MR. DAVID GREGORY: Our issues this Sunday: anger and outrage over AIG and executive bonuses.
(Videotape)
REP. CHARLIE RANGEL (D-NY): These people are getting away with murder.
PRES. BARACK OBAMA: I think people are right to be angry. I'm angry. What I want us to do, though, is channel our anger in a constructive way.
(End videotape)
MR. GREGORY: Who should be held accountable? And will this anger undermine the president as he tries to take additional steps to save the financial system and restore confidence?
Also, the other threat to the economy, crumbling infrastructure around the nation, which carries a staggering price tag. With us, three leaders trying to put that issue high on the agenda. They met with President Obama Friday at the White House and we'll hear from them exclusively this morning. The founders of Building America's Future: New York City mayor Michael Bloomberg, Pennsylvania's Democratic governor, Ed Rendell; and California's Republican governor, Arnold Schwarzenegger.
Then, where do the president and his economic team go from here? And is the country losing patience even as the financial crisis deepens? Insights and analysis from NBC News special correspondent Tom Brokaw and anchor of CNBC's "Street Signs" and co-anchor of CNBC's "Squawk on the Street," Erin Burnett.
But first, with us, three leaders on the front lines of this economic crisis. Governor Schwarzenegger, Mayor Bloomberg, Governor Rendell, welcome all back to MEET THE PRESS. I don't have to tell any of you that anger in Washington and around the country this week boiled over over one number, $165 million, the amount of money that AIG paid in bonuses to executives with its financial products division. But you three have come to Washington this week with a different number in mind, $1.6 trillion, which is the amount that your group cites as the deficiency, the amount of money necessary to deal with that shortfall when it comes to the nation's infrastructure.
Governor Schwarzenegger, you met with the president. Tell me about why that is the key to this economy, and what's the case you made to him?
GOV. ARNOLD SCHWARZENEGGER (R-CA): Well, I think that infrastructure is extremely important. And I have been promoting and talking about infrastructure since I've come into office in 2003 because I felt that in California our infrastructure has fallen behind; in the last four decades we really didn't build much out there, and it's really something that is very important for the economy. In order for the economy to thrive and to live up to 100 percent of its potential, you need to have moved people and goods around very quickly. And so if that falls behind, then the economy falls behind. And so we were very successful in having the legislature in California and the people of California approve $42 billion of infrastructure bonds so that we can start rebuilding California. Now, my interest also isn't just in California. I want those in America to rebuild because our infrastructure in the whole United States is falling behind. And so we've formed this great partnership here because Governor Rendell is very much into building infrastructure in his own state; also, Mayor Bloomberg is interested and has done a great job in New York to build infrastructure. So we kind of joined forces and created this partnership here...
MR. GREGORY: Mm-hmm. Right.
GOV. SCHWARZENEGGER: ...to put the spotlight on this issue. We're very fortunate that this president is listening to that and, and is interested in rebuilding America, and so we're trying to let him know we want to help and help draft the plan.
MR. GREGORY: So, Governor Rendell, first of all, it was Governor Schwarzenegger who said infrastructure's not a very sexy word when it comes to building political will. What are we talking about here? Bridges, roads, what else?
GOV. ED RENDELL (D-PA): Well, it's not just transportation infrastructure. First of all, high-speed rail. This country desperately needs to build a high-speed rail passenger system. We need to improve our rail freight system. But it's not just transportation. It's the levees that failed in Cedar Rapids and New Orleans. It's dams, it's water and wastewater systems. It's so much more. And the message is fairly clear. We started Building America's Future because we think this is about the future. We think it's about generations down the road. And unless we can rebuild our infrastructure, we're not going to be competitive. Unless we can rebuild our infrastructure, our quality of life is going to suffer. Unless we rebuild our infrastructure, things like what happened in Minnesota are going to repeat.
MR. GREGORY: Bridge collapse.
GOV. RENDELL: So our message to the president was, "Look, you've taken some great first steps." Infrastructure in the stimulus, his commitment to light--to building high-speed rail, the infrastructure bank, so important. We took a poll, Building America's Future, and the poll showed the American people are willing pay for infrastructure improvements, pay more taxes, if they believe it'll be done in a nonpolitical way, if the choices made will be good choices based on cost benefit analysis. That was our message to the president. We're willing to support him. We think the infrastructure bank is terrific. We need to do it in a little bit bigger scale.
MAYOR MICHAEL BLOOMBERG: The president deserves a lot of credit for trying to do what he promised he would do if he got elected. He's trying to address the difficult issues that have gone on for much too long with Congress and the White House being unwilling to face them. He's trying to do something about energy independence, health care, education, infrastructure, whole series of things. And so he deserves a lot of credit for trying to just not sit back and say, "I'll take only the stimulus part of the problem." He's going to make the investments for the long term.
MR. GREGORY: Though you said before the election that he should prioritize.
MAYOR BLOOMBERG: Well, I've said that he's--number one, he's got to build a team, which he's working on. That still takes a while to do. But number two, he's, he--somebody said a crisis is too important to waste. This is the time where he can galvanize Congress. This is a time where he can galvanize the country to get behind these things.
Yes, the amount of stimulus in the--the amount of money in the infrastructure package is a small amount. But Governor Rendell--who deserves all the credit, I think Arnold would agree with me, to putting this organization together--has talked about how you can leverage that money. And today it takes a while to get projects going. This president's willing to face the issues and he's going to have to work with Congress...
MR. GREGORY: Right.
MAYOR BLOOMBERG: ...as are all of us, and we've pledged to help him in every way we can to start attacking the problems where our sewers systems and water systems are inadequate, our transportation is inadequate, whether it's rail or air or roads, or our ports are inadequate to carry this country into the future.
MR. GREGORY: Did you get a commitment from the president?
MAYOR BLOOMBERG: The president started out by saying he got it. We gave him a briefing paper. He had read the briefing paper, and he assembled a team to say, "OK, these are my people. We're going to work together. Here's who you contact." We established the dialogue. President wants to get this done.
