CQ Transcriptwire

SPEAKERS: GEORGE STEPHANOPOULOS, HOST

SEN. JOHN MCCAIN, R-ARIZ.

STEPHANOPOULOS: Good morning and welcome to a special edition of “This Week.” From the Grand Canyon, our exclusive headliner, John McCain .

(BEGIN VIDEO CLIP)

MCCAIN: Preserve this. Don’t mar it for future generations.

(END VIDEO CLIP)

STEPHANOPOULOS: Our national parks, Afghanistan and Iraq, meeting with Gadhafi, and the death panel debates sparked by his former running mate.

(BEGIN VIDEO CLIP)

STEPHANOPOULOS: Every single independent group that looked at it said it just wasn’t true.

MCCAIN: Well, then why did the Democrats turn down our amendments?

(END VIDEO CLIP)

STEPHANOPOULOS: John McCain , the Grand Canyon, only on “This Week.”

Then...

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: There’s something about August going into September where everybody in Washington gets all wee-weeed up.

(END VIDEO CLIP)

STEPHANOPOULOS: The president is ready for a break. Will it recharge his agenda? That debate and all the week’s politics on our roundtable, with George Will, Paul Krugman, Robert Reich and David Frum.

Then, as always, the Sunday Funnies.

(BEGIN VIDEO CLIP)

BILL MAHER, TALK SHOW HOST: So apparently they’re going to have a runoff election in Afghanistan. That’s when the Taliban shows up and everyone runs off.

(END VIDEO CLIP)

STEPHANOPOULOS: Hello again. I’m just back from a little bonus summer break, a trip to the Grand Canyon with John McCain .

(BEGIN VIDEO CLIP)

MCCAIN: There’s a place called Phantom Ranch, and they got these little cabins there...

(END VIDEO CLIP) STEPHANOPOULOS: Last week, the president was here with his family. This weekend, McCain’s son Jimmy, back from Iraq, joined his dad.

The senator is holding a series of hearings on how to preserve our national parks with Interior Secretary Ken Salazar and Colorado Senator Mark Udall .

(BEGIN VIDEO CLIP)

(UNKNOWN): The Udalls, the McCains, the McCains, the love for the land, the love for the place, people work for solutions...

(END VIDEO CLIP)

STEPHANOPOULOS: I guess you could say that politics stops at the canyon’s edge, but as was clear from our conversation, the McCain and Obama still have big differences on most of the big issues, especially health care and the economy. I began by asking McCain to weigh in on the president’s war strategy.

(BEGIN VIDEOTAPE)

STEPHANOPOULOS: You just got back from Afghanistan. Earlier this spring, President Obama announced 17,000 more troops and a mission to really take the fight to the Taliban. From what you saw, is it working?

MCCAIN: They’re taking the fight to the Taliban. It’s a very tough fight. They’re going into areas that the Taliban have controlled for long periods of time, in the south. Casualties are up, as we had unfortunately predicted. But they are taking the fight to them. Our military is incredibly good.

STEPHANOPOULOS: And do we have enough troops now, from what you saw?

MCCAIN: We don’t. General McChrystal is going to make some recommendations. I’m not happy with what he’s going to do, because it’s been published. It will be high-risk, medium risk, low risk. Whenever you do that, they always pick the medium risk. I think that he ought to do what General Petraeus did, and that’s decide on exactly the number he needs and then we debate it, and the president makes the ultimate decision.

STEPHANOPOULOS: I’m going to stop you there, though, because I know you were concerned a few weeks ago. Bob Woodward went to Afghanistan with General Jones and wrote a story where it seemed as if General Jones was sending a message to the commanders not to send back a request for more troops.

Are you convinced that General McChrystal is completely free to make the best recommendation?

MCCAIN: I think there are great pressures on General McChrystal to reduce those estimates. But I have great confidence.

STEPHANOPOULOS: From the president?

MCCAIN: No. I don’t think it’s necessarily from the president. I think it’s from the people around him and others, and that I think don’t want to see a significant increase in our troops presence there.

But I have confidence that he will make his most honest and best recommendations. I just wish it wasn’t this three choices, because they always choose the middle one. We need to know exactly what resources he needs.

STEPHANOPOULOS: How do you answer the argument, though, of others who say that adding more troops now to Afghanistan is a fool’s errand in nation-building? That we can achieve the goal of denying a safe haven to al Qaeda by letting the Afghan government take the lead and taking them out with drones when necessary?

