'This Week' Transcript: Austan Goolsbee

WASHINGTON, June 5, 2011 — -- (BEGIN VIDEO CLIP)

AMANPOUR (voice-over): This week, the recovery hits the brakes. Tough economic news on jobs, on housing, and gridlock in Washington sends jitters through Wall Street.

OBAMA: We still face some tough times. We still face some challenges.

AMANPOUR: Is there any relief in sight? I ask the president's top economic adviser, Austan Goolsbee, what to expect.

Republican presidential candidates have their own answers.

ROMNEY: Barack Obama has failed America.

PAWLENTY: President Obama's fluffy rhetoric doesn't fill our gas tanks with gas.

AMANPOUR: In a week filled with political drama, will John Edwards go to jail?

Then, a slaughter in Syria, even children a target. Will the United States call on President Assad to step down?

CLINTON: If he cannot end the violence against his own people, then he needs to get out of the way.

(END VIDEO CLIP)

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

AMANPOUR: Welcome to the program. We'll get to the economy in just a moment, but first, some news since your morning papers.

Protesters in Yemen are celebrating today, this after the embattled Yemeni president Ali Abdullah Saleh left for Saudi Arabia to seek medical treatment after being wounded in an attack on his compound on Friday. His regime, now in danger of falling, is a key U.S. ally against Al Qaida, which could take advantage of a leadership vacuum there.

And American and Pakistani officials are increasingly confident that top Al Qaida leader Ilyas Kashmiri was killed in a U.S. drone attack Friday in Pakistan. Pakistani intelligence officials say they provided the key tip-off about his whereabouts. The operation is being seen as a confidence-building measure between the two countries. And we'll have more on the U.S.-Pakistan relations with Diane Sawyer, who's in Afghanistan. We'll have that later in the program.

And this week, just as the race for the Republican nomination shifts into high gear, the economy has dominated the headlines, and it makes for very grim reading. High gas prices, disruptions caused by the earthquake in Japan, and uncertainty about government debt have made the road to recovery a rocky one.

Here's ABC's John Berman.

(BEGIN VIDEOTAPE)

BERMAN (voice-over): The American road to recovery, just one month ago speeding along with the strongest private-sector growth in five years, until suddenly...

OBAMA: There are always going to be bumps on the road to recovery.

BERMAN: Bumps on jobs, just 54,000 new jobs added last month, unemployment back up to 9.1 percent; bumps on manufacturing, new factory orders fell to the lowest level in two years; bumps in housing, a double dip in home prices all of the way down to 2002 levels. And if the economy hit a bump, for the White House, something else hit the fan.

PALIN: When you're looking at the extremely high unemployment numbers, still aren't coming down as fast as they should be.

ROMNEY: This is now his economy, and what he has done has failed the American people.

BERMAN: Republican candidate, official and otherwise, smell opportunity.

(on-screen): Why you, why now?

ROMNEY: Well, the president has failed at getting our economy going, and the economy is in my wheelhouse.

BERMAN (voice-over): Just what do they see? The fact that no president since Franklin Roosevelt has been re-elected with unemployment higher than 7.2 percent. So what can the president do? He can argue reasonably...

OBAMA: Over the last three months alone, we've added about 750,000 private-sector jobs. Over the last 14 months, we've added more than 2 million private-sector jobs.

BERMAN: His surrogates and supporters can say...

WASSERMAN SCHULTZ: We continue to be on the right track.

(UNKNOWN): We're headed in the right direction.

BERMAN: But you know what that sounds like?

GEORGE H.W. BUSH: And things are moving forward in this country. The economy is moving forward.

BERMAN: And we know what happened to him, which is why President Obama is always careful not to oversell, trying not to seem out of touch.

OBAMA: You know, it's like, if you had a bad illness, if you got hit by a -- by a truck, you know, it's going to take a while for you to mend.

BERMAN: But now it may have to mend on its own, because, practically speaking, there isn't much left the president can do. With the political wars over the debt, there is no chance for another stimulus, no more bank bailouts, there are no federal jobs to offer. And with interest rates at or near zero, the Fed can't do anything to lower them. The president might just have to watch and hope that the American road to recovery is merely a bumpy road and not a road to nowhere.

For "This Week," John Berman, ABC News, Stratham, New Hampshire.

(END VIDEOTAPE)

AMANPOUR: And we're joined now by Austan Goolsbee, the chairman of the president's Council of Economic Advisers.

Welcome back to "This Week."

GOOLSBEE: Great to see you again, Christiane.

AMANPOUR: So you've heard all that. John Berman set it up. This Friday, this last jobs report was meant to be the acid test. What is that telling us? Is the recovery threatened?

GOOLSBEE: Well, hold on. And I said last month when we had an excellent jobs report, 100,000 above expectations, and I said again this last Friday when it came in below expectations, don't -- don't make too much of any one month's job report, because they're highly variable. You want to look at a little bit of a trend to get a more accurate barometer, and the overall direction is, yes, somewhat slowed from the stiff headwinds of gas prices, of the events in Japan, of some of the events in Europe. But overall, the last six months, we've added a million jobs in the private sector.

