'This Week' Transcript: Gen. Jim Jones (Ret.)

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AMANPOUR: This week -- furious mobs kill more western civilians in Afghanistan. And as the death toll mounts, the Florida pastor who started it by burning a Koran says that he has no regrets.


TERRY JONES: We do not feel responsible, no.


AMANPOUR: Our correspondent is with American soldiers in the deadliest firefight against the Taliban in months.

Then in Libya, despite U.S. and NATO bombing runs meant to save them, rebels are in retreat from Gadhafi's forces. Is America in a battle it can't win? Three wars and billions of dollars later, we'll discuss all of this with the president's former national security adviser in his first interview since leaving the White House.

Also, who will pay for it all?

The jobs picture is getting brighter. But could rising prices, revolution, and a nuclear disaster kill the recovery? And as partisan bickering meets the bloated budget, will the government shut down later this week?


REP. MIKE PENCE R-IND.: I say, shut it down.


AMANPOUR: Two top senators join us for a This Week debate.

ANNOUNCER: Live from the Newseum in Washington, This Week starts right now.

AMANPOUR: Welcome to the program. Right now, the Middle East is falling further into chaos, violence and uncertainty as the United States grapples with fresh challenges in two of its three wars. President Obama, who ran as the anti-war candidate, now finds himself struggling to defend new American military action overseas, while the rapidly changing situations in Libya, Afghanistan, and across the Middle East pose new threats to U.S. security and credibility.

I'll be talking to my colleagues Mike Boettcher and Nick Schifrin in Afghanistan, and Jeffrey Kaufman and Alex Marquardt on the front lines in Libya.

Let's turn first to Afghanistan, where a firefight along the Pakistan border brought one of the deadliest days for American troops in months, and where the battle for hearts and minds may have been virtually erased overnight at the hands of a fringe pastor in Florida.

After months of threatening to burn a copy of the Koran, Pastor Terry Jones and his handful of followers finally did just that. This deliberately provocative act received little media attention here in the United States, but it did spread like wildfire online. And within days, protests in Afghanistan turned deadly.

ABC's Mike Boettcher is embedded with the 101st Airborne Division. Mike was the lone reporter on that bloody six-day offensive along the border.

Mike, how bad was that?

MIKE BOETTCHER, ABC CORRESPONDENT: In 30 years of covering war, I have never seen such withering fire. And soldiers who have been deployed four or five times will tell you the same thing.

A high price was paid. Six U.S. soldiers were killed. Six were wounded. Two Afghan national army were killed. And seven Afghans were wounded in this battle, and the battle continues as we speak, right now.

This is a significant engagement because it marks a turning point or a change in strategy along the Pakistan border where bases have been closed in recent months, small combat outposts. The U.S. now says that they're taking a more mobile strategy, going to areas they haven't been before, and going after the Taliban. They're going to carry this through, through the spring and summer and expect to see very heavy fighting in the east part of the country in the coming year. Christiane?

AMANPOUR: Meantime, in cities across Afghanistan today, more scenes of rage and violence in response to that Florida pastor's decision to burn a Koran. The situation does present a grave new problem for the United States. And ABC's Nick Schifrin joins me now from Kabul.

Nick, today, General Petraeus had to come out and specifically condemn the burning of that Koran. How bad is it there?

NICK SCHIFRIN, ABC CORRESPONDENT: Well, we've seen three protests three days in a row now, massive protests, 8,000 miles away from that Koran-burning. Today thousands of Afghans in the streets of southern Afghanistan and eastern Afghanistan, they were burning U.S. flags and chanting "death to President Obama."

Now David Petraeus came out with that statement today, but there is one good piece of news. The Afghan police did not shoot into the crowds like they did yesterday. On Friday, they were supposed to be the first line of defense around a U.N. building where seven U.N. workers were killed. They were not able to keep those workers -- keep those protesters out of that U.N. building.

And U.S. officials are deeply concerned about that, because the place where that happened, Mazar-i-Sharif, is the first city that is supposed to transfer to Afghan control, to transfer to Afghan police control in three months.

And U.S. and U.N. officials are worried that this incident is a sign that the police aren't ready to take control -- Christiane. AMANPOUR: Nick, thank you. And obviously we'll keep monitoring that situation.

And now we turn to Libya. America's newest war is entering its third week of bombing, and still there is no sign that Colonel Gadhafi is stepping down. And now more bad news for the makeshift rebel forces. NATO warplanes seem to have mistakenly bombed one of their convoys. Another blow in a week where they've seen most of their gains against Gadhafi wiped out.

Just Monday, the rebels were within striking distance of capturing Gadhafi's home town of Sirt. And they had the capital Tripoli in their sites. But by week's end, they were beating a hasty retreat with Gadhafi forces once again in control of the long stretch of coastline.

Our reporters in Libya have been tracking all of this. Jeffrey Kaufman just arrived in Tripoli, and Alex Marquardt joins us from the rebel bastion of Benghazi. Let's start with Jeffrey.

Jeffrey, in Tripoli, any signs of the tension or that maybe Gadhafi is on his last few days?

JEFFREY KAUFMAN, ABC CORRESPONDENT: Well, actually, just moments ago we heard a NATO warplane flying above us. We didn't hear any bombs dropping. But, you know, it's actually remarkably normal here. You can see the traffic behind me on the highway.

