you'll be judged a success or a failure? >> i hope i'm judged a success. i'm going to be dead. matt, when they finally figure it out. and i'm comfortable knowing that i gave it my all, that i love america, and that i know it's an honor to serve. >> and that's all for now. i'm matt lauer. for all of us at nbc news, thank you for joining us. this sunday the politics of the economy at home and abroad. the president is dealt a setback at the economic summit in asia over trade and rebuke over his approach to economic recovery. at home the debate over the bush era tax cuts and the cochairs of the president's debt commission propose taking the knife to social security, medicare, and the defense budget. after the election will the white house and republicans be capable of finding common ground? my guest this morning the

president's senior adviser david axelrod in his first sunday interview since the democratic loss aets the polls. then the view from the republicans. just back from afghanistan ranking member of the senate armed services committee senator john mccain. plus a special focus on the future of the economy, whether washington will take meaningful action on the debt. with us the former chairman of the federal reserve alan greenspan, former speaker of the house, republican newt gingrich. author of the new book "all the devils are here" about the financial crisis journalist bethany mcclain and former congressman, democrat, harold ford. >> good morning. president obama on the way back from his ten-day trip to asia stopping a short time ago back on u.s. soil to refuel in

alaska. he returns home to a host of domestic challenges and debates as a lame duck session of congress begins tomorrow. join me now from chicago. this morning the president's senior adviser david axelrod. welcome back. >> good morning, david. good to be here. >> some of the headlines from the trip were not very good. a setback at the polls on election day and then headlines like this from the "new york times" on friday. obama's economic views rejected on world stage. china, britain, and germany challenged u.s. trade talks with seoul fail. u.s. gets rebuffed at divided summit. after an election day setback has the president also lost his ability to forge international consensus on the world stage? >> not at all, david. if you have more time i'm sure you'd show the positive headlines from the trip as well. the president went on this mission because asia is the most vibrant market, growing market in the world. and we want to compete for those jobs and that's why he went. and his first step was in india, a growing power in the world,

and we saw american businesses walk away with $10 billion in new deals, 50,000 jobs back here. we strengthened that key relationship and we went on and we forced the agenda at the g-20 to focus on this issue of trade imbalances which is an important thing. it's obviously going to be the case that countries are going to pursue their national interests. germany is a great exporter. that's the core of their economy. they don't want greater competition from us. china, we know, the same. so there's going to be tug and pull in these but the point is you have a president of the united states who is out there fighting for american jobs. in korea we want a trade agreement because korea is a huge market in which we want to sell american products but what the president said was the deal that was on the table wasn't good enough, wasn't good enough for the auto industry, wasn't good enough for american beef. we want to keep on negotiating

and that's what we're going to do. we're going to make the best deal for the american worker and american industry. >> let's talk about another hot topic and that is the issue of the bush era tax cuts. a lot of back and forth involving you this week about what's going to happen, whether they'll be extended. i want to go back to december, 2008. you were thon program and unequivocal about the president's position. will you hold off on tax increases? >> well, the question is on the bush tax cuts for the very wealthiest americans and it's something we plainly can't avoid moving forward in whether it expires or whether we peel it a little early we'll determine later but it has to go. >> it has to go. with the new political reality in washington has the president changed his view? >> no. the president still believes that we have to move forward on these tax cuts for the middle class. the middle class has taken a beating in this last decade, seeing their incomes decline and

have born the brunt of this recession. we can't afford to borrow another $700 billion to pay for tax cuts for millionaires and billionaires. your next guest senator mccain was very courageous in 2003 when he voted against the second bush tax cut because he said it was irresponsible to pay for these -- to borrow money for these tax cuts skewed to the wealthy at a time when we had two wars and so many other pressures. and that is still the case. >> are you saying no deal, no compromise? >> well, you're asking me, i'm telling you what the president's position is. we need to move forward on the middle class tax cuts and can't afford a permanent extension for the wealthiest americans which would cost us $700 billion that we don't have over the next ten years. >> i know the arguments. here is the question. if the president could get an agreement on middle class extension would he agree to an extension at least temporary for the tax cuts on the upper earners?

