>> what you think a tree can be? can it be stronger than steel? 10 at st. be biodegradable plastic? can it be fuel for our cars, or clothing, or medicine that fights cancer? with our tree cell technology, we think it can. weyerhaeuser, growing ideas. >> this week on "inside washington," the changing fortunes of newt gingrich and herman cain. >> ok, libya.

>> the odd couple -- newt gingrich and freddie mac. >> no lobbying of any kind. >> solyndra and the politics of energy. >> anything of a political nature, i would have to say no. >> the president it's message to china -- >> we are here to stay. >> the super committee deadline. >> we have at six people on their who signed an oath of blood to never raise revenues. >> what happens if nothing happens? captioned by the national captioning institute --www.ncicap.org-- thanks to lukewarm support for mitt romney, rick perry's lousy debate performances, and herman

cain's recent problems, newt gingrich was having a good week. you even heard the word "front runner" attached to his name. then at the story broke that freddie mac paid him more than $1.5 million between 1999 and 2008, and reporters reminded him that he set in it last week's debate that he merely advised freddie mac as a historian. >> look, i was speaker of the house and a strategic adviser. i was glad to offer strategic advice. >> he was a strategic adviser . he says he did no lobbying of any kind, period. is this a rose by any other name, evan? >> one of the great scams and washington is a former statesmen who are not lobbyists but are still getting paid millions. i doubt that he was a lobbyist. but he got paid an awful lot of money and he looks very uncomfortable. >> is this going to come back to bite him, charles?

>> people say he has as much baggage as delta airlines, and they are normally talking about the personal stuff. i think that is not that important. is the ideological stuff, the ideas he has proposed in the past, the association's on health care, global warming, and these particular events, because he had attacked fannie and freddie relentlessly. and now we learn that he had a monetary association. it doesn't look good. >> nina? >> newt gingrich is nothing if not glib. unfortunately, there are facts that contradict the things he says. when you say you did not lobby, that becomes a technical trick, because you offer strategic advice and not paid mammoth amounts of money -- got paid mammoth amounts of money. and the strategic advice was

access to people he was formerly speaker for and to do the deal is you want to do. it becomes a distinction without a difference. >> mark? >> newt gingrich, according to newt gingrich, told a freddie mac while he was being paid $25,000 to $30,000 a month, that their business model was insane. nobody at freddie mac ever heard him say this, and at least five people say he never did say it. but this is newt gingrich, and going back to what charles' point was, this is a man who has shown incredible intellectual flexibility. he is somebody who has been on both sides of an awful lot of issues. i think that is what is going to be his undoing. >> here's a question from friday's "wall street journal." "how to politicians who are rife in washington, d.c. as a minimum of modest means the as millionairess?"

-- leave as millionaires?" question posed by sarah palin. >> while the rest of the country has been hurting, the washington area has been doing great, and a big part of that is lobbying money. congress is bought and sold legally. that is the problem. if you don't think that these congressmen are bought and sold, you are dreaming. >> taking advantage of inside information that would send somebody on wall street to prison. >> the supreme court may say that there is no corruption that justifies restrictions on campaign money, but there are going to be billions and billions of dollars spent this year. we won't know who spent it and who benefited. the kinds of scandals that you might see, like a solyndra -- we won't know who gave the money. >> but the conservative critique of all this is to say the federal government has decided

over the last 50 years it will intrude into every avenue of american life -- every business, every enterprise, ethanol to textiles. everything in life is controlled or regulated in some way. you create a state of that size and intrusiveness, of course you will have lobby and in every element of american life. the root problem here is the overextension of the federal power. if you have a government of jefferson and adams, you have a lot less lobbying because it did a lot less. >> they did not have a population of over 300 million. >> they did not, and the theory that charles e. lights over easily -- the most corrupt era of politics was at the time of 40 roosevelt took over, at time of the small government with very big business interests, including railroads and banks. where newt gingrich is really in trouble here is the fundamental hypocrisy of his position.

