'Meet the Press' transcript for April 19, 2009

MR. DAVID GREGORY:  Our issues this Sunday:  the economy's mixed signals.  A Wall Street winning streak, banks making money again and signs a bottom may be in sight; but with job losses mounting and home foreclosures rising, the president walks a fine line.

(Videotape)

PRES. BARACK OBAMA:  By no means are we out of the woods just yet.  But from where we stand, for the very first time we're beginning to see glimmers of hope.

(End videotape)

MR. GREGORY:  At the same time, TEA party protests over taxes this week highlighting the political divide as conservatives rail against the administration's big government answers to the financial crisis.  With us exclusively from the president's trip to the Summit of the Americas in Trinidad, his top economic adviser, Larry Summers.

Then, how has the recession changed the way Americans spend and save?  What is the potential for a new era in U.S.-Cuba relations?  And reaction to the release of controversial memos about how U.S. interrogators treated terror suspects.  Insights and analysis from our roundtable:  former House majority leader, Republican Dick Armey; former Democratic congressman Harold Ford Jr.; Washington editor of Fortune magazine, Nina Easton; business columnist for The Washington Post Steven Pearlstein; and managing editor of Time magazine, Rick Stengel.

But first the president's point man on the economy, Larry Summers.  We spoke to him last night from the site of the Summit of the Americas in Trinidad.

Dr. Summers, welcome back to MEET THE PRESS.

DR. LARRY SUMMERS:  Glad to be with you, David.

MR. GREGORY:  Cuba and a potential thaw between U.S. and Cuba relations has really dominated the summit business there, even though it hasn't officially been on the agenda.  This week the administration eased up some of the restrictions on travel between Cuban-Americans going back to see relatives and also the flow of money, sending money back to relatives back in Cuba.  Cuba has also signaled that it's willing to have a more open dialogue with the Obama administration, and increased calls for the U.S. to lift the embargo against Cuba.  This is where the politics meets the economic.  Under what circumstances would President Obama lift the 47-year-old embargo?

DR. SUMMERS:  That's way down the road, and it's going to depend on what Cuba did--Cuba does going forward.  You know, what the president announced this week is what he's been talking about for two years.  It's a set of measures that are grounded in American interests, that are grounded in morality, letting families get back together, together again.  Cuba's known what it needs to do for a very long time and it's up to them in terms of their policies, their democratization, all of the steps that they can take.  And we'll have to see what happens down the road.

MR. GREGORY:  What is the economic case for lifting the embargo?

DR. SUMMERS:  Obviously it's, it's desirable to be able to trade in as many directions as possible.  But fundamentally, David, this is an issue that's going to get decided on the basis of Cuba's behavior, on the basis of the steps that they, that they choose to take or that they choose not to take in terms of their policies in this hemisphere.  And it's about really whether they want to rejoin the community of nations in Latin America or not.  And we'll have to see, we'll have to see what they're prepared to do.  The president's decisions are really going to be grounded in what's best for the United States.

MR. GREGORY:  Also down at the summit a rather striking scene, Venezuela's Hugo Chavez warmly greeting President Obama, even giving him a book about the exploitation of South America.  This is a man, as you well know, who called President Bush the devil, who has referred to the United States as a collapsed empire, as the world's principal terrorist state.  I wonder what the president made--or what impressions he took away from that short encounter?

DR. SUMMERS:  Well, I'm not able to speak for the president on, on that, David, but I will say this.  You know, if you look at the data on many of these countries in many parts of the world, and certainly in Latin America as well, the president is the most popular political leader in the world.  He's more popular in many countries than their own head of government.  And so it's perhaps understandable that political figures want to bond with him, want to connect with him.  And he has a message, and there's something universal about his message of economic renewal, his message of getting the economy growing again, his message of wanting to have a, a different kind of economic expansion, one whose benefits are more widely shared, one that's less based on bubbles in financial markets.  There's something almost universal about that message, and that's why it seems to have such a resonance around the world. That's what we saw at the G-20 meeting the president attended in London a couple weeks ago and I think that's what many people are seeing here in Latin America, where the kinds of things the president's talking about are seen as very important for the Americas.

MR. GREGORY:  Let me turn to the U.S. economy.  The big economic news this week had to do with leading U.S. banks.  These are banks who have accepted or been given hundreds of billions of dollars in bailout money, and now they're making billions of dollars after reporting their first quarter earnings.  At the same time, as you well know, home foreclosures are up 24 percent, the economy is losing 650,000 jobs a month.  Are you worried that all of these recovery efforts on the part of the administration are helping Wall Street and not Main Street?

