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updated 2/3/2010 3:10:09 PM ET 2010-02-03T20:10:09

MR. DAVID GREGORY:  This Sunday:  The State of the Union and a new start for the president after a rough first year.

(Videotape)

PRES. BARACK OBAMA:  I don't quit.

(End videotape)

MR. GREGORY:  With a renewed focus on jobs and the economy, is healthcare reform dead?  Plus, the Massachusetts message clearly heard, growing frustration with the way Washington works as the president tries to engage the other side in a face-to-face policy debate open to cameras.

(Videotape)

REP. JEB HENSARLING:  Now very soon, Mr. President, you're due to submit a new budget, and my question is...

PRES. OBAMA:  Jim***(as spoken), I know there's a question in there somewhere, because you're making a whole bunch of assertions, half of which I disagree with.

(End videotape)

MR. GREGORY:  But can the two sides work together?  Will there be give and take?  We'll speak to two men central to making that happen:  the president's senior adviser, David Axelrod, and the House Republican leader, Congressman John Boehner of Ohio.

Then our roundtable weighs in on the president's focus on jobs and his political standing:  The New York Times' David Brooks, CNBC's David Faber, The Washington Post's Eugene Robinson, and U.S. News & World Report's Mort Zuckerman.

And in our MEET THE PRESS MINUTE, we look back to a time not too long ago when both sides engaged more openly in policy dialogue, the majority and minority leaders of the Senate side-by-side together in one or their frequent MEET THE PRESS appearances.

But first, here with us exclusively this morning, David Axelrod, senior adviser to the president.

Welcome back to MEET THE PRESS.

MR. DAVID AXELROD:  Thanks, David.  Good to be here.

MR. GREGORY:  I want to begin with some news this morning.  First, the trial of Khalid Sheikh Mohammed, the alleged mastermind behind 9/11, has the administration reversed its stance and decided not to transfer him to New York for trial?

MR. AXELROD:  We've made no decisions on that, David.  I've seen the reports. We've made no decisions on that yet.  Look, here's the situation:  The attorney general and the Defense Department worked out protocols about how these cases should be handled.  Under those protocols, the attorney general decided to bring Khalid Sheikh Mohammed back to New York to stand trial for his crime for the murder of 3,000 innocent people, and he wanted to do it near the, the site of, of the crime itself.  He wanted to do what the Bush administration did over and over and over again and try these people in--try these murderers in, in Article III court where these--and, and that's what he decided to do.  The local authorities were receptive to that at the time. Since then, as you know, the mayor and the police chief and others have changed their minds and said they thought it would be too logistically difficult and too expensive.  We have to take that into consideration, and we're doing that now.

MR. GREGORY:  What does the president think?  New York in or out?

MR. AXELROD:  The president believes that we need to take into consideration what the local authorities are saying.  But he also believes this:  He believes that we ought to, to, to bring Khalid Sheikh Mohammed and all others who are involved in terrorist acts to justice swift and sure in the American justice system.  Now, we have a military commission system and that has its place, but we ought to bring people to justice.  The Bush administration tried 190 or more terrorists in that system.  During that period, Mr. Boehner and others had nothing to say about that, they were all supportive.  When we tried Richard Reid, the shoe bomber, in the, in the civilian courts for his crime, when we tried the 20th bomber, 9/11 conspirator, Moussaoui, in Virginia for his crime, nobody said anything.  In fact, Rudy Giuliani said he was in awe of the American justice system.  Mr. Cheney said this was the way to do it.  Now we have a Democratic president and suddenly we hear this--these protests, and it doesn't make sense.  And you ought to clarify what has changed between now and then that would cause people to reverse their positions 180.

MR. GREGORY:  So, bottom line, what are the chances it stays in New York?

MR. AXELROD:  Well, obviously, as I said, we have to take into consideration the concerns of the local authorities in New York, and we will do so.

MR. GREGORY:  Still on the, the question of terrorism, there's a lot of criticism leveled at the administration for the fact that the shoe--the, the, the bomber, the Christmas Day bomber, was read his Miranda rights after some only 50 minutes of questioning, and he was read those rights without the approval of senior officials in the administration who would have authority over that.  How big of a concern is that for the president?

MR. AXELROD:  That is not, that is not--let's clarify what happened with him. He was interrogated by FBI interrogators.  They came back later, he was unwilling to submit to questioning.  But over time, they have had additional opportunities to question.  And we'll see.  I, I, I would suggest that everybody wait and see the, the disposition of this case, because my sense is that he has given very valuable information to, to the government about activities in Yemen and some of his experiences there.  And that--and we have not lost anything as a result of how his case has been handled.

MR. GREGORY:  Let me move on to domestic matters and that pretty extraordinary appearance on Friday in Baltimore at the House Republican retreat.  The president came there, a kind of British style question-and-answer period.  He even gets the blueprint for the Republican agenda from the House side.  I wonder whether the decision to accept that invitation was a recognition on the president's part that if he wants to be more than a one-term president, he's got to govern from the middle?

MR. AXELROD:  You know, David, I'd say a few things about that.  First of all, the decision to attend was not a last-minute decision on our part, it was, it was, it was on the calendar, we were aware of it.  The Republican caucus had been good enough to extend that invitation.  And this is something that--we had visited the caucus before.  But it's interesting the way you asked the question:  Does he, does he--did he do it because he wants to be more than a one-term president?  We don't sit around in the White House making calculations on that basis.  The president of the United States has one concern, which is how do we move this country forward, how do we get people back to work, how do we lift incomes, how do we build some security for the middle class who have been facing economic challenges not just through this recession but for a decade or more?  And, and that's what he's thinking about. And if we can get some cooperation from the other side to do that, we're going to be a stronger country for it.  That's why he went to the caucus, and that's why we're going to continue to have a dialogue with Mr. Boehner and others.

MR. GREGORY:  Does he feel, does he feel like he has to move to the middle to achieve?

