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updated 2/4/2010 12:18:28 PM ET 2010-02-04T17:18:28

MR. DAVID GREGORY: This Sunday: With the president on the world stage,

his agenda is under fire back home. Critics charge his stimulus plan is

stuck, while the number of unemployed Americans continues to climb. And

Democrats appear in disarray over the president's massive healthcare

overhaul.

Meanwhile, the political world remains puzzled by Palin. After her abrupt

resignation, what's next for her and the GOP? With us, the man who put

her on the political map by choosing her as his running mate during the

2008 presidential campaign, Arizona Senator John McCain. Then, the view

from the other side of the aisle, New York Senator Chuck Schumer.

Finally, the take from our political roundtable: Karen Hughes, Republican

strategist and former counselor to President George W. Bush; Bob Shrum,

Democratic strategist and senior adviser to the Gore and Kerry

presidential campaigns; Andrea Mitchell, NBC News' chief foreign affairs

correspondent; and Roger Simon, Politico's chief political columnist.

MR. DAVID GREGORY: But first, Senator John McCain, welcome back to MEET

THE PRESS.

SEN. JOHN McCAIN (R-AZ): Thank you, David. Thanks for having me back

again.

MR. GREGORY: I'd like to--always happy to have you here. I want to start

with some breaking news this morning. The front story in The New York

Times is that former Vice President Dick Cheney kept Congress in the

dark, his orders to keep Congress in the dark about a covert CIA program.

It's a program that CIA Director Panetta has now shut down. He's briefed

Congress about it. What do you know about this and what's your reaction

to it?

SEN. McCAIN: Well, uncharacteristically, not a lot. I, I am not on the

Intelligence Committee. I don't know what the details of this are. The

vice president, I think, should obviously be heard from if the

accusations are leveled in his direction. Clearly the Republicans did not

sign a letter, apparently, that was written alleging this, so I, I think

it's, frankly, too early for me to reach any conclusion.

MR. GREGORY: It doesn't appear as if any lines were crossed, in your

judgment?

SEN. McCAIN: I don't know because, again, a lot of this is anonymous

sources.

MR. GREGORY: Hm.

SEN. McCAIN: And this is--if I know Washington, this is the beginning of

a pretty involved and detailed story. And I, I don't have enough

information, but I think a lot more's to come on this.

MR. GREGORY: Should there be an investigation, do you think?

SEN. McCAIN: I don't know if--first of all, I'd like to know the facts of

the case before there should be an, "an investigation."

MR. GREGORY: Mm-hmm.

SEN. McCAIN: How long did, did the director of the CIA know about this

program and when did he terminate it? And all of these things are going

to, are probably going to be heavily discussed in the weeks ahead.

MR. GREGORY: Speaking about investigations, there's now word from

Newsweek magazine today with a story about the attorney general, that

he's getting closer to investigating alleged torture during the Bush

administration. This is the reporting from Daniel Klaidman, that Holder

"may be on the verge of asserting his independence in a profound way.

Four sources telling Newsweek that he's now leaning towards appointing a

prosecutor to investigate the Bush administration's brutal interrogation

practices." Would that be a good idea?

SEN. McCAIN: No. Look, I fought against waterboarding. I said

waterboarding was torture. We passed the Detainee Treatment Act, which

prohibited cruel and inhumane treatment. I have spoken out as forcefully

as possible everywhere against what went on and that we need--it harms

our image so much around the world when photographs come out and--we all

know that bad things were done. We all know that the operatives who did

it most likely were under orders to do so. For us to continue this and

harm our image throughout the world--I agree with the president of the

United States, it's time to move forward and not go back.

MR. GREGORY: But where's the accountability?

SEN. McCAIN: Well, the accountability, obviously, is that people's

reputations have been harmed very badly. The question is, is do we want

America's image harmed more by dragging this out further and further?

You've got to--what's going to be the positive result from airing out and

ventilating details of what we already knew took place and should never

have, and we are committed to making sure never happens again? I do not

excuse it, I'm just saying what's the, what's the effect on America's

image in the world? I don't, I don't mean to drag out my answer, but I

did meet with a high ranking member of al-Qaeda in a prison in Iraq who

said his greatest recruiting tool was the pictures of Abu Ghraib. We

don't want to give the, the terrorists and the radical Islamic extremists

more tools and bullets to shoot against us and help their recruiting in

this ongoing struggle we're in.

MR. GREGORY: Let me turn to politics. You must have been shocked to see

Governor Sarah Palin resign as governor.

SEN. McCAIN: Well, I wasn't shocked. Obviously, I was a bit surprised,

but I wasn't shocked. I understand that Sarah made the decision where she

can be most effective for Alaska and for the country. I love and respect

her and her family. I'm grateful that she agreed to run with me. I am

confident she will be a major factor in the national scene and, and in

Alaska, as well.

MR. GREGORY: But you say you were surprised a little bit. Why?

SEN. McCAIN: Well, because she had not called me. We've discussed it

since and I better understand the reasons for her decision.

MR. GREGORY: What were they?

SEN. McCAIN: Look, there's--well, how could she best serve? How could she

most effectively serve Alaska and the country? And that was her decision.

MR. GREGORY: But, but, but, Senator, you have a reputation...

SEN. McCAIN: Mm-hmm.

MR. GREGORY: ...of personal and professional toughness and

stick-to-itiveness.

SEN. McCAIN: Mm-hmm. Mm-hmm.

MR. GREGORY: You sought the highest role in the land, president of the

United States.

SEN. McCAIN: Mm-hmm.

MR. GREGORY: You never quit.

SEN. McCAIN: Oh, I don't think she quit. I think she changed her

priorities.

MR. GREGORY: She made a promise to the voters to serve out her term,

didn't she?

SEN. McCAIN: I don't know if there was a "promise," but I do know that

she will be an effective player on the national stage. And I will say, I

have never seen the sustained personal family attacks that were made on

Sarah Palin and her family in, in, in my life. Carl Cannon has a very

interesting piece about the media establishment and the attacks that were

made on her, and I'm sure that that had some impact. Ethics charge after

ethics charge, hundreds of thousands of dollars worth of, worth of legal

fees. But the fact is she is very popular with our Republican base. She

will be a strong voice. I chose her because she was a reformer, because

she beat an incumbent governor, she was a popular Republican of her own

party, she ignited our base, she did a great job as my running mate even

under the most sustained personal attacks that...

