This Week Transcript: Rahm Emanuel

Nov. 9, 2008 — -- The following is a transcript of George's interview with President-elect Barack Obama's incoming chief of staff Rep. Rahm Emanuel, D-Ill., and the "This Week Roundtable on ABC's "This Week with George Stephanopoulos" Nov. 9, 2008.

GEORGE STEPHANOPOULOS (ABC NEWS)The day after his barrier-breaking win, President-Elect Barack Obama went to work.

GEORGE STEPHANOPOULOS (ABC NEWS)After a trip to the gym, his first piece of business, convincing Congressman Rahm Emanuel to sign on as chief of staff. The hard-charging veteran of Bill Clinton's White House worried the job would take a toll on his family and his ambition to become the first Jewish House Speaker. But he couldn't say no to his new president and old friend. Obama says Rahm gets things done.

GEORGE STEPHANOPOULOS (ABC NEWS)Privately he adds that Rahm's got his back. At a roast three years ago, Obama joked about it.

SENATOR BARACK OBAMA (PRESIDENT-ELECT)Rahm studied ballet for years. In fact, he was the first to adopt Machiavelli's 'The Prince" for dance. It was an intriguing piece. As you can imagine, there were a lot of kicks below the waist.

GEORGE STEPHANOPOULOS (ABC NEWS)And Congressman Rahm Emanuel joins us this morning from Chicago. Congratulations, Congressman.

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)Thank you. I wish you played the rest of that tape.

GEORGE STEPHANOPOULOS (ABC NEWS)Well, we might get back to it later. But let's begin, you know, you've also received some praise from Republicans. Senator Lindsey Graham said you were a wise choice. But the Republican National Committee also put out this press release.

GEORGE STEPHANOPOULOS (ABC NEWS)They said "Obama's broken promise after promising change Obama selects hyper-partisan."

GEORGE STEPHANOPOULOS (ABC NEWS)The Republican leader in the House, John Boehner, said "this is an ironic choice for a president-elect who has promised to change Washington, make politics more civil and govern from the center." Your response?

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)

Oh, President-Elect Obama is very clear, as you look at his career both in the state senate, US Senate and the campaign, that we have to govern in a bipartisan fashion. And if you look at the way his campaign is run and also the ideas, he has always said that we have to be bipartisan. The challenges are big enough that it's going to be an ability for people of both parties as well as Independents to contribute ideas to help meet the challenges on health care, energy, tax reform, education. So that is the tone, that is the policy and that is exactly how we're going to go forward and he has said it for us.

GEORGE STEPHANOPOULOS (ABC NEWS)On Tuesday night Senator McCain pledged to do everything he could to help President-Elect Obama. And in your book that you wrote with Bruce Reed, 'The Plan," you had special praise for Senator McCain's ideas on taking on corporate welfare. Is that one specific idea that President-Elect Obama and Senator McCain can work together on and what are some others?

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)First of all, they had, as you know, they had a very good phone call. It would be presumptuous for me to say that's where they're going to work. Obviously President-Elect Obama reached out to him. As I said, they had a good call. They're going to be talking about a series of things, not only domestically but internationally on where they can work together. And the good news is that John McCain has said, you know, as a total patriot throughout the campaign and cares about his country, he's gonna be supportive of what we got to do because the challenges, as you noted in the introduction, George, whether on the national security front or on the economic, are looming large and they're gonna require both parties and leaders of both parties, as well as Independents, to offer up ideas to how to meet those challenges.

GEORGE STEPHANOPOULOS (ABC NEWS)Let's get to...

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)

So there'll be places, a lot of places to work together and Senator McCain, I think, obviously I wasn't privy to the conversation as he has throughout his career, when the campaign is over, the work of solving the problems of the country begin and he, I'm sure, will be a partner in helping do that.

GEORGE STEPHANOPOULOS (ABC NEWS)Let's get to some the news on those economic challenges. Just last night Speaker of the House Nancy Pelosi and Democratic leader in the Senate Majority Leader Harry Reid sent a letter to the administration urging the treasury secretary to tap that $700 billion rescue fund in order to help the auto industry. The White House has already signaled they're opposed. Is President-Elect Obama for using that fund to help the auto industry?

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)George, as President-Elect Obama has said throughout the campaign and I think as recently as Friday, first, the auto industry is an essential part of our economy and an essential part of our industrial base. Second, they should look at accelerating the 25 billion that was offered for retooling for the industry going forward.

Third, there are other authorities within the administration that they should use at this immediate time. And, fourth, President-Elect Obama has asked his economic team to look at different options of what it takes to help bridge the auto industry so they are a part of not only a revived economy but part of an energy policy going forward where America is less dependent on foreign oil. Those are the parts that is necessary for both the auto industry and the economy.

GEORGE STEPHANOPOULOS (ABC NEWS)So the administration, it does have the authority to tap that rescue fund. Do you think they should?

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)Well, he has been very clear that they're part of any sustained economic activity in this country. They're an industrial base. They employ 3 million Americans. And it's very, very important that anything that's been done, A, you got to tap the 25 billion that's been offered. B, there's all this other authorities within the administration and within the government that they should do to help the industry.

And, fourth, he has asked his own economic team to come up with proposals at this point that would help the industry bridge towards a point in the future where they have a restructured, retooled auto industry that is part of not only our - essential part of our economy, essential part of our energy policy which is less dependent on foreign oil. And that is the most important thing to be done. And I think that the administration needs to and Congress work with the auto industry at this time to deal with the problems. But, remember, it's all towards an eye of a very important part, as he has said throughout the campaign, an important part of your economy, that is the auto industry.