AMANPOUR: Right, but every economist, including many of your advisers and colleagues, have said that in order for this to be sustainable, you have to actually have above 150,000 jobs per month. And it was way below that this month.

GOOLSBEE: Well, and in the three months before that, it was well above it. What I'm emphasizing is the -- every economist knows that the monthly numbers are highly variable, so you want to look at a little bit more than just one month before concluding on a trend.

AMANPOUR: So what happens if this same kind of report comes out next month? What does that then tell you?

GOOLSBEE: Well, look, what we know is that we have moved a long way from when the economy is in a rescue mode, the private sector's in freefall, and the government is the only thing standing between us and falling into another Great Depression. We were losing 780,000 jobs a month when the president comes into office. Fast-forward to now: We've added 1 million jobs over the last six months.

If we face stiff headwinds, that are shocks like the -- like the Japanese earthquake, we have to deal with that, but I think the -- the trend is relatively clear.

AMANPOUR: But what do you say to the American people when so many economists were expecting something, according to a Bloomberg survey, of 165,000 to 170,000 to be created this month, to see the unemployment come down a little, which it didn't? What do you say to the American people about that? Where is the light, in other words?

GOOLSBEE: The first thing that I say is the same thing I said one month ago when it came in the opposite, 100,000 above expectations, and that is, let's not conclude too much of anything from one report. Let's look at what's happened over six months.

And what has happened over six months is we've added a million jobs in the private sector. The president has enacted -- we passed a tax policy in December, which has come into place this year and will continue over the course of this year, to put -- to give a payroll tax of $1,000 plus to 150 million workers and to give direct incentives for business to start investing. And they've accumulated money on their balance sheet.

Our -- our effort now as a government should be to get the private sector, to help them stand up and lead the recovery. It -- the government is not the central driver of recovery.

AMANPOUR: Right, but, again, it is slower than expected. So, economists are asking and people are asking, is this kind of a wake-up call, do you think, to sort of shift the political debate from what's been all about debt reduction and shift it back to job creation? I mean, is this an opportunity, for instance, to try to talk about creating jobs and adding maybe another stimulus? Let's say there was no politics involved, in a perfect environment. What would you do to get this off the slow burner?

GOOLSBEE: Well, I would say two or three thing. The first is, the president has never stopped talking about jobs. For him, the growth strategy is the number-one issue.

Now, we must live within our means. We have a moment that we can talk about long-run deficit reduction. And the vice president's leading an effort to do that, that the president has asked him to. But the president is getting up every day -- on Friday, he's going out to Ohio to talk about jobs in manufacturing, which manufacturing is having its best employment year in almost 15 years.

AMANPOUR: And yet that came down, as well, manufacturing jobs...

GOOLSBEE: Well, durable goods manufacturing was up.

AMANPOUR: But what specifically can you do to change this?

GOOLSBEE: OK. So the -- we have shifted in the economy from a rescue phase, which is government-directed, to a phase in which government policies have got -- we've got to rely on government policies that are trying to leverage the private sector and give incentives to the private sector to be doing the growth.

And that -- so the president has started these tax cuts that will continue over the rest of this year, has put in place this regulatory review in which all of the major agencies are going to go through, find any outmoded regulations, ones that are excessively costly for their benefits, find ways to streamline.

AMANPOUR: Would there be more payroll cuts...

GOOLSBEE: The free-trade agreements...

AMANPOUR: ... tax cut holiday?

GOOLSBEE: Well, we still -- there will be more payroll tax cut over the entire course of this year. It's more than $1,000 a worker for 150 million workers.

The free-trade agreements, trying to increase exports, which are rising at 15 percent annual rates. The infrastructure bank that the president has called for, which, again, is trying to leverage, using government incentives to get private capital to enter and help grow the economy. That -- that -- those are the things that we've got to be doing.

And I would just emphasize, the president's plan is putting us on the right track. Over the last 15 months, we've added more than 2 million jobs in the private sector. That's far in excess of what it was in the comparable period after the last recession.

AMANPOUR: So are you -- are you not worried -- well, I mean, a report that's about to come out is saying that this is the longest jobless recovery, it's going to come out this month, that'll it take more than 60 months...

GOOLSBEE: It's not a jobless recovery.

AMANPOUR: ... of GDP recovered. It'll take until 2016.

GOOLSBEE: It's not a jobless recovery. That is an incorrect phrase. After the last recession, in this comparable period, post-recession, we had lost 100,000 jobs. We've added more than 2 million jobs. There's a major difference between a jobless recovery and a very deep hole that we're climbing our way out of, and that is what -- the position we're in.

AMANPOUR: So a part of the whole that everybody is looking at right now is the debt ceiling. Do you anticipate that this is going to be resolved over the next -- over the next month or so...

(CROSSTALK)

GOOLSBEE: I do. I do -- I -- I definitely think it's going to be resolved, because it has to be. The U.S. is a nation that pays its bills, and ultimately we're not going to decide that we refuse to pay the bills that we already have.

AMANPOUR: Are you concerned that Moody's is saying that it may look at downgrading if certain benchmarks aren't met?

GOOLSBEE: Look, I think what Moody said is, you have to pay your bills, and if you don't pay your bills, there are going to be consequences. And I think everybody agrees with that.

