>> production assistance for "inside washington" was provided by allbritton communications and "politico," reporting on the legislative, executive, and political arena. >> at stake is whether new jobs take root in this country or somewhere else. >> this week on "inside washington," the state of the union. the president says we must build for the future. >> we've got to be more productive, more capable, more skilled than any workers under the. >> how do you build a future bought $1.50 trillion of red ink? >> and this borrowing is not a strategy. spending cuts have to come first. >> why are republicans speaking with two voices? >> for years president obama has made promises like the ones we heard this evening.

>> thousands of young egyptians take to the streets. time in washington nearly derails emanuel's quest for his dream job. - >> people of the right to decide for themselves who they think should be mayor. captioned by the national captioning institute --www.ncicap.org-- >> well, the reviews, no surprise, were mixed. washington post financial ho,columnist robert samuelson said that this was the teachable moment and barack obama did not teach. joe klein said that the address made the democrats the party of optimism and the republicans the party over cal. nina, optimism or root canal? >> optimism, the facts bear that out, at least to the instant polls they did good people like it in huge numbers.

that and a dime will buy you a cup of coffee in the long run. >> charles? >> optimism after we just heard from the cbot announced that we are about to run our third -- cbo that we are about to run our third $0.20 trillion deficit is folly. >> colby? >> we got rid of the sophomoric behavior were at one side stands in shares and the other it sits on its hands. that was good i was happy that the speaker did not cry. [laughter] president obama was good with the rhetoric, uplifting, but very disappointing on the substance. he punted when he should address the serious problems of the deficit. >> mark, did the present rise to the occasion? >> politically, it works. the themes were pitched a

perfect fit capturing the future, which every political leader wants to do and has to do. americans expect optimism from their leaders. there is no question she did that. -- he did that. but where's the beef is a pretty legitimate question. >> the president was talking about winning the future. >> we are poised for progress. two years after the worst recession most of us have ever known, the stock market has come roaring back, corporate profits are up, the economy is growing again. >> stimulus or repackaged as investment, their actions it showed they want a federal government that controls to much, taxes too much, and spends too much in order to do too much. during the last two years, that is exactly what we have gotten, along with record deficits and debt. >> take your pick, mark. the glass is half-empty, half full. >> there are two kinds of

conservative spirit there is the five minutes to midnight conservatives, things are dark and are going to get darker, and five minutes till dawn conservatives, and i would put in that category jack kemp and ronald reagan, the smiley face of conservatism. paul ryan, unfortunately for his national debut, someone who is well regarded by many, fell into the category of 5 minutes to midnight, things are dark and are going to be bleaker and this is the time for cold showers and root canal. >> five minutes to dawn, five minutes to midnight? >> there are two kinds of democrats, those who's been, those who tell the truth. what we got from the president was a remarkable speech of spin. he did not even use the word "debt" until he was 35 minutes into the speech, and what he proposed was essentially nothing, the most trivial cuts

come in a speech were the first half was all about new stimulus. it is as if nothing had happened, as if he was going to continue it exactly as he -- if the face the electorate is not serious when it says it wants shrinking of government -- >> the electorate is not serious, and you see that all the time. they want it generically but not specifically. there are not willing to pay -- they are not willing to pay -- >> in those circumstances, the president should lead and not pander to end irresponsible electorate that allows three consecutive years of $1.50 trillion of debt. everyone knows it is completely unsustainable, or would you say uotherwise? >> education, rebuilding the infrastructure of the country. how'd you do that with a $1.50 to hint that? >> gordon, there are two kinds

of panelists, ones that are just cranky, cranky, cranky, and there are ones with the milk of human kind just flows freely. i am a letter. -- the latter. we have to rebuild the infrastructure and make investments in education. i don't criticize that all. work does fall short is what to do about spending. -- where he does fall short is what to do about spending. i fear that we are getting into the same situation we got into with the health-care debate, where the president -- at that time i did not criticize him -- saiet out broad parameters but left the congress to do it will initially. i don't think he can do that with the budget. >> if you look at the budget and

you look at the amount of money that has to be cut to make a serious dent in it, discretionary spending is really a relatively small part of the budget, and you have to do something about even defense spending is small compared to entitlements. you have to do something about entitlements. >> one of the problems of the alleged crankiness that dr. colby has encountered and detect it is that republicans and conservatives -- barack obama stole their rhetorical clothes. "make america the best place in the world to do business"? all people who celebrated -- entrepreneurs, business executives -- with the exception of the principal and the woman getting by on her technology degree.