MR. AXELROD:  Again, I don't think this is a question of left, right or center, this is a question of what, what--what's--what works.  How do we--now we've proposed, for example, tax cuts for small business.  We, we, we passed without, frankly, the help of the Republican caucus, we passed 25 tax cuts last year, mostly aimed at the middle class and small businesses.  The president's come back and said, "We need to do more." We've, we've gone from a period of rapid descent in our economy to, as we saw on Friday, six percent growth.  But the job production has to be accelerated.  And so he said, "Let's give a tax cut to small businesses to begin hiring--to encourage hiring." That was an idea that Mr. Cantor, Mr. Boehner's deputy, said was a good idea at one time, and he said that they would follow if we would lead on it.  He said, "Let's eliminate capital gains taxes for small businesses." He said, "Let's accelerate the tax break that businesses get for buying equipment so that they can, they can reap the benefit of it next year." Also, something that will encourage growth in--job growth.  These are things we ought to be able to work together on, and we--and I hope we can.

MR. GREGORY:  You've talked about a price for Republicans if they continue to block the president's agenda.  What should that price be?  What will it be?

MR. AXELROD:  Well, I think there's a price for both parties if the impression is what we're more interested in our own jobs than we are in the jobs of the American people, if we play politics on every single issue.  I'll give you an example.  We believe that in the near--in the, in the mid and long term, we have to deal with these deficits, that's why the president has proposed a, a freeze on domestic discretionary spending, something that the Republican leadership actually suggested when we had a bipartisan meeting some weeks ago.  But when a measure came up in the Senate this week, or this past week, for a bipartisan commission, a statutory commission to deal with the fiscal crisis--because we understand we can only deal with that together--it lost by seven votes, and the seven votes were seven Republican co-sponsors of that amendment who then walked away from their own proposal.  Well, we have to get serious about this.  So I think the American people will punish any party who they believe is playing politics ahead of solving problems, and, and they should.

MR. GREGORY:  Do you think the Republicans want the president to fail?  Do they want the economy to fail?

MR. AXELROD:  Well, that's a question you should ask Mr. Boehner.  I, I don't believe that--I don't--I'm not going to make that allegation here.  I, I hope that's not the case.  All I know is that in the first year of our administration, they largely sat on the sidelines on a lot of these issues. We have taken--we have had some discussions, we have incorporated some of, some of their ideas.  But moving forward, I hope that the spirit is we are all Americans, we have great problems to solve, let's work together, and let's make putting Americans back to work more important than scoring political points.

MR. GREGORY:  Let me ask you about health care.  The president speaking to Congress a year before the State of the Union said this about healthcare reform.

(Videotape, February 24, 2009)

PRES. OBAMA:  So let there be no doubt, healthcare reform cannot wait, it must not wait, and it will not wait another year.

(End videotape)

MR. GREGORY:  Is the reality now that it has to wait?

MR. AXELROD:  No, I don't think so.  And I think that--and I don't think that's what the American people are saying.  If--you know, I, I don't like to make polling the, the gospel, but it's all very consistent.  The American people aren't saying let's walk away from health insurance reform.  They've seen their premiums double in the last 10 years.  They understand that if they have pre-existing conditions, they can't get insurance.  They understand that if they become seriously ill, they're, they're subject to being thrown off their insurance.  They know what their out-of-pocket costs are doing.  And they know that this is a long-term threat to their families, businesses and the government.  They want us to act.  They want us--they'd like us to work together to do it.  And in fact, we've incorporated a number of the main Republican ideas into our proposal.

MR. GREGORY:  I want to get to that in just a minute.  Mary Landrieu, conservative Democrat from Louisiana, said it's on life support, health care. Is it on life support?

MR. AXELROD:  Well, I, I hope for the, for the sake of the American people and the tens of millions of people out there who are, who are disadvantaged in their relationship with their insurance companies today or who have no insurance, I hope that's not the case.  Again, this is a situation where we ought to put the economic interests of everyday Americans ahead of the politics of the moment.  And that's what the president's saying.  These are extraordinary times.  Middle-class families and people who want to be middle class are struggling all over this country.  Let's, let's, let's provide some help.

MR. GREGORY:  Is the president clear-eyed, though, that there's still a chance this is not going to happen?

MR. AXELROD:  The president is determined that we deal with the problems in front of us, and health care is one of those problems.

MR. GREGORY:  One of the debates about spending has to do with the other side of it, which is tax relief.  The president's very clear that he wants to let the Bush tax cuts expire, doesn't want to tax anybody--or wants to keep--wants taxes to go up, those making above $250,000.  What tax relief would the president consider?

MR. AXELROD:  Well, first of all, the president has said that, that he thinks that we ought to continue those portions of the tax cuts that apply to the middle class.  The middle class has struggled mightily in this economy and for some time before.  He, he's also--he, he initiated--the, the Republican caucus voted against it, but he initiated a tax cut for 95 percent of the American people, the make work pay cut--tax cut.  He wants, he wants to continue that in the, in the next budget.  He's proposed tax cuts for, for child care, to help working families.  He's--and a series of other things that would help give some, some assistance to people in a very difficult time here.  And we, we hope to get some cooperation on all of that.

MR. GREGORY:  During the State of the Union, there, there was a moment that got a lot of attention--I want to show it to you here--where the president was critical of the Supreme Court decision about campaign finance reform.  And in the audience, Justice Alito had a, what seemed to be a pretty critical response, as the line was said.  He's shaking his head there.  And then as it gets closer, it looks like he's saying, "That's not true." Was it appropriate for the president to criticize the Supreme Court during the State of the Union?  And do you consider Justice Alito's response to be appropriate or inappropriate?

MR. AXELROD:  Well, I certainly think it was appropriate for the president to talk about the threat that this decision brings to our democracy.  Basically, it's going to be open season for special interest groups and big corporations to participate in our elections with all their might and all their money.  And that includes foreign--domestic branches of foreign-owned businesses, even government--foreign government-owned businesses.  In fact, some of the, some of those companies signaled on Friday, according to The Wall Street Journal, that they're going to lobby vigorously against any effort to rein this in.

