>> rose: welcome to the broadcast. tonight, we again with the editor of "teem" magazine, richard stengel, the columnest joe clean, and a provoc tef cover. >> this is's young woman who was brutal eased in a away that is unimaginable, and yet she was's very aaware of the perk being taken. she was certainly aware that it was going to be on the cover. she wanted to show the world what had happened to her. she wanted to become, in fact, whatty think she will become is's sem bol for the brutality of the taliban regime. >> part of the reason why the taliban has the keend of sway to do that sort of descracyful, disgusting thing, is the afghan government hasn't proceeded a coherent system of justice. to get justice in afghanistan through the governmentee courts attacks months and you have to 53's lot of breebz. the taliban, who issued these

descracyful edekts within's half an hour. >> rose: we continue with david rubenstein, one of the cofounders of the car leel group. >>y would say the united states economy is going to grow tea reasonable rate the next decade or so. in part, we have's lot of demographic issues and other problems, including our debt. we reet now have $13 trelion of debt, five trelion of fannie mae and freddie mac. we can't grow at 4% to sex%'s year until we address that issue i believe. >> rose: "teem" magazine and daefd rubenstein next.

captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: "time" magazine has a powerful photograph of a young afghan woman aged 18 who had her nose and ears cut off on orders from the taliban because she fled her abusive in-laws. the story in "time" is not only about this young woman but women

in afghanistan and what has happened to them in afghanistan. joining me is richard stengel, managing editor for "time", and joe klein writes about pakistan this week. begin with the cover. tell me about how it came into being. what were the powerful forces in your own head that said we have to do this, and what were the restraining forces that said maybe not? >> yes. well, charlie, we had aaron baker, our afghanistan bureau chief there, who had written a very powerful and emotional story about how afghan women were blossoming and changing without the taliban ruling. we then got this extraordinary picture by a south african photographer of the 18-year-old woman who had her nose cut off and her ears cut off by a taliban judge. and it's a stunning, brutal, very difficult image, and i really agonized about whether to put it on the cover or not

because it's disturbing. it's disturbing on all kinds of levels. but at the same time, the reality of what is going on in afghanistan is disturbing, and i thought the picture itself was a window into what is happening there in a way that we are confronting people with the reality, with the hard reality of what's going on. it's hard to look at, but we can't look away. so ultimately, that was the decision that i made, charlie, that we had to look at this. we had to face it four-square and as difficult as it is to look at, the reality on the ground is even more difficult. >> rose: so it's been out all day and you've done some media. what's the response so far? >> well, the-- you know, it's a mixture of things, charlie, and, of course, not-- i tend to not hear the bad things because people don't say them to me. a lot of people have commended us for the boldness and courage of putting such an image on the cover for championing this side of the discussion, which by the way, i think with the release of the wikileaks has been sidelined. the fact that the issue of

nation building, which i think we'll talk about in a minute based on what vice president biden said today, is some part of our mission there, the humanitarian side of our mission. so this has gotten lost. so people have said, look, you forced us to confront this, and i think when people have to make the decision about what to do in afghanistan, they have to factor these kinds of things in. >> rose: so are you wanting to remind the united states and people who see this magazine part of what this afghan war is about? it is about stopping people who do this thing to women. >> yes. it's-- i want to remind people that when we're making this momentous decision-- and it is a momentous decision-- we have to factor in the fact that the u.s. does have some humanitarian interest in afghanistan. it isn't simply national security, but it is a nation-building aspect. >> rose: so tell me about her. >> i was very, very, very keen about making sure that she

understood the consequences of being on the cover of "time" magazine, that she was protected that she was ensalated from anything that might happen. but, at the same time, this is a young woman who was brutallized in a way that is unimaginable. and yet sheaf very aware of the picture being taken. she was certainly aware that it was going to be on the cover. she wanted to show the world what had happened to her, she wanted to become in fact what i think she will become, a symbol for the brutality ofhital began regime. >> rose: afghanistan, we have had now petraeus there for a while. tell me what you think is going on and what keend of assessment they are making about the reality of how afghanistan is different than iraq. >> from what i've heard, general petraeus is having the same sort of tough time trying to convince hamid karzai to build a noncorrupt government as

everybody else has had. part of the reason why the taliban has the kind of sway to do that sort of disgraceful, disgusting thing is that the afghan government hasn't provided a system of co-- coherent system of justice. to get justice in afghanistan through the government's courts takes months, and you have to pay a lot of bribes. the taliban will issue these disgraceful edicts within a half an hour. the other fact about about this case that's really important is that the judge made the decision but the husband cut off her nose and ears. so we're dealing with a society here that is very, very, very different from ours and very resistant to change. and now you're beginning to hear from the petraeus group-- david killcullen, a counter-insurgency expert who you've had on the show-- is now using a different

word. they're using "stabilization operations," for what we're doing in afghanistan. that's a military term of art which means that you're in a failed state, that the government can't provide services, and it makes it harder to do the keend of counter-insurgency humanitarian nation-building sort of stuff that rick was just talking about. this is a very, very difficult situation. >> rose: greg mortenson was on the program here recently and has been in contact, obviously, with people in afghanistan and pakistan, saying that some of the elders across afghanistan had convinced general petraeus and even general mcchrystal not to go ahead and delay the kandahar offensive. >> well, that's true. i don't know, it's very difficult to do what they want to do in kandahar without an afghan partner.

