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'Meet the Press' transcript for April 5, 2009

MR. DAVID GREGORY:  Our issues this Sunday:  At the height of the global economic crisis the president takes an unprecedented step toward saving the auto industry, ousting General Motors CEO Rick Wagoner.


PRES. BARACK OBAMA:  It's a failure of leadership from Washington to Detroit that led our auto companies to this point.

(End videotape)

MR. GREGORY:  But even as he gives GM a new deadline to reinvent itself, the president says the government will stand behind Detroit.


PRES. OBAMA:  We cannot and must not and we will not let our auto industry simply vanish.

(End videotape)

MR. GREGORY:  Can General Motors be saved?  With us, the new CEO, Fritz Henderson.

Then, North Korea fires a long-range rocket, sparking international outrage and an emergency U.N. Security Council meeting.  Was it a weapons test?

And President Obama on the world stage.  What did the historic economic summit accomplish, and can this new administration enlist wider support from our allies in the battle against terrorism?  Our roundtable weighs in:  Michael Gerson, senior fellow at the Council on Foreign Relations and former speech writer and policy adviser to President George W.  Bush; John Harwood of CNBC and The New York Times; Katty Kay, Washington correspondent for BBC World News America; Joshua Cooper Ramo, author of "The New Age of the Unthinkable:  Why the New World Disorder Constantly Surprises Us and What We Can Do About It"; and Dr. Bill Rodgers, professor and economist at Rutgers University, former chief economist at the U.S. Department of Labor under President Clinton.

But first, we're joined live from Detroit this morning by the new CEO of General Motors, Fritz Henderson.

Welcome to MEET THE PRESS.

MR. FRITZ HENDERSON:  Good morning, David.

MR. GREGORY:  The administration's auto task force tasked General Motors with the idea of coming up with a viability plan.  The company did that and the White House rejected it flatly.  There were some stinging rebukes embedded in that report.  Here's just a sampling:  "General Motors' plan is not viable at is, at is--as it is currently structured.  The assumptions in GM's business plan are too optimistic.  Progress has been far too slow." Pretty harsh reaction from the Obama White House.  How did the company get it wrong?

MR. HENDERSON:  Well, as, as we looked at the situation--first, we're very appreciative of the support, David, of the White House and the automotive task force.  They got up to speed very fast, in a very short period of time.  They, they basically took a very hard look at, at both the assumptions as well as the actions in our plan.  They talked about the progress that has been made. But the, the conclusion was not far enough, not fast enough.  And candidly, that's where, that's where our charge is going forward, how we go deeper, faster.

MR. GREGORY:  All right.  But you were there, you were there as this report was put together, you've been there for 25 years.  Where do you think the company misjudged its own reality and the way forward?

MR. HENDERSON:  David, I have been with the company 25 years.  Through my career I've made a lot of mistakes, as we all do, but I--my, my job is to learn from them and then look forward to make sure we get the job done.

MR. GREGORY:  Do you--your predecessor, Rick Wagoner, was pushed out by the White House.  That, of course, is well known.  Under his tenure GM has lost $82 billion in just the last four years.  The value of the stock has plunged 95 percent.  It was $43 a share a year and a half ago, it's $2.10 as it closed on Friday.  Do you think the firing of Rick Wagoner was the right decision?

MR. HENDERSON:  David, Rick was my--is my friend, mentor.  I worked for him for the better part of my career.  But with Rick it was always about the company, not about him.  And he was asked to step aside and he did, and we need to look forward.

MR. GREGORY:  Well, but part of looking forward is trying to take account for what's gone on up till now, and mistakes that have been made, decisions that have been made that the White House says were not reflective of the idea of really taking account for mistakes that had been made.  Can you point to some areas where you think the company has really faltered?

MR. HENDERSON:  Well, it has been a difficult--you, you, you mentioned it, it has been a certainly challenging last several years.  We've had, we've had challenges in a number of places around the globe, whether it's here in our home market in the United States or in Europe, and in many ways we're not the only ones that have had those problems.  But I don't--I really don't focus on that.  We just need to take the mistakes we've made, learn from them, not get overly invested in them, and go forward and, and learn from them.

MR. GREGORY:  As a prominent member of the business community, I wonder if you agree with the governor of Michigan, who thinks there's a double standard when it comes to this financial crisis; that the government will go in and fire Rick Wagoner, but they don't deal with some of the CEOs in the banking industry at the top banks where there have been such mistakes made.  Do you think it's a double standard?

MR. HENDERSON:  David, I don't really think about what happens in other industries.  It's not for me to say, it's not a worry of mine.  Our worry is how do we get General Motors going forward?  And that's where we're going to spend 100 percent of our time.

MR. GREGORY:  The government role in effectively running GM has been criticized here in Washington, real questions about whether the government ought to be doing this.  Republican from Tennessee, Senator Bob Corker spoke out about it this week.  This is what he said, I'd like to have you react to it:  "They have opened Pandora's box--the U.S. government has decided they know better than the private company.  There's no question that this country is moving down a very different and foreign path.  We have crossed this threshold:  We own this company and we are telling it what to do." Here's an image from BusinessWeek in its current magazine.  There you are in the front seat and a visual backseat driver, President Obama, telling you exactly which way to go.  The president said that the administration doesn't want to run GM, but is that right?  Doesn't, in fact, the government run GM?

MR. HENDERSON:  No, David.  I, I think the administration and the task force has been very clear, they don't wish to run General Motors.  They expect us to get our job done.  But the day we took money from the taxpayer was one of the, one of the most difficult days of certainly my career and of the history of General Motors.  We need to respect the fact that we need to look after the taxpayer, we need to justify to the consumer and the taxpayer that we're going to succeed going forward.  And one of the, one of the happiest days of my future career is going to be the day we pay the loans back.

MR. GREGORY:  But the reality is that the administration has said who should run the company and who shouldn't, the administration is reconstituting the board of directors.  You report to the Obama White House, do you not?