One thing we ought to be able to agree on, and, and maybe we can here today, is that we shouldn't have foreign-owned businesses and foreign--you know, Hugo Chavez should not be playing in American political campaigns.  And I, for the life of me, don't understand why we wouldn't make that illegal.

MR. GREGORY:  That moment, though, was that the appropriate forum?

MR. AXELROD:  Well, this is a big--one of the things that we face, David, and one of the things the American people recognize is that we have too much influence of special interests in the decision making here in, in Washington.

MR. GREGORY:  But the question I'm asking, David, is whether that was an...

MR. AXELROD:  But, but this...

MR. GREGORY:  ...appropriate criticism.

MR. AXELROD:  But this, this, this is central to that.  If you're going to deliver a message on the State of the Union, then one of the things you have to address is how do we get--how do we free our government from the grips of special interests?  We, for example, proposed that every lobbyist disclose who they have contact with, whether it's in the administration or contact--or Congress, on behalf of their clients.  We have to take some steps to protect our, our government, our democracy from the overweening influence of special interests.

MR. GREGORY:  You still haven't answered whether you think it was an appropriate thing--criticism of the president.

MR. AXELROD:  I, I think it was totally appropriate.

MR. GREGORY:  And Alito's response?

MR. AXELROD:  Well, I--look, we--in this weird political season, we've become accustomed to unusual outbursts in the chamber during these speeches, so.

MR. GREGORY:  Final question, is the country better off than it was a year ago?

MR. AXELROD:  Look, until--obviously, in some ways, the answer is yes.  We--a year ago we were losing 700,000 jobs a month.  We are, are--when the president took office, our economy was shrinking at a rate of 6.4 percent.  Last Friday, we learned it's growing now at a rate of 6 percent.  The job loss has--is one-tenth of what it was.  But until people are working, until incomes are growing, until there's a sense of stability and economic security on the part of the middle class, we've got a lot of work to do.

MR. GREGORY:  David Axelrod, thank you, as always, for being here.

MR. AXELROD:  Great to be here.

MR. GREGORY:  Appreciate it.

I want to turn now right to the leader of the Republicans in the House, Congressman John Boehner.

Leader, welcome back to MEET THE PRESS.  You heard...

REP. JOHN BOEHNER (R-OH):  David, good to be with you.

MR. GREGORY:  You heard David Axelrod say that any party, including the Republicans, will be punished if they continue to stand in the way of the president's agenda.  What do you say?

REP. BOEHNER:  Listen, there are parts of the president agenda that, that we've been supportive of.  But as a political party and in the minority on the Hill, we have an obligation to the American people to stand on principle. That's why we've all stood and voted against a stimulus bill that was supposed to be about creating jobs immediately, yet three million Americans have lost their job.  President said it wouldn't--unemployment wouldn't exceed 8 percent, now it's over 10.  Whether it's his budget with trillion-dollar deficits for as far as the eye can see, their national energy tax that they call cap-and-trade, or this government takeover of health care, Republicans have an obligation to stand on principle and to fight these proposals, but, but, at the same time, to offer better solutions.  We've offered better solutions all year long on all these major policies.  But we're not going to be bashful about walking away from our principles.

MR. GREGORY:  Well, let's bring some of that down.  But first, what was your overall impression--we see the, the appearance on Friday, shaking hands with the president, taking questions.  A pretty unusual forum, you haven't seen that a lot.  What was your overall impression of the president?

REP. BOEHNER:  I thought it was a very good afternoon.  We invited the president to come because we wanted to have a dialogue, and we're glad that the president accepted.  I thought our members were honest, and I thought the president was honest.  It's not that we're going to agree on everything.  But the American people sent us all here to Washington to, to do what we can to help solve the problems we have in our country.

MR. GREGORY:  Well, let's talk about solving problems.  This is one of the points that the president made, chastising Republicans in terms of coming together to deal constructively with issues.  This is what he said.

(Videotape, January 29, 2010)

PRES. OBAMA:  We're not going to be able to do anything about any of these entitlements if what we do is characterized, whatever proposals are put out there, as, "Well, you know, that's--the other party's being irresponsible. The other party's trying to hurt old--our senior citizens." That the other party is doing X, Y, Z.  That's why I say if we're going to frame these debates in ways that allow us to solve them, then we can't start off by figuring out, A, who's to blame; B, how can we make the American people afraid of the other side?

(End videotape)

MR. GREGORY:  And to that point, I mean, even here you're talking about deficits and debt as far as the eye can see, when you know full well that the president owns a very small percentage, comparatively, of that overall debt as far as the eye can see.

REP. BOEHNER:  No.

MR. GREGORY:  Does he have a point?

REP. BOEHNER:  No.  If, if you think about what I said, I was referring to the--all the president's policies.  Wasn't demonizing him, wasn't demonizing the White House.  And I'm usually very careful about dealing with the subject at hand.  Listen, there aren't that many places where we can come together. The president is--well, he was the most liberal member of the United States Senate.  You don't get there by accident.  And if you look at the policies that we've seen over the course of this year from the administration and his Democratic colleagues in Congress, they're all these leftist proposals.  And the people of Massachusetts, the people of Virginia, the people of New Jersey are sending a pretty loud signal, just like the other 47 states, to the--to Washington, saying, "Stop!  This is, this is way more than we ever wanted Washington to do."

MR. GREGORY:  Although the president took on this idea of it being leftist policies on health care, indicating that it was, in fact, the move to the center and cost containment that cost him some of the, the support among--within his own party.  My question is, if you--you heard the president, in the State of the Union, say that saying no is short-term good politics, but it's not leadership.  You heard the State of the Union, you heard the president's Friday address.  What are you prepared to say yes to, specifically?

REP. BOEHNER:  Leadership is about standing on your principle and, and opposing those policies that, that we believe are bad for the country.  But leadership is also standing up and offering what we think is a better solution.  And when it comes to issues like health care, the president did his best to blur the differences, agreeing with us on five or six points, but didn't refer to the other 100 commissions, boards, mandates that are in this government takeover of health care.