MCCAIN: Well, I say with respect, and I understand that argument, but that was the same argument under Rumsfeld and Casey that didn’t work. I think the fundamental to success of a counterinsurgency is to clear and hold and secure an environment for people so that the political and economic progress can be made.

STEPHANOPOULOS: That’s a 40-year effort, isn’t it?

MCCAIN: I think within a year to 18 months, you could start to see progress. It’s very hard. It’s very tough. We’re facing a very determined enemy that will stand and fight in some instances, that are very adaptable, and obviously with safe havens in Pakistan.

But as the president described it in the campaign, this is a good war and one that we have to win. And I think he’ll hold to that.

STEPHANOPOULOS: We’re seeing now that the American public is turning against the war.

MCCAIN: Yes.

STEPHANOPOULOS: The majority now says it’s not worth fighting. Two to one, they don’t want more troops. The clock is ticking, both with the public and Congress. You say 12 to 18 months.

What do we need to see in 12 to 18 months to make sure the public and the Congress stay behind this war?

MCCAIN: I think you need to see a reversal of these very alarming and disturbing trends on attacks, casualties, areas of the country that the Taliban has increased control of.

In other words, you need to see all of those things reversed and on a significant downward slope. And I think we can do that in a year to 18 months.

STEPHANOPOULOS: If not, should we leave?

MCCAIN: I think we have to make decisions as the situation calls for, but we always have to remember that we cannot allow Afghanistan to return to a base for terrorist attacks on the United States and our allies. That’s why we went in, in the first place.

STEPHANOPOULOS: There’s a concern that there may be a turning back in Iraq as well, a huge flare-up of violence this week. Did we leave the cities too soon?

MCCAIN: I think you could argue that we may have left a bit too soon, but I think it was important, in General Odierno’s eyes, to give them what they wanted. I think there’s probably going to be a need for greater American cooperation, particularly as far as some of our technology is concerned.

STEPHANOPOULOS: So go back in?

MCCAIN: Not to go back in, but to assist. For example, after these bombings, Americans have gone in to help, you know, with the damage, et cetera. But overall, this is an uptick but one which I think can return to steady progress. We’ve made an agreement. We’re going to have to stick to it.

STEPHANOPOULOS: Leaving by 2011?

MCCAIN: And, you know, again, it’s like -- it’s definitional because I think we’re going to have to train the Iraqi air force, for example, and do some of that. But as far as active combat involvement is concerned, I think we’re going to be out of there. I think that’s the commitment that we’ve made.

STEPHANOPOULOS: Would we be fighting these two wars any differently if you were president now?

MCCAIN: Not now, but it’s very obvious that, for at least three years, we conducted the war in Iraq in the wrong fashion. And we paid a very heavy price in American blood and treasure. And we developed a strategy that worked. That strategy is adopted to the different conditions in Afghanistan.

And what has emerged, George, which I think we haven’t appreciated, maybe, as much as we should, is that we have a group of leaders, both at the officer and non-commission officer level that is unbelievably good.

I ran into a colonel in Iraq that was there for his sixth tour, his sixth tour of duty, because he wanted to be back there. I mean, it’s amazing.

STEPHANOPOULOS: That’s put a huge strain on so many families.

MCCAIN: It’s put tremendous strain on families. It has caused tragedies and loss that grieves us and brings tears to our eyes, but they have succeeded and they are so good. They are incredibly good, professional, skilled and they believe in what they’re doing

STEPHANOPOULOS: And you believe that President Obama is giving those troops the support they need?

MCCAIN: I think the decision on resources which is coming up will determine that. I know that President Obama made those statements about how important this conflict was during the campaign, and I do have confidence that he’ll make the right decisions.

STEPHANOPOULOS: One more foreign policy question. You were in Libya last week with Colonel Gadhafi. You tweeted and said it was an interesting meeting at his ranch with an interesting man, yet we see today the Lockerbie bomber returns to a hero’s welcome.

Did you talk to the Colonel about that?

MCCAIN: Yes, we said that we thought it would be a grave mistake to give this individual a hero’s welcome. And I think most Americans condemn this decision of the Scottish judiciary to let him loose.

I would point out that Colonel Gadhafi and his regime, which is very dictatorial and totalitarian in every way and very cruel, did reverse their position on weapons of mass destruction. Now, there’s still further steps that need to be taken, but he’s basically agreed to dismantle his nuclear efforts. If Ahmadinejad did that tomorrow, I’d be glad to sit down and talk with Ahmadinejad. So he has at least reversed the path that they were on, which was that they were going to acquire nuclear weapons.