Now, I'm relatively optimistic that -- because you've seen leaders on both sides of the aisle saying they don't want to push this all the way right up to the -- to the edge of the -- of Treasury's authority of what can be done. This is not an alarm clock. It would be extremely dangerous to get right up to the edge or -- you've seen some people even saying, well, it'd be OK if we defaulted for a short period. That's not true; we shouldn't do that. We should resolve this over the next month.

AMANPOUR: Austan Goolsbee, thank you very much, indeed, for joining me.

GOOLSBEE: Great to see you again.

AMANPOUR: Thank you.

And when we come back, our experts weigh in on the state of the economy and the jobs outlook.

(COMMERCIAL BREAK)

AMANPOUR: A disappointing jobs report has raised more questions on the state of the economy. And so we turn now to our panel of economic experts for their insights: Paul Krugman of the New York Times; Chrystia Freeland of Thomson Reuters; and Martin Regalia of the U.S. Chamber of Commerce.

Thank you all for joining me.

You just heard the president's chairman of the Council on Economic Advisers basically making -- putting on the best face of some dismal numbers. What do you think the American people can expect, Paul, from now on?

KRUGMAN: The trouble is -- I mean, Austan was right to say, you know, one month doesn't matter that much, but the fact is, for about 18 months, we've had an economy that's recovering in a technical sense, but it's not generating jobs faster than population growth. So we've basically been in a holding pattern, and that's likely to continue.

AMANPOUR: And does that mean, if it's not generating jobs fast enough, that the economy is not self-sustainably growing?

KRUGMAN: Oh, I think it's self-sustainably growing. The trouble is, it's not growing in a way that takes up the slack, right? We're kind of in lost decade territory. This is -- you know, those of us who studied Japan in the '90s look at this and say just -- gosh, we're looking awfully Japanese right now.

FREELAND: I thought you asked a really great question, Christiane, when you said, you know, is this is a jobless recovery? And Austan really...

AMANPOUR: Well, he denied it.

FREELAND: Yeah, and he didn't like to hear that, but Paul is absolutely right. And, you know, you need 150,000 jobs a month just to tread water. And that's not taking into account all of those millions of people who lost their jobs in the recession.

AMANPOUR: Well, then let me ask -- ask both of you. And let me ask you, Martin. Obviously, the momentum has been with the debt reduction crowd, so to speak. Is that at the expense of real, huge effort on job creation? In other words, what's more toxic, billions of dollars of stimulus or these kind of unemployment numbers?

REGALIA: Well, right now, we're looking at a situation where we have a lot of noise coming into the system. And that noise detracts the momentum. So we get an economy that doesn't grow very fast and doesn't create the number of jobs we need.

So what you have to do is kind of strip away some of the distractions. The leading distraction right now is the debt ceiling. There ought to be a decision on the debt ceiling. We've had these debates before. They come up repeatedly. We ought to pass an extension of the debt ceiling. If it's done with spending cuts, that's great. That's even better.

But the fact of the matter is, we have to get that done. Then we have to make some long-term headway on where we're going with our debt and our deficit. It's -- it's binding up the system. People are concerned about what's going to happen to the value of the dollar, what's going to happen to interest rates, and as long as that concern is out there, businesses aren't going to do what they do best, which is go out, compete, create jobs, and make everybody money.

KRUGMAN: Can I just say, I -- I agree we ought to pass the debt ceiling fast, but the rest I just disagree. If you ask, why are businesses not growing? Businesses aren't expanding because consumer demand isn't there, and consumer demand isn't there because of a combination of high consumer debt and low incomes. So what we really need, in an ideal world -- Austan dodged that question -- but we really need a new stimulus. We need more move from the Fed. We need -- we need to really boot this economy up, not just sort of say, well, we're getting our house in order and expect it to fix itself.

AMANPOUR: Is there a remote chance that that could ever happen?

FREELAND: Another stimulus?

AMANPOUR: Yeah, now.

FREELAND: It sure doesn't look like it. I mean...

REGALIA: This administration has tried to boost this economy in fits and starts by addressing a pinpoint here and a pinpoint there. The fact of the matter is, the economy is broad and diverse. And what this government has to do is get out of its way. And if it gets out of its way, the business confidence will return.

As Paul said, they're trying to meet demand. When they can meet demand with the current labor force, they're not going to hire new workers. When they can't, they will. So what you've got to do is get out of the way.

And public stimulus aimed at the consumer or at business, we -- we had a housing stimulus, we had an investment stimulus, short term, targeted. They don't last. They have no staying power. You have to get out of the way, let businesses do what they do.

Right now, we've got a housing crisis, an enormous housing crisis. We've seen a tremendous deterioration in household net worth. And yet we're delaying the process of equilibration. We're delaying the process by which those homes get put back on to the market. That reduces household net worth; that reduces demand.

FREELAND: So, Martin, is your view that there should just be more upfront pain right now, kind of, you know, a shock therapy model, and, really, you just need the economy to...

(CROSSTALK)

REGALIA: Not at all. But economies have to equilibrate before they move forward. And if you -- we've thrown in a significant amount of additional regulation. We've got 400 or 500 projects around this country right now that could be started tomorrow if they were permitted. They are not.