MR. GREGORY:  What are a few things that the president could do--maybe he could convene Republicans and Democrats together on C-SPAN, as he said he would initially, and acknowledge that it was a mistake that he did not fulfill that promise during the Friday retreat, get everybody together.  What are a few things that Republicans could say, "Hey, if these could be included, we could vote for this"?

REP. BOEHNER:  Well, I'll give you an example.  Last year I told the president, you know, what--when we can be with you and when we agree with you, we will stand tall with you, as we did on Afghanistan, as we did on Iraq, as we did on things like teacher quality and a number of other areas.  But when it comes to, when it comes to health care, we could agree on a some commonsense steps to make our healthcare system work better.  But we are not going to put the government in charge of people's health care.  And, and it, it's something that there's a fundamental difference here.  And most of American has already said no to this big government takeover.

MR. GREGORY:  It's interesting.  You say you don't want government in charge of health care, and yet you're a supporter of the idea of portable health insurance, the ability to take health insurance across state lines.  But I thought the Republicans were states' rights guys and didn't want--because you'd have to have some kind of federal regulatory agency to monitor that kind of portability, wouldn't you?

REP. BOEHNER:  No, you wouldn't have to.

MR. GREGORY:  Really?  Because that's...

REP. BOEHNER:  What we're saying is the American people ought to buy health insurance across state lines.  They ought to buy health insurance where they get the policy that they need for themselves and their family at the best price.

MR. GREGORY:  And there wouldn't have to be some sort of federal regulatory system to, to receive that?

REP. BOEHNER:  Well, no.  That's the whole point.  The president said, "Well, I'm for that.  But, you know, there'd have to be some bureaucrat here in Washington that needs to make sure that this is done fairly." The American people are smart enough to do this on their own.

MR. GREGORY:  Let me ask you about health care.  Is it dead?

REP. BOEHNER:  No.  We've seen all week, Speaker Pelosi, Majority Leader Reid continuing to scheme and plot, trying to find some way to get their big government takeover of health care enacted.  And so I do think they're having problems, but I think Republicans are going to continue to be vigilant in exposing this.  And I think the American people need to stay engaged because I'm watching all of, all of the, the movement on the Hill.  They're still trying to find a way, even after Massachusetts, the election there, they're still trying to find a way to shove this down the throats of the American people.  And the American people are saying, "No, stop!" And what we need to do is scrap the big government takeover bill and let's start over.  Let's start over on commonsense steps that we can do--we can take to make our system work better.

No one in Washington thinks our current healthcare system is perfect, and certainly not Republicans.  We've outlined our eight or nine ideas about how we can make it work better.  But we want to preserve the best healthcare system in the world, and we don't want the government to take control of it.

MR. GREGORY:  The, the question of spending and, and commonsense steps that could be taken, you heard David Axelrod say, "Look, the Republicans voted against paying as you go.  They voted against a commission to control the debt." They suggest a spending freeze, the president's budget will.  And Speaker Pelosi has said that should not exempt defense spending, it should include it.  What do you say?  Should the spending freeze be a good start but be expanded?

REP. BOEHNER:  I think the president's proposal on freezing nonsecurity domestic spending is a good first step, but it's only $15 billion for each of the next three years.  I think we can do much better than that.  I don't think any agency of the federal government should be exempt from rooting out wasteful spending or unnecessary spending.  And I, frankly, I would agree with it at the Pentagon.  There's got to be wasteful spending there, unnecessary spending there.  It all ought to be eliminated, and we should be going through this budget line by line and, and asking the question, is this spending worth having to borrow money that our kids and grandkids are going to have to pay back?  That's the real question.  And if we went through the budget line by line like that, I think there's a lot more spending that we could cut.

MR. GREGORY:  Let, let me ask you about the prospect of Republican leadership.  In The New York Times today, front page, is this story, as the GOP hits its stride, pitfalls await.  And this is a portion of that piece. "At a moment of what appears to be great if unexpected opportunity, the Republican Party continues to struggle with disputes over ideology and tactics, as well as what party leaders say is an absence of strong figures to lead it back to power, from the party chairman to prospective presidential candidates."

Are Republicans too fractured to seize this moment and return to power?

REP. BOEHNER:  Listen, we have, we have our share of differences within our party, but I, I don't see any big fractures that are out there.  What we're trying to do here in Washington is to show the American people that we've learned our lessons in terms of too much spending.  And what we've tried to demonstrate over the course of the, of the last year is a real sense of fiscal responsibility, a real sense that Republicans need to show the American people that we can stand on principle and that we are the party of better solutions.

MR. GREGORY:  But with the tea party out there, who is the--what's the leader in the Republican--who's the leader in the Republican Party now to lead a charge with a new “Contract With America,” say?

REP. BOEHNER:  David, we're not, there's not going to be a leader in the Republican Party until we have a presidential candidate.  In the meantime, there are going to be a lot of people leading.  There are going to be a lot of flowers out there blooming.  And I think that's good for our party and, frankly, good for the country.

MR. GREGORY:  Do you support Michael Steele as chairman of the party?

REP. BOEHNER:  He's been elected as the chairman of the party.  I've worked closely with him.  It's not that I agree with everything that he does, but he's, by and large, he's doing a pretty good job.

MR. GREGORY:  So you support him in his role?

REP. BOEHNER:  I do.

MR. GREGORY:  Let me show you something from our Wall Street Journal which is interesting in terms of blame.  "Who do you blame for not finding solutions" in Washington?  Republicans get the lion's share of this, certainly more than President Obama.  Why do you think that is?

REP. BOEHNER:  Well, it's one of the reasons why we put this book together, so you and the president and others can't continue to call us the "party of no," the "party of no ideas." We've worked very hard over the last year to make sure that if we had to disagree with our Democratic colleagues in Congress or the administration that, that we, we outlined what we were for. And I think that's a responsible way to do our job as the minority party. Remember, David, you've got President Obama in the White House.  You've got large majorities of Democrats in the House and Senate.  They can't blame us for their problems.  And the, and the, the fact is, it's their problems. They've got a number of members who are saying no to what the liberals in Congress and the White House want to do.  It's, it's, they've got these big majorities.  They can't blame us for their inability to govern.

