and our future. and if there were ever a time to stick with what works, now is it. the future has always been our business. and the future begins now. this sunday, the pollticks of the economy, at home and abroad. the president is dealt a setback at the econoc sum knit asia over trade and a rebuke of his approach to economic recovery. at home, the debate over t bush era tax cuts and the co-chairs 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 guests this morning, the president's senioradviser, david axelrod, his first sunday interview since the democratic losses at 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 jobs, the future of the economy, whether washington will take meaningful action on the debt. with us, 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 bhany mcclaine and former congressman, crisis, journalist bhany mcclaine and former congressman, democrat, harold ford. captions paid for by nbc-universal television 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 bits, as a lame duck session of congress begins tomorrow.

joining me now from chicago this morning, the president's senior adviser, david axelrod. mr. axelrod, welcome ba. >> 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, headlines like from the "new york times" on friday, obama's economic rerejected on world stage. china, britain, germany fights with the u.s. u.s. rebuffed at divided summit. after an election day setback has the predent lost his ability to forge international consensus on the world stage? >> not at all, david, if you had more time, i'm sure you would 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 world and we want to compete for those jobs and that's why went. his first stop informs 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. we went on and forced the agenda at the g-20 to focus on this issue of trade imbalances,hich is an important thing. it is obviously going tonight case that countries are going to pursue their national interest. germany is a great exporter, that is the core of their economy, they don't want greater competition from us. china, we note same -- so there are going to be -- there is going to be tug and pull in these. the point is you have the president of the united states out there fighting for american jobs. korea, we want a tradeagreement 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 a industry, wasn't good enough for american beef. want to keep on negotiating, that is what we are going to do we are going to make the best deal for the american worker and

american industry. let's talk about another hot topic, the sue of the bush era tax cuts, ck and forth involving you this week, whas going to happen here, whether they will be extended. i want to go back to december of 2008, you were on this program and you were unequivocal about the president's position. take a look. >> will you hold off on any tax increases? >> well, the question is on the bush tax cut for the very wealthiest americans and something we plainly can't afford moving forward and whether it expires or whether we repeal it a little bit early we will determine later, but it is going to go it has to go. it has to go the new political real knit washington, has the president changed his view? >> no the president still believes we have to mo forward on these tax cuts for the middle class. the middle class has take an beating in the last decade, seen their incos decline and borne the bankrupt of this recession. we can't afford to borrow another $700 billion to pay for

tax cuts for millionaires and billionaires. next guest, senator mccain, was very courageous in 2003, he voted against the second bush tax cu he said it was irresponsiblible to pay for -- borrow for money for tax cuts skewed to the wealthy at a time we had two wars and so many pressures. that is still the case. >> you are saying no deal, no compromise? >> well, you are asking me -- i am telling what you the president's positi is, need to move forward on the middle class tax cuts, we cannot afford a permanent extension of tax cuts for wealthiest americans cost $700 billion we don't have the next ten years. >> i note arguments. here is the question f the president could get anagreement on middle class tax cut exnsion would he agree to an extension, at least temporary for the tax cuts on the upper earners? >> david, we are looking forward to sitting down with leaders in both parties and talking about those issues.

i'm not going to negotiate that here. there have been a lot of formulations thrown out the past weeks interest 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 design ready going to expire on january 1st. we want people of the certain of knowing that is not going to haen. congress ought to -- before they go on vacation, they ought to ensure people have a better vacations of their own by knowing that this matter is has been taken care of to. >> bottom line, he is to open to compromise is that fair? >> he wants to sit down and talk out this. is he open to compromise? >> no bend on the permanent extension of tax cuts for the wealth ye americans. >> to en 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 he endured a

shellacking, his word. what is the course correction for this president he's moves forward? >> i think that fundamentally what drove electorate were two things. one is that while we he a recovery, ten straight months of job growth after a horrendous downturn it hasn't been fast enou, 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 a the primary message that we heard in that election. the second is they want us to work together to doit. many instances we had to move as one party in congress, virtually as one party, the other party decided they did not want to participate as a strategy. now, i think the country is sang to both republicans and democrats, forget about the politics for a while, sit down, work together, solve these problems, get this economy moving at a faster pace, that is what we intend to do. >> i'm not hearing from you so far this morning where the president is prepared to give

