This Week Transcript: Peter Orszag and Eric Cantor

March 1, 2009 — -- ABC'S "THIS WEEK WITH GEORGE STEPHANOPOULOS"

MARCH 1, 2009

SPEAKERS: GEORGE STEPHANOPOULOS, HOST

REP. ERIC CANTOR, R-VA., HOUSE MINORITY WHIP

PETER ORSZAG, DIRECTOR, OFFICE OF MANAGEMENT ANDBUDGET

[*] (BEGIN VIDEO CLIP) STEPHANOPOULOS: Good morning, and welcome to "This Week."

PRESIDENT BARACK OBAMA: The time to take charge of our future ishere.

STEPHANOPOULOS: Obama's ambitions.

OBAMA: Health care cannot wait. Double this nation's supply ofrenewable energy. Make sure that you can afford a higher education.

STEPHANOPOULOS: Is the president's bold agenda achievable? WillCongress choke on the cost? We'll ask the cabinet member who wroteObama's budget and the congressman who's now the president's sparringpartner.

OBAMA: I'm going to keep on talking to Eric Cantor. Some day,he's going to say, "Boy, Obama had a good idea."

STEPHANOPOULOS: Republican Whip Eric Cantor, OMB Director PeterOrszag, only on "This Week."

Then...

OBAMA: Our combat mission in Iraq will end.

STEPHANOPOULOS: ... a promise kept. But why are Democrats moreskeptical than Republicans? That and the rest of the week's politicson our powerhouse roundtable with George Will, Katrina vanden Heuvel,plus, Bill Clinton's pollster Stan Greenberg and George W. Bushstrategist Karl Rove.

And, as always, the Sunday funnies.

BILL MAHER, TALK SHOW HOST: It was a powerful speech. Joe Bidensaid it made the hair that was transplanted from the back of his neckstand up.

(END VIDEO CLIP)

ANNOUNCER: From the heart of the nation's capital, "This Week"with ABC News chief Washington correspondent George Stephanopoulos,live from the Newseum on Pennsylvania Avenue.

STEPHANOPOULOS: Hello again. The headlines screamed out allthis week, each day another sweeping proposal from President Obama andeach day more signs of just how sick our economy is, with warningsthat another depression is increasingly possible.

The key question: How should government respond to this economicemergency? We'll hear from both sides this morning, starting with thekey player crafting President Obama's budget, Budget Director PeterOrszag.

Welcome to "This Week," your first Sunday show appearance.

ORSZAG: Good morning. STEPHANOPOULOS: Let me begin with the budget, $3.6 trillion onThursday, you said you could cut the deficit in half over the nextfive years, based on reasonable but somewhat optimistic assumptions.Then, on Friday, we learn that the economy dropped more than 6 percentin the fourth quarter of last year. Does that mean you have to goback to the drawing board?

ORSZAG: I think what it means is it just underscores that we'veinherited these pair of trillion-dollar deficits. Remember, that wasa very negative number for the end of last year before we took office.It just...

STEPHANOPOULOS: But it affects this year.

ORSZAG: It does. It just -- it -- and that's why we have thesetwo problems that we need to face, the trillion-dollar gap between howmuch the economy is producing and how much it could produce and thenthese trillion-dollar deficits under current policies.

The first thing we had to do was get the recovery act enacted.We did that. That's intended to address that first gap, the GDP gap.As we go out over time and the economy recovers, we need to get thoseout-year deficits down, and that's what this budget does.

STEPHANOPOULOS: But the question is, is the stimulus going to beenough to actually get the kind of growth you're calling for? I wantto show a chart here that shows where the OMB projections of theeconomy turn up right now.

You say that, over the next year, the economy is going to fallabout 1.2 percent, the average private forecast 2.0 percent. The caseyou're putting to the banks, the stress tests you're putting on thebanks assumes that the economy is going to fall by 3.3 percent.

And, you know, economists like Allen Sinai say it's a hope, awing, and a prayer. It's a return to a sanguine view of the economythat is simply not justified.

ORSZAG: Well, what I would say is, our forecast is entirely inline with, for example, the Congressional Budget Office's, once youinclude the effects of the recovery act. Now, since those forecastswere done...

