>> production assistance for "inside washington" was provided by allbritton communications and "politico," reporting on the legislative, executive, and political arena. >> while we have fought back from the worst of the recession, we still have a lot of work to do. we've still got a long way to go. >> a long way to go. this week on "inside washington," wall street drops on at thfears of a double-dip recession. in the face of grim economic news, the house approves a $26 billion spending bill for cash strapped states. >> we are broke. we do not have the money to bail out the states.

>> for the pundits and talking heads, a simple message -- welcome to colorado. >> they ought to savor it, because there are not too many more good election nights coming their way. >> as the american troop commitment in iraq once down, the secretary of defense announces plans for major belt- tightening. and charlie rangel fights for his political life. >> if i was you, i may want me to go away, too. i am not going away. captioned by the national captioning institute --www.ncicap.org-- >> thursday morning's headlines give you the flavor of the week's economic news. "markets swoon on fears," "wall street journal." "trouble abroad a worries for

s. recovery," "new york times." and yes, some of those still read newspapers. on tuesday, the federal reserve announced it would buy treasury debt to shore up the economy, on wednesday, the dow dropped to moderate 65 points. the world's biggest -- dropped 265 point spread the world's biggest economy still needs help. more lousy news of the jobs front. according to the latest poll, 2/3 of the american people think the economy has yet to hit bottom. i hate to be crass about such bad news, mark, but should republicans take part? >> yes, republicans should take heart. predictions are today, as we meet here, but economists that unemployment will not drop -- by economists that em

unemployment will not drop by next year to 8.5%. household spending is the most fearsome indicator, down 1.2%] from 2009. that is what drives our economy. that is the largest drop since 1942 in the middle of world war ii. it is not good news. >> charles? >> what happened is that the fed action, repurchasing debt, is a signal that it is worried about the ecomy. but it is out of bullets. that is what said the market into the soon. >> jeanne? >> they can argue -- republicans can argue that we need change in washington. in that poll, the voters only give republicans a to- or three- point edge when it comes to managing the economy. i think the republicans needed

to develop a strong message about how they would fix things and take that on the road with them instead of just saying that you need somebody do. it would benefit if they provided any answer or road map on what they would do. >> congressman paul ryan has a road map. we can get to that later. colby? >> people without jobs don't spend money. you also have a lot of liquidity in the system. banks have money but they are not lending money, because they don't find borrowers out there. the other thing that is happening is we have the chinese scaling down their purchase of imports. if the chinese economy is slowing down as well, that is going to have an effect on us as well. >> nancy pelosi drag house members back from vacation to vote on a jobs bill that

republicans say we cannot afford. >> the bailouts have to stop. >> we cannot stand by and did nothing whopping slips are given to men and women who educate our -- wild pink slips are given to men and women who to get out children and keep our people said. >> congressman john boehner says we are broken we do not have money to bail out states. is there a new normal? the former head of omb under bill clinton says there is, and it means recoveries are much slower. >> if you go back to the early 1980's during the recession of president reagan -- the recession that president reagan was dealing with, there was a long lag before jobs came back. with each recession, the same thing happened. economists believe that the(+ distances are becoming more efficient. they don't hire back as quickly as they did before. there is also a normal because

we have to remember the way we worked before the recession. we brought in a bubble, a state economy. in somewhat -- we were in a bubble, a fake economy. in some ways we cannot go back to that because we would be added trouble ahead. >> maybe for the first time i will disagree with something that jean cummings said. -- jeanne cummings said. we went through 25 years of uninterrupted low inflation and low unemployment. it was unprecedented. if the new normal of law or tyson's budget -- new normal laura tyson's budget is 8.5%, that is a lot of tightening. mae west said that when forced to choose between the two evils, i like to try the one i have not

tried before. >> what about congressman appalled by an's rohrbaugh for americas -- congressman paul ryan's rode out for america's future? it winhigh marks from charles krauthammer, i believe. >> a guy who says the trillion- dollar stimulus is not enough -- thiat is keynesianism squared. paul light is the only one who offers an honest stab -- paul light is the only one who says an honest -- paul mwai and was the only guy who offers an honest take on entitlements. today even republicans don't want to embrace his agenda because they are going to win in november and they don't have to have a program. with the economy this lousy at

with disaffection with the president is high, all you got to do is be the party of no and have a referendum on the democrats. but after this election, when we have to get together at some point and work together, i think it will be the ryan outline our blueprint eventually. >> is the social security to be here 25 years from now? >> it will be here two years from now. >> in what form? >> look, it will get fixed it has to get fixed. with entitlements, what are we going to do with medicare? the measures that we have been posing, those have to be changed and will take a political earthquake to make it happen. >> charles and i have been doing

