>> this is "the chris matthews show." >> ask not what your country can do for you. >> tear down this wall. >> the time for change has come. chris: unemployment is rising like a skyscraper. soon the entire country could be beneath its shadow. with government debt rising even faster, what can president obama do? and even if he wins on health care, will he have the political help to get another job stimulus? the candidate barack obama talked of limiting any new tax burden to the better off.

but can he really stanch the bleeding of deficits and debt and still keep his promise not to add taxes to the struggling class? finally,he gift of fear. will the specter of losing their seats in next year's elections for congress keep democrats from sticking their necks out for obama? but could it also give his party the fighting edge to play it smart? i'm chris matthews. welcome to the show. trh regan covers wall street for cnbc and nbc news. richard stengel is the editor of "time" magazine. kathleen parker is a "washington post" columnist. and andrew ross sorkin covers wall street. for "the new york times." first up, right now, maybe all about getting health care passed but what happens next? number one, unemployment will stay very high for quite a while. number two, that means there may be a move for a second stimulus. and more federal spending to fund jobs. number three, taxes may go up to pay for all of this. but can president obama get more, especially after he's pushed health care through? he may have exhausted his

political capital at a crucial time when he needs the second wind. a "washington post," abc news poll, obama has lost huge ground. in february obama was trusted to handle the economy by a big margin over republicans. 61-26. but now that number is much closer. 48-37. trish, i look at the high unemployment rate and it's coming out next week with more bad news probably. now is he going to deal with that big fact in front of him? double digit unemployment. as far as the eye can see. >> well, unfortunately there's not a whole lot he can do right now. the reality is we're coming out of the recession. but you're going to have an unemployment rate that's going to linger and linger. something that could potentially last years. so it's going to be challenging for him because there's not a ton politically that can be done. he can sort of talk up the good side which is the fact that this pace of job loss is slowing. but the reality is we're still losing hundreds of thousands of jobs every month. chris: and this isn't just a p.r. problem. this is a reality in american

life. you've had in your cover of "time" a big store about jobs that are going or ain't coming back. >> right. one of the things we talked about is whether high unemployment is secular or cyclical, temporary or permanent. our writer talked about the fact that 9-11, i.e., an unemployment rate of 9-11 could be spame's 9-11 -- could be obama's 9-11. every lost job is a rock thrown in a pond and circulates and affects all other people. that's the problem heas and so difficult to unwind. chris: we had this high unemployment rate. people have a fairly fresh memory of it being around 5% last year. there was not only is it getting high and staying high, but we have a pretty clear memory it wasn't all like this. we don't like that. >> it ain't ever going to be like that again. i really believe that we are going to live with a high unemployment rate and we'll have to figure it out. i always ask economists, why should any big economy actually have a low unemployment rate? i mean, what is it about the nature of the economy that does that? and there really is no answer. when we're moving into this new

age, green jobs, things like that, they're not going to take the place of the old manufacturing jobs. chris: the times and the journal, ty say wait a minute, this news like bernanke said recession over, and they look at the unemployment rate coming out again next week up around 10%. what's the disconnect? >> the pare docks is the economy is going to get better. i think it will continue to get better and the number will go up and probably go up like this for the next 12 or 24 months. chris: jobless number. >> jobless number will keep going up and the economy will seem like it's going up. the question, though, how long is that sustainable? and i think you might see the economy get better over the next 12 months. but at some point, something's got to give. i actually don't agree that we can remain in a high jobless rate and the economy will maintain. you look, there are pockets of this country, michigan, for example, number 17 plus percent. and that's -- you have to get manufacturing jobs and we're still not manufacturing. chris: here's the question, kathleen, for years, president

faced high unemployment, ok, i'll cut taxes big. ok, i'll spend more money. but with the deficit already $2 trillion this year, and a debt heading up to $13 trillion, this guy can't exactly start shoveling money out the door. >> the truth is we haven't given the stimulus plan, the first stem luss plan still hasn't fully taken effect. and i ink there's a chance for some of those numbers to shift in a positive way. and republicans are a little worried about it. that by next summer, unemployment may not be quite so drastic. and just in time for the mid-term elections. the democrats will benefit from some of the programs picking up steam, jobs coming back. chris: do you buy that, that jobs created by this big stimulus package and the $2 trillion deficit that the government is running can that offset the secular decline in jobs we're talking about here? >> there's two schools of thought on this. one is that we are looking at a double dip recession. you don't have a consumer base that can really sustain a recovery because people don't have jobs. and so they're not going to buy the products that businesses

