ros welme to our progra tonight, t polics of 201 and the imicatns f the ama ministration andhe congress we tk with al hunt of oomberg news, mark halper of "time" magine and john heileman of new yk magazine plus, here in the studio, steven pearlstein of th"washington post >> ie ver seen a midterm eltion where you had the challenging or insurgent party as unpopular if not more unpopular than the incumbent party. people don't like the republicans, they don't even like their ideas but they're angry. >> the president is too committed to getting things done aspposed to playing politics. that's the most admirable thing about how he's conducted himself in office and i think he's going to havto try to find a way-- and i hopee succeeds-- to work with the leaders in the new congress. >> no one could have predicted 20 months ago they could hang together and pursue thi strategy of no with so little

defection and such gat effect polically that they would be in a position to do what i think they're going to do on november 2. >> this is the underlying fallacy thi polital year. government doesn'tontrol t economy. >> rose: we continue withthe deputy secretary of defense william lynn and the threat of cyber waare and what we are ing about it. >> much of the economy that we have is dendent on the intelltual propey the've developed. if people use cyberspace to steal that property, steal it willesigns steal the intellectual capital that was built up, they can undermine the econom future of this country. >> rose: there also the rert todafrom a nato offici saying they know and al-zawahiri ar living in are living in somewre north waziristanear the chinese bord. does this co a news to yo >> y. i don't thinkwe know where they are, if we knew where th are i think we'd do something about

it. >> rose: wherever they were, u'd go get them. >> we would do something about it. >> rose: so why would somebody from nato say that? >> i don't know. >> rose: but you've got to be interested. do they know something you don't know? is it possible they know something you don't know? i can't imagine. >> ion't think so. i think s either an exaggeration in the telling or an exaggeration in the promotion of that. i don't think we know precisely where bin laden is and i don't think the report's accura. rose: the thing that was disturbing about the report is that he's in pt procted by pakistani intelligence, i.s.i.. >> i... i've not seen th repo, either. >> rose: a pgram note. a segment with a wrir will b en aanother time. tonight, politics 2010 and cyber security. maybe you wantchool kids posure to e ar.

maybyou want to provide meals r thneedy. or maybe you wanto help en the unexpected happens. whater you want to do, members project from american express can help you take the first step. vote, volunteer, or donate for the causes the you believe in at membersproject.com. take charge of making a difference.

captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: we begin tonight with thfall polital season and a prevw of the midrm elections cong u in just over two weeks. aleyes will be on congress, where the republicans stand t make gains in bothhe houseand the senate. the struggling economy ntins to be one of the most important issues. unemployment is still at 9% and an increasg deficit dominates the national debate. the rise of teaarty candidates in certain electoral racehas been grabbing headlines for months and my woer how the movement will shape coress in 2011. joining me nowfroman fransco, john heilenn of t new rk magazine and mark halperinof "time" magazine. they're co-authors ofheook "game change." from denver, executive editor al hunt. with me in new york steven pearlstein of the "washington post." i'm pleasedo have all of them here on the this program to talk about politics with an election

so close. al, tell me where whether this is wave election a what tha means. well, charlie, we know it's going to be a bad weather electi for democrats. i'm stealing a thoug from james carville. the question is is it just a bad storm where ey lose 30, 35 seats, five, six senate seats or is it a tsunami where they lose 50 or0 house seats and ten or 11 senate seats? and what willecide that is who comes out on election day. that sound silly. o votes by mail now. but if the profile is anywhere like '08, the democratwill have minimal losses. >> but nobody thinks it will be. that gap, whatever that gap is, is what' really striking. the thing when i look at survey data, ie ner se a mterm elecon where y had e chalnging or insurgent pty as unpopular if not mo unpopular than t incbent part people don'tike republicans. they don't even leheir ideas t ty're hangry. and it's the republicans that are rninut and if that doesn't ange in the last 12 or

13 days-- and i don'know why it's gng to-- i think you y prove. we may prove to be cler to a tsunami tn just a orm. ros so a tsunami is a wave ection, coect? >>t's a big wave. it's huge wave election, yes. >> rose: so what's the consensus that makes democrat so vulnerable? >> 9% unemployment. the feeling that your kid's not going to have as good a life-style as you d. and you can argue all you want to if you're a democrat that it began under bush, that tarp was a republican idea, that john boehr and mitch mcconnell voted for it. it doesn't matter. you're the... the democrats are the in party and people are, i think, anxious. i think it's largely economic driven, a littleit cultural and they are paying the price for the in-pay and because conditions are worse than usual, the price may be larger than usual. >>ose: is the preside as he gotten more active on the campaign trail having an imsnakt >> well, he can turn out 35,000 pple at ohio ste. i'not re tt's going to ke a whole l of difference