when i was there in april and in kandahar province, i was in a district that was 80% taliban controlled and there was no afghan government presence. there was a district governor, but he lived on the american base. there were 40 afghan police whose job it was to protect the local warlord. so unless you have afghans actually providing services, it's very hard to do the kind of transformation in kandahar that petraeus did in the neighborhoods of baghdad where you had americans and iraqis working together to secure neighborhoods. >> rose: your column says the forest and the trees. forget the secret documents and all that and even forget afghanistan for a moment. what counts is how we deal with pakistan. so part of the conversation today is that we thought this idea of the i.s.i. supporting the taliban was history. that's what the pakistani government wanted us to understand. and that's what we assumed might be. with some exception from that? are we now going back to the idea that the i.s.i. and its

connections to the taliban is much-- continues and is every bet as bad or as deep as we once believed it to be? >> yeah, well, there was a paper by matt waldman of the-- >> rose: absolutely, yeah. >> and that paper was far more ref latorre than the wikileaks stuff because he interviewed separately-- they weren't in a group and feeding off of each other. he interviewed nine separate taliban field commanders about, you know, about their relationship with pakistan and the pakistan intelligence services. and, you know, the i.s.i. is providing arms. it's providing salaries. it's, you know, providing traeng camps. it's providing rest facilities across the border in pakistan. one -- you know, waldman asked one of the field commanders,

"where do you get your money?" and he said, "from the americans they give it to the pakistani army, and the pakistani army gives it to us." now, this situation is in flux right now because the relationship between afghanistan and pakistan has been warming considerably over the last two months. karzai fired members of his government who were considered anti-pakistani. there are active negotiations going on towarded sort of reconciliation that the women in aaron baker's piece are dreading. but that's in progress now. it's happening. >> rose: all right,arian baker, who wrote this story here today, but are we looking at a new reappraisal of what are we doing in afghanistan? >> well, certainly, as you know, charlie, the president is actually doing a reappraiseal and an evaluation in december at the end of the year, but i think what's happening in the body politic and among americans are people are feeling a certain amount of exhaustion. they're feeling a certain amount

of ignorance about what the mission is. there is-- there is mission fatigue, and the release of the wikeleak documentses that crystallized that. it has confirmed a lot of the things that we believed already, but suddenly people are seeing the primary sources and they're being confront with it in a way they hadn't before. and part of the reason i wanted to view this cover and confront people with a different kind of reality is people are reevaluating the commitment to afghanistan. they're trying to understand what it is. the administration in its own way is kind of obfuscating it. to have the vice president this morning say that what we're doing there has nothing to do with nation building is in some ways disingenuous because part of what we have found about the war is that we have made a difference in that nation, and that we are not simply there exclusively for national security reasons, even though that is the utmost importance. >> rose: the question the

afghans continue to ask is are you going to abandon us? >> if i'm sitting in hamid karzai's shoes and i see the americans, my backers, are talking about withdrawal, i have to start looking for allies, allies to preserve both myself, allies to preserve my government. so in a sense his talking to the taliban, the conversations between the karzai government and taliban is in part envoked by the fact that the u.s. is putting a date certain of when we're going to leave. i think that is the pragmatic reason for it. >> rose: joe. >> well, we've put a date certain on when we're going to begin to leave. >> rose: right. >> i think that, you know, the president-- by the way, i talked to the white house fairly regularly about whether they're reconsidering when they're going to do their next, you know, policy review. they're sticking with december now, but they're paying far more attention on a weekly basis because it isn't going well. so they ramped up their attention a little bit. a couple of things about the

situation that i need to explain to complicate it some more. first of all, i don't think there's a real chance of the taliban coming back and overthrowing the karzai government. you have in afghanistan many non. pasthan porss forces who represented the alliance in the past and there is a civil war going on there. there will probably be a civil war going on after we leave. the non-pashtan elements are strengthened by the fact that there is a an army 90% non. pashtan. karzai will have to consider the fact his government may fall if the deal gives too much away. i think they have to come to their form of settlement. ening the women who do not live in the southern pashtan areas are going to be safer than they

