Transcript: Senior WH Adviser Valerie Jarrett

Nov. 1, 2009 — -- ABC NEWS, THIS WEEK WITH GEORGE STEPHANOPOULOS INTERVIEW WITH SENIOR WHITE HOUSE ADVISER VALERIE JARRETT

GEORGE STEPHANOPOULOS, HOST: It was one year ago this week thatBarack Obama made history with his sweeping win over John McCain. Howmuch has he changed the country? How much has the office changed him?We have the "Roundtable" standing by to debate those questions and allof the week's politics, including Harry Reid's role in the publicoption, and the GOP civil war that has forced their nominee out ofTuesday's congressional race in Upstate New York.

But first, let's check in with one of the president's closestfriends and advisers, White House counselor Valerie Jarrett.

Welcome to the THIS WEEK.

VALERIE JARRETT, ASSISTANT TO THE PRESIDENT FOR INTERGOVERNMENTALRELATIONS & PUBLIC LIAISON: Thank you, George. It's a pleasure to behere.

STEPHANOPOULOS: Let me bring you back to one of -- probably one ofthe best moments of your life, one year ago this week, when PresidentObama accepted the verdict of the country's voters. Here is what hesaid that night.

(BEGIN VIDEO CLIP)

BARACK OBAMA, THEN-PRESIDENT-ELECT: Let's resist the temptation tofall back on the same partisanship and pettiness and immaturity that haspoisoned our politics for so long. And while the Democratic Party haswon a great victory tonight, we do so with a measure of humility anddetermination to heal the divide that have held back our progress.

(END VIDEO CLIP)

STEPHANOPOULOS: One year later, the president's economic plan haspassed, but with no Republican votes in the House, only three in theSenate. It sure looks like right now no Republican support, the healthcare bills, as they are going forward in the Congress.

And our polling shows that this partisan divide persists on issueafter issue after issue. Why has that core promise of the president'scampaign, healing the divide, gone unfulfilled?

JARRETT: Well, you should ask that question to the RepublicanParty. I mean, frankly, just listening to the president's words again,it brought back terrific memories, and I think his message was aprofound one. And he has stayed true to that message. He has reachedout. He has listened. He has reached across the aisle.

Just recently meeting with both the Democrats -- the Republicans andthe Democrats in both the House and in the Senate. His effort has beensustained throughout the year. And the fact...

STEPHANOPOULOS: So the president bears no responsibility for thefailure to get Republican votes?

JARRETT: Well, I think -- I think what we look to the president todo is to lead by example. He has reached out. He has listened. He hasincluded very helpful advice from the Republicans when it has beenforthcoming. But the fact...

STEPHANOPOULOS: But not their ideas in the legislation..

JARRETT: Well, actually, that's not true. There have been examplesof where he has included their ideas. And ultimately whether they votefor a piece of legislation or not, doesn't mean that it hasn't been anopen and fruitful process.

STEPHANOPOULOS: So the president doesn't feel he needs to changethe way he does business at all, to reach out more to Republicans, toget more Republicans buy-in?

JARRETT: Oh, George, listen. He is constantly reaching out toRepublicans. Both he and his team. And he will continue to do that.But ultimately it's up to the Republicans to decide if they want to be aconstructive force and come to the table and work with us in a positive way.

We want to hear good ideas. The president is known for listeningmost closely to those with whom he disagrees. So the door is always open.

STEPHANOPOULOS: Does that mean, for example, that Speaker Pelosishould give the Republicans a vote on an alternative in health care?

JARRETT: I'm not going to in any way comment on what the speakershould do. She is an extraordinary leader and she is going to continueto do that. And she is going to reach out in a way that she deemsappropriate.

But your question is what is the president's leadership about it,and hearkening back to the message from last year, and I think he hasbeen consistent not just here, domestically, but also around the worldin the way he has reached out.

STEPHANOPOULOS: Well, to follow through, shouldn't he ask thespeaker then to give Republicans a vote?

JARRETT: To give them a vote and give them a voice. It gives theman opportunity to contribute constructively. That doesn't mean that youactually have to change what you think is in the best interests of theAmerican people simply to get a Republican vote.

What you do is you reach out, you listen, you collaborate, butultimately, the president is accountable to the Republican people -- tothe American people, sorry.

STEPHANOPOULOS: Let's talk about this election coming up Tuesday inUpstate New York. The president created a vacancy by making John McHugh-- Congressman John McHugh, the secretary of the army. And now thereappears to be a bit of a Republican civil war going on there. TheRepublican nominee, Dede Scozzafava, was forced out of the race by aconservative challenger.

And I know that the president's political team is hoping to convinceher to throw her support to the Democrat, Bill Owens. Any luck on that?

JARRETT: Well, we'll see. We would love to have -- of course, haveher support. And it's rather telling when the Republican Party forcesout a moderate Republican and it says I think a great deal about wherethe Republican Party leadership is right now.

So of course we would love to have her support, and those are thepeople who are going to vote for her.

STEPHANOPOULOS: What does it say about where the Republican Partyleadership is?

JARRETT: Well, I think it's becoming more and more extreme and moreand more marginalized. Look at the number of people who actually saythat they are registered, consider themselves a Republican. And ifthat's the direction they want to go find, what we're going to do iswhat we've always done, and that is, we're going reach out, we're goingto try to include as many people to be a part of our governing process,being open, being transparent, and we're going to let the Americanpeople decide.

And right now what you see is a great deal of momentum movingforward, for example, on health care. The American people want change.They don't want the same old health care system that is not affordable,that doesn't offer coverage to everybody, that keeps escalating in costs.

And what we've seen from the Republicans is really a desire to havethe status quote. And, George, that's not acceptable anymore.

STEPHANOPOULOS: Our latest polling shows that there is not majoritysupport for the president's health care plans.