MR. GREGORY: Right.

SEN. McCAIN: ...in certainly recent American political history.

MR. GREGORY: But, Senator McCain, you have faced personal torture,

personal attacks, political attacks, investigations. You have never

resigned from anything. Is it consistent with your qualities of

leadership to resign an elected post like this?

SEN. McCAIN: Sure. If you think you can be...

MR. GREGORY: It is consistent?

SEN. McCAIN: If you can be--the question is, is how can you serve most

effectively? Sarah and Todd and her family made a decision that she can

be most effective by stepping down, and she did. I respect that, that

position and that decision, and I cannot tell you the appreciation I have

for her.

MR. GREGORY: You think she's qualified to seek the high, highest office

in the land?

SEN. McCAIN: I know she's qualified. I know she's qualified.

MR. GREGORY: She is qualified?

SEN. McCAIN: Sure. Absolutely.

MR. GREGORY: No doubt about it.

SEN. McCAIN: No doubt about it. She has all the right instincts, all the

right principles. She was a, she was a, a mayor, she's a governor. She

understands the challenges that families face. She has, she has a great

background, and I am confident that she will continue to play, as I say,

a major role.

MR. GREGORY: And if she, if she seeks the presidency in 2012, you would

endorse her?

SEN. McCAIN: Oh, I--look, I think it's way too early for that kind of

thing, because she obviously has not made that decision yet. And

traditionally, those of us who were the nominees have waited at least a

period, a long period of time before we got into that. But we've got a

lot of good, strong, young, attractive, articulate spokespersons for our

party and our principles.

MR. GREGORY: But can you understand how people would think it's a little

bit strange? You vouched for her in front of the country.

SEN. McCAIN: Mm-hmm.

MR. GREGORY: Said she was qualified for the highest position in the land.

SEN. McCAIN: Absolutely. Absolutely.

MR. GREGORY: And yet you're not prepared to endorse her now?

SEN. McCAIN: Well, I mean, George Bush--Ronald Reagan didn't endorse

George Herbert Walker Bush, his own vice president, until the year of, of

the election. I mean, it's, it's just way too early. But I'm confident

she would make a fine president. The question is, is what's the whole

political scenario?

MR. GREGORY: Do you think she'll run?

SEN. McCAIN: I don't know. I know she will play a major role. I know she

has the ability to ignite our party and to galvanize us and get us going

again and give us a strong positive message.

MR. GREGORY: One more on this.

SEN. McCAIN: Sure.

MR. GREGORY: Your trusted adviser for many years, Mike Murphy, wrote this

week something very pointed. He writes that "Governor Sarah Palin is the

political train wreck that keeps on giving. First, she was an awful

choice," he wrote, "last year as John McCain's running mate. ... An

inexperienced governor of a small state, she lacked the experience to be

president and brought nothing to the ticket except a surefire knack for

exciting voters who were already reliably Republican. It was a

strategically awful choice." Knowing everything you know now, you would

pick her again?

SEN. McCAIN: Absolutely. And in all due respect to those who like to

examine the entrails and, and, and look backward, the fact is we were

three points ahead on September 15th, and the stock market crashed and we

went seven points down. Sarah Palin ignited our party. We were winning

and we could have won. But I'm proud of the campaign we ran. I'm proud of

the people around me. I'm grateful for their support. I love them. I am

proud to have had the honor of being the nominee of the party of Abraham

Lincoln and Theodore Roosevelt and Ronald Reagan.

MR. GREGORY: Is she a...

SEN. McCAIN: And I will remain so.

MR. GREGORY: Is she ahead of the pack in terms of leaders of this party,

going forward?

SEN. McCAIN: I don't know. A recent poll I saw shows she and Mitt Romney

and Huckabee very tight. But it's so--way so early. You might remember,

in 2007 my campaign was dead.

MR. GREGORY: Right, right. Remember well. And you, and you came back.

Let me switch gears a little bit, talk about the president of the United

States currently, and that's Barack Obama, and his performance. Look at

the recent poll numbers that came out, and it shows declining support.

His approval rating now 58 percent; back in January it was a 66 percent.

What's your assessment of how he's performing?

SEN. McCAIN: Well, first of all, his numbers are still strong, so they're

relative. Second of all, I think Americans, understandably, are becoming

very, very concerned about the deep, deep political--I mean economic debt

that we are laying on future generations of Americans. We are committing

generational theft. Just last week, the, the estimate of the deficit was

$1.1 trillion just for the first nine months. It's going to be $1.8

trillion. That's, by a factor of two, the highest in anytime in peacetime

history. I mean, we are spending and spending and spending. Who, five

months ago, thought we would own Chrysler and General Motors? Who thought

we would own AIG? Who thought we would own all these banks and

institutions? It's, it's a, it's a most massive movement from the free

enterprise system to the government in the history of this country.

MR. GREGORY: The president says be patient. How much more patience do you

have?

SEN. McCAIN: Well, I, I, I also think it was interesting, the president

uses a very effective rhetorical ploy. He says--he sets up the position

of opposition. Like he said, "There are those who said we wanted to do

nothing." Who was that? We wanted to have a stimulus package. We wanted

one that would help small business, the generator of jobs in this

country, that would cut the corporate tax from 35 to 25 percent, that would help

small businesses buy equipment and hire people. That's, that--and would

have immediate, shovel ready projects. And we predicted that most of this

"stimulus package" that was passed through the Senate, in a partisan

fashion, would not have any real long--short-term effect. So guess what,

we're finding out only 10 percent of the money has been spent. A lot of

it has been on ridiculous projects. So I say, with respect, we

Republicans had a positive alternative. It was over $400 billion. We've

had an alternative budget. We had an alternative to the omnibus spending

bill, and so...

MR. GREGORY: But 40 percent...

SEN. McCAIN: Yeah.

MR. GREGORY: ...of this stimulus package included tax cuts.

SEN. McCAIN: It included tax cuts, but a lot of them were in the wrong

direction. Why not make sure we focus on small business and also on

corporations, which now have the highest tax rates of any, of any country

in the world.

MR. GREGORY: Here's what his top economics adviser said this week, Larry

Summers, to The New York Times: "People know that problems of this

seriousness cannot be turned around in six months or nine months," Mr.

