>> what do you think of when you see a tree? a treatment for cancer? alternative fuel for our cars? do you think of hope for the environment, or food, clothing, shelter? we do. weyerhaeuser, growing ideas.

>> this debt is like a cancer that will truly destroy this country from within if we don't fix it. >> this week on "inside washington," a plan to deal with the nation's oceans of red ink. thank pain, lots of pain. the british are talking austerity, too, and look what happened in london as a result. the president and age it tackles the currency showdown with china and gets pushed around on trade. >> no nation should assume that the path to prosperity is paved simply with exports to the united states. >> for president bush's book tour. >> 400421 troops now gone. how happily does that weigh on you? -- heavily does that why you? >> well, it weighs heavily. >> uncle sam's plan to get

people off cigarettes. captioned by the national captioning institute --www.ncicap.org-- the cochairs of president obama's deficit commission offered harsh medicine for dealing with the nation's nearly $14 trillion debt. each american citizen shares that by more than $44,000, each taxpayer share over $124,000, the national debt clock is ticking. some of the proposals that deal with the debt include cuts in social security payments, changes in the retirement age, limiting or eliminating tax deductions for home mortgages, cutting defense spending by $100 billion, an increase in gasoline taxes. house speaker nancy pelosi said that the plan is simply unacceptable. colby, what will it take for democrats to get on board? >> facing up to reality, that is

not a partisan issue at all. dealing with the facts that are out there. they have cut to signal -- i've got to do a single job in laying the issue before the american people, similar to though obama health plan and talking about the cost of it. we cannot ignore this problem. this is a serious crisis we are facing. >> nina, will any of this see the light of day? >> not anytime soon. it is not just republicans or democrats that go on to face reality. republicans want to cut spending, democrats think they can tax the way out of it. neither is true. but also week, the public, want something for nothing. the reckoning is coming. i don't think it is quite as you have suggested, but it is coming. >> charles, republicans have been complaining about red ink since obama took office. isn't it is a great opportunity for them?

>> i think it is, and they are not waiting to pounce because if they do, democrats will demagogue them for whatever cuts they approve of. they are kind of a feeling it out like boxers. this has to be done, like the base closing commission. you have to empower committee to make recommendations, like when you close a military base, and then the congress has one choice, yes or no with no amendments. it is the only way it will ever happen. it will not happen now, but i think the way they presented the issue, as a trade-off, even though everybody is going to reject any detail, is exactly the right way to start the debate that will take probably half a decade to conclude. >> margaret, do you think congress will touch the third rail stuff? social security, for example? >> well, they will touch means testing, because as warren buffett says, he should not be getting a social security check.

these cuts and tax cuts have to be dealt with, because some of these proposals heard the 69- year-old. listen, as a blue-chip corporate lawyer, all of us, we can work until 69. my irish grandmother working in a hotel changing beds cannot work until she is 69. should we put another $40 trillion a hole in the deficit with tax cuts for the wealthy? let us put all this together and try to make it fair. >> let's listen to erskine bowles, co-chair of the deficit commission who served as bill clinton's chief of staff. >> we are clearly on an unsustainable path. we cannot grow our way out of this problem, we cannot tax our way out of it, we cannot cut our way out of it. every single member of congress knows that the path we are on today is not sustainable, and if we don't bring these deficits down, we are headed for

disaster. >> there are 12 members of congress on this 14-member commission, charles. >> well, look, there is no way the commission is going to approve this spirit that is why the chairman spoke out in advance, because anything they are recommending will fail to get a super majority on the commission. but i just want to make one point. margaret is talking about her grandmother not being able to work until 69. margaret, this does not apply to your grandmother. it does not apply to anybody in kindergarten or above. a kick in -- it kicks in 2075, meaning the only people it will affect our pre-kindergarten you work until you're 69 or you get nothing, because it will not exist in 2075 -- >> those doing labor as opposed to having the cushy jobs we have --

