'Meet the Press' transcript for Jan. 18, 2009

MR. DAVID GREGORY:  Our issues this Sunday:  the transition ceremonies are under way, and in just two days the historic inauguration of Barack Obama as our nation's 44th president.  He'll inherit a country in economic turmoil, an ongoing multifront war on terror and renewed violence in the Middle East. What will be his first priority?  And is he already facing his first fight on the Hill, as Democrats and Republicans clash over a proposed stimulus package?

(Videotape)

REP. JOHN BOEHNER (R-OH):  Oh, my God.  I don't even--my notes here say that I'm disappointed.  I just can't tell you how shocked I am at what we're seeing.

(End videotape)

MR. GREGORY:  Will Mr. Obama be able to find a bipartisan solution?

Plus, a bump on the road to the Cabinet; Obama's Treasury pick admits a taxing mistake.  What could this mean for the nomination of Timothy Geithner?  This morning, an exclusive interview with the man who will be by Obama's side in the office:  the gatekeeper of the president, incoming White House Chief of Staff Rahm Emanuel.

Then, Inauguration Day will be a time of great significance in this country. How will Mr. Obama capture the moment?  And will his presidency be able to live up to the high expectations?  Insights and analysis from our special roundtable:  NBC News special correspondent Tom Brokaw; columnist for The New York Times David Brooks; presidential historian Doris Kearns Goodwin; host of PBS' "Tavis Smiley" and PRI's "The Tavis Smiley Show," Tavis Smiley; and NBC News political director and chief White House correspondent Chuck Todd.

But first, incoming White House Chief of Staff Rahm Emanuel.

Welcome back to MEET THE PRESS.  As we look forward to an historic day, Inauguration Day and the inaugural address, the president-elect has spoken about the need to capture the moment that Americans are in.  What does he want to say on Tuesday?

MR. RAHM EMANUEL:  Well, I, I don't--at one level, I don't think it's different than what you've heard over the campaign.  On the other hand, it's a--the inaugural and the inaugural address is something significant in American history and its culture.  I think the--what you will hear is a time and a place in which we all have an era of responsibility, that too long there's been a culture of anything goes, and that to do what we need to do as a country, to, to regain America's greatness and continue to move forward and be an example around the world, that we need that culture of responsibility not just to be asked of the American people, but that its leaders must also lead by example.  And so that for--in both business, in the corporate boardroom, to in government offices, that there has been a culture of--that anything goes and is permissible, and that we want--must once again restore a values system that respects and honors a sense of responsibility, and that we all have something to give to our country and have an obligation to do that, to return it to its greatness.

MR. GREGORY:  Does he want to call on the American people for sacrifice, given the state of our economy?

MR. EMANUEL:  Well, I think--well, it's--well, it's not just the economy. This goes larger than the economy, David.  It goes to a, a values system that, that has held us well for 200-plus years, a values system that's about responsibility, about being held accountable, and that all of us have an obligation.  So it's beyond just--although sacrifice is important in restoring the greatness of the economy, it's to a values system that is so much a definition of who we are as a country.

MR. GREGORY:  Let's talk about the economy.  And as the stimulus or recovery package takes shape, the era of big government is back in a big way.  And I want to ask you about spending.  We have put together a rather staggering chart of the federal bailout and stimulus spending since February of 2008. The first stimulus, $168 billion; the money allocated for Fannie Mae and Freddie Mac, 200 billion, only about 14 billion of that has been drawn down by Freddie Mac; the bailout of AIG, the insurance company on Wall Street, 122.8 billion; the bailout money known as the TARP, you've now got the second half of that authorized, that's $700 billion, some of that for the auto, Bank of America, Citigroup; the proposed stimulus--or recovery plan, as you put it, $825 billion.  That is $2 trillion from February of '08 and, if it's passed in the middle of February, to February of '09.  Now, we wanted to put some of that in perspective here, in some context for the American people.  In terms of the debt burden that Americans are going to facing, per household that's $17,000 worth of debt.  That's an enormous burden on the backs of the American taxpayers.

MR. EMANUEL:  Yeah.  Well, as you probably know, that there--over the last decade, the last eight years there's been actually a--there was a surplus at one time, and now we've added in the last eight years $4 trillion of debt to the nation's obligations.  What you see here--and the president has always said that we must have an approach to spending money differently and respect for the taxpayers' dollars, and do it in a more efficient way and in a different way.  And most importantly, we must deal with the long-term challenges that face this country.  So while he has talked about the need--and everybody I think from economists on the left to economists on the right realize that we must make critical investments at this time.  And yes, they'll add to our obligation.  It has got to be coupled with a serious attack about putting our fiscal house in order.  And for too long that hasn't happened. Challenges that needed to be met, responsibilities that needed to be met have not.  So from the era--from the area of, let's just say, in the defense area.

