updated 11/24/2010 11:51:03 AM ET 2010-11-24T16:51:03

MR. DAVID GREGORY: This Sunday, the politics of the economy at home and abroad.  The president is dealt a setback at the economic summit in Asia over trade and a rebuke of his approach to economic recovery.  At home, the debate over the 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 guest this morning, the president's senior adviser, David Axelrod, in 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, and 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 Bethany McLean; and former congressman, Democrat, Harold Ford.

Announcer: From NBC News in Washington, MEET THE PRESS with David Gregory.

MR. GREGORY: Good morning.

MR. DAVID GREGORY:  President Obama on the way back from his 10-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 debates 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 back.

MR. DAVID AXELROD: Morning, David.  Good to be here.

MR. GREGORY: Some of the headlines from the trip were not very good.  A setback at the polls on Election Day and then headlines like this from The New York Times on Friday, "Obama's Economic View is Rejected on World Stage; China, Britain and Germany Challenge U.S. - Trade Talks With Seoul Fail, Too." And The Wall Street Journal over the weekend, "U.S. Gets Rebuffed at Divided Summit." After an Election Day setback, has the president also lost his ability to forge international consensus on the world stage?

MR. AXELROD: Not at all, David.  And if you had more time, I'm sure you'd show the positive headlines from the trip as well.  The president went on this mission because Asia's the most vibrant market, growing market in the world and we want to compete for those jobs and that's why he went. And his first stop was in 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.  And we went on and we forced the agenda at the G-20 to focus on this issue of trade imbalances, which is an important thing.

Now, it's, it's obviously going to be the case that countries are going to pursue their national interests.  Germany is a great exporter.  That's all--that's, that's the, the core of their economy.  They don't want greater competition from us.  China, we know the same.  So there are going to be--there's going to be tug and pull in these.  But the point is you have a president of the United States who's out there fighting for American jobs.  In Korea we want a trade agreement because Korea is a, 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 auto industry, wasn't good enough for American beef.  We want to keep on negotiating, and that's what we're going to do.

MR. GREGORY: Let...

MR. AXELROD: We're going to make the best deal for the American worker and the American industry.

MR. GREGORY: Let's talk about another hot topic, and that is the issue of the Bush-era tax cuts.  A lot of back and forth involving you this week about what's going to happen here, whether there'll 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.

(Videotape, December 28, 2008)

MR. GREGORY: Will you hold off on any tax increases?

MR. AXELROD: Well, look, the question is on the Bush tax cuts for the very wealthiest Americans, and it's something that we plainly can't afford moving forward, and whether it, it, it expires or whether we repeal it a little bit early, we'll determine later, but it's going to go, it has to go.

(End videotape)

MR. GREGORY: "It has to go." With the new political reality in Washington, has the president changed his view?

MR. AXELROD: No.  The president still believes that we have to move forward on these tax cuts for the middle class.  The middle class has taken a beating in this last decade.  They've seen their incomes decline, and they've borne the brunt of this recession, but we can't afford to borrow another $700 billion to pay for tax cuts for millionaires and billionaires.  You know, your next guest, Senator McCain, was very courageous in 2003 when he voted against the second Bush tax cut, because he said it was irresponsible to, to, to pay for these--to borrow money for these tax cuts skewed to the wealthy at a time when we had two wars
and so many other pressures.  And that is still the case. So the president's...

MR. GREGORY: But are you saying--so you're saying no deal...

MR. AXELROD: ...position has--the president has not changed.

MR. GREGORY: ...no compromise.

MR. AXELROD: Well, you're asking me--I'm telling you what the president's position is.  We need to move forward on the middle-class tax cuts.  We cannot afford a permanent extension of tax cuts for the wealthiest Americans, which would cost us $700 billion that we don't have over the next 10 years.

MR. GREGORY: Right.  All right, but I know...

MR. AXELROD: We, we simply shouldn't do that.

MR. GREGORY: ...the, I know the arguments.  Here's the question.  If the president could get an agreement on middle class tax cut extension, would he agree to an extension, at least temporary, for the tax cuts on the upper earners?

MR. AXELROD: David, we're looking forward to sitting down with leaders of both parties and talking about those issues.  I'm not going to negotiate that with you here.  There have been a lot of formulations thrown out in the last few weeks that are interesting, 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 designed, are going to expire on January 1.  We want people to have the certainty of knowing that's not going to happen.  And Congress ought to--before they go on vacation, they ought to ensure that
people have better vacations of their own by knowing that this matter has been taken care of.

MR. GREGORY: All right.  Bottom line...

MR. AXELROD: So we're going to work hard to do that.

MR. GREGORY: Bottom line, he's open to compromise.  Is that fair?

MR. AXELROD: The bottom line is he wants to sit down and talk about this, but...

MR. GREGORY: Is he open to compromise?

MR. AXELROD: ...as to your original question--there's no, there's no bend on the, on the permanent extension of tax cuts for the wealthiest Americans.

MR. GREGORY: He's open to compromise.

MR. AXELROD: He wants to sit down--we want to get this done.  The American people expect to get this done, and we, we are, we are eager to sit down and talk about how to move forward.

MR. GREGORY: The president said after the election that he endured a "shellacking," his word.  What is the course correction for this president as he moves forward?

MR. AXELROD: Look, I think that, fundamentally, what drove the electorate were two things.  One is that while we have a recovery, while we've had 10 straight months of job growth after a horrendous downturn, it hasn't been fast enough.  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 and that was the primary message that we heard in that election. The second is they want us to work together to do it.  In many instances, we had to move as one party in Congress, or virtually as one party because the other party decided that they did not want to participate as a strategy.  Now I think the country is saying to both Republicans and Democrats, "Forget about the politics for a while.  Sit down and work together to solve these problems and get this economy moving at a faster pace." And that's what we intend to do.

MR. GREGORY: OK, but 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 taxes, on the issue of what happened in the election still plenty of fight.  I'm sure your supporters are happy to hear that. What I'm wondering is, how does the president course correct, change the dynamic to actually get something done?

MR. AXELROD: Well, you know, here's the thing, David.  That is more important in a conversation between the president and members of both parties than me talking to you here.  I think those are issues that we need to move forward on.  I think on--there are plenty of economic issues.  We proposed a--to--a tax cut that would all allow businesses to buy capital equipment next year without paying the taxes on them in, in 2011.  That would get the economy moving.  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, and get this--and get these things done so the economy grows at a faster pace.

MR. GREGORY: Let me ask you about the, the debt commission, the president's debt commission.  The chairman came out maybe a little earlier than they had planned and put forth a rather Draconian document about how to slash spending and deal with the deficit.  The New York Times summarized it this way--to bring viewers into it, let me put it on the screen: "The chairman ... outlined a politically provocative and economically ambitious package of spending cuts and tax increases.  ...

"The plan calls for deep cuts in domestic and military spending, a gradual 15-cents-a-gallon increase in the federal gasoline tax, limiting or eliminating popular tax breaks in return for lower" taxes, " and benefit cuts and an increased retirement age for Social Security." Here's
the bottom line, if they don't get 14 commission members to agree to this, this is an intellectual exercise and not a real document.  Can they get to 14?

MR. AXELROD: I don't know whether they can or they can't, David.  But obviously they did a--it's a voluminous work and they have not yet completed it.  That was the chairman--chairman's recommendation, and now they're going to vote on it.  The president said that he'll comment on their work after they complete it.  That's his commitment to them.  But, look, it underscores what we knew.  The president appointed this commission, bipartisan commission, because this is a huge problem.  We have to deal with it, and it's not going to be easy to deal with.  And if one side says, “No taxes on anyone can go up, any interest, any corporation, any individual,” and then the other side says, “No cuts can be made, then we're not going to solve it.”  Everybody's going to have to give a little, and we're going to have to move forward and deal with this problem together.  And hopefully, whatever happens, this commission report will give the impetus to do that.

MR. GREGORY: Is--so the president's position is, “Look, everything has to be on the table." Tax hikes, taking on entitlement spending, raising the retirement age for Social Security, on those specifics, all of those are on the table in the president's mind.

MR. AXELROD: Yeah, I'm not going to deal with specifics because that would violate the president's commitment.  But I will say this.  There's no--the president has shown his willingness in the last two years.  You know, when we took on the healthcare issue, one of the reasons was that our budget people said we cannot deal with these deficits if we have an
inexorable climb in healthcare costs to the government, to businesses, to individuals, and so we did that.  And part of it was economies and the Medicare program.  We took away subsidies to insurance companies and made other economies that didn't affect patient care.  Unfortunately, the other party ran against us on it in the election and accused us of...

MR. GREGORY: But why--but I have to ask you...

MR. AXELROD: ...cutting Medicare.  We have to set, we have to set aside those kinds of tactics...

MR. GREGORY: But I didn't even ask you for specifics.

MR. AXELROD: ...hold hands and move together.

MR. GREGORY: I asked you whether everything was on the table.  And the level of caution from you on this--I mean, how are you going to expect both Democrats and Republicans to make painful choices if you can't even say publicly here today that those tough issues should at least be on the table?

MR. AXELROD: The president--the president...

MR. GREGORY: And yet you expect Republicans to come to you.

MR. AXELROD: David, David, the president empaneled this commission because he recognized that we had to take a, a, a wide lens look at this, and then--he said then everything should be on the table.  That hasn't changed.  What, what you want me to do, though, is, is react to
individual aspects of it here, and that, that I can't do because we need to see what the final report is.  But obviously there are going to be some hard choices to be made.  We're willing to make them.  It's going to take both parties together, working together to get them done.

MR. GREGORY: Speaker Pelosi said this draft report was unacceptable.  Did the president found--find that reaction counter-productive?

MR. AXELROD: Look, there were reactions on--across the political spectrum. Some on the right, who said it was unacceptable.  Mr. Norquist and others on the right said, "It raises taxes, we can't be for it." Others on the left said it was unacceptable for other reasons.  I think
the best thing to do is wait for the final report, look at it, see where we can find common ground and move forward.  This is something the American people expect us to do, and we, we have to do it because we all know that this is a big dark cloud on our horizon and that--and the president is very intent on moving forward.

MR. GREGORY: All right, before you go, two quick ones.  Rahm Emanuel, former chief of staff, now preparing to run for mayor in Chicago, in your town.  Will the president campaign for him?

MR. AXELROD: Well, the president hasn't--the president's made clear what his view of Rahm is.  He said he was an excellent chief of staff, thought he'd 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.

MR. GREGORY: About Afghanistan.  My next guest, as you know, Senator McCain, is just back from Iraq and Afghanistan and has been critical of the timeline for the beginning of withdrawal, saying that, in fact, it is creating erratic behavior in Hamid Karzai, among others in the region,
because there's a sense that the U.S. will leave.  Is it a problem for the U.S. to announce the beginning of the end of the war? Does it undercut our policy?

MR. AXELROD: No, it's, it's, it's important that we announce the beginning of a drawdown.  We've always said it would be based on conditions on the ground, and that is still the case.  But it's important to let the Afghans know that they have to pick up the, pick up the pace
in terms of training up the military, training up their police, being ready to accept responsibility. And the--this, this beginning of the drawdown has a disciplining effect in that regard.  So it's important. We, we, we set it in conjunction with our military leadership.  Everyone
agreed that it was important, and it, and it's not going to shift.

