Transcript: Sens. Chuck Schumer and John Cornyn

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


MAY 31, 2009





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

Supreme Court history.

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

STEPHANOPOULOS: President Obama nominates the first Hispanic justice.

JUDGE SONIA SOTOMAYOR, SUPREME COURT NOMINEE: I am an ordinary person 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 kind of justice will she be? That debate this morning with Democrat Chuck Schumer, the judge's guide through the Senate. And the Republican Senate campaign chair, John Cornyn of Texas.

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

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


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: Hello again. The political spin cycles twirl faster than ever these days. It has been less than a week since President Obama made his choice for the Supreme Court, but it seems like Judge Sonia Sotomayor has already had public hearings.

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

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

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

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

And then, of course, we have what is really the gold standard in judging a judge, an extensive judicial record. She has been on the bench 17 years. More federal experience than -- more federal judicial experience than any judge in a hundred years. And what has been clear throughout 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 quite natural to understand that our experiences affect us. I don't think anybody wants nine justices on the Supreme Court who have ice water in their veins. But you can't let that experience supersede rule of law...

STEPHANOPOULOS: But did she...

SCHUMER: ... and she hasn't.

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

SCHUMER: I think she'll stand by the entire speech. I think that she will show that the speech, when you read it, says rule of law comes 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 sentence there is simply saying, that people's experiences matter, and we ought to have some diversity of experience on the court. And I think that's accurate.

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

CORNYN: Well, of course, George, the concern is that above the Supreme Court it says "Equal justice under law." And it's doesn't -- shouldn't make any difference what your ethnicity is, what your sex is, 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 the umpire and what their sex or gender is, or their ethnicity. It ought to 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 firefighter case where she apparently ignored legitimate constitutional claims of a number of firefighters, including an Hispanic who claimed discrimination on -- because of the color of their skin. And now the Supreme Court, I think, is poised to perhaps even reverse that.

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

And, Senator Schumer, one of Judge Sotomayor's colleagues on the court, one of her mentors, really, Judge Cabranes, who was appointed by a Democrat, really scolded her in a dissent on that -- in that case.

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 reference whatsoever to the constitutional claims at the core of this case. This perfunctory disposition rests uneasily with the weighty issues presented 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 we want in judges. She was following the precedent of the Second Circuit.

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

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

SCHUMER: You know, we hear all these claims we don't want judicial activists, and that is true. We don't. Here, she was being modest, 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 was doing what a judge should do.

You can't have people say we don't want judicial activists, but then 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 if you look -- you're talking about looking at her entire record, if you looked not only at that case, but the judge's entire record in race- related cases -- this has been done by SCOTUSblog, Tom Goldstein, a Supreme Court scholar and lawyer -- and he shows that she's ruled in about 100 race-related cases and rejected claims of discrimination and bias 80 percent of the time. Doesn't that show that she's not bringing personal feelings to bear in an improper way?

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

I might say that's in stark contrast to the way Miguel Estrada was treated, somebody who was on a path to become the first Hispanic Supreme Court justice, and Clarence Thomas, somebody with a compelling story like Judge Sotomayor, but who was subjected, at least in his words, 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's review those 17 years of federal judicial history, and let's ask the nominee some questions in a dignified Senate process.

STEPHANOPOULOS: Senator, let me bring this back to you because...

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

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

SCHUMER: Absolutely not, and let me explain why. First, Estrada was never a judge, so we had no way to judge what his record would be in the best way to judge it, cases that we had ruled on. And so when we asked him questions, he said absolutely nothing. He said, I cannot answer this question, I cannot answer that question. In fact, Judge Sotomayor has answered more questions on hearings already, because of her two confirmation hearings, than Estrada said. So we had totally nothing to do on with Estrada.

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

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

CORNYN: Well, George, I think -- I take a contrary view, as you might imagine. I think this is pretext. I mean, Miguel Estrada immigrated from Honduras. He couldn't speak English, when he was 17 years old, came here, graduated from the two top schools in America, and rose to the very top of the legal profession. And yet, he was filibustered by Democrats who denied an up-or-down vote in the United States 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 to speculate. That's why I...

STEPHANOPOULOS: So it's possible that Republicans will filibuster?

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 give Judge Sotomayor the fair hearing that Miguel Estrada, and, indeed, Clarence Thomas were denied by our friends on the other side of the aisle.