JARRETT: Well, we actually think that there is. And I suppose itdepends upon what poll you're looking at. But as more and more word hasgotten out about what health care reform is all about, whether it's ourdesire to make it affordable, whether it's to cover all people, whetherit's to make sure that people who have pre-existing conditions don'tlose their coverage, whether if somebody changes a job, they don't losetheir coverage, if somebody is unemployed they don't lose their coverage.

All of these are extraordinarily important to the American people.This has been an unusual process. It has been open, it has beentransparent. Oftentimes the sausage-making in Washington is a littlebit off-putting.

But look how far we've come. George, five different committees haveapproved health care. It's now being debated. And all of those fivecommittees have -- the content of those bills is consistent with whatthe president put forward.

STEPHANOPOULOS: You know, you say that all five bills areconsistent with what the president has put forward, but the bill comingout of the Senate Finance Committee includes a tax on these high-pricedinsurance plans.

Senator Charles Grassley, the Republican ranking member of thatcommittee has looked at Joint Tax Committee figures, and according tothose figures, it shows that 46 million families making less than$200,000 will eventually see their taxes go up under this plan. Thatwould break the president's promise not to raise any taxes on peopleearning under $250,000 a year.

So how can you say that's consistent with his plan?

JARRETT: Yes, well, first of all, there are lots of differentanalyses of the plans, and until we have a final bill, let's hold offprejudging what it's going to do. But the president has been clear, hedoes not want to impose a tax on the middle class. That's whyimmediately upon taking office, when the Recovery Act was passed, itprovided a tax relief to the middle class, something -- a very big pointhe made in the course of the campaign.

STEPHANOPOULOS: Well, then let me press this point, because it'snot just Republicans who say this. You've got union leaders like GerryMcEntee and several others have said this is also a tax increase on themiddle class. You've got 180 House Democrats who are saying the samething, saying that that's why they're opposed to it.

So are you saying that the president will not sign this proposal ifit does indeed raise taxes on the middle class?

JARRETT: What I'm saying to you, George, is, let's let the processgo forward. Let's not pre-judge to the end. There have been so manyconstructive conversations going on as recently as Friday with thevarious leadership in both the House and the Senate.

And I think what the president has said is, look, we do not want tohave any additional tax burden on the middle class. We want to haveaffordable health care. We want to make sure that people who have nothad insurance before have it. We need to bring down the costs, becausethat's going to help our federal deficit...

STEPHANOPOULOS: So if...

JARRETT: All of those parameters -- and no, what I'm saying is thatI'm not going to leap forward to the end. What we're going to do...

STEPHANOPOULOS: But don't you have to set the bottom line for the...

(CROSSTALK)

JARRETT: No, no. What you do and what he has done, and what hasbrought us to the point where we are right now where we have five billsfor the first time in history, after decades of effort, what he is doingis working. And what he is doing is talking constructively.

His team is up on the Hill every single day, meeting with theleadership, meeting with all of the different members. And we're goingto see where we go. And he has made it clear, as I said from theoutset, what his parameters are. And he's constantly...

STEPHANOPOULOS: So he will not -- bottom line, he will not violatethat commitment, is what you're saying?

JARRETT: What I'm saying is that he is confident that a bill that'sgoing to be passed is going to be consistent with his parameters, yes.

STEPHANOPOULOS: OK. Let's talk about Afghanistan for a second. Wesee today the opposition candidate to President Karzai, AbdullahAbdullah, has said he's not going to run in the run-off. Is this awelcome development or is the White House worried the questions aboutthis election will cast a cloud over President Karzai and make it moredifficult for the president to implement his strategy?

JARRETT: We don't think that it's going to add a complication tothe strategy. It's up to the Afghan people and their authorities todecide how to proceed going forward. We watched the election verycarefully. And we're going to work with the leader of the Afghangovernment and hopefully that's going to improve the state of conditionsfor the people in Afghanistan, and also help us as we try to bring thiswar to a close.

STEPHANOPOULOS: So this is not a complication as far as you see it?

JARRETT: No. We don't see it as a complication.

STEPHANOPOULOS: And we also -- we're getting some word followingthe president's meeting with the joint chiefs on Friday that the targetdate for announcing this decision may be slipping a bit. The presidentwants some more information from the Joint Chiefs.

Is it now possible that it's going to come after the presidentreturns from Asia, more like the end of November than the middle?

JARRETT: What the president has said consistently is he is goingthrough a very rigorous process. George, before he puts our men andwomen in harm's way, he wants to make absolutely sure that he has astrategy. This isn't just a matter of how many troops are sent over.Although that is a very important component.

We have to look at what's going on on the ground. We have to lookat what our allies are doing. We have to look at the state of thegovernment in Afghanistan. And he's looking for a strategy that leadsto keeping our nation safe. And so the timing for that is completely upto the president, who makes the decision when he is confident that hehas all of the facts that he needs to make the right decision for ourcountry.

STEPHANOPOULOS: So it could be later in the month.

Let me just -- also this week the president went to Dover. And wewant to show our audience some of the pictures from that. The presidentseemed -- did seem quite moved, almost stricken at times during thatvisit. It had quite an impact on the president, didn't it?

JARRETT: How could it not? I mean, my goodness, to meet thefamilies of people who have given their lives, the maximum sacrifice toour country? Of course he was deeply moved by the experience. Anyonewho was there would have to be.

STEPHANOPOULOS: Did you have a chance to talk to him about it andhow do you think it will affect his decision-making?

JARRETT: I think that he is going to make the decision that he --that he thinks is right for the American people. It certainly is areminder of what is at stake. And you talk about 40,000 troops, behindevery troop is a family. And it's a huge sacrifice that we're askingour men and women to make.

And I think going to Dover and showing respect on behalf of ourcountry for that sacrifice was something that was very important to thepresident. But ultimately he is going to make the decision that hethinks is going to keep our country safe.