in the election booth. what the democrats only hope now is that somehow talking about how awfuthealternativ is. look,harr ron angle made a mb comment yesterday in which she said she couldn't tellhe difference between latos and asians. ordinarily don't think that matters at all a it probably doest buthe democrats hope that willnfuriate enou latinos that they'll get a 2% or 3% rger turnout. at may be a thin read. kennebunk in colorado here on sunday said that gays are gay because of choice. it's kind of ke alcoholism. i don't think there are a lot of independent voters who are going to say "ah-ha, ll forget about the economy and vote for ken buck." if that somehow energes a few more democrats, it will make a dierence but that'the only thing they have to go on now. i don't think the president is doing a whole lot of good right now. >> rose: what has to happen for the democrats to at least make suret's not asuna, in your words. >> almost every survey i see

shows the same thing: 90% of self-identified democrats are going to vote for the democratic candidate. 90% of the republicans are going to vote for the republican candidate and independents break about ten points for republin this is time. so if that turnout is what should be a normal... awher wh-to-close whait w last time they will hold down the losses. the problem is, all indicators we see suggest that that turnout will not be replicated. but that's what they have to try to do. they're not going to convert independents at th stage. >> rose: wil the presint able to rn out the african american vote as he did in 2008 and will that have an impact? >> i ink it's tgher to do when you're not on the ballot. i don't find vyany examples in amican polits o somody turninout a vote when it wasn't for them. ceainly he'll try. certainlye's done tt in philadelphia and sewhe. that's a large part o that democratic constituency. that, latis, young voters and the like. at have to turn out.

but, you know, history is not on his side right now. >> rose: how do you see it today >> geez, i don't have a great track record in this. but today i think the republicans win the house and they come close in the senate and there's just two or three senate races that we're not quite sure of. if the democrats can hold the senate seats that they think they're going to hold like california and washington, west virginia, and connecticut, then they'll hold the senate. but f they start losing two or three of those they're in real trouble. there's a few places, charl, like pennsylvania. republicans, when i talk to the g.o.p. in pennsylvania, they are supremely confident that toomey's going to win. when i lk tdemoat iis last three or four days they claim sestak has made a run and the race is almost even. so i don't know who's right. ey he different model when they do polling but i think there are enough races that are still uncertain and we don't knows mh about the hou races. t i'll b very surprised if

the two contests-house a senate don't very closely k one another. if the democrats are sing 4 house seats, they're going to lose at least seven or eight senate seats and vice versa. >> rose: thank you for joining us. sorry out wake forest but at's the w it goes, you know? >> and about duk,harl. rose: (laug) touche. mark, 90 house seats are in play? >> well, close to that. and it's possible it's even more. one of the things the democrats were counting on in october was that they had lots or money to spend on their house races, thr incumbents were very well armed with money tt they banked and they were holding for this month. we've seen an equalizing in the spending. not in ery ce but between outside group ending and committee spending, republicans have more than enough to put races in py and we still see a lot of democratic incumbents who are below 50%, in some cases

well below 50% and of course incumbents geral don get at undecided vote late and they've not done-- except in a very small numbe of ces-- the job ey eected to do in disqualifying some of these republican challengers. >> rose: so, john, tell me about money in this race. i saw or heard i think even this morning that the only thing that seems to be sticking is this question of... in terms of democrats trying to sto the republican march has to do with where their funds are coming from. >> yeah. an mocrats se tohink at charges sticking. and certainly, you know, it's hard not to be in favor ofull disclore aut wre cpaign finance... financial funds come from, wherehether it's forei funds or domestic funds. t, you know,o go bac t what al said before, it does strike me as... you kno if you poll on this question, you asked voters "do you want to know whether someone's... where the funds for someone's campaign come from." voters will say yes to that come from. if you ask where that ranks in

terms of the issues that affect their lives, it's so f dow e list compared to what al said, which is this maoeconomic overhang. and the sense that for a lotf voters and pticularly for independent vote they look at what a lot of vary ambitious things that the president and the democraticparty did over the course of the past 20 months that seem to have had no affect on the economy. now, the whi hou and democrats ve a real economic argument that the stimulus did stave off a much work enomic calamity thawhat we now see today. but, in fact, the unemployment rate is as high today as it was the day barack obama took office and fo most people in the country whoren't economi experts, they say, wow, we spent nearly a trillion dollars and things are noetter taythan they webefore and th debt and deficit are mounting, let's go in the other direction. >> rose: so how do you measure that? is it, ashe president suggested, a bit in a "new york tis" magazine article, an interview with peter baker that they've done a trible job of... took a peerse pride in letting the policyake car of

itself and didn't sell it? is it that or... >> this is whatpolicians who are long, as you know, charlie alys say, we didn't communicate our msage they communicated asell as anyone can. th wer dealt a bad set cards and from a policy standpoint, they probably played them as well as they cld and from a political stand point ey'v.. i won't say ty played them as well as they could but in terms of the mmunicating what they did, they've done that as well. in my opinion,he problem... just think back to 1936, wasn't so great in the economy, either. franklin roosevelt didn't have a hard time getting reelected. now, we have to be careful about these comparisons, politics are different. but at franklin roosevelt offered was a vision and a hope for the future. okay, things may not be great right now but we're going this way d hers t vion. and what happened is they got so stuck defending what they did that they didn't come up with a pl toake pple hopeful about how we were going to get

