new sunday, is the government finally getting serious about reducing america's debt or is the president's prescription just the first shot in next year's race for the white house? >> i'm really serious about a plan that claims to reduce the deficit by spending $1 trillion on tax cuts for millionaires and trillion yarz. >> what we heard today was not leadership from our commander in chief. what we heard today was a political broadside from our campaigner in chief. >> 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 into the race. >> it's time we put america back on a course of greatness, with a growing economy, good jobs and fiscal discipline in washington. >> 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, the former democratic governor of michigan, jennifer granholm, the executive editor at random house, jon meacham, and author of the new book "fail up," pbs' tavis smiley. captions paid for by nbc-universal television

good morning. 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 the 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 is 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? >> 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. we're a country that meets its obligations and we have to meet our obligations, and they

recognize that. in fact, i heard the leadership tell the president that again on wednesday. >> but some republicans are saying, no, no, there's got to be a deal here. >> but as we do that, in parallel with that, we're going to work with 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. >> but does there have to be a link? >> i think you can do these things in parallel. we're going to move forward, and again, we want congress to put in place a comprehensive, balanced framework to 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 that out, congress still needs to raise the debt limit. congress realized that. >> or what? because they say the warnings are overblown. senator demint of south carolina says those warnings of a catastrophe are overblown.

>> that's, again, not the case. i've spent a lot of time with democrats and republicans on this, 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 us some leverage, they're going to own the responsibility for the risk that creates for the american economy. >> and what are the stakes? >> well, again, 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 you can't take that risk. again, the responsible people up there understand that and i'm very confident they'll do this. and i heard them say that to the president on wednesday. they said, again, they recognize we can't play around with this. >> do you think this risks another shutdown? >> i don't think so. if you listen carefully -- you know, there's a lot of politics in the moment, but if you listen carefully to what the people are say, 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 ten years. you saw bipartisan fiscal commission the president

established lay out basically the same target, and the president of the united states on wednesday lays 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're going 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'd like for congress to do is, again, before we get too far into june, we'd like congress to agree on concrete targets, deadlines, time lines and enforcement mechanism that will force congress to live within its means over the next three to five years. >> on the debt limit when he was senator obama, he voted against raising the debt limit in 2006. >> he did, and -- >> he said at the time that the debt problem was a "failure of leadership and americans deserve better." the debt has gone up 35% during his presidency. is that also a failure of leadership? >> you heard him say this week that was a mistake. he recognizes that's a mistake and he recognizes that's not

something he can play politics with this. steny hoyer said something similar on the floor earlier this year. he said i thought this was something you could demagogue. i was wrong. it's not something you can play politics with. again, this is absolutely a 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, 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. >> let me ask you about gas prices. that's what americans are thinking about around the country and we've done a 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? >> gas prices have risen quite a lot, and people can feel it, and

it's hurting, and it's an effect on consumer confidence, makes people feel a little bit more uneasy about the economy as a whole. and what's driving this is partly just the growth is stronger around the world as we come out of this crisis, and that's a good thing, but it's probably a reflection of concerns of what's happening in north africa, mideast and the gulf, what that might mean for supply in the future. and 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 prices higher. >> do they keep going higher as we get into the summer, do you think? >> again, it's hard to know. at this level, there's a measurable impact on the economy, but it's an impact we can withstand, we can absorb, because the economy itself is still gradually getting stronger. you know, we've now had about 18 months of positive growth. >> it doesn't slow down recovery? >> 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 important, david that we work on fixing our long-term energy problems. because you need americans to use energy more efficiently, we shift towards better energy. people are too focused on oil. those things are important. >> let me talk about jobs. we frequently put up the unemployment chart dating back to february of 2009 when it was 8.2%, the first month of the obama presidency. the high point, october of 2009, 10.1%. march of 2010, 8.8%. mitt romney, who looks to be running against the president next year, has taken aim at the record on jobs of this administration. >> across the nation, over 20 million americans still can't find a job or have given up looking. how has that i 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. >> not just taking aim at the president, he's taking aim at