MR. GREGORY: All right, we'll leave it there.  David Axelrod in Chicago this morning, thank you as always.

MR. AXELROD: Good to be with you.  Thank you.

MR. DAVID GREGORY:  Now the view from the other side of the aisle, Republican 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?

SEN. JOHN McCAIN (R-AZ): Well, I'd like to see the president say that it's only condition based.  According to Mr. Woodward's book, his problem is the political--the left base of the Democrat Party.  You don't fight and conduct wars that way.  You win and then you leave.  And that's what we've done in Iraq.  And the fact is, the perception is, amongst friends
and enemies alike, that we've--we may be leaving, And that has caused them to make certain accommodations because they can't leave.  I mean, it's just a fact.

MR. GREGORY: Well, Hamid Karzai...

SEN. McCAIN: Down to the, down to the governor level.

MR. GREGORY: Right.

SEN. McCAIN: Down to the police chief level they say, yes, the Taliban are telling us we're leaving and they're going to cut off our heads. Famous captive, Taliban captive, said to his American interrogator, "You've got the watches, we've got the time."

MR. GREGORY: Well, but Hamid Karzai, who you met with, says in The Washington Post this morning that it's time for the U.S. to reduce the intrusiveness into daily Afghan life, that they ought to get boots that are on the ground off the ground, out of the country.

SEN. McCAIN: Yes, and Hamid Karzai is reflecting his desire to survive, also a degree of paranoia.  There's three big problems in Afghanistan right now, and let me tell you one of them that isn't, and that is the military aspect of it.  Our Marines, Army, Navy, Air Force are doing a
magnificent job.  They are penetrating into areas that they haven't been before.  The hometown of Mullah Omar is now under our control.  So that's--they've done a magnificent job under the leadership of General Petraeus and others.

The other side, though, is that there's corruption at very high levels. The attorney general of, 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
al-Haqqani network and other elements of Taliban.  You can't defeat the nemy if they have sanctuary.  We also went to Pakistan and had a, a very andid meeting with General Kayani on this issue.  But it boils down to hat the ISI, Kayani, the Pakistani leadership, the Afghan leadership, India's leadership, all are not convinced that the United States is going
to stay the course.

MR. GREGORY: Let me, let me talk to you about another military matter back home and a priority for this administration; that's whether the ban on gays and lesbians in the military is going to be rescinded.

SEN. McCAIN: Mm-hmm.

MR. GREGORY: Are you going to stand in the way, you personally, in the way of this ban being lifted?

SEN. McCAIN: 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, as I've said for years, to our military leaders and not a, not a study that is leaked--as we know this town's pretty good
at that.

MR. GREGORY: That said, seven in 10 members of the military think it would be just fine to have it lifted.

SEN. McCAIN: Yeah.  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 importantly, we have people like the commandant of the Marine Corps, the three other--all four service chiefs are saying we need a thorough and complete study of the effects--not how
to implement a repeal, but the effects on morale and battle effectiveness.  That's what I want.  And once we get this study, we need to have hearings, and we need to examine it, and we need to look at whether it's the kind of study that we wanted.  It isn't, in my view,
because I wanted a study to determine the effects of the repeal on battle effectiveness and morale.  What this study is, is designed to do is, is to find out how the repeal could be implemented.  Those are two very different aspects of this issue.

MR. GREGORY: In a lot of households, this is a subject of debate, including your own, apparently.

SEN. McCAIN: That's right.

MR. GREGORY: Your wife, Cindy McCain, has, has cut an ad, a public service announcement with NOH8, a group that promotes gay, lesbian, transgender rights.  And this is a portion of it.  Let me, let me play it.

(Videotape from NOH8 public service announcement)

MS. CINDY McCAIN: Our political and religious leaders tell LGBT youth that they have no future.

MR. DAVE NAVARRO: They can't get married.

MR. STEPH JONES: They can't donate blood.

MS. McCAIN: They can't serve our country openly.

(End videotape)

MR. GREGORY: Referring to "Don't Ask, Don't Tell." She did clarify this on her Twitter page.  I--you're both so active on Twitter.  She said this.  She said, "I fully support the NOH8 campaign and all it stands for and am proud to be part of it.  But I stand by my husband's stance on
`don't ask, don't' tell.'"

SEN. McCAIN: Which is a complete and thorough study and review of the effect on battle readiness and...

MR. GREGORY: OK.

SEN. McCAIN: ...and morale.  And by the way, I respect the First Amendment rights of every member of my family.

MR. GREGORY: But, but, you know, what's interesting about this, I mean, a debate in families, is...

SEN. McCAIN: Sure.

MR. GREGORY: ...there is kind of--you, you talk about waiting for the--there is an appeal to honor, I mean to your honor.  You had the chairman of the Joint Chiefs saying, "Look, it's just not right to have, to have people lying about who they are just to be able to protect fellow
citizens." It has been an appeal...

SEN. McCAIN: Yeah.  And you have the, you have the commandant of the Marine Corps who says...

MR. GREGORY: Right.

SEN. McCAIN: ...whose, whose people he's directly responsible for, is saying this could hurt our ability to win.  This, this is about...

MR. GREGORY: Do you believe that?

SEN. McCAIN: This is about...

MR. GREGORY: I mean, you say you wait for the study.  What do you believe?

SEN. McCAIN: I'm paying attention to the commandant of the Marine Corps.

MR. GREGORY: Right.

SEN. McCAIN: I'm paying attention to the chief of staff of the Air Force,
the Army and...

MR. GREGORY: But you're so close to the military, Senator.  You know these people.  You know the issue.  I mean, do you have a sense of it in your gut about what should happen?

SEN. McCAIN: I, I have a sense that I respect and admire these four service chiefs who have expressed either outright opposition or deep reservation about the repeal.  They're the ones who are in charge.  Now, the chairman of the Joint Chiefs of Staff, I agree, the president and the secretary of Defense have all come out for repeal.  But I really would--I was in, I was in an outpost near Kandahar.  Army master sergeant, 19 years in, fifth deployment to Iraq and Afghanistan, says to me, "Senator McCain, we live, eat, sleep, and fight together in close proximity.  I'm concerned about the repeal.  I'd like to know more about it." That's, that's the view that I got from chief petty officers and sergeants all over Afghanistan.

MR. GREGORY: The ban's not going to be lifted in the lame duck session, is that fair to say?

SEN. McCAIN: I think that we should at least--I, I don't think it should be, because I think once this study comes out in the beginning of December, we should at least have a chance to review it and maybe have hearings on it.

MR. GREGORY: I just want to spend a couple of minutes on taxes and spending.

SEN. McCAIN: Mm-hmm.

MR. GREGORY: This is your 59th appearance on MEET THE PRESS.  You know what that means.  We have so much tape.  So if we--if you go back to 2004, I know your, your...

SEN. McCAIN: Yeah.

MR. GREGORY: ...position on the Bush tax cuts...

SEN. McCAIN: Yeah.

MR. GREGORY: ...did change and you've talked about that before.  But I do want to play something you said from an interview in 2004 and ask you about it.

(Videotape, April 11, 2004)

SEN. McCAIN: I voted against the tax cuts because of the disproportional amount that went to the wealthiest Americans.  I would clearly support not extending those tax cuts in order to help address the, the deficit. But the middle income tax credits, the families, the child tax credits,
the marriage tax credit, all those I would keep.

(End videotape)

MR. GREGORY: That's exactly...

SEN. McCAIN: Is there…

MR. GREGORY: ...what President Obama says.

SEN. McCAIN: Is there a statute of limitations? The economic situation 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 control
at that time. I said otherwise we're facing massive deficits, and that's what happened.

MR. GREGORY: Should tax cuts on the wealthiest Americans only be extended for a temporary period and only if there are corresponding spending cuts?

SEN. McCAIN: I think they should be extended until we're out of this recession.  At such time then we could look at, at other tax hikes.  But when we're in a serious recession, I cannot believe that raising taxes is a good thing on anybody.

MR. GREGORY: Is the debt commission a nonstarter or a good start or something else?

SEN. McCAIN: I hope it's a starter.  I hope that even if they don't get the 14 members, as you mentioned earlier when you were talking with David Axelrod, that I hope that this is a wake-up call to America.  It gives us an idea of the breadth of this problem, that we are going to have to make significant changes, we're going to have to challenge some of the very, very tough areas such as entitlements if we're ever going to dig out of this hole.

MR. GREGORY: Everything should be on the table?

SEN. McCAIN: Everything should be on the table.

MR. GREGORY: Raising the retirement age?

SEN. McCAIN: Everything should be on the table.  And if it's not, then, obviously, I don't think we're going to make progress.  And again, I'd like to applaud Alan Simpson and Erskine Bowles because at least Americans--I think the lesson of 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.

MR. GREGORY: Just about a minute left.

SEN. McCAIN: Mm-hmm.

MR. GREGORY: President Bush's memoir is out, "Decision Points." He talks about you in a couple of places.  And he talks about your decision not to have him campaign with you.

SEN. McCAIN: Mm-hmm.

MR. GREGORY: 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?

SEN. McCAIN: No.  That--it was a decision made at the time of the campaign. I respect and admire President Bush.  At the time, it's just was the realities of the political situation.  As you know, then--President Obama, at the time, was doing everything he could to tie me to President Bush.  I admire and respect and I believe I called President Bush a friend.  And it was just a decision we made and I hope he respects it.

MR. GREGORY: There was a meeting--he talks about September of '08, the height of the financial collapse.  You suspend your campaign, call for a meeting in the White House.  Here's a picture of it.  You're there--actually, you're next to Boehner there.  And, and then-Senator
Obama there as well.  And he writes that he was surprised that you actually--you, you had called this meeting, you didn't really add that much substantively, didn't have a question, suggesting that you were unprepared for the meeting.  Is that fair?

SEN. McCAIN: I was prepared for the meeting.  I wasn't prepared for the onslaught that came, took place from all of the Democrats in the room. My reason for being there was to make sure that Republicans were heard, people like Boehner, Mitch McConnell and others.  That was the reason why I was there.  I didn't think I was going to make any headway with some of the Democrats who were in the room.  But I didn't ask for that meeting. But the fact is that 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.

MR. GREGORY: We'll leave it there until your 60th appearance.  Senator,
thank you, as always.

SEN. McCAIN: Thanks for having me on.

MR. GREGORY: Appreciate it.

Up next, our special focus on the economy, jobs and the debt with 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 Bethany McLean; former congressman, Democrat Harold Ford.

(Announcements)

MR. GREGORY: Coming up, jobs, the future of the economy, and Washington's solution to our growing debt.  A special economic discussion featuring Alan Greenspan and Newt Gingrich right after this brief commercial break.

(Announcements)

MR. DAVID GREGORY:  We are back.  Joining me this morning for our special discussion on the problems facing our nation's economy, co-author of the new book on the financial crisis, "All the Devils Are Here," Vanity Fair's Bethany McLean; former Chairman of the Federal Reserve Alan Greenspan; co-author of the new novel "Valley Forge:  George Washington and the Crucible of Victory," former speaker of the House, Republican Newt Gingrich; and chair of the Democratic Leadership Council, former Congressman Harold Ford Jr.

Welcome to all of you.  So much to discuss about the future of our economy, the president on the world stage, free trade, and his approach to economic recovery.

But Alan Greenspan, Dr.  Greenspan, let me begin with you.  Where are we on our search for jobs and on our overall economic outlook?