are producing. chris: when is that going to happen, the second dip? >> that second dip, the expectation is sometime in the next year and a half. that you could see that. but on the other side, what kathleen is saying is you do have stimulus money that still hasn't reached the full economy. and once that kicks in, it's hopefully you have businesses buying from each other. because inventories are so low. and maybe all of that compounds to help the economy. chris: the president is going to keep unemployment down as much as he can and stop the spiking in unemployment and with the big deficit and very little he can do about it, but one thing i wonder if he will do, we will ask you about this, will he do what he said during the campaign? i'm going to get rid of that tax cut tonight rich? the bush tax cut, would he actual do that? >> i think he has to. he has to do something that pleases democratic base and what he's done on health care hasn't actually pleased the democratic base. get rid of the bush tax cuts is an easy thing to do. he'll aim nature the people who are already -- he'll alienate the people who are already alienated. chris: won't people go crazy,

tax increases? >> if the unemployment number looks better, he may do the tax cuts. chris: really? >> but if things don't -- chris: you moon tax increases? >> tax increases. but if he doesn't, if those numbers don't get better, he's not going to be in a position coming into the next election. >> what happens to his base? the constituents that are expecting and anticipating that he will raise taxes on the wealthy? that will make them -- chris: who are these people who go out and vote so that the president will raise taxes on rich people? do they vote in mid-term elections these people? >> the number of people making more than $250,000 in this country is very small. so your base, most of the voters out there don't belong in there. chris: they feel better because the rich are getting hit. >> yeah, hey, you're feeling my pain, too. chris: that's the way to say it. i like the way you say that. >> the health care plan doesn't have anything to do with it. if health care goes through in the form of the balk us bill and there is -- baucus bill and there is a tax on increase that pays for health care, then he

can say look, i didn't raise your taxes on health care and now we're going to start reducing the deficit by taxing the rich $250,000 and over. chris: a high unemployment number that may survive a long time and may be offset by the stimulus monday as it keeps being spent. and one final question on this front. given the debt level, given the tax situation, will the president do anything like a big stimulus bill again? >> i'm not sure. but i could see tax rebates. i think when you talk about michigan 17%, you have to get investment going and act like a republican. chris: richard, anything out there about a big jobs bill? >> here's the thing. after health care he needs a new narrative. he needs a new story and the one way he gets that is by going to the energy bill. which he regards also as a stimulus plan. the same way he does health care. chris: the one that passed the house? >> the one that patched the house. chris: and can create green jobs enough -- >> and gives him a new story. chris: -- >> he needs to give a tax rebate and go shopping. chris: we have to get people to stop saving their money.

here's something, could he go right, trish? and do something the bess community will like -- the business community will like? >> i would be surprised if he does that. chris: investment tax credit. republicans, i'll give a big incentive for more investment. >> i would be surprised if he would do that because he hasn't really shown that indication. he hasn't really shown any kind of fiscal conserving tism. but many economists believe that's what's needed. chris: republicans will always say that. you act like it's a brand new idea. you ask a business person what do you want, they say they want a tax cut. >> how can we afford it? that's the other question with the deficit. chris: go right? >> he might have to do that because when you talk about jobs and making stuff in this country, we are not doing by the way, the only way to get it going again. chris: we put it to the matthews meter. 12 of our regulars, first, will president obama propose a new stimulus package? this is a dead idea. eight say no, four say it will. so he's going to give that 2-1 ain't going to happen. and then will president obama propose income tax increases?

this surprised me. 6-6. kathleen, you're with the meter and said no to any new taxes. but yes to a stimulus. you're in the minority. no new taxes. you think that's a good bet. new tacks. >> no new income taxes. i'll stick with that. chris: everybody agree? >> until the second term. chris: everybody agree? >> i don't know how you can pay for the whole pie without raising taxes. chris: anybody else say raise taxes? >> after the election. >> after the mid-term election. chris: let's go around with this big question here. let's bring it back to this question of the health care bill. which is certainly hasn't passed yet and may not pass. but if it gets through, he gets through something that's substantively important, the democrats have a signing ceremony, will it help the market and people say it shows this guy can govern? >> it won't help the markets. because people worry that he's being fiscally irresponsible. that this is the wrong time to be spending so much money on such a big program. chris: don't believe it's deficit neutral? >> no, because it's not.