MR. HENDERSON:  David, I report to Kent Kresa, the interim chairman of the board, the board of directors.  But I also have direct line into the president's task force.  In fact, I have several masters.  But in the end it's about getting the company in the right direction, and that's what I'm planning to do.

MR. GREGORY:  You would agree that General Motors needs to be reinvented and badly needs change.

MR. HENDERSON:  I would agree, yes.

MR. GREGORY:  Now, you've been at the company for 25 years.  You are an insider.  Critics of the industry and of General Motors in particular say the culture at GM is simply too inbred.  How can an insider like yourself be relied upon to make transformational change?

MR. HENDERSON:  Well, I do come to the job with 25 years of experience in the company.  And having run our businesses just about everywhere around the globe, I've seen a lot of things happen in the automotive industry.  I've seen good times, I've seen bad times, and we've adjusted.  I think in the end we have to prove it.  And you just watch us, we'll get this job done.

MR. GREGORY:  But you can be relied upon to bring change?

MR. HENDERSON:  I will spend 100 percent of my time doing exactly that.

MR. GREGORY:  Let me bring in the issue of bankruptcy.  And everybody should understand that bankruptcy is used in businesses to help a company like General Motors that has negative cash flow, it has a lot of debt to creditors, legacy costs, etc.  to sort of get out from underneath that debt.  You did some interviews this week; you said about bankruptcy that it's now "more probable." Do you think bankruptcy at this point is inevitable?

MR. HENDERSON:  No.  I think what--when, when you look back at the, the findings of the president's task force, they basically said we need to go deeper and we need to go faster in our restructuring.  And we can't compromise those critical goals, and they outlined them in their report.  And so what was provided was a period--now we're 55 days, not 60 days away--and we either accomplish this job outside of bankruptcy in the short term; or alternatively, if it's necessary, we'll go into bankruptcy in order to get this job done.

MR. GREGORY:  But in your own mind are you planning in a way where you're preparing yourself for bankruptcy?

MR. HENDERSON:  We are planning to get the job done.  Our preference is to do it outside of a bankruptcy process, but it would only be prudent to make sure that we're planning for if we need to resort to that, that we can move and we can move fast.

MR. GREGORY:  The USA Today in an editorial this week talked about some of the upsides, saying Chapter 11 may be the best cure for what ails the automakers.  Here's the rationale:  "Shareholders come away with little if anything.  Creditors get only a portion of what they are owed.  Contractual obligation to unions, suppliers and distributors and others are reworked. Unless an endangered automaker can come up with a plan that accomplishes most of the same results with greater speed and certainty, a controlled or managed bankruptcy might be the best alternative." Do you agree?

MR. HENDERSON:  Well, the administration basically said the same thing, it may very well be the best alternative.  As I look at the situation, we need to accomplish a set of goals, and accomplishing those is--can't be compromised. So if it can't be done outside of a bankruptcy process, it will be done within it.

MR. GREGORY:  The reality, bankruptcy or no bankruptcy, is a fundamental question, which is:  Who is going to buy a car from GM given the question mark that surrounds your financial future?

MR. HENDERSON:  David, I'd say a couple things.  One, I started out, one of the points I made earlier was we're immensely appreciative of the support we've received from the president task force and from the president himself. He basically went on, went on television and said General Motors will be part of the future, A.  B, you can, you can count on your warranties, your service, you can be confident in your ability to buy a General Motors car or truck.  C, we have the very finest cars and trucks in our history coming into the market today.  And then we, we basically have launched recently, for example, our Total Confidence program, which is to basically say you can judge whether or not you buy a GM car or truck solely on its merits, and we're going to make sure we're there for you.

MR. GREGORY:  Do you expect and would you like to see President Obama encourage the country to buy American cars?

MR. HENDERSON:  No, actually.  I, I, I think the consumer should buy exactly what kind of car they think meets their needs and that excites them.  And as I look at it, it's our job to make sure we provide that, not necessarily have it mandated or otherwise encouraged.  I think we have fantastic cars and trucks. We're going to win in the marketplace and not necessarily because--just because we're a U.S. company.

MR. GREGORY:  I want to talk about restructuring.  You have less than 60 days and there are some real challenges to restructuring.  One has to do with the number of brands that GM currently has.  In the government's report it made the conclusion that there are simply too many brands.  If we put them up on the screen, we can see them.  There has already been a determination made that you would cut Saab, Saturn and Hummer.  But what else, as you look at restructuring and coming up with a revised viability plan, are you willing to cut, shut down or sell?

MR. HENDERSON:  Well, the report did point out that we had already taken those actions.  And in this particular area, David, it was about how do we go faster, particularly in the area of I'll call it dealer network restructuring. So we need to do that.  We need to pull forward a plan that went out to 2013, 2014.  How do we get it pulled forward into '09 and '10?  That's the--that was the finding, and we're going to get that done.

And with respect to the other plan--other brands, we're really building a plan around four core brands.  And we think that not only is that the right thing to do in the marketplace, but it gives us the best chance to earning, earning a high return on capital.

MR. GREGORY:  Legacy costs, meaning all of the costs associated with union employees, part of the United Auto Workers, is just a huge issue for General Motors.  The government report indicates that in order to pay those retired autoworkers GM has to produce an extra 900,000 cars every year.  What is the message to the union now?  Doesn't it have to be, "Those days are over"?

MR. HENDERSON:  I, I think the message to all the constituencies that, that play a part in our future is we need to pull together.  We need to, we need, we need to sacrifice as a group.  Whether it's our people, our unions, our salaried employees, our dealers, our suppliers, we need to pull together to make sure we do what's necessary in order to make General Motors viable going forward.  So we're going, we're going to be--we have been doing that.  We've gotten enormous support for that up to this point, but we need to do more.

MR. GREGORY:  Well, let's talk about how you can do more.  How many union jobs are there in a typical factory for General Motors that have nothing to do with producing automobiles?