STEPHANOPOULOS: While you were gone, the health care debate has erupted here at home. This week President Obama placed the blame for the gridlock on health care squarely on your party.

(BEGIN VIDEO CLIP)

OBAMA: Early on, a decision was made by the Republican leadership that said, “Look, let’s not give them a victory and maybe we can have a replay of 1993-94 when Clinton came in. He failed on health care and then we won the midterm election and we got the majority.”

(END VIDEO CLIP)

STEPHANOPOULOS: Is that what’s going on here?

MCCAIN: No, I hope not. It may be with some, but I don’t think so with the majority of the Republican Party. I look at this as an opportunity right now. The president’s numbers are falling about their -- Americans’ confidence in his ability to address this issue and how he’s addressing it.

Now, wouldn’t it be a good idea for us Republicans and Democrats to sit down with the president?

The president has not come forward with a plan of his own, as you know. He’s got plans in the House and the Senate, but not from the administration.

STEPHANOPOULOS: He met with a group of bipartisan negotiators on Senate Finance Committee.

MCCAIN: But now the time, I think, is to come with the leadership and with others, at least try to sit down and see. There’s so many areas that we are in agreement on. All of us agree that health care costs are out of control and we have to bring them under control.

So maybe it would be a good idea for us to sit down, and after consultation and agreement, the president could say, “Here’s the health care plan that I want passed through the Congress. At least we ought to try it.”

STEPHANOPOULOS: So you think start fresh?

MCCAIN: Well, at least sit down -- well, through this debate, at least we know what we agree on. We know we need more competition. We know we need more accessibility. We know we’ve got to provide an opportunity for every American to acquire health insurance.

STEPHANOPOULOS: Would you agree to the kind of insurance reforms the president is talking about, that you can’t be denied health insurance for a pre-existing condition, you can’t lose it if you get sick?

MCCAIN: You can’t be denied it, and certainly, if you have it, you shouldn’t have to lose it. But under the president’s plan, you would have to lose it, in my view, because of the government option. I believe that one of the fundamentals for any agreement would be that the president abandon the government option. That may be hard...

STEPHANOPOULOS: No pun intended.

MCCAIN: Yes, excuse me, the public option. I think he’d have to abandon the public option and that I think is what a lot of Americans now are concerned about.

STEPHANOPOULOS: If he does you’re willing to sit down and talk about insurance reforms and agree to that?

MCCAIN: I think that Republicans are more than agreeable to sit down and talk about various reforms.

STEPHANOPOULOS: The president also says that the debate has been infected by falsehoods. And probably the most notorious one is the one made by your former running mate, Sarah Palin , who said that his bill would encourage death panels that would encourage euthanasia.

He called that “an extraordinary lie” and he is right about that, isn’t he?

MCCAIN: Well, I think that what we are talking about here is do -- are we going to have groups that actually advise people as these decisions are made later in life and...

STEPHANOPOULOS: That’s not in the bill.

MCCAIN: But -- it’s been taken out, but the way that it was written made it a little bit ambiguous. And another thing ...

STEPHANOPOULOS: I don’t think that’s correct, Senator. The bill -- all it said was that, if a patient wanted to have a Medicare consultation about end-of-life issues, they could have it at their request and the doctor would get reimbursed for it, no panel.

MCCAIN: There was a provision in the bill that talks about a board that would decide the most effective measures to provide health care for people, OK?

Now, we had amendments. We Republicans have said that in no way would that affect the decisions that the patients would have made and their families. That was rejected by the Democrats and the HELP Committee.

STEPHANOPOULOS: But that’s not a death panel.

MCCAIN: So what does -- what does that lead to? Doesn’t that lead to a possibility, at least opens the door to a possibility of rationing and decisions made such are made in other countries?

STEPHANOPOULOS: Well, every single independent group that looked at it said it just wasn’t true.

MCCAIN: Well, then why did the Democrats turn down our amendments that clarified that none of the decisions that would be made by this board would in any way affect the depriving of needed treatments for patients?

I don’t know why they did that then.

STEPHANOPOULOS: So you think Sarah Palin was right?

MCCAIN: Look, I don’t think they were called death panels, don’t get me wrong. I don’t think -- but on the best treatment procedures part of the bill, it does open it up to decisions being made as far -- that should be left -- those choices left to the patient and the individual. That’s what I think is pretty clear, which was a different section of the bill.

