate. And the RepublicanSenate campaign chair, John Cornyn of Texas.

Then, GM becomes "Government Motors." But is that good forAmerica? That, the Sotomayor fight and the rest of the week'spolitics on a special expanded roundtable with George Will, JanCrawford Greenburg, Gwen Ifill of PBS, Paul Krugman of The New YorkTimes, and Bush White House veteran, Ed Gillespie. And as always, the"Sunday Funnies."

JAY LENO, HOST, "THE TONIGHT SHOW": If confirmed, she would bethe country's first Hispanic judge. In fact, her first order ofbusiness, deporting Lou Dobbs. That's what she said today.


ANNOUNCER: From the heart of the nation's capital, THIS WEEKwith ABC News chief Washington correspondent, George Stephanopoulos,live from the Newseum on Pennsylvania Avenue.


STEPHANOPOULOS: Hello again. The political spin cycles twirlfaster than ever these days. It has been less than a week sincePresident Obama made his choice for the Supreme Court, but it seemslike Judge Sonia Sotomayor has already had public hearings.

Of course, the official proceedings are coming up. And for apreview of that debate, we're joined this morning by two key membersof the Judiciary Committee, Republican John Cornyn of Texas, andDemocrat Chuck Schumer of New York.

And, gentlemen, welcome to both of you. Let me begin by puttingup the words that have caused so much controversy already this weekfrom Judge Sotomayor, from a 2001 law review article where she says:"I would hope that a wise Latina woman with the richness of herexperiences would more often than not reach a better conclusion than awhite male who hasn't lived that life."

And, Senator Schumer, we saw Rush Limbaugh and Newt Gingrich callit racist, but even President Obama said it was a poor choice ofwords. You're going to be guiding Judge Sotomayor through thisprocess. How is she going to explain that statement to senators whenshe meets with them this week?

SCHUMER: Well, I think the first thing she'll say is read thewhole speech, which was then published in a law review article. Andshe makes it clear that while, of course, people's personalexperiences guide them, rule of law comes first.

And then, of course, we have what is really the gold standard injudging a judge, an extensive judicial record. She has been on thebench 17 years. More federal experience than -- more federal judicialexperience than any judge in a hundred years. And what has been clearthroughout her judicial experience is that she puts rule of law first.

And as long as you put rule of law first, of course, it's quitenatural to understand that our experiences affect us. I don't thinkanybody wants nine justices on the Supreme Court who have ice water intheir veins. But you can't let that experience supersede rule oflaw...

STEPHANOPOULOS: But did she...

SCHUMER: ... and she hasn't.

STEPHANOPOULOS: But did she tell you this was a poor choice ofwords? Or will they stand by that statement?

SCHUMER: I think she'll stand by the entire speech. I thinkthat she will show that the speech, when you read it, says rule of lawcomes above experience. And no one can ask for more than that.

STEPHANOPOULOS: But what about the sentence?

SCHUMER: Well, the sentence -- you know, the specific sentencethere is simply saying, that people's experiences matter, and we oughtto have some diversity of experience on the court. And I think that'saccurate.

STEPHANOPOULOS: Senator Cornyn, what's your reaction to that?

CORNYN: Well, of course, George, the concern is that above theSupreme Court it says "Equal justice under law." And it's doesn't --shouldn't make any difference what your ethnicity is, what your sexis, or the like.

We would also hope that judges would be, you know, umpires,impartial umpires. And, you know, the focus shouldn't be on theumpire and what their sex or gender is, or their ethnicity. It oughtto be on the game. And here it's on the rule of law, I agree. But it's not just her statements. It's the New Haven firefightercase where she apparently ignored legitimate constitutional claims ofa number of firefighters, including an Hispanic who claimeddiscrimination on -- because of the color of their skin. And now theSupreme Court, I think, is poised to perhaps even reverse that.

STEPHANOPOULOS: Well, let's take a look at that. Of course, inthat case, Judge Sotomayor's court upheld a decision by the New Haven-- the City of New Haven to throw out an employment test which hadbeen -- which a white a firefighter and others had passed, but theywere denied the promotion because the City of New Haven threw out thetest.

And, Senator Schumer, one of Judge Sotomayor's colleagues on thecourt, one of her mentors, really, Judge Cabranes, who was appointedby a Democrat, really scolded her in a dissent on that -- in thatcase.

He said that she didn't deal with the core issues in the case.And he went on to say: "Indeed, the opinion contains no referencewhatsoever to the constitutional claims at the core of this case.This perfunctory disposition rests uneasily with the weighty issuespresented by this appeal."

Those are pretty stinging words.

SCHUMER: Well, bottom line is she was doing what Judge Roberts-- or Justice Roberts called be "judicially modest," which is what wewant in judges. She was following the precedent of the SecondCircuit.

There were two cases, the Hayden case, and the Bushie (ph) case,that made clear what the Second Circuit's opinion was, and she wasfollowing it.

And secondly, she was simply implementing, allowing to go forwardwhat the elected officials in New Haven had chosen to do.

SCHUMER: You know, we hear all these claims we don't wantjudicial activists, and that is true. We don't. Here, she was beingmodest, following the precedent of her court, not overruling what(inaudible) had been done. It would be quite different if New Haven-- if she was overruling what New Haven had done. So I think she wasdoing what a judge should do.

You can't have people say we don't want judicial activists, butthen when there is a case that they don't like, they say overrule it,even though you're going outside the precedent of the law.