>> david, we're looking forward to sitting down with leaders of both parties and talking about those issues. i'm not going to negotiate that with you here. there have been a lot of formulations thrown out in the last few weeks that are interesting but we fundamentally want to uphold the principles that i laid out and we believe that congress should act before the first of the year. these taxes, the way the bush tax cuts were designed, are going to expire on january first. we want people to have the certainty of knowing that's not going to happen. congress ought to, before they go on vacation, they ought to ensure that people have better vacations of their own by knowing that this matter has been taken care of. >> bottom line. he's open to compromise. is that fair? >> the bottom line is he wants to sit down and talk about this. >> is he open to compromise? >> there is no bend on the permanent extension of tax cuts for the wealthiest americans. >> he is open to compromise? >> he wants to sit down. we want to get this done. the american people expect to get this done and we are eager to sit down and talk about how

to move forward. >> the president said after the election that he endured a shellaking his word. >> i think fundamentally what drove the electorate were two things. one is that while we have had a recovery, ten straight months of job growth at the horrendous downturn, it hasn't been fast enough. we still have millions of people looking for jobs. we still have -- we need more robust growth. i think that was one of the messages and that was the primary message that we heard in that election. the second is they want us to work together to do it. in many instances we have to move as one party because the other party decided they did not want to participate as a strategy. now i think the country is saying to both republicans and democrats forget the politics for a while. sit down and work together to solve these problems and get the

economy moving. that's what we intend to do. >> i'm not hearing from you so far where the president is prepared to give and change this dynamic. i'm hearing on the issue of taxes, on the issue of what happened in the election still plenty of fight. i'm sure your supporters are happy to hear that. what i wonder is how does this change the dynamic to actually get something done? >> here is the thing, david. that is more important in a conversation between the president and members of both parties than me talking to you here. those are issues that we need to move forward. there are plenty of economic issues. we propose to a tax cut that would allow businesses to buy capital equipment next year without paying the taxes on them in 2011. that would get the economy moving. we've proposed a permanent tax cut for research and development. that would get the economy moving. there are other ideas. these are ideas republicans have traditionally supported. we ought to sit down and work on these things together and get

these things done so the economy grows at a faster pace. >> let me ask you about the debt commission, the president's debt commission, the chairman came out maybe a little earlier than they planned and put forth a rather draconian document about how to slash spending and deal with the deficit. the "new york times" summarized it this way to bring viewers into it let me put it on the screen. the chairman outlined a politically provocative and ambitious package of spending cuts and tax increases. it calls for deep cuts in domestic and military spending, eliminating popular tax breaks in return for lower taxes and benefit cuts and an increased retirement age for social security. here is the bottom line. if they don't get 14 commission members to agree to this, this is an intellectual exercise and not a real document. can they get to 14? >> i don't know whether they can or they can't, david, but obviously it's a voluminous work and they haven't yet completed it. that was the chairman's recommendation and now they'll vote on it.

the president said he'll comment on their work after they completed it. that's his commitment. the president appointed this bipartisan commission because this is a huge problem. we have to deal with it and it won't be easy to deal with. if one size says no taxes on anyone can go up, any interest, any corporation, any individual the other side says no cuts can be made then we're not going to solve it. everybody has to give a little and we have to move forward and deal with this problem together. hopefully whatever happens this commission report will give the impetus to do that. >> so the president's position is, look. everything has to be on the table. tax hikes, taking on entitlement spending, raising the retirement age for social security. on those specifics, all of those are on the table in the president's mind. >> yeah. i'm not going to deal with specifics because that would violate the president's commitment but i will say this. the president has shown his willingness in the last two years. you know, we took on the health care issue, one of the reasons was that our budget people said

we cannot deal with these deficits if we have an inex-orable climb in health care costs to the government, to businesses, to individuals. so we did that. and part of it was economies in the medicare program. we took away subsidies to insurance companies and made other economies that didn't affect the patient care. unfortunately, the other party ran against us on it in the election and accused us of cutting medicare. we have to set aside those kind of tactics and hold hands and move together. >> i didn't ask you for specifics. i asked whether everything is on the table and the level of caution from you on this, i mean how are you going to expect both democrats and republicans to make painful choices if you can't even say publicly here today, that those tough issues should at least be on the table? yet you expect republicans to come to you. >> david, the president impaneled this question because he recognized that we had to take a wide lens look at this and he said then everything should be on the table.

