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PRES. BARACK OBAMA: There's nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires.
REP. PAUL RYAN (R-WI): What we heard today was not fiscal leadership from our commander in chief. What we heard today was a political broadside from our campaigner in chief.
MR. GREGORY: The budget war, rising gas prices, the looming debt ceiling deadline, and the jobs outlook--all topics for our lead newsmaker guest this morning, the president's point man on the economy, Treasury Secretary Tim Geithner.
Then, what's realistic? Our political roundtable weighs in on who has the more serious plan to tackle the deficit, and whether there is the political will to solve the toughest problems, like Medicare and our tax system, without another threat to shut down the government.
Plus, Mitt Romney inches closer to jumping in the race.
FMR. GOV. MITT ROMNEY (R-MA): It's time that we put America back on a course of greatness with a growing economy, good jobs, and fiscal discipline in Washington.
MR. GREGORY: If he's seen by many as the GOP front-runner, why is Donald Trump doing so well in the polls? With us, former chairman of the Federal Reserve Alan Greenspan; tea party-backed Republican senator from Utah Mike Lee; former Democratic governor of Michigan Jennifer Granholm; the executive editor at Random House, Jon Meacham; and the author of the
new book "Fail Up," PBS' Tavis Smiley.
Announcer: From NBC News in Washington, MEET THE PRESS with David Gregory.
MR. GREGORY: Good morning.
MR. DAVID GREGORY: Millions of Americans will rush to file their tax return by tomorrow's deadline at a time when taxes are at the heart of the budget debate here in Washington. The spending fight and high gas prices, with a national average now of $3.83 a gallon, top of mind for the president's chief economic adviser, Treasury Secretary Tim Geithner. I sat down with him yesterday at the Treasury Department.
There's so much to get to. I want to begin with the next big fight here in Washington. The government nearly shut down because this year's budget. Now there's the decision to raise the credit limit on America's credit card, with the debt at $14 trillion. That is, raising the debt ceiling. Will the president agree, as Republicans demand, to tie spending cuts to an agreement to raise the debt ceiling?
SEC'Y TIMOTHY GEITHNER: David, let me tell you how we're going to do this. Congress is going to have to raise the debt limit. They understand that. That's absolutely essential to preserve the creditworthiness of the United States of America. You know, we're a country that meets its obligations, and we have to meet our obligations, and they recognize
that. I heard--in fact, I heard the leadership tell the president that again on Wednesday.
MR. GREGORY: But you hear so many Republicans saying, "No, no, there's got to be a deal here."
SEC'Y GEITHNER: But, but, but as we do that, in parallel to that, we're going to work with the Republicans and Democrats and try and get people to come together on a long-term plan to bring our fiscal position back down towards balance so we're living within our means again. We have to do both those two things. And we're going to work very hard again to take advantage of this opportunity to get Democrats and Republicans to come together.
MR. GREGORY: But does there have to be a link?
SEC'Y GEITHNER: I think you can do these things in parallel. And I'll--let me say it this way. You know, we're going to move forward, and we want--again, we want Congress to put in place a comprehensive framework, a balanced framework, that can reduce our long-term deficits. And we're going to work hard to do that. But if, by the time we need to raise the debt limit, we haven't worked all that out, Congress still has to raise the debt limit. Again, leadership recognize that. They don't--they know...
MR. GREGORY: Or, or else what? Because they say a lot of your warnings are overblown. Those like Senator DeMint of South Carolina say those warnings about, you know, the catastrophe are overblown.
SEC'Y GEITHNER: Oh, that's absolutely not the case. And again, I think--I've spent a lot of time with Republicans and Democrats on this--you know, I saw the Senate Finance Committee last week--and they absolutely understand the stakes in this. And the leadership understand
that you can't play around with this, you can't take it too long. And those people up there who are telling people that you can take this to the brink because it gives them some leverage, they're going to own the responsibility for the risk that creates for the American economy.
MR. GREGORY: And what are the stakes?
SEC'Y GEITHNER: Well, again, if you just think of it this way, if you allow people to start to doubt whether the United States of America will meet its obligations, that would be catastrophic, and we can't take that risk. But again, the responsible people up there understand that, and I'm very confident they'll do this. And I heard them say that, that to the president on Wednesday. Again, they said that, "We, we recognize we can't play around with this."
MR. GREGORY: Do you think this risks another shutdown?
SEC'Y GEITHNER: I don't think so. Again, I think if you, if you listen carefully--I know there's a lot of politics in the moment, but if you listen carefully to what people are saying, a very important thing has happened. You've seen the Republican leadership say we need to try and
cut about $4 trillion from our deficit over about 10 years. You saw a bipartisan fiscal commission the president established lay out basically the same target. And the president of the United States on Wednesday laid out a balanced, responsible plan that achieves about the same level of deficit reduction over about the same period. We take a little longer because we want to go a little more gradually. But when you have leadership of Republicans and Democrats saying that, "This is the right thing to do for the economy now. We all agree on how much you have to do," that's very important. And what we like to--Congress to do is,
again, before we get too far into June we want Congress to agree on concrete targets, deadlines, timelines, and an enforcement mechanism that will force Congress to live within its means over the next three to five years.
MR. GREGORY: OK, but one more on the debt limit. When he was Senator Obama, he voted against raising the debt limit in 2006.
SEC'Y GEITHNER: He did. And he said...
MR. GREGORY: And he said, he said at the time that the debt problem was a, quote, "failure of leadership, and Americans deserve better." Look, the debt has gone up 35 percent during his presidency. Is that also a failure of leadership?