STEPHANOPOULOS: One final question, the president received bothpraise and criticism for doing that visit with television camerasthere. Why was it important for the president to do that somewhat inpublic?

JARRETT: Well, he wouldn't have done it in public if the familieshad objected. So the first and foremost thing is what is important tothe families. And I think that it's important for us all to recognizewhat is at stake. And so when you talk about numbers, like 40,000troops, as I said a minute ago, I think it's a reminder about how deepthe sacrifice is.

And it's something that's open and transparent, and it was a way forhim as the president to convey to those families on behalf of theAmerican people how much we appreciate that enormous sacrifice they'vemade.

STEPHANOPOULOS: Valerie Jarrett, thanks very much.

JARRETT: You're welcome. Good to see you.

STEPHANOPOULOS: We're going to go straight to the roundtable, so asour panelists take their seats, we have a little bookend to thatelection night excerpt we showed from President Obama. Gracious wordsfrom Senator McCain.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), THEN-REPUBLICAN PRESIDENTIAL NOMINEE:Senator Obama and I have and argued our differences, and he hasprevailed. No doubt many of those differences remain. These aredifficult times for our country. And I pledge to him tonight to do allin my power to help and lead us through the many challenges we face.

(APPLAUSE)

(END VIDEO CLIP)

STEPHANOPOULOS: We're going to go straight to the roundtable, soas our panelists take their seats, we have a little bookend to thatelection night excerpt we showed from President Obama. Gracious wordsfrom Senator McCain.

(BEGIN VIDEO CLIP)

MCCAIN: Senator Obama and I have and argued our differences, andhe has prevailed. No doubt many of those differences remain. Theseare difficult times for our country. And I pledge to him tonight todo all in my power to help and lead us through the many challenges weface.

(END VIDEO CLIP)

STEPHANOPOULOS: One year ago this week. With that, let me bringin our roundtable. I am joined as always by George Will; EdGillespie, counselor to President George W. Bush; Ron Brownstein ofthe National Journal; Dee Dee Myers, press secretary to Bill Clinton;and the Reverend Al Sharpton. Welcome to all of you.

And let me just begin with the threshold question. We're about ayear out from the election. Has the president delivered on thatpromise of change?

WILL: I think domestically and in foreign policy, he has. Hisone great achievement is to enhance the status of the United States.Now, that happens to have zero cash value, it turns out. TheIranians, the North Koreans, the Afghan government, China and Indiaregarding carbon limitations -- he's made no progress on any of thesefronts, but people like us better. So I suppose that's anachievement.

SHARPTON: I think he absolutely has changed -- I agree withGeorge. He's changed the perception of America. I think that he'salso changed some things here, the economy. When you look at the GDP,up 3.5. When you look at 30-year mortgages at a lower rate than it'sever been...

STEPHANOPOULOS: Be careful there. Unemployment almost 10percent.

SHARPTON: Unemployment -- again, the hardest thing once youbring an economy back, is the jobs. I think he has to finish thetask.

Let's remember, George, he's only been there 10 months aspresident. In nine months, he's helped restore America's image, he'shelped to stop the hemorrhaging of jobs, and bring the economy back.So in nine months, what it usually takes to make a baby, he's startingthe rebirth of America.

STEPHANOPOULOS: And Ed Gillespie, I was thinking of you asValerie Jarrett was here talking. Basically, her answer on why thispartisan divide hasn't healed at all is it was the Republicans' fault.

GILLESPIE: Right. Well, it's always the Republicans' fault ifyou listen to this White House, and I think that's one of thedisappointments, I think, frankly, for a lot of us Republicans,independents, is that this has not been a post-partisan presidency, aswe were led to believe. In fact, it's been a very partisan WhiteHouse, very political in its nature.

And just, for example, I've heard Valerie Jarrett say, well, interms of health care reform, you know, no Republican support. Well,look at what's happened in that debate. The things that got OlympiaSnowe's vote in the United States Senate, they dropped and so yet theycontend they're looking for Republican support. They eliminated theone Republican they had a shot of getting so far. The president inhis Joint Session speech talked about medical liability reform. ThePelosi bill punishes states that put a limit on attorney's fees or puta cap on damages. So when you look at their actions relative to therhetoric, I think that accounts for the bipartisanship.

STEPHANOPOULOS: I want to get more to health care later. Butfirst, Dee Dee, on this broader question, the president obviously camein with more popular support than Bill Clinton had in 1993 but similarnumbers in both the House and the Senate. And they did seem to makethe choice, not unlike the choice in 1993/'94 to secure the Democraticbase first on their big pieces of legislation.

MYERS: Well, I think after some consultation in the early weeksand months, they ran up against the reality. It's true the presidenthas in some ways changed the tone, but he's also in these nine shortmonths, 10 short months shown the limitations of bipartisanship. Youcan talk a good game, you can go meet with people and you realizethey're just not going to be for you and so that leaves you noalternative than to secure your base. You have to get the votes outof your base. And if you can pick off one or two people in the middlelike Olympia Snowe, moderate Republican, to call the bill bipartisan,great. But if not, then you have to be able to pass legislation withDemocrats.

BROWNSTEIN: These are much more structural problems than reallydealing with one president in their control. We are moving muchcloser to something like a parliamentary system in this country whereeach party is now much more the base, the coalition is much moreideologically homogeneous than it was a generation ago and that exertstremendous and typical pressure for legislators on one side to standwith their side against the other on almost every major issue.

I think Obama wants to bring in Republicans but he wants to do soby addition. He's willing to add Republican ideas, I think, to hispackage. Republicans need -- really need subtraction.

I mean that even if, for example, you have medical malpracticereform in the health care bill, there are very few Republicans todaywho could vote for an individual mandate, which is the cornerstone ofthe bill, even though that was the Republican alternative to HillaryClinton's plan in 1993.