out of this. they didn't set up competitiveness, for examp, globalcompetitiveness as the go and foshat we could all work on together. maybe not as divisively, for ampl as we' talking about these othe things. they dn't have a forward-looking progr in a way and let me emphasize that, ey were always playing defense. and, you know, y can't win particular if you're an incumbenplaying defense. you ve tplay offense. >> i agreehe's done a very we job given how smart he is and how aiculate hes in explainingo pele what h strate is to tur the econo ound. he's passed a set of discrete, very big pieces o legislation that he believes firmly, intellectually, will eventually lay down a foundation that allowed the economy to improve. but getting both credit for those things and also projecting forward a vision o what needs be done now rather than just saying "don't go back to the republican policies" i think is a big failure of not just the present but of democrats generally. if you look at what democrats are running on, their big

complaint primarily is republicanaren't offering up any solutions on the deficit, aren't creating jobs on dealing with health care, on migrion. they're right and it's a total valid criticism that honest republicans would admit to. they aren't offering up very many specifics except throw the bu out on the other hand, i think it's a fair criticism of the democrats-- including the president-- to say not only is not oering many spefics about what he'd like to do with the democratic congress but not even being very thatic in saying "he'swhere we need to go don't go back to the republica is part of a message but i don't think he's burned in aore affirmative optimistic messa abt gog forward. >> rose: tell me why not, john. >> i actually thi thiis a prlem at setches wayack r barack obama. the truth is, unlike a really ccesul president thawe can think of in ourifetimes, pele like bi clion and people like ronal reagan who had aery cpelling kind of theory of the case about their vision of the le of government and in pticular when itame

to ecomics. you think about bill clinn's argument in 1992, putting people first, the notion of globalization, the information economy, human capital agenda he had a story he could tell that was very sophisticated, coherent and subtle and he laid it out for ople. candidate obama did not do that very well as a candidate and he continues to struggle doing it now. that in dition to the fact that he isot a comfortable populist, this is not someone who is either comfortable with hot populism or comfortable with a cooler kind populism, the kind that bill clinton trafficed in that'm demonstrated everyday that he was thinking about and fighting for working people in amera. president obama has never mastered that language as great an orator as he is, that's not a language he's master and he doesn't have the bigger, broader narrative. he never has. i think it' hurt him enormously over the course of the last 20 months as they've advance add very ambitious anda b people largely the country, ithink,

don't understand how it all hangs together and that ha been a devastating thing, i thk for them. >> rose: john, are you mor surprised by the ft th the prident findhimself in this position or something else as a signal defition of this midterm ection? >> i'm not at surprised that the president has had these troues and, frankly, even on a peonal level, he's got... ill got a 4 approl ting whic hioricly is not th bad compared to ronald reagan or bill clinton. so that doesn't surprise me. i think the most surprising thing about the past 20 months, frankly, has been the thing you were just alluding to, charlie, which is that the republican party 20 months ago when barack obama became president was in its weakest state of any time ve seen me years covering politics. they had really no leadership, they had no policies, they had no ideas, they had no coherence. people thought they were going to fall apart over the course of the first 20 months. instead, whatever you think about e nihilis- which is what it has been in terms of their policy approach-- they

have been an extraordinarily scipned d agessive a focused political force. one, i think, coul have predicted that 20 months ago, that they wod hg togher and pursue thistrategy o no with so ttle defection and to such great affect poticay that they wod be in a pition to do what i think th're going to do on november 2. >>ose: and did the president after bipartisanship fled for whater rson, whoer ge the blame for that, did he have an alternative to go to the left that would have made... less o the nter that wouldhave made life any better with him with his traditional... with his primary constituency? >> well, i think for t very beginning the president would... did not pursue eithef t possle strategies thate coulhave psued. id... heffered, basically, an atmospheric kind of bipartisanip. you know, in the campaign he promised to bridge the partisan divide and he came in and seemed to think that by talking to republicans, by looking like he

was reaching out to them that that was enough. the truth is that if you are actually going to deliver bipartisanship-- and i'm not saying bipartisanship is a goal in and of itself-- but if that is yougoal, as he said it was at one point, you have to give up things that matter to you. you have to make actual sacrifices, actual compromises, not meerly have republicans over for lunch but give up things that actually matter to you and your constitnts. he was not largely willing to do that. at the same time, he did not actually run in a really aggressive partisaway to the left. so he kind of was betwixt and betwn. so that's w he's either veered to one extreme or the other. >> on that,ou don't know whether thereould have bee anyoneo make the deal with on the her side. you don't know-- as john said-- that the republicans wod have been wling to give up something in order to participate in the solutio it's possible he cou have co-opted some of them. but he didn't look like he was governing om the center. heidn' marry ten members...