As we came in, we saw a lot of military checkpoints, long lines for gasoline, a lot of shops closed. But the tension is not palpable at this point. The rebels are clearly on the retreat. Really, what we're seeing now in Libya is a divided country, almost two countries: the rebel-held east and the Gadhafi-held west.

And neither one seems to have the strength right now to unseat the other. Certainly the rebels aren't organized enough, manned enough, or skilled enough to come to Tripoli. And Gadhafi, it seems, the coalition will not let him go further east and retake those valuable oil fields in those areas.

So right now the word to describe this revolution, weeks into it, is stalemate -- Christiane.

AMANPOUR: Jeffrey, thank you. You mentioned stalemate and also divided country. And joining me now from the rebel-held city of Benghazi is ABC's Alex Marquardt.

Alex, how are these rebels dealing with being unable to really capitalize on all of the help the no-fly zone is giving them?

ALEX MARQUARDT, ABC CORRESPONDENT: Christiane, they're not able to capitalize because they are outmanned, they are outgunned, and they are not able to organize. They don't have the weapons to face Gadhafi's superior firepower. So they're forced to beat a retreat.

They don't have any sort of leadership. So when they retreat, they do so in a disorganized fashion, very quickly, no one showing them how to hold the line, how to retreat.

So we're seeing now glimmers of hope that they'll be able to organize. Experienced officers on the frontlines trying to corral these groups into units, keeping people back without any sort of training.

And for the first time on the frontlines on Friday we saw the general who is technically in charge of these forces, General Abdel Fattah Yunis, welcomed with a hero's welcome. So signs that there is some leadership coming to the frontlines that is so desperately needed by these rebels.

AMANPOUR: Alex, thank you so much.

Rarely has a president faced a foreign policy puzzle this complex. President Obama, of course, came into office pledging to repair America's relationship with the Muslim world. Now that relationship is tested like never before. Joining me to discuss the path forward, the president's former national security adviser, General Jim Jones. He's now a senior fellow at the Bipartisan Policy Center.

Thank you for joining us.

JONES: Thank you, Christiane. Good to be here.

AMANPOUR: Let's first talk about Afghanistan, since that seems to be a real crisis again at the moment. This pastor who burned the Koran, is unrepentant. Do you think despite the freedoms envisioned and expressed specifically in the American Constitution, he should not have burned that Koran?

JONES: Oh, I don't think he should have done that at all. I think it's extremely irresponsible, and look at what it has led to.

AMANPOUR: You also heard Mike Boettcher's report, a fierce firefight along the Pakistani border, one of the worst that the Americans had been involved in. Right now, do you think the United States forces can pull down significantly in July?

JONES: Well, I think that there can be and there will be some reduction of force in keeping with the agreement made at Portugal at the NATO summit in December to target 2014 as, in President Karzai's own words at the London Conference, "This is when I want to be able to control my entire country."

AMANPOUR: But can it be done responsibly, if you'd like?

JONES: Yes, I think so. I think it can be done responsibly. And we'll have to see what it looks like. A lot of it hinges on what happens on the other side of the border with our friends, the -- our neighbors the Pakistanis.

If Pakistan turns to what some of us think they should have done more effectively for a long period of time now, attacking and removing those safe havens that cause us so much difficulties, and if we can get some sort of coordination with their forces, then I think you can in fact...


AMANPOUR: You say if. You don't seem convinced that they're playing their part.

JONES: Well, I don't -- I'm not convinced. I think there was some good progress made in the Swat Valley and in North Waziristan a year or so ago. But it hasn't been sustained. There still seems to be that reluctance to engage comprehensively and buy into an overall plan that would, I think, really help Pakistan in the long term.

AMANPOUR: All right. General Jones, stay with us because up next we will talk about Libya. Will Libya become Obama's Iraq, as some are now suggesting? And it's a question you'll hear more and more in the coming days. I will ask General Jones if he sees an end in sight.



ROBERT GATES, DEFENSE SECRETARY: There will be no American boots on the ground in Libya. Deposing the Gadhafi regime, as welcome as that eventuality would be, is not part of the military mission.


AMANPOUR: Defense Secretary Robert Gates testifying on Capitol Hill Thursday. He is on the record saying that stopping the violence in Libya is not a vital national interest of the United States. But America is in the game now. And the big questions, for how long? And to what end? Let's bring back retired General Jim Jones, who was President Obama's first national security adviser.

Welcome back again. On Libya, Secretary Gates has said on this program and on several last week, that it was not in the vital interest of the United States. Do you agree?

JONES: I agree with that.

AMANPOUR: You agree that it's not in the vital interest?

JONES: I agree that it's not a vital interest in the sense that it affects the security -- the vital security of the nation. But we are part of an alliance. We are one of the global leaders, if not the global leader. And we have to do -- it is in the vital interest -- more in the vital interest of Europeans, when you consider the effects of massive immigration, the effects of terror, the effects of the oil market.

AMANPOUR: So the United States is now in it. You can call it what you want. But it's a third armed conflict.

JONES: We're a part of it. We are transitioning to a supporting part, only the United States could have gotten there as quickly as it did.