GEORGE STEPHANOPOULOS (ABC NEWS)So there's no reason to think that he's opposed to what Speaker Pelosi and Senator Reid want?

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)George, I just outlined the four basis points, authorities there, both there on the $25 billion that's been laid out as well as other authorities to help the auto industry. But all part of a strategy that's going forward on a retooled auto industry that is focused on our energy independence and economy.

GEORGE STEPHANOPOULOS (ABC NEWS)Okay, let's move on to the stimulus plan. President-Elect Obama said he wants that to happen sooner rather than later. The White House has certainly signaled its reluctance, but they've also signaled that perhaps if Congress attached the Columbia Free Trade Agreement to a stimulus package then the president could sign on this year. Is that a trade worth taking?

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)Look, first of all, as President-Elect Obama said on Friday, when the unemployment numbers came out, you have 10 million Americans who are without work. Earlier in the week you had a steep drop-off in retail sales. The American people right now need help economically.

You have a package there that, Economic Recovery Act, that deals with extending unemployment insurance and given Friday's numbers, that's essential, aid and assistance to states to provide health care to those who are losing it. You don't link those essential needs to some other trade deal. What you have to deal with is what's immediate here, and the lame duck is for immediate things that are important. That's what should be the focus right now. There's an economic recovery package in front of Congress. Washington should get it done. I think the economic news as the president-elect has said this week both retail sales and unemployment indicate we have a crisis here. There's not time to waste. Let's get on with helping the American people.

GEORGE STEPHANOPOULOS (ABC NEWS)Speaker Pelosi suggested that the broader stimulus package that they want to consider on Capitol Hill in January should include a permanent tax cut. Do you agree?

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)There is no doubt that a larger economic recovery act, as President-Elect Obama has said repeatedly, must do two things, one, get people working rebuilding our roads, our bridges, our schools, our basic infrastructure that allows the economy to be very productive.

Second, there should be a tax rebate to the middle class. Why? Because over the last seven years, the American middle class are working harder, earning less and paying more. Median household income has gone down $2,000 while costs for energy, health care as well as - health care, education and energy have all gone up $4,800. It is essential that we focus on the stress and strains on the middle class. That is what President-Elect Obama has said throughout the campaign. You cannot have a strong and resilient economy that does not have a strong and resilient middle class. They have been squeezed over the last number of years, and it is essential to have an economic strategy that strengthens them going forward.

GEORGE STEPHANOPOULOS (ABC NEWS)I know that the...

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)And those are the core of his policies, whether that be in education, whether that be in health care, whether that be in the tax code. All focused on a middle class that is strong and resilient going forward.

GEORGE STEPHANOPOULOS (ABC NEWS)I know that the president-elect also believes he has the right economic plan overall which includes a tax increase on wealthy Americans, but is he willing to consider postponing that tax increase until the country has emerged from the recession?

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)George, President-Elect Obama and vice president - President-Elect Obama and Vice President Joe Biden have all said that their economic plan at this juncture is based on giving 95% of the working Americans a tax cut, about a thousand dollars. It is a net tax reduction. It was built around this basic premise, as I just outlined, that the fact over the years, the middle class have been squeezed consistently by rising costs on education, health care and energy, as well as a diminishing income, and their median household income has declined $2,000. And you must have an economic program that focuses on them. It was not built for any particular, you know, data at this particular moment. It was built on the fact that the middle class have been hurt and to have a strong recovery and a sustained recovery over a period of time means that the middle class must be the focus of any economic strategy.

GEORGE STEPHANOPOULOS (ABC NEWS)I understand that that's going to be the focus. That clearly, you just said that the president-elect is gonna move on the middle class tax cut right away. I'm just asking if he wants to postpone, not cancel but postpone the tax increase on wealthy Americans.

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)The core economic part of his strategy is the middle class. That is the basis of it, George. And it is - and the economic plan was built on that. And whether - when it's dealing with, A, the first year of the tax cut, but also the immediate things of dealing with the reforms that are related to both education, health care, energy, taxes. Those immediate - those issues that are usually referred to as long term are immediate. And this opportunity in crisis provides, as the president-elect has said repeatedly, the opportunity to do things that Americans have pushed off for years.

Health care costs for median - seven years ago, the health care costs were 5,000 plus dollars for a family of four. Today they're $12,000. Today we export $700 billion of our wealth to foreign countries. You cannot sustain an economy for the middle class and for the entire country in which two issues, just take energy and health care, are really squeezing the middle class. So this provides an opportunity to finally tackle the issues that for too long have been postponed, kicked down the road, kicked down the road basically. And so that's what he says, we should use this opportunity, this crisis to finally tackle the issues that have hurt the economy both in the immediate basis as well as over the long term.

GEORGE STEPHANOPOULOS (ABC NEWS)I think we're going to put off that question for now, but let me ask just two quick political questions before I let you go. Number one, Senator Reid has signaled...

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)Thanks.

GEORGE STEPHANOPOULOS (ABC NEWS) ...that he's going to - wants to deny the chairmanship of the Homeland Security Committee to Senator Lieberman. Did you think that's appropriate? Or in the interests of getting beyond the selection should Senator Lieberman be allowed to retain his position?