you, too. >> that's just about politics, and i understand it. people have to say those kinds of things. but if you look at what's happened to this economy over the last 2 1/2 years, this president came in and he did what was necessary to prevent the great depression, to put out a terribly damaging national 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 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%. a lot of people are hurting still. it's a very tough economy still because of -- >> would you still call it a crisis? >> we're still? n a deeply difficult, deeply challenging economy for millions and millions of americans, and that's because the 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, look at the strength of private investment by businesses, if you look at what's happening to u.s. exports, you look at how strong high technology is, the agricultural economy of the united states is the strongest in decades. there is a lot of sign of not just healing, but strength and resilience that's going on because of the policies this president has put in place. now, but we have a lot of work to do and we'll have a debate about the best strategies for the country going forward. but i want to come back to where you began, david, because it's important that people understand, we may disagree on the best strategy for dealing with future entitlements, we may disagree on what to do about 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 time lines and credible enforcement measures that will bring our fiscal position back down to balance, because to do that, we have to live within our means so that we can afford to make the investments in things necessary to make sure our economy grows in the future. >> i want to get into some of the high points on the budget, but before i leave jobs, by next

fall, yes, it's the election calendar, do you think the unemployment is still above 8%? >> you know, 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, you're going to see the unemployment rate fall to 8%, some people say below 8% by the end of 2012, but again, that's private economists. and this is, obviously, inherently uncertain. >> 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. >> 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. >> that's a veto threat. >> 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 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. >> 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 cuts? >> 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 will -- >> not talking about taxes, because he says no way am i raising taxes on those making $250,000 or less. >> let me just say, these spending reforms that the president talked about, they will touch all americans. 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 just the top, the wealthiest americans. so, we have plenty of room in this tax code that will result in just a modest increase in the burden on the most fortunate. and if we do that, 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. >> but the president has said that paul ryan's plan is not a serious plan. he's basically said no way, no how on we newing the bush-era tax cuts, and you're talking about working parallel tracks and getting something done. hasn't he completely poisoned the well?

look at what happened two weeks ago. >> what we're going to do is what's good for the economy. and we all recognize -- and of course, the president and republican leadership understands this -- that we have to do this together. there's no way -- >> but how do you do that, mr. secretary? the president basically just gave the back of his hand to what republicans proposed. >> we've been talking actively to republicans throughout this process. we're going to continue to. i spoke to senator coburn on thursday, we sat with allan simpson and erskine bowles on thursday, and absolutely, we have to do this together. but i think, 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 10 to 12 years. we disagree on how we want to do it, but what we want to do now is, again, because the world is 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 will give us a little bit of time to work out our disagreements -- >> but tax hikes won't hurt

economic recovery? >> no, absolutely. 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, but -- >> but to the point -- >> hold on one second on this. it's very important to understand this. but we can do this, we can handle this without putting an undo burden on the economy as a whole and the middle class. it is perfectly within our capacity as a country and you do not need to make savage, deep cuts in these entitlement programs to our seniors, commitments we've made for generations. you do not need to abandon those commitments in order to bring balance to the fiscal position. you can reform them. >> 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. 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? >> well, if you look at what cbo said, the congressional budget

office, which is the independent, non-partisan arbiter and analyst in this that 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 fact because he wants to maintain these tax breaks for the top 2% of americans. >> but he also argues, look, if you're serious about this, you have to do something fundamental. the president's 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? >> no, i'll tell you the difference in the strategy. okay, in one strategy, which is the president's strategy, we have to put in place new reforms that reduce the cost of health care to all americans, reduce the rate and costs, and that's a very complicated, difficult, requires a complicated set of reforms, changes the way we do health care in many cases. the alternative strategy that

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, they're difficult and they're very difficult, substantive reforms, and they'll face a lot of opposition, and the choice is not, again, not whether to reform, it's just how you do it. >> the real question, i think, is whether it's possible between now and an election, rather than entitlement reform, can you get tax reform done? and here's the cover of "bloomberg business week" -- "how to pay no taxes: 11 shelters, dodges and roles all perfectly legal used by america's wealthiest people," talking about general electric, who didn't pay taxes last year, other companies who have been targeted, google and others. are there too many loopholes out there. >> 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. >> ge, of course, says look, they had big losses in ge capital. they did pay taxes, certainly, around the world and in states. 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 snend. >> 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. you want a corporate tax system that makes it more likely that encourages investment in this country. that will make us stronger going forward. we think we can do that. and this is an area, david, where i think you're going to find broad bipartisan support. >> is this doable, do you think? >> i do think it's doable, absolutely. >> this year? >> i do think it's doable this year. we'll have to see. i think we're going to see democrats and republicans come together to pass trade