DR. ALAN GREENSPAN: Well, our search for jobs is still, well, not doing too well.  The, the 10 percent 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 reason is that, unlike previous
recoveries when, for example, we would be getting very significant pickups in building, residential, nonresidential, in a sense, longer term assets, we're not getting that today, and it's a big hole in the economy. And the reason, essentially, as far as the business section is--sector is concerned, is that business is highly uncertain about the future in a way which I have never seen it before and a way in which the data suggests has never, in fact, been so depressed. And unless and until we can begin to lift that pall of uncertainty, it is very difficult to see people reaching out into the longer term.  In other words, remember, buildings are 20, 30-year investments.

MR. GREGORY: Right.

DR. GREENSPAN: And what the data show is that they are--there's extremely high risk aversion in what a columnist called "illiquid assets" like buildings.

MR. GREGORY: Speaker Gingrich, President Obama was on the air a week ago and he talked about a new normal in our economy.  Let me play a portion of that interview and have you react to it.

(Videotape, "60 Minutes," last Sunday)

PRES. BARACK OBAMA: 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, businesses 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 eight million
jobs that were lost.

(End videotape)

MR. GREGORY: Do you accept that?

FMR. REP. NEWT GINGRICH (R-GA): No.  I think, I think we have two enormous policy challenges.  The first is that we're now in a world market, a genuine world market where you've got to think about economics in terms of competing with China, India, Germany.  And you ought to study Germany, which is a high cost country with a huge export manufacturing
base.  Second, this administration is just wrong.  I mean, the Obama model of the economy's just fundamentally, profoundly wrong.  And I don't care--I think Chairman Bernanke is very foolish to be printing $600 billion of additional money, because the fact is, the problems in this
economy are problems of fiscal policy, they're problems of taxation, and they're problems of an anti-business, anti-jobs bureaucracy that this president encourages.

MR. GREGORY: We prop up the economy, Harold, for--we're certainly propping up the housing market.  And so we're in this state.  You agree with that?

FMR. REP. HAROLD FORD JR. (D-TN): In large part.  But 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, there's some steps that government's going to have
to take.  I agree with the chairman wholeheartedly that certainly around taxes and regulations going forward, I hope that the administration will call for a year moratorium on regulations.  I hope they extend the tax cuts and even cut the corporate rate.  But to suggest that the Fed should not continue to play an active role, especially in the face of some inaction from--on the fiscal side I think is wrong.

Two, the entitlement debt.  I think that recommendations made by this deficit reduction commission have been responsible.  There may be some areas where we disagree with, but I hope the left in my party and the right in the Republican Party don't scream so loud that they scare the crowded middle.

MR. GREGORY: And I, and I want to get back to the debt commission.

But, Bethany McLean, let me bring you into this.  A big part of your book, of course, deals with the, the financial collapse and the housing market. The--what--we don't talk about this enough, that--the fact that the government is propping 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?

MS. BETHANY McLEAN: It's a great question, and it's a really interesting thing because one of the great ironies of the financial crisis, one of the big complaints is that government involvement in the housing market was a factor. People want to overplay it as "the factor"; it was a factor.  But the great irony is that we've come out of the financial crisis with the, the housing market even more reliant on the government. It's now some 90 percent of the housing market.  And I don't know if anybody has the guts to see what 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've found, that we've found a real bottom in, in, in housing prices.  But doing so will risk putting the economy into more of a tailspin.

MR. GREGORY: And, Alan Greenspan, again, another kind of bottom line question, is there a second crash out there that you fear?

DR. GREENSPAN: 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, we're moving forward, but at too slow a pace to bring the unemployment rate down.  But there's very little evidence of any deterioration that suggests we're about to have a double dip, as they call it. And, 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 there's all evidence out there that there's a very mild degree of acceleration in the American economy, but not enough to
get the system to function.

MR. GREGORY: Well, let's talk about the debt commission because, Speaker Gingrich, you've been on the 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, a starter, or something in between?

REP. GINGRICH: Well, the, the statement by the chairman is a nonstarter because, remember, you don't have to get to 14, you have to get to passage in the House and Senate.

MR. GREGORY: Right.

REP. GINGRICH: Well, so the fact that they, they, they get together, they issue a statement guaranteed to frighten most Americans--which is what it did, I mean, a number of people are now calling me or e-mailing me about cutting Social Security--is absurd because it's not going to happen.

MR. GREGORY: But don't we have to have an adult conversation with people about what the real problem is?

DR. GREENSPAN: Look, I think something equivalent to what Erskine Bowles and Alan Simpson put out is going to be passed by the Congress.  The only question is, is it before or after a bond market crisis?

MR. GREGORY: Right.

DR. GREENSPAN: Because there's no alternative.  Look, I...

MR. GREGORY: But you got to explain a little bit more what that means. You're talking about debt.

DR. GREENSPAN: Well, here, here's the issue.  Right now we have very low bond prices, the 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 rates and mortgage rates move up very sharply.  If that happens, that will cause the double dip. And I'm just basically hoping that we have enough sense to realize that we've got to resolve this issue before it gets forced upon us.

MR. GREGORY: Bethany, I mean, David Brooks writes in his column on Friday about the politics here, and he writes this: "The report from the chairman lists some of the best ways to raise revenue and cut spending." ...  "It comes with no enactment strategy," however.  "In this climate, asking politicians to end the mortgage deduction and tax employer health care plans and raise capital gains taxes and cut benefits for affluent seniors is like asking them to jump on a buzzing sack full of live grenades.  They won't do it."

MS. McLEAN: And I think that's really scary.  The situation right now reminds me for all the world of the situation in the years leading up to the financial crisis.  We've got a big problem, except this one is even bigger. People can see it coming, and we need to take action.  And I
think if we don't take action, we're going to look back, perhaps when there is a bond market crisis, and say, "Why didn't we do something when we had choices?" And people at this table may disagree with me, but it seems to me that our budget problems aren't calculus, they're not
algebra, they're simple arithmetic. We're spending $3 for every $2 we take in.  Something needs to give.

MR. GREGORY: I don't see why, for instance, some of these suggestions, Harold, on Social Security are going to be demagogued to death.  Why, in 50 years, people can't look at raising the retirement age and have that be a serious discussion point?

REP. FORD: Look, you can't pay off the debt without either cutting things or raising taxes.  This is a pretty good mixer of things.  The, the chairman is right in another regard.  This is going to happen.  We're going to have to deal with our deficit either by congressional and Senate and political leaders acting, or the global capital markets will impose a harsher set of realities on us, force interest payments to go up, and change our standing in the world. I would hope--and my--Speaker Gingrich is a friend.  He has been not only a leader in his--the Republican Party, he's been a leader in a lot of ways for calling for a new American way, a
new American majority.  I would hope that all of the smart minds in Republican and Democratic Party could come together and say, "Look, this is painful, but we're going to have to do this." If we're serious with all this talk about our kids and our grandkids, we're facing one of those
critical moments where...

MR. GREGORY: Well, well, let's, let's bring it more up-to-date, Speaker Gingrich.  The tea party movement itself, within the Republican Party, why don't you think there's more of a mandate for some really tough choices on, on government spending?

REP. GINGRICH: Let me, let me just come back for a second, David, because I want to suggest to you people can disagree without it being demagoguery.  I mean, I helped, working with Bill Clinton, we balanced the federal budget for four straight years, we paid off $405 billion in
debt.  It was not a trivial achievement.  It can be done.  It can't be done by sweeping, slashing generalizations by people who won't be affected.  And I'm just saying that this--the deficit commission, at the rate they're going, will actually be a step backwards, OK.

MR. GREGORY: Hm.

REP. GINGRICH: The tea party movement wants real change, but they would start and say to you what John Boehner has said, the new speaker, "Roll back the discretionary accounts to the 2008 level." That's a trillion dollars over 10 years.  IBM and other technical companies have come in with a set of proposals that change the management of the federal government.  They believe that's another trillion dollars.  At the Center for Health Transformation, we published a study of fraud in Medicare and Medicaid because the federal government's such a bad manager.  That's $70 billion to $120 billion a year. Now, you can do a lot of things to get
back to a balanced budget without having to hurt the American people.

MR. GREGORY: All right, let me get a break in here.  We're going to come back and talk a little bit more about this, also the tax cut issue, the Bush tax cuts, and a little politics as well.  Our economic discussion continues right after this station break.

(Announcements)

MR. GREGORY: We're back with the roundtable.  We're talking about this country's debt and the debt commission.

Harold Ford, here were some of the scenes from around the world.  London, where you saw rioting in the street because of a hike of college tuition costs.  We remember in the past year the scenes from Greece.  Draconian cuts were introduced and there was social unrest.  I mean, is that what it could come to in this country if the politicians do move forward to
really tackle the debt?

REP. FORD: I hope not.  I think that there's a sense of who we are, what we represent, and why we're important to the world.  The notion of exceptionalism is thrown around, or the term is thrown around often.  I think people realize that we've built a lot of stuff in this country,
we've innovated, we've led. And for us to maintain that position, some changes are going to have to come about.  I think the rise of the tea party movement in some ways is positive for this discussion in that they recognize that overspending, overtaxing are challenges for the country. The same is true when you look back at the Clinton years.  He realized that as well.  There are smart, sensible people in both parties.  As long as you don't allow the far left and the far right, again, to crowd out the, the, the predominant middle, we can get a lot of this done.  If that means making tough choices on Social Security--I'm 40, I'm willing to
give mine up, and I think a lot of people my age who may reach a certain income level are willing to do the same.  But political leaders have to show some courage and will to make it happen.

MR. GREGORY: I had, I had no idea you were that old.

Newt--Speaker Gingrich, do you think this president has the political stroke that Bill Clinton did to actually forge a consensus on tough choices?

REP. GINGRICH: I have no idea.  I was a little disappointed in Mr. Axelrod's comments this morning.  But it took, it took President Clinton eight months from the time we won in November to his decision in June of '95 to work with us.  I mean, change on this scale is very wrenching, and it's wrenching for his staff, it's wrenching for his allies.  Frankly, I think Speaker Pelosi becoming the minority leader will make it harder. So I, I don't, I, I don't know what the president will do.  What I do--the only place I worry about in terms of the kind of riots you were showing is not Americans in general.  I believe the scale of change coming to government 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 last 20 years.

MR. GREGORY: Let me get to the issue of tax cuts to both of you, Bethany and Dr.  Greenspan.  Dr.  Greenspan, we talked about this issue before, are tax cuts paid for? Or, to put it a different way, should the tax cuts on wealthier Americans be extended without corresponding spending cuts? What's going to happen? What should happen?

DR. GREENSPAN: Well, what's going to happen is that they're going to get extended.  I mean, that's very obvious, irrespective of what the rhetoric is, because that's the easiest thing to do politically at this stage. But 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 funding? 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, and it's not going to be easily reversed.  Look, as far as I'm concerned, what we're going to have to do is to essentially look at, not individual, piecemeal cuts or taxes, we have to look at whole projects.  I mean, for example, I happen to think Paul Ryan did a very important--was--made, made a very important contribution...

MR. GREGORY: He's going to be chairman of the Budget Committee in the new Republican House.

DR. GREENSPAN: Yeah.  Now, you can agree or disagree with his whole structure.  I happen to agree with almost all of it.