So we put obstacles in the way. Yes, we've been hit with temporary headwinds like Japan. And those things will pass. And we'll actually see a positive rebound towards the end of the year.

AMANPOUR: But how do you -- if Austan Goolsbee's central premises is that the private sector really has to be the driver, how does one make that happen now?

KRUGMAN: Well, I mean, the answer would be stimulus, fiscal and monetary. It's not -- it's not the case, right? I was just looking at the National Federation of Independent Business poll, and businesses are asked why they're not expanding. And, yeah, some of them mentioned government regulation, political climate. But by about 6 to 1, they say because lousy business conditions. The demand isn't there.

You need to -- you know, we used to say pump-priming. We need jump-starting. You need something that gets this moving, which would be -- you know, if we -- if we suddenly had a threat of war and had a military buildup, you'd be amazed at how fast this economy would recover. The problem is, we can't get ourselves together to do that without that kind of -- you know, we can't get to do it for the right reasons instead of the wrong reasons.

AMANPOUR: Do you think it's a wake-up call right now, Chrystia?

FREELAND: Well, I think it should be. And I would really strongly push back against this notion that business isn't investing because government is in business's way right now. Tax rates are at Bush levels. This notion that there's been a whole bunch of new regulation, really, it's only been in the financial sector.

And I think that it's a little bit absurd for people to argue that the financial industry post the financial crisis was overregulated. Right? It was clearly under-regulated.

Interest rates are incredibly low. The interest rate on the 10-year bond went below 3 percent. So, clearly, something is going on here which is not about the government getting in the way of business.

And the tragedy for me that I think people do not talk about enough is how unemployment is becoming a long-term structural part of the U.S. economy. It's at 9 percent. The average amount of time an American person who is unemployed has been unemployed...

KRUGMAN: It's 39 weeks.

FREELAND: ... 39 weeks, longer than at any time since 1948. Those are lives that are...

(CROSSTALK)

REGALIA: Those are terrible numbers. And you want to get them going again. But to sit there and say that financial services regulation only affects -- it's like saying coronary artery disease only affects the heart and the blood flow.

AMANPOUR: You can, I hope, continue this conversation in the green room. Thank you very much, indeed. And stay tuned for the Sunday funnies next. And later, rising Tea Party favorite and Republican presidential candidate Herman Cain joins our roundtable.

(COMMERCIAL BREAK)

AMANPOUR: And now the Sunday funnies.

(BEGIN VIDEO CLIP)

(UNKNOWN): Is she running for president?

STEWART: Hello, lame-stream media. Why? Because she's driving her family around key primary states in a bus, with her signature, in roughly equal size to the preamble of the Constitution? Has anyone ever stopped to consider the possibility that Sarah Palin and her family are driving from town to town, solving mysteries and unmasking monsters?

COLBERT: Well, the Chicken Little Democrats are so worried the U.S. will default on its loans that they want to raise the U.S. debt ceiling. Come on, we already raised the debt ceiling under President Bush. That is so 2002, 2003, 2004, 2006, 2007, and twice in 2008.

(END VIDEO CLIP)

AMANPOUR: And coming up, Republican presidential candidate and Tea Party rising star Herman Cain joins us on our roundtable as we look at Mitt Romney's campaign rollout, the John Edwards' indictment, and the rest of the week's politics.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARBOUR: We can't start out with the idea as the Faith and Freedom Coalition that our candidate's got to agree with me on every single thing. We cannot expect our candidate to be pure. Winning is about unity.

PAWLENTY: Traditional marriage matters. And we need to tell each other and the country that we need to keep traditional marriage elevated on a platform. All domestic relationships are not the same as traditional marriage. It needs to be protected.

ROMNEY: We're united in our belief in the sanctity of human life. We're united in our belief in the importance and significance of marriage between one man and one woman.

HUNTSMAN: I do not believe the Republican Party should focus only on our economic life to the neglect of our human life. That is a trade we should not make. If Republicans ignore life, the deficit we will face is one that is much more destructive.

BACHMANN: America will not rest until we repeal Obamacare. Take it to the bank. Cash the check. It will be done. It will not stand.

REED: In 2012, we're going to add to the majority in the House, we're going to see a conservative majority in the U.S. Senate, and we're going to replace Barack Obama with a president that we can be proud of.

(END VIDEO CLIP)

AMANPOUR: Republican leaders and presidential candidates addressing the Faith and Freedom Coalition conference this weekend here in Washington.

And we're joined by our roundtable, Republican presidential candidate and former Godfather's Pizza CEO Herman Cain; former Clinton White House press secretary Dee Dee Myers; Mark McKinnon, co-founder of the nonpartisan group No Labels and Republican strategist to John McCain and George W. Bush; and ABC News senior political correspondent Jonathan Karl.

Thank you all for joining me.

Let me ask you first, Mr. Cain...

CAIN: Yes. Yes.

AMANPOUR: ... you are rapidly rising. There's a big article about you in the New York Times today. Are you surprised?

CAIN: We're not surprised, but we are surprised at how quickly that the media and others are catching on, because our strategy from the beginning has been to develop a very strong ground game. I've been doing that ever since the beginning of the year. But we are a bit surprised at how quickly I'm starting to show up in the top of the polls.