MR. GREGORY:  Finally, I want to ask you about "don't ask, don't tell." The president said that he wants this to be reversed, that prohibition against gays in the military.  You have said, "I think that `don't ask, don't tell' has worked very well, and we just ought to leave it alone." Will this be a Republican campaign issue?

REP. BOEHNER:  I don't think it will be a campaign issue.  But in the middle of two wars, and, and in the middle of this giant security threat, why would we want to get into this debate?  While, at a time when Americans are asking, "Where are the jobs?" why do we want to get in this debate?  While we're fighting over health care and trying to find some way to come to some common ground, why do we want to get into a divisive debate that will do nothing more than distract the, the real debate that should occur here about helping get our economy going again and getting the American people back to work.

MR. GREGORY:  Leader Boehner, we'll leave it there.  Always nice to have you on the program.

REP. BOEHNER:  Thank you.

MR. GREGORY:  Thanks very much.

And coming up next, we'll break down the president's new agenda and his political standing.  A final word on the week ahead, a week that was and a look ahead--David Brooks, David Faber, Eugene Robinson and Mort Zuckerman. Plus, our MEET THE PRESS MINUTE, a look back at a time when Democrats and Republicans enjoyed open policy dialogues.  Right here on MEET THE PRESS.

(Announcements)

MR. GREGORY:  Our roundtable on a busy political week coming up right after this brief commercial break.

(Announcements)

MR. GREGORY:  And we're back, joined now by CNBC's David Faber, Mort Zuckerman of U.S. News & World Report, David Brooks of The New York Times, and Gene Robinson of The Washington Post.

Welcome to all of you.

Well, David Brooks, the final word at the end of the week, it was crystallized, I think, by The New Yorker cartoon which, I can tell you on good authority, the president finds quite amusing.  Here it is, these various panes describing how the president used to be able to walk on water, and that final page he actually shows he's a mere mortal, he's lost his magic power, he's into the drink.  Where are we?

MR. DAVID BROOKS:  Yeah.  Well, he's still got it, he's still carried in by cherubs when he goes to these meetings, he's still fantastic.  Listen, he's--what's happened is we've got two huge problems the government is not going to solve.  One is short-term, which is the economy, the jobs are just terrible.  I think they're probably going to be terrible for a while.  There's nothing the government's going to do to solve that over the next year.  The longer term is the fiscal situation, which is suicidal.  And the Republicans are not going to be willing to raise taxes, the Democrats are not going to be willing to cut spending, and so that looks almost unsolvable, too.  And so when the government is screwing up on the two major things, then the country gets really angry.  And the country is way ahead of Washington right now in its anger and its rage, and we're all struggling to catch up.

MR. GREGORY:  And, Mort, if, if you listen to these two here this morning, Axelrod and Boehner, there isn't a lot of common cause.  There's potential for some agreements, but there's still this fundamental tension about whether the Republicans are obstructionists or not.

MR. MORT ZUCKERMAN:  Well, I agree, there isn't that agreement; and there isn't that agreement on a program to at least deal with the short-term problem, which is getting people back to work.  I just don't think we have anything near that kind of a program that might have, in a sense, have gotten both the Republicans and Democrats together.  That seems to me the issue that is absolutely overwhelming the American public, and until they get some sense of progress on that, it's going to be a plague on both your houses, and the president's popularity has dropped because he is a symbol of the Democratic Party in this first year more than in any other period--short a period.  He's gone down by about 30 points in approval rating, and it's really primarily because of the economy.

MR. GREGORY:  And it's interesting, Gene, here was the president, he took a little time out, a little break, going with some of his aides and the vice president to the ballgame yesterday, here at Verizon Center, Georgetown and Duke.  Georgetown overpowering Duke, I should point out.  And the, the president enjoying himself.  He even did a little commentary on the sidelines where was it basketball or politics they were talking about?  Listen.

(Videotape, January 30, 2010)

MR. VERNE LUNDQUIST:  You're obviously a left-hander.

PRES. OBAMA:  Yeah.

MR. LUNDQUIST:  Do you have any problems at all going to your right?

PRES. OBAMA:  You know, I went to the Republican House Caucus just yesterday to prove that I could go to my right once in a while.

MR. LUNDQUIST:  Thank you.

PRES. OBAMA:  But there's no doubt that I've got a stronger left hand.

(End videotape)

MR. GREGORY:  Right.  See, a Republican, Gene, will say "Exactly!  You've got a great left hand." And he had to go to this Republican retreat and say, "Hey, I'm not an ideologue." And yet you heard me ask David Axelrod, "Is it his view that he needs to move to the center?" No, that's not what you took away from the State of the Union.  Did you?

MR. EUGENE ROBINSON:  No, I didn't.  And, and look, at the White House, they believe they've moved to the center, they believe that they have--that, in their policies, beginning with the stimulus bill, which was one-third tax cuts, and throughout their policies that they've tried to accommodate centrist and, and even conservative views, or certainly Republican views, and that they've gotten, you know, slapped--they've, they've gotten the back of the Republicans Party--Party's hand for their effort, that's what they believe. They--at the White House, they were thrilled with the, with the, the, the, the Baltimore...

MR. GREGORY:  Mm-hmm.

MR. ROBINSON:  ...showdown question time and, and thought the president did really well and were very happy that he had had the opportunity to, to face his opponents in that forum, in a, in a, in a forum in which he does well. So, you know, I think they're, they're, they're very happy coming out of the week, State of the Union and the, and the Baltimore...(unintelligible).

MR. GREGORY:  David Faber, as you look at the week, has anything changed?

MR. DAVID FABER:  Well, it, it appears in some ways that the president is making it clear to the American people he is solely focused to the extent on the economy.  Obviously health care continues to be an important issue.  But that's where he's focused, that's where he meant--focused his State of the Union, clearly, on trying to create jobs.  He didn't go after the banks in a way that he had previously, even the week prior, in the State of the Union. And, and so perhaps the tone is changing just a bit, but that's where he's focused, of course, as David alluded, the challenges are, are significant.  We had a good GDP number in the, in the fourth quarter.  Mr. Axelrod mentioned it.  It was up 5.7 percent, not quite 6 percent, but nonetheless strong. However, a lot of questions remain about the economy, about the ability to deliver jobs, and about the consumer.