SEC'Y GEITHNER: You know, you, you heard him say this week that that was a mistake. He recognized that's a mistake, and he recognizes that's not something you can play politics with. You know, Steny Hoyer said in the--on the floor something similar earlier this year. He said that, "I thought this was something you could demagogue. I was wrong at that point. Not something you can play politics with." Again, that it's--this is a absolutely critical thing for people to understand. This is about the trust and confidence in the American people, and the world is watching us. Markets around the world are watching Washington to see whether this political leadership, Republicans and Democrats, understand that we need to get on with it and start to bring down the long-term deficits. And, of course, as we do that, as we work that out, Congress will pass the debt limit.
MR. GREGORY: Let me ask you about gas prices. That's what Americans are thinking about around the country. And we've done a little sampling. If you look at some of the prices around the country, in Los Angeles like a lot of the West Coast it's over $4, $4.19. Chicago's over $4. Cleveland is $3.85, New York City $3.77. Are you worried that gas is going to go up to what, $5?
SEC'Y GEITHNER: You're right, gas prices have risen quite a lot. And people can feel it, and it's hurting. And it's, and it's--you--had some effect on consumer confidence. Makes people feel a little bit more uneasy about the economy as a whole.
MR. GREGORY: Mm-hmm.
SEC'Y GEITHNER: And what's driving this is, is partly just growth is stronger around the world as we come out of this crisis, and that's a good thing. But it's partly a reflection of concerns about what's happening in North Africa and the Mideast and the gulf, what that might mean for supply in the future. And, you know, part of it, David, is the impact of the nuclear disaster in Japan, because people are wondering whether nuclear power's going to be able to meet as large a share of our energy needs in the future. So those things are all what's driving gas
MR. GREGORY: Do they keep going higher as we get into the summer, do you think?
SEC'Y GEITHNER: Well, you know, it's just--again, it's hard to know. And, you know, at this level there's a measurable impact on the economy, but it's an impact we can, we can withstand, we can absorb because the economy itself is still gradually getting stronger, and we've now had about 18 months of positive growth.
MR. GREGORY: It doesn't slow down recovery?
SEC'Y GEITHNER: It slows it down modestly. It's a measurable--you can feel it, you can see it, but it won't put in danger the recovery under way. But people are going to feel it still, and that's why it's very important, David, we work on fixing our long-term energy problems.
Because you need Americans to use energy more efficiently, we need to make sure we're shifting to other forms of energy, reduce our dependence on foreign oil. Those things are very important.
MR. GREGORY: Let me focus, as well, on jobs. Something we do frequently is put up the unemployment chart dating back to February of 2009, when it was at 8.2 percent, the first full month of the Obama presidency. The high point, of course, October 2009, over 10 percent; March 2011 it's at 8.8 percent. Mitt Romney, who looks like he's going to run to challenge
the president next year, has taken aim at the record on jobs of this administration.
GOV. ROMNEY: Across the nation, over 20 million Americans still can't find a job or have given up looking. How has this happened in the nation that leads the world in innovation and productivity? The answer is that President Obama's policies have failed. He and virtually all the people around him have never worked in the real economy. They just don't know how jobs are created in the private sector.
MR. GREGORY: He's not just taking aim at the president, he's taking aim at you too.
SEC'Y GEITHNER: It's just about politics, and I understand that. People have to say those kind of things. But if you look at what's happened to this economy over the last two and a half years, this president came in and he did what was necessary to prevent the Great Depression, to put out a terribly damaging financial fire that was engulfing not just this
economy, but the global economy as a whole. And for 18 months this economy has been growing, people have been creating jobs. We've had more than a million jobs created in the private sector just over this--these--this last year. And we had job creation come back stronger and faster than you saw in the last two recoveries. Now, we have a lot of challenges ahead. Unemployment's still close to 9 percent. A lot of people are hurting still. It's a very tough economy still because of the...
MR. GREGORY: Is it still a jobs crisis?
SEC'Y GEITHNER: Well, it's--I would still, still--we're still in a deeply difficult, deeply challenging economy for millions and millions of Americans, and that is because this crisis was so severe and the scars ran so deep. And it's just going to take more time to heal it. But our
economy's getting stronger. And don't bet against this economy. Again, if you look at productivity growth, you look at the strength of private investment by businesses, you look at what's happening to U.S. exports, you look at how strong high technology is, the agricultural economy in the United States is the strongest in, in decades. There is a lot of sign of not just healing, but strength and resilient and dynamism in this economy because of the policies this president of the United States put in place. Now--but we have a lot of work to do, and we're going to have a debate about what the best strategy is for the country going forward.
MR. GREGORY: And I...
SEC'Y GEITHNER: But I want to come back to where you began, though, David, in this...
MR. GREGORY: Yeah.
SEC'Y GEITHNER: ...because it's very important people understand that we may disagree exactly on what the best strategy is for dealing with future entitlements, we may disagree on what we have to do on tax reform to fix our broken tax code, but we all have to understand it is absolutely essential that we put in place a set of targets and timelines and credible enforcement measures that will bring out fiscal position back down to balance. Because to do that we have to, we have to live within our means so that we can afford to make the investments and things necessary to make sure our economy grows in the future.
MR. GREGORY: I want to get into some of the high points on the, on the budget, but before I leave jobs, by next fall--yes, it's the election calendar--do you think unemployment is still above 8 percent?
SEC'Y GEITHNER: If you look at what private economists say about the economy, you know, there's a lot of uncertainty in forecasts, no magic in forecasts, there's much more confidence now that we're going to have pretty steady, solid growth over this period of time, and enough jobs created that you're going to see the unemployment rate fall to a 8 percent, some people say below 8 percent, by the end of 2012. But, again, that's private economists and this is, you know, obviously, inherently uncertain.
MR. GREGORY: I want to talk about the budget, but let's start with the tax fight. The president made it very clear, reacting to Chairman Paul Ryan's budget proposal, which includes a lot of tax cuts, that he wasn't going to go there.
PRES. BARACK OBAMA: We cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. We can't afford it. And I refuse to renew them again.