I think the parties are structurally moving apart, and it is verydifficult for either side to win substantial support on theirlegislative priorities from the other. That is just a reality of ourpolitics today.

MYERS: But it's worth noting that twice as many people, Americanpeople, think Obama and the Democrats have tried harder to reachacross the aisle than Republicans.

WILL: But the reality is the Democrats have a very clear agenda,unified theory of this administration and it is equality, understoodas equality of outcome. And, therefore, every proposal the presidenthas from dealing with General Motors to the United Autoworkers tohealth care is to increase the number of Americans equally dependenton the federal government for more and more things. And I don't thinkthe American people at the end of the day want that.

SHARPTON: Well, I think that you cannot get by Dee Dee's point.I think that the American people have said very, very clearly thatthey think that this administration and the Democrats have been theones to reach out. We're waiting to see the Republican that emergesthat reaches back. Even on education reform, the president has NewtGingrich and I touring together. I mean, you can't reach out morethan to try to get Newt Gingrich and I to go on tour together.

I think that he has reached out. I think at some point, therewill be a tremendous backlash on the Republicans when they don't reachback. And I think that that is the problem that they're having in alot of these pollings that we're seeing.

BROWNSTEIN: I was going to say, look, the president has had somesuccess and broadening his coalition outside of Congress. He has hadmore success than Clinton did at bringing in business interests onreally all of the major initiatives whether it's on cap and trade withsome of the major utilities...

STEPHANOPOULOS: Or health care policy.

BROWNSTEIN: But the underlying fact I think is George is correctwhether you characterize it the way he did or not, what Obama and theDemocrats want to do and what the Republicans fundamentally want to doat this point, the gulf is so large, it is very difficult to see themcoming together in meaningful numbers.

And if you say what Obama has done in nine months, he really haschanged the frame of debate. The stimulus plan included more net newpublic investment and the things that Democrats prize, like education,alternative energy than Clinton was able to achieve in his eightyears.

And let's not forget that he is within sight now of a health carebill that has defeated every president who has tried it since FranklinRoosevelt. So he is changing the terms of the debate. There arepolitical costs, we'll talk about those later, but he is shifting whatwe're discussing and what the solutions we're discussing are.

STEPHANOPOULOS: One area where we've seen less change thanactually I would have expected is on the issue of race relations inthe United States. Remarkable poll from the Gallup organization thisweek. They asked, "Do you think that relations between blacks andwhites will always be a problem for the United States, or that asolution will eventually be worked out?" You go back to December1963, 42 percent thought it would be a problem, 55 percent thought itwould eventually be worked out. By November 2008, the number thoughta year ago on Election Day, it would be a problem, had gone down quitea bit.

STEPHANOPOULOS: And the number who thought it would be workedout had gone up.

But look at October 2009, right back to where we were, basically,in November 1963, despite all the changes we've had in those times,Reverend Sharpton.

SHARPTON: Because I think the structural inequality is stillthere. The reality is that you still see the race gap in education,in employment, in health care. And I think the reality has sobered alot of people up.

I think what the president has done is tried to reach out andbring people together, and I think everyone appreciates that. But Ithink people are looking at the reality.

So a year after his election, with all the hope of Americanscoming together and the great symbolism of having an African-Americanpresident, I don't think we've lost that; I think we just sobered upto the reality. We've learned that he can't walk on water, but he'sstill the best swimmer in national politics.

(LAUGHTER)

STEPHANOPOULOS: Best swimmer, George?

WILL: When a poll shows something that is so obviouslypreposterous, they ought to go back and look at the poll. The VotingRights Act, public accommodations act, enormous changes in educationin the United States, access to college -- we've made enormousstrides. And for them to say essentially nothing has changed is justnonsense.

Watch the election in Atlanta this week.

(CROSSTALK)

WILL: ... mayor. A black city may be about to elect, for thefirst time in, what, two generations, a white mayor. Now, thatindicates a, kind of, coming of the real color-blind nature of ourpolitics.

(CROSSTALK)

MYERS: The same thing may (ph) happen in Atlanta. GILLESPIE: No, I think -- the (inaudible), George, is that it's-- we're moving the goal posts in a good way. You know, we've alwaysgot to do better, but the fact is, I can tell you, my children havegrown up in a more color-blind society than I grew up in, and I grewup in a more color-blind society than my parents grew up in. And wehave made great progress.

The election of President Obama was a proud moment for the UnitedStates of America in that regard.

But, that said, I think what you see is an American public thatsays, you know what, we've got to keep striving. And I think that's apositive thing.

BROWNSTEIN: Each cohort -- each younger cohort in American lifeis more diverse than the one older. We are becoming inexorably a morediverse society. This was the first election in American history morethan a quarter of the voters were nonwhite. That number isn't goingdown. It's only going up.

Now, having said that, there is a red flag out there that goesback to what George was saying before, I think. There are very --there are divergent views between white and nonwhite America over therole of government, and that is widening at a really -- almost at anominous rate.

I mean, white America is moving, I think, by and large, in avery, kind of, Perot-esque direction. There is, kind of, a backlashagainst some of the ambition of what Obama is pursuing and theDemocrats pursuing across the board, whereas there is much moretolerance in nonwhite America for a larger, more expansive federalrole.

And that skepticism about institutions that you see in big chunksof the white electorate, contrasted with the support in the nonwhiteelectorate, is, kind of, an unstable phenomenon.

STEPHANOPOULOS: It's going to reach such tension next year, asthe president goes forward. We're going to take a break in just aminute.

Before we do, there's a new book out by President Obama'scampaign manager, David Bluff -- Plouffe -- called "The Audacity toWin."