MR. GREGORY:  Well, here's how--to that point, Larry Summers was over in Davos at the economic gathering, and this is what was reported on The Wall Street Journal:  Economic "adviser Summers coined a telling way to look at the current American economic state of play.  He said the U.S. is experiencing a `statistical recovery and a human recession.'" That's the issue.

MR. ZUCKERMAN:  That recovery, 3.7 percent of the 5.7 percent, was for a reduction in the rate of inventory liquidation.  This is not exactly a formula for economic success.  I don't think that the major area that the country is focused on, which is the jobs part, has really been addressed yet.  And I didn't think--frankly, I had a real problem with his State of the Union message, not because I didn't think it was a good speech, but because, again, he was boiling the ocean, he was focusing on too many things, and I think he has to have much more comprehensive programs to deal with the economy.  That did not come out of it.

MR. GREGORY:  Mort, you were at the White House this week, at the president's invitation, with other business leaders.  Give us some sense of that.

MR. ZUCKERMAN:  Well, it's a little difficult for me to do that since it was supposed to be off the record.

MR. GREGORY:  Yeah.

MR. ZUCKERMAN:  But I'll give you a general sense without--I'll cross my legs for a second, OK?

MR. GREGORY:  Yeah.

MR. ZUCKERMAN:  Look, I think it all focused on the economy.  And again, a, a good part of it focused on what I just said, in fact, I focused on that, because I do think that he's got to really concentrate his political capital and the country's attention and the Congress' attention on a whole series of programs to improve the economy and the jobs.  We can't do much, as David says, about the fiscal thing at this point, but the country is really terrified.  It's--the overall unemployment rate, if you take full- and part-time unemployment, is somewhere in the range of 20 percent.  We've never seen that in our lifetime.

MR. FABER:  But we do know, I mean, jobs lag a recovery, and certainly that will be the case here.  It is always the case.

MR. ZUCKERMAN:  Without question.  But we're in a very different kind of economic recession now because it was induced by a financial crisis.  And that is something we have not experienced in this country anywhere near to this degree.  It's going to take a much longer time.  We've got to have government programs.  It's the only agent...

MR. FABER:  Yeah.  We've lost 7.2 million jobs...

MR. GREGORY:  Right.

MR. FABER:  ...since the recession began.  It's going to be tough.

MR. ROBINSON:  Who's got political capital to spend, at this point, except for Scott Brown, in, in Massachusetts, perhaps?  You know, if, if you look at the--personal popularity, the president is actually, personally, quite popular.

MR. GREGORY:  Right.

MR. ROBINSON:  And that graphic you showed earlier, 27 percent are, are blaming him essentially for everything being messed up, 48 percent blaming the, the congressional Republicans and 41 percent the congressional Democrats. It's, it's unclear who is the--I guess the president's in a better position than anybody else.  But how are you going to get a second stimulus?  What are you going to do about jobs and, and the economy?

MR. BROOKS:  Yeah, to me, that's the profundity of what Larry Summers has said about the human recession, because it's a psychological recession.  If you ask people, "Why aren't you investing?  Why aren't you lending?" it all comes down to uncertainty, at the end of the day.  And so we could shove money into the economy, but if bankers and entrepreneurs don't have any sense of certainty, then they're just not going to invest for something six months out, a year out.  And so we've not only got this economic problem, but it's compounded by a psychological problem, magnified by the fact that distrust of institutions is at a highest level in American history.  You go back to Watergate, you could go back to everything, people distrust institutions more than ever before.

MR. GREGORY:  You know, to that point, from our Wall Street Journal poll, look at this in terms of the view of the federal government and the fact that most people believe that it's not working well, that it's unhealthy.  Seventy percent feel that way.

And, David Faber, it gets to the point--the president wants a focus on jobs, rhetorically for sure, but ultimately government has to deliver.  The stimulus has not lived up to its promise by the, the own admission of the, of the administration in terms of that initial impact on the unemployment rate.  How much can government do at this point to create jobs?

MR. BROOKS:  It--that's a very good question.  I mean, $800 billion in stimulus, of course a lot of it has yet to be spent.

MR. GREGORY:  Right.

MR. FABER:  And so we're still going to see some of the effect from that. But, certainly, the government can only help.  It can't actually deal with the problem directly and create jobs all over the place, other than with direct spending to have people making roads and things like that.  Businesses need to hire--small businesses, medium-size businesses.  Those are challenged right now because they can't get loans from banks to help them expand.  And big business needs to hire.  We're not seeing any of that.  It doesn't mean we won't.  Typically, you need to get some confidence back before you'll see CEOs say, "OK, I feel like I can actually start to hire now." It hasn't happened as yet.

MR. ZUCKERMAN:  Look, we are also looking at a condition where the state and local governments and local school boards are going to be cutting their expenses by $200 billion this year.  It's completely countercyclical.  It's going to wipe out much of what we still think is left of the stimulus program. They've got to come up with a much more serious program.  I, I, I mean, there's a major industrial program, industrial policy that is possible to improve manufacturing in this country.  They've got to have a whole series of these programs because we may have a double dip in this recession, and then we're going to be in real, real trouble.

MR. GREGORY:  Well, let me bring up health care as well, and, and you heard David Axelrod say the president does not think it's dead, that it can't be dead.  Even though it's not going to be a priority, they're going to let it linger, which has been dangerous.  There's a reason why the president set deadlines and said it has to be done this year.  Going back to Clinton's experience and the failure of healthcare reform, Joe Klein wrote an interesting column on this.  And this is part of what he said:  "The other mistake that [President Clinton made on Health Care reform] was political:  a dozen years after Ronald Reagan was elected president, the public still believed, as Reagan said in his Inaugural, that `government is the problem,' not the solution to the country's difficulties.  Clinton realized, too late, that he should have focused on governing effectively first."