MR. GREGORY: Draconian cuts in Medicare and other programs.

DR. GREENSPAN: Yeah.  But the problem here is that you're going to have to vote an up or down budget each time.  In other words, all of these budgets that are going to come up are going to be compromises.  You can't do it piecemeal.  And then the very fascinating question is how--and I ask my colleagues across the table here--how does the Congress deal with that sort of thing when the committees and the committee chairmen and the committees which have jurisdiction for all various aspects of the budget, are going to insist upon wanting to get into the middle of it?

MR. GREGORY: Well, let me get Bethany on the tax cut issue here, whether this is actually going to move forward or only on a temporary basis.

MS. McLEAN: Well, I have to say I hope it does because I think if you look at economic history, the Bush tax cuts didn't put our economy on a sound footing.  The Obama spending didn't put our economy on a sound footing.  Since neither one has worked, let's try, let's try some of
both.  My big fear is that, is that we don't have as much time as Washington seems to think we have. And I say that because smart--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 conflagration in Greece.

MR. GREGORY: And what does that mean?

MS. McLEAN: And--that, that, that means that we're going to have this bond market crisis that Dr.  Greenspan was talking about earlier sooner than we may expect.  And I worry that we have less time to fix this problem and less time to get our house in order than, than people seem to think.

MR. GREGORY: What happens--an indulgence in an area that I spend time thinking about--if, if the big government companies, Fannie Mae and, and Freddie Mac, taken over by the government, if they guarantee 95 percent of the mortgage debt, there is no market now for mortgages, and the government says, "Well, we got to wind these things down." What's going
to happen here with the mortgage market?

MS. McLEAN: Two alternatives.  Either the private market does step up--and the case that some people argue, which is that the Fannie and Freddie are crowding out the private market, comes to the fore and the private market steps up and we're fine.  Or we have a huge collapse in housing.

MR. GREGORY: You worry, Dr.  Greenspan, about propping up the housing market.

DR. GREENSPAN: Well, let me just say this, that unless the housing market begins to move back, we're not going to have any significant cuts in the unemployment rate generally.  But at the moment, housing starts are as low as they can get and really just replace the number of units we need.

MR. GREGORY: Mm-hmm.

DR. GREENSPAN: So that there's a question not of the housing market going down more, the key question here is the price of homes.  Because what we saw, for example, in 2005, 2006, is there were something like eight million new home purchases financed by conventional conforming mortgages, which means 20 percent down, and the like.  That eight million--those
eight million homes are now right on the edge of being so-called "underwater." And while the price levels of homes have been remarkably stable since the beginning of this year, the critical issue is that if they tilt below where they are now, say 5 or 10 percent, it's going to
create a major increase in foreclosures...

MR. GREGORY: All right.

DR. GREENSPAN: ...with problems.

MR. GREGORY: We're going to take a break here, come back with a last couple of minutes, talk a little politics before we close out the program.  Back in just a moment.

(Announcements)

MR. GREGORY: Back with a couple of closing thoughts.

Speaker Gingrich, somebody made a smart point the other day, said, "You know what, Newt Gingrich will be the first to announce for president. He'll do it in January in Iowa." Where are you? You going to run?

REP. FORD: I'm leaning back for you.

REP. GINGRICH: How's that? It's like you and the Senate race last year. No, I, I think Callista and I'll make a decision probably in February; and probably, if we do run, we'll announce, I suspect, in late March. But we're still months away from that.

MR. GREGORY: What's going into your thinking on that?

REP. GINGRICH: I think partially can you create a movement that really wants to get to fundamental change and can you make that bigger than the presidency. I don't you can solve problems in a country of 513,000 elected officials by focusing only on the Oval Office.

MR. GREGORY: Do you really think the president's vulnerable in 2012?

REP. GINGRICH: Sure.  I mean--but he's not, he's not, he's not beaten. The--this president has enormous capacity to recover.  I think the economy will actually get marginally better over the next year, and he and the House Republicans will fight over who did it.  But I suspect
he'll--we'll be at closer to 8 percent than to 10 percent unemployment in '12.

MR. GREGORY: But the Republicans I talk to say that Sarah Palin and the tea party have created a whole new dynamic on the Republican side.  It is impossible to say who's got an early edge.  What is the impact?

REP. GINGRICH: Yes.  I think that's exactly right, and I think it's like all the races we saw this year.  You will not know who the nominee is until very late in the spring of, of 2012 because Governor Palin has a role, Governor Huckabee has a role, Governor Romney has a role, you know, Governor Daniels. I mean, go down the list, Governor Pawlenty, Governor Barbour.  I mean, you could have 12 or 15 candidates out there early next year, and you won't know how the conversation leads to a decision until it actually happens.

MR. GREGORY: Mm-hmm.  All right.  Well, we're going to leave it there. Thank you all very much for joining us today.

MR. DAVID GREGORY:  You can read an excerpt, by the way, of Bethany McLean's book, "All the Devils Are Here:  The Hidden History of the Financial Crisis," plus watch our Take Two Web extra with former House Speaker Newt Gingrich about his latest novel, "Valley Forge:  George
Washington and the Crucible of Victory." It's all on our Web site at mtp.msnbc.com.

That's all for today.  We'll be back next week.  An exclusive interview with Republican governor of Louisiana, Bobby Jindal.  Maybe he runs in 2012.  He's written a new book taking aim at the administration over the handling of the gulf oil spill.

If it's Sunday, it's MEET THE PRESS.

Video: Watch the full broadcast

  1. Transcript of: Watch the full broadcast

    MR. DAVID GREGORY: This Sunday, the politics of the economy at home and abroad . The president is dealt a setback at the economic summit in Asia over trade and a rebuke of his approach to economic recovery. At home, the debate over the 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 guest this morning, the president's senior adviser, David Axelrod , in 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 , and 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 Bethany McLean ; and former congressman, Democrat, Harold Ford .

    Announcer: From NBC News in Washington , MEET THE PRESS with David Gregory .

    MR. GREGORY: Good morning. President Obama on the way back from his 10- 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 debates 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 back.

    MR. DAVID AXELROD: Morning, David . Good to be here.

    MR. GREGORY: Some of the headlines from the trip were not very good. A setback at the polls on Election Day and then headlines like this from The New York Times on Friday, " Obama 's Economic View is Rejected on World Stage ; China , Britain and Germany Challenge U.S. Trade Talks With Seoul Fail , Too." And The Wall Street Journal over the weekend, "U.S. Gets Rebuffed at Divided Summit." After an Election Day setback, has the president also lost his ability to forge international consensus on the world stage?

    MR. AXELROD: Not at all, David . And if you had more time, I'm sure you'd show the positive headlines from the trip as well. The president went on this mission because Asia 's the most vibrant market , growing market in the world and we want to compete for those jobs and that's why he went. And his first stop was in India , a growing power in the world . And we saw American businesses walk away with $10 billion in new deals, 50,000 new jobs back here. We strengthened that key relationship. And we went on and we forced the agenda at the G-20 to focus on this issue of trade imbalances, which is an important thing. Now, it's, it's obviously going to be the case that countries are going to pursue their national interests. Germany is a great exporter. That's all -- that's, that's the, the core of their economy . They don't want greater competition from us. China , we know the same. So there are going to be -- there's going to be tug and pull in these. But the point is you have a president of the United States who's out there fighting for American jobs . In Korea we want a trade agreement because Korea is a, 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 auto industry, wasn't good enough for American beef. We want to keep on negotiating, and that's what we're going to do.

    MR. GREGORY: Let...

    MR. AXELROD: We're going to make the best deal for the American worker and the American industry.

    MR. GREGORY: Let's talk about another hot topic, and that is the issue of the Bush era tax cuts . A lot of back and forth involving you this week about what's going to happen here, whether there'll 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.

    MR. GREGORY: Will you hold off on any tax increases?

    MR. AXELROD: Well, look, the question is on the Bush tax cuts for the very wealthiest Americans , and it's something that we plainly can't afford moving forward , and whether it, it, it expires or whether we repeal it a little bit early, we'll determine later, but it's going to go, it has to go.

    MR. GREGORY: Right.

    MR. GREGORY: "It has to go." With the new political reality in Washington , has the president changed his view?

    MR. AXELROD: No. The president still believes that we have to move forward on these tax cuts for the middle class . The middle class has taken a beating in this last decade. They've seen their incomes decline, and they've borne the brunt of this recession, but we can't afford to borrow another $700 billion to pay for tax cuts for millionaires and billionaires. You know, your next guest, Senator McCain , was very courageous in 2003 when he voted against the second Bush tax cut , because he said it was irresponsible to, to, to pay for these -- to borrow money for these tax cuts skewed to the wealthy at a time when we had two wars and so many other pressures. And that is still the case. So the president's...

    MR. GREGORY: But are you saying -- so you're saying no deal...

    MR. AXELROD: ...position has -- the president has not changed.

    MR. GREGORY: ...no compromise.

    MR. AXELROD: Well, you're asking me -- I'm telling you what the president's position is. We need to move forward on the middle-class tax cuts . We cannot afford a permanent extension of tax cuts for the wealthiest Americans , which would cost us $700 billion that we don't have over the next 10 years.

    MR. GREGORY: Right. All right, but I know...

    MR. AXELROD: We, we simply shouldn't do that.

    MR. GREGORY: ...the, I know the arguments. Here's the question. If the president could get an agreement on middle class tax cut extension, would he agree to an extension, at least temporary, for the tax cuts on the upper earners?

    MR. AXELROD: David , we're looking forward to sitting down with leaders of both parties and talking about those issues. I'm not going to negotiate that with you here. There have been a lot of formulations thrown out in the last few weeks that are interesting, but we fundamentally want to uphold the principles that are laid out, and we believe that Congress should act before the first of the year. These taxes , the way the Bush tax cuts were designed, are going to expire on January 1 . We, we want people to have the certainty of knowing that's not going to happen. And Congress ought to -- before they go on vacation, they ought to ensure that people have better vacations of their own by knowing that this matter has been taken care of.

    MR. GREGORY: All right. Bottom line ...

    MR. AXELROD: So we're going to work hard to do that.

    MR. GREGORY: Bottom line , he's open to compromise. Is that fair?

    MR. AXELROD: The bottom line is he wants to sit down and talk about this, but...

    MR. GREGORY: Is he open to compromise?

    MR. AXELROD: ...as to your original question -- there's no, there's no bend on the, on the permanent extension of tax cuts for the wealthiest Americans .

    MR. GREGORY: He's open to compromise.

    MR. AXELROD: He wants to sit down -- we want to get this done. The American people expect to get this done, and we, we are, we are eager to sit down and talk about how to move forward .

    MR. GREGORY: The president said after the election that he endured a "shellacking," his word. What is the course correction for this president as he moves forward ?

    MR. AXELROD: Look, I think that, fundamentally, what drove the electorate were two things. One is that while we have a recovery, while we've had 10 straight months of job growth after a horrendous downturn, it hasn't been fast enough. 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 and that was the primary message that we heard in that election . The second is they want us to work together to do it. In many instances, we had to move as one party in Congress , or virtually as one party because the other party decided that they did not want to participate as a strategy. Now I think the country is saying to both Republicans and Democrats , "Forget about the politics for a while. Sit down and work together to solve these problems and get this economy moving at a faster pace." And that's what we intend to do.