And, Reverend Sharpton, there's a fascinating little excerptabout you in the book. He describes a moment on Christmas Eve 2007,very close race in Iowa, where President -- then Senator Obama callsPlouffe as Plouffe is in church, because he's worried -- he's gottenword that you might be coming to Iowa, and that is not entirely goodnews for him.

On the one hand, if you're coming to endorse Hillary Clinton,they're fine with that, but they felt that, if you were coming toendorse him, it might create problems for Obama that they didn't want.The way it ends us, you don't come. They say you played aconstructive role the rest of the campaign. What happened?

SHARPTON: There was a group that tried to get me to come in, andI think they were -- this was at the time when they were trying toreally go for these race politics and miscast...

STEPHANOPOULOS: Coming for Obama.

SHARPTON: No, they wanted me to come in, period, on a raceissue, which, really, you'd have to be hard-pressed to really dealwith that in Iowa.

(LAUGHTER)

But we determined it was a distraction (inaudible). And I pickedup the phone and called then-Senator Obama and said, I'm not going tobe used like that. And I've worked, as they said, constructivelythroughout the rest of the campaign.

Because, even though he and I may not agree on every strategy, Ithink that, once you decide you want to work with someone, you do whatis best, whether you're out front or behind the scenes.

STEPHANOPOULOS: OK, we're going to take a quick break. We'll beback with more roundtable in just a minute, and later, the Sundayfunnies.

(BEGIN VIDEO CLIP)

DAVID LETTERMAN, HOST, "THE LATE SHOW": Because of the weatherand due to the low ceiling -- listen to this -- earlier this afternoona Northwest Airline airplane, passenger plane, accidentally landed atthe correct airport.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

STEPHEN COLBERT, DAILY SHOW: Staunch conservative George Willhas for the last two Sundays on ABC's THIS WEEK wore a long tie.Clearly his bow ties were the only thing tethering George Will toreality.

WILL: Marijuana is getting much better.

COLBERT: Then he tried to eat George Stephanopoulos because hethought he was a teddy graham.

WILL: We legalized prostitution, as anyone who opens a telephonebook and looks under escort can tell you.

COLBERT: I don't now which is more disturbing, that George Willgoes to prostitutes or that he still uses the phone book.

(END VIDEO CLIP)

STEPHANOPOULOS: George Will's star turn on "Comedy Central," youand Steve Colbert.

I want to bring you back in here along with Ed Gillespie, RonBrownstein, Dee Dee Myers and the Reverend Al Sharpton. I could askyou to respond but we can go straight to the politics of the week.First time I've ever seen George Will blush.

MYERS: Yeah.

STEPHANOPOULOS: A lot of elections coming up this week. Let'sshow the latest polling in these gubernatorial races and importantcongressional race. No. 1, down in Virginia, Creigh Deeds, theDemocrat, about 10 points behind in the latest "Washington Post" pollto Bob McDonnell, the Republican.

Up in New Jersey, Jon Corzine, the incumbent, 43 percent, ChrisChristie, Republican, 38 percent and Independent Chris Daggett has 13percent. That race really too close to call according to most of thepolling right now.

And then this congressional district up in upstate New York, NewYork 23. John McHugh left to become secretary of the army. It was adead heat according to the poll that came out from the Siena ResearchInstitute yesterday between the Democrat Bill Owens, the conservativecandidate, Doug Hoffman, the Republican Dede Scozzafava was far behindat 20 percent.

And yesterday, George Will, she dropped out of the race. A lotof big Republican power brokers had come in on either side of thisrace. Sarah Palin came in for the conservative candidate. So did TimPawlenty. Newt Gingrich, the former speaker came in on behalf ofScozzafava and he said something interesting in "The New York Times"this morning. And he said, he warned about an impending civil war inthe Republican Party. He said "If we get into a cycle where everytime one side loses they run a third-party candidate, we'll makePelosi speaker for life and guarantee Obama's re-election."

WILL: If they had done what Newt Gingrich urged them to do inthat district, the district probably would have gone to a Democrat andwould have lost a seat. Newt was just tone deaf as were the peoplewho picked this woman. Who is a candidate of among other things theworking families party which is a wholly owned subsidiary of thePublic Employees Union. She's for tax increases, same-sex marriage.She's for abolishing the right of secret ballot in union elections.There's already a party for people who think like that. It's calledthe Democratic Party.

MYERS: It was interesting that she was chosen by the countyparty chairs, 11 people got in a back room and chose her for somereasons that may have to do with state party politics and not to dowith winning. But there's no question -- it will be very interestingto see what lessons both Democrats and particularly Republicans takefrom this. Is this going to be a carte blanche for conservatives totake on more moderate incumbents in primaries?

GILLESPIE: Well, look, Dee Dee's point is a very important one.This nominee, Scozzafava was chosen by 11 people behind closed doors.Disenfranchised Republican primary voters and that led to I think alot of greater --

STEPHANOPOULOS: It was a caucus process, wasn't it?

GILLESPIE: It's a process but it doesn't make it a good one.The fact is that a lot of Republicans said, wait a second, she wasn'ta moderate Republican as George pointed out. She is a liberalRepublican. Daily Kos, the left wing Web site endorsed her over theDemocrat. The fact is I think Republicans, many of whom support herbecause she was the Republican Party nominee, and there is anobligation that have you in the party to support the nominee arerelieved today at the opportunity to pick up this seat now.

And I think that if you look at the 20 percent that Scozzafavawas getting in that poll, I suspect that breaks about 3-1 to Hoffmanat the end of the day.

STEPHANOPOULOS: And Ron, the Republicans almost certainly willnow win. BROWNSTEIN: It seems the momentum is there. It sends a mixedmessage for Republicans out of this. On the one hand, I think it'sgoing to be another indication, I think we'll see others on Tuesday,that there is energy in the small government, anti-spending argumentat this point.