were when the taliban ruled the country. but i think there may be a retrenchment, sadly, in women's rights across the country. >> rose: how do these people, the white house, who you talk to or the pentagon, define victory? what is necessary-- >> stability. >> rose: stability. >> stability. >> rose: and stablth-- and how do you achieve stability? >> well, i think the only way to achieve stability at this point is reconciliation in some way with the taliban. i don't know, what joe biden was doing today was continuing an argument he's had with david petraeus for over a year now. biden, during the last policy review, if you remember, was totally opposed to nation building-- >> rose: and opposed to the surge, it was said. >> right. biden was actually in favor-- and his position has gained some strength in the white house because the kind of counter-terrorism, you know, the special ops sort of stuff, the dronz, you know, the black ops

team, that's the one part of this effort of ours in afghanistan that's actually working. you know, we're rolling up every night, we're rolling up midlevel taliban leaders in, you know, throughout the southern part of afghanistan. that's not enough to win this because, you know, you need an afghan partner who will provide the sort of government services that don't exist now, like the justice that aisha would be able to find comfort in, if a real system of justice existed. >> rose: thank you very much. rick, congratulations to you. when people ask where are weekly news magazines, this is a powerful statement as to where they are. >> thanks, charlie. >> rose: thank you both very much. >> thank you, charlie. >> rose: monday on charlie rose, kevin kline.

david rubenstein is here. he is the cofounder and managing director of the carlisle group. it is one of the world's largest private equity firms. carlisle has over did 90 billion of capital under management spread over 67 funds. it invests in a wide range of industry, including consumer, retail, defense, and health care. it is active across asia, especially in china, where it invested $2.5 billion over the last two years. rubenstein is also a passionate philanthropist. he donated to duke university and elsewhere. last month he became chairman of the kennedy center and has bought rare historical documents for preservation.

having said all of that, i am pleased to have david rubenstein at this table. welcome. >> my pleasure to be here, charlie. >> rose: first, let's look at the american economy. where do you think we are today? >> well, today we're not exactly where we want to be. i think most people thought the stimulus would get us to the point where we're very clearly out on a road to recovery, maybe 4%, 5% growth growth. i think it's more likely than not that we'll have 1% to 2% growth this year and maybe 3% to 4% next year. we lot of 8.5 million jobs in the past recession, and probably i guess more than eight of those million jobs will not go back to the same people that had them before. in other words, they won't be rehired by their previous employer. that unemployment rate is actually very, very high today. it's effectively 16.5% if you count marjorie attached workers. we have a long way to go before we get back to where we were, which, at the lowest point of the economic boon, we were at

4.5% of unemployment. we were officially 9.5%. i think we won't go back to's double-dip recession. i think europe is more in a danger of that considering. we aren't likely to do a lot more between now and the november election. there is no will in congress to pass a stimulus package. the federal reserve can't do much. it's already got interest rates as low as they probably can go. we're just going to have to hope a bit the economy stays at a reasonably flat level and goes up a little bit but you're not going to see probably any gigantic upward swings or downwar swings. >> rose: do you think over the next five to 10 years get back to the unemployment rate we have? >> i think it probably will. the united states has been the biggest economy in the world sincine 70, and we have grown at enormous rates. we were the greatest emerging market of all times. when people invested in the 1700 sdps 1800s they didn't ready what the economy would become.

we would will lose the title in 2035 to china which will then probably become the biggest economy in the world. it's recovering where it really was many, many years ago. in our case, i'd say the united states economy is probably going to grow at a reasonable rate over the next decade or, so probably 2% to 4% would probably be very good. i doubt you're going to see 5%, 6%, 7% growth. we have a lot of demographic issues and other problems, including our debt. we right now have $13 trillion of debt. $5 trillion of fannie mae and freddie mac debt, and about 57 trillion of unfunded pension liability for social security, medicare and medicaid and it's about $240,000 for every man, woman and child in the united states. we can't grow at 4% or 6% a year until we address that issue. >> rose: there was a poll out this week that said the debt was the number one issue for america. >> we have to be able to resolve

this issue because if we don't we're not going to be able to afford to keep our national security where we want it to be or to be able to do all the programs we have in the federal budget-- the entitlement programs-- and we're not going to have full unemployment any time soon until we deal with that. american public has finally recognized that and that's why the stimulus will not go through congress. so right now, i think we're running at about $1.5 trillion annual deficit and members of congress i don't think want to increase that deficit and increase the debt any bigger. >> rose: the same poll suggested that people favored debt-- something of a debt more than they favor even lowering taxes. >> well, that may be the case. i think right now, people are worried about what the deficit is going to produce in the future. not only for themselves but their children. right now, the people who are going to pay off the debt will be my children and grandchildren. i'm not likely to be in the workforce and paying off this

debt. it's too staggering an amount of debt. you can get out of this kind of debt by defaulting, which is not realistic-- a bailout by the i.m.f.-- which is not realistic-- deflating your way out of it-- which is not realistic-- and cutting and spending, a lot of it will be entitlements and defense spending and increasing taxes. that's the only way to do it. the president appointed a commission that will report after the election about what their recommendations will be for cutting spending and increasing taxes, presumably. i hope congress will have an hup vote on that. unless we have an up-and-down vote i'm not sure the political situation is such that we can each really get our hands around it. when we want to increase congressional salaries and close bases it's politically difficult to do that. we have a commission, and the commission's recommendation goes into effect unless congress overturns it. ening the fiscal commission the president appointed probably can't have its recommendations going into effect without