AMANPOUR: So let me ask all of you. And perhaps you'll weigh in, as well. You heard Haley Barbour say unity is what we need, enemy is -- rather, purity is the enemy of unity. What is this saying then about a conference like -- like the one we just had in Washington? Should there be a truce on social values in order for -- for you to gather around and actually focus on what matters to the Americans right now?

CAIN: It does not need to be a truce. You can simultaneously address the social issues as well as the fiscal issues. And I think that was the key message. And the other good thing is, if you look at all of the potential Republican nominees, they are not that far apart. And that was the unity that Haley was talking about. So I think that would be a good thing going into the nomination process.

MCKINNON: Well, I think the interesting thing is that the fun thing about American politics is that we often throw conventional wisdom out the window. The Republican race is wide open. You see people like Herman Cain catching on. I think -- I think other people are going to get in. I think Rick Perry is going to get in this race. Nature abhors a vacuum, and there's still a vacuum out there, and somebody's going to come fill it on the social conservative Tea Party. That's where the energy is. But...

AMANPOUR: You don't see the energy in Mitt Romney, who just announced his campaign this week?

MCKINNON: In a conventional -- conventional year, he'd be the front-runner -- well, he is the front-runner. But it's not a conventional time. And people are looking for a nontraditional, antiestablishment candidate, and that's not Mitt Romney.

Now, he's doing very well. He's raised a lot of money, has a great organization, a good team, and he's going to try to muscle through it. But I think there's going to be a lot of people up there trying to...

(CROSSTALK)

AMANPOUR: Nontraditional antiestablishment, Dee Dee. What does that say about the Republicans and for the Democrats?

MYERS: Right. I think there's a segment of the Republican electorate that's looking for a nontraditional candidate, and then there's another segment of the Republican and independent electorate that wants a traditional candidate that's going to focus on the economy and focus on jobs. And so, you know, you see the Republican party going through -- it's like they've been dating Mitt Romney for a couple of years, and they keep making lists about all the things that are great about them, but they haven't fallen in love.

KARL: I mean, you can have three places in this race, right? There's going to be three people when you get down to it. There's going to be Mitt Romney. There's going to be the mainstream anti-Mitt Romney candidate. And there's going to be a Tea Party candidate.

AMANPOUR: And when Mitt Romney unveiled his -- his candidacy this week in New Hampshire, he was basically overshadowed, wasn't he, by Sarah Palin, Jon?

KARL: Well, he did -- this is the front page of the Union Leader, which is, of course, the number-one newspaper in New Hampshire. The day after Romney's announcement, Palin has the headline. You've got to really look to find the Romney mention, story on page A-3.

But, you know, Romney -- a lot was made of the fact he took off his tie, he took off the coat. He was outside. His people were thrilled. The wind was blowing, so his hair got a little messed up. It's a different optic for Mitt Romney, who was always a little too buttoned down.

But what was more important is not how he looked, but what he said. If you listen to him, it's all about the economy. Even at the speech at the -- at the values forum, he was talking economy. He's not getting into -- you know, and we played one sound bite where he mentioned the sanctity of life. That's it. He is going to be -- this time, unlike last time -- only about the economy.

AMANPOUR: You were laughing then. Which bit are you laughing at, Sarah Palin's grabbing the headlines or the hair-blowing?

CAIN: No. Well, the hair-blowing was...

(CROSSTALK)

CAIN: But that just shows you how detailed Jon gets, he's focusing on the hair. And I was also laughing about the fact that, yes, Sarah has gained a lot of the headlines and this sort of thing.

AMANPOUR: Do you think she'll get in?

CAIN: I don't know for sure. If I had to guess, I would say no. But I wouldn't bet on that. And the other thing that I was amused about was, yes, he had his announcement, and a lot of people making a big deal about, you know, the no tie and so forth. And I contrast that to two weeks ago when I did my announcement, and we attracted 15,000 people in the middle of the day in Atlanta's Centennial Park. So I think that's a statement to your first question, as well.

AMANPOUR: One of the things I want you to respond to, which was in the article today, Karl Rove, Republican strategist, and other Republicans have dismissed Herman Cain as little more than somebody with a great personal story. What do you say about that?

CAIN: Well, they don't know Herman Cain, number one. And, secondly...

AMANPOUR: Who is Herman Cain?

CAIN: Herman Cain is someone who has lived the American dream, and he now wants to make sure that other generations coming behind him also are able to live that American dream.

And Jon touched on the point. Many of the people in the mainstream, like Karl Rove, Charles Krauthammer, I have great respect for them. They are working off of the traditional model of great name ID before you start out, whole lot of money, and you've held public office before. But Herman Cain is just the reverse. But guess what's happening? The American people aren't looking at it from the traditional model standpoint.

MCKINNON: That's true. I mean, this is the kind of environment where somebody like a Herman Cain can strike. You don't need money. What you need is message. And people are looking for a spark to hit that gasoline out there, and it will light up fast. And you can -- people can get in late. All this traditional idea about money and having to do it early, throw it out the window. This is going to be a different kind of election cycle.

AMANPOUR: Really?

MCKINNON: Absolutely.

AMANPOUR: You don't need money?

