'This Week' Transcript: Bill Clinton, Tony Blair

— -- CHRISTIANE AMANPOUR: This week, advice from the original comeback kid on fixing a country in crisis and a presidency in peril. We ask Bill Clinton what it will take to get the White House back on track and put America back to work as the president pitches his jobs plan and Republicans dig in their heels.

Then, the business community sitting on a huge pile of money; what will it take to convince them to start hiring again? Answers from Google chairman, Eric Schmidt.

Plus we'll preview the looming showdown of the United Nations. As Palestinians make a bold bid for statehood, the United States scrambles to contain the fallout. We'll talk with the envoy to the peace process, former British Prime Minister Tony Blair.

And leadership lessons from Camelot, Jacqueline Kennedy on the making of a president and our roundtable on what Barack Obama can learn from JFK.

ANNOUNCER: Live from the Newseum in Washington, "This Week with Christiane Amanpour" starts right now.

AMANPOUR: Good morning. Bill Clinton coming up in a moment, but first some news since your morning papers. The two American hikers imprisoned in Iran will remain in jail for at least a couple more days. They are now waiting for a second judge to sign their paperwork. But lawyers tell ABC News that judge is still on vacation until Tuesday. The affair is a reflection of the power struggle between Iran's President Mahmoud Ahmadinejad and the country's top leadership. Last week, Ahmadinejad said he hoped the hikers would be released before he travels to New York this week for the United Nations General Assembly.

And for the second time in 24 hours, there's been a deadly crash at an air show. The latest one happened in West Virginia where a World War II-era plane fell from the sky exploding into flames. The pilot was killed. Meanwhile, the death toll from Friday's crash in Nevada rose to nine.

Former President Bill Clinton is preparing to convene the annual meeting of his Clinton Global Initiative. This year's session has an eye on the home front, focusing on the unemployment crisis. It'll bring together world leaders and CEOs to confront the huge challenges this country faces right now. President Obama addresses the group later in the week.

And former President Bill Clinton joins me now from New York. Thank you very much for being with us.

FORMER PRESIDENT BILL CLINTON: Thank you, Christiane.

AMANPOUR: Now, sir, your mantra right now is jobs, jobs, jobs. What do you think can happen to radically shift the unemployment picture and, also, pass muster in Washington in these very partisan times?

PRESIDENT CLINTON: Well, I don't know that I am the best person to answer the second part of that question, but I believe that we -- those of us who aren't in government -- can think of ways to create jobs which will reinforce what I believe are the positive suggestions coming out of Washington. Essentially, the president's plan has big payroll tax cuts in it which will benefit the economy by lowering the average family's tax bill about $1,500, and then they can have that to spend. That will help. And then by lowering payroll taxes for employers, will make it more attractive for them to hire new people.

But those of us who aren't in government, we don't have anything to do with that. So what we should do is it focus on possible areas of job creation that will free up some of the corporate money that's in treasuries now that could be invested in America and make bank loans more attractive to create jobs.

So that's what we try to do. We try to go around thinking about ways to specifically do that. And if you look at the way the CGI program is set up this year, we also are trying to create more jobs around the world by focusing on the possibilities of green energy elsewhere because it's not just in America that the green-tech jobs are growing at twice the rate of overall employment. That's true around the world. And by focusing on trying to empower women and girls because, in many other countries, they're left out of the economy and that's driving the economic prospects of everyone down.

AMANPOUR: So what will you tell the CEOs and the world leaders who come to your Clinton Global Initiative meeting this next week?

PRESIDENT CLINTON: Well, I will ask them to put aside for the moment whatever their recommendations are to Washington about changes in the corporate tax laws or the trade bills or, you know, the tariffs that are imposed to component parts that some manufacturers use here but have to import from overseas and just think about where we are now and what we can do now with the resources we now have.

For example, I think we'll have an update on an announcement we made in Chicago where the AFL-CIO and a couple of its affiliate unions are going to put some of the their own pension funds into putting people to work retrofitting buildings and doing other things that will create jobs for their members and for other Americans in a way that will actually make more money for the pension funds than just putting it into the stock market will today. And they'll be in partnership with business instead of having a Washington political fight with them.

AMANPOUR: And where do you see -- obviously, this is all about this stubborn unemployment rate. Where do you see the unemployment after all these suggestions? And if they're implemented, where do you see it standing this time next year?