AMANPOUR: The United States is making a great fanfare about now giving over to NATO. But you were a former SACEUR, a former NATO commander. NATO, to all intents and purposes, is an American organization. It's run by an American commander. The chain of command is American. The biggest command and control and resources are American. This is still an American-led operation, right?

JONES: I'm not sure I completely agree with that. We have, you know, in the sorties that are being flown now, as I understand it, it's roughly 50-50. And it's going to go down to where the Americans are going to be supporting and reconnaissance, search and rescue, intelligence, refueling, things like that.

There are 40-some-odd ships off the coast, only 10 are American. There are 40 flag officers from different countries involved, only 10 of which are American. So it really is a -- I think it's encouraging to see allies stepping up at a level that we haven't seen before. I mean, it has been good.

AMANPOUR: What is the endgame? I mean, really, what is the endgame? We've seen two weeks of bombing. Gadhafi is where he is. Yes, there have been some high profile defections. The president has said Gadhafi has to go.

JONES: And this is the next piece that's the difficult piece. Because...

AMANPOUR: But what is -- how does one accomplish that?

JONES: The strategic question is, what do you do when Gadhafi goes? Because we don't know exactly who the opposition is, yet.

AMANPOUR: But before that, how do you get Gadhafi to go?

JONES: Well, that's the part that is being working on. And I think...

AMANPOUR: Do you know?

JONES: I don't know. I don't know. I don't know the answer to that. But I do know that that is the wish and the goal of this entire effort.

AMANPOUR: You mentioned, who are these rebels? It's a question everybody wants to know.

JONES: Opposition.

AMANPOUR: Opposition rebels...

JONES: You can call them whatever you want.

AMANPOUR: Whoever they are, freedom fighters. But the world has now taken their side. Who are they? Do you know? JONES: Well, I don't -- I personally do not know. And I know that there is tremendous effort going on in many capitals around the world to make sure that we do understand what that is.

AMANPOUR: When you see these rebels, as Alex Marquardt said and we've been reporting, unable to capitalize on the no-fly zone, what has to be done to help them? Should they be armed? Should they be trained?

JONES: Well, I think the first thing that has to be done is to find out who these -- who they are. And so if you start from the proposition that our reason for committing our forces, as Americans or as part of NATO, was basically to avoid a massacre of innocent civilians, which probably would have happened, and now we're there, and now we have to do -- now we have to take the rest -- follow the rest of the trail to identify these people, then decide, you know, whether that's meritorious or not in terms of training, organizing, equipping.

The United States has not done that yet.

AMANPOUR: Isn't it troubling that we don't know who they are and what their goals and aspirations are?

JONES: Well, it's a pop-up mission that came very quickly. It metastasized to the point where 700,000 people were going to be threatened. And, you know, I wish -- in all of these things, we always want it to be clear, we want nice end-state rules. But the fog of war doesn't sometimes allow for that.

And so now we are putting this together, I think, from what I can see, we're doing the things that have to be done before we decide -- before the coalition decides, the U.N. decides exactly what to do next.

AMANPOUR: Let's just quickly turn to Yemen, a major American ally. If Saleh falls, how bad is that for the fight against al Qaeda -- if the president of Yemen falls?

JONES: Well, I think that's -- I think Yemen is very worrisome. This is a -- Saleh has been very skillful over the years in being able to consolidate and maintain his power. The trends in Yemen are not good. And this could be a major problem. And where terror is concerned, this would be a safe haven that would be a very troubling turn of events for us.

AMANPOUR: So is the U.S. to try to keep Saleh in power or what?

JONES: Well, I don't know -- you know, there are certain things that we can do and that we can't do. When events reach a certain stage, they have a life of their own. And it would be nice to be able to think that we could do everything and make the world, you know, perfect the way we want it. But that's not the case.

So the trendlines in Yemen are not good. We've invested a lot of work in Yemen. But it is a disturbing trend for the future. And this is -- again, one of the things that I feel strongly about is that when you look at what's going on in this part of the world and you look at the potential, there is reason to be optimistic in some areas and there is reason to be very concerned in others.

But it's a tremendous tectonic shift in terms of the world as we know it, and this part of the world since -- for the last 80 years.

AMANPOUR: General Jones, thank you very much, indeed, for joining us.

And what do you think the U.S. should do next in Libya? Tweet me, @camanpour #libyanext.

Meantime, the costs of the new war are already piling up. More than half a billion dollars so far. All this as Congress and the White House remain at loggerheads over a federal budget, and a government shutdown is looming.

The deadline just five days off. Will lawmakers beat the clock? We'll hear from one of the Democrats' toughest negotiators, Senator Chuck Schumer, and the top Republican on the Budget Committee, Jeff Sessions. That's in a moment.



REP. JOHN BOEHNER, (R) OHIO: I have never believed that shutting the government down was the goal. And frankly, let's all be honest, if you shut the government down, it will end up costing more than you save because you interrupt contracts -- there are a lot of problems with the idea of shutting the government down. It is not the goal.


AMANPOUR: House Speaker John Boehner, the man in the middle this weekend, caught between a rowdy freshman class of hardline conservatives and the more moderate congressional Republicans who want to deal.

Boehner, of course, wants a deal, too. But as senior political correspondent Jon Karl tells us, it's hard to broker compromise in a town where compromise itself has become a dirty word.


CROWD: We want it back. We want it back.