STEPHANOPOULOS: Let me bring that to Senator Cornyn, because ifyou look -- you're talking about looking at her entire record, if youlooked not only at that case, but the judge's entire record in race-related cases -- this has been done by SCOTUSblog, Tom Goldstein, aSupreme Court scholar and lawyer -- and he shows that she's ruled inabout 100 race-related cases and rejected claims of discrimination andbias 80 percent of the time. Doesn't that show that she's notbringing personal feelings to bear in an improper way?

CORNYN: Well, George, what you'll see from our side of the aisleduring these hearings is members of the Judiciary Committee andsenators who are not willing to prejudge or pre-confirm any nominee,but are committed to a fair process, and one that allows JudgeSotomayor to explain what the context is for all this and what hertrue feelings are.

I might say that's in stark contrast to the way Miguel Estradawas treated, somebody who was on a path to become the first HispanicSupreme Court justice, and Clarence Thomas, somebody with a compellingstory like Judge Sotomayor, but who was subjected, at least in hiswords, to a high-tech lynching.

So I think the most important thing that can happen here is,everybody take a deep breath, calm down. Let's take our time, let'sreview those 17 years of federal judicial history, and let's ask thenominee some questions in a dignified Senate process.

STEPHANOPOULOS: Senator, let me bring this back to youbecause...

SCHUMER: I just want to say, George, that John Cornyn is rightand deserves to be commended. When some, you know, sort of on thehard right started saying she was a racist, or this or that, JohnCornyn said it was terrible. And our Republican senators, to theircredit, have not prejudged. I think when they examine her long and extensive record, whenthey see that she puts rule of record first, almost inevitably, whenthey see that, yes, her experience is reflected, but Justice Thomastalked about his experiences; Justice Alito talked about hisexperiences -- I think she's going to be approved by a very largemajority.

STEPHANOPOULOS: Senator Schumer, how do you respond to thischarge of hypocrisy and double standards? You led the charge againstMiguel Estrada when he was trying to -- when he was nominated for theappeals court. There were internal memos among Democrats, citing asone possible reason the fact that he would be an Hispanic elevated tothe appeals court. Are you using a different standard for JudgeSotomayor than you used for Mr. Estrada?

SCHUMER: Absolutely not, and let me explain why. First, Estradawas never a judge, so we had no way to judge what his record would bein the best way to judge it, cases that we had ruled on. And so whenwe asked him questions, he said absolutely nothing. He said, I cannotanswer this question, I cannot answer that question. In fact, JudgeSotomayor has answered more questions on hearings already, because ofher two confirmation hearings, than Estrada said. So we had totallynothing to do on with Estrada.

What we said about Miguel Estrada is, if he talked a little bitabout his judicial philosophy, we could give him a fair hearing. Heabsolutely refused. He had no record as a judge. The two standardsare like night and day.

Justice Roberts, Justice Alito, they answered questions far moreextensively than Estrada did, and I think most commentators said theylearned a lesson from Estrada, that you have to answer some questionsabout your judicial philosophy, particularly when you don't have arecord as a judge.

CORNYN: Well, George, I think -- I take a contrary view, as youmight imagine. I think this is pretext. I mean, Miguel Estradaimmigrated from Honduras. He couldn't speak English, when he was 17years old, came here, graduated from the two top schools in America,and rose to the very top of the legal profession. And yet, he wasfilibustered by Democrats who denied an up-or-down vote in the UnitedStates Senate.

Now, can you imagine if the shoe were on the other foot today?

STEPHANOPOULOS: Is filibuster on the table today?

CORNYN: Well, I think it's really premature to say that, or tospeculate. That's why I...

STEPHANOPOULOS: So it's possible that Republicans willfilibuster?

CORNYN: I'm not willing to judge one way or the other, George,because frankly, we need to not prejudge, not pre-confirm, and to giveJudge Sotomayor the fair hearing that Miguel Estrada, and, indeed,Clarence Thomas were denied by our friends on the other side of theaisle.

SCHUMER: Let me say this, George. I think when my Republicancolleagues -- and I think they have approached this in an open-mindedway -- when they see her record of excellence -- she's legallyexcellent -- of moderation. She is not a far left-wing judge.

SCHUMER: Businessweek said her record on business was moderate.The Wall Street Journal called her mainstream. And then hercompelling history, I think she's virtually filibuster-proof whenpeople learn her record and her story.

STEPHANOPOULOS: Let me finish up with Senator Cornyn. Yourcolleague, Republican Senator Chuck Grassley, has already said hebelieves that she will be confirmed. Do you see anything standing inthe way of Judge Sotomayor's confirmation right now?

CORNYN: Well, there are a lot of important questions. We'vetalked about some of them this morning. We need to know, for example,whether she's going to be a justice for all of us, or just a justicefor a few of us. And, you know, this promise of equal justice underthe law is not just a motto emblazoned above the Supreme Court, thisis the standard. And indeed, by ignoring a genuine constitutionalissue about reverse discrimination in the New Haven firefighter case,you know, the comments she made about the quality of her decisionsbeing better than those of a white male -- I mean, we need to gofurther into her record to see whether this is a trend, or whetherthese are isolated and explainable events.

STEPHANOPOULOS: And we'll be doing that. Gentlemen, thank youboth very much.