agreements to expand exports. we'll see if we can do something on corporate tax reform together. and again -- 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. >> 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 clear with the audience about that. final question for you. would you say you deserve a second term as treasury secretary? >> look, i've got a lot on my plate, but i'm not going to make news on that today. >> that's not a no. in our business, that's not a no. >> i've got a lot i'm doing and i enjoy this work. >> but you can imagine staying on just because the challenges are so great? >> again, david 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. >> but close? mr. secretary, thank you. >> thank you. >> good to see you. 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 jon meacham, and pbs' tavis smiley, coming right up. breathe in, breathe out. as volatile as markets have been lately, having the security of a strong financial partner certainly lets you breathe easier. for more than 140 years, pacific life has helped millions of americans build a secure financial future

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to build a better tomorrow. that's why we're here. ♪ 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, jon meacham, tavis smiley, mike lee and jennifer granholm. did i also say tabitha? tabitha's here, up next after this brief commercial. we thought about boxes. on a smarter planet, computing has left the box. generating 2.5 quintillion bytes of data every day. today everything computes. which means we need to think differently about computing. how we manage it. how we deliver it. how we design it to run a railroad spot a trend. spot a market change and act on it. a smarter planet is built with smarter computing. i'm an ibmer. let's build a smarter planet.

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somewhere in america, there's a doctor who can peer into the future. there's a nurse who can access in an instant every patient's past. and because the whole hospital's working together, there's a family who can breathe easy, right now. somewhere in america, we've already answered some of the nation's toughest healthcare questions. and the over 60,000 people of siemens are ready to do it again. siemens. answers. we are back joined now by our roundtable. executive editor at random house, jon 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 will be spending cuts in exchange for your vote, senator, on raising the debt ceiling. how does that go down with you? >> 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 look, i agree with what then senator obama said in 2006, this represents a failure of leadership every time we have to raise 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. >> well, he says you will, that you will get into parallel tracks, they'll work on it, but if there's still no deal, you'll have to raise the debt ceiling. >> well, that's his opinion. >> not your opinion. >> in my opinion, it doesn't make sense to do that. we need structural reform, like a balanced budget amendment that will tell us we are going to balance our budget. >> right. so you will vote no? >> i will vote no unless or until we have a deal that brings

about structural -- >> you've got to have a deal. dr. greenspan, that's a critical point. is that playing politics like senator lee is talking about? can you mess around? because you heard secretary geithner say this will be catastrophic. >> i have a more fundamental question -- why do we have a debt limit in the first place? we appropriate funds or we have tax law, and one reasonably adept at arithmetic can calculate what the debt change is going to be. 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. >> but now that we've got them, the question is -- >> well, 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. >> so, you can't let it default? >> well, you can, but you shouldn't. >> it would be dangerous, you think? >> 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've already predetermined when that limit has to be, and so, consequently, you're trying to aggregate what the congress did. >> 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 fund-raiser 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. >> 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?" [ laughter ] i said, "you want to repeal health care? go at it. we'll have that debate. you're not going to be able to do that by nickel-and-diming me in the budget. you think we're stupid?" >> so, he was talking about health care, but he's also talking about, what we've been talking about, in terms of the threat of lockdown, of not

extending the debt ceiling, of shutting down the government if we can't find a way to agree. >> but here is the great thing, is that 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 everybody should put entitlements on the stable. 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 -- >> but does that assume, tavis, that 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? >> 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 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 believe is this, i believe budgets are moral documents. budgets are moral documents. you can say what you say, but you are what you are. and when 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. >> well, 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 an agreement about cutting a lot out of the deficit, and that's where the conversation is, shrinking government, shrinking its role, cutting spending.