STEPHANOPOULOS: You got this bad news about last year.

ORSZAG: ... and the -- which is why it's a good thing we actedso quickly on the recovery act. Going out over time, we have to getthese out-year deficits down, and that's what we're intended to do.

STEPHANOPOULOS: But -- but -- but looking at this year, becauseyour whole deficit reduction strategy hinges on the economy growing atthe rate you say it's going to grow. It is still realistic to thinkyour numbers are going to be met?

ORSZAG: I think so. And, again, the deficit reduction doesn'tjust come from the economy recovering. And by 2013 or 2014, let's allhope that the economy is back on its feet. That's what we're tryingto do through all -- all the changes that we're making.

But we have $2 trillion in deficit reduction contained in thebudget. We've got both spending constraints and additional revenue,as the economy recovers. That's where a lot of the deficit reductioncomes from.

STEPHANOPOULOS: But most of the deficit reduction comes fromassuming at first that the war in Iraq was going to continue at thesame levels for several years, and that simply wasn't going to happen,was it?

ORSZAG: Well, let's -- let's be clear about this. We're goingto spend about $140 billion on the war this year. The president iscommitted to getting -- to winding down the war. That's going to savemoney. It's pretty clear.

STEPHANOPOULOS: The Republicans have taken aim specifically atthe revenues in this package, especially the idea you have to getabout $600 billion from capping carbon emissions. Here was NewtGingrich speaking this week.

(END VIDEO CLIP)

GINGRICH: How dumb do they think we are that they can pretendthat an energy tax isn't an energy tax, and they can pretend thatevery retired American who uses electricity isn't going to pay it, andevery person in New Hampshire who uses heating oil isn't going to payit, and every person who drives a car isn't going to pay it?

(END VIDEO CLIP)

STEPHANOPOULOS: You've talked a lot about honesty andtransparency in the budget. The Republicans are saying you're simplynot being honest, that this revenue from the carbon -- from cappingcarbon tax is going to be a tax on everyone, pure and simple.

ORSZAG: What's very clear is this budget delivers a tax cut to95 percent of working families. I mean, I think we have to come backto the basic question here. I just reject the theory that the onlything that drives economic performance is the marginal tax rate onwealthy Americans and the only way of being pro-market is to funnelbillions and billions of dollars of subsidies to corporations.

That is the heart of this argument. And I think it's -- I thinkwe've already -- we've seen what the effects are over the last eightyears.

STEPHANOPOULOS: But you do concede that this capping of carbonemissions is going to increase energy rates for just about everyone inthe country? And that is the equivalent of a tax, isn't it?

ORSZAG: Well, I think we have to be -- let's be fair about this.Either you're going to look at what -- what is collected through thetax code and what's returned through the tax code.

And on that basis, there's a tax cut for 95 percent of Americans,or you have to go all in. Let's also count the benefits that familiesget through Pell Grants, the benefits that they'll receive throughconstraining health care costs, the benefits that they get fromweatherizing their homes, and so on. All in, this budget makes thevast majority of American families much better off.

STEPHANOPOULOS: So you're not -- you're not disputing that thispackage -- the cap-and-trade on its own will increase prices for --for most Americans, but they're going to be getting other benefits inthe budget?

ORSZAG: Absolutely.

STEPHANOPOULOS: And there is also -- the Republicans are alsotaking aim -- including our next guest, Eric Cantor -- at yourproposal to shave deductions, the benefit of the deductions forAmericans earning over $250,000 a year. Congressman Cantor says, "Isthere any better time to have charities in full throttle than when youhave tough economic times?" Your response? ORSZAG: There's been a lot of confusion about this, too. Let'sbe clear about several things. First, the best thing that could helpcharitable contributions is to get the economy back on its feet. Thatwas the whole goal of the recovery act.

This proposal doesn't take effect until 2011. The revenue wouldbe dedicated to health care reform, and that is the key to our fiscalfuture, so let's keep our eye on that.

Furthermore, the majority of contributions come from middle-classfamilies. And you have to ask this fundamental question...

STEPHANOPOULOS: Who, you say, aren't going to be hit by this?