STEPHANOPOULOS: We're going to go straight to the roundtable.So as our panelists take their seats, take a look at how two otherSupreme Court firsts grappled with the question of how their personalexperience affected their professional judgment.


SANDRA DAY O'CONNOR, SUPREME COURT JUSTICE: Looking back overtime, I can't see that on the issues that we address at the court,that a wise old woman is going to decide a case differently than awise old man. I just don't think that's the case.

CLARENCE THOMAS, SUPREME COURT JUSTICE: There's so many peoplenow who will make judgments based on what you look like. I'm black,so I'm supposed to think a certain way, I'm supposed to have certainopinions. I don't do that. You don't create a box and put people inand then make a lot of generalizations about them.


STEPHANOPOULOS: And with that, let me bring in our roundtable.Joined, as always, by George Will; our Supreme Court correspondent JanCrawford Greenburg; Ed Gillespie, veteran of the Bush White House,where you helped both Justice Alito and Justice Roberts in theirconfirmation hearings; Paul Krugman of the New York Times, and GwenIfill of PBS.

And, George, it does seem like the central question right now, towhat extent should and do personal experiences, feelings, instinctsaffect judgment in the court?

WILL: Hard to say. The question is not are they important, butis there a judicial obligation, is it part of the judicial temperamentto keep those in the background? The question is, she seems to haveaffirmed what's called identity politics, which is a main propositionand a subproposition. The main proposition is, that an American is orshould be thought of as his or her race, ethnicity, sex, sexualpreference, that that should define their political identity. And thesubproposition is, called categorical representation. You can only berepresented by someone of the same sexual, ethnic, racial group as youare, because only they can understand or empathize with you. That isof no relevance whatever to the court, however, because it's not arepresentative institution.

IFILL: I guess I see it differently. I mean, I've spent thepast year talking to a lot of people, who got elected, elected --black elected officials for a book, and all of them talked aboutidentity politics and defined it differently. They defined it asbeing -- that being part of what you are, but not all of what you are.And I think that's what the defenders of Sonia Sotomayor are trying tosay, which is that her point was, yes, what she is and what we all areshapes us, but it's not all that shapes you.

I always take arguments like this and try to turn them on theirheads. And I never hear people say that for a white male, that it'sidentity politics if he is shaped by his white maleness and by thethings that affected his life, and whether privilege affected hislife. That's never considered to be a negative. It's only consideredto be a negative when ethnicity is involved or race is involved orgender is involved.

GREENBURG: Well, the problem, though, I think, for JudgeSotomayor -- and obviously, we've seen this week in Justice Alito'sconfirmation hearings, when he talked about how his life experiences,being the son of an Italian immigrant, affected his thinking when he'staking up immigration cases or discrimination cases.

But with Judge Sotomayor in that speech, she also said a linebefore we got to the now famous line, and you played this clip fromJustice O'Connor, when Justice O'Connor was saying that I think a wiseold man and a wise woman judge will reach the same result. In thatspeech, Judge Sotomayor says, I don't think I agree with JusticeO'Connor on that. So she's really going beyond life experience.

STEPHANOPOULOS: But I actually think that's less controversialthan the sentence that's gotten all the attention. I mean, has JudgeSotomayor said reach a different conclusion than a white male, itprobably wouldn't have been a problem. But Ed Gillespie, let me bringyou in on this. A lot of studies have shown that who you are doeschange. When you have more women on a panel, that does tend to changehow panels of judges deal with discrimination cases.

GILLESPIE: We are all shaped by who we are. We all bring thatto the table. I do think, though, the -- you know, the consciousinjection that you see, in a lot of her comments, of gender and raceis what is causing for concern. And not only -- a little differentwith politicians, I think, our identity, than with a judge, and with aSupreme Court justice for a lifetime appointment.

I disagree with my friends on the Republican side, some who say,well, we should give her a pass because she's a Latina. I disagreewith those who say, well, she's racist because of these comments.Neither of that is the right approach.

The fact is, you know, look, we can all, as Americans, be proudthat the first African-American president just nominated the firstLatina to the Supreme Court of the United States. But we need to askthe tough questions.

And frankly, I don't think those questions are so much revolvingaround race or gender as how did it end up that, seven of your casesthat went to the Supreme Court, six of them were overturned. That's alegitimate question to ask. STEPHANOPOULOS: Well, actually that was three out of six. Butthat's not that exceptional, is it, for cases on the Supreme Court?

KRUGMAN: Yes, you know, what amazes me about all this is thatthis was a speech, right? The famous line comes from a speech whereshe was trying to be entertaining.

And, you know, have I -- I was thinking about this -- have I,somewhere along the line, said something like, I like to think thatbright Jewish kids from suburban New York make the best economists? Iprobably have, somewhere along the line. It doesn't mean anything,right?

She's trying to makes a little bit of who she is...



KRUGMAN: But the judicial record shows nothing of this. Thejudicial record shows a straight, mainstream careful judge. And thisis just crazy to be making so much out of this line.

STEPHANOPOULOS: Jan, you studied her opinions. What does -- ifyou look broadly at her -- at her record, her judicial record, youknow, you saw, going into this, a lot of liberals were hoping thepresident was going to appoint a firebrand. He was sending signals toboth sides.

You heard Senator Schumer say he believes she's got a moderaterecord.

GREENBURG: Well, they're pretty -- you know, she's an appealscourt judge, an experienced jump. They're pretty technical, a lot ofthem. You know, you don't get a lot of those hot-button issues onthat New York-based federal appeals court, those social issues thatyou see, kind of, out in the heartland.