in 2008, he was riding in "the washington post" advice for republicans to go after democrats because of their relationship with freddie mac, demanding they return contributions from freddie mac, saying those who helped freddie mac ought to go to jail, democratic officeholders. at the same time, he is cashing checks and walking away with money. where is the consistency in this man? >> herman cain is doing well despite allegations of sexual harassment. then came into view with "the milwaukee sentinel" and questions about libya that seemed to be wilder him. he seems to think that interviews with newspapers are toxic, so this week he stiffed the manchester "union leader." it is like somebody in the college of cardinals stiffing the pope. it just isn't done. >> the manchester "union leader

" can completely break you still, i believe. i think it's still in an election year can break and it. >> -- can break a candidate. >> enormously influential paper, especially in the republican primary. its imprimatur or opposition can be dispositive. >> look, it is not going to make any difference. what is killing him is not the manchester "union leader." it is that he is in it over his head and is winging it and everybody can see it plain as day. he said yesterday in new hampshire in dismissing the importance of knowing anything about other countries that what the country needs is "a leader, not our reader." that is a hell of a slogan to run for the presidency on.

>> romney is going to win because he is the only one who is not a comic figure in all of this. this is kind of extraordinary, that in the race for that nomination for the gop, there is only one guy who is not a laughing stock by definition. >> we have gotten lazy over the last couple of decades. >> can you believe that? that is what the president thinks is wrong with america? that is pathetic. >> mitt romney it has picked up on this, too, saying he does not think the president understands america. what the president said was, but what we have gotten a little bit lazy will last couple of decades. we not out there hungry, selling america, trying to bring business into america." will this fly, mark? >> it will in the republican primaries. it was a bad choice of words by the president did you could make the case that his argument was

valid. with iraq. a- with rick perry, is life preserver. he will anything at this point, and the other day he said john maynard keynes did not know anything about economics. >> i think obama made that lazy statement on the golf course in hawaii. i will have to check. it is like anything in campaigns. if it is an isolated incident, is nothing, but it reinforces a stereotype -- this is a president who said america is now soft, america lacks the imagination and ambition that builds the golden gate bridge as an example, he is a man who said, as we know famously in 2008, that people in flyover country cling to guns, god, and bigotry as a way to overcome the bitterness over economic circumstances.

that is why it resonates, as a man who does not understand or has contempt in many ways for his own people. >> that was not even a comment about people. it is about a country taking for granted that people would want to bring businesses here, and that we should do a better job -- you talk to any business person, and they will tell you there are all kinds of barriers. >> a country consists of people. >> romney runs against obama, gingrich runs against obama and the news media, which is not a bad tactics. what do you think, evan? >> the only way romney is going to win, because he's basically not all that appealing a person, is by making obama seem less appealing. it is going to be a dirty, nasty campaign. >> no, i think he runs on the record. he says we have a 9%

unemployment, i am a reasonable, i ran a state, i ran at the olympics, i ran a business, i can do this. he is not going to run a campaign against a persona. obama is going to attack romney on the personal stuff and you can be sure that. >> romney as the electability problem and one way to deal with that is to make obama seem like a cold fish. >> charles has distilled the romney strategy, which is a replication of the 1988 massachusetts governor,, b confidence over ideology. >> but in 1988 he ran in a boom time. >> there was a hearing on the hill, five hours. steven chu, secretary of energy, was in the hot seat over solyndra. 53 $5 million -- $535 million

loan guarantee. republicans said they acted illegally by guaranteeing that investors would get a break before taxpayers. >> it doesn't look good when half a billion dollars goes down the drain. on the other hand, this program, which was originally with the bush administration and solyndra was originally ok'd by the bush administration, actually allocate $10 billion for losses, because it was supposed to be as seed money program it it was endorsed by every republican and democratic member of the house committee which originally. approved it -- which originally approved it. many people think it is a good idea, many people don't come up that there is nothing illegal that went on here, or even very political, except that somebody wanted the layoffs delay. >> what about the timing of the layoffs? >> oh, yeah,. except. >> -- except for that. >> they should not have done