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)As the chief of staff for the new president, he's going to be focused on the basic problems facing the country. As you outlined, it's the first time in four decades we have - there's going to be a transfer of power while you have American troops fighting not just one but two wars. Second, we have a huge economic crisis here at home that is looming large. That is going to be the focus of his policies. What happens on the House and Senate, on chairmanship is their business. But the business of what we have to do when we get sworn in is focusing on what the American people care about. Priority one is the economy.

GEORGE STEPHANOPOULOS (ABC NEWS)Final question, Barack Obama's confidante and transition co-chair Valerie Jarrett, WLS-TV in Chicago reported this morning that she's his choice to become the new senator to replace him as Senator from Illinois. Is that true?

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)I haven't seen that story. She is a very, very dear friend, as you know, of the President-Elect, and I don't think there's been any decision or any discussion that I've seen to that basis. But what people should know is that Valerie Jarrett is a ? and people do know, she is a very dear friend of the President-Elect and a valuable ally of his, not only prior to running for president, in his Senate life and just personally for Michelle and Barack.

GEORGE STEPHANOPOULOS (ABC NEWS)Okay, Congressman Emanuel, thanks very much for your time this morning.

REPRESENTATIVE RAHM EMANUEL (INCOMING WHITE HOUSE CHIEF OF STAFF)Thank you.

********

GEORGE STEPHANOPOULOS (ABC NEWS)And let me come out now for more discussion on the election with our roundtable. I have here George Will, welcome back to our old friend, Fareed Zakaria, now the host of "Fareed Zakaria's GPS" on CNN and of course the editor of 'Newsweek International," David Gergen from the Kennedy School of Government at Harvard University, adviser to many presidents and Cynthia Tucker, editorial page editor of "The Atlanta Journal-Constitution." I'm tempted to say, what should we talk about today? But let's just start out, we heard, George Will, Rahm Emanuel's take on what Barack Obama was elected to do. What do you think the voters were saying in a big way on Tuesday?

GEORGE WILL (ABC NEWS)They were saying, we don't like the competence of the government that we've been experiencing. Can I give you three points that should cheer up Republicans and three that should cause them despair? Start with despair. 90% of John McCain's vote was white. That's fine in 1976 when 90% of the turnout is white. It was 77% in 2004. It was 74% this time.

GEORGE STEPHANOPOULOS (ABC NEWS)Remarkable figure.

GEORGE WILL (ABC NEWS)The trend line is down and alarming. Second, 25% of Barack Obama's vote were young people under 30 years old. The question is does this imprint a generation for a generation? And finally, the Republican Party is becoming a regional party. The red is concentrated in the south. There are 64 Congressional seats in the northeast, 8 of them held by Republicans. Now the good news, running in the most daunting conditions confronting a Republican since the depression, John McCain still got 46% of the vote. Furthermore, this electoral earthquake was produced by 4% shift. Kerry got 78% and is consigned to oblivion. Obama gets 42% and the world...

GEORGE STEPHANOPOULOS (ABC NEWS)But that's the story of American politics. Small changes make enormous differences.

GEORGE WILL (ABC NEWS)Indeed, is it is because the much maligned and much misunderstood electoral college and the winner take all allocation of electoral votes does what it's supposed to do. It kind of presents a national mandate that might not be there simply in the popular vote. Finally, one-quarter of all of Obama's voters say the government is doing too much. Half of Obama's voters, this is exit poll self-definition, define themselves as moderates or conservatives.

GEORGE STEPHANOPOULOS (ABC NEWS)So much there to pick up on, Cynthia, where do you want to begin?

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")Let me begin with George's point about those who said the government is doing too much or shouldn't do more. 51% of the electorate said that the government should do more to solve problems. That's the first time there has been a majority since pollsters started asking that question back in...

GEORGE STEPHANOPOULOS (ABC NEWS)Especially on the economy.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")...in the '90s. So I think Obama has a mandate for significant change. If his is a competent administration, then I think absolutely we're talking about a realignment that could last for a generation. Interestingly enough, the group of voters who most substantially still identify as Republicans are those between 30 and 49. Those were the voters who were young when Ronald Reagan was president and his was seen as a successful presidency. If Obama is also seen as a successful president, then I think the young voters will stay with Democrats for generations.

GEORGE STEPHANOPOULOS (ABC NEWS)David, we've heard the word competence twice now and that makes it sound as if the election is as much as anything else a referendum on George Bush.

DAVID GERGEN (HARVARD UNIVERSITY)It was a massive repudiation of the last eight years, and I think that's central to the argument. But I think it was also and just as importantly and perhaps more importantly an embrace of change, both politically and culturally. This was a cultural election more, as much as it was a political election, and it said a great deal about the desire of the country for more diversity, for openness and a willingness now to embrace an African American as president at a country 20 years ago was inconceivable we would have been here.

GEORGE STEPHANOPOULOS (ABC NEWS)But that's what's so interesting about it, Fareed. It almost seemed as if it was - race was a non-issue by the time we got to the voting. 80% of voters said it wasn't a factor in their voting at all.

FAREED ZAKARIA ('NEWSWEEK")And that's why I think this is a big deal. This is a potentially realigning election because it does seem to bring together political issues, cultural issues and ideological issues. I mean, I think that there's some kind of new America out here that the Democratic Party is appealing to much more. David Frum, a conservative writer, had a very nice line in a column this week where he said "college educated Americans clearly feel the Democratic Party is safe and can be trusted with their money, but that the Republican Party cannot be trusted with their values."