MR. HENDERSON:  Well, actually every job we have in a factory has something to do with producing an automobile, in--whether it's obviously putting the actual car together, or supplying materials to the line, or maintaining the, the equipment that's in the plant.  So I, I mean, we have, we have worked very hard, and if you look at external surveys--for example, like The Harbour Report--we've really closed the gap in terms of competitiveness, in terms of the manpower we have within our operations.  We need to do more.  But every person in the plant has something to do with putting together a car or truck.

MR. GREGORY:  But in some factories you have a, a, a shop steward who's responsible for appointing--whether it's a civil rights chief or an education person, these are all union jobs that don't have anything to do with producing the car.

MR. HENDERSON:  Well, we have--the union has, has key, has key, key, key jobs, as you identified.  But I'll take an example, let's take health and safety.  We work together with the union on the health and safety in our plants.  We have the safest plants in, in, in the United States--in fact, around the globe.  And I think providing, for example, a safe workplace is very much in the best interest of the company as well as the union.

MR. GREGORY:  You have told health care managers and executives over 65 that they no longer get health care benefits, they have to revert at that point to Medicare.  Is it time for union workers to accept that same limit?

MR. HENDERSON:  David, the provision of health care to our hourly employees will, will basically vest to the responsibility of a VEBA trust effective January 1, 2010.  The VEBA trust will, will be responsible for determining the level of benefits.  And I can't really, can't really forecast, if you will, what decisions they're going to make.

MR. GREGORY:  But do you think that's the kind of cut that the union should have to accept?

MR. HENDERSON:  It's not for me to say, David.  I think in the end the, the trustees of the VEBA are going to have to make those sorts of decisions.

MR. GREGORY:  Do you really expect this president, given how strongly supported he is by the unions, do you really expect him to take a step that would hurt he unions?

MR. HENDERSON:  I think President Obama--let me put it in the positive.  He basically said we want to work together to make sure this company's viable and successful and part of the automotive industry in the next 100 years.  And basically he asked all the parties to come back together to make sure we do exactly that.  So I don't think it's about hurting some constituency or another, it's about what do we have to do to win in the future.

MR. GREGORY:  The issue of the quality of GM cars is what's at the center of getting the consumer to come back and buy those cars.  Again, in the government report it came to this conclusion:  "Fundamentally, the lingering consumer perception is that GM makes lower-quality cars." Do you agree with that?

MR. HENDERSON:  We have perception issues, without a doubt.  I, I, I think if you look at the actual quality of our cars, we continue every day to not only improve, win awards--whether it's Cars of the Year, whether it's awards with JD Power; continuing progress, for example, in Consumer Reports.  With respect to perception, David, it's really about step by step.  You don't change perception in, in massive amounts overnight, you change it every day, every single consumer.  We sell cars one at a time.  And with every launch, with every product, every time we touch a consumer it's about changing those perceptions.  There's no magic, there's no magic to this, you've just got to get the job done every day.

MR. GREGORY:  Your predecessor, Rick Wagoner, agreed to work for a dollar, given the taxpayers were putting so much money into General Motors.  You didn't make that agreement.  You're going to be working for considerably more than that.  Why?

MR. HENDERSON:  David, at the beginning of this year, as part of the series of sacrifices, my salary was cut 30 percent, and basically it stayed where it is.  My, my salary today is the same it was two weeks ago.  We've asked all of the parties of General Motors, including myself and others, to make sacrifices, and it's going to stay that way.

MR. GREGORY:  But how much will you make?

MR. HENDERSON:  My salary is $1.3 million.

MR. GREGORY:  It was said years ago that what's good for GM is good for America and vice versa.  Is that still the case today, and what is the GM of the future?

MR. HENDERSON:  GM of the future is a couple things.  One, it's a, it's a globally competitive company.  It's a company that wins in the major markets. It's a company that grows in emerging markets.  It's a company focused around products, fantastic products and consumers.  In terms of what we have to do to be successful, David, we need to take the tough actions to restructure our business.  But it's all about capturing the imagination of consumers with great cars and trucks, fantastic styling, winning the consumer back.  Because in the end, the consumer is going to pay the bills so that we can pay the government back.

MR. GREGORY:  If GM lives to fight another day here, restructures in a way that the government deems viable and gets additional loans, in that new company, in that new GM, do you think you're the person to run it?

MR. HENDERSON:  I do.  In the end, the determination of who runs it is a function of the board of directors.  But I certainly feel that I have the experience and the knowledge of the industry and the knowledge of the company to get the job done, and that's exactly what I'm going to be spending my time doing.

MR. GREGORY:  Mr. Henderson, good luck with your very important work.

MR. HENDERSON:  Thank you very much, David.

MR. GREGORY:  Thank you.

And coming next, the very latest reaction to North Korea's missile launch. Plus, President Obama's historic meeting with world leaders at the G20 summit this week.  What was accomplished?  Our roundtable weighs in:  Michael Gerson, John Harwood, Katty Kay, Joshua Cooper Ramo and Bill Rodgers, here only on MEET THE PRESS.


MR. GREGORY:  Our roundtable on the North Korea rocket launch, President Obama, the G20 and the global economy after this brief commercial break.


MR. GREGORY:  And we're back, joined now by John Harwood, Katty Kay and Joshua Cooper Ramo, Dr. Bill Rodgers and Michael Gerson.  Big panel and a big week.  So much going on, including this breaking news that we're dealing with today out of North Korea.  They fired off a rocket.  Some dispute about whether it was a dud or not.  But nevertheless, they threatened to do it, they did it, and now you have a big international reaction and the first international test for President Obama.  He spoke in Prague this morning about nonproliferation, about the moral need for the United States to lead in getting rid of nuclear weapons.  This is what he said about North Korea.

(Videotape, this morning)

PRES. OBAMA:  Just this morning we were reminded again of why we need a new and more rigorous approach to address this threat.  North Korea broke the rules once again by testing a rocket that could be used for long-range missiles.  This provocation underscores the need for action not just this afternoon at the U.N. Security Council, but in our determination to prevent the spread of these weapons.  Rules must be binding.  Violations must be punished.  Words must mean something.