congress voting on it but i think if congress would have an up-or-down vote which is not agreed to i think that would go a long way to ensuring the debt markets and the country that we're going to really solve this problem. >> rose: how much could reducing the defense budget contribute to reducing the deficit without endangering national security? >> well, of course, we have the largest defense budget in the world, and i think our defense budget is roughly equal to what every other country in the world combined spends. we're spending about $800 billion a year. it's hard to believe you can't find some cuts there but again, nobody wants to reduce our preparedness for an attack on our country or reduce our national security operation. i don't think we're going to find gigantic cuts but there are probably some things we can do but they're probably down the road. a lot of spending of the defense budget is really for programs and military equipment that's down the road to be purchased down the road. so you have to cut off things now and you won't see the benefits for quite some years in the future. again, we have a very, very

large defense budget. i do think it's very important but i do think we have to probably make some cuts there but the real important thing is this-- you can't cut just entitlements and make people think it is fair. to have a cut across the board is something people will recognition as probably fair. if you cut entitlements on domestic spending you will probably have to have defense spending cuts. >> rose: one issue is the extension of the bush tax cuts. while the president supports the extension having to do with the middle class and people making less than $250,000, where do you stand on that? >> my view is probably less relevant than the president's view. the president made a commitment in the came kae and many presidents say things based on the best information you have at the time which circumstances changed. when i worked for president carter we had a long list of campaign promises and it's difficult to honor every one of them and it's true for all presidents. right now members of congress think it's very difficult to not increase taxes for those who

have incomes, let's say, in the level the president promised to protect. because so much of the budget and so much of the tax revenues come from people who make let's say $50,000 to $250,000 in annual income. you can't get enough revenue just taxing people $250,000 above. it isn't realistic. i think the president is going to hear that message from members of congress. >> rose: what do you think would be the wise choice? >> well, the wise choice, i think, would be to see what the fiscal kmegz comes up with, look at their recommendations. they are studying this. they'll be somewhat bipartisan in their approach and i think the president should take very seriously whatever the commission comes up with and probably not feel he's duty-bound to do what he said in the campaign. >> rose: i'll ask it one other way, are you prepared, as warren buffett is, additional taxation of people who make more than $250,000. >> absolutely. >> rose: and that's a good idea. >> absolutely. >> rose: to generate more revenue and you will not somehow whether capital gains or

ordinary income, you will not somehow reduce the amount of or the inclination of the wealthiest among us to spend money on things that do good for the economy. >> first, taxation is designed to provide revenue for governments to accomplish certain things, and people have recognized since we have the income tax, when it came into effect in 1911, i think it was, when the constitution amendment was passed, that it has to raise revenue but it has to be fair. and i think it's recognized if you're only taxing a certain part of society it isn't fair. right now, roughly 50% of the americans do not pay federal income tax. i think it's very important that everybody pay something or do something. now,, obviously, some people can't afford very much. but i do think that probably the sense that everybody is suffering a little bit-- the wealthy, the middle class, and maybe even the people who are not quite as wealthy as the middle class have to pay something. obviously, some people can't afford anything and that should be dealt with. but i do think if we have an

increase in taxes the wealthy should pay their share and i think those who can afford to pay something in the middle class should pay something as well. >> rose: what about reduction of spending? >> reduction of spending is very difficult to do in congress because congress doesn't reduce spending easily. remember, in washington we call it a reduction of spending if you don't get an increase roughly comparable to inflation. the budget now in the united states is roughly about $3.8 trillion. when lyndon johnson was president of the united states, not that long ago, he very much wanted to have the budget not be over $100 billion. i wong one of his budgets was $99.9 million. whatever is done should be fair. the most important thing is whatever the president ultimately decides to do, it should be a concept that everybody is sharing the 59 a little bit and everybody is putting in their contribution to society to make the country a

little bit stronger. >> rose: assess for me how well you think barack obama has handled the economy? >> the economy was in worse shape than he realized and worse shape than most people realize and the problems he had to deal with were significant so it's hard to say how he's done given what he's inherited. the most important thing he has to deal with now is the american people are not that happy where the economy is going and the dissatisfaction that his job approval ratings probably reflect the fact the economy is probably the number one issue on the minds of americans and getting jobs rating is something they want. whether it's fair or not, he has to address it. when you become president of the united states, you can blame your successor-- and i've seen every president do this-- for six to nine months-- and after six to nine months people say it's your burden now. and i think the president can't say it's something he inherited as much as he could have before, rightly or wrongly. and so now people say it's your problem and he has to address it and i think he recognized that. >> rose: did the stimulus work?