ORSZAG: Not only are not going to be hit by it, but let's ask aquestion of fairness. A middle-class family makes $1,000 contributionto a charity, they get $150 back on their taxes. Bill Gates makesthat same contribution, $1,000 to the same charity, he gets $350 backon his taxes. All we're saying is the tax break for Bill Gates shouldbe walked back a bit to $280.

STEPHANOPOULOS: But you know it's not just Republicans who havea problem with this proposal. Key Democrats, like the chairman of theSenate Budget Committee, Kent Conrad, I think Senator Baucus, as well,have said, wait a second, we're not sure we can go along with this.If the Senate and the House will not go along with this proposal toshave deductions, does that mean you'll scale back your health carepromises?

ORSZAG: Well, we hope they will go along with it. And what wehave said is...

STEPHANOPOULOS: I know, but that's not what I asked.

ORSZAG: But let's be clear about the health reform. Health careis the key to our fiscal future. We are going to make sure that it isnot only self-financing over the next 5 to 10 years, which means ifthat revenue stream isn't available, something else will have to be.

And in addition, those reforms to health care, making the systemmore efficient, will help bend the curve over the long term and vastlyimprove our long-term fiscal future.

STEPHANOPOULOS: So that's an important point. Just to be clear,then, you're saying you will not increase the deficit more than wehave right now in order to pay for that health care? If the revenuesdon't come in, then you will not go forward with the health care?

ORSZAG: We need some other proposal. No, no, that's -- we'regoing forward with health care. We're going to get health care reformdone this year. I think this proposal will get enacted. But if it --if it doesn't, then we're going to need to come up with some otheroffset.

STEPHANOPOULOS: Congress will have to fill the hole. But whatif they don't? ORSZAG: Look, we want to get health care reform done this year,and we want to do it in a way that doesn't add to the deficit and thatalso helps bend the curve over the long term.

STEPHANOPOULOS: A lot of people I talked to on Capitol Hill say,you know, they look at the scope of this, and they worry that you'regoing to overload the circuits in the House and the Senate inCongress. Can you really go forward with the kind of health careproposal you're talking about here, a more than $600 billion reservefund, and go forward with the energy proposals, more than $600 billionin revenue? Can you do both this year? And if you can't, which onetakes priority?

ORSZAG: I think we can. We face big problems, and we've got to-- we've got to tackle them. Clearly, this budget is changing course.It's, like, you know -- and the GPS system is recalculating the routeand people are getting used to that. But we -- we have these bigproblems, and we need to tackle them.

STEPHANOPOULOS: And in order to get it, though, you saw howdifficult it was to actually spend money, give benefits with thestimulus package. You're scrapping for those three Republican votes.Some key Democrats on Capitol Hill are saying, if you want to do allof these big projects this year, you're going to have to follow whatis called the reconciliation process, put health care, put energyinside the reconciliation process so that the effect of it is you onlyneed 51 votes, not 60. Is that the administration's intention?

ORSZAG: I think it's premature to be figuring out thelegislative strategy exactly right now.

STEPHANOPOULOS: But you're not ruling it out?

ORSZAG: It's not where we go first, but we have to keepeverything on the table. We want to get these -- these importantthings done this year.

STEPHANOPOULOS: How about on the bank bailout? The presidentwas pretty clear on Tuesday night that more funds might be needed forthe banks.

(BEGIN VIDEO CLIP)

OBAMA: This plan will require significant resources from thefederal government and, yes, probably more than we've already setaside. But while the cost of action will be great, I can assure youthat the cost of inaction will be far greater.

(END VIDEO CLIP)

STEPHANOPOULOS: You've put a $750 billion placeholder in thebudget for the banks. Is that what you're going to be requesting fromthe Congress?

ORSZAG: No, let's again be clear about this. The budget isintending to be responsible. We put a placeholder in there just as aninsurance policy should additional financial stabilization effortsbecome...

STEPHANOPOULOS: But he was pretty clear you're going to needmore money.

ORSZAG: It's not -- look, let's -- if additional efforts becomenecessary, we'll work with Congress on the scale and scope of them.We wanted to put a placeholder in just in case, because there's a lotof uncertainty, obviously, and, again, just to be responsible, wethought it was better to put a placeholder than -- than nothing.