In other words, there is some kind of shift here taking place where people regard the Republican Party as out of touch and I think it's real. If you look at, you know, Richard Weaver once said ideas matter, and George Will has occasionally said only ideas matter. Well the Republican ideas of tight money, low taxes, deregulation seem kind of weirdly irrelevant in a world where you have either unregulated financial industries...

GEORGE STEPHANOPOULOS (ABC NEWS)It's interesting when you go to the building blocks of the Obama coalition. Whether it can last, we'll see. African-Americans, Hispanics, young people...

GEORGE WILL (ABC NEWS)Two-thirds.

GEORGE STEPHANOPOULOS (ABC NEWS)Right. Two-thirds of Hispanics, two-thirds of under 30s, yet he also won this interesting group that I think Fareed is referring to, relatively affluent college educated professionals across the board in another generation they would be called Rockefeller Republicans.

GEORGE WILL (ABC NEWS)He carried those he's going to tax. Those earning over $200,000.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")That's right.

GEORGE WILL (ABC NEWS) In three counties...

FAREED ZAKARIA ('NEWSWEEK") You cannot count everyone with a college education...

GEORGE WILL (ABC NEWS)In three counties surrounding Denver, three counties, suburban counties, and, by the way, he got 50% of the suburban vote, which is astonishing. In three counties surrounding Denver, he got 100,000 more votes than Kerry got just four years ago. That's an astonishing sign of broad-based strength.

FAREED ZAKARIA ('NEWSWEEK")George, I want to pick up the Hispanic thing, though, because I think that is the single largest net shift. I may be wrong but I believe that that's the case. 66% of the Hispanic voters, 67% of the Hispanic voters, 10 points up from Kerry. If you look at Florida, he carries Florida with - by 15 points of the Hispanic vote. Kerry lost it by 12 points. The immigration issue is the single issue that has done the Republican Party more harm in this election than anything else.

GEORGE STEPHANOPOULOS (ABC NEWS)The fastest growing voter group.

DAVID GERGEN (HARVARD UNIVERSITY)Actually the largest group shift was among the young, 18 to 29.

FAREED ZAKARIA ("NEWSWEEK")

No, I meant ethnic groups.

DAVID GERGEN (HARVARD UNIVERSITY)18 to 29-year-olds, let's go back to what Cynthia was saying. Eight years ago Gore won it by two. Kerry won it by nine. Obama won it by 35. And that group coming in, this millennial generation the 'Times" renamed today, the "O" generation, along with the Hispanic generation, that's the future. You know, if...

GEORGE STEPHANOPOULOS (ABC NEWS)If we pick up on Cynthia's point, you were in Reagan's White House. He solidified that vote for at least a generation, at least up until 2000.

DAVID GERGEN (HARVARD UNIVERSITY)The young vote.

GEORGE STEPHANOPOULOS (ABC NEWS)Yes.

DAVID GERGEN (HARVARD UNIVERSITY)Yes, that's right.

GEORGE STEPHANOPOULOS (ABC NEWS)How does Obama do it?

DAVID GERGEN (HARVARD UNIVERSITY)Well, it's very important you said that because when people come of age and how they vote and they vote a couple times for one party, they tend to stick with that party for a long time thereafter. And Reagan brought in a great number of young people who continue to be more conservative today than most of the population, especially the young. Obama now has the opportunity because of this enthusiastic embrace and the huge number of volunteers that he had out of the young to become the leader and spokesperson for that generation both politically and culturally and it's again very, very important.

FAREED ZAKARIA ("NEWSWEEK")I think what you have to do, George, is for the young ? I think the issue is not the old debate, less government, more government, it's sort of smart government. Everyone accepts that government has certain inevitable responsibilities. The whole idea that we were going to get rid of government by having lower taxes hasn't worked. We simply borrowed the money instead. We kept the same size of government, in fact, expanded it. So what I think people are saying is, look, let's make this thing work and let's not have it be predatory and corrupt.

GEORGE STEPHANOPOULOS (ABC NEWS)And meanwhile, Cynthia, for so many African Americans, there was just this disbelief I think right up until the final moment.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")Oh, yes.

GEORGE STEPHANOPOULOS (ABC NEWS)They said it couldn't be done to quote Barack Obama from Iowa, yet, it happened.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")I was one of those who didn't quite believe it. It was only in October that I started to think perhaps this could happen. I grew up in the Deep South under Jim Crow. The part of the nation, by the way, that is still firmly entrenched with the Republican Party. I didn't believe it would happen. I was worried about the Bradley effect. I think one of the things...

GEORGE STEPHANOPOULOS (ABC NEWS)None, it just didn't exist.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")...we now know is that there may have been a reverse Bradley effect. Not only were there unlikely voters that pollsters didn't count but there may have also been some whites, oddly enough, who were traditionally cultural conservatives who had a lot of very conservative friends, older voters in Ohio or Pennsylvania who told pollsters they were voting for McCain but instead...

GEORGE STEPHANOPOULOS (ABC NEWS)And then didn't.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")...in the voting booth voted for Obama.

GEORGE STEPHANOPOULOS (ABC NEWS)You know, we're going to have to take a break, but before we do, George, you and I, have to clean up some business from last week. We had the predictions last week. And you and I came close closest. Let me show our viewers what we had here.