that hasn't changed. what you want me to do is live and react to individual aspects of it here and that i can't do because we need to see what the final report is but obviously there are going to be hard choices to be made. we're willing to make them. it's going to take both parties working together to get them done. >> speaker pelosi said this draft report was unacceptable. did the president find that reaction counterproductive? >> there were reactions across the political spectrum. some on the right said it was unacceptable. mr. norquist and others on the right said it raises taxes. we can't -- others on the left said it was unacceptable for other reasons. i think the best thing to do is wait for the final report. look at it. see where we can find common ground and move forward. this is something the american people expect us to do and we have to do it because we all know this is a big, dark cloud on our horizon and that's -- and the president is very intent on moving forward. >> all right. before you go two quick ones. rahm emanuel former chief of

staff now preparing to run for mayor in chicago. in your town. will the president campaign for him? >> well, the president hasn't -- the president's made clear what his view of rahm is. he said he was an excellent chief of staff, thought he'd be an excellent mayor. whether he involves himself actively in this campaign is a matter we haven't yet decided but i think his view of rahm is very clear. >> about afghanistan, my next guest as you know senator mccain is just back from iraq and afghanistan and has been critical of the time line for the beginning of withdrawal. saying that in fact it is creating erratic behavior in hamid karzai among others in the region because there is a sense that the u.s. will leave. is it a problem for the u.s. to announce the beginning of the end of the war? does it undercut our policy? >> no. it's important that we announce the beginning of a drawdown. we've always said it would be based on conditions on the ground and that is still the case. but it's important to let the

afghans know that they have to pick up the pace in terms of training up the military, training up their police, being ready to accept responsibility and the -- this beginning of the drawdown has a disciplining effect in that regard. so it's important. we set it in conjunction with our military leadership. everyone agreed it was important. and it's not going to shift. >> all right. we'll leave it there. david axelrod in chicago this morning, thank us an always. >> good to be here. thank you. >> now the view from the other side of the aisle, republican senator john mccain. welcome back to "meet the press" and to the country. you were in iraq and afghanistan. you just heard david axelrod say any withdrawal will be conditions based. is that not enough to satisfy you? >> well i'd like to see the ion. according to mr. woodward's book his problem is the political, the left base of the democrat

party. you don't fight and conduct wars that way. you win and then you leave. that's what we've done in iraq and the fact is the perception is amongst friends and the and alike that we may be leaving and that has caused them to make certain accommodations because they can't leave. just a fact. down to the governor, down to the police chief level. they say, yes, the taliban are telling us we're leaving and they're going to cut off our heads. famous captive, taliban captive said to his american interrogator you've got the watches. we've got the time. >> hamid karzai whom you met with says in "the washington post" this morning that it's time for the u.s. to reduce the intrusiveness in the daily afghan life, that they ought to get boots on the ground off the ground and out of the country. >> yes. and hamid karzai is reflecting his desire to survive, also a degree of paranoia. there are three big problems in afghanistan right now. let me tell you one of them that isn't. that is the military aspect of it. our marines, army, navy, air

force are doing a magnificent job. they are penetrating the areas they haven't been before. the hometown of mullah omar is now under our control. so that's -- they have done a a magnificent job under the leadership of general petraeus and others. the other side, though, is that there's corruption at very high levels. the attorney general of afghanistan is corrupt. it's just a fact. and also we have unfortunately a situation in pakistan where the enemy and isi, the pakistani military intelligence is working with and harboring the haqqani network and other elements of taliban. you can't defeat the enemy if they have sanctuary. we also went to pakistan and had a very candid meeting with the general on this issue. but it boils down that the isi, the pakistani leadership,

india's leadership, all are not convinced that the united states is going to stay the course. >> let me tell you about another military matter back home and priority for the administration. that is whether the ban on the gays and lesbians in the military will be rescinded. are you going to personally stand in the way of this ban being lifted? >> i will stand that i want a thorough and complete study of the effect on morale and battle effectiveness of the united states military. i will listen as i've said for years to our military leaders and not a study that is leaked as we know -- >> it said 7 in 10 members of the military think it would be fine to have it lifted. >> you and i have not seen that study and this was directed at how to implement the repeal not whether the repeal should take place. very importantly we have people like the commandant of the marine corps, all the service chiefs saying we need a complete study of the effects not how to implement a repeal but the effects on morale and battle