>> it worked in the sense it kept us from going into a deeper recession than we might have otherwise had and it was the deepest recession than the great depression. it appears it was not big enough. defense roughly $800 billion. some thought it should be a little more at the time. that was the compromise congress came up with. in hindsight, if we had a little more stimulus the economy would probably not be stalling. >> rose: and that is because, the stimulus money has dried up and whatever stimulus that was making good the economy is no longer in play. >> the stimulus has largely played through the economy-- not completely-- but i think one of the other factors is that we have $1.8 trillion on the balance sheet of u.s. companies that are not spending that money. they're not investing in new plants and equipment. they're not hiring as much. they're sitting on the sidelines. >> rose: because they don't have confidence in the future of the american economy? >> i think because they're not sure where the regulatory situation is going to be, the

tax situation is going to be. i think they have some concerns about the economic growth so they're sitting on the sidelines. the most important thing the president can do is get the business leaders to spend money, invest, create new jobs and hiring again and that requires a bit of a bully pulpit approach, some arm-twisting perhaps, but this is where he can show great leadership. he doesn't have financial tools anymore. there's no more stimulus that will come up on the of congress. >> rose: if there was money in congress would it be a good idea to have a second stimulus? >> if there was money and it wouldn't increase the deficit unduly it might not be a bad thing bit right now there won't be a stimulus because there are only about 60 legislative days. i think some additional stimulus is needed but it would probably be better coming from the private sector to spend its enormous cash. >> rose: carlisle group has a lot of investments and companies. >> that's correct. >> rose: are you encouraging them to invest and spend and

build up their inventory and create new jobs in order to meet an increased demand? >> each company has to do its own, and we own about 260 companies around the world, and some are in the united states, some are around the world. everybody's situation is different. but we are buying companies now. we're invekting again pretty heavily. we're buying companies which we think can grow, but every company is different. some situations are just not appropriate to make enormous additional expenditures but some are. >> rose: what grade would you give the president his handling of the economy. >> i'm not very good at giving grades-- >> rose: you're good at evading answers. >> well, i'd like to be able to say hello to the president again. maybe other people in the administration. to be serious i think he's done a reasonably good job of solving some significant problems. >> rose: huk. was that the right tactic at the time that he did? >> i don't think based on his campaign statements at the time

one would have thought this would have been his highest private priority. i think many people were surprised made it as significant a push as he did. in hindsight he probably wishes he didn't spend as much time on it but on the other hand he has a historic billion. >> rose: when someone like you says that it makes meebl that's what the president has said to nusome private conversation. >> that isn't the case. but i would say in hindsight, any president who pushes a major piece of legislation through and gets it through deserves some credit. it's not easy to get something through the congress as kplekted as that. we won't really know whether the bill works or not for quite some time because it's delayed in its implication. >> rose: the criticism i hear is it addresses access but it doesn't address cost containment and that is the problem with it. >> that may be a problem. we don't know because the bill is phased in over time. the law of unintended

consequences is probably the most significant law in washington. the regulatory reform bill and health care bill are large bills. the health care bill is roughly 2,000 pages. and the reform bill is-- >> rose: 2300 pages. >> together you've got roughly 4,300 pages of new legislation. and each of these bills requires additional studies. i think the health care bill requires 40 diminish studies to be done. and the regulatory reform bill 68 additional studies. now, i wish we could do things a little bit more simply. the greatest legislation passed in my lifetime is probably the 1964 civil rights act, 16 pages. >> rose: you hear a groundswell of criticism of the president among people who voted for him in 2008. tell me how serious you think that is. tell me if you think it's justified. >> well, first, there's no doubt that the president's popularity has gone down. of course everyone knows that-- >> rose: i'm talking about with

the segment of the population. >> let me just talk about the business community. obviously, a large number of the business communities were republican and not generally supportive of him. there are large members of the business community who are democrats and they were very enthusiastic about him. i would say now a lot of people are concerned about some aspects of what he's done. he's trying to deal with it, but yes, he has lost-- other presidents have had the same problem. john kennedy had a famous run-in with the head of u.s. steel. >> rose: roger blou. >> jimmy carter had his problem with the business community. a lot of democratic presidents do-- >> rose: franklin roosevelt. >> it's not unusual for democratic presidents to have problems with the business community and republican presidents have some problems, too. the president has an opportunity i think, though, to reach out to the business community. the administration is very accessible, and the business community will come in. ening the-- >> rose: but they say he's not doing that as you know and they say there's no member of the business community in a

significant position, and the-- in the administration. people would say i was in the private sector for a long time and things like that. >> in most administrations you do have some people who have either serve served as the c.e.o. of a major company or entrepreneurs or somebody who has been a professional investor. you don't see as much of that in this administration, there's no doubt about it, and because of the problems of wall street, the administration of the reluctant to take a lot of people from wall street and the financial services community. i think the administration would do well when it does do some reshaping of its cab cabinet and white house staff to bring in people who have that kind of experience and i suspect there will be reshaping after the midterm elections. >> rose: what's your assessment of the dodd-frank bill? >> first, the business community recognizes that something had to be done in order to make the public feel that the problem has been dealt with, and we won't deal with the kind of great recession or financial calamity we had before. i think it was a good thing to get a bill done.