SCHUMER: Let me say this, George. I think when my Republican colleagues -- and I think they have approached this in an open-minded way -- when they see her record of excellence -- she's legally excellent -- 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 her compelling history, I think she's virtually filibuster-proof when people learn her record and her story.

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

CORNYN: Well, there are a lot of important questions. We've talked 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 justice for a few of us. And, you know, this promise of equal justice under the law is not just a motto emblazoned above the Supreme Court, this is the standard. And indeed, by ignoring a genuine constitutional issue about reverse discrimination in the New Haven firefighter case, you know, the comments she made about the quality of her decisions being better than those of a white male -- I mean, we need to go further into her record to see whether this is a trend, or whether these are isolated and explainable events.

STEPHANOPOULOS: And we'll be doing that. Gentlemen, thank you both 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 other Supreme Court firsts grappled with the question of how their personal experience affected their professional judgment.


SANDRA DAY O'CONNOR, SUPREME COURT JUSTICE: Looking back over time, 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 a wise old man. I just don't think that's the case.

CLARENCE THOMAS, SUPREME COURT JUSTICE: There's so many people now 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 certain opinions. I don't do that. You don't create a box and put people in and 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 Jan Crawford Greenburg; Ed Gillespie, veteran of the Bush White House, where you helped both Justice Alito and Justice Roberts in their confirmation hearings; Paul Krugman of the New York Times, and Gwen Ifill of PBS.

And, George, it does seem like the central question right now, to what extent should and do personal experiences, feelings, instincts affect judgment in the court?

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

IFILL: I guess I see it differently. I mean, I've spent the past year talking to a lot of people, who got elected, elected -- black elected officials for a book, and all of them talked about identity politics and defined it differently. They defined it as being -- 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 to say, which is that her point was, yes, what she is and what we all are shapes us, but it's not all that shapes you.

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

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

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

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

GILLESPIE: We are all shaped by who we are. We all bring that to the table. I do think, though, the -- you know, the conscious injection that you see, in a lot of her comments, of gender and race is what is causing for concern. And not only -- a little different with politicians, I think, our identity, than with a judge, and with a Supreme 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 disagree with 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 proud that the first African-American president just nominated the first Latina to the Supreme Court of the United States. But we need to ask the tough questions.

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

KRUGMAN: Yes, you know, what amazes me about all this is that this was a speech, right? The famous line comes from a speech where she 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 that bright Jewish kids from suburban New York make the best economists? I probably 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. The judicial record shows a straight, mainstream careful judge. And this is just crazy to be making so much out of this line.

STEPHANOPOULOS: Jan, you studied her opinions. What does -- if you look broadly at her -- at her record, her judicial record, you know, you saw, going into this, a lot of liberals were hoping the president was going to appoint a firebrand. He was sending signals to both sides.

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

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

So, you know, there's not a lot out there for Republicans, at this point, to work with. We've seen a lot of discussion about a case that'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's going 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 that we saw from some of the other potential contenders.

WILL: In the New Haven fireman case, however, the accusation is not just that she came to a perverse conclusion or affirmed a perverse conclusion, which was that, because fire department promotions were denied equally to those who qualified for them and those who didn't qualify for them, somehow, equal protection and equality under the law was respected, but the accusation goes beyond that, which is that the three-judge panel on the second circuit that, in the most perfunctory, cursory, indeed unsigned way affirmed the lower court's judgment, did so in a perverse way, that seemed to be trying to slip one by a majority on the second circuit.


STEPHANOPOULOS: ... Tom Goldstein has also looked at that question 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, these hot-button issues: not much of a record, at all, on abortion. In fact, the one time -- or the two times that the judge ruled on abortion, one time, she upheld President Bush's Mexico City family planning policy. One time she ruled in favor of anti-abortion protesters. And this raised some concern among...

IFILL: On the left.

STEPHANOPOULOS: On the left, pro-choice groups. Yet the White House 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 little an issue, when, for so many Supreme Court confirmations, it has been the main first thing out of the box.

It's almost as if whatever -- it's identity politics, whatever you 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, you know, it doesn't bother me at all that she doesn't have much of a record on abortion.


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

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

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

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


WILL: ... the "something elses."


WILL: Let me tell you three "something elses" that are going to come up. She has said that campaign contributions are inherently, kind of, bribes. Now, that would overturn campaign finance regulation and -- 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 subject we'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 are going to go, here?