MR. GREGORY: That's a veto threat.
SEC'Y GEITHNER: Well, you know, the president's been very clear on this from the beginning, and he's got absolutely the right position for the economy as a whole, that the taxes the most fortunate Americans pay today are lower than they've been in a decade. And in order to sustain them--if you were going to--if you wanted to try to sustain those tax breaks, you have to do one of two things. You have to either cut incredibly deeply into commitments to our seniors, to the elderly, to the poor, to the disabled, or you have to gut spending on defense, or you have to gut spending on education. Or you have to ask me to go out and
borrow trillions of dollars from China, from Americans, from our children to afford those. And we're not prepared to do that. And it is not necessary to do that and would not be responsible to do that. So when the president says we can't afford it, he's absolutely right.
MR. GREGORY: But can you really pursue a policy where you cut the deficit if you exempt the middle class from any pain in terms of tax hikes?
SEC'Y GEITHNER: No, absolutely. This has to be balanced. It's going to touch all Americans. The framework the president laid out on Wednesday of this week was a comprehensive balanced set of cuts on spending, things that'll...
MR. GREGORY: Right, but I'm asking about taxes, because he says, "No, no way am I raising taxes on those making $250,000 or less."
SEC'Y GEITHNER: Well, well, let me just say, the spending restraints, spending reforms the president talked about, they will touch all Americans. Now, on the tax side, if you look at the way our tax code is structured, and it's a broken tax code, we spend hundreds of billions of
dollars a year on special tax expenditures, special tax breaks that go to the--just the top--the wealthiest Americans. So we have plenty of room in this tax code that there's just a modest increase in the burden on the most fortunate. And if we do that, then we can afford to, along with other spending cuts, we can preserve the commitments we made to our seniors, to the disabled, to the poor, and we can still make sure we're investing in education...
MR. GREGORY: But, but the president, the president has said that Paul Ryan's plan is not a serious plan. He's basically said, "No way, no how," on renewing the Bush era tax cuts. And you're talking about working in parallel tracks and getting something done. Hasn't he completely poisoned the well here? Look what we just went through two weeks ago.
SEC'Y GEITHNER: What we're going to do is what's good for the economy, and we all recognize--of course, the president understands this and Republican leadership understands this--that we have to do this together. There is no way we can...
MR. GREGORY: But how do you do that, Mr. Secretary? The president just--he simply gave the back of his hand to what Republicans were proposing.
SEC'Y GEITHNER: Well, we've been talking very actively to Republicans throughout this process. We're going to continue to do it. I spoke with Senator Coburn on Friday, I spoke to Senator Conrad on Thursday. We sat with Alan Simpson and Erskine Bowles, who chaired the bipartisan commission in the Oval Office on, on Thursday. And absolutely we have to do this together. But I think if you--again, if you listen carefully and listen carefully to this debate now, you're seeing both sides say we need to do about $4 trillion in deficit reduction between over a period of about 10 to 12 years. We disagree on how we want to do it, but we want
to do--what we want to do now is, again, because the world's watching us, David, we want to find where we can agree--and we can agree on the broad targets and make sure that we lock that in, and that'll give us a little bit of time to work out our disagreements and things like taxes.
MR. GREGORY: But tax hikes won't hurt economic recovery?
SEC'Y GEITHNER: No. The--absolutely. This--the important thing for people to recognize about this, fixing our fiscal problem is going to require us doing tough things. Things again, that are going to touch all Americans.
MR. GREGORY: But to that point...
SEC'Y GEITHNER: But--hold on just one second.
MR. GREGORY: Yeah.
SEC'Y GEITHNER: But it's very important to understand this, OK? But we can do this, we can handle this without putting an undue burden on the economy as a whole and without adding to the burden of the middle class. It is perfectly within our capacity as a country, a you do not need to make savage, deep cuts in these entitlement programs to our seniors,
commitments we made for generations. You do not need to abandon those commitments in order to bring our--some balance to our fiscal budget. You can reform them...
MR. GREGORY: You talk about--yeah, you talk about the proposal that Chairman Ryan has in the House to change Medicare basically as we know it, change it into a voucher program, as they say a premium support program. The incoming head of the Democratic National Committee, Representative Debbie Wasserman Schultz, she called that plan "a death trap for some seniors." Do you agree with that?
SEC'Y GEITHNER: Well, if you look at what CBO said, the Congressional Budget Office, which is the independent, nonpartisan arbiter in--and an analyst in this the Congress relies on, what they said is that plan, if enacted, would raise the cost of Medicare to seniors by about $6,000 a year. Now, that is a major shift, a major increase in the burden on the elderly. And the reason why that is in their plan is, in part, because he wants to maintain these tax breaks for the top 2 percent of Americans.
MR. GREGORY: But he also argues, "Look, if you're serious about this, you have to do something fundamental." The president, in his plan, did not--all he said was, "We're going to set up a group to work on some of the areas where we can try to reform Medicare." Is that really a serious way to reform that?
SEC'Y GEITHNER: No, I'll tell you the difference in the strategy, OK. In one strategy, which is the president's strategy, we have to put in place in reforms that reduce the cost of health care to all Americans, reduce the rate of growth in costs, and that's a very complicated and
very difficult. It requires a comprehensive framework of reforms for changes how we use health care in many ways. What the alternative strategy you heard, you heard House Republicans embrace is to shift the burden of costs to seniors in ways that make health care more expensive for seniors and will not reduce, will not help get us get ahead of this problem. And what the president proposed are--they're difficult and they're very difficult substantive reforms, and they'll be--they'll face a lot of opposition. And the choice is not, again, not whether to reform, it's just, it's just how you do it.