now, whether all 2300 pages are perfect and whether all of them will work as intended nobody really knows. it will be years before some of it is implemented. i think the so-called vokele rule takes seven years. nobody would say they like the bill perfectly. i wouldn't say it's perfect whanjts do you not like about it? >> the complexity. it's very difficult to know exactly what you're supposed to do when you have 2300 pages of legislation plus, presumably, a lot of regulatory-- regulations that will come out afterwards. the most important thing a citizen can do is know what the law is and comply with it. when you don't know what the law is it's not a very good thing. i hope people can understand the bill. i hope it works. we'll try to make the best of it as we kbut for businessmen what they want more than anything else, i think, is clarity. tell us what the rules are, within reason, and we'll try to comply with the rules and create jobs and profit and wealth for

the country. the cloud that has been over the regulatory environment with respect to financial services i think will have been lifted. still, there will be some uncertainty for a while because we don't know exactly what the regulations are going to be. it's better to have had it done than not have it, in my view. >> rose: one group in washington criticizing the president on the way he's handled the economy is the chamber of commerce as you know. >> yes. >> rose: they have criticized him for government expansion, for creating deficits, they criticized him for too many regulations and have called for the extension of the tax cuts, the so-called bush tax cuts. >> that's correct. >> rose: who is right on the argument about the president and what he has done, the chamber of commerce or the president? >> well, i suspect the answer is somewhere in between. nobody's ever completely right. in washington, the way we work in washington is you have to assert your position and fight for it and you can't say the world is gray. so people who succeed in washington often take positions that are black and white and

then they compromise later. if the chamber of commerce were to say it's right down the middle and pretty good or the president would say it's right down the middle you wouldn't get what you want. unfortunately you have to stake out your position and that's what the chamber and the president has done. there's no doubt the chamber is expressing some disfaction. the head wouldn't survive if he didn't reflect, some extent, his constituency, and i think his constituency is not that happy right now. >> rose: because principally the argument seems to be they think there is a new philosophy of the expansion of the government into the economy and they think that's a philosophy the president has, his supporters say far from it. he's a very practical, perhaps left of center guy but he respects business. he believes business is necessary for job creation. and he, you know, is looking to include business in terms of what's necessary to turn the economy around. >> there's no doubt that the perception is the president has brought government a little bit

more into the economy than maybe people would have preferred, and certainly than he would have preferred. and, you know, white house staffs often say when they get in some political troubles, they have problems with their voting approval ratings, that it's a communications problem. and so may be this administration is beginning to say there's a communications problem. i suspect there's a little bit more than that but i do feel the business community is not happy for the fact that they feel the government is intrude a little bit more into the private sector than they're comfortable with. the general motors situation couldn't have been prevented, probably, and the president had to do what he had to do and i think some of the things done-- so a lot of what had to be done was done, but i think the president recognizes now that probe there's a perception that he has to deal with it, and i think he probably will deal with it. but he recognizes his political support is not likely to increase unless he addresses this perception, at least certainly among the business community. >> rose: private equity. do you need the carried interest

tax advantage? >> i don't know if i need anything really, but let me explain. private equity is taxed, to some extent, on profits." so when we invest, i invest, i get all the profits back to the investors and 20% of the profits go to the private equity firm. same in venture capital and often the same in real estate and energy. that 20% has been taxed at the capital gains rate historically and that's been done 40 or 50 years on the theory we are taking a risk and do not get a salary. >> rose: should it change? >> i think the concept of fairness is very important and if the way we're treated is perceived as not being as fair as we think it is there probably will have to be some change but there's no doubt the private equity industry has done extremely well for the united states. we dominate very few industries around the world anymore. we dominate the private equity world. they've done a very good job of

bringing profits back to america and improving companies in the united states and around the world. let's not destroy the industry that's done so well. >> rose: but you have spoken out in speeches, i think one in canada, in which you basically said our problem is our image. >> yes, our image is not as good as we would like. we have not done a good job explaining what we do. historically private equity-- we didn't go to the government, media, labor unions, consumer groups and saying here's what we're doing to create jobs and pay taxes and make the environment better. we have to do a much better job of that. hopefully we will. >> rose: what do you think the image is? >> our image of is people who make may lot of money and don't really worry about paying their fair share of taxes and don't create as much value as we say we're creating. we have to do a better job of explaining the jobs we've created, the companies we've made better. clearly it's a job that is