    MR. GREGORY: OK, but 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 taxes , on the issue of what happened in the election still plenty of fight. I'm sure your supporters are happy to hear that. What I'm wondering is, how does the president course correct, change the dynamic to actually get something done?

    MR. AXELROD: Well, you know, here's the thing, David . That is more important in a conversation between the president and members of both parties than me talking to you here. I think those are issues that we need to move forward on. I think on -- there are plenty of economic issues. We proposed a -- to -- a tax cut that would all allow businesses to buy capital equipment next year without paying the taxes on them in, in 2011 . That would get the economy moving. 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, and get this -- and get these things done so the economy grows at a faster pace.

    MR. GREGORY: Let me ask you about the, the debt commission , the president's debt commission . The chairman came out maybe a little earlier than they had planned and put forth a rather Draconian document about how to slash spending and deal with the deficit. The New

    York Times summarized it this way -- to bring viewers into it, let me put it on the screen: "The chairman ... outlined a politically provocative and economically ambitious package of spending cuts and tax increases. ... "The plan calls for deep cuts in domestic and military spending , a gradual 15-cents-a-gallon increase in the federal gasoline tax , limiting or eliminating popular tax breaks in return for lower" taxes , and benefit cuts and an increased retirement age for Social Security ." Here's the bottom line , if they don't get 14 commission members to agree to this, this is an intellectual exercise and not a real document. Can they get to 14?

    MR. AXELROD: I don't know whether they can or they can't, David , but obviously they did a -- it's a voluminous work and they have not yet completed it. That was the chairman -- chairman's recommendation, and now they're going to vote on it. The president said that he'll comment on their work after they complete it. That's his commitment to them. But, look, it underscores what we knew. The president appointed this commission , bipartisan commission , because this is a huge problem . We have to deal with it , and it's not going to be easy to deal with. And if one side says no taxes on anyone can go up, any interest, any corporation, any individual, and then the other side says no cuts can be made, then we're not going to solve it. Everybody's going to have to give a little , and we're going to have to move forward and deal with this problem together. And hopefully, whatever happens , this commission report will give the impetus to do that.

    MR. GREGORY: Is -- so the president's position is, 'Look, everything has to be on the table." Tax hikes, taking on entitlement spending, raising the retirement age for Social Security , on those specifics, all of those are on the table in the president's mind.

    MR. AXELROD: Yeah, I'm not going to deal with specifics because that would violate the president's commitment. But I will say this. There's no -- the president has shown his willingness in the last two years. You know, when we took on the healthcare issue, one of the reasons was that our budget people said we cannot deal with these deficits if we have an inexorable climb in healthcare costs to the government , to businesses, to individuals, and so we did that. And part of it was economies and the Medicare program. We took away subsidies to insurance companies and made other economies that didn't affect patient care . Unfortunately, the other party ran against us on it in the election and accused us of...

    MR. GREGORY: But why -- but I have to ask you...

    MR. AXELROD: ...cutting Medicare . We have to set, we have to set aside those kinds of tactics...

    MR. GREGORY: But I didn't even ask you for specifics.

    MR. AXELROD: ...hold hands and move together.

    MR. GREGORY: I asked you whether everything was on the table. And the level of caution from you on this -- I mean, how are you going to expect both Democrats and Republicans to make painful choices if you can't even say publicly here today that those tough issues should at least be on the table?

    MR. AXELROD: The president -- the president...

    MR. GREGORY: And yet you expect Republicans to come to you.

    MR. AXELROD: David , David , the president empaneled this commission because he recognized that we had to take a, a, a wide lens look at this, and then -- he said then everything should be on the table. That hasn't changed. What, what you want me to do, though, is, is react to individual aspects of it here, and that, that I can't do because we need to see what the final report is. But obviously there are going to be some hard choices to be made. We're willing to make them. It's going to take both parties together, working together to get them done.

    MR. GREGORY: Speaker Pelosi said this draft report was unacceptable. Did the president found -- find that reaction counter-productive?

    MR. AXELROD: Look, there were reactions on -- across the political spectrum . Some on the right, who said it was unacceptable. Mr. Norquist and others on the right said, "It raises taxes , we can't be for it." Others on the left said it was unacceptable for other reasons. I think the best thing to do is wait for the final report , look at it, see where we can find common ground and move forward . This is something the American people expect us to do, and we, we have to do it because we all know that this is a big dark cloud on our horizon and that -- and the president is very intent on moving forward .

    MR. GREGORY: All right, before you go, two quick ones. Rahm Emanuel , former chief of staff, now preparing to run for mayor in Chicago , in your town. Will the president campaign for him?

    MR. AXELROD: Well, the president hasn't -- the president's made clear what his view of Rahm is. He said he was an excellent chief of staff, thought he'd 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.

    MR. GREGORY: About Afghanistan . My next guest, as you know, Senator McCain , is just back from Iraq and Afghanistan and has been critical of the timeline for the beginning of withdrawal, saying that, in fact, it is creating erratic behavior in Hamid Karzai , among others in the region, because there's a sense that the U.S. will leave. Is it a problem for the U.S. to announce the beginning of the end of the war? Does it undercut our policy?

    MR. AXELROD: No, it's, it's, it's important that we announce the beginning of a drawdown. We've always said it would be based on conditions on the ground, and that is still the case. But it's important to let the Afghans know that they have to pick up the, pick up the pace in terms of training up the military , training up their police, being ready to accept responsibility. And the -- this, this beginning of the drawdown has a disciplining effect in that regard. So it's important. We, we, we set it in conjunction with our military leadership. Everyone agreed that it was important, and it, and it's not going to shift.

    MR. GREGORY: All right, we'll leave it there. David Axelrod in Chicago this morning, thank you as always.

    MR. AXELROD: Good to be with you . Thank you.

    MR. GREGORY: Now the view from the other side of the aisle, Republican 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?

    SEN. JOHN McCAIN (R-AZ): Well, I'd like to see the president say that it's only condition based. According to Mr. Woodward's book, his problem is the political -- the left base of the Democrat Party . You don't fight and conduct wars that way. You win and then you leave. And that's what we've done in Iraq . And the fact is, the perception is, amongst friends and enemies alike, that we've -- we may be leaving, And that has caused them to make certain accommodations because they can't leave. I mean, it's just a fact.

    MR. GREGORY: Well, Hamid Karzai ...

    SEN. McCAIN: Down to the, down to the governor level.

    MR. GREGORY: Right.

    SEN. McCAIN: Down to the police chief level they say, yes, the Taliban are telling us we're leaving and they're going to cut off our heads. Famous captive, Taliban captive, said to his American interrogator, "You've got the watches, we've got the time."

    MR. GREGORY: Well, but Hamid Karzai , who you met with, says in The Washington Post this morning that it's time for the U.S. to reduce the intrusiveness into daily Afghan life, that they ought to get boots that are on the ground off the ground, out of the country .

    SEN. McCAIN: Yes, and Hamid Karzai is reflecting his desire to survive, also a degree of paranoia. There's three big problems in Afghanistan right now, and let me tell you one of them that isn't, and that is the military aspect of it. Our Marines , Army , Navy , Air Force are doing a magnificent job. They are penetrating into areas that they haven't been before. The hometown of Mullah Omar is now under our control. So that's -- they've done a magnificent job under the leadership of General Petraeus and others. The other side, though, is that there's corruption at very high levels. The attorney general of, 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 al- Haqqani network and other elements of Taliban . You can't defeat the enemy if they have sanctuary. We also went to Pakistan and had a, a very candid meeting with General Kayani on this issue. But it boils down to that the ISI , Kayani , the Pakistani leadership, the Afghan leadership, India 's leadership, all are not convinced that the United States is going to stay the course.

    MR. GREGORY: Let me, let me talk to you about another military matter back home and a priority for this administration ; that's whether the ban on gays and lesbians in the military is going to be rescinded.

    SEN. McCAIN: Mm-hmm.

    MR. GREGORY: Are you going to stand in the way, you personally, in the way of this ban being lifted?

    SEN. McCAIN: 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, as I've said for years, to our military leaders and not a, not a study that is leaked -- as we know this town's pretty good at that.

    MR. GREGORY: That said, seven in 10 members of the military think it would be just fine to have it lifted.

    SEN. McCAIN: Yeah. 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 importantly, we have people like the commandant of the Marine Corps , the three other -- all four service chiefs are saying we need a thorough and complete study of the effects -- not how to implement a repeal , but the effects on morale and battle effectiveness. That's what I want. And once we get this study , we need to have hearings, and we need to examine it, and we need to look at whether it's the kind of study that we wanted. It isn't, in my view, because I wanted a study to determine the effects of the repeal on battle effectiveness and morale. What this study is, is designed to do is, is to find out how the repeal could be implemented. Those are two very different aspects of this issue.

    MR. GREGORY: In a lot of households, this is a subject of debate, including your own, apparently.

    SEN. McCAIN: That's right .

    MR. GREGORY: Your wife, Cindy McCain , has, has cut an ad, a public service announcement with NOH8 , a group that promotes gay, lesbian, transgender rights . And this is a portion of it. Let me, let me play it.

    MS. CINDY McCAIN: Our political and religious leaders tell LGBT youth that they have no future.

    MR. DAVE NAVARRO: They can't get married.

    MR. STEPH JONES: They can't donate blood.

    MS. McCAIN: They can't serve our country openly.

    MR. GREGORY: Referring to "don't ask, don't tell." She did clarify this on her Twitter page. I- -you're both so active on Twitter . She said this. She said, "I fully support the NOH8 campaign and all it stands for and am proud to be part of it. But I stand by my husband's stance on 'don't ask, don't' tell.'"

    SEN. McCAIN: Which is a complete and thorough study and review of the effect on battle readiness and...

    MR. GREGORY: OK.

    SEN. McCAIN: ...and morale. And by the way, I respect the First Amendment rights of every member of my family.

    MR. GREGORY: But, but, you know, what's interesting about this, I mean, a debate in families, is...

    SEN. McCAIN: Sure.

    MR. GREGORY: ...there is kind of -- you, you talk about waiting for the -- there is an appeal to honor, I mean to your honor. You had the chairman of the Joint Chiefs saying, "Look, it's just not right to have, to have people lying about who they are just to be able to protect fellow citizens." It has been an appeal...

    SEN. McCAIN: Yeah. And you have the, you have the commandant of the Marine Corps who says...

    MR. GREGORY: Right.

    SEN. McCAIN: ...whose, whose people he's directly responsible for, is saying this could hurt our ability to win. This, this is about...

    MR. GREGORY: Do you believe that?

    SEN. McCAIN: This is about...

    MR. GREGORY: I mean, you say you wait for the study . What do you believe?

    SEN. McCAIN: I'm paying attention to the commandant of the Marine Corps .

    MR. GREGORY: Right.

    SEN. McCAIN: I'm paying attention to the chief of staff of the Air Force , the Army and...

    MR. GREGORY: But you're so close to the military , Senator . You know these people. You know the issue. I mean, do you have a sense of it in your gut about what should happen?

    SEN. McCAIN: I, I have a sense that I respect and admire these four service chiefs who have expressed either outright opposition or deep reservation about the repeal . They're the ones who are in charge. Now, the chairman of the Joint Chiefs of Staff , I agree , the president and the secretary of Defense have all come out for repeal . But I really would -- I was in, I was in an outpost near Kandahar . Army master sergeant, 19 years in, fifth deployment to Iraq and Afghanistan , says to me, " Senator McCain , we live, eat, sleep, and fight together in close proximity. I'm concerned about the repeal . I'd like to know more about it." That's, that's the view that I got from chief petty officers and sergeants all over Afghanistan .