this program for over 20 years, and for over 20 years we've been talking about fixing socialist herrity. > -- fixing social security. >> it can be fixed. you can do it on the back of an envelope. we would all agree, a gradual increase in the retirement age, because it has never been indexed to life expectancy, a change in the formula -- it is complicated, but the inflation formula now is slightly exaggerated. lastly, some kind of means testing. the rich will get less, which is what i think everybody understands is just. you do all three together, which is roughly what happened in the greenspan commission in the early 1980's, and you have a solution doubled its port 50 years. it is the medical staff, medicaid and medicare, which is absolutely killing us, and nobody has a good answer as of

yet. on social security, the answer is clear and obvious. >> to find rich. -- define rich. >> anybody with an engine over 100,050. -- and income over $100,050. >> what about medical expenses? >> the reality is that it can be fixed. let's be honest about this -- it was fixed in 1983, entirely different political climate. alan greenspan, to his enormous credit, but it was the political operation that fixed it. that was done by it dan rostenkowski and tip o'neill. what we're talking about in 2010, the overriding and driving and organizing principle of conservative candidates is no compromise, no politician in any way.

that in itself is an act of treason. the senate candidate from nevada, colorado, across the board, this is what you are talking about, not the kind of climate that is necessary for that kind of problem lies. >> i thi he is right. the system will not break before it gets -- the system will have to break before it gets fixed. neither side will compromise the way they did and the good old days just 20 or 30 years ago. on the health care reform law that was passed, they took a shot and trying to fix some of the medical costs. we will see if the reforms do any good. if they don't, we have to wait until the system collapses upon us. >> colby, trawls fixed social security for us. can you fix medicare? -- charles fixed social spirit

for us. can you fix medicare? >> in one minute? >> i will be a minute and a half. we need the prospect of hanging that will concentrate our minds wonderfully. we propose more and more mandates without wastepaper these things. this is the reality -- without ways to pay for these things. this is the reality we have to face. at a point where we are spending what we don't have, we have a huge debt overload, it is not just a political argument, but it is a major financial issue that the country is facing, and we are not stepping up to that at all. >> 30-second cure for health care -- tort reform, a full taxation of benefits and employment, and lastly, allow people to purchase health insurance across stateines. all three are essentially left

out of obamacare. >> all of the points, the arcane argument points, are fascinating. the reality is this -- we spent 24% of our gdp and tax 13.5%. that is a formula for financial chaos and crisis and calamity. until we address that, where we balance the budget only under bill clinton, because we tax it 18.5%. who is going to stick up for that? >> primaries this week had interesting results. >> they don't want to send the same politicians to washington and get the same politics out of washington. they want someone that is an outsider. real-life business experience. they want someone who has run a business and create jobs and understands the impact of taxes and additions on small businesses can have more of an impact on the economy. >> linda mcmahon, a former ceo

of world wrestling and a tame, spent her own money to win the nomination -- world wrestling entertainment, spent her own money to win the republin nomination for the color of the senate to democrats had a good -- for the connecticut senate seat. democrats had a good night with michael bennet. >> the republican primary voters are really, really angry. ithere is anger out there, the epicenter of it is the base of the republican party. they threw overboard the more established candidates that had the backing of the u.s. chamber of commerce and leaders in washington, and instead nominated outsiders, and newcomers, and very strong conservatives who have got some flaws. decrats are hoping that they can exploit those flaws and eke out factors that might of been

hard and not even possible. >> is that wishful thinking? >> i don't think it is wishful thinking. peter hart, a democratic pollster, says that is the jet tblue election. everybody is frustrated and headed for the emergency exits. [laughter] the four consensus, establishment candidate choices and four republicans -- i don't think there's any question that there would be competitive in the race is now. instead, they chose people that were far to the rit, like sharron angle in nevada, who wants to abolish social security, or privatize social security, get rid of the social security, the phrase she used. >> charles, we heard that democrats were whistling in the

wind here. >> i heard a lot of loud whistling here. i think in nevada, sharron angle is an iffy candidate, and this was a winnable secret it should not -- this was a winnable seat. she is not mainstream. i am not sure about rob simmons. he was a fantastic, it's been and he was my choice for republican senatorial -- fantastic congressman and he was my choice for the republican senatorial candidate linda mcmahon has a lot of money. the only thing i would add about her is if we can elect a professional wrestler to the governor of minnesota, we can have his boss, essentially, as the senator from connecticut. >> michael bennet got a lot of help from the obama people. when george stephanopoulos asked him if he would welcome that

