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FACE THE NATION
Sunday, December 28, 2008
GUESTS: Mr. DAVID AXELROD
Obama White House Senior Advisor
Lieutenant Governor PAT QUINN
Mr. PAUL KRUGMAN
2008 Nobel Laureate in Economics
MODERATOR/PANELIST: Mr. Chip Reid ? CBS News
This is a rush transcript provided
for the information and convenience of
the press. Accuracy is not guaranteed.
In case of doubt, please check with
CHIP REID, host:
Today on FACE THE NATION: Obama senior adviser David Axelrod, Illinois Lieutenant Governor Pat Quinn and Nobel Prize-winning economist Paul Krugman.
What does President-elect Obama think of the situation in Gaza, where Israeli airstrikes killed at least 225 Palestinians? Does his new administration face a new Mideast crisis along with everything else? We'll ask his senior adviser David Axelrod.
Can Illinois legislators force Governor Rod Blagojevich out of office? And if so, how soon? We'll ask Lieutenant Governor Pat Quinn.
And how long is this devastating recession going to last and how deep will it go? We'll ask economist Paul Krugman.
Axelrod, Quinn and Krugman on FACE THE NATION.
Announcer: FACE THE NATION with CBS News chief Washington correspondent Bob Schieffer. And now, from Washington, substituting for Bob Schieffer, CBS News correspondent Chip Reid.
REID: Joining us now from Chicago, David Axelrod, senior adviser to President-elect Obama.
David, thank you for joining us.
Mr. DAVID AXELROD (Obama White House Senior Advisor): Great to be here. Thank you.
REID: Let's go with the headlines today, we've got to. The news is just really difficult in Gaza right now. Nearly 300 killed in Israeli airstrikes. The Bush administration response so far has been to blame Hamas and to urge Israel to be very careful about civilian casualties. Now, I suspect if I ask you specifically what Barack Obama would do here, you'll tell me that there's only one president at a time. So let me ask you a slightly different question, which is do you anticipate that the Obama administration will be just as supportive of Israel as the Bush administration has been?
Mr. AXELROD: Well, certainly the president-elect recognizes the special relationship between the United States and Israel. It's a--it's an important bond, an important relationship, he's going to honor it. And he wants to be a constructive force in helping to bring about the peace and security that both the Israelis and the Palestinians want and deserve. And obviously, this situation has become even more complicated in the last couple of days and weeks, as Hamas began at shelling, Israel responded. But it's something that he's committed to.
REID: But do you think he will be equally as supportive of Israel as the Bush administration?
Mr. AXELROD: I think he--I think--as I said, I think he recognizes that special relationship. He's going to work closely with the Israelis. They're a great ally of ours, the most important ally in the region. And we're--that is a fundamental principle from which he'll work. But he will do so in a way that will promote the cause of peace and work closely with Israelis and Palestinians on that--toward that objective.
REID: There are tanks massing on the border, Israeli tanks on the Gaza border as we speak, and they are calling up 6,500 reserve soldiers for a possible land invasion. Would that change things? Because then it becomes an Obama administration problem. Obviously, if they go into Gaza with a land invasion, that is something that's going to take some time. Would that change things, and change how an Obama administration views Israel? And would it also affect the entire agenda? Might they have to put other things off if that's problem number one on day one?
Mr. AXELROD: Well, let me say, we started this interview with you doing my part, so--but I have to go back to that. The fact is that there is only one president at the time. There's only--only one president can speak for America at a time, and that president now is George Bush. The president-elect was on the phone with Secretary Rice yesterday, he's monitoring the situation closely. But the Bush administration has to speak for America now, and it wouldn't be appropriate for me to opine on these matters.
REID: Let me...
Mr. AXELROD: I will say, the president--you go ahead, Chip.
REID: No, you go ahead.
Mr. AXELROD: The president-elect was in Sderot last July, in southern Israel, a town that's taken the brunt of the Hamas attacks, and he said then that when bombs are raining down on your citizens there is an urge to respond and act and try and put an end to that. So you know, that's what he said then and I think that's what he believes.
REID: When he talks to Secretary Rice, is he simply passively listening or is he also offering an assessment?
Mr. AXELROD: Well, I think they have a--they have a good working relationship and there's a--I think that the calls are largely in the--in the area of fact-finding for him. I would hardly describe him as passive. But I think he wants to get a handle on the situation so that when he becomes president on January 20th he has the advantage of all the facts and information leading up to that point.