and change this dynamic. i'm hearing on the issue of tax, issue of what happened in the election, plenty of fight. i'm sure your supporters are happy to hear that. i'm what wondering ho does the president course correct, chan the dynamic to get something done? >> here is the thing, david. that is more important in a conversation between the president and members of both parties th me talking to you here we proposed a permanent tax cut for research and development that would get the economy moving. there are other ideas. these are ideas that republicans have traditionally supported. we ought to sit down and work on these things together and get these things done so the econy grows at a faster pace. >> let me ask you about the debt

commission, the president's debt commission, the chairman came out earlier than they had planned d put forth a rather draconian document how to slash spending and deal with the deficit. the "new york times" summarize it had this way, bring viewers into it, put it on the screen. here is the bottom line if they don't get 14 commission members to agree to this, this san intelltual exercise and not a real document. can they get to 14? >> i don't know whether they can or they ca't, david. obviously they did volume nous work and not yet completed it that was the chairman's recommendation now going to vote on it the predent said he will comment on their work after they complete t that is his

commitment to them. look it underscore what is we knew the president appointed this commission, bipartisan commission because this is a huge problem. we have to deal with it and it is not going to be easy to deal with. if one side says no tax on anyone can go up, any interest any corporation, any individual and the other side says no cuts can be made, then we are not going solve it. everybody is going to have to give aittle and we have to move forward and deal with this problem together and hopefully whatever happens, this commission report will give the impetus to do that. >> the president's position is, look, everything has to be on the table, tax hikes, taking on entitlement spending, raising the retirement age for scial security. on those specifics, all those are on the tablen the president's mind? >> i'm n going to deal with specifics because that would violate the presint's commitment. i will say this. there's -- the president has shown his willingness the last two years. we took on the health care issue, one of the reasons was that our budget people said we cannot deal with the deficits we

have an inexorable climb to health care and individuals, we did that. part of the reason was economies in the medicare program, took away subsidies to shush companies the other party ran on it against us in the election. . i didn't ask you for specifics. i asked if everythg was on the table. the level of caution on this how will you expect democrats and republicans to make painful choices if you can't say publicly here today those tough issues should at lst be on the table? yet you expect republicans to come to you? >> david, david, the president inpanelled this commission, he recognized we had to take a wide-lens look at this and everything should be on the table that hasn't changed. what you want me to do is react to individual aspects of it

here, that i can't do. we nd to see what the final report is. obviously, there will be hard choices to be made. we're wiing to make them. it will take both parties together, working together to get them done. >> speaker pelosi said this draft report was unacceptable. did the president find that reaction counterproductive? reaction counterproductive? reaction counterproductive? reaction counterproductive? reaction counterproductive? >> some on the right said it was unacceptable, we can't raise taxes and others said it was unacceptable for other reasons. wait for the final report. look at it. see where we can find common ground and move forwd. this is somethinthe american people expect us to do. we have to do it. we all know this is a big, dark cloud on our horizon. and the president is very intent on moving forward. all right, before you go, two quick ones. rahm emanual, former chief of staff, now prepang to run for mayor in chicago, in your town. will the president campaign for him?

>> well, the president hasn't -- the president has madelear what his view of rahm is. he said he was an excellent chief of staff, thought he wld be an excellent mayor. whether he involves himself actively in this campaign is a matter that 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 timelineor the beginning of withdrawal, sing that, in fact, it is creating erratic behavior among hamid karzai and others in the region. is it a problem for the u.s. to announce the beginning of the end of the war? does it undercut our polic >> no. it's important that we announce the beginning of a drawdow we've always said it would be based on conditions on the ground, and that is still the case. but it's imptant 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 this beginning of the drawdown has a discipling effect in that regard. so, it's important. we set it in conjunction with our military leadership. everyone agreed that it was important and it's not going to shift. >> we'll leave it there. david axelrod in chicago this morning. thank you as always. >>ood toe with you. now senator john mccain, welcome back to "meet the press." welcome back to the country. you were, as i said, 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 would like the president to say that it's only condition based. according to mr. woodward's book, his problem is the political -- the left base of the democratic pty. you don't fight and conduct wars that way. you win, then you leave.