effectiveness. that's what i want and once we get this study, we need to have hearings and we need to examine it and look at whether it's the kind of study that we wanted. it isn't in my view because i wanted a study to determine the effects of the repeal on battle effectiveness and morale. what this study is, is designed to do, is to find out how the repeal could be implemented. those are two very different aspects of the issue. >> a lot of households, this is a subject of debate, including your own, apparently. your wife cindy mccain has had a public service announcement with no hate a group that promotes gay, lesbian, transgender rights. >> our leaders tell lgbt youth they have no future. >> they can't get married. >> they can't donate blood. >> they can't serve our country openly. >> referring to don't ask don't tell. she did clarify this on her twitter page. you're both so active on twitter. she said i fully support the no hate campaign and all it stands for and am proud to be part of

it but i stand by my husband's stance on don't ask don't tell. >> which is a complete and thorough study and review of the effect on battle readiness and morale. by the way, i respect the first amendment rights of every member of my family. >> you know, what is interesting about this, a debate in families, is there is kind of -- you talk about waiting -- there is an appeal, to your honor, you have the chairman of the joint chiefs saying it's just not right to have people lying about who they are just to be able to protect fellow citizens. >> and you have the commandant of the marine corps whose people, he is directly responsible for, is saying, this could hurt our ability to win. >> do you believe that? >> i'm paying atoentention to t commandant of the marine corps and the chief of staff. >> but you've been in the military. you know the issue. do you have a sense in your gut about what should happen? >> i have a sense that i respect and admire these four service chiefs who have expressed either outright opposition or deep

reservation about the repeal. they're the ones who are in charge. now the chairman of joint chiefs of staff, i agree. the president and secretary of defense have all come out for repeal. but i really would -- i was in an out post near kandahar. army master sergeant, 19 years in. fifth deployment to iraq and afghanistan. says to me, senator mccain, we live, eat, sleep, and fight together in proximity. i'm concerned about the repeal. i'd like to know more about it. that's the view that i got from chief petty officers and sergeants all over afghanistan. >> it's not going to be listed in the lame duck session, fair to say? >> i think we should at least -- i don't think it should be because i think once this study comes out the beginning of december we should have a chance to review it and maybe have hearings on it. >> just a couple minutes on taxes and spending. this is your 59th appearance on "meet the press." you know what that means. we have so much tape. if you go back to 2004 i know your position on the bush tax

cuts did change and you've talked about it before. i want to play something you said in an interview in 2004 and ask you about it. >> i voted against the tax cuts because of the disproportional anlt that went to the wealthiest americans. i would clearly support not extending those tax cuts in order to help address the deficit but the middle income tax credits, the families, the child tax credits, marriage tax credits, all those i would keep. >> that's exactly what president obama says. >> is there a statute of limitations? the economic situation is vastly different today. we are in the midst of the greatest recession in the history of this country since the great depression. it is not the time to raise anyone's taxes. and by the way, also along that statement i said we have to restrain spending and spending was way out of control at that time. i said, otherwise we're facing massive deficits and that's what happened. >> should tax cuts on the wealthiest americans only be extended for a temporary period and only if there are corresponding spending cuts? >> i think they should be

extended until we're out of this recession and such time then we can look at other tax hikes but in a serious recession i cannot believe that raising taxes is a good thing on anybody. >> is the debt commission a nonstarter or a good start or something else? >> i hope it's a starter. i hope that even if they don't get the 14 members as you mentioned earlier when you were talking with david axelrod, i hope that this is a wakeup call to america. it gives us an idea of the breadth of this problem that we are going to have to make significant changes. we are going to have to challenge some of the very, very tough areas such as entitlements if we're ever going to dig out. >> everything should be on the table. raising the retirement age everything should be on the table and if it's not, then obviously i don't think we're going to make progress. and again, i'd like to applaud alan simpson and erskine bowles because americans, i think the

message was stop the spending. do things differently. we're worried about our children and our grandchildren and we can't keep going like we are. so maybe the environment has changed enough that americans will respect us making some tough decisions. >> just about a minute left. president bush's memoir is out, decision points. he talks about you. in a couple places. and he talks about your decision not to have him campaign with you. and he writes this. i thought it looked offensive for john to distance himself from me. i was confident i could have helped him make the case. any regrets that you kept him on the sidelines. >> no, it was a decision made at the time in the campaign. i respect and admire president bush. at the time it was just the realities of the political situation. as you know, president obama at the time was doing everything he could to tie me to president bush. i admire and respect him and i believe i call president bush a friend and it was just a decision we made and i hope he respects it.