On the other hand, the fall of the Dede as I think she's knownnow, I think is a sign that the leash that the base is holding on theparty is tightening and that the Palins, the talk radio, the RushLimbaughs, the FOX, the definition of what is acceptable as aRepublican I think is narrowing.

I mean this does come after Arlen Specter essentially was forcedto leave the party after voting for the stimulus, after Chuck Grassleyfaced threats, open threats of a primary challenge if he compromisedwith Max Baucus.

In the long run -- in the short run, there's clear energy here inthe small government, anti-government argument. But in the long run,I do wonder about whether Republicans are going to have the freedom ofmaneuver they'll need to recover in some of those blue states wherethey've significantly eroded.

GILLESPIE: I think they will. Let's understand something. Thisis a conservative district. This is a district where a conservative-- this is not some swing district where having a moderate Republican,not a liberal Republican, but a moderate Republican who may vary withthe party on some things has a better change of winning here.

(CROSSTALK)

GILLESPIE: ... conservative Republican.

(CROSSTALK)

GILLESPIE: I agree, but I just -- I don't think it's right toread too much into New York 23, in terms of this civil war that I'mreading about...

SHARPTON: Newt Gingrich was the one that said it. And I thinkwe should read all we could.

(LAUGHTER)

I encourage civil war all over the Republican Party.

(LAUGHTER)

And I'm very encouraged, on a Sunday morning, to hear you, Ed,admit that the Republicans' candidates are chosen by these 11 guys atthe top.

GILLESPIE: Not always.

SHARPTON: And I hope the masses of the Republicans rebel anddivide all over the country.

GILLESPIE: My point, Reverend, is that was the exception.That's one of the things -- you know, usually, our nominees comethrough a primary process where the voters have a chance to expressthemselves.

MYERS: Really important point, which is the Democratic Part wasable to take back the House in 2006 with a big-tent strategy, byopening the party to people who didn't agree on every ideological --you know, the Heath Shulers of the world.

Will the Republicans be able to do that, if they want to win backthe House in 2010?

GILLESPIE: One of the points I make, Dee Dee, all the time, is,look, if you look at what the Democrats did, they were very smartabout it. They did get districts, one, carried by people in Oklahoma,Texas, other places, predominantly Catholic areas, where they mightnot agree on abortion as the party platform. But in doing so, in winning the majority in the House, they didnot -- their party did not move to the right. The Democratic Party,if anything, moved to the left in that process. So I think there's alesson we've learned there.

STEPHANOPOULOS: You're now going to see this play out in otherraces. We've Marco Rubio challenging Governor Crist for the Senate.

WILL: And primary...

(CROSSTALK)

WILL: He will win.

STEPHANOPOULOS: He will win?

WILL: Absolutely. Absolutely, he'll win.

STEPHANOPOULOS: Against the popular governor of Florida, thestate of Florida?

WILL: Look -- look what the local caucuses are saying in theirstraw polls. Look at who votes in an off-year, closed primary. Itwill be the ideologically intense, and Rubio will get them.

BROWNSTEIN: You know, the problem with the civil war metaphor isit implies two equal armies contesting on the battlefield. There isnot a civil war in the Republican Party.

You have a dominant conservative wing that is a larger share ofthe Republican coalition, by far, than the liberals are, by the way,of the Democratic coalition. And then you have, kind of, a moderateto liberal -- not even liberal -- remnant that is declining ininfluence.

And the -- and the ability of the moderate side of the party, Ithink, to, kind of, shape the definition or the image of the party isvery limited.

And I think what you saw -- I agree with you; New York 23 is aconservative place. You can't read too much into it. But I think itis part of an overall continuum in which, after Bush, after McCain,the conservative part of the party is saying, look, we lost notbecause we were too moderate but because we were -- not because wewere too conservative; because we were too moderate.

And I think they will -- I think there is going to be a tightleash on Republican leaders in terms of how far they can deviate froma small government message in the next couple years.

WILL: Independents -- independents are moving to the right indroves. Gallup says the number of Americans who identify themselvesas liberal is down 20. Those identifying as conservative, Reverend,are up to 40. That's two times 20.

SHARPTON: Well, I'm a conservative. I want to conserve voterrights. I want to conserve women's rights.

(LAUGHTER)

WILL: You don't want to conserve voting rights for unionmembers.

SHARPTON: I think you've got to redefine what conservatives are,now. I think that a lot of what people who used to call themselvesconservatives, they're the extremists. They want to change America asit has become. I think we are now the conservatives. We're trying toconserve the America of the last 40 years that is making the progressyou talked about.

STEPHANOPOULOS: One feeling I think a lot of those conservativeshave -- I mean, and you see this across the polling -- independentsare going up in every poll. But these are, as Ron suggests, is Perot-like independents, really, really angry, right now. And that couldcost Jon Corzine from your neighboring state, New Jersey, his race,even though he's ahead right now.

SHARPTON: I think unfairly so. But I think you're right. Ithink that Corzine was impacted in his tenure as governor by whathappened in terms of the national economy and things that were beyondhis control.

I have been in New Jersey. And I've been on the ground there,and I think that the problem there is trying to get that messagethrough and to really raise a lot of the things concretely that he diddo in the state.

And I think that is going to be a close election. And I thinkhe'll win.

(CROSSTALK)

STEPHANOPOULOS: But in that state, you've also, though, got moreof a moderate Republican challenging the Republican nominee, and he'scosting Chris Christie, the Republican, how many votes, as well.

GILLESPIE: For right now...

STEPHANOPOULOS: Third party.

GILLESPIE: Yes, a third-party candidate. But, look,independents -- New Jersey's the first state in the union with aplurality of registered independent voters. They tend to be -- havebeen leaning Democrat for years, but they are fed up with thespending. They are fed up with the taxes. They're tired of seeingbusinesses run out of the state and they're tired of seeing one-partyrule in Trenton.