MR. GREGORY: The real question I think is whether it's possible between now and election, rather than entitlement reform, can you get tax reform done? And here's the cover of Bloomberg Businessweek, "How to Pay No Taxes: Eleven Shelters, dodges, and rolls--all perfectly legal--used by America's wealthiest people." Talking about companies like General
Electric that didn't pay taxes last year, other companies that have been targeted, Google and others. Are there too many loopholes out there?
SEC'Y GEITHNER: Absolutely. And it makes the system unfair. It means that companies are not paying taxes on the basis of the strength of their business. They're paying taxes on the basis of, you know, how good their lobbyist was. And that's an unfair, untenable system, and it's bad for the economy.
MR. GREGORY: GE, of course, says, look, they had big losses in GE Capital. They did pay taxes, certainly, around the world and, and in states. That that's kind of an unfair knock. Do you look at, not just GE, but other companies, and say this is a system that has to end?
SEC'Y GEITHNER: Well, what we want to do is have a corporate tax system where we have a lower corporate rate, and we clean up these special tax shelters, special tax expenditures to make sure we can afford to do that, not add to future deficits. But the key thing is to do this in a way that makes the economy stronger, more competitive, and makes it more likely that these great companies in the world build their next plant in the United States. So you want a tax reform--you want a corporate tax system that makes it more likely, that encourages investment in this country. That'll make it stronger going forward. And we think we can do
that. And, and this is an area, David, where I think you're going to find broad bipartisan support.
MR. GREGORY: Is this doable do you think?
SEC'Y GEITHNER: I do think it's doable, absolutely.
MR. GREGORY: This year?
SEC'Y GEITHNER: And I think--I do think it's doable this year. You know, we have to see. You know we're--I think we're going to see Democrats and Republicans come together to pass a set of very good trade agreements to expand exports. We're going to see whether we can do something in corporate tax reform together. And again, you know, I know this is a
political moment and there's a lot of rhetoric out there, but if you listen carefully to what both sides are saying on the deficits, we've got the same basic view on how much you have to do to bring our deficits down so we start to pay down our debt. And we'd like to see Congress lock that in.
MR. GREGORY: Full disclosure, when we're talking about General Electric, it is a partial owner of NBC News, and I want to make sure I'm very clear with the audience about that.
Final question for you. Would you stay on to serve a second term as treasury secretary?
SEC'Y GEITHNER: David, I can tell you this, I got a lot on my plate, I enjoy these challenges, I believe in them, but I'm not going to make news on that today.
MR. GREGORY: That's not, that's not a no. In our business that's not a no.
SEC'Y GEITHNER: We're going to do this again. I got a lot I'm doing, I enjoy this work, I enjoy a challenge.
MR. GREGORY: But you could, you could, you could imagine staying on because the challenges are so great.
SEC'Y GEITHNER: Again, David, when I'm, when I'm going to make news on this, I'll let you know. You won't be the first person, but I'll let you know.
MR. GREGORY: But close? Mr. Secretary, thank you very much.
SEC'Y GEITHNER: Thank you. Good to see you.
MR. GREGORY: And coming up, what's at stake in the budget battles and what will it mean for the economy? Plus, the 2012 campaign coming into view through the lens of a fragile economic recovery as two of the president's potential opponents, Mitt Romney and, yes, even Donald Trump, tout their business experience. Will President Obama's re-election hinge on his handling of the economy? Our roundtable weighs in: the former chairman of the Federal Reserve, Alan Greenspan; tea party-backed senator from Utah, Mike Lee; former governor of Michigan, Jennifer Granholm; author John Meacham; and PBS' Tavis Smiley. Coming right up.
MR. GREGORY: Coming up, getting real about the deficit and how will the budget battle impact the race for the White House in 2012. Look, the roundtable is here, ready to weigh in. Alan Greenspan, John Meacham, Tavis Smiley, Senator Mike Lee, and former Governor Jennifer Granholm. Did I also say Tavis is here? Tavis is here. Up next after this brief commercial break.
MR. DAVID GREGORY: We are back, joined now by our roundtable: executive editor at Random House, John Meacham; former chairman of the Federal Reserve, Alan Greenspan; former Democratic governor of Michigan, Jennifer Granholm; Republican senator from Utah, Mike Lee; and author of the new book, "Fail Up," PBS' Tavis Smiley. Welcome to all of you.
Let's get right into it. Senator Mike Lee, you heard Treasury Secretary Geithner say, "Here's how we're going to deal with raising the credit limit on America's credit card, the debt ceiling. We'll work in parallel tracks." But no direct linkage where there'll be spending cuts in exchange for your vote, Senator, on raising the debt ceiling. How does that go down with you?
SEN. MIKE LEE (R-UT): Well, to the extent that he's saying that we're not willing to change the way Washington, D.C., spends money, I think that's a problem, because I--look, I agree with then Senator Obama said in 2006. This represents a failure of leadership every time we have to raise the debts--the debt ceiling. And that's what he did in 2006. I agree with that. This time around, I think we ought to approach it from the standpoint that, instead of kicking the can down the road again, just reflexively, we ought to change the way we spend money.
MR. GREGORY: Well, but he's saying that you will, that you'll get into a parallel track, they'll work on it. But if there's no deal, you still got to raise the debt ceiling.
SEN. LEE: Well, that's his opinion.
MR. GREGORY: Right.
SEN. LEE: In my opinion, it isn't...
MR. GREGORY: Not your opinion?
SEN. LEE: Doesn't make any sense to do that. We need structural reform, reform like unto a balanced budget amendment that will tell us we are going to balance our budget.
MR. GREGORY: Right. So you'll vote no.
SEN. LEE: I will vote no unless or until we come up with a deal that brings about structural reform for real.
MR. GREGORY: You got to have a deal.
Dr. Greenspan, this is the critical point. Is that playing politics, what Senator Lee is talking about? Can you mess around? Because you heard Secretary Geithner say this would be catastrophic.