>> if we had index to the retirement age to life expectancy, it would be way in the 70's now. the idea of a pension instituted by fdr and before him, bismarck, was to support you in old age. we are not retiring in old age. that is not even close. that is the huge mistake we make. 1/3 of the life is receiving funds through taxes, and that is completely unsustainable. >> hence the scope of the shoe print one piece of this has gotten it into a discussion between the two of you about whether this is fair. major issues have to be tackled, and the question is how do we get these things on the table? how do we get to a point where it decision makers have to step up to them? if they cannot clear the commission, how do they get to the point -- >> i am really struck by what is

going on in europe, even in greece, which was the first place where the rubber met the road. there were riots in france, england, greece, and yet those governments have not fallen. it is almost as if the people in those countries are in a lot of pain -- a lot more in greece than in france -- but they have actually sustained the governments that have made these tough decisions. i wonder if our people would do that. >> congress must extend unemployment benefits by the end of this month or, starting next month, 2 million people will lose benefits. >> i think they will, even though it is a republican congress. this call to citizenship, has happened in other countries, can only happen when you begin to make people think it is there.

the jobless people, through no fault of their own, because of the kind of recovery we are having, have to be looked after before you begin taking away their mortgage deduction. >> there is a new bloomberg poll that says that investors around the world think obama is bad for the bottom line. 68% of u.s. investors think that obama is bad for business, even though it be standard and poor's index has risen fosince he has inaugurated and corporate profits have rebounded to almost pre-recession levels. >> goldman sachs bankers that the biggest bonus this year since their inception. i just don't know how these people can complain. the money obama spent its money that had to be spent in an emergency. it is not the onslaught of socialism. >> here is a poll -- the vast majority of retirees feel they

were given the opportunity to achieve the american dream but forecast a grim outlook for their offspring. 89.2% believed it will be more difficult for their children to live the american dream, and only 1.9% see their grandchildren having an easier time than they did. that is all connected with what we're talking about. >> but i don't see that, and i have grandchildren. i expect my grandchildren to do as well or better. >> look, we are undermining our economy, as we heard from the commission, to the point where we will not be able to function or educate or invest, if we don't fix the debt problem. it is not as it is rocket science. it is eminently flexible. the one success we have had over the last 30 years is the tax reform of 1986, reagan, bradley, tip o'neill, where they took a hatchet to all of the loopholes and deductions in the tax code.

they wiped them out and radically lower rates. that is what the commissioners are recommending today. you might out all of the deductions -- wipe out all the deductions, which means you rationalize the economy and increase efficiency of the economy will produce wealth again. that was done in 1986, and in the last quarter century since, we have added all of these crazy deductions and tax incentives. like barnacles on a ship, you sweep them away and the with the rates and it's easy and understandable, but it requires political will and agreement in advance that you are not going to snipe at each other over details. >> charles describes an integrated thing where you do taxes and cuts and spending and a whole thing, and has a sense of fairness for everyone.

what is troubling retirees is that there was a sense of an expanding world where the kids were going to do better. i will do better than my parents. that is gone. we fear the chinese century replacing the american century and all that weighs down. >> but is it just a matter of psychology, nina? >> it is not just a matter of psychology. we were the ascendant power for a half century or more, and now we have genuine competition for that position. nobody is a super power the way we are, but we can see that that is likely going to happen. my 100-year-old father was reading the newspaper yesterday about the deficit commission, reading about cuts in social security, and said, "i am 100, i don't have to worry about that." [laughter] >> sure, my generation is

pessimistic, but not the younger generation. the younger generation is not pessimistic. i had my grandson with me in china this past summer, and he knew what we are going to have to deal with and how competitive is, but his generation knows that, and they know they want to do things different. >> we have had waves and waves of predictions of american decline, and in the 1960's after sputnik, the russians would overtake us, and and japan. it is not going to happen. decline is a choice and we can choose otherwise. >> thank you for the good news. the president in asia. >> it is undervalued, and china spends enormous amounts of money intervening in the market to keep it undervalued. >> president obama at the g-20 meeting in south korea on his belief that china artificially manipulate currency to keep