PRESIDENT CLINTON: Well, if you look at the program the president's outlined, I think, if we had the payroll tax cuts and the special incentives to hire the long-term unemployed and we did some of the things that I've been pushing very hard for to invest in building refits -- which, if we did it right, could create a million jobs -- the estimates are right across the economic board including by Mr. Zandi, who was an economic adviser to Senator McCain in the 2008 election. All the estimates are that it will create somewhere between 1.3 (million) and 2 million jobs and drop up employment by approximately 1 percent, maybe a little more. That's if they're implemented.

We can't do much better than that right now unless -- unless there is an aggressive action which seems unlikely in Washington's political climate, to clean up this housing mess because that's freezing too much investment in place. So I think that it's a very good program that he outlined, and I think if the Congress seriously takes him up on it and they start trying to work through it and get anything approaching the amount of activity that was recommended, they can put about 2 percent more on the GDP growth of the coming year and they can drop unemployment by somewhere between 1 to 2 million.

AMANPOUR: Mr. President, taking that --

PRESIDENT CLINTON: Or they can create 1 (million) to 2 million jobs.

AMANPOUR: Mm-hmm. You have said in the past that this is not time for Mexican standoff or sort of macho politics. What can be done to make people in this city understand that the country faces a national emergency in this regard?

PRESIDENT CLINTON: Well, we need a little help from the American people. I mean, conflict has proved to be remarkably good politics, and it -- that sort of thing, you know, that -- it's very hard for the people in Washington who got there based on pure conflict, pure attack, pure ideology to take it seriously when their same constituents are saying please do something positive. That's not how they got elected.

And we live in a time where there's this huge disconnect between the way the political system works and the way the economic system works. If you look at -- there are places all over America, believe it or not, that have low unemployment, high growth, strong home prices, job being created, a shortage of skilled workers. And in every one of those places, they have networks of cooperation.

San Diego has got the largest number of Nobel Prize scientists in America. It's become the biotech center of the country. Everybody knows Silicon Valley is back.

But look at what's happening in Pittsburgh where they're trading steel for nanotechnology and other biomedical advances. Look at what's happening in Cleveland around the Cleveland Clinic. Look at what's happening in Massachusetts with the recovery of high-tech manufacturing around the MIT area. I mean, I could give you lots and lots of other examples.

Every place the American economy is booming, cooperation is the order of the day, but conflict is still good politics in Washington. So until the American people make it clear that whatever -- however they voted in past elections, they want these folks to work together and to do something, there's going to be a little ambivalence in Washington.

AMANPOUR: Well, let me -- let me ask you this then. Mayor Bloomberg of New York has said this week that unless something is done to really address this unemployment problem, there could be riots in the street, unrest. Do you agree with that?

PRESIDENT CLINTON: I don't know. There have been demonstrations in many other countries where the same thing is going on. But if you -- the most important thing Mayor Bloomberg said recently is to offer land on Governor's Island or Roosevelt Island or the Navy Yard in Brooklyn for a new world-class science and technology research center. And he said that he'll kick in a hundred million dollars worth of investment if a group of universities will put one there because he wants New York, in effect, to rival Silicon Valley as a technology center. That's the kind of thing that works.

If you want to put people to work, we've got to focus on what works. And what works is not all this back-and-forth fighting in Washington. I think that -- as I said, I think that, if we can't fix the housing crisis now -- which is probably not politically possible but should be done -- we can't return to full employment. But if we adopt the plan that the president outlined, according to all these economic analysis, it will create between one and a half, 2 percent increase in GDP growth. It'll put a million or 2 million people to work, and we'll be on the way back.

We need some signal out of Washington that they understand that cooperation is good economics even if conflict is good politics.

AMANPOUR: Mr. President, obviously, the current situation in various polls are suggesting that people aren't satisfied with President Obama's leadership on this. And there was a special election in New York in District 9 that the Democrats loss after holding it for nearly a hundred years. What does that say to you?

PRESIDENT CLINTON: Well, the New York case is -- I know that district very well, and they were good enough to vote for me twice. But I think Mayor Koch had a big impact on that election because of the controversy surrounding Israel and how they're reacting to the proposal of the Palestinians to get the U.N. to recognize them as a state. I think that had a lot to do with it.

I also think it's a real blue-collar district that is suffering economically. So it didn't surprise me. And I don't think that -- and the Nevada district was a Republican district. So it just -- it is what it is. You know, we won not very long ago the district in Upstate New York that had been Republican for even longer than this district had been Democrat because of the Medicare plan, and the Republicans have stopped talking about their plan to voucherize Medicare.

So I -- there's a lot of upheaval now, a lot of -- you know, people are feeling disjointed because they're hurting economically and they don't see the country going forward.