Summers said. "One of the president's strengths” in his extraordinary

candor—“is his extraordinary candor. The president has been honest with

the American people about the enormity of the challenge and the amount of

time it will take to turn things around." Then the president yesterday in

his radio address said, "This Recovery Act has worked as intended." Is he

leveling with the American people?

SEN. McCAIN: Well, I'm, I'm sure the president is doing everything that

he can to try to help their--this economy.

MR. GREGORY: But is he leveling? Is he being straight?

SEN. McCAIN: Well, he's either not leveling now or he wasn't leveling at

the time of the passage of the stimulus package, because they said the

maximum unemployment would be at 8 percent. That was what they told us.

It's 9.5, going to 10. They said that most of these projects were shovel

ready and the money would go out as--very, very quickly. We know now that

that has not happened. And even that 10 percent is a little deceiving,

because it really hasn't actually been used. So what they promised us

would be the result of this stimulus in a short-term has turned out not

to be true. So I'm not saying that it's "not leveling," but it's

certainly not factually correct, because they said unemployment would be

a maximum of 8 percent and probably closer to 7.

MR. GREGORY: Could you support a second stimulus plan if it comes, comes

down?

SEN. McCAIN: Oh, I think that would be the biggest mistake we could ever

make. Why don't we focus on tax cuts? Why don't we focus on small

businesses? Why don't we, instead of saying we're going to increase taxes

to pay for healthcare reform, why don't we say, "Look, let's ease this

burden on small businesses, particularly." And I keep going back to that.

Who generates jobs in America? Not General Motors, not Chrysler. People

that generate jobs in America, the small business people who all over,

all over my hometown of Phoenix, Arizona, are shutting these storefront

enterprises of theirs. And yet General Motors is too big to fail, and so

is AIG. But they're too small to save? Something wrong with that picture.

And that's why the American people are unhappy.

MR. GREGORY: You mentioned healthcare reform. This is what the president

said back in March. He said, "Look, this is critical to the overall

financial health of the country." Listen.

(Videotape, March 5, 2009)

PRES. BARACK OBAMA: If we want to create jobs and rebuild our economy and

get our federal budget under control, then we have to address the

crushing costs of health care this year.

(End videotape)

MR. GREGORY: Do you agree?

SEN. McCAIN: I agree that we need to reform health care and we need to

make it affordable and available. But we're losing sight of the fact that

the highest quality health care in the world is in the United States of

America. That must be preserved. So the key, what we should be focusing

on is affordability and availability for all Americans. I don't think

that these proposals are doing that.

I was at MD Anderson in Houston. People--with Senator McConnell and

Senator Cornyn. We did a healthcare town hall. People from 90 countries

all over the world were there. They could have gone anyplace in the

world. The best, highest quality health care is in America. It's the

cost that's the problem.

MR. GREGORY: Are you prepared to support what the administration's

proposing on health care?

SEN. McCAIN: Well, the latest was by CBO, that we still are only...

MR. GREGORY: Congressional Budget Office.

SEN. McCAIN: Yeah, the Congressional Budget Office. After saying we were

a trillion dollars short and only covered a, a third of the people who

are uninsured, now about half of them are uninsured under this plan.

Look, we got to give people the ability to go across state lines to get

the health insurance of their choice. We've got to have--we're in

agreement on prevention, on wellness, on trying to have outcome-based

health care. A whole lot of areas we're in agreement on. We should be

sitting down now across the table, not trying to do what they did with

the stimulus package, with the budget and with all the others, and that

is pick off a couple of Republicans. Let's sit down and have some real

conversations, some real negotiations rather than the charade that we've

been going through.

MR. GREGORY: The House says--House Democrats say we need to raise taxes,

a tax surcharge in order to pay for this. Does that kill this effort?

SEN. McCAIN: I don't know if it kills the effort, but it kills our

economy. What--I don't think there's any rationale for raising taxes on

anybody at this particular time, in the economic difficulties that we're

in. And look, malpractice reform is another thing that's been taken off

the table. We need to have that as well. That could save us tens of

billions of dollars a year, because of the practice of defensive medicine

that doctors have to engage in.

MR. GREGORY: A couple of foreign policy notes. Look at this striking

statistic out of Afghanistan, released this week. The number of roadside

bomb incidents; these are the ones that were successful, that hurt or

killed people. Back in June of '07, 24; June of 2009, up to 82. That's

got to trouble you.

SEN. McCAIN: It troubles me enormously. But we all knew that once we went

into areas that have been controlled by the Taliban, particularly in

Helmand province and in the south, that causalities are going to go up.

British just took a terrible blow this week, as you know, with 10 British

soldiers killed one day. The--look, this is going to be long and hard and

tough, and I want to work with the president. But we've got to remember

what worked in Iraq, and that is it requires additional troops if

necessary. Listen to our military leaders. I saw on the front page of the

Post this morning, General McChrystal may say we need more troops. Let's

tell the American people how tough it is. Let's tell them what's at

stake. And I want to work with the president and make sure we win this

thing. But let's not try to go back to the Rumsfeld era of trying to just

go out, kill people, leave and try to get out of there.

MR. GREGORY: Is that the risk of this administration now?

SEN. McCAIN: That's the risk. That's the risk.

MR. GREGORY: You think we need more troops.

SEN. McCAIN: I know that we should listen to General McChrystal and the

leaders on the ground who according to news reports, not my information,

say we are going to need additional troops in order to really secure. And

we talk about economic, political, military.

MR. GREGORY: Mm-hmm.

SEN. McCAIN: First you've got to provide a secure environment. We proved

that time after time.

MR. GREGORY: In terms of Iran, the president says by September they

abandon the program or get into negotiations, or face consequences. What

does this administration have to do now to get that changed, to get them

to abandon a nuclear program?

SEN. McCAIN: Look, this is one of the toughest challenges we face. Again,

we all want to work with the president. Meaningful sanctions need to be

imposed. But also, we need to tell the people of Iran who are struggling

for a free democracy and an open society and elections that are fair that

we're with them morally. I'm not talking about sending arms, I'm not

talk--I think the seminal event was the death of Neda on the street that

was broadcast all around the world. That will fundamentally change the

future of Iran, because she was the symbol of an oppressive and

repressive regime. And I think the winds of change will even blow through

Iran. Now, whether it does quickly or not is hard to say. We didn't

predict the collapse of the Berlin Wall, but it happened; and I believe

that in Iran, something is afoot that can't be stopped.