that's what we've done in iraq. and the fact is the perception is, amongst friendand enemies alike, that we may be leaving. and that has caused them to make certain accommodations, because they can't leave. that's jusa fact, down to the govern level, down to the police chief level. they say the taliban are telling us we're leaving a they're going to cut off our heads. famous taliban captive said to his american interrogator, you've got the watches. we've got the time. >> hamid karzai, who you met with, said in "the washington post" this morning that it's time for the u.s. to reduce the intrusiveness in daily afghan life, that they ought to get boots in the count out of the country. >> and hamid karzai is reflecting his desire to survive, also a grave paranoia. there are a few problems right now. one that isn't is the milita aspect that our marines, army, navy, air force are doing a wonderful job.

the hometown omullah omar is now under our control. so, that they've done a magnificent job under the leadership of general petraeus and others. the other side, though, is that there is 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, pakistani military intelligence, is working with and harboring hakani 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. it boils down to the isi, the pakistani leaderip, afghan leadership, india's leadership are all not convinced that the united states isoing to stay the course. >> let me talk to you about another military matter back

home and a priority of this administration, and that's whether the ban on gays and lesbians in the military is going to be rescinded. are you going to stand, you personally, 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,s i've said for years, to our litary leaders annot a study that is leaked, as we know this town -- >> seven in ten meers of the military think it would be just fine. >> you and i have not seen that study. and this study was directed at how to implement the repeal, not whether the repeal should take place or not. but very important, we have people like the commandant of the marine corps, the three other, all four chiefs are saying we need a thorough and complete study of the effects -- not how to implement aepeal, but the effects on morale and battle effectiveness. that's what i want. and once we get this study, we ed to have hearings and we

needo examine it and we need to see if it's the kind of study we wanted. it isn't in my view, because i want a study to determine the effects of the repeal on battle effectiveness and morale. what this study is designed to do is to find out how the repeal could be implemented. those are two very different aspects of this issue. >> in a lot of households, this is a subject of debate, including your own, apparently. your wife, cindy mccain, has cut an ad, a public service announcement with no hate, a gay, lesbian and transgender group, and this is aortion of it. let me play it. >> our political and religious leaders say they he 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 openly. she did clarifthis on her twittepage. you're both so active on twitter. i fully support the no hate campaignnd all it stands for and 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 thorou study and review on battle effectiveness and morale. by the way, i respect the first amendment rights of evermember of my family. >> what is interesting about this, a debate in families, there is kind of -- you talk about waiting -- there is an appeal to honor. it's not right for people to be lying who th are to protect fellow citizens. >> and you have a commandant in the marine corps who says, whose people he is directly responsible for, says this could affect our ability to win. >> do you believe that? >> i pay attention to the commandant of the marine corps. i'm paying attention to the chief of staff of the air force, the army. >> you know these people. you know the issue. do you have a sense in it 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 oreep reservation about the repeal. they're the ones who are in charge.

now, the chairman of theoint chiefs of staff, i agree. the president and secrety of defense have all come out for repeal. but i really would -- i was in an opost near kandahar. army master sergeant, appointed to iraq and ghanistan. he said senator mccain, we live, eat, sleep and fight together in close proximity. i'm concerned about the repeal. i would like to know more about it. that's the view that i got from chief petty officers and sergeants alover afghanistan. >> the ban will not be lifted in the lame duck session, is that fair to say? >> i think we should at least -- i don't think it should , because i think once the study comes out the beginning of december, we should at least have a chance to review it and maybe have hearings on it. >> i want to spend a couple of minus 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 24. i know your position on the bush tax cuts did change and you talked about that before. i wanted to play something from an interview in 2004 and ask you about it. >> i voted against the tax cuts

because of the disproptional amount 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, the marriage tax credits, all those i would keep. >> that's exactly what president obama says. >> is there a statute of limitations? the economic sittion 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 with that statement, i said we have to restrain spending, and spending was way out of contl 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 perd d only if therare corresponding spending cuts? >> ihink they should be extended until we're out of this recession. at such time, we could look at other tax hikes.