GOV. RENDELL: And the president understands, David, that we have to do it in a new way. If we let ISTEA be reauthorized next year, same old, same old.
MR. GREGORY: Right.
GOV. RENDELL: It's a disaster for future generations. We have to change. We have to do something like the infrastructure bank; creative, innovative, visionary.
MR. GREGORY: Right. But there is still the question, Governor Schwarzenegger, of, of who's going to pay for this. And are Americans, especially Americans who are none too pleased with where their tax dollars are going at the moment when it comes to the economy, are they really willing to pay higher taxes for this?
GOV. SCHWARZENEGGER: Well, I think that Governor Rendell has just mentioned that in the latest polls it shows that the people are very interested in rebuilding America and they're willing also to pay for it. Because look, everyone gets stuck in traffic. There is no reason why we should get stuck in traffic. I mean, what we have to do is have a plan in America to see how do we move people and goods around? Is it through rail? Is it high-speed rail? For instance, I am a big believer in high-speed rail. Is it through roads? What--which direction should we go? People want to move faster, companies want to move their goods much, much faster. We want to upgrade all of those things rather than getting stuck with that.
MR. GREGORY: Is an increase in the gas tax a place to start?
GOV. SCHWARZENEGGER: I think one has to look at it. Look, there's--that's, that's the next question maybe they do, how do you finance all of this. But I think the important thing is that there's a willingness amongst the people to pay for it. It doesn't all have to be done through public money. We are talking here about public-private partnerships.
MR. GREGORY: Right.
GOV. SCHWARZENEGGER: There's many companies that are interested in coming in and financing the high-speed rail or other rail systems, light rail and so on.
MR. GREGORY: Right. And we talk about private equity. There's so much money in this economy on the sidelines with nowhere to go and nobody wanting to assume any risk. So if there's this kind of private sector money, how would it work? If they--if private equity or hedge funds want to put up money for a light rail system, fast rail system around the country, what's in it for them?
GOV. SCHWARZENEGGER: Well, it's a, it's a great investment.
MR. GREGORY: Right.
GOV. SCHWARZENEGGER: I mean, that's what--it's like when you look at British Columbia or other places where they have a public-private partnership, where everyone is happy. Businesses are happy, the people are happy, labor is happy, the politicians are happy. I mean, everyone is happy. We want to do the same thing. We should--the United States should copy that kind of a principle so that you can go out there and build.
GOV. RENDELL: There's so many innovative ways to, to use the tax code to get private investment...
MR. GREGORY: Mm-hmm.
GOV. RENDELL: ...involved in this. There are innovative ways. David, we don't have a capital budget, a federal capital budget. We're the only governmental subdivision in the country without one. You could finance--for $30 billion a year, which these days is not a lot of money, you could finance almost $400 billion to put up front in an infrastructure repair program administered through something like the infrastructure bank.
MR. GREGORY: Right.
Let's talk about economic reality for a moment. Mayor Bloomberg, you say there's nothing like a crisis to mobilize political support for long overdue reforms. But this week we got socked in the, in the, in the jaw here with the reality about this government's budget deficit and the long-term debt picture. This is how the Associated Press reported it: "One trillion dollar deficit seen for the next 10 years. The CBO, Congressional Budget Office, figures...predict that President Obama's budget will produce $9.3 trillion worth of red ink between 2010 and 2019, $2.3 trillion worse than the White House predicted in its budget. ... The latest figures, even worse than expected by top Democrats, throw a major money wrench into efforts to enact Obama's budget. ... The dismal deficit figures...inevitably raise the prospect that Obama and his allies controlling Congress would have to consider raising taxes after the recession ends, or paring back his agenda." How do you, as a matter of political will, make this kind of long-term investment when the country just can't afford it?
MAYOR BLOOMBERG: The political will issue is the president's greatest single challenge. There is a crisis of confidence in this country, and it's up to the president. He comes in--he's been in office two months. He campaigned on change, everybody wants him to succeed and he's got to now explain exactly that to the public, why it is so important to make the investment and to commit ourselves down the road and our kids down the road to pay back all of the money they're spending today. It's--we're in a situation where we can't not spend. We've got to get people back confident that they're not going to lose their job, that--their jobs, that they're not going to lose their houses. You know, I see it every day. I talk to people on the subway, they are worried. In this country people really--even if it hasn't hurt them directly, they see it with their neighbors. And so we've got to stop focusing on some of the publicity issues and focus on the real issue here. We've got to get the banking system liquid again and get them loaning. We've got to get the people being willing to spend. We've got to have business downsize or right size, but more importantly find ways to do things more efficiently. We live in a different world than we did a year ago.
MR. GREGORY: Right. But, Governor Rendell, the question of priorities. Can the nation afford, can the government afford to make long-term investments now, even if they're good programs, with this sort of crisis of confidence and this immediate liquidity problem in the banks and with this deficit picture?
GOV. RENDELL: I agree with Mayor Bloomberg, I don't think we can afford not to do it. But I think the president is making good in this year--in this budget. The, the, the high-speed rail component of it, the infrastructure bank, $25 billion. He's making good on that. So you have to under--I think the American people don't--aren't against spending, they're against spending they can't see. The bailouts, they can't get their arms around it, they can't touch it. They can't say, "Well, that's what happened for our money in the bailout." But for infrastructure, if we do it right and we're committed to seeing that it's done right...
MR. GREGORY: Right.
GOV. RENDELL: If we do it right, the American people will not only be able to see it, they'll be able to touch it.
MAYOR BLOOMBERG: Well, let me, let me tell you what happened in New York City in the '70s. We had an economic problem, they stopped investing in the future and we went a few decades with high crime and bad schools and filthy streets and cultural institutions falling apart and people leaving the city. Fortunately, we got it turned around. Today the crime is as low as it is in any city of 100,000 or more, the schools are getting better. The--we, we have record tourism, record number of people coming in because we have made the investments and we are making the investments. We have a $10.4 billion construction budget just for the city with city taxpayers dollars.