So, you know, there's not a lot out there for Republicans, atthis point, to work with. We've seen a lot of discussion about a casethat's now before the Supreme Court that she was involved in,involving these white firefighters...

STEPHANOPOULOS: The New Haven case we just talked about?

GREENBURG: New Haven -- and, so, you know, I think that one'sgoing to be, obviously, pretty controversial. But her opinion in the-- her opinions that we've seen so far, there's not a lot in them thatwe saw from some of the other potential contenders.

WILL: In the New Haven fireman case, however, the accusation isnot just that she came to a perverse conclusion or affirmed a perverseconclusion, which was that, because fire department promotions weredenied equally to those who qualified for them and those who didn'tqualify for them, somehow, equal protection and equality under the lawwas respected, but the accusation goes beyond that, which is that thethree-judge panel on the second circuit that, in the most perfunctory,cursory, indeed unsigned way affirmed the lower court's judgment, didso in a perverse way, that seemed to be trying to slip one by amajority on the second circuit.


STEPHANOPOULOS: ... Tom Goldstein has also looked at thatquestion and says it's not that exceptional in these kinds of cases.I think he says 24 out of 28 times, there have been unsigned opinions.

But let me look, also, Gwen, at what Jan was talking about, thesehot-button issues: not much of a record, at all, on abortion. Infact, the one time -- or the two times that the judge ruled onabortion, one time, she upheld President Bush's Mexico City familyplanning policy. One time she ruled in favor of anti-abortionprotesters. And this raised some concern among...

IFILL: On the left.

STEPHANOPOULOS: On the left, pro-choice groups. Yet the WhiteHouse comes out and says, "We're comfortable with where she is."

IFILL: "We're confident she shares the president's philosophy,"is what they're saying.

Is anybody as surprised as I am that abortion has been so littlean issue, when, for so many Supreme Court confirmations, it has beenthe main first thing out of the box.

It's almost as if whatever -- it's identity politics, whateveryou want to call it, has taken its place as the litmus test issue.

I talked to people at the White House this week who said, youknow, it doesn't bother me at all that she doesn't have much of arecord on abortion.


They're perfectly happy to change the subject and have it move onto something else. And well they should be, I suppose, except they'vegot to be prepared to handle the something else.

STEPHANOPOULOS: But do you -- you know, and they say thepresident is comfortable with her. But they say that he did not askher directly...

IFILL: You know what, that was a very clever thing. They wereasked whether he asked her and they said "he did not ask her in hisconversation with her."

In fact, it would have been malpractice if someone didn't askher. They had, maybe, 100 people working on vetting this woman. Sosomebody somewhere (inaudible) every thing she did.


WILL: ... the "something elses."


WILL: Let me tell you three "something elses" that are going tocome up. She has said that campaign contributions are inherently,kind of, bribes. Now, that would overturn campaign finance regulationand -- and postulate whole new laws if she adhered to that.

Second, she has suggested that disenfranchisement of felons,which is a state option, and most states, to some degree or other,violates the Voting Rights Act. And the third, because of a subjectwe'll come to in a moment; that is, gay marriage, same-sex marriage,they're going to want to know if that is an equal protection question.

STEPHANOPOULOS: Is that what you think, Ed, that Republicans aregoing to go, here?

What kinds of questions do you think are going to draw the mostattention?

GILLESPIE: Well, I think -- I actually think Bush will come upin the hearings, obviously. And I think, where the media'sconcentration has been, over the past week, and where the hearingsgoes could be two very different things.

And I do think they will probe, in terms of whether or not thisnotion of empathy, you know, is going to be brought in to bear. Howmuch do you, you know, of your own personal feelings, do you bringinto your judgment as a -- or would you, as a justice on the SupremeCourt.

And I think the challenge for Republicans is going to be, at theend of the day, would they adopt the standard that Democrats apply toparticularly Justice Alito and say, well, he may be qualified in termsof intellect and experience and judicial temperament, but we disagreewith where we think you may rule, down the line, and 40 out of 44voted against, breaking from, you know, kind of, an historic standardthat, well, elections have consequences and presidents should be ableto nominate, unless there's...


STEPHANOPOULOS: ... the fact that then-Senator Obama joined thefilibuster of Alito.


STEPHANOPOULOS: Here's how explained it back in 2006.


PRESIDENT BARACK OBAMA: I will be supporting the filibusterbecause I think Judge Alito in fact is somebody who is contrary tocore American values, not just liberal values.


STEPHANOPOULOS: So, Paul, the Democrats really did change thestandard, there, and that opens up, kind of, a free no vote forRepublicans, if that's the way they want to go? KRUGMAN: Well, except, you know, the real story of this wholething has been the sheer craziness displayed by a lot of theRepublican Party. I think the Republicans have got a real problemhere. Because, if they do go no, they're going to seem to be theparty of Rush Limbaugh, the party of Newt Gingrich, the party ofcompletely crazy accusations against someone who is, after all, ahighly respectable, very smart, middle-of-the-road jurist.

STEPHANOPOULOS: You guess that's the way they're going to go?

GREENBURG: Well, yes, I think they're going to take the longview. They know this is not the last nomination that Barack Obama is,you know, going to be making to that Supreme Court. And thisnomination's not going to change the Supreme Court. That's not why --that's why we're not seeing, I think, abortion, at this point, beingsuch a big issue.