CAIN: You need some.

(LAUGHTER)

He didn't mean that exactly like that, OK?

(LAUGHTER)

AMANPOUR: Because the conventional wisdom is that, actually, in the end, you get a more moderate candidate or a business-friendly candidate. I know you're a CEO, but people who can actually fundraise.

CAIN: Yes. Yes.

MCKINNON: Mitt Romney is going to need every penny that he raises, but it -- but it doesn't count like it used to, because there are ways to get your message out now with the tools that we have.

KARL: Well, and we saw with Meg Whitman, I mean, money's not going to be enough. But I'll tell you, Romney -- watch June 30th. That's the next fundraising quarter will end. Romney will raise more money than all the other candidates combined. What I'll be looking for is, what does Herman Cain raise?

CAIN: Well, see, we're on -- we're on track to do -- to hit our goals, but, see, getting back to the other point that Mark made, there are two dynamics that have changed the political landscape, the power of the Internet, as well as the citizens' Tea Party movement. Those dynamics neutralizes having the most amount of money. We'll have enough money to be competitive, but we don't have to have the most amount.

AMANPOUR: Let me switch gears for a moment, because there's been another big story which you've all reported on this week, and that is the indictment of John Edwards, former presidential candidate. He was charged with six counts, including conspiracy, false statements, and illegal campaign contributions. And here's what he had to say after he was indicted.

(BEGIN VIDEO CLIP)

EDWARDS: There's no question that I've done wrong, and I take full responsibility for having done wrong. And I will regret for the rest of my life the pain and the harm that I've caused to others. But I did not break the law, and I never, ever thought I was breaking the law.

(END VIDEO CLIP)

AMANPOUR: So I guess the question is, cad or criminal? I mean, there are people who are saying that this indictment is very questionable and based on very questionable legalities.

KARL: He's a great lawyer. And the statement there -- the important part of that statement, where he said I never, ever thought I broke the law, this is a campaign finance violation. We've never seen a case like this prosecuted. And it requires the offender to know that he was breaking the law.

And to think he was breaking the law, that would mean -- I mean, to break the law here, the government's theory is that those expenditures were actual campaign expenditures when he was taking care of his mistress and covering this up. Was that a traditional campaign expenditure?

AMANPOUR: And so, Dee Dee...

MYERS: And -- yeah, in front of a grand jury, there is no cross-examination. The defense doesn't get to present its side of the case. For example, Fred Baron, Bunny Melon both paid gift taxes on the money that they gave to him. I mean, there's clear evidence that they were trying to comply with the law in addition to -- you know, the prosecution says evidence that they were trying to skirt the law.

So it is a novel theory. It's going to be, I think, very tough in court. I think there's no sympathy for John Edwards, and so going in front of a jury is dicey, but he clearly wanted to hang on to his law license. He sees that as his -- you know, the way he's going to support his family going forward.

AMANPOUR: And do you think it will come to trial?

MYERS: You know, there's a lot of conflict in -- among prosecutors who say that there's no way this is going to go to trial and that it won't make it that far, but we don't know.

KARL: But I've talked to people close to Edwards who say, in his mind, he thinks that if he can win this, somehow he's absolved.

MYERS: Right...

KARL: Of the larger issue.

MYERS: And he also thought -- he also thought he could be attorney general after a lot of the scandal was revealed, so his judgment on his own, you know, place in the story is not exactly clear. But he has a good case, I think.

MCKINNON: He's created a new category for felonies for cads, though.

(LAUGHTER)

MYERS: Yes, but it's still not illegal to be a cad or we'd have a lot of people in jail right now.

MCKINNON: Yes, we would.

AMANPOUR: Let me just turn to foreign policy, which raised its head very, very high this week, with Nancy Pelosi, who you talked to, with the troops in Afghanistan, with the Democrats trying to challenge President Obama on the war powers, et cetera What did Nancy Pelosi say to you about the troops?

KARL: Well, this is really -- this is going to be a showdown this summer. She was talking about what kind of a withdrawal from Afghanistan she and Democrats in Congress are expecting this summer, when the president's promised it will begin. And there's been reports that you might see 5,000 troops or so. Pelosi told me, point blank, that is not enough. And, you know, there's a growing antiwar sentiment in the Congress, even among Republicans. I think that this is going to be a very closely watched announcement. And you may see revolt from the president's out party.

CAIN: I find it very interesting that now the Democrats are putting pressure on the president, after he made this -- he basically made the promise that the troops are going to be out in July 2011. You don't make those kind of statements not having all of the information. And so now, even his own party, I find it interesting that they are now demanding that he get more specific about when he's going to get out. They're asking for that plan.

MYERS: And on Libya, too, I mean, there's -- I think there's a sense of growing war fatigue in Congress, you know (inaudible) invoked the War Powers Act.

AMANPOUR: All right. Well, Diane Sawyer is in Afghanistan, where she's traveling with the defense secretary, Robert Gates. And I spoke to her earlier today about this and other issues.

(BEGIN VIDEOTAPE)

SAWYER: Christiane, good morning to you from Afghanistan, another big turning point, as you know, for the United States. And we have a question for America's leaders. The secretary of defense and the general in charge will be talking with me here. And I've also been talking to the forces themselves. Is America winning? And what happens is some of America's troops begin to come home?