MS. AMANPOUR: Can I shift gears to overseas? You touched on it, but the potential showdown at the U.N. with the Palestinians seeking the recognition of a state there. There has been some suggestion that Israel's friends in Congress might react by cutting off funding to Palestinian security. Is that wise, do you think? What should be done?

PRESIDENT CLINTON: No, I don't think that -- I hope that won't happen unless the administration asks for that. I think that everybody knows the U.S. Congress is the most pro-Israel parliamentary body in the world. They don't have to demonstrate that. And I believe that that's clear.

So everyone knows that the United States is not going allow Israel's security to be threatened. I believe, therefore, that the secretary of state and the national security team should determine what happens on the aid front, I don't think Congress ought to take an option away from the administration in trying to work through this.

There's a lot of frustration around this issue because the Palestinians believe that they supported Israel when it invaded Gaza and the military action there that is the current government in the West Bank. They have maintained security. They have promoted economic growth. And they have supported the other Arab states in offering a political, military and economic partnership with Israel to build a different Middle East and to fight against Iranian extremism and security threats.

So they all feel that this is necessary. The American government has agreed with Israel that there's no way the U.N. can impose a peace plan and, therefore, the peace plan has to be the subject of negotiations. So I think that this is not a good thing to have the Congress tie the hands the administration one way or the other. I think that we out to try to use this conflict to try to head off conflict and get back to cooperation.

This is another one of those areas where it might be good politics for the Palestinians for their people and the Israelis with theirs to have this standoff. But the most important thing is to have good-faith negotiations. The Israelis have agreed that -- they have not yet renounced at least, the idea that there should be a Palestinian state on the West Bank. And in Gaza, if you get -- either they vote against Hamas or Hamas totally renounces terrorism and disarms.

So the U.N. resolution is an act the frustration on the part of the Palestinians that can't lead to a state anyway, and we'll just have to see what happens. But I think as this unfolds, the worst thing we could do is to tie the administration's hands.

We're going to stick by Israel in its security, but we need to give them the ability to bring the Palestinians back into a negotiated position, and I don't know Congress would want to give that up.

AMANPOUR: All right. Mr. President, thank you very much, indeed, for joining us.

PRESIDENT CLINTON: Thank you, Christiane.

AMANPOUR: And up next, President Obama opens a new front in the budget war with a plan to raise taxes on the rich, but will it be enough for him to regain the political offensive? The roundtable is next.

(Announcements.)

(Roundtable discussion not transcribed.)

AMANPOUR: Google, the quintessential success story of the new American economy. As companies around the country bleed jobs, Google just keeps hiring. This week, I sat down with Chairman Eric Schmidt to ask what it will take for businesses to follow his company's lead and put America back to work.

(Begin recorded interview.)

AMANPOUR: Thank you for joining us. Everybody says that confidence is the name of the game; that the economy and consumers are not going to start buying and businesses aren't going to start hiring again unless they feel a period of confidence and stability producing the kind of confidence that's necessary for a hiring binge.

ERIC SCHMIDT: The economy is, today, stuck behind the power curve. It needs a lot of encouragement. It needs not just something like the jobs bill but, also, significant government stimulation in terms of buying power and investment otherwise we're set up for years of extraordinarily low growth in the economy and no real solution to the jobless problem.

AMANPOUR: But you say significant stimulus. Obviously, this is a political environment where the only real conversation is about cutting. Do you see any expectation or possibility of a climate for more stimulus?

SCHMIDT: Well, that's a political question, but the current strategy is ludicrous. You have a situation where the private sector sees essentially no growth in demand. The classic solution is to have the government step in and, with short-term initiatives, help stimulate that demand. If they do it right, they'll invest in income- and growth-producing things like highways and bridges and schools, new opportunities for the private sector to go then build businesses.

Today, not only is there no demand coming out of the government, but because of the housing crisis, nobody sees any improvement in their own liquidity so nobody is buying anything.

AMANPOUR: So this is a pretty dark picture that you're painting. Add to that no confidence from the consumers and businesses sitting on something like $2 trillion worth of profits which they're not going to spend, apparently. Is the president -- does he have a material problem with the business community right now?

SCHMIDT: The real problem is not the business community. The real problem is the Democrats and the Republicans fight for one point or another in a political sphere while the rest of us are waiting for the government to do something concrete and predictable.

What business needs is predictable, long-term plans. We need to know where is government spending going to be, what are the government programs going to be and off we go. Business can create enormous numbers of new jobs in America. All we need to see is more demand.