MR. GREGORY: Before you go, are you prepared to support Sonia Sotomayor

to be on the Supreme Court?

SEN. McCAIN: I want to see the hearings; obviously, those are a very

critical part. Obviously, she's a great American success story and we all

respect and admire that. I'd just like to see the hearings and watch very

closely, starting on Monday.

MR. GREGORY: All right. Senator McCain, thank you, as always.

SEN. McCAIN: Thanks for having me back on.

MR. GREGORY: Appreciate it.

Up next, the other side of the debate; Democratic senator Chuck Schumer

of New York joins us. Plus, our political roundtable with Karen Hughes,

Bob Shrum, Andrea Mitchell and Roger Simon, only on MEET THE PRESS.

(Announcements)

MR. GREGORY: Senator Chuck Schumer and the view from the other side of

the aisle, after this brief commercial break.

MR. DAVID GREGORY: We're back, joined now by Senator Chuck Schumer of New

York.

Welcome back to MEET THE PRESS.

SEN. CHUCK SCHUMER (D-NY): Good to be here.

MR. GREGORY: So this White House is on the defensive about the economy

and specifically about the stimulus plan. Over the course of the summer,

Vice President Biden has been out talking about the projections then and

now. They said with a stimulus plan they'd keep unemployment to 8

percent; that has not been the case. Here he was on this program back in

June.

(Videotape, June 14, 2009)

MR. GREGORY: This package was sold on the premise that it would, in fact,

keep unemployment at 8 percent. It's exceeded that...

VICE PRES. JOE BIDEN: No, no, no...

MR. GREGORY: ...with the recovery plan.

VICE PRES. BIDEN: ...no, no, no, no. It, it wasn't sold on that. It was

sold on it would create or save...

MR. GREGORY: That's what the reports said, Mr. Vice President.

VICE PRES. BIDEN: No, it said it would--what would happen was it would

save or create jobs. It's doing that. It is doing that. Everyone guessed

wrong at the time the estimate was made about what the state of the

economy was at the moment this was passed.

(End videotape)

MR. GREGORY: Everybody guessed wrong. This is what he said back on July

5th to ABC: "The truth is, we--and everyone else--misread the economy."

Did you?

SEN. SCHUMER: Well, the bottom line here is it was very hard to read the

economy. I mean, you had a whole new world. We--I had never seen anything

like this, experienced. I think none of had. Financial markets frozen.

Just think, back in December and January, most people said there's a 25,

50 percent chance we're going to be in the Great Depression.

MR. GREGORY: Mm-hmm.

SEN. SCHUMER: And the good thing that the president is doing is twofold.

One, he has strong medicine against it. Second, he has a long-term time

horizon. He's not going to be bounced around by what happens today on

export numbers, which were good, or what happens on consumer confidence,

which was bad. And they keep adjusting. And so I think that, yes, the

economy is very, very important, probably number one to the American

people, but the president has their confidence. He's doing a good job and

it's going to work well.

MR. GREGORY: But I asked you if you misread this. You are the senator

from New York.

SEN. SCHUMER: Yes.

MR. GREGORY: You have your finger on the pulse of the financial center of

this country. This is a list of economists and others who said that

unemployment would be worse than the administration anticipated. Do you

agree that everyone got it wrong, or did the White House get it wrong?

SEN. SCHUMER: Well, the bottom line is I think there were estimates all

over the place, and everyone said it's very hard to chart this out

because, again, we were, we were in uncharted waters. I think what...

MR. GREGORY: But there were certainly people who said unemployment would

get worse, you need a much bigger stimulus; they have got the wrong

medicine.

SEN. SCHUMER: Yes. And there were many, mostly--many on the Republican

side and elsewhere who said we need a smaller stimulus and we don't need

this kind of thing. The president--I mean, I remember Larry Summers and

others saying we're trying to get the number right but erring on the side

of having it a little higher, because the downside is significant here.

MR. GREGORY: So you'd put yourself in their lot, that you misread it as

long--as well as they did?

SEN. SCHUMER: Well, I, I wouldn't characterize them or me as misreading.

You give the best estimates you can. I didn't make a projection as to

what the number would be.

MR. GREGORY: Mm-hmm.

SEN. SCHUMER: We knew it was bad, we knew it needed serious medicine.

That's what we're doing.

MR. GREGORY: Let's talk about the stimulus in New York state. This is

what the GAO reported, the Government Accounting Office, by the New York

Post: "New York has spent only about 22 percent of the federal stimulus

funds set aside for the state, and a [GAO] report revealed that most of

the money is being used just to keep governments afloat, rather than to

create jobs." This is apparently happening all over the country. Is that

what the stimulus was designed to do, to plug holes in government

finances at the state level?

SEN. SCHUMER: The stimulus, the stimulus was designed to do many things.

At the, at the immediate, it had to get some money into the economy. If

you remember then, and you can quote all those economists, the danger of

going into what economists call a deflationary spiral--where prices go

down, more jobs are lost, prices go down further--was the nightmare.

Because once you get into a deflationary spiral, no economist--liberal,

moderate, conservative--knows how to get out. You had to avoid that at

all costs. Getting money quickly into the economy, which is what the

government-type spending did, was the first phase.

Now we're in the second phase. Money's still continuing to go to the

governments, but...

MR. GREGORY: But is it too slow? Look at the numbers out of New York.

SEN. SCHUMER: This is not a four-month plan, this is a two-year plan.

When you have such an awful situation, the worst economy that we've had

in December, the president hamstrung because the usual tools of getting

us out of a recession were lowing interest rates but interest rates were

already at 1 percent, you need a strong, long-term plan that has a number

of phases. Now you're going to see the second part of the stimulus, which

is the job creation part, really kick in. You're getting...

MR. GREGORY: So you're not disappointed at what's happening at the state

level?

SEN. SCHUMER: I am not. I think that it's working. I'm beginning to see,

in the last month, projects in upstate New York...

MR. GREGORY: Mm-hmm.

SEN. SCHUMER: ...New York City, the New York City suburbs begin to get

going. I see the people working. A lot of construction going on that I

didn't see three months ago. And that, that money is going to start

coursing into the veins of the economy.

MR. GREGORY: More broadly, on the economy, back in April the president

sounded fairly optimistic. This is what he said.