But I think, at the end of the day, you know, when we look backon all this, and we're talking about the filibuster and the Democratssuccessfully filibustering during President Bush's tenure, all thesenominees like you talked about, Miguel Estrada, Republicans have onlythemselves to blame -- not only for the Miguel Estrada filibuster, butfor Sonia Sotomayor, because it was failures -- and I covered all thisat the time -- complete failures of leadership in the RepublicanSenate, led by Bill Frist, that allowed Democrats to start off thesehistoric filibusters in the first place, back in '02 and '03, whichthen led, of course, to, you know, as we saw, Miguel being -- Estradabeing blocked. He would be the first Hispanic Supreme Court justiceif Democrats hadn't prevailed.

GILLESPIE: That's an interesting take to blame Republicans forDemocrats filibustering nominees for the first time...


... and especially when the memos came out that showed it was aconscious effort to block minority nominees, particularly in MiguelEstrada's case, for fear that President Bush would then make him thefirst Hispanic nominee to the Supreme Court, very crass politicalmaneuver.

GREENBURG: But Democrats -- right. Democrats knew that. Andthey recognized it was a lot easier to block these guys when...


GILLESPIE: It's very much easier to block it, so I don't thinkit's fair to blame Republicans for Democrats blocking it.

And I do think, though, going back to the point, look -- toPaul's point -- 35 out of 44 Republicans in the Senate voted forJustice Breyer; 40 out of 43 who were present at the time voted forJustice Ginsburg.

The Democrats are the ones, if Republicans vote against thisnominee on philosophical grounds, as President Obama, then SenatorObama laid out his rationale for opposing; he didn't agree with thevalues of that person -- not didn't agree with the temperament or theintellect or the experience. They have set that standard. And Ithink, unless -- if Republicans don't, we're sending up an inexorablemove to the left on the Supreme Court, and I think that's a veryserious consequence.

STEPHANOPOULOS: We're going to have to end on that note, rightnow. We're going to come back in just a minute. We're going to havemore roundtable after the break.

Big question: Is "Government Motors" good for America?



OBAMA: The question we ask today is not whether our governmentis too big or too small, but whether it works.

OBAMA: I know that if the Japanese can design an affordable,well-designed hybrid, then doggone it, the American people should beable to do the same. So my job is to ask the auto industry, why is ityou guys can't do this?

OBAMA: We want to get out of the business of helping autocompanies as quickly as we can. I got more than enough to do withoutthat.

OBAMA: Just last week, "Car and Driver" named me auto executiveof the year.



STEPHANOPOULOS: Who knows, by next year, that may actually betrue. Let me bring our roundtable back in. George Will, Jan CrawfordGreenburg, Ed Gillespie, Paul Krugman, and Gwen Ifill.

And George, the president has said -- you saw the contradictionsthere. He wants to get out of the business as quickly as possible.He also wants to urge the auto industry to move in the direction thathe thinks is good for the country. And as of tomorrow, most likely orin a couple of months, once it's all completed, the United Statesgovernment, along with Canada, will be a 70 percent owner of GeneralMotors.

WILL: Yes. $20 billion in so far, perhaps $50 billion more tocome. The president will be long into collecting Social Securitybefore General Motors pays all this back, if it ever does, which Isincerely doubt.

Why are we doing this? We're doing this because it is too big tofail. First, big. Harley-Davidson has a market capitalization eighttimes larger than that of General Motors. In what sense is it biganymore?

Fail? A year ago, in the second quarter of 2008, it was losing$118,000 a minute. It has failed. The question is what you do aboutit. It seems to me the point of capitalism, which is a profit andloss system, is to clear away things like Chrysler and General Motors.

STEPHANOPOULOS: The White House would argue that they had tostep in, because even though the numbers you cite are correct, theywould say if GM goes into liquidation, 65,000 jobs lost immediately,hundreds of thousands of jobs lost in collateral damage.

WILL: That's partly assuming, partly assuming that Americanswould stop buying American cars. They'd buy different cars, made inAmerica, most of them, using American parts mostly, sold to America.

KRUGMAN: OK. I think it's kind of telling that you're talkingabout market cap. Of course, workers, not, you know, GM stock isessentially worthless, which we knew. But there are still a lot ofworkers there.

The thing is, we have a mechanism. Bankruptcy, Chapter 11. Theproblem is that the mechanism won't work in this case. That's beenhashed over many, many times. The financial markets are still indisarray, so the kind of special financing that firms in bankruptcyget still won't be available unless the government stands behind it,and people won't buy durable goods -- automobiles -- from a companythat they think has got only a few months to live.

So if you're going to do anything, you're going to have to havesome kind of packaged bankruptcy that has a lot more English on theball from the federal government than normal. That's what's happeninghere. This is not seizing the commanding heights. This is trying tosort of make bankruptcy work. Even odds that anything survives fiveyears from now, but that seems like an option we're taking.

STEPHANOPOULOS: And even odds, let's dig into that a little bitmore. The federal government drove a fairly hard bargain, we believe,with GM. The overall labor costs are down to about the prevailinglabor costs in other parts of the industry. They've cut the number ofbrands down from eight to four. What will it take for GM to be aviable company in two years, as this plan envisions?

KRUGMAN: Well, first, auto sales have to come back up, whichthey probably will. Even if the economy has only a weak recovery,which is what most of us expect, the fact is, people are buying veryfew cars right now. At current takes, it would take something like 20years...


