'Meet the Press' transcript for Feb. 8, 2009

MR. DAVID GREGORY: Our issues this Sunday: The president issues a dire warning to Congress, don't delay on the economic stimulus.

(Videotape)

PRES. BARACK OBAMA: Failure to act and act now will turn crisis into a catastrophe.

(End videotape)

MR. GREGORY: In the Senate there is now a deal ensuring enough votes to pass the president's massive recovery plan.  But it is far from bipartisan, with only a handful of moderate Republicans on board.

(Videotape)

SEN. JOHN McCAIN (R-AZ): We'll hear all the other side about how worthwhile this long, long list of pork barrel projects are.  But the fact is they don't create jobs.

(End videotape)

MR. GREGORY: The debate now intensifies as a final bill is negotiated between the House and the Senate.  Will the plan prevent a deeper recession and provide relief to the 11.6 million Americans out of work?  Our panel of key lawmakers weighs in: chair of the Senate Republican Policy Committee and member of the Finance and Budget Committees, Republican Senator John Ensign of Nevada; chairman of the House Financial Services Committee, Democratic Congressman Barney Frank of Massachusetts; Democratic Senator Claire McCaskill of Missouri; and chairman of the House Republican Conference, Congressman Mike Pence of Indiana.

Then we continue our in-depth look at leadership tests for this new president. This morning, confronting the ongoing and new challenges in Iraq and Afghanistan.  How long will American troops likely remain on the front lines? How do we now define victory?  Insights and analysis from our guest Tom Ricks, senior Pentagon correspondent for The Washington Post and author of the new book "The Gamble: General David Petraeus and the American Military Adventure in Iraq, 2006-2008."

But first, the economy with our panel of lawmakers.  Here with us: U.S. Republican Senator John Ensign, Democratic Senator Claire Caskill--McCaskill, rather, Democratic Congressman Barney Frank and Republican Congressman Mike Pence.  Welcome to all of you.

So there is a deal in the Senate.  We may get a vote early this week.  Let's put the packages up, House and Senate, side by side, for comparison.  The overall cost on the Senate side, $827 billion; $820 billion in the House. Massive packages.  In the Senate you've got more tax cuts, in the House you have more overall spending.  This is not a bipartisan measure in the Senate. There are three Republican moderates who are now prepared to support it.  One of them, Republican Susan Collins, on the floor.  This is what she said Friday.

(Videotape, Friday):

SEN. SUSAN COLLINS (R-ME): Is it perfect?  No.  But this bill is an enormous improvement.  The American people don't want to see partisan gridlock.  They don't want to see us divided and fighting.  They want to see us working together to solve the most important crisis facing our country.

(End videotape)

MR. GREGORY: Senator Ensign, if there is consensus among economists, it's not about the particulars of the bill but the need to act fast and not delay. Is this bill better than no bill at all?

SEN. JOHN ENSIGN (R-NV): I don't believe that it is.  Remember, Japan, during the 1990s, they acted.  They continued to act and they had six different stimulus bills, none of which brought their economy out of the severe recession that it was in.  As a matter of fact, it's called the lost decade because they just never grew out of it.  And the problem is they didn't get it right.  They built all kinds of bridges to nowhere, roads to nowhere. You need to get it right.  You don't want to spend these precious taxpayer dollars in the wrong way.  So yes, speed is important, but the speed is relative.  You know, taking a couple of weeks, sitting down with both parties, because Republicans don't have all the right ideas, Democrats don't have all the right ideas.  We should've done this from the beginning, sat down in a bipartisan fashion and bring the best ideas to the table.  Because there are people out there that are really hurting--losing their jobs, losing their homes--and we should put the best ideas on the table.  This was one party rule.

MR. GREGORY: But you cite Japan.  Critics of what Japan did during that decade was that they often, with these stimulus plans, raised taxes at the same times, which sort of leveled out the impact of stimulus.  So they're not directly comparable.

SEN. ENSIGN: Well, well, David, David, taxes are going up in two years. Unless the Bush tax cuts are, are kept where they are today, taxes are going up.  So you're going to see the same kind of effect in the United States.

MR. GREGORY: This issue of spending, Congressman Pence, is something that the president took on head on with regard to how much spending there is in the bill.  And this is what he said.

(Videotape, Thursday)

PRES. OBAMA: So--well, then I--then you get the argument, "Well, this is not a stimulus bill, this is a spending bill." What do you think a stimulus is? That's the whole point.  No, seriously, that's the point.  Don't come to the table with the same tired arguments and worn ideas that helped to create this crisis.

(End videotape)

MR. GREGORY: Still on the issue of spending.  Conservative economic professor, economist from Harvard Martin Feldstein, who supported the stimulus originally, this is what he said back in October: "The only way to prevent a deepening recession will be a temporary program of increased government spending." So what's wrong with this approach?

REP. MIKE PENCE (R-IN): Well, Martin Feldstein now says it's an $800 billion mistake.  With, with all due respect to the president of the United States, the ideas, the worn-out ideas that the American people are tired of is runaway federal spending.  I believe the American people rejected that under Republican control, and I believe that's the reason why support for this stimulus bill is collapsing by the hour.  The American people know we can't borrow and spend and bail our way back to a growing economy.  This bill--the only thing this bill's going to stimulate is more government and more debt. There is a time-honored way to stimulate the economy.  John F.  Kennedy knew it, Ronald Reagan knew it.  When the towers fell in 2001, President George W. Bush knew it.  And that is you give the American people more of their hard-earned tax dollars, work--tax relief for working families and small businesses, and you marry that with--as I'm sure Barney will argue, you marry that with some appropriate investments in infrastructure, certainly make sure unemployment insurance is covered.  But the centerpiece of any effective stimulus bill that's ever been passed by Congress in the recent past has been tax relief.