And what we're seeing now is a reaction to that. And we've gotwind at our back for Chris Christie. I think Daggett's numbers willcome down between now and Tuesday, and they will accrue to -- theywill go to Christie.

BROWNSTEIN: You know, you -- I think you are going to see somewarning signs for Democrats out of this election. I mean, you canmake too much of these -- these off-year elections, but in 2006 and2008 Democrats won independents substantially, both in the state racesand at the presidential level.

In the last polls these week, in all three, Virginia, New Jersey,and New York 23, independents are moving toward the Republicans,largely, I think, around a size-of-government, scale-of-government,cost-of-agenda argument. I think you're going to see more pressurefrom Democratic centrists next year as the result for some kind ofdeficit reduction.

STEPHANOPOULOS: I want to get into that, because...

BROWNSTEIN: Can I just -- one quick point, having said that,President Obama's approval rating has stabilized over 50 percent withunemployment at 9.8 percent. When unemployment hit 9.8 percent underRonald Reagan in July '82, he was at 41 percent approval. There isstill a substantial base that supports Obama that puts him in adifferent position than Clinton was in, both legislatively andpolitically heading into that first midterm.

STEPHANOPOULOS: Right now I think that's exactly right. I thinkthe other thing you're going to hear from Democrats, Dee Dee, if,indeed, Republicans win in both New Jersey and Virginia, is that inthese off-year elections, those states always go to the out-party.

But if both states, both Virginia and New Jersey, go to theRepublicans, that could have an impact on this health care debate.

MYERS: It could. You know, it could make a lot of Democrats --or moderate Democrats in both the House and Senate very nervous. Imean, there is backlash against -- this can't be completely attributedto a bad economy and to an unpopular incumbent in New Jersey.

There is something afoot in the land that people areuncomfortable about, and one of the issues is spending. And that'sprobably the biggest issue.

WILL: Well, that's right. I mean they've seen, A, on Friday, wehad the biggest contraction of the stock market in six months. Thejobs numbers come out, and they say, well, the GDP is growing. Peoplesay, well, so what, where are the jobs? We've had "Cash forClunkers," which was a government-engineered automotive bubble thatpromptly collapsed.

Our next stroke of genius in managing the economy from Washingtonwill probably be to extend the $8,000 tax credit for first-time ormultiple-time home-buyers, which is to say a government subsidy to getpeople into houses they cannot afford to be in.

GILLESPIE: And by the way, the "Cash for Clunkers," you know,which was a vaunted success supposedly, it turns out each of thesecars, apparently, $24,000 per car is the estimated cost of these. Thejobs that they attribute to stimulus, $71,500 per job. We're lookingat now having $540,000 per household in debt imposed by thisadministration. That is jarring to people, and the jobs aren't there. The fact is, is that we saw Jared Bernstein, a White Houseeconomic adviser, on TV last week say that they expect job creation tobegin the second half of next year, eight months from now.

STEPHANOPOULOS: Of course, what the White House says and theireconomic advisers say is that without these programs that we wouldhave had 2 or 3 percent less...

(CROSSTALK)

SHARPTON: And no one is more concerned about the 9.8unemployment rate than I am. But at the same time, you have to stopthe job loss. I live in New York. People forget that when we saw theWall Street companies go down, the financial services jobs thatordinary people lost on the ground, we had to stop the hemorrhaging.And I think that a lot of Americans which is why President Obama'spoll numbers are staying as high as they are, understand that heinherited a bad hand.

He got the key to the bank with no money in the vault and thepeople that took the money are asking him, why aren't we makingwithdrawals? I think he has got to deal with what he was handed, andI think that that it is not just blaming the Republicans, it'sreality. He was handed a bad hand.

BROWNSTEIN: You know, there's a short term and a long term arcto be looking at here. I think that in the near term you do havemovement among independents toward a -- especially white independents,toward a more skeptical Perot-esque view of government, and you add tothat the fact that the electorate in 2010 is going to be older andwhiter than the electorate in 2008, and younger and non-white votersare the core of the Democratic Party. That kind of adds up to whatcould be a difficult election in 2010.

But if you look over the longer arc toward 2012, I do have towonder if Republicans are drawing the right lessons here, because insome ways they are responding to Obama's effort to expand governmentby becoming more aggressive in their proposals to retrench (ph)government.

You had four-fifths of House Republicans vote this spring toconvert Medicare into a voucher for everybody under 55. And you'vehad three-quarters of House and Senate Republicans vote this year tolower the top marginal tax rate for the wealthiest to 25 percent, thelowest level since 1931.

Now that's not going to be part of the debate in 2010. It'sgoing to be a referendum on Democrats. But when you get to 2012, ifthat is the trajectory of the party, I think Obama has an excellentchance of recapturing some of those independents who are skeptical.

STEPHANOPOULOS: A lot will depend on whether health care passes,and what kind of impact it has had on people by 2012, as well. Andthis week we did see some major movement. You saw the House ofRepresentatives announce their bill, also Senator Harry Reid on thiswhole issue of the public option, choosing to side with his Democraticbase rather than Olympia Snowe, who the president had decided to gowith on the public option.

Yet what he couldn't say at the end of that press conference wasthat he had the votes to get this to the floor and pass it.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: We have 60 people inthe caucus, it's -- the comfort level is kind of -- we all hugtogether and see where we come out.

(END VIDEO CLIP)

STEPHANOPOULOS: A gamble forced by necessity, right, George?

WILL: Yes. Now the president has now declared swine flu anemergency because the government hasn't done very well in coping withan epidemic we saw coming. Now at this very moment we're saying whatwe ought to do is expand radically the role of government in handlinghealth care.