KRUGMAN: Yes, it would take something like 20 years to replacethe existing stock of autos at current rates of sale, right, so weknow that that's not going to -- we know there's going to be somerecovery. People will start buying more cars. That helps even ifthey can even, you know, partially maintain their share.

It needs some general revival. It's not that hard to tell astory where GM starts to have a positive cash flow. It's by no meansguaranteed. This is a company that spent several decades ruiningitself, so it's not easy. But it's not crazy to think that this mightwork.

STEPHANOPOULOS: And this is a decision that President Bush, Ed,in the White House in the final months, basically said he would allowPresident Obama to make, because he gave the bridge financing to GM.

GILLESPIE: He did a bridge. And I have always felt that had the-- you know, this come up in the first month of President Bush'ssecond term, rather than the last month of his second term, he wouldhave done something different. I think he would have made differentdecisions.

STEPHANOPOULOS: Let them go under?

GILLESPIE: I think he would have -- my personal view is, had itbeen a different time, he would have probably done a structuredbankruptcy, a debtor-in-possession type financing arrangement. Butdidn't feel like it was fair to the institution of the presidency tohand off to a successor in the last month of his presidency to make adecision like that, and so he bridged this gap in a way that gave themtime to come back with a plan of restructuring of their own and allowfor the successor president to make his own policy decision. I thinkit was the responsible thing to do, probably one of the toughestdecisions of his presidency.


WILL: Well, two things. I mean, these things have ricochetsafter you start into this business. First of all, General Motorsacceptance corporation gets itself declared a bank holding company, soit's eligible for TARP. Immediately does two things after it gets $6billion of taxpayer money. It offers zero percent, five-year loans ofproducts competing with Ford Motor Company products, thereby injuringthe most healthy company out there.

Then, it further lowers the credit score that you have to have toget a GMAC loan. Now, what would we call this? I think we would callthose subprime auto loans. So you can drive away from your foreclosedhouse that you bought with a subprime housing loan in a car you boughtwith a subprime auto loan.

GREENBURG: But George, I mean, that is exactly right when youthink about these ricochet effects. I mean, you've got Ford now, theonly one of the big three that is not going to be controlled by thegovernment. So how then can you assure Ford is not made vulnerable byletting GM or Chrysler have, you know, access to capital at virtuallylower...


IFILL: What does government control mean? I think that's thething that's really dawned on everybody this week, that when peoplemake jokes about Government Motors, but in fact, when the governmentcontrolled 72.5 percent of a privately owned company in kind of ashockingly -- shocking incursion into the private-sector company, doesthat mean that President Obama has to sign off on a new car that theydecide they're going to build? (CROSSTALK)

KRUGMAN: AIG is 80 percent government-owned, and it doesn't seemto be any different, so I'm not sure...


GILLESPIE: It means it's better to be a union autoworker than itis to be a bondholder at these auto companies, for one thing.


STEPHANOPOULOS: That's not that unusual. When the steelcompanies went under, the government didn't get involved in that andthe unions were put at the front of the line there as well.

But, Gwen, I do think you raise an important question that theyhave to wrestle with right now. The government is now going to be theowner of General -- 70 percent owner of General Motors. But thequestion is, what kind of an owner are they going to be? And, Paul,everything we hear from Larry Summers and others are that thegovernment is not going to be micromanaging these decisions, but...

KRUGMAN: But don't we (inaudible) them to?


STEPHANOPOULOS: If they do, then you're not going to get a lotof new investors who want to be in the middle of it all.

KRUGMAN: You could not have a more centrist economic team thanthis administration has, right? These people are -- are -- have nodesire to control the commanding heights of the economy. Yes, therewill be some pressures, but you know, this, in a way, if you areworried that the government is going to start, you know,micromanaging, they're going to start using all -- using GM to pursueall sorts of non-economic aims, the fact that the company is probablygoing to be losing money hand over fist for a long time is going to bea guarantee against that. They're going to be very eager to see thisthing become commercially viable, or at least lose less money.

I think your fears that this is socialism, you know, it's justcrazy. It's not going to happen, because they really don't want thisalbatross around their necks.

STEPHANOPOULOS: They want to get out?

KRUGMAN: They want to get out as fast as they can.

WILL: Let me give you another ricochet effect. The governmentis mandating smaller cars. The government wouldn't need to mandatesmaller cars if the public wanted them, so the government is mandatingcars the public hitherto has shown it does not want. That is anincentive for Americans to keep the cars they are driving longer,which will deprive Detroit of customers. Hence, we now have, to copewith that ricochet effect, there's a move on Capitol Hill to havesomething called cash for clunkers, where you will be bribed by thefederal government to buy a new car.

KRUGMAN: You know, CAFE standards, which is what this is allabout, mileage standards, fuel efficiency, that's about -- you know,there is a huge market failure. Actually, a couple of huge marketfailures, right? There is pollution, there's global warming, there isoil dependence. So to say, well, you're forcing the public to buysomething it doesn't want -- well, you're forcing the public toactually recognize the real costs of some decisions that it makes, nottaking those costs into account. There's nothing wrong with this.

IFILL: Why isn't that -- why isn't that nationalization? Whynot just call it that?

KRUGMAN: It's not nationalization. Look, there's lots of thingswe would like to do. I'd like to burn coal in an open grate in myhouse, maybe, you know, and add to the smog over Princeton, but I'mnot allowed to do that, because it does negative things to myneighbors, right? And so you know, there's lots of things that thegovernment regulates, and this is one of them.