significant. we have to do that. >> rose: the argument is also it's too close to the people in government. >> well, i don't know that we're that close to people in government. private equity industry doesn't have a very effective long time-- we have a good group in washington that's been created, the private equity council but that's relatively new. many business organizations have been in washington 10, 20, 30, 40 years and have long-standing relations to congress. while the council has done a good job getting our message out it's relatively new on the scene in washington. >> rose: so here you are, life has been exciting, interesting. it is said you travel the globe, spend, like, 250 days on a plane going somewhere, far-flung businesses. i have two questions. number one, where do you see world going? if you take the fact that you say the chinese economy will be largest economy in 2035. >> right. >> rose: and the chinese are doing an enormous amount in order to rebuild their infrastructure. >> right. >> rose: they are developing a consumer spending that will

create the demand for more products that may be good for the united states and other places. it will be really good for chinese manufacturers. >> right. >> rose: who are right there to create products for all the new consumer demand. >> right. >> rose: what's going to be the new world order, the relationship among nations? >> the developed world right now consists of western europe, the united states, australia, japan, new zealand, and canada. that's the developed world. every other country is called an emerging market. in 2014 for the first time the emerging market g.d.p. will surpass that of the developed markets. njtsd that include china, india-- >> china, india and brazil. china will be the biggest economy in the world. i think india will be the second biggest. we'll be the third biggest for mostest century. we're going to grow at 1%, 2%, 3%, and maybe europe will grow

at 1%, 2%, 3%. but china has been growing at 8% for a decade, india seven to 9% for almost a decade, and brazil 5% to 7% for almost a decade. the enormous size of these markets and the growth of them makes them a much more attractive and exciting place to invest and be. so you're going to see much more of the world go in that direction. one of the interesting questions is this-- the united states has been the dominant military and political and economic force in the world for quite some time. if we are not the dominant economy in the world, will we be also the dominant political and military force in the economy-- in the world? who knows. >> rose: i can tell you what the president of the united states said at west point, there is no recorded history that suggests a country that loses its economy-- economic vibrancy will continue to have the political power that it has exercised in the world. >> well, i think that's true, and i think we have to recognize that as the emerging markets become a bigger force in the

global economy, we can't do everything we could politically do before, even everything we could do military before. china, india, brazil and other emerging markets will assert themselves much more. >> rose: what raises the important question-- if that is the reality what ought to be the strategy on the part of the united states, just to take one example. over the next 25 years. if that's the reality, what is the smart thing to do over the next 25 years? >> well, first, we have to make sure our economy is in good shape. so we've got to deal with our debt problems. we've got to deal with our infrastructure problems. we've got to make sure our economy is growing as much as we can and that our unemployment problem is addressed. when our economy is in a good shape and we have an energy policy and other things that are significant we have to develop relations with the other large emerging market countries and treat them as their equals, treat them as partners. we can't just say, "this is the way it was done in 1950, 1960. we're going to do it the same way." obviously, we realize it has to

be changed and done differently and we have to be somewhat more accommodating of other people's views. >> rose: do we have to form new alliances? do we have to go to india and say we have a long-term reason to be better partners than we are now? >> i think we do need to have stronger relationships in the emerging markets than we probably have had before. >> rose: and do we have to convince the chinese that we welcome their growth and want to be partners and convince the russians that this is a multipolar world? >> i do think-- >> rose: we need new policies and solutions that will be-- benefit all of us? >> yes, we still in a post-cold war environment where we look at the world as almost, you know, the united states is the sole, dominant global power. and the world is really changing. we're not going to be the sole power for much longer. >> rose: we're not the sole power now. >> but we are still the dominant economy in the world and we still the dominant military power in the world and probably still the dominant political power in the world but 10 years

from now that may not be the case. >> rose: looking at china, we're beginning to see criticism of some people trying to do business there. >> when emerging markets are growing they want foreign capital because they need to grow. they want jobs. they want techniques that are developed by western companies. as emerging markets get stronger they don't need the capital as much and maybe they change their views. remember, china has $2.5 trillion of foreign reserves, by far more than anybody else in the world. they're not quite in the situation they were 10, 15 years ago. we have been a large investor there. the largest private equity investor there and a great source of profits for us and our investors but recognize it's not going to be as easy as before relatively speaking. the chinese government has been very good to welcoming us into invest there. every deal we wanted to do we couldn't do, perhaps, but it's a very attractive place to invest. i analogize the united states in 1910, if you invested in the

united states in 1910 you would have done very well. china in 2010 is somewhere comparable-- >> rose: to where we were in 1910? >> yes. while i think the chinese has a great economy and will grow and be a large economy we still have the biggest economy in the world now and probably will for quite some time. we have the large largest r & d expenditures of any place in the world by far. >> rose: but is that changing in an exponential way in the terms of the amount of money spent, percentage, on r & d? >> we have the largest amount. obviously, other countries are yous with the capital they now have spending a larger percentage than we are but for a long time we're going to be the most creative place in the world with r & d. >> rose: what makes us the most creative place in the world? we have more scientists and people who are creative. >> we have the finest university system in the world, bar none. our private universities are the