JON KARL, ABC NEWS CORRESPONDENT: Compromise on spending cuts? Not if these folks have anything to say about it.

UNIDENTIFIED MALE; It's time to pick a fight.

UNIDENTIFIED MALE: Because if we don't, we deserve to be thrown out of office.

REP MIKE PENCE, (R) INDIANA: Liberals in the Senate would rather play political games and shut down the government instead of making a small down payment on fiscal discipline and reform. I say, shut it down.


KARL: That was at a Tea Party rally on Capitol Hill where one organizer had this message for GOP leaders.

KATHY DIRR, TEA PARTY PATRIOT: I say to the Republican leadership, take off your lace panties. Stop being noodle-backs. KARL: The attitude runs deep among House Republicans, some of whom don't want to compromise on spending cuts, or issues like funding for Planned Parenthood. Democrats have already agreed to make more than $30 billion in cuts over the next six months, perhaps the largest cut Congress has ever made.

But Speaker of the House John Boehner's biggest challenge may be to convince his rank and file to accept victory.

BOEHNER: We control one half of one third of the government here in Washington. We can't impose our will on another body. We can't impose our will on the Senate. All we can do is fight for all of the spending cuts we can get an agreement to.

KARL: Democrats have their hot heads, too. One Obama administration official said the Republican bill, which cuts $5 billion from the agency for International Development would kill kids. That's right. Kill kids.

RAJIV SHAH, USAID ADMINISTRATOR: We estimate, and I believe these are conservative. That HR 1 would lead to 70,000 kids dying.

KARL: For weeks, Democrats have been accusing Republicans of putting the country at risk of a government shutdown. Enter Howard Dean.


KARL: Former Democratic Party chairman who told a forum this week that it is Democrats who should quietly rooting for a shutdown so they can blame it all on Republicans.

DEAN: From a partisan point of view, I think it would be the best thing in the world to have a shutdown.

KARL: And even the Democratic leaders trying to negotiate the deal seem to have one word describe their Republican colleagues.

UNIDENTIFIED MALE: Extreme level far to the right.


UNIDENTIFIED MALE: Extreme territory beyond what was reasonable.

UNIDENTIFIED MALE: Small, extreme minority.

KARL: Compromise with extremists out to kill kids? They have less than a week to make it happen.

For This Week I'm Jonathan Karl.


AMANPOUR: And joining me now, the Senate's third ranking Democrat, who you just saw there, Chuck Schumer, who joins us from his home state of New York, at our bureau there this morning. And with me here in the Newseum, Senator Jeff Sessions of Alabama, the ranking Republican on the budget committee.

Senators thank you very much for joining me.

Well, you saw Jon Karl's piece. And there's, you know, a lot of hijinks in that piece.

Let's get to the bottom of what's going on, Senator Sessions, has any progress been made this weekend amongst negotiators?

SESSIONS: I don't know that it has.

AMANPOUR: Is that a no?

SESSIONS: Well, I don't know that it has.

Mr. Boehner, the speaker, has indicated that he has not reached an agreement. So has Mitch McConnell, the Republican leader. So I think that negotiations continue and they need to continue.

But what this is -- Christiane, we really need to understand this is more than a Republican-Democratic squabble. This is -- the fundamental question is, are we headed to a financial crisis if we don't get off the fiscal course we're on? We have had witness after witness say that is so, Erskine Bowles said that President Obama's choice to head the debt commission, we're facing the most predictable debt crisis in American history. It could happen within two years.

We have got to take action now.

AMANPOUR: And we'll get to that.

Senator Schumer, from your perspective, has any progress been made? Will there be a shutdown in five days?

SCHUMER: Yes. No I don't -- excuse me. I don't think there will be a shutdown, Christiane. In fact, I'm quite optimistic. I think progress is being made. They're working off a number, $33 billion in cuts. That's very reasonable. It's right in between what Democrats have proposed and Republicans have proposed right in the middle. And after all, that was the number proposed originally by the House Republican leaders, Ryan and Rogers, the head of the appropriations committee.

So they're working off that number. That's good. Now we have to figure out what goes into that number. And that's where the discussions are headed.

Let me just say a word about that. We have two goals here. Jeff is right, we have to deal with the deficit very seriously. But we also have to deal with the economy and job growth. And we don't want to snuff that out. And particularly when we're beginning to see jobs grow.

If you just cut from domestic discretionary, you'll have to cut things like helping students go to college, you'll have to cut scientific research, including cancer research. These things have created millions of jobs through the years.

And so the good news is this: There's another place we can look to cut not just on domestic discretionary. It's called mandatory spending. It requires you to do something for somebody, but the way of doing it is not required. We can find cuts in places like agriculture and justice and banking. These are now being called CHIMPS...


SCHUMER: CHIMPS, yes, changes in mandatory program spending.

And we've offered about $10 billion of those to our Republican colleagues. They're not adverse to them, because HR 1 had some of those in. And I believe that's how we can come to an agreement that both keeps job growth and cuts the deficit at about the $33 billion level. And I believe that's where we'll end up.

AMANPOUR: You've raised a number of issues there. Let me first quickly ask Senator Sessions, do you -- we're talking about the job numbers, do you think that's -- that's good news, obviously. The job numbers have increased. The unemployment number has come down, lowest in two years.