exports teak. ben bernanke and the federal reserve plan to put $600 billion into our economy and the chinese accuse of manipulating currency grid called art kane, the former banker, will explain all this -- colbert king, the former banker, will explain all this in terms we can understand. >> it is true, on both sides. the chinese are keeping their currency rates low so they can sell to the rest of the world, and we will have a currency war. >> the result of which will be what? >> it will get us to a very dangerous place, almost like smoot-hawley did during the depression. they will have to wake up and come to some kind of agreement. >> but that did not work for the chinese. this is chutzpah for the chinese to say you are doing this -- >> from the chinese standpoint,

they have all this foreign exchange they have earned. what are they doing with it? they are investing it, that is what they're doing. it is money they would never have gotten if they rely only on domestic consumption but they will continue to do it. >> i am not saying they should not have a lot of trade i t -- i am not saying they should not have a lot of trade. i just think you should try to have it on equal playing field, and obama is forcing them to have this conversation. >> now we are trying to have parity in manipulation. let's hope this bernanke trick works. qe2 -- that ship no longer sales and that should make you nervous. it is such that sarah palin was practically speaking a foreign language this week on prime pumping and cease and desist and what it might do domestically.

>> the president had two jobs going to the summit. number one was finalizing a free-trade agreement with south korea. that was a catastrophe. you don't have a meeting with a head of state without having it wired, and he left empty-handed. the bush administration negotiated a treaty and it was in place, but of course, always wants to reinvent the world and he has nothing. -- obama always wants to reinvent the world and he has nothing. obama wanted to rally other countries about chinese pushing the currency parity. but you don't do that if weeks earlier your central bank had essentially devalued the american dollar. it does not give you any ammunition. who attacked us? the brazilians and the europeans and the germans and others who are going to be hurt by our actions as they have been by the chinese. if your intent is to go to the g-20 and rally our allies, you don't do it, after you devalue the dollar. it ended that he had a very hard

time in korea, two black of the -- two lack of successes in a row -- >> i agree with charles about korea. it was an absolute disaster not being able to pull that deal off, and he should not have gone to the discussions without it being already done. but i disagree with you that it was an ego trip, obama's part that kept this going. when bush presented his deal to a democratic congress, they did not want it because of the auto industry and the labor unions. obama, not because of ego, but because of politics, try to get more -- >> margaret wanted to talk about india. >> and he did not get eight pit the end result was the same. he feel that he should not have failed. he set himself up for failure.

>> i agree, you don't want to lose face when you are in korea. charles, even you must appreciate the warming of relations with india. the india trip was a great thing, and that is one path forward -- >> so you read my column in which i praised his actions? >> i did not read your column, but nina told me. [laughter] >> as moynihan said, "i read it, but not personally." >> let me say one thing about korea. i agree that he probably should not have gone into a meeting where there was not going to be a deal. but you seem to like the deal that the bush administration negotiated i don't think that kind of deal is feasible in the current economic times. >> speaking of the bush administration, former president

george w. bush comes out of retirement with his memoirs. >> we had to view saddam hussein differently after 9/11, that when you saw a threat materialize, you have to prevent it. a lot of people were concerned about it, and when we did not find weapons, i felt terrible about it and sick about it and still do. >> former president george w. bush with oprah winfrey, discussing his book "decision points." he says he still thinks the world is better off without saddam hussein even though our people never found weapons of mass destruction in iraq. >> and they did not find out why the, really, either. whatever be -- they did not fight al qaeda, either. what ever you want to say about saddam hussein, a horrible person, he was a counterbalance to iran and he did not attack as then.