STEPHANOPOULOS: But the odds are that you're going to needsomething. The president was clear on that. We've gotten nothing butbad news out of the banks over the last week. And it was also clearfrom the last time the TARP, the bank bailout, was voted on that thisis going to be a very tough vote. And I'm -- I know from my ownreporting that, if this were put to a vote today, you do not have thevotes in the House or the Senate. What's going to have to change toget congressional support?

ORSZAG: Well, again, we don't have a legislative proposal atthis point. We have a placeholder just in case something becomesnecessary. We would work with the Congress to craft a response,should one become necessary, that would pass.

STEPHANOPOULOS: The -- you've seen some bipartisan criticismover the long-term impact of this budget, real concern over the long-term increase to the debt from both the Democratic chairman of theSenate Budget Committee and the Republican ranking member, SenatorGregg. Take a look. (BEGIN VIDEO CLIP)

SEN. KENT CONRAD, D-N.D.: I'm concerned about the long-termbuild-up of debt. I'm especially concerned about the second fiveyears of this budget.

SEN. JUDD GREGG, R-N.H.: This budget doubles the debt of thefederal government in 5 years, triples the debt of the federalgovernment in 10 years.

(END VIDEO CLIP)

STEPHANOPOULOS: They want to solve the problem by creating acommission, similar to the base-closing commission, where Congress andthe administration would come together, come up with a package ofrevenue increases, spending cuts, and then force an up-or-down vote inthe Congress. The president told a group, according to the WallStreet Journal, of Blue Dog Democrats last month that he was for thisproposal. Is he?

ORSZAG: Well, I think it's clear that we need some changes inthe process, whether it's the one that Senators Conrad and Gregg haveproposed or ones that are more focused on health care. And let's --let's focus on that, because that is the key driver of those long-termdeficits.

That's why we want to get reform done this year. We can make ourhealth care system much more efficient, and that is the single mostimportant thing we could do to get those long-term deficits undercontrol.

STEPHANOPOULOS: So -- so to be clear on that, are you then, Imean, looking for a -- some kind of a commission for health care?

ORSZAG: Well, there are different ideas that have been out thereon health care. For example, Senator Baucus, the chairman of theSenate Finance Committee, has proposed a federal health board thatwould move a lot of the decision-making away from the Senate FinanceCommittee and the -- and the Congress in general towards a group ofmore politically insulated and technically skilled people.

STEPHANOPOULOS: So you're for that, but not for a broader budgetcommission right now?

ORSZAG: Well, I'm just saying, there are lots of ideas floatingaround out there. And, obviously, one of the things that came out ofthe fiscal responsibility summit that we had last week is a discussionabout the best way of moving forward. We will be exploring all ofthese ideas with the Congress. And, clearly, I think some changes arenecessary, whether it's the focus on health care or -- or ourbroader...

STEPHANOPOULOS: So open to it, but no final decision?

ORSZAG: Yes. STEPHANOPOULOS: Finally, this week the Senate is going to bedebating an omnibus spending proposal that has several thousandearmarks. The president was very clear that he wanted earmark reformduring the campaign, said he wanted to get back to 1994 levels.Congressman Cantor, who's coming up, says the president ought to vetothis budget because there are so many earmarks in it, yet theDemocratic leaders in the Senate are defending the proposal.

(BEGIN VIDEO CLIP)

SEN. HARRY REID, D-NEV., SENATE MAJORITY LEADER: Since we'vebeen a country, we have had the obligation as a Congress to helpdirect spending. We cannot let spending be done by a bunch ofnameless, faceless bureaucrats buried in this town someplace.

(END VIDEO CLIP)

STEPHANOPOULOS: I don't think he meant that personally to you,but there's a real showdown here between the president's priorities.There's a lot of spending in that bill, investments that he thinks areimportant. There are also several thousand earmarks. So does thatmean he signs the bill or vetoes it?

ORSZAG: We want to -- this is last year's business. We want tojust move on. Let's get this bill done, get it into law and moveforward.

STEPHANOPOULOS: So he'll sign it?