REID: Last question on this topic. Hillary Clinton, of course, will be your--is expected to be...
MR. AXELROD: Mm-hmm.
REID: ...assuming she gets confirmed--the secretary of state in the Obama administration. Is he talking--is the president-elect talking to her? Are the wheels moving within the Obama team on this?
MR. AXELROD: Well, he's been meeting with his national security team and consulting with them on a consistent basis. One of the things that we feel good about is that we've got such a strong and experienced team: Senator Clinton as secretary of state, Secretary Gates staying on, and General Jones as the national security advisor, who has vast experience in that region. And the president-elect is in touch with all of them around this situation and other events.
REID: OK, job number one when--on January 20th is the stimulus package, or the stimulus-- or the economic recovery plan, as the Obama team likes to call it. Where does that stand right now? Is that aggressively being worked on Capitol Hill already? And we're hearing numbers anywhere from $650 billion to a trillion dollars. Is there a number you can put on it?
MR. AXELROD: Well, no, I think the number'll be determined. We've talked about a package from 675 billion to 775 billion. But you know, those numbers are not fixed. One thing we--I think everyone agrees on, economists from left to right, is that we have to do something very large. Larry Summers wrote an op-ed in The Washington Post today in which he said that economists believe that if we don't do something large that we're going to be looking at double-digit employment--unemployment by the end of next year, and that is totally unacceptable. So we want to create three million--or create or save three million jobs to forestall that. And we want to do it in a way that leaves a lasting footprint, by investing in energy and health care projects and refurbishing the nation's classrooms and labs and libraries so our kids can compete, and rebuilding our crumbling roads and bridges and waterways. and in this way we're not only just--we're not only creating work, but we're laying the foundation for the future of economy.
REID: Would you like to see that bill on the president's desk on January 20th, or perhaps the 21st, or will it take longer than that?
MR. AXELROD: Well, we'll see. Obviously, the sooner the better. I don't think Americans can wait. People are suffering, our economy is sliding and we need to act. And so our message to the Congress is to work on it with all deliberate speed. Obviously, we want it done right. One of the things we have to do is ensure that this is done in a way that the public can have confidence in, so we want--we want strict review on the front end on what we're investing in, we want oversight once those investments are made and we want transparency so people can follow this. We're not going to have earmarks in this--congressional earmarks in this package. This has to be something different than business as usual, and we're going to make sure that it is.
REID: Is January 20th realistic?
MR. AXELROD: I don't know. We hope so. That would be great. But however long it takes, you know, we're going to--this is--as you say, jobs are job number one for us. Right now we have to get this economy moving again. We have to unstuck our credit markets and we have to get businesses and jobs flowing again. And so this is--this is what we're going to be working on from the moment we get there.
REID: Let's switch quickly to the situation with Governor Blagojevich in Illinois.
MR. AXELROD: Mm-hmm.
REID: Now, the internal report came out from the Obama team...
MR. AXELROD: Yes.
REID: ...basically saying that nobody did anything wrong, there were no inappropriate conversations. But those transcripts are still out there and they haven't been made public, the transcripts of Rahm Emanuel's calls--and I'm not sure if there are other calls that might be on transcripts, too. You know how Washington works.
Mr. AXELROD: Mm-hmm.
REID: If there are transcripts out there of Rahm Emanuel on the phone talking about this with Blagojevich's office, this is not going to go away. So even though you guys would like to say, `This is it, it's over, it's done,' I think you know the way Washington works. It's not.
MR. AXELROD: Well, I know the way Washington works; I also know the way the US attorney's office works. Those transcripts are in their possession, they're not in our possession. We didn't tape conversations. We don't have transcripts of those conversations. I will say, some of the reporting on this has been wildly inaccurate. Before our report was released, there were reports in some newspapers that Rahm had had 20 discussions with the governor and all kind of wild things that weren't true. You know, the--it's--but it's within the power and purview of the US attorney to release any transcripts. We don't have any control over that. And when they are released, when and if they are released, they will completely bear our the report that we--that we issued this week. The fact is...
Mr. AXELROD: The fact is we're sort of innocent bystanders in this process, and we have tried to work with the US attorney's office so as not to interfere with their investigation. That's why our report was delayed. But the report was complete.