GEORGE STEPHANOPOULOS (ABC NEWS)The final outcome on electoral votes was 364 with Missouri hanging out there. I was at 353. You were at 378. So unless Missouri flips, I take that one. And the Senate, it's 57 with three hanging out there. I was at 58, you were at 59. Neither one of us knows who is going to win that one yet. In the House you were closer, it looks like it's going to be 256 to 260 for the Democrats. You had it at 257. I had it at 264, so we'll call it a tie for now.

GEORGE STEPHANOPOULOS (ABC NEWS)But if Missouri flips, I think you got a better chance of actually winning this one in a recount.

GEORGE WILL (ABC NEWS)Oh, good.

GEORGE STEPHANOPOULOS (ABC NEWS)We'll have more roundtable when we come back. We'll debate the Obama agenda the first 100 days and how Republicans can recover from this election and later "The Sunday Funnies."

JAY LENO ("THE TONIGHT SHOW")As a comedian, I'm going to miss President Bush, you know, because Barack Obama is not easy to do jokes about. He doesn't give you a lot to go on. See, this is why god gave us Joe Biden.

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GRAPHICS: THIS WEEK WITH GEORGE STEPHANOPOULOS

REPORTER Everyone wants to know what kind of dog are you going to buy for your girls?

SENATOR BARACK OBAMA (PRESIDENT-ELECT)We have two criteria that have to be reconciled. One is that Malia is allergic, so it has to be hypoallergenic. There are a number of breeds that are hypoallergenic. On the other hand, our preference would be to get a shelter dog but obviously a lot of shelter dogs are mutts like me. So whether we're going to be able to balance those two things I think is a pressing issue on the Obama household.

GEORGE STEPHANOPOULOS (ABC NEWS)Probably the most expansive and newsy answer President-Elect Obama Friday's press conference coming out of his meeting with his economic advisers on Friday. Let me reintroduce our roundtable here. I'm joined by George Will, Fareed Zakaria, David Gergen and Cynthia Tucker. And, George, I do think it was the most newsy part of the press conference. We know on the president-elect's economic plans, as we've just heard from Rahm Emanuel, the middle class tax cut is going to be front and center. He wants to do something for the auto industries but a lot of the other big choices put off.

GEORGE WILL (ABC NEWS)They are, but the grinding paradox that he faces is this, the very conditions that did more than anything else to produce a liberal administration, that is, the economic crisis, has now put severe restraints on what that administration can do because a thousand billion dollars, that's a trillion dollars, has been siphoned off into the economy willy-nilly. That's a thousand billion dollars not available for health care and other things.

GEORGE STEPHANOPOULOS (ABC NEWS)That's true in the short run. And David Gergen, let me bring you in on this. Yet, I think that the president-elect will get a lot of leeway from the public and probably from economists to have a significant stimulus early on.

DAVID GERGEN (HARVARD UNIVERSITY)Absolutely, and the Bush administration may well help him. If it resists a stimulus package in this session...

GEORGE STEPHANOPOULOS (ABC NEWS)Which they're doing.

DAVID GERGEN (HARVARD UNIVERSITY)Which they're doing now and if they continue to resist any help for the automobile industry, which they're continuing to do and both packages are shaping up to be very large. George's point, my sense is a lot of these Democrats think we've got a trillion dollars already, what's another 200 or another 300 on top of that? You know, my sense is they're coming in with a view that they're going to go massive up front, certainly on the economic side and there remains a possibility they will also go with health care and energy reform. Everything tied together. This big bang theory.

GEORGE STEPHANOPOULOS (ABC NEWS)(OC) Do everything all at once.

FAREED ZAKARIA ("NEWSWEEK")I think that's the smart thing to do. I think, first of all, front load all the pain. Do all the stuff you have to early on. That is sort of the Reagan model. And then, you know, two or three years later you can benefit from the recovery.

GEORGE STEPHANOPOULOS (ABC NEWS)Well, wait a second, Ronald Reagan didn't frontload the pain. He frontloaded tax cuts.

FAREED ZAKARIA ("NEWSWEEK")No, but he got Volcker to - he told Volcker to raise interest rates as high as you need to and he suffered through a very bad recession.

GEORGE STEPHANOPOULOS (ABC NEWS)That's true.

FAREED ZAKARIA ("NEWSWEEK")What I mean is get the pain over early. In this case I think what I mean is do all the difficult things politically. And I think you're right, economists would argue this is not the worst thing in the world. I mean the big difference between Clinton and now, if you remember, there was this debate during the Clinton years between Robert Reich and Robert Rubin. Reich saying we should spend a lot of money. Rubin saying, no, the long bond will go up, in other words, the bond market will go crazy. This time around interest rates are low. What Rubin was trying to do was lower interest rates so that you could stimulate growth. Right now you don't have to worry about that. You can spend a lot of money. Deficits are gonna be high in every industrialized country in the world. They're going to be sky high. And that's just going to be a fact of life and my view the market will accept it because it's gonna happen in every country in the world.

GEORGE STEPHANOPOULOS (ABC NEWS)Interest rates are lower and the economy is in much more trouble now than it was in 1993.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")The economy is in an awful lot of trouble. George Will is right that it was these incredible economic conditions that led to the Obama presidency. They will give him an awful lot of trouble, those economic conditions, but they also give him some wonderful opportunities. I think the American public will be very patient with him. I think he brings some enormous rhetorical gifts. He can reprise FDR's radio fireside chats as television talks.