centrist members othe house and the centrist members of the nate and basicly use them as core for governing. >> rose: t we don't know whether it was possible. >> w don't kn whether it would have been worked. but i'd like to just mention someing, crlie, which i something that i think a lot of people miss. if you look at the polls and when the problems started for the democrats, it looks suspiciously like that oilspill in the gulf had something to do with it. if you look back at george bush's second term, he was reelected, tre fs some momentum behind him, he had a hurricane and that was the end of him politically. and the... >> rose: you think so? that the oil spill showed he wasn't on the job? >> he wasn't on the job and he wasn't someone that could be as trusted as we thought we could. i think it was a very bad moment having to do with trust and confidence and respect for the presidency that really hurt. when you begin to question that, then you begin to question other things and if you just look

temporally at what happened, that was the moment at which they really srted lose thgs. rose: they losthe battle of the narrative for health care, it seems to me, a the time, and it became another bigrogram at was adding t the defic whatever t realityas. mark? >> well, i tnk, charlie, the's no question health care is driving this morehan anytng ee. i think this is a real thing, not shington/n york/san francisco creation. if you look back to january whe ott brown won the massachuses senate st that senator kennedy ld all ofhe econic namics, the overrehing perception on health car on thetimu law on jus t general tre of deficit spending, all of that has been in place since january. anthe democrats have had 10 months to try to address it. they haven't for the most part. they continue to lose that and i think he's absolutely right that the oil spill contributed to what i think's been a dangerous second narrative. less about the democrats than the president which is the perception tt he's not big enough for the job. that he doesn't understand

how... understand how markets work, doesn't understand ho deal with a big crisis. and th has caught on if not at large with the american people-- as john said, his approval rating is still relatively high-- i think it's caught on amongst elites in business, in government of both parties amongst thpresin wayhat has reallyurt the predent and ma his megaone a really diminished tool for him and his party. >> rose: you mentioned the press. john, is he diminished in the press? >> well, the press now treats the president not in the way thathe pre treated the presidenwhen he wa a candidate which is to say with kid gloves. he now is getting the same kind of treatment and scrutiny all presidents get and that drives themrazy. he is in private and sometimes evenn public he sousike s two predecessors, george w. bush and bill clton, both of whom came to despise the press corp not merely because it's so partisan-- and certainly that's one of the things that makes life very diffict for these presidentsnd that barack obama has beco an incredible

punching bag. not just among the right wing media, because o course he i there, but the left wing blogosphere which has exacerbated his aggravation. the other thing he and these guys believe-- and i don't think they're wrong about this-- is that there's so much focus on triviality and on the day to day ups and downs of the news cle he says look, we' doing tngs here substantively and no one's paying attention to those things. i think that's an excuse but also somewhat true. if you watch our mastream media there's a lot of focus on triviality and not that much on subsnce. >> ros tell me what the tea party-- beyond bringing energy to this campaign dwhas is going to bthe consequence of their... >> i'm going to be tough in answering your question this ways which to say i don't thi they bri muc e publicdoes not agree wit them. they represent t anger mar talked aboutefore and they've channeled it an given it

expression and human character to it and u know what? it's great people are participating in the proce even if wenight not agree with them, it's great. but the amecan ople are n sitting around their dinner table worrying about the 1h amendment to the conitution or the 17t amendment. they are rlly not worrying abouthe things that theea party people are worrying about it. >> iaw a studyhere somebody went to a tea party rallynd said... this w signs and i forgot who wrote it, 95% of the signs were about the deficit, big government, those things that are lj mat questions and only 5% were about immigration and the president's birthday and all that stuff. >> i don't agree with you at the ameran pple are consumed with the idea of the deficit or that they hate big government. you assume that is the case. i don't think there's any evidence for that. yes, it's true, the politicians who are complaining about that are winning the election. does not mea there winning

election because they're complaining about it. the only reason they're winning the election, as mark said, is because they're the party out of power. people don't like the way things are going so wll tow the ms out andry the other guy. >> rose: let's suppose we have a republican house and the senate is much narwer but t democrats arin control. what ds th mean for the last two yearsf a presincy? >> you're ingo t... it's going to be th mtivise and the end of the day unsatisfactory congress you've mean? a long time. flog get done. this has beegoing downhl for a long time, it's been going downhill for years but nothing will be done in the nt two year almost no matter what happensn th election that's reason the realm ofossility even ifor se rson nancy pelosi and her pay were to ho on wittwo or thr ves. every rticular issue that comes up she's goino lose ten or 15 and she won't be able to get anything done. even if she wanted to. so nothing will get done in the

next two years. >> rose: mark, you would add to that what? >> well, that that is logical and the most likely outcome but as a citizen i think it's going to be incumbent upon the presidenand the ne leaders of which ever partyis in the majority to not let that happen. the challenges the country faces right now too sious. the president is too committed to getting things done as opposed to playing politics. i think that's the most adrable thing about how he's conducted himself in office and i think he's going to have to try to find a way-- and i hope he succeeds-- to workwith oever the leaders of the new congress are. 's going to require i think more personal and interpersonal victory in terms of geing the trust and confidence going rather than the substance. the subance isn't as big a barrier because there is a lot of agreement on some of these issues the president wants to focus . in terms of the tea party if you denehem narroy as people who go to the events it may be they're not much of a force. it's true the arican public

