>> 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. i think pain, lots of pain. >> is not the way to do it. >> the british are talking austerity and look what happened in london. the president gets pushed around on trade prepa. >> known agent should think the path to austerity is through exports with the united states.

>> 4021 of our troops now gone. how heavily does that weigh on you? >> well, it weighs heavily. >> uncle sam's new plan to scare people from cigarettes. captioned by the national captioning institute --www.ncicap.org-- the cochairs of the deficit commission offered harsh medicine for dealing with the nation's nearly $14 trillion debt. each american citizen shares that debt by $44,000, each taxpayer, over 140 for the smallest, and the national debt clock is ticking. some of the proposals include cuts in social security payments, changing 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 says that the plan is simply unacceptable. colby, what will it take for democrats to get on board? >> facing up to reality, that it is not a partisan issue at all. dealing with the facts that are out there. the job of laying the issue before the american people, similar to the way they did with the obama health plan, talking about the cost of it. we cannot ignore this problem. this is a serious crisis we are facing. >> nina, will any of its see the light of day? >> well, not anytime soon, because it is not just republicans and democrats that go on to face reality. republicans think they can cut spending, democrats think they can tax the way out of it. neither is true bu.

but also, we, the public, want something for nothing. the reckoning is coming. i don't think it is coming quite as you have suggested, but it is coming. >> charles, republicans have been complaining about getting ever since obama took office. isn't this a good opportunity for them? >> it is, and they don't want to pots because if they do, democrats will demagogue them for any cuts they approve of. this obviously has to be done, like the base closing commission. you have to empower a committee to make recommendations,, and then the congress has one choice, yes or no, no amendments. 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 it in detail, is exactly the right way to start the

debate that will take probably half a decade to conclude. >> margaret, will the congress touched any of the third real stuff -- social security, for example? >> i think they will touch means testing, because as warren buffett says, he should not get a social security check the fairness of these cuts and tax cuts passed to be dealt with. some of these proposals her to the 69-year-old -- listen, a blue-chip corporate lawyer, all of us, we can work until 69. my irish grandmother is working in a hotel changing beds and she cannot work until she is 69. income tax or the tax cuts should put another $40 trillion hole in the tub is it with tax cuts for the wealthy? let us put all of this together and make it fair. >> let's listen to erskine bowles, co-chair of the deficit who was 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 this, we cannot cut our way out of it. every single member of congress knows that the path we on today is unsustainable, and if we don't bring these deficits down and eventually get to balance, we are headed for disaster. >> there are 12 members of congress on this 15-member commission, charles. >> listen, there's no way the commission is going to approve this spirit that is what the chairman spoke out in advance -- that is why the chairman spoke out in advance, because anything they are recommending will not get a majority of the commission. margaret is talking about her grandmother not being able to work until 69. margaret, this is not like your grandmother. it does not apply to anybody in kindergarten or above. it kicks in in 2075, meaning the only people it is going to

affect ouare pre-kindergarten. it is their option to work until 69 or you get nothing, because it will not exist in 275. -- 275. >> but those doing labor as opposed the cushy jobs we have -- >> if we had indexed the retirement age to life expectancy, it would be the 70's now. the idea was to support you in old age. we're not retiring and old age yet. it is not even close. 1/3 of your life is receiving the funds of unpaid taxes, and that is completely understandable. > -- unsustainable. >> hence the problem with this issue. one small piece of this got into a discussion between the two view of whether this is fair or accurate -- two of you of

whether this is fair or accurate. there is a whole popery of major issues that have to be tackled, and how do we get these on the table, how do we get to a point where decision makers step up to them? if they cannot clear the commission, how do we get to the point -- >> you know, i'm really struck by what is going on in europe, even pries -- greece, the first place where the rubber met the road. there are 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 england or france -- but they actually stand 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. what is going to happen there? >> i think they will come even though it is a republican congress. this call to citizenship, what has happened in other countries, can only happen if 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, after looked after before you take away the mortgage deduction. >> there is a new bloomberg poll that says that investors around the world believe barack obama is bad for the bottom line. 60% of u.s. investors believe he is bad for business, even though the standard and poor's index has risen since he took office and corporate profits are back to pre-deceptio -- pre- recession levels. >> goldman sachs bankers that the biggest bonus this year

since their inception. i just don't understand how these people can complain. the money obama spent had to be spent in an

>> 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, and his belief that china ought to artificially lower the currency to keep exports cheaper the chinese accuse us of manipulating currency. colbert king, the four banker, will now explain all this at a language began -- the former banker, will now explain all this in language we can

understand. >> it is true on both sides. they're keeping the currency lower said that they consult on the world, we're doing the same thing, and we will have its currency more. >> the result of which will be what? >> you will get us to a dangerous place, much like smoot-hawley did during the depression. but by now this is a beggar thy neighbor policy we are pursuing. >> but this is chutzpah for the chinese is it that you are to ring with policy. >> -- to say that you are tinkering with currency. >> what do they do with the money they earn? they are investing it, and until you can find a way to force them out of that, there will continue to do it.