SESSIONS: Well, it's really high.

AMANPOUR: It is, but it's come down. That's good.

SESSIONS: Not much.

This was a good month. This was a good month of a little over 200,000. We need to average 250,000 jobs a month. In the last three months we have only averaged 124,000 new jobs. We are well below where we need to be.

One of the reasons, as the testimony of Secretary Geithner, President Obama's Secretary of Treasury, testified that the debt is pulling down our growth and creates a threat of a crisis that could put us back into recession. We have got to make changes now.

AMANPOUR: Can you live with the short-term method here. Can you live with the $33 billion in cuts?

SESSIONS: I really believe we should do 61 total as the House proposed over ten years. That would be a savings of $860 billion.

We have to borrow this money. The House has sent a bill over that reduces what is before us, discretionary spending, CR, is the only thing before us. They proposed 61. The Democrats started at 4 or 5. They've how to been pushed up to halfway. I think we should go all the way.

But we'll have to let our leaders work on this and see, hopefully, an agreement that goes as far as possible.

AMANPOUR: As this haggling continues, I'm going to ask you, Senator Sessions. Speaker Boehner this week basically said, and I think it's sarcasm, thank you guys for painting me into a box that's just where I want to be, talking about the conservative -- the Tea Partiers. Have they held the Republican leadership sort of hostage in these negotiations.

SESSIONS: Christiane, that's the Democratic spin. That's the way...

AMANPOUR: But this is what Speaker Boehner said.

SESSIONS: I know that. But I'm telling you what the real deal is. This week, the House -- Republican House will submit a mature, serious budget for long-term reform of spending in America that will avoid a debt crisis this country is facing in two years, according to Mr. Erskine Bowles.

The Democrats have no plan except the president's plan which makes the debt worse than the current trajectory we're on. It raises taxes. It increases spending even more. It doubles the debt. We'll take interest from $200 billion last year in one year to $900 billion in 10 years, crowding out all kind of social programs and beneficial programs that Senator Schumer has talked about.

AMANPOUR: Right. Senator Schumer...

SCHUMER: Well, let me say this, Christiane. Yes, I have a lot of sympathy for Speaker Boehner because he does want to come to an agreement. He knows how devastating a shutdown would be. That's his words, not ours. Although we all agree on that.

The one group that's standing in the way here is the tea party. Now they have said that a shutdown is a good thing. You saw it on that tape. Some of their leaders have said it over and over again. Sarah Palin, Mike Pence, Michelle Bachmann. They say it's our way or no way.

Well, that's not how the American government works. And I would say this though, here's the good news. The American people are seeing the tea party for what it is, extreme. And their popularity is declining.

They now have only 33 percent of people in support of them, and 47 percent people against them. And when they lose clout, it makes an agreement much more likely. It's another reason I'm optimistic.

AMANPOUR: All right. Let me just ask you this before we turn to you, Senator Sessions. Today -- or rather, this week, you sort of stepped in it, sort of recording-wise. You were caught briefing your fellow senators on how to address this issue, didn't know apparently the reporters were still on the conference call. Let's just play that, because it plays right into the spin and the language about what is going on right now.


SCHUMER: I always use the word "extreme." That's what the caucus instructed me to do the other week. Extreme cuts and all these riders. And Boehner is in a box. But if he supports the tea party, there's going to inevitably be a shutdown.


SCHUMER: Now, you know, Christiane, I have no problem with reporters hearing that. I said it a few hours before on the floor of the Senate. I've said on it this show. The tea party is the group standing in the way. They are extreme.

Any group that says you don't cut oil subsidies to companies making billions and billions of dollars, subsidies that were passed when the price of oil was $17 to encourage production, and now the price is over $100, and at the same time, says, cut student aid to help qualified students go to college, yes, I believe they're extreme. And I have no problem with that...


AMANPOUR: OK, Senator Sessions, extreme and holding the party hostage.

SESSIONS: It's absolutely false. Millions of Americans participated in the tea parties. Tens of millions of Americans support and believe what they're saying. And they are right fundamentally. Maybe they don't understand all the realities of Washington politics.

AMANPOUR: But are they right for being...

SESSIONS: But fundamentally they know this country is on a path to fiscal disaster. As Erskine Bowles said, as Secretary Geithner has said, as Alan Greenspan has said, we're heading -- and this Democratic leadership proposes nothing.

AMANPOUR: Do you believe...

SESSIONS: But to attack the people who are trying to get this country on the right course.

AMANPOUR: Do you believe there will be a shutdown?

SESSIONS: I hope not.

AMANPOUR: But do you think there will be?

SESSIONS: I doubt it. I doubt there will be a shutdown.

AMANPOUR: All right. Well, both of you agree on that. And, of course, we do have to talk at another time about these huge mega- issues, which really right now is tinkering around the edges, isn't it? The big, big entitlement programs.

SESSIONS: We're talking about trillions of dollars.

AMANPOUR: Precisely. And we'll have you back... SESSIONS: And the president has no plan whatsoever to deal with it.

AMANPOUR: There seems to be no plan in general.

SCHUMER: That's not true at all.

AMANPOUR: And we'll discuss that the next time.

SCHUMER: That's not true at all.

AMANPOUR: Thank you very much, indeed, for being on this program.

