MSNBC "Meet the Press" - Transcript

Interview

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MR. 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...
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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: John 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 in is 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 us.

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.... 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.

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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.

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