MR. GREGORY: I want to turn to this issue of political will more generally. Governor Schwarzenegger, this AIG mess is in part about American's frustrations. They don't know who's protecting them anymore. They don't know what to believe in anymore. They feel like government's letting them down, they feel like the financial system and industry is letting them down. A lot of people upset with the media as well. The Asbury Park Press in New Jersey, on the shore there, wrote this in an editorial this week: "Here's the one part of the bailout that makes our stomach churn"--this was an editorial--"churn the most: None of these guys are in prison. You can rob a bank out of desperation and end up with 10 or 15 years in jail. You can rob a nation blind out of pure greed and get nothing but a tongue lashing. Something's got to change." Now, nobody at AIG is accused of any wrongdoing or committing any crime, just bad judgment at the very least. Where do Americans go for accountability for all this?
GOV. SCHWARZENEGGER: Well, I think that political leaders are responsible for that, and also, you know, Wall Street and those companies are responsible. What they've done is unacceptable, there's no two ways about that. And I think that the federal government has to deal with that. I mean, this is not our kind of responsibility. What we are trying to do here in Washington is to go to the White House, talk to the president and say, "Help us to get America rebuilt." We are into infrastructure, we are into rebuilding America...
MR. GREGORY: Right.
GOV. SCHWARZENEGGER: ...rebuilding our bridges and our roads and our rail system, high-speed rail and all of those kind of things.
But at the same time, I have to tell you that the kind of financial struggles and the uncertainties that you see here in America, you see all over the world. I just came back from Germany from a trade mission where we met, met with 100 different countries over there, high technology companies. It was the biggest trade mission in the world. And everyone there talked about exactly the same thing. And you know, America--not only America, but the whole world is in an, an economic crisis. But there's one thing I know for sure, that I have total trust in America. I've been here now for 40 years. Even though there are a lot of uncertainties, and there were uncertainties in the past...
MR. GREGORY: Mm-hmm.
GOV. SCHWARZENEGGER: ...one thing is certain, and that is that we will come back and America will come back stronger than ever and it will sort out all of those problems.
MR. GREGORY: Right.
GOV. SCHWARZENEGGER: We, we will learn from the mistakes that were made in the past.
MR. GREGORY: Governor, Governor Rendell, you were nodding your head on this question of this lack of confidence, or a feeling that people aren't--do you think Americans are mad or even--are madder about AIG and bonuses than they are frustrated or scared about their own individual financial position?
GOV. RENDELL: Well, they're mad because the AIG bonus is something simple that they can see and get their arms around.
MR. GREGORY: Right.
GOV. RENDELL: The financial crisis nobody can exactly get their arms around. But the answer to your question, David, is we have a free market economy. And I think we'll always have a free market economy. But government has a role to regulate and police, and that's where government failed. We are a free market, entrepreneurial economy, but government has to have regulations and checks and balances and, and they weren't there.
MR. GREGORY: Mayor Bloomberg, remedies. When this AIG business came along here and it really blew up this week, the response has been taxes. The House has passed a measure to go back and sort of claw back these bonuses, get 90 percent in taxes. Republicans and Democrats have raised their voices to say the tax code should not be used punitively like this. There's talk of trying to publicly out the people who received these bonuses. Is this the right response?
MAYOR BLOOMBERG: Well, number one, the first thing to do is to put the right people in charge. And I think Tim Geithner is exactly the guy that I would want there. He's smart, he is a workaholic, he's been there, he's been part of the financial system for a long time, he understands how things work, how markets work, how people react. When it comes down to worrying about the bonuses, I understand why people are really upset. But the real thing that we've got to focus on is getting the banks liquid, getting them to start making loans again. What I'm worried about, we have 6500 people who work for AIG that live in New York City. Most of them make less than $100,000 a year, they don't get bonuses. They want to keep their jobs, they want to be able to pay their mortgages. So what we've got to do is find some ways to balance all of this, make those who are culpable lose their investments, not get their bonuses, but really focus on how we're going to get companies back going, growing again.
MR. GREGORY: David Brooks writes about this in The New York Times on Friday when he talks about the shortsightedness of this outrage over AIG. He writes this: "The Washington political class has spent the past week going into made-for-TV hysterics over $165 million in AIG bonuses. We're in the middle of a multitrillion-dollar crisis, and our political masters...have decided to risk destroying the entire bank-rescue plan because of bonuses that account for 0.001 percent of the annual GDP."
Governor Schwarzenegger, California's harder hit than almost any, any part of the country. Do you think the populism, the populist anger in the country is good or bad for the country at this point?
GOV. SCHWARZENEGGER: Well, you know, I understand with your job that you have to kind of point a lot of times at the negatives things. I see things also in a positive way. We in California, we had a $42 billion budget deficit. And the legislators, Democrats and Republicans came together after long negotiations and we came to an agreement, a budget agreement, and reformed also the budget system, which will go on a ballot on May 19th with six measures on the ballot, and it has a good chance of passing. So there will be historic reforms. So I think that one can take the crisis and turn it into an opportunity and do really great things, and that will bring the confidence back when the people see Democrats and Republicans coming together. In California they've come together, and I think the people really appreciate that. So I think that's what we have to do on a national level. Like I said, I have great hopes for this country, and I think that, that Washington is going to learn from the mistakes that it--that were made in the past, and I think in the end we're going to come out stronger and better.
MR. GREGORY: You're talking about being more positive. President Obama faces great leadership challenges with regard to this economic crisis, and he spoke in, in the context of taxpayers' frustration, bailout fatigue and just anger. Back in--during his address to Congress February 24th, this is what he said.
(Videotape, February 24, 2009)
PRES. OBAMA: I also know that in a time of crisis we cannot afford to govern out of anger or yield to the politics of the moment.
(End videotape)
MR. GREGORY: And yet the politics of the moment this week, all about outrage over AIG. This is what he said Wednesday.
(Videotape, Wednesday)
PRES. OBAMA: I don't want to quell anger. I think people are right to be angry. I'm angry. What I want us to do, though, is channel our anger in a constructive way.
(End videotape)
MR. GREGORY: Is he keeping his promise of not governing in anger?