And tell us your thoughts on the war on Capitol Hill. Tweet me @camanpour #budgetbattle.

And up next, new job numbers are moving in the right direction, as we have heard, but could a government shutdown deal a serious blow to the recovery? We'll get answers from our roundtable.


AMANPOUR: A Florida pastor's reckless stunt sends shock waves across Afghanistan, bringing mayhem and death. But today, Terry Jones is unrepentant. How does the White House contain the damage caused by a preacher gone rogue? Our "Roundtable" tackles that one. Stay tuned.



OBAMA: Today, we learned that we added 230,000 private sector jobs last month. And that's good news. That means more packages, right?


AMANPOUR: The president at a UPS facility on Friday. And yes, the jobs picture is looking up. Unemployment is the lowest it has been since March of 2009, just after President Obama took office. So it's good news, if 8.8 percent unemployment can be considered good news. But as the recovery picks up steam, the budget showdown in Washington threatens to derail the progress that has been made.

Here to make sense of it all, our "Roundtable" with George Will; Paul Krugman, Nobel Prize-winning New York Times columnist; Torie Clarke, the former Pentagon spokeswoman in the Bush administration; and David Ignatius of The Washington Post.

Great to see you all here. So, the jobs numbers, good, right?


PAUL KRUGMAN, THE NEW YORK TIMES: Yes, it begins with a sigh, because, look, this is better than naught. Right? Better than no jobs. But unemployment is a funny number. Unemployment, you're only considered unemployed if you're actively looking for work. And so if you look, over the past year, the unemployment rates have come down a lot, significantly anyway. But that's basically almost all because fewer people are looking for work.

AMANPOUR: So where is it headed in terms of the people looking for work?

KRUGMAN: Well, it's still terrible. It's still a terrible job market. It's not deteriorating. But it's still a very -- there's still about five times as many people looking for jobs as there are job openings. And it's still -- the length, the average duration of unemployment hit a new record.

So we're in a situation where, you know, things are not getting worse, or at least not getting worse in all dimensions anymore.

AMANPOUR: So is that good news? It's not getting worse.

GEORGE WILL, THE WASHINGTON POST: Well, it's not getting worse. Actually, the good news within the news is that there are 14,000 fewer people working for government in the United States as state and local governments shed jobs.

But a corollary of what Paul just said is that when the economy picks up and people become encouraged to go back into seeking jobs, you could have the economy rising and unemployment rising simultaneously.

We lost more jobs in this great recession than the last four recessions combined. Now we have had, for 28 months, essentially zero interest rates. The quantitative easing, the printing of money that began in November, under this the Fed -- the Federal Reserve Board has been buying 70 percent of the new issues of Treasury debt. That ends in June.

That probably distresses Paul.

KRUGMAN: Yes, I would just say that the aftermath of a terrible financial crisis, and this was the worst financial crisis since the 1930s, is always a prolonged period of weak growth. And the tragedy is that Washington has given up on the jobs picture.

It's not that -- it's not a failure of policy. I think the policies that we have undertaken made things less bad than they would have been. But here we are with still terrible unemployment rate, 37 weeks the average unemployed person is unemployed. And no interest in Washington about doing anything to create jobs.

AMANPOUR: So we were just speaking to Senators Sessions and Schumer. Did you hear anything from them that would lead to a slightly less grim outlook?

IGNATIUS: Only that you heard a reluctance on both sides to take the budget showdown off the edge of a cliff. I didn't hear much enthusiasm for a shutdown from Senator Sessions on the Republican side.

I think what's excited the White House about these numbers is not the unemployment number per se, because as Paul says, there are all sorts of complicated factors that go into that, but the job growth number. And it does look as if the economy is finally beginning to generate jobs in the numbers that over time, would bring the unemployment rate down and would get you back on a trajectory of more normal growth. We're not there yet. But I think people see, you know, a light at the end of the tunnel, you can say, they at least see the tunnel.

CLARKE: I think the good thing from the two senators is neither one of them tried to score huge political points one way or the other, which is kind of the norm, and I thought was very responsible and even-handed, which is good.

But here's the failure of policy, I think. What will really get the private sector humming and hiring a lot of people is if they have predictability and certainty about things like regulatory regimes and are some of these trade agreements going to go through that we really need? Because it is a global picture, not just a domestic one.

And I know there's a lot going on, but nobody seems to be focusing on that, not the administration, not Congress. And Paul is laughing.

KRUGMAN: Because that's not -- the reason businesses are not investing is they have tons and tons of excess capacity. There's a very clear relationship historically between the amount of unemployment and the amount of business investment. When unemployment is high, when capacity is low, investment is low. There's nothing -- all of this stuff about uncertainty is just a myth being made up to blame this on Obama.


CLARKE: No, it's not. Money is a coward. Money is a coward. It's not going to go unless it knows it can make money.

KRUGMAN: There's nothing in there. There's nothing in there. It's exactly what you expect.

AMANPOUR: Torie mentioned reform. And tax reform is one of them. I mean, it looks like this week, there was this whole issue with Jeffrey Immelt, the president's adviser, and you know, allegedly paying actually no tax on having made billions of dollars in profit, the company. It was OK. He took advantage of the system. But is it right? Does that need to be conformed (ph)? GE?