view tards deficit is at a minimum schizophrenic. but when youave this deficit reductn committee repting in deceer, when y have the president in juary giving a state the uni and then a new congress liky to be controlled in partor in wle by republins, t predent i going to have to deal th deficit reduction. he is going to make an offer and i think the republican leaders are going to hava harder final the prident plays it right saying no, we're just going to do gridlock then i think he thinks they are. >> i think he's going to have to find some different republican to talk to because the republicans who have the names leader and minority leader or speaker those particular people are not going to be the people to make a deal. with he's going to have to find other interlocutors to make a deal with. >> rose: as the president made bad policy choices? we could argue a little... let's imagine he decided in e health care bill to not have

individualandate, for examp. do you think the polical siation, charlie, wld be dierenif hhad t mandate or not mandate? or if f in the case of. he was pushed quier fhe trade trea with sout korea or do you think in theable if regulation bill if he'd leftff the volcker amendment that pele sitting around and say "g, that's so much better, i'm voting democrat." >> rose: the answe is no,o, no. >> of urse not. those are not the primary this that are driving. he did a pretty good job with host the of mose choices, as did the congress. the problem is president t economy was never going to be robust and you cannot win an election-- as marcus and john have said-- by saying boy, it would have been 13% unemployment but thank god it's only 10%. or to ge you another example, about three million mortgages were renegotied reset and about 1.5 million were

foreclosures. well do you think if you went out to the public and said "hey we had two reset for every one foreclosure, that's a good batting average." do you think the public would say "thanks, mr. president, that really worked"? no, that i nor going to do that. and that i a pretty good batting average. governmentoesn't control this thing. th is the uerlying fallacy of this political year. government doesn control t economy. >> re:no matterow it plays, was the tarp program-- secretary geithner satwher you're siing last week and said we're going to get bac all but $29 billion. >> you know, at's close within plus or minor $20 10-billion. doou tnk tt wouldsway one vote out there, chaie? not one. they made money on it and it's as if it was a nonssue people either tre i as if it's aie or ifit's irrelevant because they've already made up eir mith tha ty're angry and once they've mad up thei mind they'rengry,hat's

otio yocan'reason withthem. th're angry. theye reasono bery cause this is a lousy situation. >> rose: john, you're in california, off big senate race out there and a big gubernatorl race. how does it look to you? >> well, you know, california... i'm from california, charlie, and california is the template for the nation and nothing says change like jerry brown. >> rose: (laughs) >> it looks to me right now like former vernor brown, all the polls have him consistently over the last week about four or five points ahead. it's going to be a very close race. i think that is the pivot avl race here. historically it's very uncommon and maybe even unheard of for a democrat to get elected governor and for a republican running in a senate race in the same year to getlected. the governor's rac drive turnout here i california. if jerry brown wins this race-- which i think he's probably like to do, narrowly--t's

almost impossie for carly fiorina beat barbara boxer in the senate race sot'sikel both these republican ladies will lose out here and you'll see california stay blue. >> ros so whaill hpen nneccut? the nate re? well, tt race i think has moved pretty comftably into theemoctic catory forick blumenthal, yeah. >>rose: what about colorado where alhunt was >> everything out the for the last couple weeks has suggested michael bennett in trouble and ken buck, the republican, tea party candidate, seemed to be on the march. as al pointed out, he sort of put his foot in his mouth over this past weekend and in a very, very close race that might make a little difference. but i think probably if i had to bet today,that's a republican pickup. >> rose: what's the most interesting race for you, whether it's in the housetor nate >> unquestionably nevada. you cannot think harry reads reelection campaign, he's the most powerful american the senate, he's been there forever and people in that state are

angry, angry, angry at him. enough person in shron angle who represents everything about the tea party, both the bests a pengts of it and the craziest aspects it. thatace is th marquee race of the country. i defy anybody to call that race right now. it's so close and has been so close for the past month but there's no question that's the one all eyes are going to be on on november >> rose: and whatould make a fferce ithe race in the remaining two plus weeks? >> i have no idea. maybe if there was a martian invaon nada and harry reid can repel it he can see a surge that will carry him over the top. lirally it's going to be turnout game. th sides trying to get the people out. if harry reid survives it will be because he has... has hadn the pa a vy sophisticed polical operation anthey will tn out to be betr than sharron ale's people at getting out thote. >> rose: mark halperin,ow will thismidterm eleion shape the pridential run in twaefl? >> i think it's going to give

every republican thinking about running for president an opportunity to look at the results of this election and how the kongsal leaders of the republican party deal with the president in early 2011s the presidential re heats up for the nomination fight and they're going to have to decide, do they think they can beat back oba ruing ke the way replica have run in 2010? opposition air, eling to the base of the party, or do they think-- as i tnk is accurate-- that they need a broader message? a message that's going to appeal to more independents, some decrats, more non-white voters in a way that's necessary to win a presidential. none of the republican presidential candidates in 2010 have spoken ou in any way with the exception... possibly exception of mitch daniels in indiana in a way tha is st of crossed the base of the party, where the energy of the party is. i think you always have a challenge when you're running for the president inither party, h do you aealo activists o dominate the nominating process while still having a general election messe which is essentially,