STEPHANOPOULOS: But isn't what's different here now is thegovernment's on both sides of the negotiating table? They have somuch power because they have such a large share?


GILLESPIE: Look at the recent history. I mean, it hasn't in thepast been very historically easy to get the auto companies to agree toan increase in the CAFE. We just went up to 39 miles per gallon. Itwas very easy this time for President Obama to bring the autocompanies in, for them to agree to that, because there's no leveragehere.

And I do worry, I think one of the broader threats to our economyis, if you're going to supplant profit motive with political motives,over time, we're going to have a much bigger drag on our economy. Thegovernment is not the most efficient allocator of resources in theAmerican economy.

STEPHANOPOULOS: And that's the biggest dilemma facing theadministration, because you know, let's say GM has a plant in Cocomo,Indiana. They say they want to move it to Buenos Aires. They saythey want to stay out of it. Will they be able to?

GREENBURG: Right, I mean, going back to your point and Gwen'spoint, you know, are you going to outsource your manufacturing orparts to South Korea or China, or are you going to mandate that it bekept here? How is the government, you know, when it's controllingthese companies, is going to make those decisions, when it's kind ofweighing now, I mean, very competing interests in a political fight.


WILL: One of the government's recent interventions in industrialpolicy is the ethanol industry. Now, the government, when it saidwe're going to put all this corn in our gas tanks, did not intend tocause food riots in Mexico, but it did.

KRUGMAN: This is a -- I've often said, if only the firstcaucuses were in New Jersey instead of in Iowa.


Then we'd have some -- someone would require you to put diners inyour cars or something, but...


But, no, look, this -- but, you know, they're very aware of -- none of this would be happening if it wasn't taking place in themiddle of the worst economic funk since the Great Depression. Veryexceptional things happened. They're not indicative of where policyis going to be for the next 20 years.

GILLESPIE: I -- think that's a -- that's a legitimate pointrelative to the auto industry and the intervention here, obviously.But, look, this is going on a number of different fronts: the healthcare debate that's going on, right now, and the public option, a hugeintervention, again, into one of the biggest sectors of our economy.

KRUGMAN: The public option is about offering people a choice. Imean, if people who are opposed to...


GILLESPIE: In the same way that autos were offered a choice andthe bond holders were offered a choice.


KRUGMAN: It's nothing like it. And it's...

WILL: Paul assumes that, once the political class gets a tastefor using American capital, broadly speaking, as a slush fund to buypolitical advantage, it will forswear doing so in the future. I don'tbelieve it. Paul, most of the -- most of the agriculture policies in thiscountry are residues of those put in place for the Depressionemergency. New York City lives under rent controls put in place forthe emergency of the Second World War. The Japanese have surrendered.They go right on forever.

KRUGMAN: But this one is on budget. I think that makes all thedifference in the world. This is going to be a drain on the federalbudget at a time when this administration, because of its veryactivism, really wants those dollars for things it really wants likehealth care.

STEPHANOPOULOS: Which brings it back to health care. I want tobring Gwen in on this. Ed brought up this idea of the public option,where there's going to be a public plan to compete with the privateplans. That's a dividing line between Republicans and Democrats.

But so far, as this begins to be debated, this week, in the Houseand the Senate, that is still a dividing line between Democrats andDemocrats.

IFILL: I'm quite interested, actually, in the atmospherics ofall of this. Because one of this things -- on health care, on GM, onnationalization -- boo -- or whatever you want to call it...


... or even on the Supreme Court nomination, what thisadministration has shown its ability to do is step up to it, say, oh,that doesn't work; let's try it this way.

The difference between something like the public option orsomething like rescuing a major American industry is you can't walkaway as easily as they like to walk away if they see something's notworking.

Politically, there's something to be said for them saying, oh --you know, they look -- these guys look backwards as much as forwards.And they say, ah, the last Democratic administration made thismistake; let's do it this way.

Their problem is that the things that they prize now, thedomestic policies are things that they can't step away from once theyget what they've asked for.

So it's -- it's very complicated. It's one of the reasons whypeople in this administration don't talk about it like it's a publicoption. They try very, very carefully to define it differently.

STEPHANOPOULOS: I think that's what -- I think the White Housedoesn't care whether they get it or not.

IFILL: They don't.

STEPHANOPOULOS: They just want to get something done. Thebigger question faced, George, is how to pay for it. The OMB director, Office of Management and Budget director saidthis is going to be deficit-neutral; we're going to pay for everypenny.

So far in these three months of debate in the House and theSenate, they've rejected every idea, so far on the table, to pay forit?

WILL: That's right. And in the process, they've been losingrevenue. It's been leaking. They had a certain number written infrom cap-and-trade. But in order to buy off certain states that weregoing to be injured by cap-and-trade, they gave away things they weregoing to sell and the revenues have declined.

KRUGMAN: Well, yes, it's a little hard. I mean, they can make avery good case that, long-run, the thing saves money. But CBO won'tscore it that way. So they have to do...

STEPHANOPOULOS: After 10 years?

KRUGMAN: Right. So they're going to have to do -- but, youknow, it's not actually all that much money. All of the studies Iknow say that the cost of actually insuring the uninsured as part ofthis -- the only place where this costs money is actually in providingsupplement to help the uninsured pay.