(End videotape)

MR. GREGORY:  And we'll see if they do.  The United Nations Security Council will meet later today to discuss this in an emergency session.  China has urged all parties not to overreact, to remain calm.  China, obviously, the big neighbor and a, and a big role to play in terms of dealing with North Korea.

Katty Kay, where does this go from here?

MS. KATTY KAY:  Well, I think that whether or not this was a dud, North Korea got exactly what it wanted.  Its timing was exquisite.  It launched this rocket on the morning of the proliferation speech--nonproliferation speech in Prague and it got the world's attention.  You know, North Korea sometimes reminds me of my three-year-old when I'm paying too much attention to my eight-year-old.  "Mommy, give me more attention." And I think that's what--some of what we've seen in Pyongyang.  They wanted to test the new president of the United States, they wanted to remind the world community that they have this capability.  And they did all of that, so they got exactly what they wanted.  The one--if there is any silver lining in this launch, I think it's the fact that the Chinese now will have to sit up and pay a bit more attention in these six-party talks...


MS. KAY:  ...because President Hu has just had successful meetings with President Obama in London this week, and the Chinese don't like it when the North Koreans actually challenge the rest of the world community like this.

MR. GREGORY:  Joshua Cooper Ramo, not only China's role in this, but also what is the long-term threat that everyone should be worried about with regard to a rocket blast like this from North Korea

MR. JOSHUA COOPER RAMO:  Well, there are a couple, obviously, to pay attention to.  The first one is that today North Korea remains the largest exporter in the world of ballistic missile technology.  So the fact that they developed this and that it's so difficult to track is, is hugely difficult and hugely problematic.  The second thing to worry about is this is an example, yet again, of North Korea controlling the pace of these discussions.  They're trying to set the agenda.  This is an opportunity for great statesmanship.  In fact, moments of great statesmanship come when your enemy is trying to force you to do something you don't want to do.  So it's an opportunity here.  But you can't let proliferators around the world determine the course of proliferation discussions.  We've got to take the incentive.

MR. GREGORY:  Again, the timing is very interesting, John Harwood.  Today in Prague the president said that there is a moral authority that the United States has to rid the world of nuclear weapons.  He'll do that in concert with Russia, for instance, in reducing stockpiles.  Well, just this week the issue of Iran came up in Israel.  Jeffrey Goldberg of The Atlantic magazine had an exclusive interview with Benjamin Netanyahu, the new prime minister of Israel, newly installed, and Netanyahu said the following:  "`The Obama presidency has two great missions:  fixing the economy and preventing Iran from gaining nuclear weapons,' Netanyahu [said].  ...  In unusually blunt language, Netanyahu said of the Iranian leadership, `You don't want a messianic apocalyptic cult controlling atomic bombs.'" And in Goldsberg--Goldberg's reporting, what was clear is that those close to Netanyahu were saying, "Look, if the U.S. does not deal with this, Israel's going to have to deal with it."

MR. JOHN HARWOOD:  Well, Iran is clearly the greater threat than North Korea. The problem, David, is that words, for some years now in either case, have not mattered very much.

MR. GREGORY:  Mm-hmm.

MR. HARWOOD:  And so in the case of North Korea, Robert Gibbs, the White House press secretary, just a few minutes ago told reporters that in fact this was a dud, that all of the stages of this rocket fell harmlessly to earth, nothing got into orbit.  So when your strategy hasn't worked as a U.S. government over multiple administrations, you know, part of your initial response is to portray the North Koreans as the Keystone Kops, because Gibbs noted that multiple times these attempts by the North Koreans have failed. But Iran's going to be watching how determined the world is in reacting to this, and, and, and that's the one we really need to worry about.

MR. GREGORY:  Yeah.  But, Michael Gerson, it's interesting about--with the Iran threat as well, you now have a second potential area of an international test, something the administration is not really planning for; which is not only North Korea as a, as a diplomatic and national security challenge, but Iran and how to handle an ally like Israel which considers Iran and its weapons program an existential threat.

MR. MICHAEL GERSON:  No, I agree with that.  That's the wild card in this debate.  There's a real question as whether Israel has the capability to deal with this type of threat, which is a dispersed threat, a hardened threat.  You know, they would--might have to over fly Iraqi territory, which would eventually complicate America's life and, and, and situation in Iraq.  There's a big debate going on within the administration on what's the red line. Israel's red line is the nuclear cycle.  They don't want Iran--that's the hardest part of developing a nuclear weapon.  Weaponization isn't that hard. But the administration is considering maybe allowing them the symbolic control of the nuclear cycle and trying to prevent, though inspections and other things, weaponization.  People are going to have to judge whether that is a concession to reality or a surrender in this circumstance.  It's going to be interesting how they deal with that.

MR. GREGORY:  All of this is the backdrop to this first trip abroad, the president greeted very warmly throughout Europe and took on a lot.  The Financial Times has a piece about the president's reception, and it says this: "[President Obama] is being accorded high ratings from almost every quarter barring conservative critics back home.  In part, this comes because of the contrast Mr. Obama strikes with the widely derided George.  W.  Bush.  ... Most of all, it is about Mr. Obama's unusual approach to foreigners.  'I have come to listen, not to lecture,' he said several times this week.  Much of the time he appeared to mean it."

Professor Rodgers, you're an economist.  Obviously the economy was central to his message as he approached Russia, and a lot of the views of Europeans toward this president influenced by what's happening around the globe with this recession.

DR. BILL RODGERS:  That's right.  It's a very, very challenging time that, that not only the U.S. but all throughout the world we're, we're, we're challenged to.  And what I really took way from, you know, his going, going there, as I said, it was really described as if he is this blue chip recruit when he, when he did his first trip before he was elected, and everyone's trying to show each other how good they are, and now this was his first time out in the rookie season.  And I give him, you know, B-plus, A-minus in terms of really beginning to, to really get us back to a dialogue where people--the Europeans and, and our other trade, trade allies--are really respecting us. And...