DR. ALAN GREENSPAN: I have a more fundamental question. Why do we have a debt limit in the first place? We appropriate funds, we have tax law, and on reasonably adept at arithmetic can calculate what the debt change is going to be.
MR. GREGORY: Mm-hmm.
DR. GREENSPAN: The Congress and the president have signed legislation predetermining what that number is. Why we need suspenders and belts is something I've never understood. And...
MR. GREGORY: But now that we've got them, the question is?
DR. GREENSPAN: Well, now, now that you've got them, the question essentially is: There is a major problem in cutting spending. And anything that works, in my regard, is probably helpful. The difficulty that I have is, you cannot have a position which stipulates that, "I will never allow the United States to default. But on the other hand, I will not allow the process to go forward unless there are additional actions with respect to the debt."
MR. GREGORY: So you can't let it default?
DR. GREENSPAN: Well, you can, but you shouldn't.
MR. GREGORY: It would be dangerous, you think?
DR. GREENSPAN: I think it is, it is inconceivable to me that we've put ourselves in this position. Why we are continuously going back to the well to continuously up the debt limit when we already predetermined what that limit has to be, and so, consequently, they're trying to abrogate what the Congress did.
MR. GREGORY: Governor Granholm, here's the issue. We just nearly shut down the government over this year's budget, a six-month budget deal. And the president was speaking at a fundraiser this week in Chicago, didn't realize, I don't think, that the mike was on and some of his audio was captured where he was talking about the--very plain language he was
using with Boehner and some of his aides--about health care and about the budget fight. Listen to this.
PRES. BARACK OBAMA: I said to them, I said, "Let me tell you something. I spent a year and a half getting health care passed. I had to take that issue across the country, and I paid significant political costs to get it done. The notion that I'm going to let you guys undo that in a six-month spending bill?" I said, "You want to, you want to, you want to repeal health care, go at it. We'll have that debate. But you're not going to be able to do that by nickel and diming me in the budget. You think we're stupid?"
MR. GREGORY: So he was talking about health care, but he's also talking about what we've basically been talking about in terms of the threats of lockdown, of not extending the debt ceiling, of shutting down the government if we can't find a way to agree.
FMR. GOV. JENNIFER GRANHOLM (D-MI): But here's the great thing, isn't it? This week the president gave the parameters on the Democratic side, and Congressman Ryan gave the parameters on the Republican side. So now we know what the arena is. And they agree that the deficit reduction should be about $4 trillion, they agree that they--that everybody should
put entitlements on the table. They disagree on how to get there. And they agree on what they're going to do about business taxes, or at least in concept, that we should have a more competitive business tax that doesn't have all these loopholes. I think that is a huge arena for
compromise, and I think the president really spoke to a lot of Democrats.
MR. GREGORY: But that--but does that assume, Tavis, that we're--that's really the arena that we're operating in or is this the land of fantasy in terms of what's actually going to get passed?
MR. TAVIS SMILEY: I think it's the latter, and I'm not even sure what the arena is. I note, with respect to the governor, that a week ago the president comes out and congratulates Republicans on the biggest budget cuts ever in the history of this country, then the next week you're slamming them about their deficit, deficit reduction priorities. So I'm not even sure I understand what side of his mouth the president's really speaking out of, respectfully. What I know is this. I believe that budgets are moral documents. Budgets are moral documents. You can say what you say, but you are what you are. I mean, you put your budget on the table, that's when we learn who you really are. And I'm not so sure that this is not anything more than an immoral document where the poor are concerned. Yes, to your point, David, we avoided a shutdown of government, but we effectively locked out the American people, namely the poor. And I don't understand why it is in this town that every debate about money always begins and ends with how we can further reward the rich and more punish the poor. I don't get that.
MR. GREGORY: Well, where--wherever you are on that debate, Jon Meacham, the reality is that the tea party or the tea party sentiment appears to be driving policy. You heard Tim Geithner say it, there's agreement about cutting a lot out of the deficit. And that's where the
conversation is, shrinking government, shrinking its role, cutting spending.
MR. JON MEACHAM: We're in a conversation that's as profound as the 1981-1982 one. Will the terms of the conversation be shifted to how small government should be, or how should we be expanding it in different ways? And I think that you have a situation where the right, broadly put, is far better organized, far more vocal than the left. And that's going to be driving this over the next several months. My question is whether the president and the Democratic Party have the capacity, the will, and the wherewithal to try to create a climate in which the people can actually let their congressmen get away with voting for some very tough entitlement changes.
MR. GREGORY: Well, Senator Lee, it's interesting. There are a number of big questions. Many of your conservative colleagues say some of this deal cutting with regard to this year's budget does not include enough spending cuts. And then there's arguments on the other side. Walter
Mondale wrote a piece this week in The Washington Post. I'll put a portion of it on the screen. It has to do with the tax debate. He says this: "We will not be able to control our budget deficits without raising taxes. ... President Obama's speech Wednesday lived up to that moment, and now Democrats and Republicans in Congress must take a similar stand. ... I told the truth," he writes, "in 1984 ... in my acceptance speech at the Democratic National Convention in San Francisco. `The budget will be squeezed. Taxes will go up. ... It must be done. Mr. Reagan will raise taxes, and so will I. He won't tell you. I just did.' I lost the election, but I won the debate. Reagan ended up increasing taxes in 1984, 1985, 1986, and 1987 to mend the budget and tax systems." Do taxes have to go up if we're going to get real about the debt?
SEN. LEE: No. And with all due respect to Mr. Mondale, that argument isn't going to go over any better this year than it did in 1984. Americans understand that...
MR. GREGORY: But Reagan did it, is his point.
SEN. LEE: ...you can't raise taxes, particularly in an economy like this one, without hurting jobs, without hitting economic growth. And we desperately need those things. Whether you're in favor of bolstering national security on the one hand, or shoring up entitlements on the other hand, you need the revenue that can fund those programs. But we can't have that when we hurt the economy by raising taxes.