(Videotape, April 14, 2009)

PRES. OBAMA: There's no doubt that times are still tough. By no means are

we out of the woods just yet. But from where we stand, for the very first

time we're beginning to see glimmers of hope.

(End videotape)

MR. GREGORY: So let's look at the numbers, first six months in office:

unemployment is up 32 percent; job losses, 3.4 million; and the deficit

is up 50 percent. Are those glimmers of hope?

SEN. SCHUMER: No, but there are glimmers of hope. That's the bad, that's

the bad news, and there's lots of bad news. But let me just say, look at

where we were January 20th, when the president got into office, and

today. There are some good things. The financial system, hardly

recovered, but it's not frozen. I no longer hear, day after day, reports

from small businesses, middle-sized businesses, they can't get money

anywhere and they're going under. That created a huge problem, created

last fall and last summer, not dealt with.

MR. GREGORY: Mm-hmm.

SEN. SCHUMER: That has ramifications on into this economy. Exports are

up. Parts of manufacturing is up. Consumer spending, which was going

down, is now flat. This is not--you know the good thing about Barack

Obama, one of the many good things about our president? He has a

long-term perspective and he has an internal gyroscope. He is not going

to get jarred by one month's number or one month's polling data. He has

his eye focused on the goal. The economy will be better, gradually but

certainly, and he's going to get us there. And I think, by the way, I

would say--maybe I'm misreading it, but I don't think so--the American

people have confidence in the president getting out of this mess.

MR. GREGORY: Let's talk about health care, his signature achievement that

he wants domestically. Will he get healthcare reform, a massive overhaul,

by the August recess?

SEN. SCHUMER: Well, we don't expect it to be signed into law by the

August recess.

MR. GREGORY: Understood, but an actual...

SEN. SCHUMER: But we expect the House and Senate to have passed bills,

yes.

MR. GREGORY: You think it's going to happen.

SEN. SCHUMER: I do.

MR. GREGORY: The big claim that he's making is that this is deficit neutral,

that it's not going to add to the debt, a trillion-dollar program. The big

question is, how is it going to be paid for?

SEN. SCHUMER: Yes.

MR. GREGORY: A couple of options out there, and one is to offset the, the

price to $300 billion is that you tax some of the benefits. Could you

support that?

SEN. SCHUMER: Well, I think what we've learned over the last week, that

on both sides of the aisle people do not want to tax the benefits,

Democrats and Republicans. And given what the House has done, given that

a majority of Democrats are against taxing benefits, no, I don't think

that's going to happen.

MR. GREGORY: Do you think a tax surcharge, as House Democrats are going

to propose, on the wealthiest Americans, is that the way to make up $550

billion worth of that cost?

SEN. SCHUMER: Well, let me say a couple of things. First, the number one

thing we have to do to pay for this trillion dollars it cut--is cut

costs. And the president has wisely said the majority of this package, a

significant majority, is going to be from cutting costs. The system is

wasteful, duplicative, inefficient, number one. Number two, we will have

to find revenues to pay for the rest. We--the beginning of this week

everyone said--well, we saw , when you got a specific on the tax

benefits, that people weren't going for it; Democrats and Republicans,

key Republicans we're negotiating with told Chairman Baucus, forget it.

MR. GREGORY: Mm-hmm.

SEN. SCHUMER: So now we're looking at other things. But here's the good

news, David. Wednesday and Thursday the Finance Committee, which is in

charge of raising the money, we met--Wednesday, Democrats; Thursday,

Democrats and Republicans--and laid out many different options. There are

a whole lot of options. We emerged from that meeting, I think, on both

sides of the aisle feeling this is doable. I believe that Chairman

Baucus' goal to have a plan that pays for it set by the end of this week

will happen. Now, to get into the specifics, I know you asked me about a

specific, obviously the surcharge has a benefit; it meets the president's

goal of not taxing anybody below $250,000. But I think to negotiate in

public when there are many different options is not going to be very

helpful, so I'm not going to do that.

MR. GREGORY: A couple of quick points. Judge Sotomayor, will she be

approved?

SEN. SCHUMER: I believe she'll be approved and I think there's a very

good chance she's going to get as many or if not more votes than Judge

Roberts got, which was 78. She has wowed people. People meet her and they

are impressed, Democrats and Republicans, not just with her story, but

she's smart but also practical. She's down to earth.

MR. GREGORY: Mm-hmm.

SEN. SCHUMER: And she makes a great impression. And the very impression

she's made on 89 Senators she's going to make to millions of Americans as

they watch the hearings. She is going to be approved by a large margin.

MR. GREGORY: You heard Senator McCain opposed to the idea of an

investigation on alleged torture in the Bush administration. Where do you

come down?

SEN. SCHUMER: Well, I generally believe that--with the president--that,

look--and John McCain--that looking forward, not back, is right. But when

there are egregious violations, you can't just brush them under the rug.

And so I think that the attorney general to look for some egregious

violations, which is what he's doing now, is the right thing to do.

MR. GREGORY: Is Sarah Palin the future of the Republican Party?

SEN. SCHUMER: Well, I guess I shouldn't judge and let them fight among

themselves.

MR. GREGORY: What do you think, though? Do you think she's qualified to

be president?

SEN. SCHUMER: Well, you know, I, I, I think the American people saw her

and they saw problems in terms of preparation and knowledge of things.

But, you know, four years away is a long--three and a half years away is

a long time away, so I'm not going to make a judgment.

MR. GREGORY: You're hedging your bets...

SEN. SCHUMER: You bet.

MR. GREGORY: ...but you're not holding out on the fact that you two are

very closely aligned. And here it is, from Field & Stream last year...

SEN. SCHUMER: Oh, yes.

MR. GREGORY: ...the political odd couple. There they are, Senator Schumer

and Governor Palin both heroes in Field & Stream. You cannot walk away

from how closely tied you two are.

SEN. SCHUMER: God bless America.

MR. GREGORY: Senator Schumer, thank you very much.

Up next, our political roundtable weighs in on all the week's news; Karen

Hughes, Bob Shrum, Andrea Mitchell and Roger Simon after this brief

station break.

MR. DAVID GREGORY: And we're back now with our roundtable: Democratic

strategist Bob Shrum; Republican strategist, former counselor to

President Bush, Karen Hughes; Andrea Mitchell of NBC News; and Roger

Simon of the Politico.