REID: OK, David, I'm going to have to cut you off there. Thank you very much and happy New Year.
Mr. AXELROD: OK. Great to be with you. Happy holidays.
REID: Thank you for joining us. Thank you.
Mr. AXELROD: Thank you. Thank you.
REID: And we'll be back in just one minute.
REID: We're back now with Lieutenant Governor Pat Quinn, who joins us from Chicago.
Thank you for joining us.
Lieutenant Governor PAT QUINN: (Democrat, Illinois): Appreciate the opportunity.
Mr. REID: Tomorrow impeachment proceedings begin anew in the extraordinary and wild case of Governor Rod Blagojevich. Do you believe he will be impeached? And if so, how long will it take?
Lt. Gov. QUINN: Yes, I do think he will be impeached. The House does that, it'll move to the Illinois Senate. I think he will be convicted by the Illinois Senate and removed from office. I hope the governor voluntarily resigns. I think that's much better for his interests, but more importantly for the people of Illinois.
REID: Now, the US attorney's office this week has said that they're not going to release any of their investigative information to the impeachment committee. Does that not make impeachment impossible?
Lt. Gov. QUINN: It's--on the contrary. There's so much other evidence that the impeachment committee has considered. I think there's many articles of impeachment that will be found by the committee and referred to the entire House. If a majority of the House votes for impeachment, then the governor's impeached and then a trial is held in the Illinois Senate. Two-thirds of the members of the Senate must vote to convict, and I think there's far more than that ready to do that.
REID: So it sounds like you believe it is inevitable that he will be thrown out by impeachment at some point. If it is inevitable, why won't he just step down?
Lt. Gov. QUINN: Well, the governor is who he is.
REID: Well, who is he?
Lt. Gov. QUINN: I think he's...
REID: Can you offer a window into his mind at all? The New York Times today, he was--he's so--said he's so narcissistic, he won't do it. Do you know him well enough...
Lt. Gov. QUINN: Well...
REID: ...to give a sense of why he won't do this?
Lt. Gov. QUINN: Well, he's isolated. He always has been. He doesn't really ask other people for their advice, other than a very tight palace guard. I think they give him bad advice, and sometimes the palace guard tells him what he wants to hear and not what he needs to know. What he needs to know is that he's disgraced himself, he's disgraced the people of Illinois, and the proper thing to do is to step aside and resign. But he's a--he is who he is, so he's not going to do that. He had a press conference and said he would fight to his last breath. But I think the people of Illinois are going to fight to their last breath to remove him as governor.
REID: His lawyer said at one point that if the state of Illinois is hurt by all this that he would step down. Do you believe him?
Lt. Gov. QUINN: Well, I sure hope so. I think they really should take that option. There's a provision in the Illinois Constitution that allows Governor Blagojevich to step aside. He still would retain the title of governor, but there would be an acting governor, lieutenant governor, that's me. But all the powers and responsibilities of governor would go to the acting governor, and the governor currently, Governor Blagojevich, could work legally to try and clear his name. That's much better for the people of Illinois. Our state government is in crisis. The people are not getting the government they deserve. There's a pretense by the governor that he's doing his regular business, but it's totally false.
REID: He's the governor, you're the lieutenant governor. Usually a governor and lieutenant governor work closely together. What's the--when is the last time that you actually spoke with him?
Lt. Gov. QUINN: August of 2007. In Illinois the lieutenant governor's nominated separately from the governor in the primary, and that's how I came to be lieutenant governor. I, you know, have tried to talk to the governor over the last year and a half. He's a hard guy to reach.
REID: Well, you would think he would return your call. Did you intentionally keep your distance from him, and were you aware that he was being investigated by federal investigators?
Lt. Gov. QUINN: Well, it's in the newspapers over the past year, but certainly on December 9th, when the governor was arrested and put in handcuffs, I think that was a shock to everyone in Illinois. And I was hopeful that the governor would decide to step aside and let our state move forward, but he made his decision and I think the people will make theirs. The people of Illinois, I think, are embarrassed by all the events of the past few weeks. They don't want this to continue. Our state is a good state with hardworking people, very patriotic people. We've had over 220 men and women from Illinois lose their lives defending our democracy in the war against terrorism. And I think it's important to remember that the people of Illinois will prevail.