DR. SUMMERS:  No, not really, David.  You know, if you look, what's most important to the president is what's most important, I think, for all your viewers, is that we should get this economy going again.  It's going to be a long road.  We've seen some more mixed statistics after a period when there were no positive statistics to be found.  But it's a, it's a long, it's a long road and it's going to take time.  It's going to take creating jobs again. That's why the recovery bill was so important.  It's going to take supporting the financial system, because without a flow of credit you really can't even begin to get the economy going again.  That's where our main focus is.

As for the financial markets, I can tell you that the president is pushing very hard for a very strong program of regulation that is going to correct many of the mistakes that were made last time around.  He's going to be very focused in the very near term on a whole set of issues having to do with credit card abuses, having to do with the way people have been deceived into paying extraordinarily high rates that they wouldn't have paid if they knew they were getting themselves into.  He's going to be pushing on issues relating to what's known as systemic risk, the, the concern that an institution gets itself into a situation where it becomes itself a source of risk to the whole, to the whole financial system.  We'll have to see where things, where things go.  And obviously, nobody's rooting for unhealthy banks. But I can assure you that the focus of everything this administration is doing is on the needs of the overall economy, is on the needs of getting a recovery well established.

MR. GREGORY:  Let me ask; the president has talked about glimmers of hope in the economy.  And obviously what the government has done through a stimulus package, what the Fed has done through buying up debt is try to create demand in the economy.  My question is, if you're seeing any easing in the economy or an easing of the recession, is that because the government is propping the economy up?  Or do you see elements of recovery that are self-sustaining?

DR. SUMMERS:  Well, I think you've got to give the government credit, some credit for what's happened, but these have the potential to build into something that's self-sustaining.  That's certainly not something that's been established to this point, and that's why we're going to need to maintain strong policies for quite some time to come.  But I think we can take some satisfaction that after a period when there was literally no positive indicator to be found, when it seemed like our economy was in a, a vertical, it's a more mixed picture today.  And you've got to give public policies a significant part of the credit for that.  But as the engine turns over, you know, at some point it will become something that's much more self, much more self-sustaining.  But right now we've got a long way to go in terms of supporting this economy.

MR. GREGORY:  Let me have you respond to some criticism.  New York Times columnist and economist, and opponent on these matters of the administration, Paul Krugman wrote this week that the administration should be careful not to, to count a recovery a before it's hatched.  He wrote this specifically about whether a full blown depression is still possible.  This is what he said: "Can [a depression] happen again?  Well, commercial real estate is coming apart at the seams, credit card losses are surging and nobody knows just how bad things will get in Japan or Eastern Europe.  We probably won't repeat the disaster of 1931, but it's far from certain that the worst is over." What do you say?

DR. SUMMERS:  You know, I disagree with Paul about a lot of things, but he is right to be raising cautions.  That's why when I just spoke about the economy I said that after a period when it, when everything was negative, there were now some mixture in the indicators.  We don't know what--we don't know, we can't know with certainty what's going to happen next, and there certainly are real risks ahead.  That's why the president's approach to the banking system involves looking at a stress test that contemplates an adverse outcome and thinks about how the financial system will function in an adverse scenario. That's why we're very focused on maintaining the pressure.  No one is in any position to declare any kind of victory here.  But the fact that no one can declare victory doesn't mean that we shouldn't take note of developments as they unfold.  And the developments, as I say, are more, are more mixed now. But cautions that we've got a long way to go, that there are still substantial risks, that there are downside contingencies that we've got to prepare for, that there are issues in the global economy, that there are issues in commercial real estate, that's right.  It's why the president has such an ambitious program.  With respect to commercial real estate he's expanded the so-called TALF facility to enable the government to contribute liquidity to that commercial real estate market.  With respect Eastern Europe, a major focus of his agenda at the G-20 was on fortifying the IMF so that it can respond to those kinds of problems.

What we are doing, and it's really the central tone that the president has set, is trying to be proactive, anticipating problems, acting on them before they become a crises.  And so whether it's commercial real estate, whether it's small business lending, whether it's the global finance, whether it's the question of trade finance, we're working very hard to be ahead of the curve. And I think this president, in less than 100 days, has done more to respond to an incipient economic crisis than, frankly, most countries or the United States at most times in its history has done in a year or a couple of years.

MR. GREGORY:  Let me turn to the issue of the banks.  You have referenced these stress tests that the administration is administering to banks, and the idea here is to try to find out how much more financial shock the banks would be able to absorb.  The president has made it very clear that he would provide additional money to the banks if it were necessary for them to shore up their financial position.  According to the Treasury secretary, you have roughly $100 billion left in the bailout fund.  What if the banks need a lot more than that in terms of capital reserves?  Where would the money come from?

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