but in this serious recession, i cannot believe that raising taxes is a good thing on anybody. >> is the tax commission a nonstarter, a good starter or something else? >> i think it's a starter. if ty don't get the 14 members, as you mentioned earlier when you were talking th david axelrod, i hope this is a wake-up call to america. it gives us an idea of the breadth of this problem. but we are going to have to make significant changes. we'll have to touch the serious issues of entitlements if we're gog to dig out of the hole. >> everything should be on the table? >> everything -- >> raising the retirement age? >> everything should be on the table. if it's not, obviously, i don't think 're going to make progress. i would like to applaud alan simpson and erskine bowles. i think ericans, if you listen to this last election, the message was stop the spending, do things differently. we're worried about our children and our grandchildren and we can't keep on going like we are.

and 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 tks about you in a couple of places and he talks about your decision not have him campaign with you. and he writes this -- "i thought it looked defensive 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 of 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 to president bush. i admire and respect, and i believe i called president bush a friend, and it was just a desion we made and i hope he respects it.

>> thereas a meeting he talks about, december of '08. you suspend your campaign, called for a meeting in the white house. here is a picture of it. senator obama is there as well. you called this meeting. you didn't really add that much substantively, didn't have a question, suggesting you were unprepared for the meeting. is that fair? >> i was prepared for the meeting. i sn't prepared for the onslaught that took place from all the democrats in the room. my reason for being there was to make sure that republicans were heard, people like boehner, mitch mcconnell was the reason i was there. i didn't think i was going to make any headway with me of the democrats who were in the room. but i didn't ask for that meeting. the fact ithat 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, thanks youas always. >> thanks for having me on.

>> up next, special focus on the economy, jobs and the bt. 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," bethany mclean and former representative democrat in 1968, as whaling continued worldwide, the first recordings of humpback songs were released. public reactioled to international bans, and whale populations began to recover. at pacific le, the whale symbolizeshat is possible when people stop and think about the future. help protect your future, with pacific life. the power to help you succeed.

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speaker of the house, newt gingrich and former democratic representative harold fo jr. 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 still -- not doing too well. 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 reas is that unlike previous recoveries when, for example, we would be getting very significant pick ups in building, residential, nonresidenti nonresidential, we're not getting that today. it's a big hole in the economy. and the reason, essentially, as

far as the business sector is concerned is that business is highly uncertain about the fute in a way which i've never seen it before and a way in which the data suggts has never, in fact, been so depressed. and unless and until we can begin to lift that uncertainty, it is very difficult to see people reaching out into the longer term. let us remember, buildings are 20, 30-year investments. >> right. >> what the data show is that extremely high risk aversion in what experts call. >> newt gingrich, the president talked about a new normal in our economy. let me play a portion of the interview 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. sinesses 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 we lost. >> do you accept that? >> no. i thi we have two enormous policy challenges. first is that we're now in a world market, general be win world market were you've got to think about economics in terms of competing with china, india, germany. you ought to study germany, high-cost country with a huge export base. this administration is just wrong. the obama model of economy is fundamentally, profoundly wrong. i don't care -- i think chairman bernanke is very foolish to be $600 billion of additional money, because the fact is that the problems in this economy are

problems of fiscal policy, problems of taxation and problems of an anti-business, anti-j anti-jobs bureaucracy that this president encourages. >> harold, we're propping up the housing market. we're in this state. do you agr with that? >> in large part. 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 trajectory and growth platform, i agree with the chairman wholeheartedly. i hope the administration will call for a moratorium on egulations and cut even the corporate rate. an active role, especially in the face of inaction on the fiscal side, i think, is wrong. two, the entitlement debt. recommendations made by this deficit reduction commission have been responsible. there may be some areas we disagree with. iope the left in my party and

the right in the republican party don't scream so loud that they scare the crowd at middle. >> i want to get back to the debt commission. bethany mclean, a big part of your book deals with the financial collapse and the housing market. we don't talk about this enough. the fact that the government is proping up the housing market. prices have not come down far enough, even though there's so much pain out there and such a crisis out there. can the economy really rebound unless the housing market corrects fully? >> that's a great question. it's a really interesting thing. one of the greatronies of the financial crisis, one of the big complaints is that government's role was a factor. it was the factor. we have 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 seehat 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 a real bottom in housing

prices. but doing so will risk putting the economy into more oa -- >> alan greenspan, 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's any evidence at all, we are actually picking up some. through the month of november, industrial production is clearly improving and all evidence is t there that this is a very mild dgree of acceleration in the american economy, but not enough to get the system -- >> let's talk out the debt commission. speaker gingrich you've been on

air this week, disagreeing with some of these recommendations. they've got to get to 14. what i asked senator mccain, is this a nonstarter, starter o something in between? >> the statement by the chairman is a nonstarter because you not only have to get to 14 but you have to get through the house and senate. to frighten most americas, that's what it did. people are calling or e-mailing me about cutting social security is absurd. it's not going to happen. >don't we have t have an adult conversation with people about what the real problem is? >> look, i think somethin equivalent to what alan simpson put ou is going to be passed by thecongress. the only question is, is it before or after a bond market crisis? because there's no alternative.