help in the general election, he took the fifth amendment. >> i am not sure he needs that in the general election. gov. tim kaine, chairman of the democratic party, got credit for picking the team and organizing the get-out-the-boat team. he needs help with fund-raising, -- >> he does not need an obama visit. >> he will be busy campaigning. >> one way to get a sense of what happened, really what happened at tuesday night -- charles is right, the democrats will not have a good year. but if you look at linda mcmahon and you get rob simmons, the congressman, richard blumenthal's weakness was lying

about his vietnam war record, and rob simmons was a combat officer. that is the democrats were facing, that kind of debate -- that is what the democrats are facing, that kind of debate. now simmons is gone and plymouth rock and fire away -- and and richard blumenthal and fire away at all eighthe muck out of world wrestling. >> jeanne is right. the president is flying around the country and a few states are letting him land. [laughter] >> major cuts in defense spending as the comet mission in iraq winds down. -- combat mission in iraq winds down. >> we are on target by the end of the mound to end our combat mission and turn basis to the iraqis and transition our role there. >> he says the plan is to have a

50,000 american troops by the end of the month. five months after elections, we still don't have a government ere. shouldn't worry people? -- shouldn't that were repeople? -- worry people? >> 50,000 is not exactly a skeletal crew. but this is the iraqis' now come up to them to pull the government together. -- iraqi's now, up to them to pull the government gether. we have done our job and made the sacrifices. they have to take up the rest of it, as will the afghans at some point. we cannot sit there forer. >> charles, will they pull it off? >> it is still problematic. no government at this time is a real issue. the chief of staff says we will

need troops there until 2020. in the agreement that bush and maliki signed -- the issue is what happens after that. colby is right, it will probably be like korea, where we still love contingent -- still have a contingent of troops. i don't think the president said we would have no troops after december of next year. the iraqis understand that if that happens that could be tastrophic. i think there will be a renegotiation happening next year. >> the secretary of defense is talking about huge military savings,k closing a bit u.s. command in norfolk five adults

and generals are going to be going. what is the start -- five admirals and generals are going to be going. what is the story? >> he has announced $100 billion in cuts. 6700 jobs in the norfolk area. you get the entire virginia congressional delegation, understandably and legitimately, objecting to it. the united states defended against an invading army and drove it out wjla.co -- defended korea against an invading army and drove it out. united states troops were not subjected to a ied's in korea. >> good defense is a good offense. that is what robert gates is doing. he is trying to get ahead up on this so that he gets what he wants to cut, getting the savings or he wants them.

>> there are troops who must be nervous when they hear this. >> that is all white. they have got their stars. -- that is it that is all right. they've got their stars. that is it. if we could do something about government spending the republican right, maybe we could get this country on the right track as soon as the talk about reducing government spending in virginia, he is weeping and wailing about needing to keep this defense sector up. politicians want to have iboth ways. >> one. on iraq and to riyadh, yes, they are not -- the same one that point on -- one point on iraq and korea, and yes, they are not the same. >> a couple alliance meet their

final report, and one of them is -- a couple of old lions meet their final report, and one of them still with us fights for his life. former republican senator ted stevens died in a plane crashe. never saw bill benefiting his home state that he did not like. four democratic congressmen dan rostenkowski is wjla.com -- spent mor-- a former democratic congressman dan rostenkowski died as well. charlie rangel is fighting for his career on charges of corruption. what happens to these guys when they stick around so long? >> no question there is a sense of entitlement. to her credit, nancy pelosi has repealed many of those perks as speaker. on dan rostenkowski, just one word -- i have already spoken

positively and emotionally about charlie rangel. danny rostenkowski was a throwback, the guy's guy, like to tell a good story. he worked across the aisle. there was no ideology to them and did you want to know what politics has changed? he is to go back to chicago by car. you know who went with them? the republican leader went with him and back, and henry hyde. they were friends. can you imagine -- >> did he bring home the bacon? >> bob michael wrote in his car and i am sure they had a lot of stories, but that is why republicans were in the minority for 40 years until the

took over with newt gingrich and the contract with america. i know if you are a democrat is lovely working across the aisle if you are in charge of the aisle. >> the chairmanship of the ways and means committee -- danny rostenkowski, charlie rangel -- >> sandy levin wants it -- >> if you look to the eulogies for ted stevens and rostenkowski, you understand what charlie rangel is fighting as hard as he is. ted stevens' conviction was overturned and rostenkowski was parted. one of the first things that was said about both men is that they had it is corruption convictions. that is one of the reasons

charlie rangel will not lay down. he does not want timthat asterisk. >> dan rostenkowski told mark shields in an interview in 1998 that it ll say on this obituary that he went to jail. >> he was pardoned by bill clinton. >> last word. see you next week. for a transcript of this broadcast, log on to insidewashington.tv.