>> there was a meeting he talks about september of 2008, height of the financial collapse, you suspend your campaign and call for a meeting in the white house. here is a picture. you're there, actually senator obama is there as well. he writes he was surprised you called this meeting. you didn't add that much, didn't have a question, suggesting you were unprepared for the meeting. is that fair? >> i was prepared for the meeting. i wasn't prepared for the onslaught that came and took place from all of the democrats in the room. my reason for being there was to make sure that republicans were heard. people like boehner, mitch mcconnell, and others. that was the reason why i was there. i didn't think i was going to make any headway with some of the democrats in the room. i didn't ask for that meeting but the fact is i thought it was best at that time to say i want republicans to be heard. until that time they had been shut out of the process. >> we'll leave it there until your 60th appearance, senator. as always. >> thanks for having me. >> up next our special focus on

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we are back. joining me this morning for our special discussion on the problems facing our nation's economy coauthor of the new book on the financial crisis "all of the devils are here" "vanity fair's" bethany mclean. alan greenspan, coauthor of the novel "valley forge" and former speaker of the house republican newt gingrich and chair of the democratic leadership council former congressman harold ford jr. welcome to all of you. so much to discuss about the

future of our economy, the president on the world stage, free trade, and his approach to economic recovery. alan greenspan, dr. greenspan, let me begin with you. where are we on our search for jobs and on our overall economic outlook? >> well, our search for jobs is not doing too well. the 10% unemployment rate is the consequence of the fact that this economy is not picking up the way it ordinarily would out of a recession. and the basic reason is that unlike previous recoveries, when, for example, we would be getting very significant pickups in building, residential, nonresidential, in a sense longer-term assets, we're not getting that today. and it's a big hole in the economy and the reason essent l essentially as far as the business sector is concerned is

that business is highly uncertain about the future in a way which i have never seen it before and a way in which the data suggests has never in fact been so depressed. and unless and until we can begin to lift that pull of uncertainty, it is very difficult to see people reaching out into the longer term. remember, buildings are 20, 30-year investments. >> right. >> what the data show is that they -- there is extremely high risk aversion in what economists call illiquid assets like buildings. >> president obama was on a couple weeks ago and talked about a new normal in our economy. let me play a portion and have you react to it. >> what is a danger is that we stay stuck in a new normal where unemployment rates stay high. people who have jobs see their

incomes go up, businesses make big profits but they've learned to do more with less and so they don't hire. and as a consequence we keep on seeing growth that is just too slow to bring back the 8 million jobs that were lost. >> do you accept that? >> no. i think we have two enormous policy challenges. the first is that we're now in a world market, a genuine world market where you've got to think about economics in terms of competing with china, india, germany, and you ought to study germany, which is a a high cost country with a huge export manufacturing base. second, this administration is just wrong. i mean, the obama model of the economy is just fundamentally, profoundly wrong. and i don't care, i think chairman bernanke is very foolish to be printing $600 billion of additional money because the fact is the problems in this economy are problems of fiscal policy. they're problems of taxation. and they're problems of an antibusiness, antijobs

bureaucracy that this president encourages. >> we prop up the economy, harold ford, we're certainly propping up the housing market. so we're in this state. do you agree with that? >> in large part. but let me differ a little bit with the speaker. i think there are two kinds of debt here. the first is the debt we're accumulating as a result of this crisis and we can't ignore the fact that to get america back on a growth to directory and growth platform there are steps government has to take. i agree with the chairman whole heartedly that certainly around taxes and regulations going forward i hope that the administration will call for a year moratorium on regulations. i hope they extend the tax cuts and even cut the corporate rate. but to suggest that the fed should not continue to play an active role especially in the face of some inaction front on the fiscal side i think is wrong. two, the entitlement debt. i think that recommendations made by this deficit reduction commission have been responsible. there may be some areas where we disagree but i hope the left in my party and the right in the republican party don't scream so loud they scare the crowded