GOV. RENDELL: Well, I think he said to channel our anger in a constructive way. Look, I think it's a bigger issue than the momentary anger, and God knows we all have to understand what people are feeling. We've got to change the corporate culture in this country. I don't think we can legislate it, but we've got to change it. People should be rewarded when they do good things for their company. What really my constituents say to me, "How dare these SOBs who tanked their own company, who caused this problem in America, get huge bonuses. They're lucky that they still have a job. They shouldn't get bonuses because they failed to perform." And that's exactly right.
MR. GREGORY: Hm.
GOV. RENDELL: That's what happens to the working guy. Think of how many Americans, David, have lost their jobs, even though they've done a brilliant job, because their company failed because the economy failed? In Pennsylvania, up until February we'd lost 60,000 jobs. In February we lost 43,000 jobs. What do we say to those people, that these individuals got bonuses?
MR. GREGORY: Right.
GOV. RENDELL: And it's not AIG's money. If it was AIG's money, they can do anything they want. It was our money.
MR. GREGORY: But, Mayor Bloomberg, you've made the point repeatedly in the course of our conversation. We know about a startling figure, $2 trillion at least is how much the banks have lost on their balance sheets from these impaired assets. The taxpayers have to do something about that. The president has said there's $750 billion in the budget for additional bailout money. He's got a steep hill to climb because of that. AIG makes it worse. A lot of critics say look, if you were opposed to the bonuses several months ago when they came to light, you could've fought to renegotiate those contracts to deny the bonuses. If you think they weren't that big of a deal or you wanted to avoid a lawsuit, then maybe the responsibility now is not to feed the anger, but to try to put it into perspective and say, "Look, we have to make priorities. You can't get so mad about this. We've got to think about the long term." What should he be doing?
MAYOR BLOOMBERG: I think he's got to look--Arnold said that you, and he's right, you go around the world and everybody's got the same kind of problems we do. I would--excuse me--I would rather have America's hand to play than any other hand. And being optimistic doesn't even cost you a dime. There's no reason not to think that we won't get through this and come out of the other side. What we have to do is make sure that those who are getting hurt in the meantime don't fall through whatever kind of safety nets we can build. But having said that, we still have to go and get on with our lives. We have to buy new cars, we have to start new businesses, we have to go and provide good educations for our kids and make those kinds of commitments.
MR. GREGORY: I understand. But I want to interrupt you because I'm asking you a very direct question about, look, the three of you around this table represent 56 million people. You're leaders, you're communicators. This is a leadership question for the president of the United States. There is rampant anger in the country. We've talked about the fact, I mean, a lot of people have legitimate claims. Is his responsibility now to try to tamp down that anger, or has he allowed himself to get caught up in it for political reasons?
MAYOR BLOOMBERG: Well, keep in mind he's only been in office, as I said before, two months, and so he's got to work his way through this kind of problem. I don't think any president's come into office with as many problems on his plate day one as this one has. What he's got to do is explain to the public why we have to get a functioning banking system. He's got to explain to the public why we want to reward people who take risks and are successful and build businesses and give us a future. That is his job. He is the leader of the free world and people listen to every word he says, and he's got to focus on that. And he's getting his team together, he's getting his voice. It just takes a little time. I think he's going to be a great president.
MR. GREGORY: And you support Secretary Geithner?
MAYOR BLOOMBERG: Absolutely.
MR. GREGORY: And, Governor Schwarzenegger, you said you supported Secretary Geithner. Do you still have confidence in him?
GOV. SCHWARZENEGGER: Yes. And I, I think that what AIG did is, is horrible and it's inexcusable and unacceptable. But you've got to also, at the same time, talk about the positive.
MR. GREGORY: Mm-hmm.
GOV. SCHWARZENEGGER: I mean, President Obama was out in California. I was with him there where he announced $80 billion of great, great part of that economic stimulus package: $35 billion in tax benefits, $50 billion on other stimulus benefits; infrastructure itself, $7 billion to help us build roads and schools and all kinds of buildings. So you know, almost $20 billion for health care and for education and on and on. That, to me, is positive. That is great for the state of California. And we wanted to let him know that we appreciate that. We had this big rally there for him. So to me, that has to be put--and at the same time, you can't always just talk about the problems that there are...
MR. GREGORY: Right.
GOV. SCHWARZENEGGER: ...or the mistakes that were made. I just want to make sure that--not to ignore this problem that you're talking about...
MR. GREGORY: Sure.
GOV. SCHWARZENEGGER: ...but also to mention the good things that are happening in this country.
MR. GREGORY: Right. Fair point. But I think what--about emphasizing the positive. But there's also--when we talk about political will and leadership, his ability, the administration's ability to achieve these goals that rely on political will is crumbling because of issues like AIG. It's a political fact for him.
GOV. RENDELL: Yeah, and it must be incredibly frustrating to the president, because he wanted the stimulus to get a chance to work and he wanted the emphasis to be on the stimulus. And the AIG thing took a week, maybe 10 days off of the momentum that we're creating with the stimulus. And Mike and Arnold are right, the stimulus is beginning to work.
MR. GREGORY: Right.
GOV. RENDELL: What the president has to do is recognize the anger and say, "OK, you're right to be angry. We're going to try to do something about it. But let's move on, let's get about the work of getting this country back together again."
MAYOR BLOOMBERG: Right. I, I, I would, I would phrase it slightly differently, but the same theme. The president can't worry about what's politically popular. He's been elected to be the president of the United States and he's taking on the tough issues right now. He's not going to be popular. Every one of those issues are contentious, otherwise we would have solved those problems a long time ago. What he should do is go out there and say, "I was elected to lead from the front, not from the back," and do that. And the American public isn't stupid. The American public, even when they don't like what you do, if they think you're doing it from the heart, if they think you've got good ideas, if they think you've consulted and tried to build the consensus and work with people in a nonpartisan way, they're going to come behind them. Maybe not day one, but he's got to build a legacy and he's got to start right now. And I think he's starting to do it.