What's happening right now is businesses are very well run, they have a lot of cash. They're waiting for more demand. At the moment, business efficiency allows them to grow at 1 or 2 percent, which is what we're seeing today. They don't have to hire more people. And until we solve that problem, people are going to sit idle, and it's a real tragedy.

AMANPOUR: But what about the very real problem -- and that is many businesses seeing, precisely because of the efficiency of, let's say, online and the new sort of technology -- that it is much cheaper to buy a machine to do the job -- you don't have to train it. You don't have to pay it wages -- rather than hire a person. This seems to be the structural reality of the economy now.

SCHMIDT: That's been true for a hundred years. It's been true of the industrial era for the last, literally, century. And over and over again, American ingenuity has meant that people who were displaced were able to find new jobs in these new industries. People who had something manually learned how to operate the machine.

AMANPOUR: What do you say to a 55-year-old guy who's lost his manufacturing job and just doesn't know where to get back into the economy?

SCHMIDT: The issue for somebody like that is often the next job is not going to have the same level of salary as the previous job, but it's better than nothing. So from the standpoint of employment, that's what they should be doing.

If there were a national compact about how to get this done -- if people agreed that it's more important to have new jobs than -- and perhaps even low-wage jobs -- than no job. Remember, a permanently jobless person in our country is a huge cost to us. They start off looking for a job. After five years, they're depressed. And after 10 years, their medical bills are much higher.

It's better for society to have a full job program and to take the necessary steps to do this. Germany, for example, three years ago when they were having trouble, actually -- this is shocking -- they actually agreed across the board to labor and wage cuts to make the German economy and German manufacturers globally competitive. They now are benefitting from that, and they have a very, very low unemployment rate.

Did you know that, in a number of manufacturing industries in America, there are job shortages? These are sophisticated, high-tech manufacturing jobs, and because the people are not properly skilled, they can't get enough of them.

AMANPOUR: Many others are saying that it's a systemic problem, the American economy. It's changing. And the infrastructure of education and all the rest --

SCHMIDT: I strongly disagree. Americans are extraordinarily creative. The American industrial structure, right, brought us all of the great things that it's done in the last 50 years, including the Internet and all the things that you see today. The generation of people coming out of university that we're hiring are smarter than the best people I've ever worked with in my generation. There's every reason to believe that, if the political system could come to a consensus around stability, solving these short-term problems and get the investments that I'm describing, we can take care of the rest.

(End recorded interview.)

AMANPOUR: This week, Eric Schmidt will be here in Washington testifying at a Senate anti-trust hearing where he'll try to fend off accusations that Google has become a monopoly stifling competition.

I asked him about that, and you can find his answer and more of my interview online at ABCNews.com.

But coming up next, drama at the United Nations as Palestinians defy the United States in a bid for statehood. We'll discuss the consequences for the region and for the United States with Middle East envoy and former British Prime Minister Tony Blair.

(Announcements.)

AMANPOUR: The stage is set this week for a dramatic showdown at the United Nations. Fed up with a stalled peace process, Palestinian President Mahmoud Abbas, on Friday, will ask the U.N. to admit Palestine as a state. The Israeli Prime Minister Benyamin Netanyahu is traveling to New York to make an in-personal rebuttal. And caught in the crossfire, the United States.

SECRETARY OF STATE HILLARY CLINTON: (From videotape.) The only way of getting a lasting solution is through direct negotiations between the parties, and the root to that lies in Jerusalem and Ramallah, not in New York.

AMANPOUR: The United States has vowed to use its Security Council veto to block the Palestinians' bid for official U.N. membership. But Abbas pledges to press on and take the matter to the General Assembly. That body is expected to overwhelmingly approve Palestinian as an observer state where it's now an observer entity.

The largely symbolic change would allow Palestinians to gain access to the international criminal court and pursue charges against Israelis. It would not affect Israel's borders or displace any of the 500,000 Israeli settlers now living in the Palestinian territories.

But the United States is concerned that the move could crush any chance of further negotiations and exacerbate anti-American sentiment in the region, and it's trying at the eleventh hour to dissuade Abbas. Joining me now, a big player in the talks, envoy to the peace process, former British Prime Minister Tony Blair. Welcome to "This Week," Mr. Blair.

FORMER BRITISH PRIME MINISTER TONY BLAIR: Thank you, Christiane.

AMANPOUR: So is there any way of avoiding this? Or is this a done proposition? They will go to the Security Council, the Palestinians?