>> you've got to explain a little bit more about what that means. >> here is the issue. right now, we have very low bond prices and 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 long-term interest and mortgage rates move up very sharply. if that happens, that will cause the double dip. just basically hoping we have enough sense to realize that we've got to resolve this issue before it gets forced upon us. >> on friday he writes abouthe politics here. some of the best ways to raise revenue and cut spending but it comes with no enactment strategy. in this climate, asking politici politians to end mortgage deduction and tax employer

health care plans a raise capital gains taxes and cuts benets for affluent seniors is asking tm to jump on a buzzing sack full of live grenades and they won't do it. >> people see it coming and we have to take action. if we don't take action, we'll look back when there is a bond market crisis and say why didn't we do something when we had choices? people at this table may disagree with me but it seems our budget problems are simple arithmetic. we're spending $3 for every dollar we take in. something ha to give. >> i don't see why some of these suggestions on social security are going to be demagogged to death. whyan't people 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 mixture of things. the chairman is riht in another regard. this is going to happen. we're going to have to deal with our deficit either by congressional, senate and political leaders aing or the global markets will impose a

harsher set of realities, force rates to go up and change our standing in the world. speaker gingrich is a friend. he has been not only a leader in the republican party, he has been a leader in a lot of ways in calling for a new american way, new american majority. i would hope that all the smart minds in the republican and democratic party could come together and say this is painful, but we have to do this. if we're serious about all this talk with our kids and grandkids, we're facing the -- >> the tea party movement its within the republican party, why don't you think there's me of a mandate for really tough choices on government spending? >> let me come back for a second, david. people can disagree without it being demagoguery. i helped to work with bill clinton and we balanced the budge for four straight years and paid off $4 billi in debt. it was not a trivial achievement. it can be done. it can't be done by sweeping, slashing generalizations by people w won't be affected.

the deficit commission at the rate they're going will be a step backwards. the tea party movement wants real change. they uld start and say to you what john boehner has said, the new speaker. roll back the discretionary accounts to the008 level. that's a trillion dollars over ten years. ibm and other technical companies will come in with a set of proposals to change the management of government. they believe that's another trillion dolls. at the center of health transformation, fraud in medicare and medicaid because the government is such a bad manager, that's 70 to $120 billioa year. you can do a lot of things to get back to a balanced budget without having to hurt the amican people. >> let me get a break in here. we'll come bac and talk more about this. the bush tax cuts and politics as well. economic discussion continues after this station break. of stepped altitude changes. [ air traffic controer ] okay, 245, proceed to your next cleared altitude. [ sighs ] [ male announcer ] today, truecourse flight management systems from ge

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we're back with the roundtable. harold ford, here are some of the scenes from around the world. london, you saw rioting in the street because of a hike of college tuition costs. in the past year, we remember scenes from greece. draconian cuts were intruced and there was social unrest. is that what it could come to in this country if the politicians really do try to tackle the debt? >> i hope not. i think there's a sense of who we are, what we represent and why we're important to the world. the notion of exceptionalism is hrown around and the term is thro around often. we have innovated, we've led. for us to maintain that position, changes will have to come back. the rise of the tea party movement, in some ways, is positive for this discussion. if they recognize that overspendin overtaxing are challenges to the country, the

same is true when we look back at the clinton years. he realized that as well. smart, sensible people in both partieas long as you don't allow the far left and the far right to crowd out the predominant middle, we can get a lot of this done f that means making tough oices on social security, i'm 40. i'm willing to give that up. a lot of people who are my age are willing to do the same but political leaders have to show courage and will to make that happ. >> i had no idea you were that old. speaker 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 mning. 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. imean, change on this scale is very wrenching. it's wrenching for his staff. it's wrenching for his allies. speaker pelosi becoming the minority leader will make it harder. i don't know what theresident will do. the only place i worry about in