MR. GREGORY: Let me follow on that point and, Governor Schwarzenegger, ask you about the political reality you face in California. The unemployment numbers up over 10 percent, what was--what the fear is about unemployment nationally. Your approach toward post-partisan government has been dealt blows by decisions you've had to make. Your approval rating at 38 percent overall; 56 percent of Republicans, your own party, disapprove of the job you're doing. Do you second-guess your approach to bipartisanship?
GOV. SCHWARZENEGGER: I love that you're such a positive fellow. But I see it differently. I think that the California people have seen Democrats and Republicans come together on this budget negotiations, also on our own economic stimulus package in California and also the reform government and to make government run more efficiently. Those are great, great achievements, and I think the people appreciate that. So to me post-partisanship, or bipartisanship is alive and well, and I think we've been very successful in that. And now together Democrats and Republicans are trying to make sure that we can pass those initiatives, like I said, in May. So good things are happening. But at the same time, we are very concerned about the 10.5 percent unemployment rate that we have. And that is why it is so important not only when we talk about infrastructure to think about rebuilding America, but since we are in a crisis right now it is important to also put people to work. And let me tell you something. Every billion dollars that we put in on infrastructure, we create 18- to 25,000 new jobs. And every person that can go back to work and bring a paycheck home to their family, to me that is great news and that's what we're doing right now.
MR. GREGORY: Take a moment, each of you. What do you expect from this stimulus for New York City?
MAYOR BLOOMBERG: We need some help paying Medicaid, which is a cost that's getting out of control. Our state budget is in trouble, so the state's cutting back their support for the city. Education money is terribly important. It's perhaps the best investment that Washington can make. I've--if President Obama changes public education in this country, it'll be the greatest legacy that will go on for decades. And those monies will help. But it's not going to solve all the problems. Federal government's not going to bail out every state budget and every city budget. Fundamentally in New York City we've cut $3 billion out of the expense side of our budget and we still don't have a balanced budget. I'll have to see what the state does to us. But we've had to raise revenues and reduce expenses. And in the end there's no easy answers to this problem. Government is going to have to find ways to do more with less and probably do less because they have less to do it with.
MR. GREGORY: Are you hopeful about the beginning of a turnaround of a recovery by the end of the year?
MAYOR BLOOMBERG: Yeah, I think there are some encouraging signs. I don't know if it's the end of this year, the middle of next year. Nobody really knows.
MR. GREGORY: Yeah.
MAYOR BLOOMBERG: But we've put an awful lot of money into the economy, whether it's through the Fed or through Treasury with the stimulus package, and the public wants to see that Congress is addressing these problems in a responsible way. That will give people overseas who buy our bonds the confidence so we can keep financing our deficit. That will get people to have the confidence to invest in businesses, which is going to create the jobs that we need.
MR. GREGORY: Speak about Pennsylvania. What do you expect out of the stimulus?
GOV. RENDELL: Well, we've lost, as I said, 103,000 jobs. I think the stimulus will bring back about 40- to 50,000 of those. It'll help us avoid another 30- to 40,000 layoffs, so that's very significant. Come May, June, July, over the summer, people are going to be packing lunch pails again, they're going to be going back to work. And the citizens are going to see that work starting and it's going to start a very positive feeling, which we need in this country. We haven't had good news. But people going back to work, orders coming into factories that haven't had any for a long time, I think that's going to generate a sense of optimism that we haven't seen. And that's exactly what the stimulus set out to do, and I think it's going to reach its goal in Pennsylvania.
MR. GREGORY: Before we end our discussion, I want to bring up what's become a rather sensitive issue out of the president's appearance on "The Tonight Show with Jay Leno." He, he made a joke about his bowling skills, or lack thereof. Let's show that.
(Videotape, Thursday)
PRES. OBAMA: I bowled a 129. Yes. I had...
MR. JAY LENO: Oh, no, that's very good. Yeah. No, that's very good, Mr. President.
PRES. OBAMA: (Unintelligible)...it's like--this is like Special Olympics or something.
MR. LENO: No, that, that...
(End videotape)
MR. GREGORY: Now, the joke about the Special Olympics, Governor Schwarzenegger, is something that the president's spokesman called a thoughtless joke. He apologized almost immediately for it when he was on Air Force One. This is obviously very important to your family, the Shriver family, head of the Special Olympics. And it was the first lady of California who released a statement saying what's so painful about this, everybody makes mistakes, but the audience laughed with it. Do you think that this is a moment to shine a light on this and, and to offer some kind of moment to teach people about some greater awareness of this?
GOV. SCHWARZENEGGER: Well, I think that, first of all, I know where his heart is at. I mean, I think that he loves Special Olympics and he would do anything that he can to be helpful to Special Olympics. This was one of those slips that, you know, you always regret afterwards. And I've had mine, believe me, plenty of them where I had to go back and apologize. And I'm sure everyone in public life has had those moments. But the important thing is where's his heart? And number two, what is important is, yes, you're right, people laughed. And I think that it needs more awareness in Special Olympics. I think that the Special Olympics itself does a great job. I think my mother-in-law, who started it in 1968, has done an extraordinary job when America was the only country that participated. Now there's 164 countries all over the world participating in Special Olympics. In, in Shanghai a year and a half ago we had the biggest opening ceremony with around 100,000 people in the stadium and having the most extraordinary event. But you know, the more we reach out through Best Buddies program...
MR. GREGORY: Mm-hmm.
GOV. SCHWARZENEGGER: ...like I have, for instance, someone in the office working for Best Buddies. Other governors are doing the same thing. In the federal government we are trying to do the same thing, where there's more and more of those folks working there, because they're so talented. The fact of the matter is when you talk about bowling, I guarantee you there's a Special Olympian out there that bowls 200, because I have witnessed it myself. I was in South Africa at a, at a golf tournament, and I got beaten badly by a Special Olympian in playing golf, that I can tell you.
MR. GREGORY: In your meeting with the president did you talk about this, talk about perhaps a role he might play going forward to shed some more light on this?