>> first obama was dr. fix the economy. then he was dr. fix health care. if he does both, the markets will go up. chris: ok. >> i agree with trish. >> going down, trish is 100% right. chris: brutal. in other words, if he has that signing ceremony, waving the pen, he's passing it around because nobody believes it. >> nobody believes that it is deficit neutral. chris: before we break, president obama's gotten huge noise from the left and right during the nine months he's been in office. but there's one group that's sort of been tongue-tied to late night comics. obama's predecessors, bush and clinton, were godsends for late neat but as jay leno said making fun of obama is a challenge. >> barack obama is not easy to do jokes about. he doesn't give you a lot to go on. this is why god gave us joe biden. [laughter] chris: but along with obama's drop in the polls, he's looking more vulnerable to the comics. most of them are lefties of course and so they're starting to see -- starting to see them zing obama for being too

cautious. too prudent. here's dana carvey on "the tonight show." >> i'm worried about, you know, that the economy kind of had a heart attack but barack still wants to work on the knee. "we are going to fix ts knee." should we do c.p.r.? we can do c.p.r. when it's efficient and cost effective. but right now, we're going to work on the meniscus. chris: that's really good. and as for john stewart he's looking back, not so fondly at the way obama's handled health care strategy. >> i'm confident that both the house and the senate are going to produce a bill before the august recess. >> before the august recess? you are adorable. the simple naivete of a new president as pure as the driven snow. this president is grabbing the reins of the debate, to focus it, and let's remember how he was received. >> the reforms i'mroposing

would not apply to those who are here illegally. >> oh, no you didn't. [laughter] >> how do you not have a snapback? they've been yelling for months. chris: bill mahr's advice, don't get civility. >> stand up for the 70% of americans who aren't crazy. [applause] chris: i love bill mahr. if even the comics are finding obama's soft underbelly is it no surprise the democrats in congress are getting scared? is barack obama putting their seats in jeopardy? could democrats lose control of the house next year? scoops and predictions out of the notebooks of these top reporters. we'll be right back.

chris: welcome back. it's not been a year since obama's electoral sweep last november and already forecasts are out there that many of the democrats who came in with him are in trouble. with all -- over jobs, spending and health care. in the first mid-term election of ronald reagan republicans lost 26 house seats. the first mid term of bill clinton's term the newt gingrich contract with america year, clinton's democrats lost a whopping 52 seats. well, here's bryant gumbel opening "the today show" with the morning after report. >> and good morning. welcome to today on this wednesday morning. the morning after an election that brought us atunning amount of republican wins. the extent of g.o.p. rout was overwhelming. in winning control the republicans gained eight senate seats, a whopping 47 seats in the house, and governorships in seven of the nation's eight largest states. all this just two years after voters gave democrats the white house and majorities in both chambers of congress. chris: what's it going to be like after next november when the democrats have to pay the

piper for high unemployment, for -- anger you've expressed in the last section about the health care bill and all the kinds of problems? >> history would tell you that there are big losses but there are two things that obama has going on. one, his chief of staff, rahm emanuel, is a man of the house. he's a pragmatist about getting house members elected. and a conservative district, he puts a conservative in there. the other thing is that obama has to understand that he -- his message has to change. he has to give something positive for democrats. and the republicans have been reflexibly saying no a don't have policy. chris: charlie cook talking about them losing 20 to 30 seats, could the democrats get the whack on the side of the head people don't say they like the republicans, they don't do anything, either. but they want to whack the democrats. >> i think they are definitely going to lose some seats. they're not going to lose the house but lose quite a few. chris: are you sure of that? >> i'm pretty sure of that. the problem is the house democrats are concerned because