MR. GREGORY:  Because there were areas of disagreement.


MR. GREGORY:  Like how much stimulus to provide in those economies over there.


MR. GREGORY:  He didn't walk away saying, at least publicly, that he had been rebuffed on that score.

DR. RODGERS:  Correct.  And, and what's interesting about the amount of stimulus, I mean, these--you know, our trade, trade partners have already been, you know, putting a regular stimulus out there.  So--but they did agree that, you know, we're going to continue to monitor the, the effects of the stimulus package, the budget conversation, and then we'll get back together if we have to act, act, act more swiftly.

MR. GREGORY:  The president talked more broadly about the relationship between the United States and Europe, and what's changed since President Bush. Let's listen to that.

(Videotape, Friday)

PRES. OBAMA:  In America there's a failure to appreciate Europe's leading role in the world.  Instead of celebrating your dynamic union and seeking to partner with you to meet common challenges, there have been times where America's shown arrogance and been dismissive, even derisive.  But in Europe there is an anti-Americanism that is at once casual, but can also be insidious.  Instead of recognizing the good that America so often does in the world, there have been times where Europeans choose to blame America for much of what's bad.  On both sides of the Atlantic these attitudes have become all too common.  They are not wise.  They do not represent the truth.

(End videotape)

MR. GREGORY:  Katty?

MS. KAY:  For me the high point of this speech was that Obama managed to speak to Europeans and wowed them so much that he could also deliver these rather difficult messages.  And he's absolutely right that there has been insidious anti-Americanism in Europe.  He's also right that the threat of Islamic extremism is a threat for Europe as is much as it is for the United States.  And he managed to put that across all at the same time as cut--being extremely popular wherever he went.  The dichotomy of Barack Obama and the interesting thing about his presidency in terms of Europe has always been, how much does that popularity actually translate into America getting more of what it wants?  And if you look at the results of this week, they didn't get more on the stimulus.  They went there wanting European countries to commit to 2 percent of GDP as stimulus.  They didn't get that.  They didn't get really what they wanted on Afghanistan.  They got these 5,000 more troops from NATO for Afghanistan, but they're going to be there on a temporary basis, they're mostly trainers.  So actually, they didn't really get very much in concrete terms.

MR. GREGORY:  Right.

MS. KAY:  What they got was the aura of a president--and that could be politically powerful--who is now newly popular in Europe.

MR. GREGORY:  Right.  But you, you worked for President Bush, Mike Gerson.

MR. GERSON:  Right.

MR. GREGORY:  Were you impressed?

MR. GERSON:  I was impressed by his performance, which was very good.  I was impressed by Michelle Obama's grace, which is a national asset.  But I was not impressed by the results that were achieved.  The purpose of diplomacy is not to have a president be popular, it's to persuade allies and enemies to do things that are in the American interest.  And for all those reasons that you were talking about, it was not particularly successful.  I would say that it's easy to go into Europe, Europe and impress Europe when you talk like a European, criticizing the United States on, on its own economic policies, its arrogance, and then defer to the European agenda instead of insisting on our own.  That's a pretty easy diplomatic task.

DR. RODGERS:  But I, but I just think, though, again, we have--the president's first task for him was to rebuild relationships, to rebuild the tone and really connect with the Europeans and European leaders.  And in the coming months you are going to continue to see, I think, the backroom conversations to where we'll begin to move further down that road of the administration going after more concrete pieces.


MR. HARWOOD:  David, since Dr. Rodgers raised the issue of a blue chip recruit a while ago I'm trapped in a football metaphor here.  And I'm sorry, it's American football.  I think what you can look at what Barack Obama is doing as he's moving the ball down the field.  He's making first downs.  He's not fumbling the ball.  Is he connecting with long passes, did he get all he wanted on stimulus or on troops?  No.  But this is progress.  The G20 communique had useful steps on regulation, on money for the IMF, on money for trade finance.  It's going to be tested down the road when we decide whether the economy in fact needs more stimulus.  That's when the pledge to do what's necessary will, will--that's where the rubber will hit the road.

MR. GREGORY:  Right.

MR. HARWOOD:  But I think at the moment Barack Obama--and you can look broadly at his agenda on steps forward in Congress, on his budget, on the stimulus plan--he is making progress and he is not turning the ball over.

MR. GREGORY:  Joshua Cooper Ramo, I want to ask you about the war on terror and how the president spoke about it during this trip.  First of all, they don't use the phrase "war on terror" anymore.

MR. RAMO:  Right.

MR. GREGORY:  He's going to go to Turkey and speak to the Muslim world in a, in a way that will provide, perhaps, more outreach and certainly try to mark that distinction from his predecessor.  You, in your book, talk about the necessary aspect of, of foreign--of powers, of U.S. power and foreign power, to deal with terrorism differently, to think more like a revolutionary.  So he's doing all of that.  Yet at the same time, this is what he said to Europe about Afghanistan and al-Qaeda.  Listen to this.

(Videotape, Friday)

PRES. OBAMA:  After the initial NATO engagement in Afghanistan, we got sidetracked by Iraq.  And we have not fully recovered that initial insight that we have a mutual interest in ensuring that organizations like al-Qaeda cannot operate.  And, and I think that it is important for Europe to understand that even though I'm now president and George Bush is no longer president, al-Qaeda is still a threat; and that we cannot pretend, somehow, that because Barack Hussein Obama got elected as president, suddenly everything's going to be OK.

(End videotape)

MR. GREGORY:  It's a pretty powerful point.