GOV. SCHWARZENEGGER: Before this ever happened he has already talked about the, the role he will play and how important Special Olympics is. That's why I said his heart is at the right place. He loves Special Olympics.
MR. GREGORY: All right, we're going to leave it there. Thank you all very much.
GOV. RENDELL: Yeah.
GOV. SCHWARZENEGGER: Thank you.
MR. GREGORY: Coming next, new details on the bank bailout. Where do the president and his economic team go from here, as anger grows and the economic crisis deepens? Our roundtable weighs in, NBC's Tom Brokaw and CNBC's Erin Burnett, here only on MEET THE PRESS.
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MR. GREGORY: Our roundtable with Tom Brokaw and Erin Burnett on the deepening economic crisis after this brief station break.
(Announcements)
MR. GREGORY: We are back and joined by Tom Brokaw and Erin Burnett. Welcome to both of you.
Big news coming out this week, Erin Burnett, has to do, finally, with that banking plan. The effort--it's very complicated, but it boils down to getting these prepared assets off the books, off the balance sheets of these major banks. How are they going to do it?
MS. ERIN BURNETT: As you said, at long last, finally, and we hope it works. Basically you could say this is just a return to what Hank Paulson had proposed last fall when he originally said, "Give me the money, we're going to buy these assets from the banks." Now they're trying to be a little bit more sophisticated about it, but the bottom line is this: they're going to try to get investors to come in, put in a little bit of money, put in some taxpayer money, give some inexpensive loans to those investors and buy the loans from the banks. And if it works, that would mean the banks have some freed up space to make more loans. And that's if it works. I don't think you should expect it to be a mammoth endeavor at first.
MR. GREGORY: The reality though, Tom, is that if the banks do this at a lower cost, what they think it's worth, they're going to lose some money. So taxpayers have to wonder, will there have to be additional capital provided by the government to keep the banks afloat?
MR. TOM BROKAW: Well, I think we're dealing with two elements here. First of all, politically the secretary of the Treasury, Tim Geithner, needs to get on the board. He needs to have a victory. And speak in March Madness terms, you know, he needs to move to the next round. And the president's going to have to help him more than he has in the past. When it comes to how the banks respond to this and how the country responds to it, a Wall Street friend of mine who is very friendly to this administration sent me an e-mail over the weekend and said, "Look, we didn't have a good sign last week when the Federal Reserve came out with that is called TALF." Now, this sounds like hieroglyphics, but they were making money available, backing it up with student loans and other things, and there was a kind of an anemic response to that.
MS. BURNETT: Mm-hmm.
MR. BROKAW: And what has happened is a lot of these financial institutions, David, are saying, "I'm not sure I want to go there. Because if Congress is going to tee me up two days later..."
MR. GREGORY: Right.
MR. BROKAW: "...and add additional conditions to it, that's not something I want to do."
MR. GREGORY: You've said before, Erin, what the market wants, what Wall Street wants, what investors want is clarity.
MS. BURNETT: Mm-hmm.
MR. GREGORY: And that's what the intervention by Congress has taken away when you change the rules of the road down the line. It's also important to remember there's a lot of money in this economy, but it's on the sidelines because people don't want the risk. But this is a real factor.
MS. BURNETT: It is. And by the way, in terms of money on the sidelines, there's a record. I mean, everyone watching has probably been, whatever money they have, putting it in their bank account as opposed to investing it. That is money on the sidelines. It, it's at a record. But in terms of the rules, this week I think the thing that was most frightening for these potential investors was the retroactivity of the House bill.
MR. BROKAW: Mm-hmm.
MS. BURNETT: That they could say, "Not just are we going to change the rules on you today as opposed to what we promised yesterday, but we can go back and say we're going to tax you on what you earned last year or the year before." And that is a risk that just is unacceptable and would prevent the private capital from coming in.
MR. BROKAW: Well, I--listen, I think that this is a crucial week for the administration. We've got to get rid of this whole business about 100 days and how many weeks he's been in office. Every day is a hundred-day test for this president...
MR. GREGORY: Hm.
MS. BURNETT: Hm.
MR. BROKAW: ...in this financial crisis. And people who are part of what I call his extended financial adviser family are saying privately and, and publicly now they need to go farther and faster and concentrate on this alone. And it probably means that the president's going to have to raise his profile and not get into a situation like a week ago you had Larry Summers on a Sunday saying, "Well, we have to honor these contracts," the next day the president's saying it's an outrage that they're getting this. They got to get their act together and move forward as one.
MS. BURNETT: They need to know where he stands.
MR. GREGORY: The--right. And...
MS. BURNETT: It's unclear where he stands right now.
MR. GREGORY: The question of defending Treasury Secretary Geithner came up this week. The president had to defend him. And he does it again in an interview that airs on "60 Minutes" tonight. He says his job is safe. He even went to great lengths this week comparing him, his Treasury secretary, to Alexander Hamilton. Let's watch that.
(Videotape, Wednesday)
PRES. OBAMA: There has never been a secretary of the Treasury, except maybe Alexander Hamilton right after the Revolutionary War, who's had to deal with the multiplicity of issues that Secretary Geithner's having to deal with all at the same time. And you know, he is doing so with intelligence and diligence. Nobody's working harder than this guy. You know, he is making all the right moves in terms of playing a bad hand.
(End videotape)
MR. GREGORY: Is there a real conversation going on out there, Erin, about replacing him?
MS. BURNETT: Yes, there is. And it was interesting watching your roundtable before, how the governors, all of whom are very respected in financial circles, were, were defending him. I, I spent a lot of time this weekend talking to Wall Street CEOs and executives. All of them supported Tim Geithner and all of them still say this is a man who understands what he's doing. They respect his intelligence and his knowledge of the complexity. They don't want someone in there who doesn't have those characteristics. That being said, some of them said they are very disappointed not just with the--some of the charisma challenges that he has had, but with this specifically, which is he asks for them to bring plans. You know, "Show me some ideas," and then sort of says, "Hey, they may not work." What they miss is the proactivity and the creativity of a Hank Paulson, where he said, "Here's an idea, take a look at it," and sort of, "Let's get this done." There is some real criticism on that, and that is a new thing from those executives.