envy of the world. we have the best rule of law, best constitution-- >> rose: best transparency. >> best regulatory markets. the most stable government in the world. we have many great things. we just have to recognize the economy is not quite as strong as it once was. >> rose: here's what i worry about-- complackencey, that we've become complacent and we don't have the same sense of urgency about our-- >> well, look, it's strew of any organization. when you're on the top of the world for a long time, you do get complacent. and we have to re-energize our young people and government to make sure we're still as competitive as before. any organization has to reinvent itself. of the 30 companies in the dow jones only one was in the original dow jones. that's because they went out of business-- >> rose: the railroad business, the transportation business didn't see the television business and on and on. >> creativity is a wonderful thing. it's one of the things we're strongest in the united states,

creating entrepreneurs and letting them grow companies. that's one of our strengths and i think it will be for quite some time. i don't think any place in the world can quite match that. >> rose: what do you think of the idea of a giving pledge-- a moral pledge-- i pledge to give at least 50% of my net worth when i die to philanthropy they choose. >> bill gates did call me about it and i did agree that i would participate in it. i think it's a good thing. the pledge is that you'll give during your lifetime or on your death 50% of your net worth or your wealth to philanthropic organizations and i think that's not a bad idea. i think it's a good idea. everybody doesn't agree and i realize everybody who is in the forbs is list is not going to agree but i think it has value value. if you go around the rest of the world, you don't see a lot of philanthropy. one of the great inventions of our country is the ability to deduct your philanthropic contributions. as a result of that, and perhaps for other philanthropic reasons,

people give away a lot of money in our country. the universities, the hospitals, the museums are really funded because of these contributions from wealthy and middle-class people and low-income people as well make contributions. i think it's a great thing. i think, you know, the ability to pass on wealth to one's heir's is a good thing but how much money do you really need to pass on? my own issue is to give away a lot of money while i'm alive. >> rose: so you choose when you're at the height of your powers not when you're doddering at, whatever, 89. >> when i turned 54, i read a white melinda on average will die in 27 years, on average. so i realized i lived two-thirds of my life. i didn't want to get to my death bed and say, gee, i wish i had given away more money, done something for this organization or that organization that was good to me in my life. i decided to get involved much more in philanthropy. i'm involved heavily, not at the level of bill gates, he has more resources than anybody. but at my level i'm trying to do

a lot and a lot of organizations that were good to me or i think are good for society. >> rose: what i think is good about this, but what's good about this is to have people think about this idea-- let's say you thought about it when you realized that the life expectancy at the time was for 81, and-- >> right. >> rose: to think about 81. and so what is it i would like to achieve before i die, not in terms of some great medal or some great financial return, but what is it that i want to have been said about me and the life that i lived? >> i think people should think about that before the last few years of their life. >> rose: exactly. >> what do most people say on their death bed? they don't say i wish i made more money and worked harder. they say i wish i spent more time with my family or done more for my society and community. i don't want to get to my death bed and say i wish i had done

the things i could have done. i'm 60 and call what i'm doing is sprinting to the finish. i'm concerned if i were to slow down and retire my immune system would relax and the germs would come in and i'll die at 61. i'm sprinting to the finish. i don't want my immune system to relax at all but i want to accomplish much more than i did in my previous 60 years because i now have the financial resources, the access, the ability to do things i couldn't do before and i don't want to get to 70 and say i wasted those 10 years sitting on a beach. i realize some people love sitting on a beach and some people are very good at it. it just isn't for me. i'm trying to be more active than i was even though i'm older than when i was in my 20s or 30s. i'm more heavily scheduled than i was before and love what i'm doing. if you don't love what you're doing you shouldn't do it. i love what i'm doing and it's not work for me. when people say how do you keep the hours and work so hard? i love what i'm doing. if you got paid nothinging for

this you'd probably still be doing it. >> rose: and the most important quality you think that has served you in terms of having the success that you have had? has it always just come down to hard work? >> there's no doubt luck is an important thing. i got lucky when i got to work in the white house. when i was a lawyer, i wasn't a great lawyer, honestly. if i was a great lawyer i wouldn't have had time to think about doing something else so i got lucky. i started a small firm in washington in 1987 hoping we could pay the rent for a couple months. it turned out to be one of the largest private equity firms. i couldn't have anticipated that. most people who start companies that become global companies are not so supporting they're going to create that kind of company. they get lucky. bill gates probably got lucky, and steve jobs got luck nesome respect.

focused discipline helps. sharing the credit helps. keeping your ego in check helps. while i've been telling myself and you about some of the things i've done i try to keep my ego in check. it may not have sounded like it in this interview but i think keeping your ego in check, realizing the importance of cooperating with other people, sharing credit and being doesn'ted and focused are the important things. >> rose: thank you, david. >> my pleasure to be here, charlie. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org