WILL: It's an old axiom that what is alarming in Washington is not what's done that is illegal but what is done that's legal. No one is accusing GE of doing anything other than taking advantage of the baroque tax code that we have produced over time. Mitch Daniels, the governor of Indiana, says, wouldn't it be wonderful if we had a tax code that looks as though someone designed it on purpose? They designed a tax code that has produced the following interesting number. According to Investors Business Daily, 975 people work in the tax department of GE, just trying to mine the tax code for advantage.

AMANPOUR: That's true (ph), but it doesn't look good, though, does it? The optics of this?

KRUGMAN: No, I have to say that Obama has got a pretty bad record now. He picked Alan Simpson to co-head the debt commission, which turned out to be given to making some rather strange remarks. As his adviser on the economy, he managed to pick the head of a corporation that is managing not to pay any taxes.

And look, we do need tax reform. But the biggest obstacle to tax reform right now is that any reasonable tax reform is going to raise taxes on some people. Because you're going to close some loopholes. And what we have is the right wing of the Republican Party, the Grover Norquist types saying, no taxes on anybody should ever go up. And we can't have a tax reform that consists solely of cutting taxes. We have to have one that levels the taxes. So at the moment, tax reform is just not on the agenda, realistically, because we have no agreement on that.

AMANPOUR: Do you think President Obama is as involved in, for instance, the budget battles that are going on in Congress as you would like to see him?

IGNATIUS: In classic Obama fashion, he's involved but tries to conceal his hand. He's the most reticent chief executive I can remember. For example yesterday, Saturday, he was on the phone both to John Boehner, the House speaker, and to Harry Reid, the Senate majority leader, trying to talk about the details of the compromise they hope will be coming this week.

On the question that Paul is raising, whether we're ever going to get to the point where we're seriously talking about tax simplification, tax changes that would lead to better budget balance and reductions in the deficits that worry everybody, I think this White House is getting ready for a process. And I think it could actually come quite soon. By June, July, in which the White House, which has been reticent, silent on all of this, will begin to roll out some ideas similar to those that were in the Simpson-Bowles deficit commission. And I think we could have this summer a big and a very important debate on how to get these numbers better.

AMANPOUR: One thing we didn't get to talk about with the senators was the really big cuts or the big reforms that have to be made in entitlements. And also on the Pentagon. Where do you think can big cuts be made in the Pentagon budget?

CLARKE: Oh, man. It's like the morbidly obese patient that's almost, where do you start? It really is. And God bless anyone, Rumsfeld, Gates and others who are trying. It's very, very hard. They have made some significant cuts. And there is plenty, plenty of waste in that place. Any time you have 2 or 3 million employees, depends on how you count them, there's a lot of waste.

But that wouldn't be the first place I would start. Most people would argue that's not the one that is going to make a big difference. And whether or not these folks up the street are really serious is if they tackle the major, major entitlement programs.

Republicans say they are going to. It has yet to be seen.

AMANPOUR: Hold that thought and we'll continue. With the world's eyes on Libya, Afghanistan explodes anew with rage and murder in the streets there. How can the United States extinguish a fuse that's been lit by that renegade Florida pastor who took it upon himself to burn a Koran? We'll have that with our roundtable when we come back.



UNIDENTIFIED MALE: Should you bear any responsibility for inciting today's horrific actions?

TERRY JONES: We do not feel responsible, no. We feel more that the Muslims and the radical element of Islam, they used that as an excuse.

STAFFAN DE MISTURA, CHIEF OF UN ASSISTANCE MISSION IN AFGHANISTAN: I would tell him my three colleagues have died, and seven all together have died. We are very good people and we're working hard. So you should be feeling guilty and should not do that.


AMANPOUR: That was Staffan de Mistura, chief of the U.N. assistance mission in Afghanistan right there talking and weighing in on pastor Terry Jones, who decided to burn a Koran. That act, as we've been telling you, has set off a tidal wave of anger and violence in Afghanistan. Pastor Jones of the ironically named Dove World Outreach Center is unrepentant and unbowed. And still a huge headache for the Obama administration.

So let's bring that subject back to our roundtable. Let me ask you, David Ignatius, is this a one-time horrible thing or is this something that's going to have a lingering effect in Afghanistan right now? And to the detriment of the Americans?

IGNATIUS: Sadly, this incident of people protesting and killing people because of anger at the burning of Korans, but it's really anger at what they see as a United States that doesn't respect their religion, it recurs in Afghanistan and Pakistan so often. I think they are irresponsible actions by pastor Jones and by the Muslim sheikhs who on Friday prayers incited people, but the larger point is that deep into a war where we -- our strategy is counterinsurgency, to get the population with us and working with us to fight against the Taliban, you see what angry, anti-American feeling is out there. Even in areas that are remote from the fighting like Mazar-e Sharif in the north -- that is where the 12 U.N. people were killed. That's far from the battlefield. So that's what worries me.

AMANPOUR: Torie, what should the administration be doing to win back some of these hearts and minds?

CLARKE: It is going to be very, very hard. Right or wrong, they take it as a sign, an excuse, and a reason to go after the United States.

AMANPOUR: General Petraeus came out strongly today, categorically blaming the pastor and basically saying this is not representative of the U.S.