middle. >> i want to get back to the debt commission but bethany mclean, a big part of your book of course deals with the financial collapse and the housing market. we don't talk about this enough, the fact that the government is propping up the housing market, prices have not come down far enough even though there is so much pain out there and such a crisis out there. can the economy really rebound unless the housing market corrects fully? >> it's a great question and it's really interesting because one of the great ironies of the financial crisis, one of the big complaints is that government involvement in the housing market was a factor. people want to overplay it as the factor. it was a factor. the great irony is we've come out of the financial crisis with the housing market even more reliant on the government. it's now some 90% of the housing market. and i don't know if anybody has the guts to see what happens if you yank government support away from the housing market right now. but i think if you don't do that it's hard to argue that we found, we found a real bottom in housing prices. but doing so will risk putting the economy into more of a tail

spin. >> alan greenspan again a kind of bottom line question is there a second crash out there that you fear? >> no, i don't. in fact, we are in a position where we are moving forward largely because the rest of the world is moving forward. so we're moving forward but at too slow a pace to bring the unemployment rate down. there's very little evidence of any deterioration that suggests we're about to have a double dip as they call it. in fact, if there is any evidence at all we are actually picking up some. through the month of november, industrial production is clearly improving. and there's all evidence out there that there is a very mild degree of acceleration in the american economy but not enough to get this -- you've been on the air this week disagreeing with some of these recommendations. they got to get to 14, what i

asked senator mccain, is this a nonstarter or something in between? >> well, the statement by the chairman is a nonstarter. you don't have to get to 14. you have to get to passage in the house and senate. >> right. >> so the fact that they get together, they issue a statement guaranteed to frighten most americans, which it did, a number of people are now calling or e-mailing me about cutting social security. is absurd because it's not going to happen. >> don't we have to have an adult conversation with people about what the real problem is? >> look, i think something equivalent to what erskine bowles and alan simpson put out is going to be passed by the congress. the only question is, is it before or after a bond market crisis? because there is no alternative. look, i personally -- >> explain a little more about what that means. >> here's the issue.

right now we have very low bond prices. the markets are functioning in a reasonably good way. the big, serious problem is whether or not the outlook for the longer term deficit spooks the bond market to a point where a long-term interest rates and mortgage rates move up very sharply. if that happens, that will cause the double dip. i'm just basically hoping that we have enough sense to realize that we've got to resolve this issue before it gets forced upon us. >> david brooks writes in his column friday about the politics here, the report from the chairman lists some of the best ways to raise revenue and cut spending. it comes with no enactment strategy however. in this climate asking politicians to end mortgage deductions and tax employer health care plans and raise capital gains taxes and cut benefits for affluent seniors is like asking them to jump on a

buzzing sack full of grenades. they won't do it. >> this big problem is even bigger. people see it coming and we need to take action. if we don't we're going to look back perhaps when there is a bond market crisis and say why didn't we do something when we had choices? and people at this table may disagree with me but it seems to me that our budget problems aren't calculus. they're not algebra. they're simple arithmetic. we're spending $3 for every $2 we take in. something needs to give. >> i don't see why for instance some of these suggestions, harold, on social security, are going to be dem goged to death. why in 50 years people can't look at raising the retirement age and have that be a serious discussion point. >> you can't pay off the debt without either cutting things or raising taxes. this is a pretty good mixer. the chairman is right in another regard. this is going to happen. we'll have to deal with our deficit either by congressional and senate and political leaders acting or the global capital markets will impose a harsher set of realities on us, force interest payments to go up and change our standing in the world.