Gene, could the same be said now for this effort at health care?

MR. ROBINSON:  Well, I think, in retrospect, yeah, you could.  I mean, the--as you know, the White House made the calculation that, you know, coming in on a wave of popularity, first year, somewhat inconvenient about the economy falling apart, but, but that this was their big opportunity to do health care before we got into an election year cycle, before things got really complicated.  Well, things got really complicated from the beginning. They got more complicated as, as time went on.  And, and so, you know, from today you can look back and say, yeah, sure, they probably would have had more success if they had had a, had a, had established a record of governing, if they had focused on the economy.  I think it was hard to--hard for them to see that then.

MR. BROOKS:  Some people were saying it, though, at the time.

MR. ZUCKERMAN:  Right.

MR. FABER:  Yeah.

MR. BROOKS:  Many people were saying it at, at the time, including a guy named Bill Galston at the Brookings Institution, who was Bill Clinton's domestic policy adviser.  He--they came in, and he was writing--listen, when FDR came in, people--70 percent of the people had trust in government to do the right thing most of the time.  Now it's 17 percent.  You can't presume they're going to trust you to take everything into Washington.  So you got to build slowly. And a lot of people were arguing against the big bang that Obama went for on precisely those grounds, and it's come back to bite them.

MR. GREGORY:  Mm-hmm.

MR. ZUCKERMAN:  And I might say, when they did that in the Congress, they were not too responsive to the Republican Party.  Now the Republican Party's sitting there stone-faced when the president delivers his State of the Union message.  But, for that first year, the Democrats, shall we say, were on a high.  They were not exactly accommodating to the Republicans.  But I agree with David, that had to be the focus.  A lot of people were saying this is much more serious because it was so different as a financial crisis-induced recession.  That's what required the focus.  We still aren't getting it.

MR. FABER:  Yeah, it was January '09.  I mean, it wasn't like we're talking 2007 when we didn't know if we were going to have a recession.  We were already in the midst of a very serious recession...

MR. ZUCKERMAN:  Right.

MR. FABER:  ...when the president took over.  So there were plenty of people who, I think, were aware of it.

MR. GREGORY:  But, Gene, is, is that fair that, you know, that the president has acknowledged the, the unified opposition of the Republicans, which has been a tactical, strategic choice that's been made.  How much room were they giving him?

MR. ROBINSON:  Well, you know, when you get to the point where, where Republican members of Congress are opposing bills that--you know, measures that they co-sponsored, which, which we have seen in recent days, clearly there, there is tactic--there are tactics and strategy involved here.  And, and now you're hearing Republicans, as, as Congressman Boehner brought out the book to, to lay on the table and present, kind of, kind of feeling that, that I think the administration has had some impact in saying "party of no, party of no, party of no" whenever anyone says "Republican." And, and I think that's, that is beginning to smart a bit.

MR. GREGORY:  Let's talk about the, the political landscape overall.  Here's the cover of The Weekly Standard, which is--asks a provocative question at a time when there are potential gains by the GOP.  It's, "Can Republicans Govern?"

David Brooks, you wrote this week about the potential for a third party re-emerging, which you call the "sane Ross Perot." You see--whether it's the tea party movement.  But so much--people look at Washington and say, "It's broken.  They're just not getting things done here."

MR. ROBINSON:  Right.

MR. BROOKS:  Yeah.  The only thing I'd caution Republicans about is distrust of government is not anti-government.

MR. GREGORY:  Hm.

MR. BROOKS:  People want government to work, they just don't believe in it. So I think Republicans are doing what Democrats have, have done and what Republicans have done before, which is overreading the ideological mandate. They think the people are--distrust government, therefore they want big slashing.  They can get away with just saying, "We want big tax cuts, tax cuts, tax cuts."

MR. GREGORY:  Right.

MR. BROOKS:  We can go back to that old song, "That's not true."

MR. GREGORY:  Well, Newt Gingrich has said--calling for a new Contract With America, that the GOP needs to be an alternative party, not an opposition party.

MR. ZUCKERMAN:  They, they do have--the Republicans have an advantage, though.  The Democrats are in power.  They--the referendum is going to be on the Democrats in the November elections, not on the Republicans.  So if the Republicans distract the country from that and become the "party of no," they'll suffer for it.  They've got to be constructive much more than they have been today.

MR. GREGORY:  David Faber, so much of the administration will tell you privately and, and publicly that if the economy doesn't make any gains here, if unemployment is not dented, it's going to be really hard for Democrats in the fall.  It's going to go on to be hard for the president in, in 2012. Based on the people that you're talking to, what is that impetus to start hiring again?  Where is it?  When is it going to come?

MR. FABER:  Well, in some cases it may come fairly soon.  But it's a fair question and a very important one.  If you're a CEO of a, let's call it a fairly large company, right now you've actually been profiting fairly well. You've cut your costs a lot by firing people, in part.  But you may start to at least feel somewhat confident.  You're watching your stock price, it's probably doing OK.  That may lead you to think, "OK, I've got to start reinvesting in the business to a certain extent." We might start to see that. Small businesses, medium-sized businesses, I think it's a larger question. The banks got us into this problem in part by making very poor lending decisions.  Now they don't want to do that again, and they are much more stringent.  They are not lending.  Very hard to get access to capital.  That's what you need if you're going to go out and create jobs.  So it's that confidence and capital.  It's not clear that we have all of that.

MR. ROBINSON:  So much of the economy and our economic growth has been driven by consumer spending.  And consumers don't want to spend.  Consumers feel poorer than they felt a few years ago.  Their houses are worth less.  They feel their jobs are, are, are more precarious.  And so how do, how do you solve that?  How do you get people...

MR. GREGORY:  Right.

MR. FABER:  In the fourth quarter they did spend a little bit more, we should point out, than they had the year previously.

MR. GREGORY:  I, I've just got about a minute left.  I want to--David, I want you to engage on this topic.  You heard David Axelrod say about this transfer of Khalid Sheikh Mohammed to New York for trial is now in a, in a state of abeyance, which is there is no decision, but obviously they're now leaning against a decision that they had made very strongly.  This is significant.