>> 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 congressman get away with voting for some very tough entitlements. >> well, 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 arguements on

the other side. walter mondale wrote a piece this week in "the washington post." i'll put a portion up 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 axes. president obama's speech wednesday lived up to that moment. now democrats and republicans in congress must take a similar stand. i told the truth 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, '85, '86, and '87 to mend the budget and tax systems." do taxes have to go up to resolve the debt? >> no, and with respect to mr. month dale, that conversation won't go over any better now than in '84. >> but reagan did it at one point. >> you can't raise taxes, particularly in this economy, without hurting jobs and 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. >> dr. greenspan, is that realistic? you're a part of many battle and budget wars. is it realistic? >> the data shows something very interesting about endeavoring to curtail budget problems with the attack that we have. the imf, a number of well-known academics have all observed that if you'd 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 uld argue that everything else should be either cutting spending or taking out the subsidies which are in the tax expenditures. so, you say let them expire for everybody. >> everybody. >> go back to clinton-era rates? >> 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 are getting ever closer to the type of economies that exist in europe, which are very heavily laden and not rapidly growing the ways 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 are going to do it realistically. i hope sooner rather than later. >> jon? >> i'm just wondering politically if the clinton-era cuts, clinton-era tax structure came back, is it conceivable that the democrats would escape another blacking, shellacking at the polls? and governor, i don't know. it just seems to me hard to believe. >> i don't think it's realistic to assume 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 3 for 1, you know, $3 in cuts or savings to $1 -- >> it depends how you count that. a lot of people are saying it's much more one to one. >> i want to talk about what jon meacham said a moment ago. i think we always start with the wrong question, jon, respectfully. it's not about whether or not democrats will take a shellacking. it's about doing right for the american people. my grandfather always said, tavis, there are some fights that aren't worth fighting, even if you win. there are other fights 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 suggests he's optimistic about. 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, and starting re-election as a number one priority is a problem. >> when he stood up and said that we are all connected, 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. >> but he did the same thing on the health care debate, though. i'm less concerned about republicans and democrats talking about lobbyists. now that he's drawn that line in the sand, was it just a great speech or will he stand behind it? >> let me get in here. i want to get to a break. we'll come back and talk more about politics. we'll also get dr. greenspan's view about the jobs outlook, the economy at large, responding to secretary geithner. more with our roundtable, right after this. ♪ crossing borders with ease ♪ ♪ clearing customs' a breeze ♪ ♪ that's logistics ♪ ♪ a-di-os, cheerio, au revoir ♪ ♪ off it goes, that's logistics ♪ ♪ over seas, over land, on the web, on demand ♪ ♪ that's logistics ♪ ♪ operations worldwide, ups on your side ♪ ♪ that's logistics ♪

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back now with our roundtable. alan greenspan, i want to talk economy at large and a few pieces of data. from treasury secretary geithner, he thinks unemployment could be at 8% or below by 2012. this is interesting, too, consistently high unemployment, but look at the consistence of the stock market while president obama has been president. up from 2009, 7,949 up to over 12,000. as we always say on this program rvelsion that's real money, that's real wealth. yet, we have persistently high unemployment. what is this view? what is this outlook that you're seeing? >> 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 the extent that, coupled with the increased contributions, 401(k)s added $1 trillion 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. >> but you say companies doing more with less. the question is when do they start spending and creating jobs? >> well, the problem, basically, is that there is 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

employees. n now, what is happening now is you are now beginning to see the productivity growth flatten out, and that's where all those jobs are coming from very recently. >> right. >> and so, if you're asking me where is 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. >> 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? >> 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 at the federal reserve 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 here. >> jon meacham, let me talk politics now. i want to show the poll on the republican side among primary voters. looks who's atop there, donald trump, mike huckabee, who might not even get in, sarah palin 12%. and then you look at romney who a lot of people think is a front-runner, is down at 11%. 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. >> whether you like him or not, george bush gave us obama, and

i'm not happy about it, okay? 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. >> the question i asked in the open, if romney is the supposed front-runner, why is trump making such headway right now? >> yeah, and we've forgotten about james buchanan, so it's a relatively tough, tough statement. 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 association you' 1964, so you're talking about almost a half century. and i suspect that will be where the race turns out. trump is an interesting figure, like all populist outbreaks. it tells you something about the frustration with both parties, and frankly, with this conversation that we're having to some extent. >> yeah. >> bottom line is donald trump is laughing all the way to the bank and he's rolling up in the media every single day. let's be frank about it. 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, on a certain level, i understand the 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. that kind of nonsense is going to get your issues not being taken seriously behind donald trump. >> who do you back right now? if you look at mitt romney, do