At the last count I heard, this 15,000 -- 1,500-page bill has theword "shall" in it. "You shall do this." "Government shall do this.""States shall do." That's the polite way of saying, "must," 3,425times.

WILL: And they say this is not government takeover of the healthcare system? It's preposterous.

SHARPTON: It is government protection of citizens, 50 millionpeople uninsured, with all of the...

WILL: Fifty? The president says 30.

SHARPTON: Well...

MYERS: Forty-seven.

SHARPTON: ... 47, if you want to be exact. I don't have theexact numbers of how many times "shall" is in the bill, so let me beexact with...

(LAUGHTER)

... 47 million people uninsured who have not been protected andwho, I might add, in the Reagan years, Bush senior and Bush junioryears, it just sat there.

I think the fact that this president has been able to move a -- adialogue forward and different manifestations of a health care packageto where it has passed five committees and we're on our way to somekind of movement, here, is nothing short of amazing.

And I think that he ought to be saluted for that. The Americanpeople should be protected by the government.

STEPHANOPOULOS: Democrats are convinced that failure here is notan option and that victory will put to rest a lot of the anxiety thatpeople have right now. Yet, at the same time, you're likely to see,if this bill does go through, at least over the next year or so,premiums continue to go up. Yet voters will also, for the first time,say they can't be denied health insurance if they're sick.

So how does that trade-off work?

GILLESPIE: I think -- George, I am stunned by this, I have tosay. I always thought, and I've said, you know, before, here, that Ithought that they would get to a bill that they could pass that hadbipartisan support, that was scaled back, that didn't have the publicoption.

They have gone whole hog. This bill is a monstrosity. And froma Republican perspective, if you look at the mandates in it, the taxesin it, the cutting of Medicare for seniors, the federal funding ofabortion, it is -- I feel like one of those old game shows, where youtake the shopping cart down the aisle and try and scoop it all in, interms of trying to pick out, where do you hone in on this...

STEPHANOPOULOS: Yes it is rolling toward passage.

MYERS: It is rolling toward passage. And I think, you know,Senator -- what are Senator Reid's motives in approaching the publicoption this way?

Well, part of it is back-home politics. He's in a very tough re-election. His state supports the public option, so he's taken a moreaggressive position.

I don't think anybody believes there's enough votes in the Senateto pass this. So what's the fall-back plan? An opt-in, which bringsback Olympia Snowe. I think it's entirely possible that they passthis.

GILLESPIE: But if they vote in the House on this bill, let metell you, it would be like the BTU of '93. And I've got to say...

(CROSSTALK)

MYERS: They're a little smarter about that now.

GILLESPIE: I've never felt this -- this is the first time I'vethought of this, but I've got to tell you something. I know that theywere willing to sacrifice 20 conservative Democrats, or moderateDemocrats, to get this done. I think they risk losing the House ifthey try to pass this bill and they jam it through the way it'swritten.

(CROSSTALK)

MYERS: That's not going to pass the Senate, so we know that'snot going to...

(CROSSTALK)

GILLESPIE: But it's going to pass the House, and those Housemembers are going to have voted for all these things.

MYERS: It will depend on what gets worked out in the Senatebefore they go to vote in the House.

BROWNSTEIN: Can I just make two quick points?

I mean, your point about, sort of, the throwing everything in theshopping car -- the core of this bill, an individual mandate, amandate on individuals to buy insurance in return for fundamentalinsurance reform, paid for by slowing the growth of Medicare spendingis the John Chafee/Bob Dole alternative to Hillary Clinton in 1993.

And it says something about the evolution of the party that,regardless of what else was in there, the individual mandate by itselfwould be a bridge too far for almost...

(CROSSTALK)

STEPHANOPOULOS: Just stop there one second. Because I want --that's -- you're right. On the other hand, now let's go hardballpolitics. When this is in an election context next year, what youhave for the House members to (inaudible) they're going to be saddledwith $400 billion in Medicare cuts, and if this tax on high-pricedinsurance plans passes, something that a lot of their own supporterswill call a middle-class tax increase.

How do you fight that?

BROWNSTEIN: Yes. The heart -- the heart of the choice is goingto be whether George or Al are right -- Reverend Sharpton -- is rightabout what Americans want from government.

Because what you are saying is that there's a fundamentallyReaganite moment, here, in which people are saying, look, governmentis just doing too much and we want it rolled back.

What you're saying is that people are angry that government seemsto be protecting the rich and not doing anything for me. And to theextent that Obama and the Democrats can portray health care assomething that's not for Wall Street but helping to provide securityfor middle-class Americans, they have a better chance of selling itthan it might now appear.

WILL: Here is why we have two parties. The Reverend Sharptonsay the American people need protected by government. Some of usthink we need protected from government.

BROWNSTEIN: And that's the core of the argument.

(LAUGHTER)

WILL: In this...

SHARPTON: But you guys lost the election a year ago, so I thinkthe American people have spoken on that...

(CROSSTALK)

WILL: The Constitution is very picky about this. We keep havingelections.

(LAUGHTER)

SHARPTON: Every four years. We have three left.

WILL: Two years -- every two years.

STEPHANOPOULOS: So are you worried about this wave, if EdGillespie -- is Ed Gillespie right, if this passes, that Democratscould lose the House?

SHARPTON: I think that I'm concerned how it comes out. I thinkDee Dee is right. I don't think that it will out in the hard linesthat it is outlined. I'm sure that he will portray it that way.

(LAUGHTER)

I think that it will not be that way, and I think that, at theend of the day, it will come down to what George Will just said.Americans will say, does government -- is the government's role toprotect us or to protect us against government? And I think moreAmericans have seen those that have had this rhetoric of protect usagainst government hasn't worked.

(CROSSTALK)

STEPHANOPOULOS: That will have to be the last word. You guyshave a lot more to say. Say it in the green room.

END