REID: You said that you do believe he will be impeached by the House and removed by the Senate. When do you think that will happen, that he will be out of office?
Lt. Gov. QUINN: I think it'll happen swiftly. You know, the 200th anniversary of Abraham Lincoln's birth is February 12th of next year, and I don't think Governor Blagojevich will be governor at that time. That bicentennial of Abraham Lincolns' birth is very special to the people of Illinois. We believe in government of the people and by the people and for the people; it shall not perish from this earth. That's what Lincoln said at Gettysburg. And I think--those words, I think, ring true today.
REID: Is there anybody--you'll be in a position to appoint the replacement for Barack Obama. Is there somebody who you favor at this point?
Lt. Gov. QUINN: Well, I hope we can have a special election. I think that probably can't occur now until June of next year. And I do think there should be a temporary appointment to make sure Illinois has two senators at all times. If I am the governor, I would certainly push that kind of a law. And we'll see what happens. The legislature has to adopt the law and then send it to the governor.
REID: Lieutenant Governor, you have been called a Goody Two-shoes by a number of people. I think in Illinois that's probably a high compliment. Are you the person who can turn Illinois around if you do become governor, or is this reputation of corruption and the reality of corruption just too ingrained?
Lt. Gov. QUINN: Well, I believe the highest office in a democracy is the office of citizen, and I believe in organizing citizens, and that's what I've done all my life. I one time walked across Illinois, from the Mississippi River all the way to Lake Michigan and Chicago on behalf of reform. And I think we can reform our state government. I think the people of America need to know that we've had good people from Illinois serve in government, like Paul Simon and Paul Douglas and Barack Obama, and we need to emphasize that and emphasize ethics and reform, and I think the people of Illinois are ready for that.
REID: OK, Lieutenant Governor Pat Quinn of Illinois, thank you very much and happy New Year.
Lt. Gov. QUINN: Same to you.
REID: We'll be back in a moment with Nobel laureate Paul Krugman.
REID: With us now from New York City, Paul Krugman, winner of the 2008 Nobel Prize in economics. He's also the author of "Return of Depression Economics" and "The Conscience of a Liberal."
Paul, thank you very much for joining us and congratulations on the Nobel Prize.
Mr. PAUL KRUGMAN (2008 Nobel Laureate in Economics): Well, thank you.
REID: How long do you see this recession lasting?
Mr. KRUGMAN: Oh, boy. It's not a simple question. I mean, I expect--if only because of all the money that the Obama administration is going to spend, I expect to see some pickup late 2009. But I think we're going to be in trouble for several years. This is going to be a tough long-term slog.
REID: In trouble. How deep do you see this going? And some people have made comparisons to the 1930s. Do you think that's fair and accurate?
Mr. KRUGMAN: You know, if we were as ignorant as we were in the 1930s, I think we would be facing a second Great Depression. You look at the scope of this thing, you look at--you know, we're in trouble, but go around the world. I mean, I've been looking at numbers for Ukraine which are terrible. All around the world there's this crisis taking place. The--really, the only reason that we're not headed for Great Depression II--at least I don't think we are--is that we think that we've learned a few things since then. So we're not trying to balance the federal budget in the face of a recession. But this is--this is big stuff. This is the worst thing, you know, in two lifetimes.
REID: I mean, people are moving very quickly on this Obama plan. You know, they want to have it on his desk--the economy recovery plan on his desk probably a week to 10 days, according to people in the Senate, after he is sworn in. Very different from back in the 1930s. I mean, you had the stock market crash in 1929, you didn't really have a depression until years later because they didn't do anything. Is that correct?
Mr. KRUGMAN: Well, it--they didn't do anything. In fact, they did perverse stuff. I mean, Herbert Hoover raised taxes in the face of a slump, he--people were cutting spending in the face of a slump, and the Federal Reserve of the time sort of didn't understand the risks.
That said, it's not so easy to deal with this thing. I mean, everybody, I think, that I'm talking to is worried about time. We're talking about, you know, there may be stimulus package on Obama's desk a week or 10 days after he takes office, but these things take time to get going. It's going to take six months, probably, before you get any significant amount of stuff going through. Maybe they can do better than that, we'll see. Probably a year before a lot it really starts happening. And meanwhile, we lost more than half a million jobs last month, we're probably losing jobs at the rate of 600,000 a month now. The economy needs to add 100,000 jobs a month just to keep up with the population. So you know, time is passing, things are headed downhill and it's going to take--be a long time before--even with all of this speed, before the Obama plan gets any traction.