Welcome, all. A lot to talk about here.

MR. ROGER SIMON: Good to be here.

MR. BOB SHRUM: Good to be here.

MS. KAREN HUGHES: Thank you.

MR. GREGORY: Karen's in from Austin, Texas.

MS. HUGHES: Great to be here.

MR. GREGORY: We appreciate having you here.

Well, a lot to talk about. Roger Simon, I want to talk with Sarah Palin.

MR. SIMON: Mm-hmm.

MR. GREGORY: I thought that Senator McCain was rather striking in his

comments today. On the one hand, he said he was surprised that she

stepped down. How could he not be, given his record as a politician, as a

senator, as a leader? Is this the same person he chose to be on his

ticket?

MR. SIMON: I think it is the same person. If the Republicans were

choosing a nominee today, I believe they would choose Sarah Palin. The

Republican Party has collapsed, like a star going nova, to its densest

core of conservative voters. Sarah Palin speaks to that core. Now, the

grandees in the party, the pooh-bahs and the mandarins, the elites, don't

like her. She's not of their ilk. She is the skunk at their garden party.

They believe, as some in the media believe, that the highest form of

political skill and authenticity today is to flawlessly read a speech

from a teleprompter that somebody else has written for you. That's not

Sarah Palin. Look, she's not going to beat Barack Obama. But all she has

to do is beat Tim Pawlenty, Bobby Jindal...

MR. SHRUM: Mitt Romney.

MR. SIMON: ...Mike Huckabee, Mitt Romney. Are you saying that she

couldn't beat Mitt Romney?

MR. SHRUM: No, I think she could. And look, I'm strongly for her. I, I

endorse her for the Republican nomination in 2012. I think she's got a

real problem with Republicans. They have a survival instinct. And she

said yesterday that she was maybe going to campaign for conservative

Democrats. That's because a lot of Republicans don't want her to campaign

for them. And that party ultimately--and you saw it with John McCain, you

saw it with Bob Dole--they nominate by primogenitor, they take the e next

person in line. I think that's probably Mitt Romney. But I agree with

you, she's got a big base and I think she might win the nomination. I

hope she does.

MR. GREGORY: But, Karen Hughes, Senator McCain just said he agrees with

her, that he thinks it, it helps her standing, it's in the best interest

of her, her interest going forward. It's OK to resign.

MS. HUGHES: Well, I think Senator McCain's in a, in a difficult position.

He chose her as his nominee and he wants to be supportive of her and her

family. I, I, like many people, was, I was surprised. I was, I was

puzzled. She sought that office. I remember when I worked for Governor

Bush and he decided to run for re-election as governor of Texas, even

when he was being mentioned as a presidential candidate he felt it was

important to have that seal of approval, that re-election from the

voters. And he was very honest with them and said, "I, I don't know

whether I will or won't run for president. I want you to make that as a

factor in, in your decision." So I was surprised and somewhat puzzled. I

think the weeks and months ahead are going to be very critical for Sarah

Palin. She's got a lot of charm. I like her. She's feisty, she's a

maverick. But there's a fine line between maverick and quirky, and so I

think she has to be very careful that the next steps she takes are very

thoughtful and that she really thinks them through before she takes them.

MR. GREGORY: Andrea, before we hear from you, we have to see you in

action.

MS. MITCHELL: Please.

MR. GREGORY: This is Andrea Mitchell live on the scene in Atlanta.

MS. MITCHELL: Spare me.

MR. GREGORY: These--Alaska. These are some of the still photos in your

waders and your--by the way, most people don't know that you actually

travel with fishing waders in your purse...

MS. MITCHELL: Always.

MR. GREGORY: ...on assignment. And there you are in--but look at this.

This was the orchestration, on this small fishing village, of Governor

Palin to speak her piece. And look at this media scrum there during the

fly fishing...

MS. MITCHELL: A photo-op to end all photo-ops.

MR. GREGORY: Here is, here is a question that you asked her about her

future. Watch.

(Videotape, Tuesday)

MS. MITCHELL: Can you imagine yourself running for president?

GOV. SARAH PALIN (R-AK): I don't know what the future holds. Can't

predict what the next fish run's going to look like, much less what's

going to happen in a couple of years. But my focus is on my state still,

and it always will be, and my family and what is best for them. What is

best for them is to not run for re-election and to avoid a lame duck kind

of wasteful session in a final year of office.

(End videotape)

MR. GREGORY: Is that--I mean, this is the question I posed to Senator

McCain, which is, is shirking from those fights the way you demonstrate

leadership in the Republican Party?

MS. MITCHELL: I think that is her big flaw right now. Because even in

Alaska, even in her hometown of Wasilla, where people are enormously

supportive of her, where people love her, they said, "We're really

disappointed because she quit." So that quitter label does attach to her.

The other problem is, look, she's really warm. She was acting, I think,

on behalf of her family, which were, were hurting, and she needed to do

something about that. She was very deeply unhappy. She's got enormous

charm, as Karen points out, and she's feisty, she's attractive. Lord

knows she's attractive. But she has to have a coherent world view to be

the Republican nominee. And the reason why she was so rambling in that

Friday statement and didn't really fix it in her interviews with many of

us is that she doesn't--she's not deeply read, she hasn't thought through

a lot of these policies, and you have to do that as a national candidate.

MR. GREGORY: Well, let me ask this question: Can a leader of the

Republican Party chart a new course without real new ideas and a new

direction for the party? In other words, does the Republican Party, to

get back to power, need a, a fundamental overhaul in terms of core

positions?

MS. HUGHES: Well, I think obviously, anytime a party is out of power,

there's a lot of talk about the crisis in the party. And new leaders and

new voices will emerge. But I think the next--the--as we move to the 2010

elections, as we move to 2012, that the leaders who emerge will have to

have a vision. It'll have to be an optimistic vision. They'll have to

make the case. I think they have to make the case that ours is an

inviting party, a welcoming party, that we want people to join us; that

we, we believe that our philosophy of educating children, of providing

health care in a fiscally sound way, of putting money back into people's

pockets rather than this massive buildup of debt and spending that we're

seeing under the Obama administration. We'll have to make the case that

our policies are in fact the, the best policies to take this country

forward. And we have, still, a country that is largely center right and

that is inclined to want to hear from us. I think the important thing is

that we have an optimistic and visionary messenger.