MR. BROOKS:  Yes.  Eric Holder did not consult the president before he made that decision, the attorney general.  And that was a huge mistake, because it's a political decision and it's a national security decision.  And they just made a tremendous error, and they're going to walk it back.

MR. GREGORY:  And yet they're saying, Gene, there's, there's still no decision yet.  I mean, what--why are--what's the final shoe?

MR. ROBINSON:  Still no decision, but it sounds like there's a decision, doesn't there?

MR. GREGORY:  Yeah.  Yeah.

MR. ROBINSON:  I mean, would you--no, if Mayor Bloomberg is saying, you know, "Thanks, but no thanks," I, I don't, I don't think over that objection you can, you can go ahead with that.

MR. GREGORY:  But...

MR. ROBINSON:  It, it is very interesting, though.  It, it, it does speak to a, to a certain independence of the attorney general, and I...

MR. GREGORY:  But what are the consequences politically on this at a time when the Republicans are mounting a new charge of being soft on terror?

MR. ROBINSON:  Well, they, they walk it back, and they say, "Why, we're tough on terror."

MR. GREGORY:  Yeah.  Yeah.

MR. ROBINSON:  "We're"--you know.  And...

MR. BROOKS:  It was a huge issue for Scott Brown.  He used that issue...

MR. ZUCKERMAN:  Scott Brown, right.  Scott Brown said, you know, "Let's spend the money on our defense systems and our anti-terrorist systems, not on providing lawyers for terrorists." I mean, that is a very easy political hit for him to make, and it--the, the Democrats are vulnerable on that issue.

MR. FABER:  The city of Newark also saying, "Hey, it's going to cost us a lot of money.  We don't want to spend that money."

MR. GREGORY:  Right.

MR. FABER:  That's going to be a huge issue this year.  State, local government, huge deficits, David.  Perhaps higher taxes on the state level, again, taxing the consumer.

MR. GREGORY:  All right, we're going to leave it there.  Thanks to all of you very much.  Great conversation.

Coming next, our MEET THE PRESS MINUTE.  A look back at the not-so-distant past, when leaders of both parties sat side-by-side debating policy and politics right here on MEET THE PRESS, right after this brief station break.

(Announcements)

MR. GREGORY:  And we're back with our MEET THE PRESS MINUTE.  Lots of talk this week of how broken Washington is and a desire to bring back a sense of bipartisanship.  Well, here's an attempt right here on MEET THE PRESS by the Senate majority leader and Senate minority leader back in 1989 to find some early areas of agreement in what would later become a major political battle over the fiscal 1991 budget.

(Videotape, October 29, 1989)

MR. GARRICK UTLEY:  You don't see any possibility of an agreement as we start to work on the fiscal 1991 budget, which is going to be a tremendous challenge, a tremendous problem that might involve some kind of revenue increase in exchange for cuts in spending?

SEN. BOB DOLE (R-KS):  Well, I would say this, and I think maybe we'd find agreement if, if everything's on the table.

MR. UTLEY:  Mm-hmm.

SEN. DOLE:  I mean everything, entitlements as well as the revenues, then you've got some reason for agreement because I think, as Senator Mitchell has pointed out, we blame Democrats for tax increases, they blame us for reducing Social Security.  So you've got to get it all on the table so there isn't any political backfire.

MR. UTLEY:  OK.  Senator Mitchell...

SEN. GEORGE MITCHELL (D-ME):  Yeah.

MR. UTLEY:  ...you'll put it all on the table?

SEN. MITCHELL:  Oh, yes.  I think if Senator Dole and I could settle this matter, that is if we were the only participants and say a group in the Senate, I think we could have an agreement in a very short order.  I think that...

MR. UTLEY:  Well, let's settle up right now.  I mean, would you agree to put some entitlement cuts on the table in principle?

SEN. DOLE:  Not cuts.

SEN. MITCHELL:  Not cuts.

MR. UTLEY:  Not cuts.  But I mean...

SEN. MITCHELL:  No, I, yeah, I think everything should be on the table.  I think the problem we have now, the preconditions before discussions by one side that require the other side to establish preconditions and pretty soon the discussion...

MR. UTLEY:  And, and you would raise...

SEN. MITCHELL:  ...everything is off the table and there's nothing left to discuss.  ...

SEN. DOLE:  That's billions of dollars.

MS. ANDREA MITCHELL:  But it's the White House that has really blocked this kind of compromise, isn't it?

SEN. MITCHELL:  That's exactly right.

MR. UTLEY:  Do you agree with that?

SEN. DOLE:  Well, I don't know.  I, I don't believe so.  I don't think we've ever had everything on the table.  You know, we came very close in Reagan's administration on two occasions.  I think next year might be an opportunity for all of us, and I'm talking about the president, too.

(End videotape)

MR. GREGORY:  Months later, as budget talks stalled, President Bush did put tax increases on the table and famously broke with his "no new taxes" vow, saying any deficit-cutting agreement would require tax increases.  By the way, the last time the majority leader and minority leader of the Senate appeared here together was eight years ago, months after the 9/11 attacks.

If there is, indeed, a new era of constructive engagement, we want Leaders Reid and McConnell to know of an open invitation to appear together and talk constructively right here, any Sunday, on MEET THE PRESS.

And we'll be right back.

(Announcements)

MR. GREGORY:  Finally, a programming note:  In honor of Black History Month, NBC News and Thegrio.com have launched "The Grio's 100:  History Makers in the Making," highlighting the next generation of African-American history makers. Watch for those reports all week on NBC and MSNBC, and, of course, on Thegrio.com.

That's all for today.  We'll be back next week when we'll talk exclusively with former Treasury Secretary Hank Paulson, author of his new book "On the Brink," and the former Chairman of the Federal Reserve Alan Greenspan, an in depth conversation on the legacy of the financial collapse and the future of the economy.  That's Paulson and Greenspan together right here next Sunday.

If it's Sunday, it's MEET THE PRESS.

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