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

GILLESPIE: Well, I think -- I actually think Bush will come up in the hearings, obviously. And I think, where the media's concentration has been, over the past week, and where the hearings goes could be two very different things.

And I do think they will probe, in terms of whether or not this notion of empathy, you know, is going to be brought in to bear. How much do you, you know, of your own personal feelings, do you bring into your judgment as a -- or would you, as a justice on the Supreme Court.

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


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


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


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


STEPHANOPOULOS: So, Paul, the Democrats really did change the standard, there, and that opens up, kind of, a free no vote for Republicans, if that's the way they want to go? KRUGMAN: Well, except, you know, the real story of this whole thing has been the sheer craziness displayed by a lot of the Republican Party. I think the Republicans have got a real problem here. Because, if they do go no, they're going to seem to be the party of Rush Limbaugh, the party of Newt Gingrich, the party of completely crazy accusations against someone who is, after all, a highly 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 long view. They know this is not the last nomination that Barack Obama is, you know, going to be making to that Supreme Court. And this nomination'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, being such a big issue.

But I think, at the end of the day, you know, when we look back on all this, and we're talking about the filibuster and the Democrats successfully filibustering during President Bush's tenure, all these nominees like you talked about, Miguel Estrada, Republicans have only themselves to blame -- not only for the Miguel Estrada filibuster, but for Sonia Sotomayor, because it was failures -- and I covered all this at the time -- complete failures of leadership in the Republican Senate, led by Bill Frist, that allowed Democrats to start off these historic filibusters in the first place, back in '02 and '03, which then led, of course, to, you know, as we saw, Miguel being -- Estrada being blocked. He would be the first Hispanic Supreme Court justice if Democrats hadn't prevailed.

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


... and especially when the memos came out that showed it was a conscious effort to block minority nominees, particularly in Miguel Estrada's case, for fear that President Bush would then make him the first Hispanic nominee to the Supreme Court, very crass political maneuver.

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


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

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

The Democrats are the ones, if Republicans vote against this nominee on philosophical grounds, as President Obama, then Senator Obama laid out his rationale for opposing; he didn't agree with the values of that person -- not didn't agree with the temperament or the intellect or the experience. They have set that standard. And I think, unless -- if Republicans don't, we're sending up an inexorable move to the left on the Supreme Court, and I think that's a very serious consequence.

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

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



OBAMA: The question we ask today is not whether our government is 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 be able to do the same. So my job is to ask the auto industry, why is it you guys can't do this?

OBAMA: We want to get out of the business of helping auto companies as quickly as we can. I got more than enough to do without that.

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



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

And George, the president has said -- you saw the contradictions there. 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 that he thinks is good for the country. And as of tomorrow, most likely or in a couple of months, once it's all completed, the United States government, along with Canada, will be a 70 percent owner of General Motors.

WILL: Yes. $20 billion in so far, perhaps $50 billion more to come. The president will be long into collecting Social Security before General Motors pays all this back, if it ever does, which I sincerely doubt.

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

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 about it. It seems to me the point of capitalism, which is a profit and loss system, is to clear away things like Chrysler and General Motors.

STEPHANOPOULOS: The White House would argue that they had to step in, because even though the numbers you cite are correct, they would 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 Americans would stop buying American cars. They'd buy different cars, made in America, most of them, using American parts mostly, sold to America.

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

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

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

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

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


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

It needs some general revival. It's not that hard to tell a story where GM starts to have a positive cash flow. It's by no means guaranteed. This is a company that spent several decades ruining itself, so it's not easy. But it's not crazy to think that this might work.

STEPHANOPOULOS: And this is a decision that President Bush, Ed, in the White House in the final months, basically said he would allow President 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's second term, rather than the last month of his second term, he would have done something different. I think he would have made different decisions.

STEPHANOPOULOS: Let them go under?

GILLESPIE: I think he would have -- my personal view is, had it been a different time, he would have probably done a structured bankruptcy, a debtor-in-possession type financing arrangement. But didn't feel like it was fair to the institution of the presidency to hand off to a successor in the last month of his presidency to make a decision like that, and so he bridged this gap in a way that gave them time to come back with a plan of restructuring of their own and allow for the successor president to make his own policy decision. I think it was the responsible thing to do, probably one of the toughest decisions of his presidency.