it was taking charge of control of your own life. those are popular themes, but once not historically associated with liberal democrats. >> colby said it was a good speech. we have to talk about the "investments," which is what democrats say when they want to otherwise suspending but will use the word. he said it was ok on that except that it did not address spending, which is like saying, "other than that, mrs. lincoln, how was the play?" that was what the president's on deficit commission said, and i thought all of you una cranky -- uncranky liberals approved their conclusions. >> we will move together or not at all. the challenges we face are bigger than party, and bigger than politics. at stake right now is not who

wins the next election -- after all, we just had an election. at stake is whether new jobs and industries take root in this country or somewhere else. >> our nation is approaching a tipping point. we are at a point where if government's growth is left unchecked and unchallenged, america's best century will be considered our past century. >> it seems to me without taking a position one way or the other it at this level of discourse is a high level than we have had the past couple of years. >> i think it wise. i think that ryan speech, for all its gloominess, was an honest reflection of the facts. he is known as mr. wonk and he knows his numbers. i wonder if anyone on the panel will deny it. if we continued expansion of government and debt, our country will decline with incredible rapidity and it could encounter

a collapse. moody's is are we speaking of downgrading the ratings of the united states, which is in tripoli for 100 years. >> "our nation is approaching a tipping point" -- paul ryan. >> when you talk about investments are spending, and this is entitlements, which i've talked about before, one of the scary statistics as, as recently in "national journal" is that in every decade, the past whatever number of decades, the number of jobs created has grown at least 20%. in the decade since 2000, before the recession, the number of jobs have only grown 5%. we have to prepare for this century with new kinds of education, more kinds of transportation, rebuilding the infrastructure.

that does take investment or spending. compared to entitlement reform, that really is not that much. >> why was michelle bachmann also giving a response to the state of the union? >> it is because sarah palin was unavailable. >> does this have the blessing of the republican leaders? >> they are obviously discomfited and upset by this. it's still the thunder of the official republican response, and that was when he delivered by the guy who knows the most about this and who is now the chairman of the budget committee. >> on the other hand, she reflects a point of view that was not reflected in paul ryan's comments. for example, the house republican study committee representing 3/5 of the republican senate and house the proposed $100 billion cuts -- republicans in the house that rose $100 billion of cuts. they are intent on going ahead

with it. boehner has said he will allow amendments so that the house can work its will. you will see at a sharp split between traditional conservatives and tea party people, who bachmann represents. she is legitimate and i'm glad to see people like her and sarah palin step forward. that is a problem they have within their ranks. >> let me say, in a spirit of comity and accommodation, like a broken clock, a major panelist here is right twice a day. [laughter] >> that is what i call a new spirit of civil discourse. how deeply i appreciate it. twice a day. >> twice a day. charles is right about the gulf. right now, not to be terribly wanonky --

[laughter] we are talking about 24.7% of gross domestic product in this country being spent by the federal government, at the same time collecting 14.8%. we balance the budget three and a half years in a row under bill clinton. each year we did, we collected at least 18.5-19% of gross domestic product. that has to be done, cuts have to be made, and increased collections have to be made. that is absolutely comparative. that is why the budget is important. the great scenes in the state of the union -- the budget is the reality. that is the moral and fiscal statement of the country. >> the economy grew in the last quarter. does that make anybody happy? >> it is definitely an improvement. >> and it is some of the stimulus spending that some people want to acknowledge, but

people with some reasonableness would say that is what happened. >> the economy to grow at 9% in earlier times under both reagan and clinton, different times. >> looks like the latest coming off in egypt and elsewhere in the middle east. >> i wish we did not have to impress on the regime that we need to change, but we tried with elections. nothing worked. >> that is it nobel laureate and egyptian pro-democracy advocate mohamed elbaradei. tens of thousands of young people demonstrate in the streets of cairo and elsewhere and the middle east. they demanded an end to the 30- year rule of president hosni mubarak. as i say, protests are spreading throughout the middle east. now the muslim brotherhood is apparently going to join in in egypt. mubarak has tried to keep a handle on the muslim brotherhood for years. >> these were not initially their demonstrations. >> no, i know that.

>> the muslim brotherhood is a late arrival here, but that is what everybody is scared about, with a real justification, because this is a muslim country. mubarak has been extremely valuable to us and lots and lots of ways, and has not been at war with israel. at the same time, he has been a pretty ruthless suppressor of any democratic instincts. it has been a tricky tight rope for the obama administration and previous administrations to walk. >> what kind of marks to you give the obama administration on this? >> there has been forced on this one. i have been to egypt may be half a dozen times and i've watched over a period of time young people really frustrated. they cannot get to work, they cannot get jobs anywhere, terminally unemployed. determine the st -- a tremendous gap between the haves and have-nots. more of a police state that any place i've been to in the middle

east. because of on was not -- because of anwar sadat and the peace accords, the united states has been giving and giving the to to keep them where they are with israel, but in terms of economic development, nothing has happened there. >> it is not egypt alone. we have demonstrations in yemen, jordan, tunisia. >> the tension here is fundamentally two values, one of the cherished american value of universal freedom and democracy that every human being has the right to life, liberty, and the pursuit of happiness, coupled with the other side with raw national interest. it is in the united states' natural interest to look the other way at this suppression and oppression, very simply because of the policies of egypt. we don't know what is going to

take over. this is not like walesa and havel in poland and czechoslovakia. we don't know what is coming. >> that is what is dangerous about this. in tunisia, the islamists are quite weak. it could happen that islamist takeover, but it is unlikely. the problem with egypt is the muslim of the road, in part because of the oppression of mubarak, is the most disciplined, strong opposition. now, it is late in the game, but you can be late in the game, light l -- like lenin in the russian revolution, and still win the game. if all but i -- it all, all or die, if he ends up in power, -- if mohamed elbaradei it ends up in power, that is ok.

but if the muslim brotherhood takes over, as happened in gaza -- >> i think the mubarak's could this move is too slow. -- mubarak's quicketst move is too slow. he has lost the opportunity to gain ground. disparate groups have coalesced, and they realize they can push the government. the prime minister is showing some concessions -- why is he doing that? because of the pressure. >> the shah of iran -- >> it does -- >> went these things happen, if one writes it succeed -- one riot succeeds with the police and i should back, it is over.