MR. GREGORY: Dr. Greenspan, is that accurate? You, you've been--you're a veteran of many budget wars. Is it realistic to say that taxes can't, can't be raised if we're going to get serious about the deficit?
DR. GREENSPAN: Well, it's--the, the data shows something very interesting about endeavoring to curtail budget problems of the type that we have. The IMF, a number of well-known academics have all observed that if you have a disproportionate part of your budget cuts from tax increases, it won't work. And indeed, the economic impact of cutting back on spending is rather modest, and the IMF is saying to the point of possibly being insignificant. But having said that, I think this crisis is so imminent and so difficult that I think we have to allow the
so-called Bush tax cuts all to expire. That is a very big number. But having put the rates back to where they were in the Clinton administration, I would argue that everything else should be either cutting spending or taking out the subsidies which are in the tax expenditures.
MR. GREGORY: So you say let them expire for everybody.
DR. GREENSPAN: Everybody.
MR. GREGORY: Go back to Clinton-era rates.
DR. GREENSPAN: Yes. And I think that what we have to become aware of is that if we allow taxes to fill in the holes here, we are going to find that we're getting ever closer to the type of economies that exist in Europe, which are very heavily laden and not rapidly growing the way our, ours can. I must say, I am feeling far more optimistic about resolving this issue now than I was several months ago. And the fact that people are saying--putting on the table that this issue requires a major cut in entitlement spending in order to resolve this issue is the issue that has got to be confronted. We're going to do it realistically. I hope sooner rather than later.
MR. GREGORY: Jon.
MR. MEACHAM: I just wondering politically, if the Clinton-era cuts--Clinton-era tax structure came back, is it conceivable that the Democrats would escape another thwacking, shellacking at the polls?
MR. GREGORY: Mm-hmm.
MR. MEACHAM: And, Governor, I don't, I don't know. I mean, it just seems to be hard to believe.
GOV. GRANHOLM: I mean, I, I don't, I don't think it's realistic to assume that, that we're going to raise taxes on everybody, in terms of political reality. But I do think that the top earners can contribute to ensure that we aren't doing such a drastic cut to Medicare and Medicaid
that we end up creating unintended consequences like a lot of people becoming uninsured. And that's what the president's saying. He wants a balanced approach. He's got a three-for-one, you know, $3 in cuts or savings to $1...
MR. GREGORY: It depends how you count, though. There's some people think that's much more one-to-one.
MR. SMILEY: And I want...
MR. GREGORY: Go ahead.
MR. SMILEY: ...I want to take exception...
MR. GREGORY: Yeah.
MR. SMILEY: ...to what my friend Jon Meacham said a moment ago. See, I, I think we always start with the wrong question, Jon, respectfully. It's not about whether or not Democrats are going to take a shellacking, it's about doing what's right for the American people. My granddad said all the time, "Tavis, there are some fights that ain't worth fighting even if you win. There are other fights that you have to fight even if you lose." And if the proposition that we start from is always whether or not this is going to get me re-elected, there's no courage, there's no conviction, there's no commitment to doing what Mr. Greenspan suggested. He's
optimistic about it. I'm not so optimistic as he is about getting this problem fixed. But somebody's got to stand up and fight for these issues.
MR. GREGORY: All right, let...
MR. SMILEY: And starting with re-election as number one priority, that's a problem.
MR. GREGORY: Go ahead.
GOV. GRANHOLM: But, but--and the president started to do that this week. I mean, when he stood up and said we are all connected, that we all--that this is what America's about, and he called us to something better than that, that is standing up for what many Democrats and many Republicans believe.
MR. SMILEY: But, but he, but he did the same, he did the same thing on the healthcare debate, though. I, I'm less concerned about Republicans and Democrats than I am about lobbyists. Now that he's drawn that line in the sand...
MR. GREGORY: All right, let me...
MR. SMILEY: ...was it just a great speech, or will he stand behind that?
MR. GREGORY: All right, let me get in here. I want to get to a break. We're going to come back, we're going to talk more about politics. We're also going to get Dr. Greenspan's view about the jobs outlook, the economy writ large, responding to Secretary Geithner. More with our roundtable right after this.
MR. GREGORY: Back now with our roundtable. Alan Greenspan, I want to talk economy writ large. And a couple pieces of data here, from the interview with Secretary Geithner, he says, referring to private economists, he thinks that unemployment could get to 8 percent or below
by the end of 2012. And this is interesting, too. Persistently high unemployment but look at the performance of the stock market while President Obama's been president. Up in 2009 from 7949 to over 12,000. We've got, as you always say on this program, that's real money, that's
real wealth, and yet we have persistently high unemployment. What, what is your view? What is this outlook you're seeing?
DR. GREENSPAN: Well, first of all, the major reason why the stock market, in fact, asset values in general, came off those extraordinary lows in early 2009 is that productivity improved very dramatically in the business sector. That meant that profits and cash flows would be
engendered in a very substantial amount, which pushed asset prices up to an extent that, coupled with the increased contributions, 401(k)s added a trillion dollars to the actual net worth of the individual households who hold them. And they are very big spenders, and that has been a very important factor in keeping the economy going up.
MR. GREGORY: But you're saying companies doing more with less. The question is when do they start spending and creating jobs?
DR. GREENSPAN: Well, the problem, basically, is that there was a contradiction in those who say that you want one and not the other. Increasing productivity, by definition, means that you are producing more goods with fewer employers.
MR. GREGORY: Mm-hmm.
DR. GREENSPAN: Now, what--employees. What is happening now is we're now beginning to see that productivity growth flatten out, and that's where all those jobs are coming from very recently.
MR. GREGORY: Right.