MR. GREGORY:  Hm.

MR. EMANUEL:  On an annual basis we have about $300 billion in cost overruns. That must be addressed, and we will be addressing it.  Area of subsidies to corporate America, that must be addressed.  And then also, dealing with the bigger obligations of health care costs and their--and what they have done to the federal budget.  So all of that must be done.  But it is essential that--and that's why it is so important to put the economic recovery act in place, that you must begin to invest in creating three and a half million jobs and make sure that America's long-term economic competitiveness, that the things--the foundations play.

But here is what that chart can't tell you, that we have not yet approached to date in this economic crisis, the worst that we've ever had since the Depression, on a two-front basis; one, dealing with the financial stabilization fund to get credit flowing again and to get the system rolling again.  Too many of those things you pointed to were dealing with institutions.  What we have got to do and what we're going to approach the second dollars with that we just--the Senate just approved, is an attempt to get banks again lending both to consumers and businesses.  In addition to that, on the other side of the ledger is making sure people are going back to work, building this country and building up its new schools, its new infrastructure...

MR. GREGORY:  OK.

MR. EMANUEL:  ...it's new hospitals.  So the economy is in such a state that you can't just approach it with one hand tied behind your back.  Both things must be done simultaneously, and done well.

MR. GREGORY:  But Democrats were always critical of the Bush tax cuts, for instance, which were the first time that, that taxes were cut during a war. There's a $1.2 trillion deficit forecast for 2009, as you well know.  There's a political element to this as well, and that is that the president-elect campaigned on a middle class tax cut.  Now, the projections are if this were to become permanent tax cut beyond two years that would be part of the stimulus, that could be a $710 billion tax cut at least, at least.

MR. EMANUEL:  Mm-hmm.

MR. GREGORY:  Is that the responsible thing to do on top of the debt burden that we talked about, on top of the deficit I just outlined?

MR. EMANUEL:  Look, first of all, let's be clear that the middle class didn't really participate in the tax cuts that you talked about in the last eight years; that they have worked harder, earned less and are paying more.  And the middle class have the fundamental different approach.

MR. GREGORY:  Right.

MR. EMANUEL:  And that's the change we want to bring to Washington as president.

MR. GREGORY:  But an additional $700 billion?

MR. EMANUEL:  President Obama's been very clear, you cannot have a strong economy that does not have a strong middle class.  And the, the approach has been to provide the middle class with a tax cut, and also to start getting the economy moving again by making critical investments.  That's why we want to create three and a half million jobs.

MR. GREGORY:  Right.

MR. EMANUEL:  The--it is no doubt you have to couple it, which has been very clear, which is why the President-elect Obama has called for an--a summit on fiscal responsibility to change the way we spend money, to do it in a more efficient way, to get rid of waste and fraud, but also to deal with the challenges that for too long have been kicked down the road.

MR. GREGORY:  Let's talk about spending.  This is what the minority leader in the House, John Boehner, said on Thursday:  "The plan released ... by congressional Democrats ... appears to be grounded in the flawed notion that we can simply borrow and spend our way back to prosperity." You have said that the top priority is jobs, jobs, jobs when it comes to the stimulus plan.  This is what Jerry Lewis had to say.  He was the ranking member of the House Appropriations Committee, and this is what he found in this package, we'll put it on the screen:  "Before we pass this Pelosi-Obey legislation," his release says, "the costliest in history, Congress has a duty to ask this basic question.  ... Are these items `stimulus'?  Fifty million dollars in funding for the National Endowment of the Arts, $15.6 billion" increase in "Pell Grants, $200 million to `encourage electric vehicle technologies' in state and local government motor pools, 1.9 billion in funding for high level physics research, 650 million to extend the coupon program to allow analog TV owners to continue to watch TV." One more.  "Four hundred million to the Oceanographic and Atmospheric Administration for `habitat restoration.'" What do these expenditures have to do with creating jobs?

MR. EMANUEL:  Well, I'm--David, I'm surprised that you would say that about college education, in this sense:  you wouldn't be here and I wouldn't be here if a college education was not provided to us.  And the Pell Grants, one of the things that--the largest one you pointed to, helps people go to college. Now, is more--is it--important as it is to build our roads and bridges, our electric grid, our new health care IT so we can control costs, the ability to provide people the, the opportunity to go to college in a era where you earned what you learn is human capital investment.

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