REID: David Axelrod, a top Obama adviser, a short time ago on this show said that he is still talking about a number of 675 billion to 775 billion, and I think that's a two-year figure.
Mr. KRUGMAN: Yeah.
REID: Do you think that's enough, or do you think it needs to be bigger than that?
Mr. KRUGMAN: I'd like to see it bigger. I understand that there's difficulty in actually spending that much money, and I--they're also afraid of the--of the T word. They're afraid of a trillion dollar for the two-year number. But you know, the back of my envelope says it takes roughly 200 billion a year to cut the unemployment rate by 1 percent from what it would otherwise be. In the absence of this program, we could very easily be looking at a 10 percent unemployment rate. So you do the math and you say, you know, even these enormous numbers we're hearing about are probably enough to mitigate but by no means to reverse the slump we're heading into. So this is--you know, I--they're thinking about it straight. I liked what Larry Summers wrote in The Washington Post. I think he was getting it right that the risks of being too small are much bigger than the risks of being too big. Nonetheless, I am actually concerned that this thing is not going to be really big enough.
REID: How do you see this recession and the response to it changing this country? I know you've been arguing for a more progressive government for a long time, and obviously at difficult times like this I don't want to suggest that a recession is a good thing. But if--looking back at this five years or some number of years from now, can you envision a country that is better off because of how it responded to this recession?
Mr. KRUGMAN: Well, if you believe as I do that we need a stronger social safety net, if we--that we need universal health care, then the revelation of just how vulnerable we are when things go wrong is going to help. If you believe that we've gone way too far in this belief that the market is always right and that regulation is always wrong, then this is one heck of a lesson in what happens if you don't adequately regulate financial markets. So I think we may be seeing a swing of the political pendulum as a result of this crisis that will hopeful leave us a better nation in the long run. We came out of the New Deal, we came out of the 1930s as a better country, a middle-class country where we had been in the Gilded Age. We came out as a country that took better care of its citizens. That doesn't mean that you hope for a depression, right? So we hope that this thing is relatively short, shorter than I expect it to be, and that it's not a bad as I expect it to be. But yeah, I mean, we're learning something and hopefully we'll make some use of those lessons.
REID: Barack Obama has talked a lot about the need to reach across the aisle on everything, on all of his policies, foreign policy and this. And clearly, in the Senate you can't get anything done with anything less than 60 votes. You need Republicans.
Mr. KRUGMAN: Right.
REID: And in fact, I've been told on Capitol Hill they want a lot more than 60 votes, they want this to be genuinely bipartisan. Which brings me to your book, which I was actually reading last night, and on page 272--I'm not playing gotcha, but I just wanted to see...
Mr. KRUGMAN: Yeah.
REID: You talk about the fact that the Republican Party is controlled by movement conservatives. You then say, quote, "The notion beloved of political pundits that we can make progress by bipartisan consensus is simply foolish." Are you suggesting that the kind of bipartisan consensus Barack Obama is looking for is foolish?
Mr. KRUGMAN: He's--you know, that--he's not going to get bipartisan consensus. He may be able to get some moderate Republican vote, he may be able to get the moderate Republicans in the Senate, both of them, to vote with the Democrats. There--the point is, you look at what John Boehner is doing in the House right now, the House Republican Leader. He's dead set against doing anything constructive right now. He's actually soliciting on his Web site, saying, `If there are any credentialed economists who are willing to, you know, say negative things about stimulus plans, please contact me.' So no, it's not--it's not going to be bipartisan in the sense that the leaders of both parties are going to get together. Reaching out across the aisle, trying to find some sensible people on the Republican side...
Mr. KRUGMAN: ...is not the same thing.
REID: OK, great. Paul Krugman, thank you so much for joining us. Happy New Year.
Mr. KRUGMAN: Thanks a lot. Same to you.
REID: We'll be back in a moment.
REID: That's our broadcast. Bob Schieffer will be back next week with an interview with Vice President Dick Cheney. Thanks for watching FACE THE NATION, and happy New Year.
Face the Nation (CBS News) - Sunday, December 28, 2008