MR. RAMO:  It's a very powerful point.  But it also highlights exactly what you were saying, which is this shift of intentionality, this shift of operationally in the way we're going to fight the war on terror.  And that's a shift away from using military forces entirely and much towards trying to use civilian forces to bolster them.  The lesson of the last decade has been that you cannot beat terrorists by bombing them into the ground, And so that's--what's so important about this new Afghanistan strategy is it is not simply about boots on the ground, but about shovels on the ground.  The reality is much more difficult, which is that today the military is ready to go.  They are forward leaning.  The challenge is that eight years after 9/11 we still do not have the civilian surge capacity that we need to get on the ground in Afghanistan and make a difference between now and those August elections.  And that's probably the biggest challenge for the president in the next three or four months.

MR. GREGORY:  Mike Gerson, I've always wondered whether this is in fact what we're seeing, chapter two in the war on terror, even if you call it something else.


MR. GREGORY:  President Bush wrote chapter one, and now there has to be a new page.

MR. GERSON:  Well, I would, I would agree.  But I think that chapter began to be written under General Petraeus and the successful Iraq strategy which, which used all those elements of national power.

MR. GREGORY:  Under President Bush.

MR. GERSON:  Under President Bush.  And so we have seen an evolution, but it's not a dividing line between the two administrations.  It's really been a progress on, on these questions, and I think it's the right direction.

MR. RAMO:  But I think--I mean, realistically speaking, the Bush administration did not do enough to, to arrange to have the civilian surge capacity.  We had eight years to prepare for this.


MR. RAMO:  Today we can't build schools, we can't build hospitals.  We've got elections in Afghanistan on August 25th.  That's what's going to determine the outcome there.  The only thing we can get there today is soldiers.  I mean, it's just a level of irresponsibility that's very hard to come to terms with.

MS. KAY:  Well, I mean, one thing that was made clear this week is that there is a much more limited U.S. agenda in Afghanistan.  And I do think that that's important, that there is no longer talk about trying to bring some sort of Jeffersonian democracy to the country.  It really is about containing al-Qaeda.  And that's why what President Obama said in Strasbourg is so important, was that focusing on Afghanistan in containing al-Qaeda and making al-Qaeda no longer a threat, and that's where he can get European help, I think.

MR. GREGORY:  But he also said--John Harwood, he said to the Europeans, "Look, you're likely to be hit before the U.S. is.  You're closer.  Don't hide from this fact."

MR. HARWOOD:  Exactly so.  But I think it's going to take some time to rebuild the confidence that this new strategy's going to work to get the longer term commitment of troops that he wants.

MS. KAY:  And...

DR. RODGERS:  And what I, what I also took away from that piece, from that, that piece and that speech was he still communicated that we're going to be strong on defense.  That--to me that came across still very, very strong.  But as Joshua said, we're going to take a more diversified approach.

MR. GERSON:  Yeah, but...

MS. KAY:  But the reality is that America still owns the Afghan war, despite these...

MR. GREGORY:  Right.

MS. KAY:  ...this extra commitment of troops, because the Germans are still saying, "We are not going to put extra troops into Helmand province.  We're not going to put them on the front line."

MR. GREGORY:  Final comment here before break.  Yeah.

MR. GERSON:  I thought that was a good, it was a good signal.  But the signal about renaming the war on terror doesn't change the reality, euphemisms don't change reality.  These groups believe they're at war with the United States. They've had--conducted an act of war against the United States.  We've pursued a strategy against al-Qaeda that assumed we were at war that's been fairly successful since 9/11.  And so calling something an overseas contingency operation, which really sounds like you're looking for lost luggage, doesn't necessarily, you know, move this debate forward.

MR. GREGORY:  All right, we're going to take a quick pause right here.  We're going to continue our discussion with our roundtable after this brief station break.


MR. GREGORY:  And we're back with our roundtable.

This overseas trip for the president, John Harwood, was all about the economy. Initially that G20 meeting, an historic meeting of the largest powers to deal with this global recession.  You were there, you're back.  What was really accomplished?

MR. HARWOOD:  Well, in part the goal of the meeting was what Gordon Brown, the British prime minister, called injected some of the oxygen of confidence into the world.  And when you saw the immediate market reaction after the session, it appears to have succeeded.  The market closed at the week, the Dow, over 8,000, which is something positive for the administration.  And I think everyone was mindful of what happened in 1933 when you had a similar meeting in London.  Franklin Roosevelt did not show up.  It was not successful, didn't achieve a common agenda going forward.  People fell into and persisted with protectionist policies and the Great Depression got worse. So I think they were trying to, in the first instance, have a unified message. The specifics are lacking, but the unified message was a start.

MR. GREGORY:  But, Professor, on some of the substance--here the G20 take great pains, they, they allocate more than a trillion dollars to help emerging markets deal with this glancing blow, but it could be a more direct blow, from this recession.  Yet a lot of people said that they didn't deal with the core problem, which is the recession in the largest economies.


MR. GREGORY:  Was this really an accomplishment?

DR. RODGERS:  Well, I think, again, we said earlier that a lot of the stimulus packages have already been sort of created, you know, in many of these countries.  You know, the U.S. we passed one in the middle of February. The United Kingdom has one, the Japanese have, have stimulus packages.  Also, the central banks in many of these countries are acting to create opportunities for--and for investment.  And finally, too, you also have with, with our, our own economy, our, our, our work on trying to unfreeze credit markets.


DR. RODGERS:  So there's a great deal of stimulus that is out there, and now, and now is really the, the time as to kind of wait and see, you know, how, how fast and quick it sort of gets in.

MR. GREGORY:  How it all works.  But at the same time he also delivered, the president did, a pretty strong message to the rest of the world, which is, "Don't look to America and our voracious appetites to lead us out of this recession.  You can't rely on the American consumer because, in effect, things are going to change; our budget deficits for our government, also individual spending habits."

DR. RODGERS:  Oh, oh, most definitely.  I, I see us coming out of this recession kind of towards the end of this year, into next year.  And, you know, many households, because of the challenges that they face with their, with their, with the debt levels that they, that they've accumulated on their homes or on credit cards, many are having to push the reset button.  Many are really having to adjust and change their attitudes about what they're going to be spending in going forward.