MR. SHRUM: I was going to say, I--which I never do--that I largely agreed

with you, till you got to that part, till you got to that part about the

country's largely center right.

MS. HUGHES: I must have said something wrong.

MR. SHRUM: I--no, you said the Republican Party needed a positive,

affirmative vision. I think that's the big problem right now. It is

coming across as the party of no. Look, if Obama fails, if the stimulus

fails, the economy does badly, Republicans would benefit anyway. They

don't have to get out there and cheerlead for failure, which is what

they're doing right now. And if we see signs of recovery next year, and

2010 and 2012 are what actually matter, I think Republicans will be

punished badly for being sore losers and for looking almost like they

were rooting for Obama to fail, which means the economy would fail.

MR. GREGORY: Well, let's look at Obama's...

MS. HUGHES: I, I disagree with that, David. I think what we're seeing

right now is that President Obama's policies unfortunately are failing,

and we're very concerned about that. We've moved from...

MR. SHRUM: Karen, that's a little like saying why didn't Berlin fall the

day after D-Day?

MS. HUGHES: Well, but we...

MR. SHRUM: I mean, it's ridiculous. We're only at the beginning of this

process.

MS. HUGHES: Well, and--but wait a minute.

MR. GREGORY: Well, hold on. Let me interrupt for a second. Let me

interrupt for a second, though, because if we're looking at Obama's

general performance, first of all, look at the numbers out of Ohio; his

job approval numbers down. Politically sensitive Ohio, approval in

February at 67, now it's at 49.

Roger Simon, the political and financial realities are that they have not

met expectations that they set out for the stimulus plan. The president

talked about glimmers of hope; we see anything but over the first six

months. As a political matter and a financial matter, as Senator McCain

said, he's not leveling now or he wasn't leveling then. Something's not

adding up.

MR. SIMON: It's not adding up. The rock star has come to an intermission

here. Barack Obama now owns the economy, it's his, and the American

people are holding him responsible. We passed a $780 billion economic

recovery bill in February and, as, as your chart just pointed out, since

then we've lost 3.4 million jobs. Now, we haven't spent all that recovery

money, but we have spent billions and billions of it. And people are

wondering, where has the--where are the jobs? Barack Obama says that

we've got two years, this is a two-year plan. Chuck Schumer said on the

show a few minutes ago, we've got two years. They don't have two years.

The congressional elections are in November of 2010.

MS. MITCHELL: And that's--well, I think a...

MR. SHRUM: Yeah.

MR. SIMON: They've got to show progress before then.

MS. MITCHELL: I think a big test will be whether they at least can get

some agreement on health care before the recess on the House side. The

Senate is going to be more difficult. That is, that is a huge problem.

And now we've got a proposal from the House Democrats, from Charlie

Rangel, for an income tax, a surtax. And first of all, this is going to

be very hard sell in the Senate and even among blue dog Democrats in the

House. Plus, the Obama administration has scored this with the

Congressional Budget Office, and they've figured out that rather than

just--it does raise $500 billion, supposedly, towards the healthcare

costs, the costs of insuring the uninsured. But after 10 years, those

numbers drop sharply. So in the out years, unless there are major savings

from healthcare reform back, you know, out there, you are going to have a

huge balloon of expenditures in 10 years out...

MR. GREGORY: Right.

MS. MITCHELL: ...and that is going to be a big debate.

MR. GREGORY: Bob, did the big lesson from the 1993 failure on healthcare

reform is you got to have Congress have its say. Well, Congress is having

its say; unfortunately, it's in several different directions on how you

pay for it and whether there's going to be a public plan. What's going to

happen?

MR. SHRUM: You know, you know, I'm fascinated by this. In the political

and media class we want the instant gratification of instant verdicts. I

mean, we saw this on stimulus, where we had a story about doomsday coming

every other day.

MR. GREGORY: But, Bob, the deadline is coming. That's not fair.

MR. SHRUM: But I--and I'll tell you, by the time that...

MR. GREGORY: There's a deadline of August that the president set.

MR. SHRUM: When that deadline comes, there will be a bill. They will come

to an agreement. I believe that bill will pass and I think he'll sign it.

But we ought to be very...

MS. MITCHELL: By August?

MR. SHRUM: No, I--he said he'd sign it by October.

MR. SIMON: By October

MR. SHRUM: But I think we ought to be very, very careful about these

kinds of judgments. Like the job loss; we were losing 700,000 jobs a

month in January, we're now losing half that number. Obviously, it's

going to take time to turn this around. We got 2,000 projects under way,

20,000 approved. But the, but the arc of the stimulus is only beginning

to jolt the economy. The same thing's going to happen with health care.

We're going to get it out there. And by the way, the cost savings the CEA

calculates of 1.5 percent a year in terms of lowering medical inflation

will actually raise GDP substantially and lower the deficit.

MR. GREGORY: It is--just to turn this around, Karen, on the

Republicans...

MS. HUGHES: Well...

MR. GREGORY: ...why shouldn't there be more patience? Why shouldn't the

Republicans, who certainly spent a long time spending a lot of government

money and under whose watch the economy took the turn that it did, why

shouldn't there be more patience from the Republican aisle?

MS. HUGHES: Well, well, David, this was sold to the American people as an

immediate fix, and I think Bob is now trying to...

MR. SHRUM: No it wasn't. It wasn't. That's not fair.

MS. MITCHELL: No, it wasn't, Karen.

MS. HUGHES: Let me, let me quote you Larry Summers: "You'll see effects

immediately." Christina Romer: "We'll start adding jobs rather than

losing them." House Majority leader Steny Hoyer: "There will be an

immediate jolt. This will begin creating jobs immediately." And instead,

we've seen a loss of 2.6 million jobs.

MS. MITCHELL: But unemployment is a, unemployment is a lagging indicator.

There has been a decline in the rate of unemployment. That's the, the

immediate fix. Plus, you've seen a loosening up of credit. We were on the

point of disaster. I think they can accurately argue that they have

avoided catastrophe. But...

MS. HUGHES: Well, I would argue that that was avoided last fall when

President Bush took the politically unpopular step...

MR. SHRUM: Do you know, I would agree with you.

MS. HUGHES: ...of the rescue plan.