i would hope and speaker gingrich is a friend, he has been not only a leader in the republican party, a leader in a lot of ways for calling for a new american way, a new american majority. i would hope that all of the smart minds and republican and democratic party could come together and say look. this is painful but we're going to have to do this. if we're serious with all this talk about our kids and grand kids we're facing one of those critical moments. >> let's bring you up to date. the tea party movement itself within the republican party why don't you think there is more of a mandate for really tough choices on government spending? >> let me come back for a second, david. i want to suggest to you people can disagree without it being demagoguery. i helped working with bill clinton and we balanced the federal budget for four straight years, paid off $405 billion in debt. it was not a trivial achievement. it can be done. it can't be done by sweeping, slashing generalizations by people who won't be affected. i'm just saying the deficit commission at the rate they're going will actually be a step backwards. the tea party movement wants

real change but they would start and say to you what john boehner has said the new speaker. roll back the discretionary accounts to the 2008 level. that's a trillion dollars over ten years. ibm and other technical companies have come in with a set of proposals to change the management of the federal government. they believe that's another trillion dollars. at the center for health transformation, we published a study of fraud in medicare and medicaid because the federal government is such a bad manager. that's 70 to $120 billion a year. now, you can do a lot of things to get back to a balanced budget without having to hurt the american people. let me get a break in here. we'll come back and talk more about this. also the tax cut issue, the bush tax cuts, and a little politics as well. our economic discussion continues right after this station break. we've used hydrogen in our plants for decades. the old hydrogen units were very large. recently, we've been able to reduce that. then our scientists said "what if we could make it small enough to produce and use hydrogen right on board a car,

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we're back with the we're talking about this country's debt and the debt commission. here are some of the scenes from around the world. london where you saw rioting in the street because of a hike of college tuition costs. we remember in the past year the scenes from greece, draconian cuts were introduced and there was social unrest. i mean, is that what it could come to in this country if the politicians do move forward to really tackle the debt? >> i hope not. i think there is a sense of who we are and what we represent and why we're important to the world.

the notion of exceptionalism is thrown around and the term is thrown around often. i think people realize we've built a lot of stuff in this country. we've innovated. we've led. for us to maintain that position some changes have to come about. i think the rise of the tea party movement in some ways is positive for the discussion. in that they recognize that over spending, over taxing, are challenges for the country. the same is true when you look back at the clinton years. he realized that as well. there are smart, sensible people in both parties. as long as you don't allow the far left and the far right again to crowd out the predominant middle we can get a lot of this done. if that means making tough choices on social security i'm 40 and willing to give mine up and i think a lot of people my age who may reach a certain income level are willing to do the same but political leaders have to show some courage and will to make it happen. >> i had no idea you were that old. newt gingrich do you think this president has the political stroke that bill clinton did to actually forge a consensus on tough choices? >> i have no idea. i was a little disappointed in

mr. axelrod's comments this morning. but it took president clinton eight months from the time we won in november to his decision in june of '95 to work with us. i mean, change on this scale is very wrenching and it's wrenching for his staff, for his allies. frankly, speaker pelosi becoming the minority leader will make it harder. so i don't know what the president will do. what i do, the only place i worry about in terms of the kind of riots you were showing is not americans in general. i believe the scale of change coming to government workers is going to be so great that you may well see in places like sacramento or albany, new york very serious unrest by union members who are offended at the idea that they should actually earn in proportion to the taxpayer and not be the new special class in america which is what they've become over the last 20 years. >> let me get to the issue of tax cuts to both of you, bethany and dr. greenspan. we talked about this issue before. are tax cuts paid for or to put it a different way should the tax cuts on wealthier americans

be extended without corresponding spending cuts? what's going to happen? what should happen? >> well, what's going to happen is that they're going to get extended. i mean that's very obvious irrespective of what the rhetoric is because that's the easiest thing to do politically at this stage. but we have to recognize that longer term the problem is spending. you can't think about the concept of taxes until you ask what is it that you're funding? at the moment, we are essentially borrowing more than a third of what we spend and this is causing a huge increase in the debt and it's not going to be easily reversed. look, as far as i'm concerned, what we're going to have to do is to essentially look at not individual piece meal cuts or taxes. we have to look at whole projects. for example, i often think paul ryan did a very important --

made a very important contribution. >> he is going to be chairman of the budget committee in the republican house. >> yeah. you can agree or disagree with his whole structure. i happen to agree with almost all of it. but the problem here is that you're going to have to vote an up or down budget each time. in other words, all of these budgets are going to come up, be compromised. you can't do it piece meal. and then the very fascinating question is, how, and i ask my colleagues across the table here, how does the congress deal with that sort of thing when the committee chairman and the committees which have jurisdiction for all various aspects of the budget are going to insist upon wanting to get into the -- >> let me get bethany on the tax cut issue here whether this is going to move forward or only on a temporary basis. >> i have to say i hope it does. i think if you look at economic history the bush tax cuts didn't put our economy on a sound footing. the obama plan didn't put us on a sound footing. since neither one worked let's