And then also, too, you know, our economy is still one of the best, strongest in the world.  Highest levels of productivity.  But with the growth of China, with the growth of India, you know, we are all much more interconnected to one another.

MR. GREGORY:  Mm-hmm.  Michael:

MR. GERSON:  Yeah.  No, I, I agree with that.  I mean, but this was in many ways a triumph for Gordon Brown, not for Barack Obama.  It was his emphasis on the IMF that triumphed at this summit.

MR. GREGORY:  International Monetary Fund...

MR. GERSON:  International Monetary Fund.

MR. GREGORY:  ...which provides a lot of the funding for smaller markets.

MR. HARWOOD:  The U.S. had a lot to do with that.

MR. GERSON:  Right.  Well, but, but it was a circumstance where for--you can view that in a good way or a bad way.  Some people are deeply skeptical of IMF.  It's probably good for, for Eastern Europe and Mexico and kind of second tier economies that need this money in the short term.  I think that's certainly true.  But nobody believes that we're in this world economic crisis because the IMF doesn't have enough money.

MR. GREGORY:  Mm-hmm.

MR. GERSON:  And that's the reality in this circumstance.

MR. GREGORY:  We have a lot of concerns, Joshua, about China, whether China will continue to buy U.S. debt.  China has been talking about finding a backup currency to the dollar.

MR. RAMO:  Right.

MR. GREGORY:  This is how The New York Times reported China's entrance onto the scene at the G20.  The headline:  "China Takes Stage as World Economic Power.  China arrives at the [G20] meeting with a sense of momentum, riding a wave of nationalism and boasting an economy that, more than any other, is surfing the trough of a crippling recession.  While other major economies shrink this year, China is expected by some economists to pass Japan's as the world's second largest, if it has not already.  ...  But just as real ...  are the factors that hamstring China:  widespread poverty, authoritarian rule, a culture shrouded by decades of isolation and poorly understood intentions. China's global ambitions are unlikely to be realized until it resolves those issues.  ...  China's economic fortunes remain deeply entangled with those of the United States, its biggest customer, rival, debtor and still--by far--the world's biggest economy."

MR. RAMO:  David, when you live in China, as I have for most of the last seven years, when your friends are there, you get a sense of the degree to which this crisis is touching on some of the biggest fears in China; everything from the ability of the party to respond to this crisis, to the question of is capitalism the right system to China, to will the United States block China's rise?  All of these things are very much on their mind, and it's part of the reason that they are trying carefully to assert themselves.

One positive thing at the end of the, the G20 is afterwards secretary of the Treasury, Tim Geithner, met with Wang Qishan.  Wang Qishan is the vice premier who is going to handle the bilateral economic relationship.  And every American should know who he is, because he's now like our loan officer.  This is the guy who is going to decide how and where we repay this debt that we're owed.  And he's a very significant political figure in China.

One other thing I'd add is that I was reading a lot of the Chinese blogs this week, and there's a new phrase that's kind of bouncing around that world, which is...(Chinese spoken)...which means essentially, like, "leaving the dollar behind." And once the popular opinion in China starts to coalesce around this notion that they need to unscrew themselves from our economy, that makes the negotiations that much more complex.

MR. GREGORY:  What would that actually mean for the United States?

MR. RAMO:  Well, it could mean...(unintelligible) means a very dramatic shift away from the dollar.  And that's what is so significant about this paper that Zhou Xiaochuan, who's the governor of the central bank, who's long seen as a pro-Western figure, coming out and saying basically we've got to find a way off of this cliff.  The internal pressure inside the leadership right now, that they are so exposed to dollar assets, is overwhelming.  And it puts a lot of pressure on the pro-Westernization, pro-political reform, pro-market people inside China.

MR. GREGORY:  And then back home, of course, despite the G20, some of the real economic headaches for this president as the recession grinds on.  Job numbers out at the end of the week, 660,000 more jobs lost last month; bringing the total, Professor, of jobs lost in this recession to more than $5 million?


MR. GREGORY:  Five million jobs, rather.  Excuse me.

DR. RODGERS:  Yeah.  It was, it was a tough, tough Friday.  But, but--and, and, you know, and the unemployment rate went up to 8.5 percent.  But if there is a silver lining, you know, people feel that these numbers are potentially getting to be at a bottom or close to a bottom...

MR. GREGORY:  Right.

DR. RODGERS:  ...and that we'll start to--we'll begin to turn around.

But another number that a lot of folks--that we, we have observed but don't really capture completely is there's nine million Americans who are working part-time for economic reasons.  And they've realized with labor statistics if you include them you actually, instead of having an unemployment rate about 8.5 percent, we're over 15 percent.  And again, it really feeds back into our conversation of the importance of the stimulus package, the budget framework and cleaning up and fixing our financial and housing markets.

MR. GREGORY:  Mm-hmm.

DR. RODGERS:  But the other piece--I want to come back to G20--is that this really also is another piece of the puzzle for the administration.  Because I think the president comes, comes back, he has more credibility with, with the electorate; he has, I think, more credibility within the--within his own party, and I think some of the more moderate, more moderate Republicans.

MR. GREGORY:  Mm-hmm.

DR. RODGERS:  Now, can he win over some of the, some of the more conservative Republicans?

MR. GREGORY:  Right.

DR. RODGERS:  Probably not.

MR. GREGORY:  Well, on that--I just want to get to that issue of the, of the budget, Mike Gerson, because you talked about this this week.  The president gets his budget blueprints through, but no Republican support.  Was this a clear victory for him?