particarly in the age of youtube and google. it will be fascinang to watch how they negiate that. w they figure ou how you at once win your nomination appealing to the base and be ready to take on back obama. >> rose: so will the traefl race be a rerendum on prident obama wil, as karl rove has often said, it always is about change. >> i think right now and wll have to see what happens with the courts and with the presumab republican-dominated congress, let's see what happens with health care in 2011 and 2012. if the law survives i think that and the employment rate-- unemployment rate-- will be the dominant issues and republicans, if they can stay disciplin as they have in this election not talking about the islamic center near ground zero, not talking about homexuality a whether it's nature orurture, if they can focus just on the economy and this question of is there somee else who's a republican who can manage things better, i ink that's probably from this remod going toe the strongest republican message.

>> just remember a little political arithmetic and i'll mentn twwords, joh main. pl won thenomination because he was perceived as the only centrist and all the other guys were fighting for the base. and if y're thenlyentrt and ere are a lot of peopl on the other end, you only have to win by a plurality, not a marityn the repuican praries. it could be that the centrist wins. john mccain's problem was he actuallyasn't the st caidatfor president. he may not have made... in fact made the better president, but the reason he won that primary is because he was the only centri. >> rose: and hmay no nger be centrist. >> he' no lger a centrist. >> rose: is there somethi that the esident and theongress could have done abouthe unemoyment that they did no do other than a trillion-doll stimulus program? >> charlie i juston't think so. you could have spent trillion dollars and you know you would have maybe shaved 1.5% or two percentage points off the unemployme rate for a while. well, you think that everyone

would be a lot happier if it was at 8% unemployment? i don't think it would have changed the potical calculation thatch and that would have would have been a lot of money. the more money you spend at this point, it takes more to accomplish even a little bit now. we're at that point of the cycle. and it's a little bit like pushing on a string which is often used to talk about monetary policy. but it can also be used to talk about fiscal pocy. it's just... medicine is becoming less and less effective. and i don't think that there is a whole that the president could do. we have a huge... we had a huge cred bubble, we ha a huge reduction in ourealth, we had a he misallotion of capital as well as the financial capital d it takes time r the stem, the rket sysm, to absorb that and it's not really a... government can't do much to speeup that process. >> rose: pluswo wa. >> plus tw wars. >> rose: thankou, steve great to have you at the table. >> tnk you. >> rose: mark,ohn, great to e you.

ame ange is now in paper back ese guysreoing around the country ting to find o wh the greatheme a o this polical seas and i hope ey'll comeack and sre it with us. thank you very much. >> thanks,harl. >> rose: william lynn ihere, he is the deputy secretary of defense. when president obama came into office, the president declared the nation's digit infrastrture a strategic national asset. drs robert gates has called cyberspace the fif dain of military opetions along with land, air, sea, and space. early this month, a whole new command, cyber comm, w set up to dend e mility's networks. bill lynn is heading up the pentagon's cyber security efforts. he writes about all of this in the current issue of "foreign affairs" magazine. i'm pleased to have him here at this table for the first time lcome. >> tnk you. >> rose: take know 2008 and what haened. >> well, in 2008, a piece of mall ware was picked up on a

thumb drive and that thumb drive was in our uncssified networks t someone in the middle east, one of our service members, probably, transferred it to the classifi nwork and it brght at mware tt comper virus, on to our classified networks. up until that point, we didt think that could happen. weid not think our classified networks could be compromised. but they were in this case. so is wa real wakeup call for thkind of threats that cyber... tt you could find in the cyber world. ansincthen we've tried t ta furer measures to y and fendur milary nworks because they're the y to our conventional military superiority. >> rose: help us understand what the threat might be and why it's so crucial, as secretary gates calls, this fth domain. >> well, much of the... many of the advantages that we now have in the conventional military world stem from information technology. our precisio our ability to strike with precision, our

intelligence capabilities, even our logistics and transportation networks, allepend on information technology. if you can compromise that technology, if you canet inside it, you can blunt all of those advantages. you can deny us the ability to rikerecily, you can brea our intellence, you can interrupt ourogistics, our tranortation networks. so it is a cheapay to challenge us. so it means we need to be extremely vigilant about precting those milita networks to ensu thatwe retain the advantages that we've developed over decades and hundre of billions dollars of expditure. >> rose: cyberspace invasions do not leave a home address. thas rit. >> ros meaning you c't tell where it came from >> wl, sometimes you can, but attribution in cyberspac i very diffict. in some cases impsible. and almo alws itakes qte a while. you have to go back over the

attack, the intrusion, and try and determine where it came from. in some cases... in fact, in the case that i mentioned in 2008 we were able ultitely to determine where it came from but it took months to do that. so unlike in the nuclear area, where a missile comes with a return address,n the cyberspace arena, if you figure it out, it's months later. >> rose: are we being tacked everyday? one way or another? or efforts to penetrate may be a better word? >> that is. what amounts to "attac is i, i think, undeterminedt this point. but certainly there are atmpted intrusions thousands tens of thousands of them everyday. >> rose: and in the private sector, too. >> absolutely. >> rose: there was a story the ew york times" today about pele stealing secrets. >> yes. >> rose: google, we know what google has complained about in china. and i'vehear peoplen t vernnt say the's more effort on that part than there's ever been in terms of tryingo