>> look at it to the jet. -- look at tunisia. >> are they going to be more cooperative with the united states or more skeptical? >> what the supreme court said it is basically, in short, the voters will make a decision who should be mayor. nobody else will make it for them. >> you don't sell your house in chicago. you rent it. he spent a couple of years here and working for the president. after richard daley says he will not run, he says, ah ha, my dream job is open. then what happens, nina? >> the appellate court says you cannot be on the ballot, you are not really a resident. at my stevenson ran for governor after he had been absent as ambassador. 40 or 50 years ago.

the state supreme court rightly and unanimously overruled that, but it took several days, and everybody in the democratic party had a heart attack in the meantime. >> is that the end of it? >> i think that is the end of it. >> it is good. this is a crisis that lasted less than one week. it is over now, and he can get on with business. >> it had to be over. they were sending out ballots. >> rahm is going to be in chicago, not washington. [laughter] >> the reality is that the court decision just made altogether good sense. it was fully his intention. he expressed it while chief of staff of the white house on the charlie rose's show that his ambition was to run for mayor of chicago. with characteristic, self- effacing humility, rahm emanuel did at that he was relieved for the people of chicago. [laughter] >> i have to say that i was not surprised by the supreme court

ruling. i know it went under reported, that each member of the illinois supreme court had received a package with a dead fish inside. [laughter] that turned the tide. >> jay carney, a new white house press secretary -- he is a good man. what you think will happen? change in climate? >> a real reporter. he has been a working journalist, and that it's up was a bit of a change of pace. >> he has a chance to be at least respected . gibbs is not respected. he is pretty universally disliked by the press corps, who thought he was a cipher -- >> i don't know. >> no, i think he was seen as wiry, but -- >> this was a press secretary who really had the president's ear. he could speak authoritatively

when he decided to do so. >> he mastered the art of being completely obscure. in a hostile way. >> a whole new look at the white house -- bill daley, jay carney. is that a good deal? >> i think it is, because it is a new look for the president. yes certainly shifted ground. -- he has certainly shifted ground, made an open ditch to the middle, to the business community. he is giving harbor to the democrats when he talks about vetoing any bill that has earmarks in at. i think the staff will pick up that new obama that we are talking about now, regardless of who the staff might be. >> what do bill daly and jay carney bring to this adventure that rahm emanuel and robert gibbs did not? >> after two years in office, it is a different place. bill baily brings longer, more

extensive experience in national politics and private affairs, business, than any chief of staff in the democratic side. he comes from -- he has had a national political experience through the mondale campaign. he knows the players. he is a grown-up. he does not have political ambitions of his own. it was always a little bit of a conflicting point with rahm. as far as jay carney is concerned, he has the advantage of having been out of the white house, he knows what it is like, he is an award winning reporter. the question is how quickly he goes to the dark side. [laughter] >> the best press secretaries are the ones who say, look, he made a mistake -- you made a mistake. these are the facts. this where we stand and where the president's stance.

rather than beating over the head, it is sure, swimming in the direction. >> i think carney will be a good one. he is a guy who genuinely likes reporters, having been wanted he is know -- having been won. he is down from his years at "time magazine" as a pretty straight shooter, middle-of-the- road guy. but these appointments, which are quite centrists, returning to what we talked about earlier, the message of the state of the union will continue on the ideological path, slightly restraint, more spending, no real cuts, and defending obamacare. in other words, reinforcing the message of the first two years, at the same time suggesting -- at the same time the appointments are suggesting a new obama. >> is there a new obama, or an old obama in any suit? >> there will of course the

spending cuts. we will see that in the budget. it may not be the ones that you like, but there will be spending cuts. he has got to deliver on that. whether there will be deficit reduction to the extent that it will make a significant difference, i don't know. >> he has not press any cuts. he only spoke about a freeze. >> he did a complete that it -- complete pivot. he was elected as a centrist, features that person, and then he was -- i would not socialist at all, but certainly leaning left, doing all the things that the left wing of the party should like, and then he pivots and respect to the center. i think is fair to ask which one is the real obama. all the people he put in place are the ones who will help him with an industrial policy that bill clinton promoted that is

centers. >> we talked about the deficit and debt. the most important issue to the american voters, last fall and today, remains the same. it is jobs, it is the economy. that is the problem. this economy is not producing jobs, not only for people who don't have them, but the people who are coming in to the work force. that is the challenge, and that is what this administration will be judged on, in my judgment. >> you get the last word. both of you. see you next week. for a transcript of this broadcast, log on to insidewashington.tv.