you think he's the front-runner, first of all? >> i do think he's the front-runner and i think he's coming into this race strong. he's got a strong record of showing he knows how to bring in revenue. and if there's something 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 the federal government has become too big and too expensive. >> 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. "the daily caller" obtained a copy of it. and he's positive about the president. he writes -- "i am 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." do you think that will rear its head in the primary fight for jon huntsman, if he's a candidate? >> that letter, coupled with the fact that he was in the administration, ambassador to china during president obama's time in office, might not be a huge benefit to him. on the other hand, i don't think it will be all that surprising to anyone that as he's writing a letter to someone 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 mill. >> jennifer granholm, governor, as i talk to white house advisers, they do look at romney 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 out-last the populist candidates of the tea party or others who would challenge him. and as he unveiled, one further step this week into the race, is he who the president should be really focused on? >> 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 lacks

a core. and it's one of 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 birthers craziness. he's talking about china and is talking about the economy. back to mr. greenspan's point, is that he is looking at what america's role 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's the candidate that's going to be able to respond to how we can aggressively create jobs in america? >> but there's also this question of optimism. we do a feature in the middle of the week on our website called "press pass," and it's something that our viewers can see a

presspas presspass.msnbc.com for the whole conversation. i sat down with deval patrick and i talked about the president's overall outlook heading towards re-election. here's some of what he said. >> i think people see the alternative and the negativism and the kind of the way that in many respects, the hard right seems to belying all of the optimism out of this country. >> that's interesting. how do you see the right doing that? >> i just see decades now 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 face us. >> how do you respond to that? >> 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. >> 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? >> you're asking me a political question, not an economic question. >> right. i like to put you on the spot like that. >> but look -- >> you're up to it. >> as i watch what's going on, we have to remember that over the next ten years or so, we are 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 consider 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 are really canceling something which didn't exist. >> all right. we are going to take a break here. when we come back, trends and takeaways. we'll 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. you are a business pro. premier of the packed bag. you know when to hold 'em... and how to fold 'em. and you...rent from national. because only national lets you choose any car in the aisle...and go. you can even take a full-size or above and still pay the mid-size price. here we are... [ male announcer ] and there you go, business pro. there you go. go national. go like a pro.

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♪ and here's what we did today in homes all across america: we created the electricity that powered the alarm clocks and brewed the coffee. we heated the bathwater and gave kelly a cleaner ride to school. cooked the cube steaks and steamed the veggies. entertained dad, and mom, and a neighbor or two. kept watch on the house when they slept. and tomorrow we could do even more. we're cleaner, domestic, abundant and ready now. we're america's natural gas. the smarter power today. learn more at anga.us. 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 news wires this morning on the "associated pres 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 republican 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? >> 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 the 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. >> one of the things trending online, as we've been looking at tweet deck 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 more common ground than we're giving credit to. tavis smiley, also pickup from what chairman greenspan is saying, that the bush-era tax cuts should be phased out altogether.

>> i suspected that may make some news the minute that came out of his mouth. i'm not surprised. and one thing i want to add to the conversation, these things so disconnected when we're talking about budget in this country, but this conversation is not disconnected from the wars we are engaged in. 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 have to say that. >> jon meacham, 20 seconds left. what drives the week here? what's next? >> i think it's going to be the political viability and staying power of obama's speech, the president's speech this last week, of can he regain an initiative in a conversation that's 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? >> 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 budget plan. we are going to leave it there. thanks to all of you. check out our website later today for our take two web extras. i'll talk more with tavis smiley about his book "fail up" and jon meacham about editing the rerelease of shelby's rerelease on the history of the civil war. all on our website at mtp.msnbc.com. and be sure 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. the real one is bigger than this. this is more suitable for television. that is it for today. we'll be back next week. if it's sunday, it's "meet the press." with prostate cancer... i needed a coach. our doctor was great, but with so many tough decisions i felt lost. unitedhealthcare offered us a specially trained rn who helped us weigh and understand all our options.

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