    MR. GREGORY: The ban's not going to be lifted in the lame duck session , is that fair to say?

    SEN. McCAIN: I think that we should at least -- I, I don't think it should be, because I think once this study comes out in the beginning of December, we should at least have a chance to review it and maybe have hearings on it.

    MR. GREGORY: I just want to spend a couple of minutes on taxes and spending.

    SEN. McCAIN: Mm-hmm.

    MR. GREGORY: This is your 59th appearance on MEET THE PRESS . You know what that means. We have so much tape. So if we -- if you go back to 2004 , I know your, your...

    SEN. McCAIN: Yeah.

    MR. GREGORY: ...position on the Bush tax cuts ...

    SEN. McCAIN: Yeah.

    MR. GREGORY: ...did change and you've talked about that before. But I do want to play something you said from an interview in 2004 and ask you about it.

    SEN. McCAIN: I voted against the tax cuts because of the disproportional amount that went to the wealthiest Americans . I would clearly support not extending those tax cuts in order to help address the, the deficit. But the middle income tax credits , the families, the child tax credits , the marriage tax credit , all those I would keep.

    MR. GREGORY: That's exactly...

    SEN. McCAIN: Yes, sir.

    MR. GREGORY: ...what President Obama says.

    SEN. McCAIN: Is there a statute of limitations? The economic situation 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 that statement, I said we have to restrain spending, and spending was way out of control at that time. I said otherwise we're facing massive deficits, and that's what happened.

    MR. GREGORY: Should tax cuts on the wealthiest Americans only be extended for a temporary period and only if there are corresponding spending cuts?

    SEN. McCAIN: I think they should be extended until we're out of this recession. At such time then we could look at, at other tax hikes. But when we're in a serious recession, I cannot believe that raising taxes is a good thing on anybody.

    MR. GREGORY: Is the debt commission a nonstarter or a good start or something else?

    SEN. McCAIN: I hope it's a starter. I hope that even if they don't get the 14 members, as you mentioned earlier when you were talking with David Axelrod , that I hope that this is a wake-up call to America . It gives us an idea of the breadth of this problem , that we are going to have to make significant changes, we're going to have to challenge some of the very, very tough areas such as entitlements if we're ever going to dig out of this hole.

    MR. GREGORY: Everything should be on the table?

    SEN. McCAIN: Everything should be on the table.

    MR. GREGORY: Raising the retirement age ?

    SEN. McCAIN: Everything should be on the table. And if it's not, then, obviously, I don't think we're going to make progress. And again, I'd like to applaud Alan Simpson and Erskine Bowles because at least Americans -- I think the lesson of 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.

    MR. GREGORY: Just about a minute left.

    SEN. McCAIN: Mm-hmm.

    MR. GREGORY: President Bush 's memoir is out, "Decision Points." He talks about you in a couple of places. And he talks about your decision not to have him campaign with you.

    SEN. McCAIN: Mm-hmm.

    MR. GREGORY: 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?

    SEN. McCAIN: No. That -- it was a decision made at the time of the campaign. I respect and admire President Bush . At the time, it's just was the realities of the political situation. As you know, then -- President Obama , at the time, was doing everything he could to tie me to President Bush . I admire and respect and I believe I called President Bush a friend. And it was just a decision we made and I hope he respects it.

    MR. GREGORY: There was a meeting -- he talks about September of '08, the height of the financial collapse. You suspend your campaign, call for a meeting in the White House . Here's a picture of it. You're there -- actually, you're next to Boehner there. And, and then- Senator Obama there as well. And he writes that he was surprised that you actually -- you, you had called this meeting, you didn't really add that much substantively, didn't have a question, suggesting that you were unprepared for the meeting. Is that fair?

    SEN. McCAIN: I was prepared for the meeting. I wasn't prepared for the onslaught that came, took place from all of the Democrats in the room. My reason for being there was to make sure that Republicans were heard, people like Boehner , Mitch McConnell and others. That was the reason why I was there. I didn't think I was going to make any headway with some of the Democrats who were in the room. But I didn't ask for that meeting. But the fact is that 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.

    MR. GREGORY: We'll leave it there until your 60th appearance. Senator , thank you, as always.

    SEN. McCAIN: Thanks for having me on.

    MR. GREGORY: Appreciate it. Up next, our special focus on the economy , jobs and the debt with 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 Bethany McLean ; former congressman, Democrat Harold Ford .

    MR. GREGORY: Coming up, jobs, the future of the economy , and Washington 's solution to our growing debt. A special economic discussion featuring Alan Greenspan and Newt Gingrich right after this brief commercial break .

    MR. GREGORY: We are back. Joining me this morning for our special discussion on the problems facing our nation's economy , co-author of the new book on the financial crisis , "All the Devils Are Here ," Vanity Fair 's Bethany McLean ; former Chairman of the Federal Reserve Alan Greenspan ; co-author of the new novel " Valley Forge : George Washington and the Crucible of Victory ," former speaker of the House , Republican Newt Gingrich ; and chair of the Democratic Leadership Council , former Congressman Harold Ford Jr . Welcome to all of you. So much to discuss about the future of our economy , the president on the world stage, free trade , and his approach to economic recovery. But Alan Greenspan , Dr. Greenspan , let me begin with you. Where are we on our search for jobs and on our overall economic outlook?

    DR. ALAN GREENSPAN: Well, our search for jobs is still, well, not doing too well. The, the 10 percent 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 reason is that, unlike previous recoveries when, for example, we would be getting very significant pickups in building, residential, nonresidential, in a sense, longer term assets, we're not getting that today, and it's a big hole in the economy . And the reason, essentially, as far as the business section is -- sector is concerned, is that business is highly uncertain about the future in a way which I have never seen it before and a way in which the data suggests has never, in fact, been so depressed. And unless and until we can begin to lift that pall of uncertainty, it is very difficult to see people reaching out into the longer term. In other words, remember, buildings are 20-, 30-year investments.

    MR. GREGORY: Right.

    DR. GREENSPAN: And what the data show is that they are -- there's extremely high risk aversion in what a columnist called "illiquid assets" like buildings.

    MR. GREGORY: Speaker Gingrich , President Obama was on the air a week ago and he talked about a new normal in our economy . Let me play a portion of that interview and have you react to it.

    PRES. BARACK OBAMA: 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, businesses 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 eight million jobs that were lost.

    MR. GREGORY: Do you accept that?

    FMR. REP. NEWT GINGRICH (R-GA): No. I think, I think we have two enormous policy challenges. The first is that we're now in a world market , a genuine world market where you've got to think about economics in terms of competing with China , India , Germany . And you ought to study Germany , which is a high cost country with a huge export manufacturing base. Second, this administration 's just wrong. I mean, the Obama model of the economy 's just fundamentally, profoundly wrong. And I don't care -- I think Chairman Bernanke is very foolish to be printing $600 billion of additional money, because the fact is, the problems in this economy are problems of fiscal policy , they're problems of taxation, and they're problems of an anti-business, anti-jobs bureaucracy that this president encourages.

    MR. GREGORY: We prop up the economy , Harold , for -- we're certainly propping up the housing market . And so we're in this state. You agree with that?

    FMR. REP. HAROLD FORD JR. (D-TN): In large part. But 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, there's some steps that government 's going to have to take. I agree with the chairman wholeheartedly that certainly around taxes and regulations going forward , I hope that the administration will call for a year moratorium on regulations. I hope they extend the tax cuts and even cut the corporate rate. But to suggest that the Fed should not continue to play an active role, especially in the face of some inaction from -- on the fiscal side I think is wrong. Two, the entitlement debt. I think that recommendations made by this deficit reduction commission have been responsible. There may be some areas where we disagree with, but I hope the left in my party and the right in the Republican Party don't scream so loud that they scare the crowded middle.

    MR. GREGORY: And I , and I want to get back to the debt commission . But, Bethany McLean , let me bring you into this. A big part of your book, of course, deals with the, the financial collapse and the housing market . The -- what -- we don't talk about this enough, that -- the fact that the government is propping 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?

    MS. BETHANY McLEAN: It's a great question, and it's a really interesting thing because one of the great ironies of the financial crisis , one of the big complaints is that government involvement in the housing market was a factor. People want to overplay it as "the factor"; it was a factor. But the great irony is that we've come out of the financial crisis with the, the housing market even more reliant on the government . It's now some 90 percent of the housing market . And I don't know if anybody has the guts to see what 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've found, that we've found a real bottom in, in, in housing prices . But doing so will risk putting the economy into more of a tailspin.

    MR. GREGORY: And, Alan Greenspan , again, another kind of bottom line question, is there a second crash out there that you fear?

    DR. GREENSPAN: 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 , we're moving forward , but at too slow a pace to bring the unemployment rate down. But there's very little evidence of any deterioration that suggests we're about to have a double dip, as they call it. And, 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 there's all evidence out there that there's a very mild degree of acceleration in the American economy , but not enough to get the system to function.

    MR. GREGORY: Well, let's talk about the debt commission because, Speaker Gingrich , you've been on the 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, a starter, or something in between?

    REP. GINGRICH: Well, the, the statement by the chairman is a nonstarter because, no, you don't have to get to 14, you have to get to passage in the House and Senate .

    MR. GREGORY: Right.

    REP. GINGRICH: Well, so the fact that they, they, they get together, they issue a statement guaranteed to frighten most Americans -- which is what it did, I mean, a number of people are now calling me or e-mailing me about cutting Social Security -- is absurd because it's not going to happen.

    MR. GREGORY: But don't we have to have an adult conversation with people about what the real problem is?

    DR. GREENSPAN: Look, I think something equivalent to what Erskine Bowles and Alan Simpson put out is going to be passed by the Congress . The only question is, is it before or after a bond market crisis?

    MR. GREGORY: Right.

    DR. GREENSPAN: Because there's no alternative. Look, I...

    MR. GREGORY: But you got to explain a little bit more what that means. You're talking about debt.

    DR. GREENSPAN: Well, here, here's the issue. Right now we have very low bond prices, the 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 rates and mortgage rates move up very sharply. If that happens, that will cause the double dip. And I 'm just basically hoping that we have enough sense to realize that we've got to resolve this issue before it gets forced upon us .

    MR. GREGORY: Bethany , I mean, David Brooks writes in his column on Friday about the

    politics here, and he writes this: "The report from the chairman lists some of the best ways to raise revenue and cut spending." ... "It comes with no enactment strategy," however. "In this climate, asking politicians to end the mortgage deduction and tax employer health care plans and raise capital gains taxes and cut benefits for affluent seniors is like asking them to jump on a buzzing sack full of live grenades. They won't do it."

    MS. McLEAN: And I think that's really scary. The situation right now reminds me for all the world of the situation in the years leading up to the financial crisis . We've got a big problem , except this one is even bigger. People can see it coming, and we need to take action. And I think if we don't take action, we're going to look back, perhaps when there is a bond market crisis, and say, "Why didn't we do something when we had choices?" And people at this table may disagree with me, but it seems to me that our budget problems aren't calculus, they're not algebra, they're simple arithmetic. We're spending $3 for every $2 we take in. Something needs to give.