CLARKE: And I know extraordinary people at extraordinary levels have talked to him before saying it is needlessly provocative. Yes, in this country you can talk about freedom of speech, but you cannot do this and underestimate the consequences it can have around the world.

There was no need to do this. But I think it will take a long time to repair these sorts of things. Fairly or unfairly, it will take a long time to repair them.

AMANPOUR: And here we are, two weeks into Libya now, which some people are calling a war others aren't. Are you calling it a war?

WILL: Of course it's a war. War planes flown by warriors doing what war looks like, which is dropping bombs.

AMANPOUR: Did the president convince you in his speech on Monday that this was in the vital national interests? It had a limited goal, limited duration?

WILL: What he said in his speech was broadening our military mission to include regime change would be a mistake. If so, we're making it.

It's perfectly clear that we who worried about mission creep got it wrong. It was mission gallop. Weeks ago when the president said this would be matter of days not weeks. He said, also, we were told there would be no boots on the ground. Well there may not be boots, there are certainly shoes on the ground now.


WILL: They're occupied by CIA people, because like it or not, the logic of events says that this is a failure if Gadhafi survives. Some of us worry that, even worse than the failure would be the success, because it is going to whet the appetite of humanitarian imperialists for more of these interventions. AMANPOUR: Well, General Jones was telling me that it was a risk, one way or the other, whether Gadhafi stays or goes, mostly because we don't know the rebels.

A lot has been made of the end game. George just rightly mentioned that the president said regime change was not the goal, but the president also says that Gadhafi has to go. So where are we here?

KRUGMAN: This is clear. I actually have a lot of sympathy for the president on this. It's clearly -- this was not like Iraq. This was not a gung-ho president who wanted to win himself some military glory. There is going to be no landings on aircraft carriers for this one, right? This was something where he was dragged in. He was dragged in by the spectacle of a looming humanitarian disaster.

And it's very, very hard -- it's hard both directions. I think if you actually look at the people like me who are very opposed to Iraq, we're actually very divided. And in many cases divided within ourselves, as I am. But this is -- this was not easy. Of course there's no clear end game. This was something where pulled in by events.

I think the president's speech wasn't very effective because I'm pretty sure he's internally divided too. But I think that's to his credit.

CLARKE: Wow. Maxwell Taylor, who President Kennedy brought back to look at Vietnam did this amazing speech in which he said, when you look at these things, the commitment of forces, you better be able to explain to the man in the street in a simple sentence or two what you're trying to accomplish.

I could pick 500 people off the street and say what are we trying to get done in Libya? They would not be able to answer that question. I don't know what the answer to that question is.

AMANPOUR: One of your former colleagues in the Bush administration, Megan Sullivan, has just written an op-ed...

CLARKE: Smart piece.

AMANPOUR: ...saying that it could be Obama's Iraq. I mean, is that completely fantastical or is that possible?


CLARKE: I think, with all due respect for all these brilliant people sitting around the table, I think anybody that says they know is either stupid or lying. We don't know.


CLARKE: You're either going to be stupid or lying. So go ahead.

IGNATIUS: The unknowns are scary. Secretary of Defense Gates said to me and then on your show, I think, the shows -- this is dark territory. We don't see what is down there. I think there's reason not to worry this is spinning off to an Iraq. There are not the tens of thousands of troops on the ground.

AMANPOUR: Do you think Gadhafi will go?

IGNATIUS: I think the White House strategy today is to seek what one person described to me as regime implosion. And that is happening. This regime that requires cash to survive. The cash basically is cut off. This is a regime that has a small inner circle of people close to Gadhafi. One by one, they're leaving. They're going to London. They're defecting to Egypt.

AMANPOUR: Well, really two biggies.

IGNATIUS: Well, there are more on the way. I have been told another senior cabinet minister has already made his deal and will be out soon.

The point is we're picking off elements around Gadhafi. The hope is that he'll end up as the mayor of Tripoli. Is that a realistic hope? Hard to say, but it's not -- I wouldn't rule that out as impossible.

AMANPOUR: Or a safe area around Benghazi for maybe 12 years like we had with Saddam Hussein in Kuwait -- in Iraq rather.

KRUGMAN: Well, the parallel with the Kurdish protection after the first Gulf war is a better parallel. And that was not ideal, but it was not such a terrible thing either.

AMANPOUR: We have to go. Everybody, thank you very much. And this conversation continues in the Green Room. You can watch at abcnews.com/thisweek.

And up next, we'll give you a tax season warning as we look at the week ahead on ABC News. Electronic thieves may be after your refunds.


AMANPOUR: And now here's a preview of what else you can expect coming up on ABC News.


AMANPOUR: Tomorrow, on Good Morning America, Bill Clinton takes a break from his globetrotting to talk about what he's been up to recently and why.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: And I wanted to come here and see this.

AMANPOUR: The former president with a full plate on Monday's GMA.

On World News a new nightmare on top of the old. Getting your taxes done is bad enough, but now there are crooks involved.

UNIDENTIFIED FEMALE; I went into a panic. I went into an absolute panic.

AMANPOUR: Someone stole her identity in order to steal her refund. What to watch out for on World News.


AMANPOUR: Nightline will closely focusing on Libya over the next several days. And I'll following developments with you on Twitter, my Facebook page and on ABCnews.com. I'll see you online and here again next Sunday on This Week. Thank you for joining us.