terms of kind of riots you were showing is not americans in neral. i believe the scale of change coming to gornment 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 past 20 years. >> let me get to -- we talked about this issue before, dr. greenspan. should the tax cuts on wealthier americans be extended without corresponding spending cuts? at's going to ppen? what should happen? >> well, what's going to happen is they're going to get extended and that's very obvious with espect to what the rhetoric is. that's the easiest thing to do politically at this stage. 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 hunting? 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. it's not going to be easily reversed. as far as i'm concerned, what we're gointo have to do is to essentially look at not individual piece meal cuts or taxes. weave to look at whole projects. for example, i think paul ryan did a very important -- made a very important ctribution. >> chairman of the budget committee in the house? >> eah. you can agree or disagree with his structure. i happen to agree with mst of it. >> draconian cuts in medicare? >> yeah. we'll have to vote an up or down budget each time. all of these budgets are going to come up, are going to be compromised. you can't do it piecemeal. very fascinating question is,

how, i ask my colleagues across the table here, how does the congress deal with that sort of thing? committee chairmen and committee s that have jurisdiction for all various aspects of the budget are going to insist upon -- >> let me get bethany on the tax cut issue, whether this will move forward or only on a temporary basis. >> i have to say, i hope it does. if you look at economic history, the bush tax cuts didn't put our economy on a soundfooting. since neither one has worked, let's try some of both. my big fear is that 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 of years now, even before we had the -- >> what does that mean? >> that mean that is we're going to have this bond market crisis that dr. greenspan was talking about earlier, sooner than we may expect and i worry thatwe have less time to fix this problem and less time to get our

house in order than people seem to think. >> what happens in an indull generaindullge indullgence in an area -- if fanny mae and freddie mac, there is no more room for mortgages and the government says we have to wind these things down, what wl happen with the mortgage market? >> the private market does step up, and the case that some people argue, that freddie and fannie are crowding out the market. >> you worry about proposition up the housing market,r. greenspan? >> unless the housing market begins to move back, we'll not have any significant cuts in the unemployment rate genelly. but at the moment, housing starts are as low as they can get and replace the number of units we need. so there's a question not of the housing market going down anymore. the key question here is the

price of homes. because what we saw, fo example, in 2005, 2006, there was something like 8 million new home purchases financed by conventional coorming mortgages, which means 20% down and the like. those 8 million homes are now riht 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 critil issue is that if they tilt below where they are now, say 5% or 10%, it will create a major increase in foreclosure. >> we'll talk a little politics before we close out the program. touild a new generation of airplanes to connect the world. ♪ airplanes that fly cleaner and farther on less fuel. and make nonstop travel possible to more places.

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by tomorrow. [ male announcer ] ducati knows it's better for xerox to manage their global publications. so they can focus on building amazing bikes. with xerox, you're ready for real business. speaker gingrich, somebody made a smart point the other day and said newt gingrich will be the first to announce for presiden he will do it in january and in iowa. where are you? are you going to run? >> i'm leaning back. it's like you in the center rse race. if we do run, we'll annnce, i suspect, in late march. we're still months away from that. >> what's going into your thinking? >> can you cate a movement that 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 13,000 elected officials with only focusing on the oval office. >> do you think the president is vulnerable in 2012? >> yes. but he has an enormous opportunity to ecovery. he and the house republicans will fight over who did it, but i suspect it will be closer 8% than 10% unemployment. >> sarah palin and the tea party have created a whole new dynamic on the republican side. it is impossible to saywho has an early edge. what is the impact? >> i think that's exactly right. it's like all the races we saw this year. you will no know who the nominee is until very latein the spring of 2012, because governor palin has a role, governor huckabee has a role, governor daniels. go down the list. governor pawlenty, governor barbour. you could have 12 or 15 candidates next year and you won't know how the conversation leads t a decision until it

actually hapns. >> we'll leave it there. thank you all very much for joining us today. you can read an excerpt of "all the devils are here" from bethany mclean, and latest novel about valley forge, george washington and the cruciblof victory all on our website. we'll be back next week with an exclusive interview with governor bobby jindal, taking aim at the administration over the handling of the gulf oil spill. if it's sunday it's "meet the press." ñ;

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