    MR. GREGORY: I don't see why, for instance, some of these suggestions, Harold , on Social Security are going to be demagogued to death. Why, in 50 years, people can't look at raising the retirement age and have that be a serious discussion point?

    REP. FORD: Look, you can't pay off the debt without either cutting things or raising taxes . This is a pretty good mixer of things. The, the chairman is right in another regard. This is going to happen. We're going to have to deal with our deficit either by congressional and Senate and political leaders acting, or the global capital markets will impose a harsher set of realities on us, force interest payments to go up, and change our standing in the world . I would hope -- and my -- Speaker Gingrich is a friend. He has been not only a leader in his -- the Republican Party , he's been a leader in a lot of ways for calling for a new American way , a new American majority. I would hope that all of the smart minds in Republican and Democratic Party could come together and say, "Look, this is painful, but we're going to have to do this." If we're serious with all this talk about our kids and our grandkids, we're facing one of those critical moments where...

    MR. GREGORY: Well, well, let's, let's bring it more up-to-date, Speaker Gingrich . The tea party movement itself, within the Republican Party , why don't you think there's more of a mandate for some really tough choices on, on government spending ?

    REP. GINGRICH: Let me, let me just come back for a second, David , because I want to suggest to you people can disagree without it being demagoguery. I mean, I helped, working with Bill Clinton , we balanced the federal budget for four straight years, we paid off $405 billion in debt. It was not a trivial achievement. It can be done. It can't be done by sweeping, slashing generalizations by people who won't be affected. And I 'm just saying that this -- the deficit commission , at the rate they're going, will actually be a step backwards, OK?

    MR. GREGORY: Hm.

    REP. GINGRICH: The tea party movement wants real change , but they would start and say to you what John Boehner has said, the new speaker, "Roll back the discretionary accounts to the 2008 level." That's a trillion dollars over 10 years. IBM and other technical companies have come in with a set of proposals that change the management of the federal government . They believe that's another trillion dollars. At the Center for Health Transformation , we published a study of fraud in Medicare and Medicaid because the federal government 's such a bad manager. That's $70 billion to $120 billion a year. Now, you can do a lot of things to get back to a balanced budget without having to hurt the American people .

    MR. GREGORY: All right, let me get a break in here. We're going to come back and talk a little bit more about this, also the tax cut issue, the Bush tax cuts , and a little politics as well. Our economic discussion continues right after this station break .

    MR. GREGORY: We're back with the roundtable. We're talking about this country 's debt and the debt commission . Harold Ford , here were some of the scenes from around the world . London , where you saw rioting in the street because of a hike of college tuition costs. We remember in the past year the scenes from Greece . Draconian cuts were introduced and there was social unrest . I mean, is that what it could come to in this country if the politicians do move forward to really tackle the debt?

    REP. FORD: I hope not. I think that there's a sense of who we are, what we represent, and why we're important to the world . The notion of exceptionalism is thrown around, or the term is thrown around often. I think people realize that we've built a lot of stuff in this country , we've innovated, we've led. And for us to maintain that position, some changes are going to have to come about. I think the rise of the tea party movement in some ways is positive for this discussion in that they recognize that overspending, overtaxing are challenges for the country . The same is true when you look back at the Clinton years. He realized that as well. There are smart, sensible people in both parties. As long as you don't allow the far left and the far right, again, to crowd out the, the, the predominant middle, we can get a lot of this done. If that means making tough choices on Social Security -- I'm 40, I'm willing to give mine up, and I think a lot of people my age who may reach a certain income level are willing to do the same. But political leaders have to show some courage and will to make it happen.

    MR. GREGORY: I had, I had no idea you were that old. Newt -- Speaker Gingrich , do you think this president has the political stroke that Bill Clinton did to actually forge a consensus on tough choices?

    REP. GINGRICH: I have no idea. I was a little disappointed in Mr. Axelrod 's comments this morning. But it took, it took President Clinton eight months from the time we won in November to his decision in June of '95 to work with us. I mean, change on this scale is very wrenching, and it's wrenching for his staff, it's wrenching for his allies. Frankly, I think Speaker Pelosi becoming the minority leader will make it harder. So I, I don't, I, I don't know what the president will do. What I do -- the only place I worry about in terms of the kind of riots you were showing is not Americans in general . I believe the scale of change coming to government 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 last 20 years.

    MR. GREGORY: Let me get to the issue of tax cuts to both of you, Bethany and Dr. Greenspan . Dr. Greenspan , we talked about this issue before, are tax cuts paid for? Or, to put it a different way, should the tax cuts on wealthier Americans be extended without corresponding spending cuts? What's going to happen? What should happen?

    DR. GREENSPAN: Well, what's going to happen is that they're going to get extended. I mean, that's very obvious, irrespective of what the rhetoric is, because that's the easiest thing to do politically at this stage. But 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 funding? 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, and it's not going to be easily reversed. Look, as far as I'm concerned, what we're going to have to do is to essentially look at, not individual, piecemeal cuts or taxes , we have to look at whole projects. I mean, for example, I happen to think Paul Ryan did a very important -- was -- made, made a very important contribution...

    MR. GREGORY: He's going to be chairman of the Budget Committee in the new Republican House .

    DR. GREENSPAN: Yeah. Now, you can agree or disagree with his whole structure. I happen to agree with almost all of it.

    MR. GREGORY: Draconian cuts in Medicare and other programs.

    DR. GREENSPAN: Yeah. But the problem here is that you're going to have to vote an up or down budget each time. In other words, all of these budgets that are going to come up are going to be compromises. You can't do it piecemeal. And then the very fascinating question is how -- and I ask my colleagues across the table here -- how does the Congress deal with that sort of thing when the committees and the committee chairmen and the committees which have jurisdiction for all various aspects of the budget , are going to insist upon wanting to get into the middle of it?

    MR. GREGORY: Well, let me get Bethany on the tax cut issue here, whether this is actually going to move forward or only on a temporary basis.

    MS. McLEAN: Well, I have to say I hope it does because I think if you look at economic history , the Bush tax cuts didn't put our economy on a sound footing. The Obama spending didn't put our economy on a sound footing. Since neither one has worked, let's try, let's try some of both. My big fear is that, is that we don't have as much time as Washington seems to think we have. And I say that because smart -- 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 conflagration in Greece .

    MR. GREGORY: And what does that mean?

    MS. McLEAN: And -- that, that, that means that we're going to have this bond market crisis that Dr. Greenspan was talking about earlier sooner than we may expect. And I worry that we have less time to fix this problem and less time to get our house in order than, than people seem to think.

    MR. GREGORY: What happens -- an indulgence in an area that I spend time thinking about -- if, if the big government companies, Fannie Mae and, and Freddie Mac , taken over by the government , if they guarantee 95 percent of the mortgage debt, there is no market now for mortgages, and the government says, "Well, we got to wind these things down." What's going to happen here with the mortgage market ?

    MS. McLEAN: Two alternatives. Either the private market does step up -- and the case that some people argue, which is that the Fannie and Freddie are crowding out the private market , comes to the fore and the private market steps up and we're fine. Or we have a huge collapse in housing.

    MR. GREGORY: You worry, Dr. Greenspan , about propping up the housing market .

    DR. GREENSPAN: Well, let me just say this, that unless the housing market begins to move back, we're not going to have any significant cuts in the unemployment rate generally. But at the moment, housing starts are as low as they can get and really just replace the number of units we need.

    MR. GREGORY: Mm-hmm.

    DR. GREENSPAN: So that there's a question not of the housing market going down more, the key question here is the price of homes. Because what we saw, for example, in 2005 , 2006 , is there were something like eight million new home purchases financed by conventional conforming mortgages, which means 20 percent down, and the like. That eight million -- those eight million homes are now right on the edge of being so-called "underwater." And while the price levels of homes have been remarkably stable since the beginning of this year, the critical issue is that if they tilt below where they are now, say 5 or 10 percent, it's going to create a major increase in foreclosures...

    MR. GREGORY: All right.

    DR. GREENSPAN: ...with problems .

    MR. GREGORY: We're going to take a break here, come back with a last couple of minutes, talk a little politics before we close out the program. Back in just a moment.

    MR. GREGORY: Back with a couple of closing thoughts. Speaker Gingrich , somebody made a smart point the other day, said, "You know what, Newt Gingrich will be the first to announce for president. He'll do it in January in Iowa ." Where are you? You going to run?

    REP. FORD: I'm leaning back for you.

    REP. GINGRICH: How's that? It's like you and the Senate race last year. No, I, I think Callista and I'll make a decision probably in February; and probably, if we do run, we'll announce, I suspect, in late March. But we're still months away from that.

    MR. GREGORY: What's going into your thinking on that?

    REP. GINGRICH: I think partially can you create a movement that really wants to get to fundamental change and can you make that bigger than the presidency. I don't you can solve problems in a country of 513,000 elected officials by focusing only on the Oval Office .

    MR. GREGORY: Do you really think the president's vulnerable in 2012 ?

    REP. GINGRICH: Sure. I mean -- but he's not, he's not, he's not beaten. The -- this president has enormous capacity to recover. I think the economy will actually get marginally better over the next year, and he and the House Republicans will fight over who did it. But I suspect he'll -- we'll be at closer to 8 percent than to 10 percent unemployment in '12.

    MR. GREGORY: But the Republicans I talk to say that Sarah Palin and the tea party have created a whole new dynamic on the Republican side . It is impossible to say who's got an early edge. What is the impact?

    REP. GINGRICH: Yes. I think that's exactly right, and I think it's like all the races we saw this year. You will not know who the nominee is until very late in the spring of, of 2012 because Governor Palin has a role, Governor Huckabee has a role, Governor Romney has a role, you know, Governor Daniels . I mean, go down the list, Governor Pawlenty , Governor Barbour . I mean, you could have 12 or 15 candidates out there early next year, and you won't know how the conversation leads to a decision until it actually happens.

    MR. GREGORY: Mm-hmm. All right. Well, we're going to leave it there. Thank you all very much for joining us today. You can read an excerpt, by the way, of Bethany McLean 's book,

    "All the Devils Are Here: The Hidden History of the Financial Crisis ," plus watch our Take Two Web extra with former House Speaker Newt Gingrich about his latest novel, " Valley

    Forge: George Washington and the Crucible of Victory ." It's all on our Web site at mtp.msnbc.com. That's all for today. We'll be back next week. An exclusive interview with Republican governor of Louisiana , Bobby Jindal . Maybe he runs in 2012 . He's written a new book taking aim at the administration over the handling of the gulf oil spill. If it's Sunday, it's MEET THE PRESS .