MR. SHRUM: Can I agree with you? Can I agree with you? I think what

George Bush and Gordon Brown did in Britain to save the world banking

system probably prevented an overall financial collapse. But in January

we were headed into a, potentially into a very deep recession if--or a

deeper and deeper recession...

MR. SIMON: Right.

MR. SHRUM: ...if not a depression. And what the administration did has

cut the rate of job loss. And I think, you know, we ought to look at

what--where it's going to be next September.

MS. HUGHES: Barack...

MR. SHRUM: If next September people think things are recovering, the

Republican Party is going to pay a very heavy price for this attitude.

MR. SIMON: The president was warned that too much of the stimulus bill

was not stimulative...

MR. SIMON: ...that it would not lead to jobs, that it was typical pork

barrel stuff that the Congress wanted. He chose not to fight with

Congress. Now, in fairness, he was trying to prevent a world economic

collapse.

MR. SHRUM: Right.

MR. SIMON: But in taking this huge bill that had a lot of stuff that

wasn't shovel ready, he risked paying the price that he's paying for now,

that the jobs aren't coming.

MR. SHRUM: Well, so...

MS. HUGHES: So we've gone from the euphoria of "yes, we can," to the deep

worry of "can we afford this?"

MR. SHRUM: You know...

MS. HUGHES: This is a massive buildup of debt and spending.

MR. SHRUM: Look, this--Reagan went through this. Reagan went through this

in 1981 and, in fact, his approval rating, by the way, at this time was

exactly the same as Obama's is today. And...

MS. MITCHELL: And unemployment went to 11 percent in '82.

MR. SHRUM: And Republicans, Republicans stayed with him. They stayed

despite the difficulties in the mid-term elections. They got to 1983, the

recovery came; so did morning in America and so did the confirmation of

the Reagan era. The real challenge here is for Democrats. Are they going

to stick with the president? Are they going to get wobbly? Are they going

to get afraid?

MR. GREGORY: I want to...

MR. SHRUM: Because if they don't hang together, they're going to hang

separately.

MR. GREGORY: I want to get to--I want to show some of the pictures. The

president was on the world stage this week while this debate was really

intensifying, traveling in Russian, then the G-8 meeting and then to

Ghana. The pictures from Ghana are striking, just from over the weekend,

as he visited, visited a slave prison with his family, an emotional tour

there. The response huge from the people of Ghana to America's first

African-American president.

In terms of image abroad, Karen Hughes, as a former counselor to the

president and as someone who was a head of public diplomacy at the State

Department as well, now we hear from the attorney general that he is

leaning toward, according to Newsweek, learning toward putting an

independent prosecutor in charge of investigating alleged torture during

the Bush administration. Do you agree with Senator McCain that that's a

bad idea?

MS. HUGHES: Well, I think it is potentially very harmful, because I,

everywhere I traveled as I tried to reach out on behalf of our country

around the world--and by the way, I, I applaud President Obama for trying

to reach out in the spirit of respect. That's exactly what President Bush

asked me to do for two and a half years as, as the undersecretary of

state for public diplomacy. But at some point it's more a matter--it's

less a matter of are you popular, or your outreach, as to are you

effective. And so let's look at what happened this week. It was a

great--great pictures, absolutely, in, in Africa. A very powerful moment

for the first African-American American president to go to the, the

continent of Africa. Some of the things that President Obama said there

were--sounded like echoes of, of President Bush, calling for more

transparency and for leaders of the continent to invest in their people,

invest in education and health.

But let's look at the results of this trip in Russia. Nice words were

exchanged, much as they were with President Putin and President Bush back

in Slovenia during their first meeting. And yet by the end of the week,

the president of Russia was basically warning our American president that

there will be no cuts in, in weapons as long--if he doesn't abandon the

missile defense system.

At the G-8 summit, they basically kicked the can down the road. They

said, "Well, we'll deal with climate change and, and the problem of a

nuclear Iran at the, at the G-20 and the U.N. in September."

MR. GREGORY: And I want to...

MR. SHRUM: Is he doing anything--is he doing anything right?

MR. GREGORY: I want to stay--but I want to--Bob Shrum, I want to stick on

this Eric Holder position: Should there be accountability for alleged

torture under the Bush administration?

MR. SHRUM: As I read what Holder is thinking about doing, it's--or

appointing someone to investigate people who acted outside of the

guidelines set by the Justice Department lawyers. I think if that is

actually what's come to light, he doesn't have much choice but to do

that, because what's been defended is the proposition that inside those

guidelines we're not going to, we're not going to go after people.

MR. GREGORY: I want to button this up with both of you on, on one topic,

I think a key point from this discussion, which is how will we know

whether the president is vulnerable on his overall agenda in terms of

going into this mid-term race?

Roger, I'll start with you. Quickly, from both of you.

MR. SIMON: How will we know if he's vulnerable?

MR. GREGORY: Vulnerable, or whether he's succeeding when it comes to the

mid-term race.

MR. SIMON: Well, we'll see his poll numbers, for one. We'll see how the

party does. He's, he's--this is--he's just coming off--back to the trip

just for a second.

MR. GREGORY: Yeah.

MR. SIMON: Because I think it makes a point. This is the first trip he

made, it seemed to me, that wasn't triumphant; that the American people

saw pictures of him in Ghana and they were very warm and emotional and

good, but also people are saying to themselves, you know, he's got a

healthcare plan he wants it wrapped up in August, but he's in Ghana in,

in mid-July. I, I think they're also going to be thrown way off track...

MR. GREGORY: OK.

MR. SIMON: ...by this truth commission.

MR. GREGORY: I...

MR. SIMON: He doesn't want the truth commission, because it's going to

throw everything else...

MR. GREGORY: All right. I'm flat, I'm flat out of time.

MR. SIMON: Oh.

MR. GREGORY: We're going to have to leave it there. Andrea, I'm sorry.

MS. MITCHELL: I know.

MR. GREGORY: Thanks very much. We'll be right back.

MR. DAVID GREGORY: A quick programming note here. Starting today, our

rebroadcast time on MSNBC cable is moving to 2 PM Eastern time Sunday

afternoons. Also, you can watch the full program online beginning Sundays

at 1 PM on our Web site, mtp.msnbc.com. So no excuse for missing the

entire thing.

That's all for today. We'll be back next week. If it's Sunday, it's MEET

THE PRESS.

Discuss:

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