GEORGE STEPHANOPOULOS (ABC NEWS)Over the Internet maybe.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")Where he's talking to the American public about the fact that this will take a while. He can ignore the deficit hawks and he can be bold and be visionary and institute some huge programs, health care, a national health care plan, energy package.

GEORGE STEPHANOPOULOS (ABC NEWS)So both you and Fareed are on the 100-days plan. David, I guess I'm a little but more skeptical. I think that there's a way to frontload a lot of legislation. Certainly they can pass the Children's Health Insurance Program as vetoed by Reagan. You can pass stem cell research. A stimulus plan will clearly work. But won't the administration have to choose, say, between a major energy program in the first four months and tackling the entire problem of health care?

DAVID GERGEN (HARVARD UNIVERSITY)Look, George, I think that they've got to get rid of the notion of a hundred days if they can and sweep that aside. So you're looking at 200 or 300 days and then come in first and foremost on the economic side and get a stimulus package as passed. Do what you're supposed to do for the automobile industry. By that time maybe other industries. I think it's going to be - we ought to be thinking much more carefully about this than we are because this is a much more massive intervention of the government into private industry. And it has to be carefully thought through...

GEORGE STEPHANOPOULOS (ABC NEWS)So managing that rescue fund is in some ways the most important job?

DAVID GERGEN (HARVARD UNIVERSITY)Managing that rescue fund in a way that you don't wind up with a government running these corporations over a long haul which some liberal Democrats are going to want to do. How does he hold that off and yet shore up the economy? I think he has to do it in the first 100 days. But I think there is great value in trying to think through, can you also do, pass energy and health care with triggers on them so the costs don't start kicking in until later but you get the legislation in place in the first year.

GEORGE WILL (ABC NEWS)Of course, what organized labor wants, first of all, is the card check for example, which would abolish the secret ballot in unionization elections. I think there are enough Republicans still to stop that. I think you'll get real unanimity and I'll bet Barack Obama will be just as glad to have it stopped so that it doesn't come to his desk that it's his gays in the military.

GEORGE STEPHANOPOULOS (ABC NEWS)It depends on what kind of a fight it turns out to be.

DAVID GERGEN (HARVARD UNIVERSITY)And George, what they're not talking about is housing. I mean how are they going to shore up the value of houses?

GEORGE STEPHANOPOULOS (ABC NEWS)Well you can use the fund to do that.

FAREED ZAKARIA ("NEWSWEEK")They are to be fair. I've talked to some of Obama's economic advisers. The problem with the housing issue, it is fairly complex and there are 25 proposals are out there. They're trying to figure out what is the right one.

DAVID GERGEN (HARVARD UNIVERSITY)But they've got to come through with something.

FAREED ZAKARIA ("NEWSWEEK")In principle - I think they are. In principle everybody realizes that the underlying asset here that is declining is housing prices. And if it keeps declining all the other rescue packages won't work.

GEORGE STEPHANOPOULOS (ABC NEWS)Well and that's why you've got the rescue package. We know some is going to the financial industry. We know some is going to the insurance industry. The outstanding question are autos and what to do for homeowners directly.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")Well there has been, I think, an ideological barrier in this administration to helping homeowners. I've never understood if, in fact, this vast economic crisis started because individual homeowners couldn't pay their mortgages, it seemed to me it would have been cheaper in the beginning to help some of those individual homeowners pay their mortgages. But this administration, the Bush administration, good conservatives, nationalize and bail out the banks, help Wall Street but for heaven's sakes don't help individual homeowners.

GEORGE STEPHANOPOULOS (ABC NEWS)And I think a lot of voters would expect Obama to take that on. Let's talk about who's gonna administer all this ? who the next treasury secretary would be.

GRAPHICS: POTENTIAL TREASURY SECRETARY

GEORGE STEPHANOPOULOS (ABC NEWS)That it seems as if the two leading contenders are Larry Summers, former treasury secretary, former president of Harvard, Tim Geithner who is the chairman of the New York Federal Reserve right in the middle of constructing what the Fed has been doing so far and perhaps someone we're not thinking of. George Will, your reaction to those names?

GEORGE WILL (ABC NEWS)Geithner has been at the heart of the bailout. The actual nuts and bolts of how to put together this unprecedented intervention in the economy. The blank space there could still be Paul Volcker, to bring him in, enormously reassuring. Policy at this point is 75% psychotherapy anyway to get the country feeling better.

GEORGE STEPHANOPOULOS (ABC NEWS)He was right behind Obama's shoulder on Friday.

GEORGE WILL (ABC NEWS)Exactly. Bring him in and let him do it and then hand it over to a younger man.

FAREED ZAKARIA ("NEWSWEEK")I would argue it's not really psychotherapy. But I think the point both of you were both making is the government is involved in the economy in extraordinary unprecedented ways. How do you dial back those commitments? The government, for example, now insures deposits up to December 31st. Of course, it's going to extend that but at some point it has to wind these down. What instruments do you use? I think this is all very complex. They're all good people. Volker is, by the way, I think 80 plus, a great guy. I think Larry Summers is an extraordinarily brilliant guy. He's been treasury secretary before. He understands the job and the rap against him, frankly, is this, you know, silly business about the comments he made at a woman's conference. And I say silly because nobody who seriously has studied Larry Summers' career...

GEORGE STEPHANOPOULOS (ABC NEWS)The question was he suggesting that women couldn't handle science and math as well as men.