BLAIR: I think there is a way of avoiding a confrontation or a showdown, as you put it, because after all, the only way in the end we are going to get a Palestinian state -- and this week is all about advancing Palestinian statehood -- the only way to do it ultimately is through negotiation. Now, I understand why the Palestinians feel that they should go to the United Nations and, by the way, they're perfectly entitled to go there.

But I think what we will be looking for over the next few days is a way of putting together something that allows their claims and legitimate aspirations for statehood to be recognized whilst actually renewing the only thing that's going to produce a state, which is a negotiation directly between the two sides.

AMANPOUR: Well, what exactly are you going to do to make that happen? In other words, what kind of document or framework for continued negotiations are there? What are the hallmarks?

BLAIR: Well, we're trying to put together in the quartet body -- that's the body of the international community -- a statement that is essentially a framework of reference for the negotiations. So it sets out, you know, where we want to go on issues like borders. It describes all the main issues to be negotiated.

And I think what's going to be really important is also to give some sense of a time frame, a timeline, if you like, for a successful negotiation. Now, that's, Christiane, work in progress at the moment, but I think it is possible to bridge the gaps and produce such a document. And if we can do that, then, in a sense, whatever happens with the United Nations happens in a less confrontational atmosphere, could even happen in a way that actually helps the process of negotiation and statehood.

AMANPOUR: Just quickly, apparently, I understand it's going to refer to '67 borders similar to what President Obama said in his speech and, also, for the Israelis, it's going to refer to a Jewish state in Israel. I understand that the Palestinians are already saying that's a nonstarter because it's their last card, and they wouldn't agree to that upfront. Are the negotiations derailed before the document is even ready?

BLAIR: No. And, by the way, some of the things that are being said about what is in the document really refer back to the original document presented by the American side in June of this year, not to the draft quartet statement that I've been discussing with the parties.

Actually, I think it is possible to see how we get a negotiation which is very much based on the speech President Obama made on the 19th of May but which also takes account of the legitimate claims and fears of both sides. And, you know, as you well know and everybody who's dealt with this over the years knows, all of these issues are very well canvassed.

So for example, on the issue to do with the Jewish state, I mean, everybody knows that you can't have a situation in which a state of Israel -- you've got to be Jewish to live in the state of Israel. There's no intention of doing that. On the other hand, what the Israelis want to know is, if there is an agreement between the Palestinians and the Israelis, that's it, that's the end of all claims and the essential character of the state of Israel is preserved.

AMANPOUR: Prime Minister, if the United States -- which it will -- it said it will -- use its veto in the Security Council to prevent recognition of the state, what knock-on effect will that have for the U.S. in that region?

BLAIR: Well, I still think and hope it's possible to avoid a situation where -- because that, obviously, would be confrontational. And I think whatever happens at the United Nations does depend really quite profoundly on whether it's also possible to establish a basis for a new negotiation. You see, the difficulty is this. We haven't had proper negotiations now for really quite a long time.

And what that means is that both sides become very frustrated with the situation. Both sides look for ways of advancing their position unilaterally rather than bilaterally or multilaterally. And the purpose of what we are trying to do now is to say, OK, we now know this is a big moment much decision, if you like, for the peace process; let's see if we can craft something that allows the Palestinians to come to the United Nations to advance their aspirations for statehood but, also, at the same time, allows us to develop a framework for negotiations so that they get back to talking because, in the end, you know, even these difficult issues like settlements and so on, the only way of resolving them is to sit down and negotiate borders, security, refugees, Jerusalem, the core issues at stake here.

AMANPOUR: Talking about security, you've heard, I believe, that Israel's friends in Congress are considering perhaps cutting off funding for security in this goes through. Would that be wise? Wouldn't that backfire on Israel after all these years of cooperation between Israeli and Palestinian security that's lowered the violence?

BLAIR: Well, it's one of the reasons why it's important that we avoid a showdown, if we possibly can. But I also very much agree with what President Clinton was saying to you earlier which is, in the end, this money -- I mean, I see on the ground -- I've just come back from my -- I think it was my 71st visit to the region since leaving office. And when I'm there on the West Bank, I see what this American money actually does, and it provides support for security on the Palestinian side, for institutions, for the economy which is hugely important to what Prime Minister Fayyad for the Palestinians has been doing rather brilliantly over the last two or three years, which is trying to build the state from the bottom up. So, you know, I very much hope we can avoid that situation.

AMANPOUR: All right. Prime Minister Blair, thank you very much. And we'll be watching, and we'll be right back.

BLAIR: Thank you.

END.