MR. BROKAW: There's another issue here, David, and that is Tim Geithner needs help. They've not been able to fill a lot of senior positions at the Treasury Department. He's working the phone a lot during the week talking to people who have sterling reputations in New York. They don't want to come to Washington in what they see as a toxic environment for Wall Street people. You know, they've made a lot of money, they've got a few houses. They're going to see that displayed on screens, they're going to have people they've never heard of before examining their every motive. So a lot of them are saying, "No thanks, I'm going to stay home at the moment." So he needs help. And again, he may need the president's help in getting the right people down here. They're now saying to potential appointees, "It may take four months to vet you." Now, that's got to stop. You know, if you, if you want to fill these jobs, you've got to get realistic about how long it's going to take. The questionnaire has gone from some 40 pages to some 60 pages. Now, someone who's very close to the president politically said to me the other night that they're going to fast track that. They're probably going to get some people who won't require confirmation. But we've got to get the best people that we can find into these senior positions because, as the president said, this is the most daunting task any secretary has had since Hamilton.
MR. GREGORY: It leads me so perfectly to a question about what happened this week. Why was this week a kind of tipping point? Here's the cover of Newsweek magazine. You've got an angry mob with pitchforks and the headline, "The Thinking Man's Guide to Populist Rage." Editor Jon Meacham writes this: "It was, in a way, overdue. Beginning last September, when the financial sector of the economy collapsed and the markets melted down, a resurgence of American populism seemed inevitable. ... And yet the temper of the time, shaped in large measure by Barack Obama's own coolness, remained calm. ... You might think of the period between September 2008 and March 2009, then, as a kind of economic phony war, the term historians use to describe the months that elapsed between Hitler's invasion of Poland in September 1939 to the broader outrake of--outbreak, rather--of hostilities in late April and early May of 1940. In this analogy, the AIG bonuses that were revealed last week are rather like the battle for France--the point after which nothing would be the same."
Your take, Tom, on what happened this week.
MR. BROKAW: Well, I--my take, I think it's understandable. One of the things that I've been saying is that for a year now, for a full year nothing that the American people have been told about the financial condition of this country has proved to be true. And very good people--Jamie Dimon from JPMorgan Chase said last June, after Bear Stearns collapsed, "Well, we think we've seen the worst for Wall Street now. We still have the housing crisis to go."
MR. GREGORY: Mm-hmm.
MR. BROKAW: Well, we hadn't seen the worst from Wall Street. And this AIG bonus thing exploded in everyone's faces. Meanwhile, across the country car dealers are going under as they watch GM get bailouts and GMAC come and clear off their lots of the vehicles that they owe money on. Mom and pop and regional retail stores are closing up or cutting back severely. I know one banker who was dealing with a client who got in some credit card difficulty and, as he said, the day that Citibank got 5 percent money from the government this client, a single mom, had her penalty bumped up 2 points on her credit card late payments. And he said, "How do you explain that?" That would ricochet up and down any Main Street. So there has been this steady building. And I think that not just the administration, but the political culture in Washington has been insufficiently attentive to what's going on on Wall--on Main Street, at the other end of the pipeline. They need to hear from those people, make them feel like they're part of the process and make them understand how we can all go forward and we not just feel your pain, but we hear what you're saying.
MR. GREGORY: And I just feel like, Erin, there's been a, a breaking of contracts. If there was a social contract between American investors and Wall Street, it was, "Look, we don't really get a lot of what you do..."
MR. BROKAW: Yeah, right.
MR. GREGORY: "...but we count on you for the long-term wealth." And all of the sudden that evaporates. And when it comes to government, hey, government's got to be looking out for us, protecting us. That seems not to have happened. It's that loss of faith that I brought up with the leaders in the earlier discussion.
MS. BURNETT: I think you, you put it in a great way when you said it's a breaking of a contract; which does, in a sense, sort of explain why there is such public support for breaking formal legal contracts...
MR. GREGORY: Hm.
MS. BURNETT: ...when people feel they've been so let down, as you're talking about. Because the irony of this is that even though it seems it's about the money when it comes to these bonuses, it really isn't. When you look at the bonuses paid last year, the $18.6 billion number from Wall Street that so shocked people, if you taxed that at the, at the House bill rate, that's only .6 percent of the tax revenue that the United States government took in a year ago. It's an infant--it's incredibly small. So in a sense it really isn't about the money, it's about this broader shift. The average executive in this country of a publicly traded company, not just Wall Street, makes 400 times the average worker. And that has been a dramatic shift over the past two decades. That is something that is causing some of the anger here. In a sense it's been building, and this is the moment where it breaks.
MR. GREGORY: And yet the leadership question for the president of the United States boils down to how do you try to lead people out of this under such difficult circumstance? The president said a couple of weeks ago, "We can't govern in anger," and yet again this week, on Monday, he was talking about AIG specifically. Listen to this.
(Videotape, Monday)
PRES. OBAMA: In the last six months AIG has received substantial sums from the U.S. Treasury, and I've asked Secretary Geithner to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole.
Everybody involved needs to understand this is not just a matter of dollars and sense. It's about our fundamental values.
(End videotape)
MR. GREGORY: So the question then, Tom, if it's a question of fundamental values, then why, when the bonuses came up several months ago, did the government not say, "Hold on. We're going to renegotiate the terms of the deal here if we're going to give you an additional $30 billion"?
MR. BROKAW: I don't have an answer for that, and neither do the people who didn't do that at that time. I'm also struck by how many members of Congress who now have all the outrage that we see in these public hearings, Democrats and Republicans alike, who are up shaking the money tree every opportunity they got for campaign contributions. We don't hear a lot of them talking about, "I'm going to send that money back," by the way. So I think everybody is at fault here. And what we need is some statesmanship on both sides. I think we need the president to step up his game, but we also need on the Republican side for people to say, "Look, we made some mistakes when we were in power, as well." We had that enormous deficit projected by the Congressional Budget Office last week, which is going to have our children, grandchildren and great-grandchildren paying it off for a long time. We're all in this together. One of the things that helped Franklin Roosevelt in the first 100 days is that some really hardback Republicans said, "The president wants this. I think we have to go forward and get it to get the country out of this." You don't see very much of that going on in Washington now.