FAREED ZAKARIA ("NEWSWEEK")Right. And it was a theoretical proposition he was throwing out to be provocative. Nobody who seriously looks at Larry Summers' career believes he thinks, you know, that he is sexist or that he has in any way ever impaired women's careers. Quite the contrary.

GEORGE STEPHANOPOULOS (ABC NEWS)Is that the issue?

FAREED ZAKARIA ("NEWSWEEK")He's done everything to make it, you know, to help them.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")I find myself agreeing with Fareed. I'm not sure that I thought - I was offended by the comments but I think that the controversy has been ? gone on far too long. And I think that in an economic crisis we should worry about who is smart enough to handle the economy? And so if Larry Summers is the guy, go for him.

DAVID GERGEN (HARVARD UNIVERSITY)Thank goodness for these comments, yes. Larry Summers is - he would be superb at this job. And, you know, I was on the faculty there when we went through all this controversy, he apologized profusely. But it's also true if you look at his record he appointed more women deans than anybody else in Harvard's history.

He set aside or started a program as getting far more women appointed as professors there. He has a long record that I think proves his support of women and - but more importantly - well, just as importantly for this, his record at treasury was an excellent record. And he is the most respected voice. If you go into Asia, you find he's the most respected American voice on economics. His column in "The Financial Times," which he just started, has got an enormous readership now. He knows the industry. He knows policy and for all those reasons I think he'd be a superb choice.

FAREED ZAKARIA ("NEWSWEEK")If you think about health care ? if you think of health care, it's a very complex problem. Most problems in Washington are actually easy to solve but politically impossible. Health care is a genuinely intellectually complex problem. You want somebody like that to be involved.

GEORGE STEPHANOPOULOS (ABC NEWS)I agree with all this. He will face questions from the left on his involvement in deregulation back in 1999 in the closing days of the Clinton administration. Let's move on to foreign policy. As well, Barack Obama also exceedingly careful and cautious on foreign policy. At his Friday press conference he was asked by Jake Tapper how he would respond to President Ahmadinejad's congratulations and whether he would be sending envoys to Iran.

GRAPHICS: THIS WEEK WITH GEORGE STEPHANOPOULOS

SENATOR BARACK OBAMA (PRESIDENT-ELECT)How we approach and deal with a country like Iran is not something that we should, you know, simply do in a knee-jerk fashion. I think we've got to think it through, but I have to reiterate once again that we only have one president at a time.

GEORGE STEPHANOPOULOS (ABC NEWS)George Will, he was determined not to make any news there. And I guess you can't really blame him at this point. But do you think it's a good idea as I know their team is talking about to send lower level envoys right away to Iran, to Venezuela, to Cuba, perhaps to Syria?

GEORGE WILL (ABC NEWS)I don't see the urgency at this point. I don't think - I mean we're not going to change the trajectory of any of those nations' policies in the near term, and we don't need to change their policies in the near term. What's the rush?

FAREED ZAKARIA ("NEWSWEEK")I would agree. I don't - first of all, I think it does send a dangerous signal about who is in charge, that you're trying to make some kind of special deal. Secondly, let's remember, right now for the first time in several years, many of these countries are facing difficulties, and one of the happy prospects of this economic recession that is, you know, somewhat global is the oil prices have plummeted. And if you look around the world at who the troublemakers are, they tend to oil-rich dysfunctional states, Venezuela, Iran, Russia, so they're all facing shortfalls in revenue. They're all feeling squeezed. There's less money to hand out to bad guys, to Hezbollah. Let them feel the pressure for a while. You know, we can start talking to them, and what we need is really a comprehensive dialogue, not an episodic one. So it's much better to do it from the start.

GEORGE STEPHANOPOULOS (ABC NEWS)I would agree not to do anything, obviously, during the transition but, David Gergen, any harm in doing that once President-Elect Obama takes office, and wouldn't that be fulfilling basically the commitments he made in the campaign?

DAVID GERGEN (HARVARD UNIVERSITY)It appears George Bush is gonna open a consular office in Tehran before he leaves office. And it seems to me of course you ought to maintain that and you ought to have some initial conversations. But I think the priority right now ought to be if you can find a way to break Syria away from Iran. If you can de-link those two, it greatly strengthens your hand in dealing with Iran and there are all sorts of signals that the Israelis are prepared to do that once they have a government. You know, we don't have stable governments in place either in Israel right now or in Iran and you've got to wait for that to sort of work itself out. Have some low-level talks now, but my first priority would be to get Syria broken off and then also be paying attention to Pakistan and Afghanistan.

FAREED ZAKARIA ("NEWSWEEK")The big challenge - I'm sorry.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")Well, the focus clearly has to be the Middle East. I don't see any reason why an Obama administration can't immediately take a look at Cuba. We have a Cuba policy that is outdated, antiquated and serves no good purpose and he needs to be lining up congressional support for ending the blockade. It makes no sense.

GEORGE STEPHANOPOULOS (ABC NEWS)It's conceivable he could get - that he's also facing an immediate challenge from President Medvedev of Russia saying that he's gonna move missiles right up to the Polish border. And, of course, one of the big questions is gonna be who will be the secretary of state for Barack Obama. Let's put up some names that again that are being talked about.

GEORGE STEPHANOPOULOS (ABC NEWS)John Kerry who is also in line to be the chairman of the Senate Foreign Relations Committee, the former Senate majority leader Tom Daschle, one of the earliest supporters of Barack Obama, Governor Bill Richardson of New Mexico, also the former UN ambassador and in the last couple of days, more and more talk, George Will, of Hillary Clinton as a potential secretary of state. It's said that Barack Obama is at least intrigued by this idea of having a team of rivals in the cabinet.