STEPHANOPOULOS: But that's between $600 billion and $1.2trillion.

KRUGMAN: Well, you think -- yes, but think about it this way.It's under 1 percent of GDP. It's not -- obviously, it's a big thing,in terms of the way budget debates are done. But it's actually not abig thing in terms of the larger picture on the budget.

There are questions about how -- you know, what's our debtoutlook going to be, 10 years, 15 years from now, are really barelyaffected by -- by this.

It's just -- it's a big number if you look at it in the abstract.If you look at it in context, it's not really a big thing, because theuninsured are mostly relatively young and relatively healthy.

The expensive people have been under a single-payer system calledMedicare all along.

GILLESPIE: The notion of the savings, though. I just -- we'venever seen this before, and I don't think we're going to see it again.And I have to give them credit at this White House. They're very goodat the stagecraft. And they bring in the health care industry andthey say we're going to save $2 trillion on health care expenditures.

STEPHANOPOULOS: Over 10 years?

GILLESPIE: Over 10 years -- and not a single detail about it.It reminded me of the old Steve Martin routine. He said, I'm going towrite a book, "How to be a Millionaire." First, get a milliondollars.


First, you get $2 trillion.


GREENBURG: That was also, you know, I mean, in terms of what theWhite House, I think, has been very good at is really setting some ofthese priorities, you know, as Gwen was, kind of, starting off thisdiscussion, too.

I mean, you know, think about what we've been discussing thismorning, all the things that are on President Obama's plate. He'swanting to make health care reform, kind of, his crowning achievementthis first year.

And that, of course, influenced, going back to the discussionearlier, why he selected Sonia Sotomayor in the first place. Youknow, his political...


GREENBURG: ... she was going to be almost impossible forRepublicans to oppose, as we're certainly seeing now. They're fallingall over themselves. So...

STEPHANOPOULOS: And it clears the path for health care.


STEPHANOPOULOS: One issue he wants to avoid is another one inthe news this week, gay marriage -- again, Proposition 8 inCalifornia. The California Supreme Court upheld the ban on gaymarriage but allowed the existing marriages to be -- to stay in place.

And right after that, very strange bedfellows came out, DavidBoies and Ted Olson. These were the two lawyers, opposing lawyers inBush v. Gore. They have joined together to challenge this ban. Theywant to take the issue of gay marriage to the Supreme Court.

OLSON: Creating a second class of citizens is discrimination,plain and simple.

BOIES: Our Constitution guarantees every American the right tobe treated equally under the law. There is no right more fundamentalthan the right to marry the person that you love.

STEPHANOPOULOS: This was surprising. We've seen a lot of -- lotof news in the last several months about gay marriage. But this oneprobably surprised me the most, Ted Olson, long-term Republican lawyerjoining David Boies. And it's also created some unrest in the --among groups who support gay marriage, because they say, wait, wedon't want this to go to the Supreme Court right now. GREENBURG: That's what's been the most extraordinary thing, Ithink. I mean, lawyers will take on a case. And obviously, theybelieve in this issue or they wouldn't have done it. And they'redoing part of it, you know, at a cut rate.

But the groups on the left and the gay rights groups areincredibly upset about this. They're like, we don't want your help,Ted Olson and David Boies, because those groups recognize that theydon't have the votes right now on the Supreme Court. And you can doreal damage if you pursue a case and you lose.

The Supreme Court, in 1986, ruled that states could ban gay sex,criminalize it. It took 17 years for the Supreme Court to overturnthat decision, which it did in 2003, in an opinion by Justice Kennedy.There's no evidence that Justice Kennedy, who's, kind of, that, youknow, human jump ball up there...


... I mean, both sides are, you know, trying to get his vote onthis -- no evidence that Justice Kennedy is going to vote that there'sa constitutional right to gay marriage.

WILL: Thirty-six years ago, at a point when state after statewas moving to liberalize abortion laws, including California, signedby Ronald Reagan, the Supreme Court yanked that issue out ofdemocratic debate and embittered our politics down to this point bynot letting a consensus emerge in the community.

And as we've seen by subsequent votes in California on gaymarriage, the consensus is moving toward gay marriage if they wouldjust let it alone. Let democracy work and settle this.

IFILL: Maybe this is the unity the president's been talkingabout, to have...


... to have David Boies and Ted Olson holding hands and singingkum-ba-ya. Who would have thunk it?

But I still don't know whether that -- whether their effort mightdo the president a favor in that it takes it out of his hands. Thelast thing he wants to do is talk about -- talk about looking back andnot wanting to reliving old mistakes. This is one of them. Theydon't want to get back into that.

GILLESPIE: I -- I couldn't agree with George more. I mean, Ithink this is clearly aimed at taking this to the Supreme Court, whereit's probably ultimately going to end up at some point, anyway.

But the fact is, this is being dealt with in a rather civilmanner in the states where there are debates over this and legislatorsare voting on it or it's taking place in referenda. And if you takeit -- if you take it out of the hands of the electorate and allow for-- don't allow for a civil discussion, and you impose it by fiat, Ithink we'll live with it for a long time.

KRUGMAN: Well, like I say, it's a shocking moment. I agree withGeorge.


STEPHANOPOULOS: That's all we're going to have time -- we'regoing to have to end with Paul Krugman and George Will agreeing onsomething. You guys can continue this in the green room. And you canget political updates all week long from me on Facebook and Twitter.


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