DR. GREENSPAN: And so that, if you're asking me where's the unemployment rate going to be, I would say it's going to depend on two things. One, there's a lot of headwinds that are hitting the economy now and slowing it down, and we are in a soft patch. In all likelihood, we will recover out of that. But what I find bothersome is that profit margins are now beginning to tilt downward, and unless we get the momentum that occurs when cash flows are rising and stock prices and equity values are moving on the economy as a whole, we're going to have some tough problems ahead.
MR. GREGORY: What about the role of the Fed? Do you worry about inflation. There's a lot of criticism the Fed is doing too much to prop up the economy, too much money floating around the system. Inflation, higher interest rates. What do you see?
DR. GREENSPAN: I think they are fully aware of the fact that they are going to have to withdraw almost all of that excess liquidity to get a stable system going. At the moment, I don't think it's had very much of an effect on the economy. I think it's bloated the balance sheet of the Federal Reserve...
MR. GREGORY: Mm-hmm.
DR. GREENSPAN: ...and bloated the balance sheets of commercial banks who hold deposits at the Federal Reserve. But there is no real evidence yet that those monies are going out and circulating in the economy and being a driving force there.
MR. GREGORY: Jon Meacham, let me talk politics now. I want to show the, the poll on the Republican side among primary voters. Look who's at top there: Donald Trump, Mike Huckabee, who may not even get in, Sarah Palin, 12 percent. And then you look at Romney, who a lot of people think is a front-runner, is down at 11 percent. Donald Trump is
capturing a lot of headlines. Whether he's serious or not, he was in Palm Beach for his first real political rally, it seemed, a tea party group. He had some choice things to say about the president.
MR. DONALD TRUMP: Whether you like him or not, George Bush gave us Obama, and I'm not happy about it, OK? I'm not happy about it. We have a disaster on our hands. We have a man right now that almost certainly will go down as the worst president in the history of the United States.
MR. GREGORY: The question I asked in the open, if Romney is the supposed front-runner, why is Trump making such headway right now?
MR. MEACHAM: Yeah, and have we forgotten about James Buchanan? So it's a relatively tough, tough statement.
DR. GREENSPAN: Re-elect him?
MR. MEACHAM: I think that Trump is an emblem of the triumph of the celebrity political culture. And I think the attention here is not because of views he holds but because of his personality, frankly. And I think that it will shake out. I suspect that Governor Romney--if history is any guide, Governor Romney is the front-runner, right, because in the
Republican Party, the nominee tends to be someone who has run before. The only exception from 1960 is 1964, so you're about almost a half century. And I suspect that will be where the, where the race turns out. Trump is an interesting figure. Like all populist outbreaks, it, it
tells you something about the frustration with both parties and, frankly, with this conversation that we're having to some extent.
MR. GREGORY: Yeah.
MR. SMILEY: The bottom line is Donald Trump is laughing all the way to the bank, and he's rolling us in the media every single day. Let's be frank about it. This--truth is such a scarce commodity in this town oftentimes, and that's the bottom line. He's laughing to the bank, and
he's playing us, number one. Number two, with all due respect to my senator and the tea party activists, there's--on a certain level, I understand their frustration because I'm frustrated. I understand the angst of the tea party. But if you're going to start taking seriously a guy like Donald Trump making those kinds of statements, that two years in he's going to go down as the worst president? That's a long list of bad presidents. So that kind of nonsense is going to get your issues not being taken seriously behind Donald Trump.
MR. GREGORY: Senator, who, who, who do you back right now? If you look at Mitt Romney, do you think he's the front-runner, first of all?
SEN. LEE: I do think he's the front-runner.
MR. GREGORY: Yeah?
SEN. LEE: And I think he's coming into this race strong. He's got a strong record of showing that he knows how to bring in revenue. And if there's one thing we desperately need right now as Americans, it's revenue. Now, look, Donald Trump is not what I would call the tea party
candidate. And I want to make clear, the tea party movement is much simpler than people give it credit for being. It's simply a phenomenon that has occurred as tens of millions of Americans, whether they call themselves tea partiers or not, have recognized that the federal
government has become too big and too expensive.
MR. GREGORY: What about Jon Huntsman, our ambassador in China? You've worked for him in the past, also from Utah. He wrote a letter to President Obama back in 2009, the Daily Caller received--obtained a copy of it. And in it he's, he's quite positive about the president. He
writes, "I'm most grateful for the graciousness and kindness you have shown me and my family, particularly your confidence in my ability to represent you in China. You are a remarkable leader, and it has been a great honor getting to know you." And that was from Jon Huntsman. Do you think that might rear its head during the primary for Jon Huntsman if he's a candidate?
SEN. LEE: Well, sure. Look, that letter, coupled with the fact that he was a member of this administration, in the sense that he was the U.S. ambassador to China during President Obama's time in office, might not be a huge benefit to him. On the other hand, I, I don't think it'll be all that surprising to anyone that, as he's writing a letter to someone who, who was his boss for a significant amount of time, if he gives him some praise for exercising some leadership, that may not be the death knell.
MR. GREGORY: OK. Jennifer Granholm, Governor, as I've talked to White House advisers, they do look at Romney most seriously. Why? Because they think he's got the staying power, the money, the organization to make this a more drawn out contest, to sort of outlast the populist
candidates of the tea party or others who would challenge him. And as he unveiled one, one further step this week into the race, is he who the president should really be focused on?
GOV. GRANHOLM: Well, I think the president can take him. Bring it on, I would say, on the president's behalf. But I do think that Romney--Romney lacks a core. And it's one or the reasons why I think Trump catches on with a certain segment is that he is talking about issues that many people care about. Separate from this birther craziness, he's talking about China and he's talking about the economy. And back to Mr. Greenspan's point is that he is looking what--at what America's role is in a global economy. How can America compete with other nations when other nations are not just standing back? Which is, with all due respect, what a lot of the tea party would have us do--hands off, free market, trickle down. But other nations are throwing sand into the engine of the free market, like China, like India. And they are aggressively competing for those jobs. So the question is, what is--what's the candidate that's going to be able to respond to how we can aggressively create jobs in America.