>> i am not saying they should not have a lot of trade. i'm saying that you should try to have it on an equal playing field. obama has finally force them, i think, to have this conversation. >> manipulator cure myself, and now we are trying to have parity in manipulation. but as of this bernanke trick works. -- let's hope his bernanke trip were spre -- works. it is such that sarah palin was practically speaking of foreign- language this week on prime pumping and what it might do domestically. >> the president had two jobs is going to the summit. number one was to finalize a free-trade agreement with south korea. that was a catastrophe. you don't go to a meeting with a head of state without it wired in advance and he came out empty-handed. the bush administration negotiated a treaty that was already in place, but of course, obama always wants to reinvent

the world and he got nothing. secondly, he wanted to rally of the countries in support of persuading the chinese, are pushing them, into currency parity. but you don't do that if three weeks earlier your central bank had essentially devalued the american dollar. it does not give you any ammunition. who attacked us? the brazilians and europeans and the germans and others, who are going to be heard by our actions, as they have been by the chinese. if your intent is to go into the g-20 and rally our allies, you don't do it a month after you devalue the dollar. it ended up that he had a really hard time in korea, two black of successes in a row -- lack of successes in a row -- >> i agree with charles about korea. i think it was a disaster, and he should not even have gone to

the discussion without it already done. but i disagree with you that it was an ego trip, obama's park that kept this going. when bush presented this to a democratic congress, they did not want it because the domestic auto industry and labor unions. but obama, not because of ego, but because of politics, tried to get more. >> margaret wanted to talk about india. >> and the end result was the same. he failed, when he should not have failed, and he set himself up for failure. >> i agree. you don't want to lose face in korea. charles, even you must appreciate at the warming of relations with india. the india trip was a great thing, and that is one that passed forward.

>> so you read my column where i praise 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 we probably should not have gone into a meeting where there was not going to be a deal, but the deal that the bush administration negotiated, i don't think that is feasible and

>> we had to view saddam hussein differently after 9/11. when you saw the threat, you could not let it fully materialize, and the threat he represented as a sworn enemy of the united states was to give weapons of mass destruction to

an enemy that had just attacked us. 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. >>, 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 we never got weapons of mass destruction in iraq. >> and they did not fight al qaeda, either. whatever you want to say about saddam hussein, horrible person, he was a counterbalance to iran and he did not attack us then. the extraordinary thing about this book and a tony blair book, both men and blamed the intelligence community for misleading them about the presence of mass destruction, and yet both say they cannot 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 my reasons anyway and was ok," that does not really fly. >> there were reporters from knight-ridder who were riding regularly that there were no weapons. charles? >> the interesting thing about that tortillas doing is that it reminds us why the country -- the tour he is doing is that it reminds us why the country originally liked him. is the, when the war went south and my dad, opposition to the policy transmitted into intense, widespread hatred of the man and accusations. you see how affable and he said 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 with the eight years, and bush was a yard away and held his tongue. he is not interested in re-

entering the arena. this is an accidental president, not a guy who hundred from a young age like obama or clinton to be the leader but he was the son of a president who ended up in the presidency. he likes to come out of the limelight again and he will as soon as the book tour is over. he is a decent guy, and part of the rehabilitation of him, which i think history is going to do, is the appreciation of how decent a person he is and how that was not overlooked but sort of misunderstood deep into his presidency when the policies went south. >> you think history will rehabilitate him, margaret? >> i agree with charles that he is 8 gracious ex-president, but it does not make him a good president and his legacy is killing us. i read the book, and it is not that the decisions were made well, but made quickly. he prides himself on this. he did not decide quickly in katrina and that is one of his few criticisms of himself.

when mentioning waterboarding, he says, "damn right." why? his lawyers told them. and how'd you square this sickening feel about not finding weapons of mass destruction no regrets about going to war? >> i had a different feeling reading about george bush, that he did what the presidency early -- want the presidency early. a very pointed moment on the day of his inauguration where he goes into the oval office and his father joins them, having taken a bath and comes into the room, and george bush, sr., walks in and says, "mr. president," and bush comes from behind a desk and says, "mr. president," and they embrace. that's a lot about what it meant to him to get there.

the other thing i got out of this was the relationship between him and his father. it was somewhat distant because the relationship was really between george bush and his mother, the fact he drove her when she had a miscarriage, to the hospital. >> i always thought he would end up like harry truman, who left office with the lowest approval, reviled and humiliated. 40 years later, he was rehabilitated by the david mcculloh book, and is considered one of the greatest presidents of the century, because truman left in the middle of a war that was a grinding and losing more, at least a stalemate, and i think history will decide. it depends on how iraq turns out. if it becomes, like korea, a democracy that is an example to the region, history will judge bush the way a judge is harry truman. >> remember pollster peter

hart's question, which rather have a beer with

>> for the first time ever, they will say that tobacco products are addictive, and they will say in the bluntest terms that tobacco can t kill. >> if you did not know that cigarette smoke is bad for you, the federal government will have more the point home by notifying you on the packet that it is addictive. 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 42% -- has cut the rate of smoking from 42% to 21%, in half.

it is one of the great successes of human health, and the amount of suffering it has reduced is great. the prestige of the anti-smoking campaign spread over two things like obesity, eating, how you sneeze on your sleeve and your hand, and i object to that. but on smoking, i am a hard- liner. i would abolish it if you could. >> i would, too. we all know people who have died from lung cancer because of this. my kids stopped me 40 years ago by pointing to 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 am so happy that government gets a good name for something in charles' world. maybe this will take it to 10%. you have to be reminded how disgusting and horrible way you die is. that is what these new pictures will do the more the better. i'd love it when they bring out the doctor's smoking 50 years ago, "camels are preferred by 60% of doctors." so long ago. >> l