try some of those. my big fear is we don't have as much time as washington seems to think we have. i say that because the smart money on wall street has been talking about a sovereign debt crisis for a couple years now even before we had the situation in greece. >> what does that mean? >> that means we're going to have this bond market crisis that dr. greenspan was talking about earlier sooner than we may expect and i worry we have less time to fix this problem and less time to get our house in order than people seem to think. >> what happens, an indulgence in an area i sometimes think about. if the big government companies, fannie mae and freddie mac taken over by the government if they guarantee 95% of the mortgage debt there is no market now for mortgages. and the government said we have to wind these things down. what is going to happen here with the mortgage market? >> two alternatives. either the private market does step up and the case that some people argue which is that the fannie and freddie are crowding out the private market comes to the floor and the private market steps up and we're fine or we have a huge collapse in housing. >> you worry, dr. greenspan, about propping up the housing

market? >> well, let me just say this. that unless the housing market begins to move back we're not going to have any significant cuts in the unemployment rate generally. but at the moment, housing starts are as low as they can get and merely replace the number of units so that there is a question not of the housing market going down more. the key question here is the price of homes because what we saw for example in 2005/2006 is there were something like 8 million new home purchases financed by conventional conforming mortgages which means 20% down and the like. that -- those 8 million homes are now right on the edge of being so-called under water. and while the price levels of homes have been remarkably stable since the beginning of this year the critical issue is that if they tilt below where

they are now, say 5% or 10% it's going to create a major increase in foreclosures with problems. >> we're going to take a break and come back with the last couple minutes and talk a little politics before we close out the program. back in a moment. it helps to have a financial partner like northern trust. by gaining a keen understanding of your financial needs, we're able to tailor a plan using a full suite... of sophisticated investment strategies and solutions. so whatever's around the corner can be faced with confidence. ♪ northern trust. look ahead with us at northerntrust.com. but basically, i'm a runner. last year. (oof). i had a bum knee that needed surgery. but it got complicated, because i had an old injury. so i wanted a doctor who had done this before. and unitedhealthcare's database helped me find a surgeon. you know you can't have great legs, if you don't have good knees. we're 78,000 people

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speaker back with closing thoughts. speaker gingrich somebody made a smart point the other day said newt gingrich will be the first to announce for president. he'll do it in january in iowa. where are you? are you going to run? >> i'm leaning back. >> yeah. >> just like you in the senate race last year.

no. i think we'll make a decision probably in february and probably if we do run we'll announce i suspect in late march. but we're still months away from that. >> what's going into your thinking on that? >> i think partially, can you create a movement that really wants to get to fundamental change and can you make that bigger than the presidency? i don't think you can solve problems in a country of 513,000 elected officials by focusing only on the oval office. >> do you think the president is vulnerable in 2012? >> sure. but this president has enormous capacity to recover. i think the economy will margely get better over the next year and he and the house republicans will fight over who did it but i suspect we'll be closer to 8% than 10% unemployment. >> the republicans i talk to say sarah palin and the tea party have created a whole new dynamic on the republican side. it is impossible to say who's got an early edge. what is the impact? >> i think that's exactly right and i think it's like all the races we saw this year. you will not know who the

nominee is until very late in the spring of 2012 because governor palin has a role. governor huckabee has a role. governor romney has a role. governor daniels. go down the list. governor pawlenty. governor barber. you could have 12 or 15 candidates out there early next year and you won't know how the conversation leads to a decision until it actually happens. >> all right. well, we'll leave it there. thank you all very much for joining us today. you could read an excerpt of bethany mclean's book all the devils are here the hidden history of the financial crisis plus watch our web extra with former speaker newt gingrich about his latest novel "valley forge, george washington and the crucible of victory". and that's all for today. we'll be next week with an exclusive interview with republican governor of louisiana bobby jindal. maybe he runs in 2012. he has written a new book taking aim at the administration over the handling of the gulf oil spill. if it's sunday it's "meet the press."