Photos: 64 years of ‘Meet the Press’

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  1. First ‘Meet the Press’ photo

    December 4, 1947: The earliest photograph in existence of the longest running television program in history. Sen. Robert Taft was the guest on "Meet the Press" that day, less than a month after the program debuted on NBC television at 8 p.m., November 6, 1947. James A. Farley, the former postmaster general and former Democratic National Committee chairman, was the guest on the first broadcast. (Meet the Press) Back to slideshow navigation
  2. All women

    December 10, 1949: With Washington's leading male reporters otherwise occupied at the men-only Gridiron Dinner, "Meet the Press" presented its first all-female program. Moderator (and program co-founder) Martha Rountree, panelists Doris Fleeson, May Craig, Judy Spivak and Ruth Montgomery question the guest, Democratic politician India Edwards. (Meet the Press) Back to slideshow navigation
  3. Billy Graham

    March 6, 1955: Rev. Billy Graham’s first "Meet the Press" appearance. He tells panelist (and program co-founder) Lawrence Spivak "anything that makes any race feel inferior ... is not only un-American but un-Christian." (Meet the Press) Back to slideshow navigation
  4. Jackie Robinson

    April 14, 1957: Jackie Robinson, the first man to break the racial barrier in Major League Baseball, also becomes the first athlete to appear on "Meet the Press." Robinson joins moderator Lawrence Spivak in a discussion about civil rights and Robinson’s work with the NAACP. (Meet the Press) Back to slideshow navigation
  5. Eleanor Roosevelt

    October 20, 1957: Former First Lady Eleanor Roosevelt in one of her six "Meet the Press" appearances. Here she talks about her trip to the Soviet Union. (Meet the Press) Back to slideshow navigation
  6. Robert Frost

    December 28, 1958: Poet Robert Frost was introduced by moderator Ned Brooks as "the poet of all America. Indeed, it can be said that he is the poet of all mankind." Two years later, Congress awarded Robert Frost a gold medal in recognition of his poetry, saying it enriched the culture of the United States and the philosophy of the world. (Meet the Press) Back to slideshow navigation
  7. Fidel Castro

    April 19, 1959: Cuban Prime Minister Fidel Castro appears on "Meet the Press" during his first visit to the United States since the revolution. Castro was annoyed that permanent panelist and producer Lawrence Spivak would not allow him to smoke cigars in the studio. (Meet the Press) Back to slideshow navigation
  8. Martin Luthur King Jr.

    April 17, 1960: Civil Rights leader Dr. Martin Luther King Jr., pictured here in one of his five "Meet the Press" appearances. (Meet the Press) Back to slideshow navigation
  9. John F. Kennedy

    October 16, 1960: After this interview, then-Senator John F. Kennedy calls Meet the Press the nation's "fifty-first state." (Meet the Press) Back to slideshow navigation
  10. Jimmy Hoffa

    July 9, 1961:This first "Meet the Press" appearance by Teamster president Jimmy Hoffa had to be rescheduled several times due to Hoffa’s string of indictments. After the interview, Hoffa was furious about being asked whether his insistence on dealing only in cash and keeping few records gave the appearance of impropriety. (Meet the Press) Back to slideshow navigation
  11. Edward Kennedy

    March 11, 1962: Edward Kennedy’s first appearance on the program. The potential Senate candidate was coached by his older brother, President John F. Kennedy. President Kennedy and his aide Theodore Sorensen prepared "Teddy" for his “Meet the Press” debut by staging a run through of questions and answers in the Oval Office. On the day of the program, President Kennedy delayed his departure from Palm Beach in order to watch the show, but later told his brother that he was almost too nervous to watch. (Meet the Press) Back to slideshow navigation
  12. Bob Dole

    July 16, 1972: Bob Dole and "Meet the Press" moderator Lawrence Spivak prepare to discuss the break-in and bugging of the Democratic National Committee headquarters at the Watergate. Former Senator Dole holds the record for the most appearances on “Meet the Press” in a career that included service as a Congressman, Senator, RNC Chairman, vice presidential candidate, Senate Majority Leader and finally, Republican presidential nominee. (Meet the Press) Back to slideshow navigation
  13. Prime Minister Wilson

    September 19, 1965: "Meet the Press" conducts television’s very first live satellite interview. The guest is British Prime Minister Harold Wilson. (Meet the Press) Back to slideshow navigation
  14. Ronald Reagan

    September 11, 1966: Ronald Reagan, making his first bid for public office, appears on "Meet the Press" with his Democratic opponent for the governorship of California, the incumbent Gov. Edmund G. Brown. Reagan appeared on "Meet the Press" seven times -- all before he was elected president. (Meet the Press) Back to slideshow navigation
  15. Robert Kennedy

    March 17, 1968: Senator Robert F. Kennedy makes his ninth -- and final -- appearance on "Meet the Press" with Lawrence E. Spivak. Kennedy was assassinated in California less than 3 months later -- shortly after claiming victory in that state's Democratic presidential primary. He was 42 years old. (Meet the Press) Back to slideshow navigation
  16. John Kerry

    April 18, 1971: John Kerry, then a former Navy Lieutenant, makes his first "Meet the Press" appearance as a spokesman for Vietnam Veterans Against the War. He has since appeared on the program as a U.S. Senator from Massachusetts 21 times. (Meet the Press) Back to slideshow navigation
  17. Golda Meir

    December 5, 1971: Golda Meir, prime minister of Israel, appears on “Meet the Press” with moderator Bill Monroe to discuss the continuing instability in the Middle East and the prospect of meeting and negotiating with Egypt’s leaders. (Meet the Press) Back to slideshow navigation
  18. Prime Minister Gandhi

    August 24, 1975: Indian Prime Minister Indira Gandhi in one of her seven appearances on "Meet the Press" before her assassination in October 1984. After she was elected Prime Minister in 1966, Gandhi grew more concerned about her television image and contacted "Meet the Press" to request makeup samples used during her appearance on the program. The program’s makeup artist consulted her notes and sent Mrs. Gandhi a complete makeup set -- including sponges and instructions for application. (Meet the Press) Back to slideshow navigation
  19. Gerald Ford

    November 9, 1975: President Gerald Ford becomes the first sitting American president to appear on the program. President Ford accepted the invitation as a tribute to "Meet the Press" co-founder Lawrence Spivak, who was making his farewell appearance as moderator of the program. (Meet the Press) Back to slideshow navigation
  20. Jimmy Carter

    January 20, 1980: In one of the most dramatic newsbreaks in the history of "Meet the Press" President Jimmy Carter announces that the U.S. would boycott the Moscow Summer Olympics because of the presence of Soviet troops in Afghanistan. Despite initial outrage over Carter’s proposal, 60 nations eventually joined the boycott. (Meet the Press) Back to slideshow navigation
  21. Richard Nixon

    April 10, 1988: In his first Sunday interview in 20 years, Former President Richard Nixon reacts to a comment on "Meet the Press. (Meet the Press) Back to slideshow navigation
  22. Tim Russert's first show

    December 8, 1991: Tim Russert makes his debut as moderator of "Meet the Press." He has since become the longest-serving moderator in "Meet the Press" history. In the center of this photo is then-intern Betsy Fischer, who is now Executive Producer of the program. (Meet the Press) Back to slideshow navigation
  23. Dan Quayle

    September 20, 1992: "Meet the Press" permanently expands from a half-hour to a one hour program. Vice President Dan Quayle is the guest. (Meet the Press) Back to slideshow navigation
  24. Shaheen and Whitman

    February 2, 1997: The broadcast breaks television history as "Meet the Press" becomes the first network television program ever to broadcast live in digital high definition. Governors Jeanne Shaheen and Christie Todd Whitman share a light moment on the set that day. (Charles Rex Arbogast / AP) Back to slideshow navigation
  25. Bill Clinton

    November 9, 1997: President Bill Clinton appears in studio on "Meet the Press" to mark the program’s 50th anniversary. (Meet the Press) Back to slideshow navigation
  26. Al Gore

    December 19, 1999: In a live Democratic presidential debate, Vice President Al Gore challenges former Sen. Bill Bradley to a "Meet the Press agreement" to have weekly debates in place of running political advertisements. (Meet the Press) Back to slideshow navigation
  27. Dick Cheney

    September 16, 2001: Five days after the September 11th attacks, Vice President Dick Cheney joins moderator Tim Russert in the first live television interview ever broadcast from Camp David. (Getty Images) Back to slideshow navigation
  28. Senate Debate Series

    September 22, 2002: "Meet the Press" kicks off its "Senate Debate Series" with the Colorado Senate race: Republican Incumbent Sen. Wayne Allard vs. Democratic Challenger Tom Strickland. At the end of the election cycle, the series of three senate debates was awarded the prestigious "USC Walter Cronkite Journalism Award" for "Excellence in Broadcast TV Political Journalism." The debate series continued in 2004 and 2006. (Alex Wong / Getty Images for Meet the Press) Back to slideshow navigation
  29. George W. Bush

    February 8, 2004: President George W. Bush kicks off his re-election campaign in an Oval Office interview with Tim Russert on "Meet the Press." Robert Novak went on to write about the interview, "no president ever before had been subjected to such tough questioning in the Oval Office." (Getty Images for Meet the Press) Back to slideshow navigation
  30. James Carville

    November 14, 2004: In another "Meet the Press" first, Democratic strategist James Carville cracks an egg on his forehead to demonstrate he's got "egg on his face" after his projected outcome of the U.S. presidential election was wrong. Carville predicted 52 percent of the vote for U.S. Sen. John Kerry (D-Mass.), 47 percent for President George W. Bush and 1 percent for Ralph Nader. (Getty Images for Meet the Press) Back to slideshow navigation
  31. Jim Webb

    November 19, 2006: The first edition of "Meet the Press" to be available via video netcast on the show’s Web site. U.S. Senator-elect Jim Webb (D-Va.) joins moderator Tim Russert on that program. (Alex Wong / Getty Images for Meet the Press) Back to slideshow navigation
  32. Barack Obama

    November 11, 2007: "Meet the Press"celebrates its 60th anniversary live from Des Moines, Iowa with Democratic Presidential hopeful Senator Barack Obama (D-Illinois) for the full hour. (Eric Thayer / Getty Images) Back to slideshow navigation
  33. June 15, 2008: The chair of late moderator Tim Russert sits empty on the set during the first MTP taping following Russert's death. He died June 13, 2008 of a heart attack while at the NBC News bureau in Washington. He was 58 years old. (Alex Wong / Getty Images for Meet the Press) Back to slideshow navigation
  34. Colin Powell

    October 19, 2008: A record-breaking 9 million viewers tune in to see Gen. Colin Powell, a Republican, announce his endorsement of Democratic Presidential Nominee Barack Obama. (Brendan Smialowski / Getty Images) Back to slideshow navigation
  35. President-elect Obama

    December 7, 2008: President-elect Barack Obama makes his first Sunday morning television appearance since winning the election to discuss the challenges facing this country and the upcoming transition of power. (Scott Olson / Getty Images for Meet the Press) Back to slideshow navigation
  36. David Gregory

    December 7, 2008: Interim moderator Tom Brokaw announces that David Gregory has been chosen as the new moderator of the show. (Alex Wong / Getty Images for Meet the Press) Back to slideshow navigation
  37. Rendell, Schwarzenegger & Bloomberg

    March 22, 2009: Gov. Ed Rendell (D-Penn.), Gov. Arnold Schwarzenegger (R-Calif.) and NYC Mayor Michael Bloomberg appeared exclusively on Meet the Press one day after meeting with President Obama to discuss the economy. (Brendan Smialowski / Getty Images for Meet the Press) Back to slideshow navigation
  38. Hillary Clinton

    July 26, 2009: Secretary of State Hillary Clinton appears for a full-hour on Meet the Press. It's her first appearance on the program since joining the Obama administration. (William B. Plowman / NBC Universal) Back to slideshow navigation
  39. President Obama

    September 20, 2009: President Barack Obama sits down with David Gregory at the White House for Obama's first MTP appearance since taking office. (Pete Souza / The White House) Back to slideshow navigation
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