penetrateur secity from that direction. >> well, no, i think that' ght, charlie. certainly the principle responsibity othe partment of defense is to focus on defending our military tworks. buif you loo at securit more broadly, wealso needo look at how defend o critical infrastructure. our power grid, our fincial twor, t transportatn networks. that's the responsibility of the department of homeland securit, although the department of defense has capabilities it can assist. and even beyond at we have to look at ways that people may exploit our intellectual property, might steal our inteectual property, the rl lifeblood of the economy. it's not as dramatic as some of the kinds of attacks that people talk about, but in the long run this may be the biggest threat. >> rose: explain that. >> much of t economy that we have is dependent on th by lech which you will property that we

developed. if people use cyberspace to steal that property, steal the sign, steal the intellectual catal that was built up, they can undermine theconomic future of this country. >> rose: do you worry that while the ited state has d a gnificant vantage in technogy at the velocity of the change i.. the difference is narrower between the united states and the rest of th world? th-- especiallychin and india-are aduang a lot mo engineers because of polati and other reasons and comput sciensts thawe ar d ththerore they ar at a faster rate buildin up their capacity to become ahallenger in technology. >> well, i think at is point we still have a lead in terms of technology, including information technology. >> rose: but is it a comfortable lead and is the gap narrowing? >> i don't think there is a

comfortable lead in this it's so dynamic and it's certainly ca, as you said, we can't compete on pure demographics, we'll lose if we just try and graduate as many couter experts. we have to find other ways such as artificial intligence to multiply the value of our huma pital. >> rose:o wt's your mandate? >> my maatein this jo is the chief management officer of the department of defense. in terms of cyber security, secretary gas has asd me to take the lead in terms of pulling the threads together and trying to develop a coherent strategy for the department of defense to defend our military networks. >> rose: and where are we in that process of developing that strategy >> well, the article that you refeed to in "foreign affairs" is essentially arough draft of th stregy. and we'relookg to finize that and put it out in the late fall of this year. rose: what merits an attack

raer than simply an inton? >> well, i don't think... >> rose: what's the metc fo it? >> ion't think there's an agreedefinition of what a attack is. i ink u have tolook at differentevel you have... first you have exploition. we've talk about people just stealing data, stealing knowledge. >> rose: or people trying to penetrate just to show that they can do it? >> or just to show that they can do it, exactly. >> rose: hacke who a wanting to flex their muscle. >> exactly. then the next level is disruption and you saw tt in th attacks before... in georgia, in estonia. >> rose: go ahead and explain that. they shut down the communicatio system in georgia. >> they shut down the communications system. they shut down some of the commercial nworks. they shut down some of the government sites. basically denial of service. >> rose: who did that? >> well,he... is not.. that's, ain, you get to the where did it come from issue, the attribution issue. and i don't think we completely

know at this point. it was obviously related to the russian incursns t georgia, but at was authorized, what wasn't authorized is very... always very dficult. >> rose: bu is it,as they say now, a teaching momentorus? >>h, i think it is. i think it is. because the xtevel after disruption is destruction. >> rose:righ >> and i think we'reeeing capabilities in the cyber arena that could actuallyause physical destrtion. whic i.. and i ink wn you get to that level you're clearly talkg about an attack. short of at, is it an attack or, you cald it, an intrusio we're still, i think, working through those definitions. >> rose: and the effort to s to find a way to defend... i an, can you make systems so that they are impenetrable? >> no i think thatould... it would be very difficult to do that. indeed, we thought we had... with the classified systems we had what you calln air gap. they weren't connected to the

internet as we know it but nertheless using thumb drives people were able to cpromise. you've always got the human factor in there. so to think that you're going to have an impenetrae system is probably the wrong approach. >> rose: so what can you hope for at the end of your strategy? >> i think what you have to hope for is you have toave a lared defense, you have to have the basic defenses our machine, a firewall perimeters. you need active defenses. you need to anticipate attacks and try and deflecthem befo they even arriv you also want toave redundancy. you want to have multiple ways of passing the informatioso at if one is shu down there are multiple other avenues. >> what was th stuck stat virus? the stuck stat... much oof what we kn... don't know lot about it. lot of it is a mysteryat this point. >> rose: that's all i can say? >>that's all we knowt this

point. >> rose: if you think about your defense, you ao think about the possibity of offense, too. you began to develop the sam kinds of systems that you can take out other people's systems? >> well, you can't talk too much about that. but i think one of... >> rose: what do you mean you can't talk too much about it? becae it's... >> y getery classifd very quickly. but i think one of the things about the offen is the way the internet was developed, it wasn developed with security in mind, it was developed with ease of introduction of new technology, it was developed with transparency, with expansion in mind but not security. so as a consequence, you find that the offense has enormous advantages inn cyberspace. and one of the things i think we want to think abo over the long haul is is it possibl t balance that out over so that you make the internet a more secure envirment. rose: do u worry that somehow we live world that is so open and acce to everythin is beginning to becomeso

widespread that people may be just a step away or a step away or a step awa fr bei able to make a connection that leads to a cattrophe? >> i think that in the cyber security arena it's less atep away fro catastrophehan i think it's this say symmetrical effort that... a couple of dozen guys with a case of red you will be in flip-flops if they're skilled enough can pose a that. rose: and ten computers. >> and ten computers. right. it takes a fair amount of human tellectual capital but not much investment. >> rose: but the intellectual capil, it seems to me that's where the... i wonder if that's where the gap is narrowing in terms of intellectual capital.