but the extraordinary thing about this book and the tony blair is that both men blamed the intelligence community for misleading them about what is of mass destruction, and yet both men say they would not change anything they did. that is astonishing to me. if you know that the premise for going to war was wrong and then you say, "i had other reasons anyway and it was ok," that does not really fly. >> there were a couple of good reporters for knight-ridder who were riding regularly that the was no evidence. charles? >> i think what is so interesting is that this reminds us why the country actually like him in the early years of his presidency. obviously, when the war went south and when bad, the opposition to the policy sort of transmuted into an intense, widespread hatred of the man and accusations -- he led us into war, is a criminal, torturer, etc. you see how affable and decent he is. he has not said a word about his

successor, and this is a successor who spoke ill of him over and over again, even in the inaugural address, six or seven references to how horrible were the eight years when bush was sitting a yard away and held his tongue. he is actually not interested in re-entering the arena. i think this is an accidental president. it is not a guy who hungered from a young age like obama and clinton to be a leader. he was a son of the president who ended up in the presidency, and you can see that he liked to come out of the limelight and will again as soon as the boat towar -- book tour is over. part of the rehabilitation of them, which history is what to do, is how decent person he is and how that was not overlooked but misunderstood into his presidency when the policies went south. >> i agree with charles that he is a gracious ex-president. it did not make him a good president, and his legacy is killing us.

i actually read the book, and one theory of his presidency is that it is not the decisions be made well but made quickly. he prides himself on this. he did not make a decision quickly on katrina and that is one of his few criticisms of himself. when asked about waterboarding, he says, "damn right." why? the lawyers told them. how do you square the sickening feeling about not finding weapons of mass destruction with no regrets about going to war? >> i am reading the book, too, and i have a different feeling reading of george bush that he did what the presidency early. he wanted it because his father had been there. a very pointed moment on the day of the inauguration where he comes into the oval office, and his father joins them, having taken a bath, and he comes into the room, and george bush, sr.,

locks in and says, "mr. president," and bush comes from behind a desk and says, " mr. president," and they embrace. that says a lot about what it meant to him to get there. the other thing is the relationship between him and his father was somewhat distant because the relationship was really between george bush and his mother. the fact that he drove her, when she had a miscarriage, to the hospital. >> i always thought that he would end like harry truman, who left office with the lowest approval, reviled and humiliated. 40 years later he is rehabilitated by the david mccullough book and is considered one of the great presidents of the century. the reason was that he left in the middle of a war that was a grinding war, losing war, at least a stalemate. i think history will decide.

it depends on how iraq turns out. if it becomes, like korea, a democracy that is an example in the region, history will judge bush the way a judge is harry truman. >> remember pollster peter hart's question, who would rather have a beer with, george w. bush or the other guy? he got elected. the government takes steps to scare us away from cigarettes. >> but the first time ever, it was a tobacco products are addictive, in the bluntest of firms, that tobacco can kill. >> if you did not already know that cigarette smoke is bad for you, the federal government will hammer the point home by notifying you on the package that cigarettes are addictive and can give you lung disease. is this big brother, charles? >> it is, and on this, i am completely inconsistent. as a physician, i saw the victims of tobacco. the public campaign against

tobacco started by the surgeon general in the early 1960's has cut the rate of smoking from 42% to 21%, in half. it is one of the great successes of public health in all of human history. the amount of suffering it has reduced is a great. i think as a result of the prestige of the success of the anti-smoking campaign, it has spread over to things like obesity, eating, how you sneeze on your sleeve or in your hand. i object to that, but on smoking, i'm a pretty hard liner. i would abolish it if you could. >> i would, too. all of us know people who have died from lung cancer because of this. my kids stopped me 40 years ago by pointing to of vince lombardi, who died from lung cancer. the more they do, the better, as far as i'm concerned. >> not to be cold hearted about

it, but this cost society a lot of money to pay for people who get all kinds of diseases from smoking. if it is nanny state, so be it. we get the bill, so why shouldn't we try to reduce it? >> i'm so happy the government gets a good name for something in charles' world. maybe this will take it to 10%. you also have to be reminded how disgusting and horrible the way you die is. that is what these new pictures will do. the more the better. i love it when they bring out the doctor's smoking 50 years ago, "camels are preferred by 60% of doctors." so long ago. >> last word. see you next week. for a transcript of this

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