'Meet the Press' transcript for October 25, 2009

MR. DAVID GREGORY:  This Sunday:  The White House strikes a blow against Wall Street.

(Videotape)

PRES. BARACK OBAMA:  It does offend our values when executives of big financial firms, firms that are struggling, pay themselves huge bonuses even as they continue to rely on taxpayer assistance to stay afloat.

(End videotape)

GREGORY:  As banks reap record profits and returned to high-flying bonus payments, is limiting executive pay the way to prevent another meltdown or punishment that could ultimately hurt the economy?  What's next?

Plus, the healthcare fight.  Is the Democratic push for a government healthcare plan, the public option, back on track, or will moderates desert the White House?  This morning, a debate between two key senators on the Finance Committee:  Democratic Senator Chuck Schumer of New York and Republican Senator John Cornyn of Texas.

Also, perspective on the fight between Main Street and Wall Street from CNBC's Erin Burnett and Andrew Ross Sorkin of The New York Times, author of the new book about the root of this financial crisis, "Too Big to Fail."

Then, the president and the left/right political divide.  The White House is taking on its critics.

(Videotape)

FMR. VICE PRES. DICK CHENEY:  The White House must stop dithering while America's armed forces are in danger.

MR. ROBERT GIBBS:  What Vice President Cheney calls "dithering," President Obama calls his solemn responsibility to the men and women in uniform and to the American public.  I think we've all seen what happens when somebody doesn't take that responsibility seriously.

(End videotape)

GREGORY:  Afghanistan, health care and the economy, and the political test this fall for the Obama presidency in Virginia and New Jersey.  With us, Jane Mayer of The New Yorker, MSNBC's Joe Scarborough, former adviser to President George W.  Bush and author of the new book "Start-Up Nation" Dan Senor, and PBS' Tavis Smiley.

Finally, more cases across the country of the H1N1 flu virus as President Obama declares the outbreak a national emergency.  Our MEET THE PRESS Minute looks back at lessons learned from the swine flu threat more than 30 years ago.

But first, a deadly morning in Iraq as two powerful car bombs exploded in downtown Baghdad, killing at least 132 people, targeting the fragile city government offices.  This comes as Iraq is preparing for elections scheduled for January.  Officials have warned that this type of violence could increase as insurgents try to make the country appear unstable.

Joining us now, Republican Senator John Cornyn of Texas and Democratic Senator Chuck Schumer of New York.

Welcome, both of you, back to MEET THE PRESS.  Let me start on this developing story out of Iraq.  Senator Cornyn, this comes as U.S. forces are in the middle of withdrawing from that country; is it a wake-up call to you, a question about whether Iraq is up to securing its own country?

SEN. JOHN CORNYN (R-TX):  Well, it's certainly a reminder that Iraq remains a fragile country and that the insurgents are going to try to test the Maliki government and the Iraqi government to see whether they have what it takes as they know we are drawing down our troops.  I thought Thomas Friedman had a good column on that this morning, talking about we can't take our eye off Iraq as we turn our gaze toward the challenge in Afghanistan.

GREGORY:  And yet, Senator Schumer, indeed that's where the debate is, it is about Afghanistan...

SEN. CHARLES SCHUMER (D-NY):  It is.

GREGORY:  ...not about Iraq.

SEN. SCHUMER:  But it also shows you how hard it is to do this.  Here we've had General Petraeus, he's done a very good job, our soldiers have done a good job, we've spent a lot of time there, a trillion dollars, of course, over 4,000 lives lost, and it's still not all that stable.  It shows you how hard this is going to be in Afghanistan.

GREGORY:  Have we won in Iraq?

SEN. SCHUMER:  Well...

SEN. CORNYN:  I think we've certainly made great progress.  You know, I wouldn't declare a victory or say we've won, but it certainly is much better than anyone even...

GREGORY:  Mm-hmm.

SEN. CORNYN:  ...hoped for just a few months ago.

SEN. SCHUMER:  If, if the goal...

GREGORY:  It's premature?

SEN. SCHUMER:  ...if the, if the goal has--if the goal was to stop terrorism, that link between Iraq and terrorism has long been exposed as false.  If the goal is to bring stability, it's still a 50/50 proposition even after all we've done.

GREGORY:  We'll get to Afghanistan in just a few minutes, but I want to start with this very controversial issue of executive compensation and get into the decision that the administration made this week.  Let's put it up on our screen, it summarizes; the top seven firms who've gotten bailout money have been told now by the Obama administration, by Ken Feinberg, the special master for pay, that the top 25 executives will see their pay slashed.  Now, the reality is, Senator Schumer, this may feel good to a lot of people who don't like the bailouts, don't like these companies.  Is this anything more than punishment?

SEN. SCHUMER:  I think it is.  First of all, look, these are companies that had real, real trouble and had to be bailed out by the government.  The average American justifiably says, "Hey, I work hard, I don't make much of a salary.  I did nothing wrong, now my taxpayer dollars are going here." At the very least, these executives, in terms of their own salary, can tighten up. Ken Feinberg, who's a very smart, down-the-middle, practical guy, says it will not hurt the effectiveness of these companies.

GREGORY:  But he doesn't know that.

SEN. SCHUMER:  Well, nobody knows it...

GREGORY:  Right.

SEN. SCHUMER:  ...but he's a pretty good judge.  And when the president chose him, he was not choosing somebody who would just be out there to punish.

GREGORY:  But...

SEN. SCHUMER:  He was choosing somebody with effective solutions.  And just this week, David, the Fed did a very revolutionary thing.  I mean, I, I thought it was amazing what they did.  They said, "We are going to look at the compensation systems, the way, way compensation works, for 28 of the largest companies in America," not for punishment--the Fed is not an agency that punishes these institutions--but because the pay may have led to undue risks. And we have to do this...

GREGORY:  All right.

SEN. SCHUMER:  ...in a careful way, in a nonvindictive way, but it's something that has to be seriously examined.

GREGORY:  All right.  But, Senator Cornyn, if the results of these actions by Ken Feinberg and by the Obama administration lead to an exodus from these companies of some of the very people who can help stabilize the companies and therefore help them pay back the bailout money, then why would you do this?

SEN. CORNYN:  Well, that's a very real concern.  And the people who are being punished now by having their compensation capped, we're not...

GREGORY:  Do you think it's just punishment?

SEN. CORNYN:  I think it's hard to interpret it as anything other than that. I would distinguish between, though, David, where the taxpayers are essentially shareholders in these companies, these companies would not exist but for the largess of the American taxpayer.  So I, I consider this a different situation than if government just tried to cap executive compensation in the private sector.

SEN. SCHUMER:  Right.

SEN. CORNYN:  But I would say that there is growing apprehension at government intervention all across the, the spectrum, from car companies...

GREGORY:  But my--but the question I asked is if the goal here is to pay back the TARP, if you ultimately hurt the companies by forcing people to leave because--as, as an executive told me this week, the economy's getting better, the phones are starting to ring, people will leave.  If the goal is to pay back the TARP, how do you do that if you risk an exodus from these companies because they don't want to stick around with pay caps?

SEN. SCHUMER:  Well, again, I think you have to be careful.  The system that Feinberg implemented is supposed to keep them around; less salary, more stock, and stock that vests over a period of time so they have an interest in staying with the company and making it work.

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