A related question, as you know, is the debate going on inside the White House about all those drones firing in Pakistan. And we had a chance on the big plane coming in to ask Secretary Gates where he stands on the drones.

(BEGIN VIDEO CLIP)

GATES: First of all, it has to be acknowledged that these drones have played a significant role in taking a lot of Taliban leaders and trainers off the table. The question really then becomes the role of the drones, our relationship with Pakistan, and how this all fits together. And I think that's the discussion that we're having.

We've gone through a difficult spell with the Pakistani government. The reality is, we need each other. And -- and so working our way through that is a complicated business. It is a complicated relationship. And clearly, the drones are a piece of that.

(END VIDEO CLIP)

SAWYER: But again, Christiane, I'll be sitting with Secretary Gates and with General Petraeus to talk to them about whether America is winning, a reality check on how many troops can come home, and what's the risk to the United States if they do.

That's it from Afghanistan for now. See you again soon. Christiane?

(END VIDEOTAPE)

AMANPOUR: Thanks, Diane. And you can see more of Diane Sawyer's report from Afghanistan on "World News" this evening and on Monday and all the time on abcnews.com.

And coming up, the collapse of control in Yemen could be bad news for the U.S. fight against Al Qaida. Another worry for the U.S. is Syria, which has killed hundreds in a brutal crackdown and is now targeting children. So will the U.S. push for regime change there? More on that when we return.

(COMMERCIAL BREAK)

AMANPOUR: The United States is caught in a bind over Syria and whether to call for regime change there. For more than four decades, the Assad family has ruled Syria with ruthless determination. With the Arab uprising sweeping through the entire region and now threatening to topple the Syrian regime, which is fighting back hard, even using tanks and guns against protesters, including the very young.

(BEGIN VIDEOTAPE)

AMANPOUR (voice-over): Of the more than 1,000 people killed in nearly three months of anti-government protests throughout Syria, it is the violence against the children which is the most appalling, and none more haunting than this 13-year-old boy, Hamza Ali al-Khateeb.

This week, pictures of his battered and mutilated corpse appeared on the Internet. Activists say that he was tortured and murdered by security forces before his eviscerated body was returned to his family. His image has galvanized opposition to the rule of President Bashar Assad.

As in so many of these cases, the Syrian government resorted to friendly state television and brought on a man they identified as Hamza's father, saying that he had met with President Assad, who was, quote, "deeply affected" by his son's death.

But on Friday, some of the largest protests yet to honor Hamza and the other dead children were held across Syria. Security forces nonetheless fired into the crowds again, and according to the opposition, dozens of civilians were killed. It was in this very city, Hama, that the president's father, Hafez Assad, killed more than 10,000 people, brutally suppressing an uprising 30 years ago.

The unrest in Syria began in the town of Daraa in March. It was triggered by the arrest of a few teenagers who were charged with spraying anti-regime graffiti on the walls and allegations that their fingernails were ripped out and other torture led to the uprising.

Foreign journalists have been banned, as more than 10,000 protesters have been arrested. But human rights reports and a steady flow of amateur video have been posted on YouTube by an underground network of activists. Countries in the region have been reluctant to criticize President Bashar Assad, but neighboring Jordan's King Abdullah told me that Assad is firmly in charge.

ABDULLAH: From my discussions with him and from what I hear, he is in charge, yes, and he is calling the shots.

AMANPOUR: As the Assad regime strikes out by cutting power and phone lines to other troubled towns and cities, the president himself is making some concessions, releasing some political prisoners and declaring a general amnesty. But exiled opponents meeting in Turkey this week reject these as token gestures. Radwan Ziadeh is one of the dissident organizers.

ZIADEH: We asked directly for Assad to step down and to give the power to his -- to his vice president.

AMANPOUR: The United States has still not called explicitly for Assad to step down, but as the violence continues to spiral out of control, Secretary of State Hillary Clinton hinted this week that the death of 13-year-old Hamza could be a watershed moment.

CLINTON: President Obama said it very clearly. If he cannot end the violence against his own people, take meaningful steps to start a process of reform, then he needs to get out of the way.

(END VIDEOTAPE)

AMANPOUR: Joining me now is Marwan Muasher, who has served as Jordan's foreign minister and deputy prime minister, and is now based here in Washington at the Carnegie Endowment for International Peace.

Welcome to "This Week." You heard what Secretary of State Hillary Clinton said. They're inching towards saying that he's lost legitimacy. Should they say that now? Should they call for him to step down, Assad?

MUASHER: The United States is basically saying it even implicitly, I mean, either implement reforms or step out of the way. This is a minority regime that has no interest in opening up the system, because they know that, if they do, they will be out of power. So the implicit, really, message is that the regime's days, I think, are numbered.

AMANPOUR: Why not make it explicit? They did in Libya; they did in Egypt; they have done elsewhere.

MUASHER: There's a big concern of the alternative. They don't know, you know, who are they going to deal with? There's a concern that the Muslim Brotherhood will come to power, and that explains part of the reluctance. The opposition, as you said, met in Turkey and, in fact, actually came up with a very strong message that they want a secular, pluralistic Syria in which religion plays no role. I think that was a very surprising, but welcome message.