MR. GERSON:  Well, it was covered as a clear victory, but in fact there were two big warning shots from the Congress in this, in this budget.  One of them was that they're not going to do cap and trade--his, his carbon restrictions--on what's called reconciliation, which the effect of this is you need to get 60 votes, not 51.  And many supporters think that may doom the bill, so that's a serious blow.  The other one is they didn't accept his view on the way health care reform, which is very expensive, should be funded.  You know, he wanted to fund it by reducing the, the incentives for charitable giving and by using money from the cap and trade for this.  The Congress has essentially said, "Look, we're open to, to health care reform, but we don't like the way you're going to fund it." It also raised the--this massive question of debt, which, which raises the prospect of future, broader tax increases, which makes us more dependent on China and other sources of revenue, which raises the prospect of inflation if we try to buy our own debt and monetize that debt.  And so I think he had a kind of serious--a series of real problems this week when it comes to his own agenda, so.

MR. GREGORY:  Right.  Comment?  Yeah.

MS. KAY:  I think it's curious that--I mean, Bill was talking there about economists wondering whether we've reached the bottom of the unemployment--the figures.  And I think it's odd that in the week in which we hit unemployment at 8.5 percent, the buzz actually at the end of the week, particularly in the administration, was this idea that there are green shoots appearing in the economy, that we might now be starting to turn around.  And you heard Larry Summers say--and of course the political reasons the administration is going to try and inject confidence into the economy, since confidence has been such a key factor.  But actually, the reasons for thinking that there might be a turnaround are pretty slim.  There were some less than calamitous numbers. But we still haven't dealt with the banking crisis.  And in a banking-induced recession, until you clean up the banks this is not going to end.


MS. KAY:  Unemployment is still going to have knock-on effects in the future when people stop spending money, and I think it's a little soon for the administration to be so confident.

MR. GREGORY:  All right, and I, and I want, I want to return to where we began on the program, which is the auto industry and the crisis there.  We had, of course, Fritz Henderson, the new CEO of General Motors, on at the top of the program.  I want to show this illustration from BusinessWeek again, because I think it's so telling.  There's the new CEO, and behind him is President Obama telling him which way to go.  In effect now this administration owns GM, runs GM.  David Brooks, in his column this week, writes this:  "The Obama administration and the Democratic Party are now completely implicated in the coming GM wreck.  Over the next few months, the White House will be subject to a gigantic lobbying barrage.  The Midwestern delegations, swing states all, will pull out all the stops to prevent plant foreclosures.  Unions will be furious if the Obama-run company rips up the union contract.  Is the White House ready for the headline, `Obama to Middle America:  Drop Dead'?  It would take a party with a political death wish to see this through." John:

MR. HARWOOD:  David, I think David Brooks has got a good point.  And in fact, the firing of Rick Wagoner strikes me as the riskiest single thing that Barack Obama has done, by increasing his responsibility over the outcome of GM.  And that's a tiger that he's going to have to ride for sometime.  And I, I do think on--Mike is right on cap and trade.

MR. GREGORY:  Mm-hmm.

MR. HARWOOD:  That is something that is going down.  And the administration is trying to figure out what a fallback strategy will be that will allow them to declare victory.  And the larger drama and challenge facing Barack Obama is how to make the short-term meet the long-term with respect to China.  We need--Barack Obama needs some voracious consumer behavior and the Chinese need it, too.  We need for them to continue buying our debt.  But on the other hand, he's trying to move the entire society toward a save and invest posture.

MR. GREGORY:  Joshua, I was struck listening to Mr. Henderson.  A couple of things.  You know, he is not working for a dollar.  He's got a base salary of $1.3 million.  In this era where there has been such anger toward the banking industry, that could be difficult when you're coming back trying to say you're viable enough for more money.

MR. RAMO:  I think that's the least of the challenges.  The problem with almost everything we face across the board today, whether it's at GM or the Department of Defense, is that we're living in a time that demands dramatic out-of-the-box thinking.  And the real question is whether or not somebody from inside that situation can possibly come up with the kinds of innovative polices that are necessary.

MR. GREGORY:  Mike Gerson, is this a problem, for government to be getting into the business of running companies?  We saw it with Fannie Mae, we saw it with Freddie Mac.  You see it to a large degree with AIG, now General Motors. Bob Corker brought it up; is this the business that the government and the taxpayers want to be in?

MR. GERSON:  Well, it's a, it's a problematic move, but maybe a necessary one.  This strikes me as a necessary and difficult use of executive power. If, if it's not economically and politically viable to let a company like GM go bankrupt, the government has to enforce the functional equivalent of bankruptcy.  This company's going to have to be half the size, it's going to have to have different labor contracts.  I disagree with David in a certain way.  If the president insists on that, even at the cost of the opposition of unions and other elements of his, his agenda, it could be more like Reagan with the air traffic controllers.  He could build a, you know, a reputation for strength in a time of economic uncertainty.  That would be an advantage for him and probably an advantage for the country.

MR. GREGORY:  Bill Rodgers, just about 10 seconds left for a final thought on this.

DR. RODGERS:  Sure.  My sense is, you know, we are in very unprecedented times and, you know, the administration is doing the right thing in terms of, I think, stepping up and taking an incremental approach and also nudging in it a direction where they want to go and possibly having to really push and be more aggressive.

MR. GREGORY:  Katty, real quick.

MS. KAY:  I would say that if you have to argue in favor of the administration doing something, it is that the leaders of AIG, the leaders of some of the financial services industries and the auto industries haven't done a very good job themselves in the past...

MR. GREGORY:  Mm-hmm.

MS. KAY:  ...and therefore perhaps somebody else can do it better right now.

MR. GREGORY:  All right, we're going to have to leave it there.  Thanks to all of you for a very good discussion.

And for more on Joshua Cooper Ramo's book, you can find an excerpt of "The Age of the Unthinkable" on our Web site.  Plus, look for update from me throughout the week.  It's all at


MR. GREGORY:  Before we go, we are celebrating two rites of spring.  Here in Washington the cherry blossoms are in full bloom, the tidal basin attracting visitors from across the world.  Also heavy winds, as you can hear there.  And tomorrow is opening day for Major League Baseball.  Take me out to the ball game, at long last.

That's all for today.  We'll be back next week.  If it's Sunday, it's MEET THE PRESS.