MR. GREGORY: But...

REP. PENCE: The center of this stimulus bill is massive, unaccountable government spending, and the American people are tired of it.

MR. GREGORY: All right.  But basic economic theory is if you want to create demand for goods and services in an economy, somebody's got to do it. Businesses aren't spending, consumers aren't spending, so doesn't government have to be the spender of last resort just as it has been engaged in deficit spending with regard to wars in Iraq and Afghanistan?

REP. PENCE: Yeah.  Well, you're, you're exactly right, there needs to be a release of resources into the economy.  But the question here is, is how do you most effectively release those dollars into the American economy?  Do you do it by giving working families and small businesses the opportunity to invest in ways that will create jobs, or do you pull out--which is what the Democrats have done here, and the American people know it--pull out a tired old wish list of liberal spending priorities and, and, and pass a bill that in one fell swoop is the size of the entire discretionary budget of the United States of America?

MR. GREGORY: Let, let's hear from the Democrats on the panel as well. Senator:

SEN. CLAIRE McCASKILL (D-MO): Well, first of all, we were compromised--we did compromise in the Senate.  We had a group of Republican senators in a room and we worked hour after hour--and by the way, that door was open to every Republican in the Senate to come into that room and go through this bill line by line by line.  And we reached a compromise, which is what the American people want.  You know, the building is on fire, and what we typically do in Washington is argue what color of fire truck do we send to the scene.  They do not want us arguing about the color of the fire truck.  They want something bold, they want something swift.  They don't want a series of procedural votes, even though you guys know we have the votes, on Monday and Tuesday.  We could pass this thing on Monday if we would quit playing the political inside the Beltway games of figure out a way to get a political advantage.

MR. GREGORY: Well, to that point, Senator, will, will Republicans in the Senate try to delay passage?

SEN. ENSIGN: Sure.  First of all, we only got the bill at 11:00 last night, OK?  The--it was so complex.  This is--this is almost $1 trillion.  You don't get do-overs with $1 trillion.  If you get this thing wrong, $1 trillion isn't like, "Well, we did it wrong, we'll try it again." A trillion dollars...

MR. GREGORY: Will it pass--do you think it'll pass this week?

SEN. ENSIGN: It'll pass this week.

MR. GREGORY: Mm-hmm.

SEN. ENSIGN: But we want some time to go through it.  We want some time for the American people to be able to look at it.  Getting it at 11:00 on a Saturday night and, and just having, you know, a day and a half to look at $1 trillion in spending I don't think is adequate.

MR. GREGORY: Congressman:

REP. BARNEY FRANK (D-MA): Well, two things.  First, watch this face, David, because some of the arguments you've been hearing now about how government spending never helps the economy, you're going to hear the absolute reverse when military spending comes up.  We have an airplane, the F-22, that is designed to defeat the Soviet Union in a war, and I think we can save billions.  The defense budget has gone way up under George Bush.  But somehow to my Republican friends enormous amounts for the war in Iraq--which I thought was a mistake--hundreds and hundreds and hundreds of billions of dollars for weapons to fight the Cold War, they don't count those.  But you're going to hear an argument about how important military spending is for the economy. So...(unintelligible).  Secondly, they talk about this wasteful spending.  Let me talk about it.  I'll be flying out of here this afternoon to go to New Bedford, Massachusetts, where they're about to lay off cops and firefighters. That's the wasteful spending that my colleagues are talking about, money to go to the states to stop from laying off cops and firefighters.  Money to help keep teachers going.  Those are jobs.  There seems to be this notion that if you hire someone to do something useful, that somehow becomes social spending that doesn't count.  In fact, these have dual purposes.  If you keep cops and firefighters and teachers from being laid off, you're improving the quality of life, I think, or preventing a deterioration.

Secondly, as to the bipartisanship--again, I want to congratulate my Republican colleagues that they're not too old to learn.  Because I was in Congress in 2001, two, three, four, five, six, when the Republicans controlled the House, the Senate, the White House and they pushed things through.  There was none of this concern that one-party rule was a bad thing.  Now that they're not the party, they've decided that that's a bad idea, and it's always nice when people know new things.  But we had an election last year which had pretty decisive results in the White House, the Senate and the House, and it did say that public spending for improved infrastructure to keep bridges from crumbling, to keep cops and firefighters working, that that's a good thing.

MR. GREGORY: Congressman:

REP. PENCE: Well, less than 5 percent of this bill is for roads and bridges and infrastructure.  And let me, let me be clear with Barney.  I, I don't, I don't have any problem with some spending on infrastructure and making sure that people's unemployment benefits aren't lapsed.  But the point is, is what, what should most of this bill be about?

MR. GREGORY: Right.

REP. PENCE: No one is saying that spending by the federal government isn't going to have some benign positive effect on the economy.

REP. FRANK: David, we--excuse me, but...

MR. GREGORY: Well, let, let's just...

REP. PENCE: It's what, what will be the most effective to turn this recession around?

REP. FRANK: Mike, you just ignored what I said.  You just ignored what I said.  As I understand, one of the big cuts that had to be done--and I think Senator McCaskill and others were trying.  But to get any Republicans at all, you had to adopt a cut that's going to mean policemen and firemen are going to be laid off.

SEN. ENSIGN: That's not true, Barney.

REP. PENCE: That's not true.

REP. FRANK: It's not just infrastructure.

SEN. ENSIGN: That's not true.

REP. FRANK: You're cutting off aid to the states.  Aid to the states is to prevent...

SEN. ENSIGN: Hold on.  All right, David...

REP. FRANK: ...this budget crunch from laying off public employees.

SEN. ENSIGN: Yeah.

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