GEORGE WILL (ABC NEWS)As Lincoln had supposedly.

GEORGE STEPHANOPOULOS (ABC NEWS)Supposedly?

GEORGE WILL (ABC NEWS)Well, there was no question who ran the show when Lincoln was here. I notice there that Richard Lugar, Republican, senator from Indiana is not there. That might indicate that they've decided to keep a Republican, Gates, at defense which would be very good. Beyond that, I should think if Kerry wants it, Kerry probably has earned it by being the titular head of his party for awhile, having run well and having shown a great interest.

GEORGE STEPHANOPOULOS (ABC NEWS)Well, and on top of that, David Gergen, also gave Barack Obama his platform back in July 2004 and endorsed him at a difficult time. Came out right after the New Hampshire primary that Hillary Clinton won.

DAVID GERGEN (HARVARD UNIVERSITY)He did, indeed, and he certainly has - he certainly has a lot of qualifications that one would consider. I do think the first - this is always a puzzle, as you know, George, about putting all the pieces together.

GEORGE STEPHANOPOULOS (ABC NEWS)How they all fit together. Right.

DAVID GERGEN (HARVARD UNIVERSITY)And so I think the first question you have to face is can you keep Bob Gates? Can you work it out? I understand there's some snags in those conversations. If they can work them through keeping Gates...

GEORGE STEPHANOPOULOS (ABC NEWS)Doesn't it make more sense keeping Bob Gates if you're certain you can continue or accelerate the withdrawal from Iraq? You wouldn't want to keep Bob Gates if you felt like you had to stay because then all your supporters would say, wait a second, you promised the end to the war in Iraq and you're staying.

DAVID GERGEN (HARVARD UNIVERSITY)Absolutely. Absolutely.

FAREED ZAKARIA ("NEWSWEEK")That's the conversation he needs to have with Gates, as to whether Gates is comfortable with some kind of drawdown, you know, along a certain timeframe. By the way, if it doesn't work out, I have a candidate. Which is if Gates says he wants to leave, you appoint Colin Powell secretary of defense. You get a Republican, and we know Colin Powell would be comfortable with that.

GEORGE STEPHANOPOULOS (ABC NEWS)Never going to happen.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")I don't think that's a job Colin Powell wants, but back to the candidates for secretary of state, it seems to me clearly the Democrats are not going to get their 60 seats they wanted in the Senate. It seems to me...

GEORGE STEPHANOPOULOS (ABC NEWS)They might get 59.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")...they need to worry about taking Democratic senators out of the Senate. It's also true...

FAREED ZAKARIA ("NEWSWEEK")In Massachusetts this is not a great...

DAVID GERGEN (HARVARD UNIVERSITY)Not in New York either.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")It is also true that Obama owes Latinos a great deal. 66% of their votes went to Obama. So he's going to have to give Bill Richardson or some other Latino a very significant position.

DAVID GERGEN (HARVARD UNIVERSITY)I hope that - one thing I hope the Democrats do not do this time is to play these very...

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")Identity politics.

DAVID GERGEN (HARVARD UNIVERSITY)Identity politics.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")That's what David's going to talk about.

DAVID GERGEN (HARVARD UNIVERSITY)It really slowed down the Clinton appointments. George will remember very well. It was a terrible mess. He had to be - the country is in such dire straits that he needs the best people he can get, administrative talents, if you will and I think to go back to what Rahm Emanuel said - and by the way, wasn't he a master at making the argument without making news? Is he sort of talked about being bipartisan. They do need to bring some Republicans into this.

GEORGE STEPHANOPOULOS (ABC NEWS)And they will.

GEORGE WILL (ABC NEWS)The Republicans have taken over identity politics. The Republicans are the ones who have picked a vice president for her chromosomes.

DAVID GERGEN (HARVARD UNIVERSITY)Yes. I agree.

GEORGE STEPHANOPOULOS (ABC NEWS)Well, and there's a good chance that in addition to Lugar, Senator Chuck Hagel, Fareed, could be considered for either defense or a state depending on how things fall out.

FAREED ZAKARIA ("NEWSWEEK")I think in a way the real challenge is do you want to pick a team of conspicuously talented people from all walks of life, public sector, private sector, a team of rivals or do you want the no drama Obama? I mean, these two philosophies are somewhat at odds and I would hope that he'd actually go for the team of rivals, that is the idea that you have just the most talented people.

GEORGE STEPHANOPOULOS (ABC NEWS)That is...

DAVID GERGEN (HARVARD UNIVERSITY)And picking Rahm Emanuel, this was not no drama.

GEORGE STEPHANOPOULOS (ABC NEWS)Not no drama but a lot of competence, a lot of talent.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")Before we leave this, can I just say...

GEORGE STEPHANOPOULOS (ABC NEWS)We've got ten seconds.

CYNTHIA TUCKER ("ATLANTA JOURNAL-CONSTITUTION")...that there are very talented people of color that he can find for his administration.

DAVID GERGEN (HARVARD UNIVERSITY)Absolutely.

FAREED ZAKARIA ("NEWSWEEK")I think he knows that. He's one of them.

GEORGE STEPHANOPOULOS (ABC NEWS)This is going to continue in the green room.