they walked the plank for nancy pelosi with cap and trade and have to go with health care, people are raising kane about it and they're in a terrible bind and want to be team players so i think you'll see a lot of fallout come midterm. chris: i'm thinking about the way they vote for health care before the end of the year is over and every house democrat, he or she, i put my yea on this. i'm a target. >> it's an unpopular program. and a lot of voters are going to say wait a second, we still got that high unemployment rate, why are you focusing on spending more money? they're concerned about the deficit. and so there's a feeling perhaps around some voters or among some voters, that their politicians are not doing what they want. president obama really needs to make this health care program more popular. chris: do -- why do i agree that you aren't focused on what i'm focused on? i'm worried about my kid not getting a job. >> this is all about am i richer or poorer? everybody remembers how rich they were, i don't know how

rich they were but only a year or two ago. and unless obama can get -- and the democrats can get us back to that place next summer, i think it's going to be a tough road. chris: so the republicans will promise to get it back for you? >> absolutely. >> never a constituency for health care. when you have 85% of americans who are pretty satisfied with their policy, their insuran coverage and their health care, where was this constituency that we have to overhaul the system? it never was there. chris: i see trouble forhe democrats. will the democrats lose control ofhe house? it will take a 38-seat loss. >> i think they could take a very heavy loss. yorn they'll lose complete -- i don't know they'll lose complete control but a heavy loss. >> they won't lose control but lose seats. >> mid 30's. it will be close. chris: i agree. i think they will lose effective control. when we come back, scoops and predictions out of the notebooks

chris: welcome back. trish, tell me something i don't know. >> this recent trade spat with china over tire imports has some economic historians worried that history could be peating itself.

go back to 1930 and the smute hally tariffs. -- smoot hawley tritches. it put a tariff on goods coming into this country and why we saw the depression last longer. chris: so the trade walls are going up? >> trade walls are going up and that's a big concern. china is a biggie for us. chris: lend us all the money. rick stengel. >> by the end of the year you are going to see a plethora of e-readers, four color, that people will have in front of them and paying for great content on it. chris: kindle. kathleen. >> if health care is still twisting in the wind come november, which it seems likely, two gubernatorial races , new jersey and virginia, could go to republicans and change the -- chris: i think they're already going republican. why are those two states going republican? >> corzine, unpopular enough to be seriously challenged. and in virginia, well, they're

just -- i think there's still support for somebody -- for change, a change agent. chris: you write for "the washington post." they have said there will be a slashover over the potomac and that will hurt them. >> i'm not sure that's true. >> democrats will actually get a boost this fall by going after wall street finally. i think you'll see barney frank and christopher dodd go after financial reform. chris: stop taking money from them? >> i don't think they're going to stop taking money from them. chris: that's the question. >> they will get a little bit of populist rage behind them and maybe helpful given all the other debates going on. chris: i love the sound of that. when we come back, the big question, what's the biggest threat right now? is it higher unemployment to come or inflation? good question. we'll be right back.

chris: welcome back. for the big question of the week, the biggest threat for the country, higher unemployment or inflation? trish. >> unemployment in the here and now, inflation down the road. because at some point we're going to have to make countries like china which are buying all of our treasury bonds happy. that means a higher interest rate. chris: when is inflation the number one concern of the country? >> a few years out. chris: --

>> inflation is a republican problem. unemployment is a big problem for barack obama. he's not going to be worried about inflation. people are worried about inflation when there's full unemployment, not when there's low employment. chris: different answers. >> and slightly different now. i would say th the biggest problem is for barack obama is the deficit. he's got to get the fiscal house in order. chris: who has ever lost an election over the deficit? >> nothing like this has ever happened before, has it? chris: i remember reagan saying it was big enough -- dick cheney saying it doesn't matter. i keep hearing this from republicannings. >> i'm going off menu and saying the deficit because i think you're going to see the republicans go perot style and start using the deficit to really make their case come next year. chris: it's the deficit. >> because the deficit is going to hit those other issues. >> inflation. chris: thanks for a great roundtable. trish regan, richard stengel, kathleen parker and andrew ross sorkin. that's the show. thanks nor watching. -- for watching. see you here next week.