AMANPOUR: Considering the Muslim Brotherhood was at that meeting, as well?

MUASHER: And was very heavily represented at the meeting.

AMANPOUR: So you don't think that there's a threat -- like many people in the region believe that the Muslim Brotherhood could fall into any of the vacuums in any of these countries we're seeing.

MUASHER: The Muslim Brotherhood has been used for a long time as a scare tactic. This is not to say that they don't have designs, but I think that in closed systems, protest votes will only go to the Brotherhood. In pluralistic, open systems, the Brotherhood will have to compete against many other alternatives. And I think that is the way that all Arab countries should go to.

AMANPOUR: Now, you have met Bashar Assad when you were foreign minister. Many called him a reformer; many thought that he would have high hopes. The U.S. administration has been trying to woo the Syrians back into the sort of league of nations, if you like. What is it about him that's turned him this way? Why is he doing this? Or was he always going to do that to hold onto power?

MUASHER: Well, he's been in power for 11 years. So he's had a chance to really put his people in power and to be able to implement reforms. The fact that he has not done so either suggests that he does not intend to do so or suggests that he has a system around him which, as I said, has no interest in opening up a system and putting its own neck on the line. Whatever the case, I think today the end result is the same.

AMANPOUR: Is he history? I mean, can he hold on?

MUASHER: I don't think so. I think any -- any regime that basically turns around -- against its own people really loses whatever legitimacy they have. It's going to be bloody, and it's going to be long. I don't think that the regime is in, you know, danger of falling out tomorrow, but I think that we have reached a no-return point.

AMANPOUR: A very, very important country for the United States and the region is Yemen. We've just seen the president being forced out because of an injury, apparently. He's handed over control. Do you think that's the end of Saleh? Will he come back?

MUASHER: It's probably the end of Saleh. I mean, it's difficult to tell, but I think that this is probably a diplomatic exit.

AMANPOUR: And the U.S. has been trying to get him out diplomatically for months, and yet -- and yet this is the most important country in terms of fighting Al Qaida. What will it mean for the fight against Al Qaida?

MUASHER: Well, Yemen, we must understand, is a problem country for some time, even before the recent uprisings. They've had the problem with the north, with the Houthis. They have the problem with the South. They have a problem with Al Qaida. All these were problems that were present in Yemen long before the uprising took place.

So whoever really replaces Ali Abdullah Saleh will still have to deal with Al Qaida problem. But I also don't think that the problem with Al Qaida, you know, is linked to one person only. This is a problem that Yemen is interested in. And whatever regime comes to power, in my view, will also have an interest in fighting Al Qaida just as much as Ali Abdullah Saleh.

AMANPOUR: So you think so, whoever comes to power? Of course, the U.S. has poured in billions of dollars and a lot of attention into -- into Yemen. So there's a huge investment there. You think whatever replaces Saleh will be committed to fighting Al Qaida, as well?

MUASHER: I think so. Let's remember that Yemen, under any new regime, will need a huge influx of funds. Probably that will come from the United States, from Saudi Arabia, and maybe others. Otherwise, it is facing an economic meltdown. So whoever comes to power is not going to be stupid and I don't think will risk the interests of Yemen in fighting Al Qaida and in putting together, you know, a country back.

AMANPOUR: Looking across the region, you see Egypt, Tunisia, Libya, obviously, all pretty different. How do you see it all playing out?

MUASHER: This is -- let's remember, this is an uprising that just started. I think it will be measured in decades, rather than months and years. We are not going to see the same reaction in each Arab country. You do have Arab countries with different degrees of legitimacy, and some with more time than others.

I think the key question is, for those who do have time and that who do enjoy legitimacy, is to invest that time in a serious, comprehensive, inclusive and measurable reform process than -- rather than, you know, continuing the reform rhetoric that we have seen in many Arab countries. If they do invest that time in such a process, they have every chance to succeed.

AMANPOUR: All right. Marwan Muasher, thank you so much for joining us. And we'll be watching to see whether those new democracies will be pro-Western, pro-American, as well.

MUASHER: Absolutely.

AMANPOUR: And up next, we remember a former secretary of state and two stars of the small screen.

(COMMERCIAL BREAK)

AMANPOUR: Now, "In Memoriam."

(BEGIN VIDEO CLIP)

EAGLEBURGER: What we need in the entire war on terrorism is as much cooperation from other allies and friends as we can get.

KEVORKIAN: I will continue to assist humans to alleviate their agony and interminable suffering.

TAYLOR: You certainly took your time, but it was worth it.

(END VIDEO CLIP)

AMANPOUR: We remember all of those who died in war this week. The Pentagon released the names of 14 servicemembers killed in Afghanistan. We'll be right back.

(COMMERCIAL BREAK)

AMANPOUR: Tomorrow morning on "Good Morning America," be sure to watch an exclusive interview with the former Pennsylvania senator, Rick Santorum, who will announce his run for the presidency.

That's it for our program today. For all of us here in Washington, thank you for watching. And you can follow me all week on Twitter and at abcnews.com, and be sure to watch "World News" with David Muir later tonight. We'll see you next week.

END