because the world is flat. >> rose: well, no, i think you're right. it is narrowing. th.. we have some advantage demography is not one of them. we have to fin tecological ways of improving our human efforts we need to be vigilant about retaining the advantages that weaveoth i the conventional military side as ll as the specific cyber tenologies. >> rose: when yook acrs th spectrum o ts, h fast is the technology changing in terms of the capacity of tools you have work with in cyber security? >> well, it's astoundily fast. i mean, when i was the pentagon in early 1990s, the internet was in its very early... in its infancy. and now it's a critical... >> rose: it was like a dream in sobody's eye at that time. >> exactly.

now it's a critical part of our military capabilities. and then you look at things... it's only in t last cple years you've started to hear about cloud computing. but it's clear that the's enormous potential in this concept of cloud computing. some of our most advanced companies are already moveing there and the dartment has to think about how do we take advantage of that. >> rose: does cloud computing make it more vulnerable? >> i think it makes it less. >> rose: why is that? >> because you are able to put your defenses around the cloud in a way that you can't put it arnd individual compute. you're ls dependent on individual users taking the rit steps to prect their haware. you're less vulnerable to what we talked about in that 2008 cident, somebody moving infoation or moving malware with a thumb drive. so i mean you again have to be very careful and you have to do

th wit the approiate eps, but ihink cloud computing has some potentlo improve our curity. >> rose: you're writinabou this in "foreign affairs," you'reppearing on this program. what is ithat you wt to mmunate out the threat of cyberecurity or the need for cyber serity? >> well, think one of the things i want to communicate is that it's an important military challenge. that we need to protect our military networks. but it's a national challenge as well. we need to protect our critical infrastructure, we need to protect our intellectual property a thas a whole of government effort. the department of homeland security has the leadership, an important piece of this, the white house, there's a cyber coordinator at the whiteouse pulling together all of the department's effort and this is a national problem, not just a defense problem. >> rose: the effort here... what you want to communicate is that we know that... we know the threat and we kw t allees to develop cyber security and that there is a kind of collaborative effort to come up with an optal mns of doing that?

>> absolutely. >> rose: can i talk to you about afghanistan and other issues? >> sure. >> rose: where are we in ghanistan? i mean, tomorrowwe'r goio talk to someone who just got back. where do you think we are today? because everyday there's a stor that seems tindicate tre is accelerated efforts to negotiate with t taliban. >> well, i think theresint laid outast fall a strategy. thestragy invold an increased litary effort with a surgin forces and a focus on sdefding t population and improvin theovernance in afghanistan. but it w never the casehat there was ever going t be a military solution alone the the challenges we faced in afghanistan. there has to be a political dimension as well. >> rose: there's als the report today from a nato official saying they know osama bin laden and al-zawahiri are living in somewhere in north waziristan ar t chine border.

did this come as news to you? >> yes. i don't think we know where they are. if w knew where they are i ink we'd do something about it. >> rose: wherever they were, you'd go get them. >> we wouldo something about it. >> rose: so why did somebody from nato say that? >> i don't know. >> rose: but you've got to be interested in why they said it is. it possible they know something you don't know? i can't imagine. >> i don't think so. i think it was eher an exaggeration in the tling or an exaggeration in the promotion of that. i don'tthink we know presely where bin laden is and i don't think the report's accurate. >> rose: the tng thatas disturbing about the report is that he's being in part protected by pakistani intelligence, i.s.i.. i... i've noteen this report, either. >> rose: "don't ask, don't te". whe does that stand with respect to t military and how lo... what's going t happen? >> well, it's proceeding obviously on two tracks.

there's the judicl track and there was... court just handed dowan injunction... >> rose: a federal judge in california. >> a federal judgen california against the policy. and then there's a legislative effort to repeal the policy. would like to repealhe policy of "don't ask, don't tell", but we'd like to do it in an orderly faion. you have to work out the issues of benefits and housing. you have to work with the force. this is a fairly major change in policy. it requires training, it requiresork th the leadership and then with the troops so what we'd like to see is congress repeal that policy but do that... doit.. tha allo us to implement it in an orderly way. >> rose: it's good to have you on the program. thank yovery much for coming. >> gat tbe he. >> rose: here is a piece called "the pentagon's new cyber strategy" by william lynn,

depu secretary of defense. again,hankou very much. >> thank you. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org