MR. GREGORY: Well, there's also this question, Senator Lee, of optimism. We do a feature in the middle of the week on our Web site called Press Pass, and it's something that, that our viewers can see at presspass.msnbc.com for the whole conversation. I sat down with
Massachusetts Governor Deval Patrick, and one of my questions had to do with the president's overall outlook as he goes toward re-election. And this is something that he said.
GOV. DEVAL PATRICK (D-MA): I think people see the, the alternative and the negativism and the kind of--the way that, that in many respects, the hard right seems to be leeching all the optimism out of this country.
MR. GREGORY: That's very interesting. How are they doing that? How do you see the right doing that?
GOV. PATRICK: Well, I just, I just see, you know, decades now of, of rhetoric about "government is bad, greed is good." It's left us unable to imagine doing the big things, solving the big challenges that, that face
MR. GREGORY: How do you, how do you respond to that?
SEN. LEE: I could not disagree more completely. Look, the tea party movement has a message of optimism. It is that this is the greatest civilization the world has ever known, the strongest economy the world has or has had. And we can be stronger if we get the government, specifically the federal government, put back into its proper role.
MR. GREGORY: Dr. Greenspan, final point on this. This budget debate that we're talking about, what's realistic in an election framework? Being serious about Medicare or entitlements? Tax reform? What do you think is possible?
DR. GREENSPAN: You're, you're asking me a political question, not an economic question.
MR. GREGORY: Right. I like to put you on the spot like that.
DR. GREENSPAN: Yeah, well...(unintelligible). But look...
MR. GREGORY: You're up to it.
DR. GREENSPAN: ...as I watch what's going on, we have to remember that over the next 10 years or so we're going to find that the baby boom generation, highly skilled, highly educated, is going to fade from the scene. It's going to be replaced by a generation who are now in school and creating grades which don't make us look very good in the international spectrum. This means that we are probably dealing with an economy which isn't growing fast enough or creating much real resources to fund the entitlement programs that we have already made. I don't, I don't, I don't consider these--the issue of cutting back spending as essentially something which is new. I don't think we could afford it in the first place. We're really canceling something which didn't exist.
MR. GREGORY: All right. We're going to take a break here. When we come back, trends and takeaways. We're going to check in on the major conversation taking place online, the news that was made on this program this morning, and what's going to be driving the agenda next week. Right after this break.
MR. GREGORY: We're back. Just a few minutes left with our roundtable here, and some of the major trends and takeaways from this program that I want to get to. Leading the newswires this morning on the Associated Press, the news that Secretary Geithner made here this morning, Senator Lee, saying that one way or the other, we may have a lot of drama, but
Republicans leaders know that the debt limit has to be raised. And he says it, as he did on the program, that ultimately Republicans will do that. Is he calling your bluff?
MR. LEE: I don't think he's calling anyone's bluff. But, again, let me just reiterate, what I'm focused on is not as much the debt limit, but what we do to make sure that we're not stuck in this same position again just a few months from now. We keep doing the same thing over and over again. And until we put a different kind of process in place a structural spending reform it's going to continue to happen.
MR. GREGORY: One of the things trending online, as we've been looking at TweetDeck throughout the program and the twitter feeds, one that talks about, I think, a familiar complaint that people have, and that is the dysfunction in the system. This is from @RSaylo. "Depressing to see how dysfunctional our government is, both Democrats and Republicans.
Governor Granholm felt that maybe there was a little more common ground than we're giving credit to. Also, Tavis Smiley, a lot of pickup here from what Chairman Greenspan is saying, that the Bush era tax cuts should be phased out altogether.
MR. SMILEY: Yeah. I suspected that might make some news the minute that came out of his mouth. So I'm not surprised to hear that. The only thing I want to add to this conversation because I would not--I couldn't live with myself if I didn't say this because these things seem so disconnected when we're talking about budget policy in this country. But this conversation is not disconnected from these wars that we are engaged in.
MR. GREGORY: Mm-hmm.
MR. SMILEY: I have to say that. Dr. King said all the time that war is the enemy of the poor. If we're going to get this country back on the right track and get these poor and the underemployed and the unemployed lifted up, we have to understand that war is the enemy of the poor. And I just got to say that.
MR. GREGORY: Jon Meacham, final point here, 20 seconds left. What drives the week here? Where does this debate go next?
MR. MEACHAM: I think it's going to be the political viability and staying power of Obama's, the president's speech this last week of can he regain an initiative in a conversation that has been driven for two years by the Republican Party. The opposition has driven the conversation
about health care and about the bailouts, about the rising deficits, the rising debt. I think can the president sustain the momentum he set up last week?
MR. GREGORY: All right. Also the president this week will be staging town halls on the budget issue. He's also going to be campaigning this week as he goes around the country, especially on the West Coast where he'll be raising some campaign dollars, in addition to selling that
We're going to leave it there. Thanks to all of you.
MR. DAVID GREGORY: Check out our Web site later today for our Take Two Web Extras. I'm going to talk more with Tavis Smiley about his new book, "Fail Up"; and with Jon Meacham about editing the re-release of Shelby Foote's famous three-volume series on the history of the Civil War. It's all on our Web site at mtp.msnbc.com.
And don't forget to watch NBC later today, Washington Capitals taking on the New York Rangers as the Caps are rocking the red in pursuit of their first Stanley Cup trophy. The real one is a little bit bigger than this, but this is more suitable for television.
That is all for today. We'll be back next week. If it's Sunday, it's MEET THE PRESS.