MR. GREGORY: And the reality is that the government has said, the president has said we're going to need more money to help these banks. The program that we're talking about being unveiled, that's expected to be unveiled tomorrow...
MS. BURNETT: Right.
GREGORY: ....involves the Fed providing a lot of financing and the Treasury Department providing a lot of equity in order to entice private investors to buy some of these troubled assets. They could be on the hook for a lot more money. How does the president, who has been involved in, in maintaining that anger level, go back to Congress and say, "Hey, by the way, I need you to provide the banks more money"?
MS. BURNETT: Right now it does appear there's an impasse when you look at what happened on, on Capitol Hill this week. I, I don't think it was just Wall Street that was shocked. I think everybody was shocked, in a sense, to see the level of rancor on, on Capitol Hill. In terms of what's going to happen from here, the real question, at least among people I've talked to even in the White House, is whether the president will stand up and, and sort of, I guess, try to walk a middle line, but say, "I want reform on compensation. We're going to have some regulations, and I'm going to do it either through legislation or through some formal legislation--regulation caps in terms of, you know, how much executives can make. And, and I'm going to put that in here. I'm going to put that into the TALF legislation, for example, so people can't. We're going to get these investors involved." A big issue, though, will be will he do that? He's said he's not going to govern out of anger, but now he's said he's outraged. It's a middle line and it's unclear whether he's going to walk it.
MR. GREGORY: And the question about this House bill, Tom, to tax at 90 percent retroactively these bonuses, does this go anywhere?
MR. BROKAW: Yeah. Well, I don't know what happens when it gets to the Senate, but I think it'll play out there a little bit because there's an awful lot of demagoguery that's attached to all this. It--look, I can under--absolutely understand the outrage of the bonuses, and something should have been--there was a better way, however, of getting the money back, getting them to be more realistic on the other side. Tom Friedman writes about it today in The New York Times, saying what if the president had appealed to those people who received the bonus and say, "Look, it's in the public interest and the national interest for you to give the money back or to rework the terms of it all." To go to a 90 percent tax, $250,000 limits--over $250,000 salaries for people who get bailout money, the motivation for people who go to work on Wall Street is they want to make money. And if they can make a lot of money for shareholders and for investors, they deserve to get a piece of the action. Well, what's outrageous about this one is they tanked a company and they still expected to get paid.
MS. BURNETT: Right.
MR. GREGORY: Right. You know, I talked to somebody in, in Los Angeles yesterday who said, "You know, it's just all of this is so distressing. Everybody's bickering with each other, blaming each other and things are so horrible."
MS. BURNETT: Right.
MR. GREGORY: It leads to the project you're working on, Tom, "The American Character." You'll--you write the forward for a new book about this. And you're going to be spending some time going around the country, I gather asking the question about how the psychology of the country's changing.
MR. BROKAW: Well, it's not just the psychology, but how businesses are responding to these circumstances that they find themselves in. Not just how they're downsizing, but how they're positioning themselves for the new economy. Not just because he's my boss, but Jeff Immelt of GE has had the best single line that I know: "It's not a cycle," he says, "it's a reset." And it's a reset not just economically, it's a reset culturally, it's a reset politically, it's a reset in terms of our expectations. So Highway 50 goes from eastern Maryland all the way out to the California coast, touches most of the political bases in this country, and I've always believed as long as I've been a journalist, and I've been covering Washington for 40 years now, that we don't hear enough from there back this way. That it's always, "We talk, you listen," in Washington. People want to be heard now. They've got something to say, they're tuned in and they've said, in effect, to people in Washington and Wall Street, "You've had your turn..."
MR. GREGORY: Hm.
MR. BROKAW: "...and look where we are."
MR. GREGORY: And the reality is that whatever recovery looks like...
MS. BURNETT: Mm-hmm.
MR. GREGORY: ...it's going to be a lot different. The notion that wealth comes back, that it's a return to where we were is simply fiction.
MS. BURNETT: It is. I mean, you say Route 50, by the way, I grew up on Route 50.
MR. BROKAW: Yeah. You did?
MS. BURNETT: Actually in eastern Maryland. So that was--when you say that, oh, yeah.
It is, though, a complete reset, and I think Jeff Immelt's right in saying that. When we're trying to talk about can we get lending--all of these acronym plans we're talking about are trying to reinflate the economy. And the question is, can it be reinflated? We had expectations that we were going to have three cars in every driveway. Well, we're probably not going to have three cars in every driveway. We might have two cars, we might even have one car. There's going to be a different standard of living. And how much lower will that be than where we were a year ago? Fundamentally nobody knows, and that is the uncertainty that you see. And in these little specific fights we see over bonus compensation or over a Treasury plan or--that's what all of these fights are about, is about that bigger question and the uncertainty we all feel.
MR. GREGORY: Just a few seconds, Tom.
MR. BROKAW: Well, Paul Volcker said to me the other night, he said--a lot of hand-wringing about consumption, and it's dropping. He said it's gotten back to about where it should have been in the first place. And I think that's what people have to use that as a calibration of where we are.
MS. BURNETT: Mm-hmm. And if we're where it should have been, then that would be a good thing for the economy.
MR. BROKAW: Yeah.
MS. BURNETT: It could mean we're stabilizing where we are now instead of going lower.
MR. GREGORY: All right, we will leave it there. Thanks to both of you.
We're going to continue our discussion online, by the way, and ask this roundtable some question that our viewers submitted via e-mail and Twitter. Watch our MEET THE PRESS Take Two Web extra up this afternoon on our Web site. Plus, look for our updates from me throughout the week. It's all at mtp.msnbc.com.
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MR. GREGORY: That's all for today. We'll be back next week. If it's Sunday, it's MEET THE PRESS.