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

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

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


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

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


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


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

But, Gwen, I do think you raise an important question that they have to wrestle with right now. The government is now going to be the owner of General -- 70 percent owner of General Motors. But the question is, what kind of an owner are they going to be? And, Paul, everything we hear from Larry Summers and others are that the government 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 lot of new investors who want to be in the middle of it all.

KRUGMAN: You could not have a more centrist economic team than this administration has, right? These people are -- are -- have no desire to control the commanding heights of the economy. Yes, there will be some pressures, but you know, this, in a way, if you are worried that the government is going to start, you know, micromanaging, they're going to start using all -- using GM to pursue all sorts of non-economic aims, the fact that the company is probably going to be losing money hand over fist for a long time is going to be a guarantee against that. They're going to be very eager to see this thing become commercially viable, or at least lose less money.

I think your fears that this is socialism, you know, it's just crazy. It's not going to happen, because they really don't want this albatross 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 government is mandating smaller cars. The government wouldn't need to mandate smaller cars if the public wanted them, so the government is mandating cars the public hitherto has shown it does not want. That is an incentive for Americans to keep the cars they are driving longer, which will deprive Detroit of customers. Hence, we now have, to cope with that ricochet effect, there's a move on Capitol Hill to have something called cash for clunkers, where you will be bribed by the federal government to buy a new car.

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

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

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

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


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

And I do worry, I think one of the broader threats to our economy is, 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. The government is not the most efficient allocator of resources in the American economy.

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

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


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

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


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


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

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

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


GILLESPIE: In the same way that autos were offered a choice and the 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 taste for using American capital, broadly speaking, as a slush fund to buy political advantage, it will forswear doing so in the future. I don't believe it. Paul, most of the -- most of the agriculture policies in this country are residues of those put in place for the Depression emergency. New York City lives under rent controls put in place for the 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 the difference in the world. This is going to be a drain on the federal budget at a time when this administration, because of its very activism, really wants those dollars for things it really wants like health care.

STEPHANOPOULOS: Which brings it back to health care. I want to bring 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 private plans. That's a dividing line between Republicans and Democrats.

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

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


... or even on the Supreme Court nomination, what this administration 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 or something like rescuing a major American industry is you can't walk away as easily as they like to walk away if they see something's not working.

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 this mistake; let's do it this way.

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

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

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

IFILL: They don't.

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

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

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

KRUGMAN: Well, yes, it's a little hard. I mean, they can make a very good case that, long-run, the thing saves money. But CBO won't score it that way. So they have to do...

STEPHANOPOULOS: After 10 years?

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


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

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 a big thing in terms of the larger picture on the budget.

There are questions about how -- you know, what's our debt outlook going to be, 10 years, 15 years from now, are really barely affected 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 the uninsured are mostly relatively young and relatively healthy.

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

GILLESPIE: The notion of the savings, though. I just -- we've never 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 good at the stagecraft. And they bring in the health care industry and they 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 to write a book, "How to be a Millionaire." First, get a million dollars.


First, you get $2 trillion.


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

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

And that, of course, influenced, going back to the discussion earlier, why he selected Sonia Sotomayor in the first place. You know, his political...


GREENBURG: ... she was going to be almost impossible for Republicans to oppose, as we're certainly seeing now. They're falling all over themselves. So...

STEPHANOPOULOS: And it clears the path for health care.


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

And right after that, very strange bedfellows came out, David Boies and Ted Olson. These were the two lawyers, opposing lawyers in Bush v. Gore. They have joined together to challenge this ban. They want 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 to be treated equally under the law. There is no right more fundamental than the right to marry the person that you love.

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

But the groups on the left and the gay rights groups are incredibly upset about this. They're like, we don't want your help, Ted Olson and David Boies, because those groups recognize that they don't have the votes right now on the Supreme Court. And you can do real 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 overturn that decision, which it did in 2003, in an opinion by Justice Kennedy. There's no evidence that Justice Kennedy, who's, kind of, that, you know, human jump ball up there...


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

WILL: Thirty-six years ago, at a point when state after state was moving to liberalize abortion laws, including California, signed by Ronald Reagan, the Supreme Court yanked that issue out of democratic debate and embittered our politics down to this point by not letting a consensus emerge in the community.

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

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


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

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

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

But the fact is, this is being dealt with in a rather civil manner in the states where there are debates over this and legislators are voting on it or it's taking place in referenda. And if you take it -- 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, I think we'll live with it for a long time.

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


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