ORSZAG: Yes.

STEPHANOPOULOS: And what kind of earmark reform will he callfor?

ORSZAG: We're going to be working with the Congress. We want tomake sure that earmarks are reduced and they're also transparent.We're going to work with the Congress on a set of reforms to achievethose...

(CROSSTALK)

STEPHANOPOULOS: But he signs this bill this year?

ORSZAG: This is -- this is last year's business. We just needto move on.

STEPHANOPOULOS: Peter Orszag, thanks very much.

ORSZAG: Thank you.

STEPHANOPOULOS: Now, for the Republican perspective, we go toCongressman Eric Cantor. He comes to us from Richmond, Virginia.

Let's start where I just ended with Mr. Orszag right there. Youheard it. The president's not taking your advice on the omnibusspending bill.

CANTOR: Good morning, George. Listen, I mean, the president waselected by the people of this country to institute change inWashington and to finally demand a federal government that isaccountable to the people. We have a -- almost a $500 billion omnibusbill that came out of the House that will be considered by the Senate.

You know, I think that we need to put our money where our mouthis and not just do as I say, not as I do. We have got to institutereform so that the public can regain their confidence. The fact thatthere are 9,000 earmarks in this bill and the fact that the vettingprocess just doesn't take place the way it should, we ought to standup and draw the line right now and stop the waste.

I mean, George, we cannot continue to afford to throw trillionsof dollars out a week on the backs of the people of this country.

STEPHANOPOULOS: So you oppose the president on the omnibusspending bill. Obviously, you opposed the president on the stimuluspackage. Your colleagues give you a lot of credit for executing thestrategy whereby no Republicans in the House voted for the president'srecovery package. Will any House Republicans vote for the president'sbudget?

CANTOR: Listen, George, this budget obviously has raised a lotof concerns and a lot of different areas. But let's remember what thepriority should be right now. The priority should be focused onpreserving and protecting creating new jobs.

I mean, I talk to small-business people in my district all thetime. They're hurting right now. They're not even taking home apaycheck, and they're struggling to make the bills at the end of themonth and to keep the lights on. That spells real danger for oureconomy.

So we need to focus our efforts to make sure that what we do inWashington does one thing and one thing first, and that is to focus oneconomic growth.

STEPHANOPOULOS: So the president...

CANTOR: And this budget -- this budget will have -- we will haveto work on this budget a lot in order to get this spending plan intothat type of focus.

STEPHANOPOULOS: So let me go back to the same question: Willany Republicans vote for this budget? CANTOR: Well, George, as you know, you know, this budget has tomake its way through the House. And, again, we want to work with thispresident. We want people to regain their confidence in Washington.And what people are looking for is results.

Again, go back to that small-business person. People arehurting. They're looking for policies that finally will institute jobgrowth, not just transfers of wealth.

And what we see in this budget, frankly, is an attempt, again, totry and stimulate the economy through government expenditure. And,you know, at best what that can do is redistribute wealth. It can'tcreate jobs; it can't create wealth. We've got to get back tofocusing on job creation and creating prosperity.

STEPHANOPOULOS: So it's clear that you're against this budget.You're not going to make a prediction. But let me move on to thebroader political question here. Right now, you've made your views on-- on the economy, on these proposals pretty clear, but the publicseems to be siding with President Obama. His approval rating is stillquite high on the economy itself.

Who do you trust to handle the economy? According to our ABCNews poll, 61 percent say they trust President Obama. Only 26 percenttrust the Republican Party. That's the largest gap we've seen in ageneration.

On who's reaching out to the other side, 73 percent say thatPresident Obama is reaching out to work with the Republicans, but only34 percent think that Republicans are reaching out to work with thepresident.

Are you worried that the impression that you're not working withthe -- the president, you're not trusted on the economy, and you'rerooting for him to fail is going to burn in and be burned in andlocked in with the American public?

CANTOR: George, nobody -- no Republican, no Democrat -- wantsthis president to fail, nor do they want this country to fail or theeconomy to fail. What we did in the House during the first weeks ofthe stimulus debate is to come up with a plan. I personally handedthat plan to President Obama at his suggestion. He said, "Bring usyour ideas."