that, but there is nothing political about the awarding of the contract. >> it shows the problem with government picking winners and losers. >> china has invested $334 billion so far in clean energy. where are we on this? >> that is picking winners and losers. are you going to compete with china? if you wait for the private sector to do it, china will on everything. >> if china wants to bond an industry where every product it makes loses money, it can have it. america wants an industry which is productive. the way to spend better money is on the basic research, like nih, that nobody -- wj[unintelligible] if you try to do it in industry to transfer money into the market, that ought to be done by venture capitalists and

not government. >> the notion that we fear china is mistaken, the notion that we are looking to exclude china is mistaken. >> nevertheless, a nine-nation pacific traded deal excludes china. the president announced he is sending 2500 marines and perhaps dozens of aircraft to australia. >> this is good news. this is a president -- i have problems with his other policies elsewhere in the world, but he realizes we have an opportunity. the pacific has been an american lake since the second world war, and it is good. not just american good, but helping smaller countries in the area, opening sea lanes, allowing congress, promoting democracy. all good. the chinese are growing and is awaiting a state - -- this is a way of putting a stake -- if this is on a democratic president who is not known for aggressive is doing it, the

chinese will get the message. >> it has terrible echoes of beirut -- >> in australia? >> in terms of the transfer of troops, where there are too many to die and too few to fight. >> in darwin, australia? >> the fact is the united state as is the major player in the world. our navy, which has been much disparaged, still has more ships than the next 13 nations in the world. he is a statement of reality of the united states' involvement and engagement in the pacific, and it is a trade initiative that charles has saluted and which i endorse. >> the bigger military issue here is the navy. chinese have all of this ship-

killing missiles. our navy is a vulnerable by chinese technology. that is a problem that the pentagon has not figured out how to solve. >> nina? >> i really don't have anything to add to this. >> let me step in. i find the comparison between ,eirut, mid-1980's, and darwin australia, which last i heard has not had trouble recently, is rather a stretch. the australians are deeply in hock and also involved commercially in china, and our real is that it becomes over- involved in over dependent and will lose its freedom of action in foreign affairs. this is away at ensuring that it remains our strongest ally in the region and an extremely important ally. >> and that we have a jumping off place there, too. >> right. it is extremely small, and it

means we have a footprint and that is important. >> and we have exhausted the reality of extending american troops around the globe. perhaps we might even think about cutting back if you in japan at this point. >> no, i'm with you on that. germany i would evacuate. >> why further extension of an admittedly shrinking force? >> because china is a potential growing threat, and in germany is not under any kind of military threat whatsoever. >> the issue is not troops, is ships. >> china's deep water navy is growing. >> and the claims it makes on the waters around it are frightening all of its neighbors, who want us to step in or lease act as an evil umbrella. >> we are afraid. we are also afraid economically -- >> half a million americans in vietnam.

china was somehow not inhibited. >> the super committee deadline approaches. >> i am still optimistic, but i don't hear anything -- i am realistic as well -- that sounds big and bold. >> what should the american people take away from this? >> we should impeach grover norquist. >> that would be the grover norquist to convince republicans to sign the notnew taxes pledge. sen. reid sounds like he's a little depressed there. >> the only ray of light, as ruth marcus pointed out in "the washington post, " is that a few republicans are backing off the grover norquist pledge. a few of the super committee guys are now edging away. i never going to get a deal unless the republicans give up that pledge. >> what if they don't reach an