We developed a plan that, frankly, we felt could create twice asmany jobs at half the cost. Now, that plan did not make its way intoSpeaker Pelosi's stimulus bill. But that doesn't mean...

STEPHANOPOULOS: Now, the White House -- let me just stop youthere, because the president says and the White House says that theydid incorporate some of your suggestions. They incorporated some ofthe tax cut suggestions you had; they also incorporated your ideas ongovernment transparency to put -- to put the spending up on a Web siteso everybody knew what was going on.

CANTOR: Well -- well, George, again, on the transparency issue,when I met with then-President-elect Obama, I suggested that we puteverything up online immediately so we could have some ventilation ofideas in this country. Unfortunately, what went up online was thefinished product once everything was hammered out, and the public didnot have enough opportunity to, I think, opine on what they felt theirtaxpayer dollars should be spent on.

But, look, at the end of the day, the public is looking forresults. They're tired of Washington just throwing money at a problemwithout having a well-thought-out plan.

That's what we need to do. We need to focus on how we can returnto an era of job creation, of more confidence on the part of small-business people, so that the middle class in this country can regainthe financial security that they lost through regaining job security.

STEPHANOPOULOS: You know, it's not just Democrats who say thatthe Republican response has been wanting. Governor Jon Huntsman ofUtah made some -- made some headlines this week when he -- he talkedabout the approach of the Republican leadership here in Washington.Here's what he had to say.

(BEGIN VIDEO CLIP)

GOV. JON HUNTSMAN JR., R-UTAH: I've not met them. I don'tlisten or read to whatever it is they say, because it'sinconsequential completely. The future of our party will be basedupon what happens in the laboratories and the incubators of democracy,make no mistake about it.

(END VIDEO CLIP)

STEPHANOPOULOS: Those are some pretty harsh words from a memberof your own party, a governor of your own party.

CANTOR: Well, I cannot comment, because I haven't spoken to thegovernor. But let me -- let's say this, George. You know that theHouse Republicans have 178 members in the House out of 435. SpeakerPelosi does not need our votes to pass any legislation.

But what we need to do as a party is we need to be out therepositing affirmative plans, positive alternatives to the problemsfacing this country. And, frankly, I believe that the people of thiscountry think that we are spending entirely too much money, the moneythat we don't have. And as we see in this budget that has beenpresented last week, it is proposing massive tax increases on peopleand on businesses that can't afford to pay them.

So we need to get some balance. We need to have a focus onmiddle-class families to make sure that the uncertainty is lifted andthey can regain their confidence, as well as the investing public, sowe can see job creation again.

STEPHANOPOULOS: But Governor Huntsman says that you're not goingto be reaching out to broaden the base of the party, reaching out toyoung people who've left the Republican Party in droves, unless you dohave that positive agenda on the environment, unless you move to themiddle on issues like gay rights. Are you prepared to do that in theHouse?

CANTOR: There is no question the Republican Party has to returnto be one of inclusion, not exclusion. And we are a party with manyideas. And we have in that a commitment to make sure that we havepositive alternatives, if we don't agree with this administration orthe House Democrats, and to continue to put those ideas forward.

And, again, the problems facing this country and the problemsfacing the working moms in the suburban office parks, the problemsfacing small-business people across this country are not justRepublican or Democrat problems. They are so big, they are sochallenging we all need to join together, not only in Washington, butaround the country, to put the ideas forward and let's come up withsolutions that actually produce results for a change, instead ofmaking matters worse, which Washington is famous for.

STEPHANOPOULOS: So the Rush Limbaugh approach of hoping thepresident fails is not the Eric Cantor, House Republican approach?

CANTOR: George, absolutely not. And I don't -- I don't thinkanyone wants anything to fail right now. We have such challenges.

What we need to do is we need to put forth solutions to theproblems that real families are facing today. And our common-sense,conservative principles of limited government, and the belief in freemarkets, and the belief that really opportunity can only be created bythe private sector are going to undergird our proposals going forward.

STEPHANOPOULOS: OK. Congressman Cantor, thanks very much foryour time this morning.

CANTOR: Thank you, George.

END