agreement by wednesday? >> that would be really bad. we could get sucked into the vortex of the european debt crisis, our bond ratings would be downgraded again. we see no particular way out. the republicans and the folks at the defense department would be yelling about their cuts. all people would be getti -- old people would not be getting checks on time. it would be a tax increase coming at the beginning of 2013. the bush tax cuts would go away and we would be paying the same taxes. but that is all while away. washington used to be a place where deadlines concentrated the minds. i am beginning to think they just don't. >> the federal government will be in business at least through december 16, because they passed another stopgap measure. what happens if nothing happens? >> the american people will

resolve the issue in november of next year. the republicans have a plan, the ryan plan, and will have a president who will in some way support it, with slight changes, and he will have a mandate or he won't. then we will have to revisit this. obviously, the way the government is divided, and these are real ideological distinctions, but you are wrong about the tax issue. the republicans, if you start with paul ryan, go all the way to the right, will accept a net tax revenue increase as long as there is not a net tax rate increase. you get that when you cut out loopholes. that is what tax reform is. that is the essence of it. the problem is agreeing on -- >> that does not violate the grover norquist pledge? >> it would override the norquist thing. of course it would. >> not talking about -- >> they will accept any they have proposed -- >> how does one guy gets so much

power? >> but you are mistaking it. the republicans on the committee have proposed themselves and as the rates are not increased. the wait is done is by cutting the loopholes. >> republicans really do need a declaration of independence from grover norquist. there is no doubt about it that he is calling the tune. jon kyl, retiring no. 2 man in the senate, respected member, absolutely -- >> how do you explain pat toomey? >> let me get in evan here. >> norquist's power is unbelievable, but i am with charles on this. it is tax reform did get rid of all of these loopholes, and you could bring in a whole lot of revenue -- >> nobody disagrees with that, but anybody who has seen washington for 40, 50, 60

years, and now, as you pointed out, is awash in money, who really believes that those loopholes are going to be gone, they are crazy. >> when newt gingrich was speaker of the house, he and bill clinton managed to cooperate on some things. >> what planet are you guys living on? this week, pat toomey, a club of rome republican, proposed an increase in tax revenues. if you or a republican and conservative, a cloud of -- club of rome conservative, even proposed raising revenues as long as marginal rates go down. the way he square that is closing loopholes, which is what he proposed. this is not history, it is not hypothetical, israel. > -- it is real. >> club for growth is what pat

toomey -- >> i retract that and i want to amend and extend my remarks -- >> rome was people who argue for scarcity. grover norquist argues that this was a play by the republicans. we are now paying 15% of gross domestic product in taxes. that is the lowest percentage in 60 years. 60 years ago, there was no medicare, 60 years ago there was no medicaid, 60 years ago there were no cost-of-living increases under social security. 60 years ago we did not have a $700 billion defense budget. the reality is that anybody -- no rational person believes that we can do anything about this debt without tax increases -- >> but i just said to you -- >> of a substantial nature. >> >> this week on "inside

toomey has proposed a substantial increases. >> they all have plans that increase loopholes, but they had revenue increases as well -- >> you are missing the point. yes, you have to have that, and republicans posted on that committee -- >> no, they have not. >> no! they oppose simpson-bowles -- >> portman and toomey have proposed it. tax revenues. >> insufficient revenues. what matters is revenues. the only thing -- >> if you strip away all the loopholes, which is what simpson-bowles did, you still needed to have some tax increases. >> exactly right. >> you cannot do it just by getting rid of loopholes. >> i have rarely encountered such thickness. i told you eight times that

these two were all the kids have proposed it, and you're telling me we have to have x -- for revenues -- to double republicans proposed it, you telling me not to have extra revenues. -- we have to have extra revenues. >> $300 billion over 10 years is what pat toomey is proposing in his loophole-closing initiative. that is $30 billion a year. we're talking about four trillion dollars over 10 years if we are going to make a dent in this. even with the sequestered now, that is the amount that will come in to be cut if there is no agreement. >> let me say this in closing -- i wish to the super committee could agree on things the way we do here. see you next week.