STEPHANOPOULOS: You worked -- have worked a lot with Senator Kennedy, on immigration and other matters. How much of a difference has it made that he hasn’t been part of this debate?

MCCAIN: Huge, huge difference. No person in that institution is indispensable, but Ted Kennedy comes as close to being indispensable as any individual I’ve ever known in the Senate, because he had a unique way of sitting down with the parties at a table and making the right concessions, which really are the essence of successful negotiations.

So it’s huge that he’s absent, not only because of my personal affection for him, but because I think that health care reform might be in a very different place today.

STEPHANOPOULOS: You talked about working with the president now on health care. On election night, you promised to work with the president.

(BEGIN VIDEO CLIP)

MCCAIN: I urge all Americans who supported me to join me in not just congratulating him, but offering our next president our good will and earnest effort to find ways to come together, to find ways to make the necessary compromises to bridge our differences.

(END VIDEO CLIP)

STEPHANOPOULOS: Yet I was struck -- this week Congressional Quarterly came out with a study of your voting record and it said your voting record this year is the most partisan of your entire Senate career.

MCCAIN: Well, I think it’s probably been some of the issues. I did work with the president on reform of defense weapons acquisition. I’ve worked with him on other defense issues. I have supported him on Iraq and Afghanistan.

I have -- on a number of other national security issues, we have worked together, and there are other areas where we have simply disagreed.

STEPHANOPOULOS: On just about every major domestic issue and on Guantanamo, even though you say it should be closed, you’ve been quite critical of the president.

MCCAIN: Well, let me just say, on spending and the stimulus, I think the major reason why the administration is having difficulty today is because of the out-of-control, unheard-of deficit that we’re running, which then gives people pause about another trillion dollars that would have to be spent to reform health care in America.

On Guantanamo, I share the same goal, but I wouldn’t -- again, they have not had an overall policy developed which should have come first, and that, I think, has caused some difficulties.

STEPHANOPOULOS: I’ve talked to people in the administration and they say, wait a second, John McCain even voted against Secretary Sebelius for health and human services secretary, Justice Sotomayor.

MCCAIN: Well, all I can say is that I used my best judgment. I consider myself the loyal opposition and that is loyal to the president where I can be and in opposition where we have fundamental disagreements. And I look forward to working with the president on a number of issues and I will continue to try to do so.

STEPHANOPOULOS: Let me bring one of them. You just talked about the deficit. You just learned today the administration’s saying that over the next 10 years the deficit will be $2 trillion higher than they thought, $9 trillion.

I spoke with Secretary -- Treasury Secretary Geithner just a couple of weeks ago. And he pledged that this administration would do whatever it takes to get that deficit down over the long run, including new revenues. Can you make that same pledge?

MCCAIN: No. First we have to send a message to the American people that we’re serious. The earmark and pork barrel spending, you know -- and when we’ve talked about earmarks, only a few million dollars, only a few ...

STEPHANOPOULOS: That’s a tiny fraction of the budget, though.

MCCAIN: It’s a tiny fraction, but it’s a signal of how serious we are. And when you say it’s a tiny fraction, remember every time we add one of those projects, it becomes a permanent part of the budget.

So it has a cumulative effect. Look, there was 9,000 of them in the omnibus bill, 9,000, and all of them became a permanent part of the budget. So we’ve got to show the American people we’re serious about tightening our belts.

Then, in my view, we have to look at entitlement reform. And we all know that Social Security and Medicare are going broke. And we have to sit down together and do that, or maybe have a same thing like a BRAC Commission, commission of most respected Americans, come out with a recommendation to reform Social Security and Medicare, and it’s an up-or-down vote in Congress.

STEPHANOPOULOS: The president has said he’s open to that kind of a commission as well, but even -- and I think you would agree that former Fed Chair Alan Greenspan is no slouch on the deficit, has credibility on the deficit. He also said there’s no way you’re going to solve this problem over the long run without new revenues, probably a value-added tax.

MCCAIN: Well, first of all think with value-added tax is a regressive tax and it’s a European model, which I don’t think has been successful.

Second of all, should we go to the American people and say, hey, we’re going to have to have new revenues when we’re spending several million dollars on a pork barrel project, that we have corruption, we have absolute corruption that people go to jail on?

Can’t we reform that first? Can we go to the American people with clean hands before we ask them to make further sacrifice?

And second of all, as principle, I think the worst thing we do in bad economic times is raise taxes.

STEPHANOPOULOS: Not right now, but over the long run, you’re not going to solve a $9 trillion gap without revenues, are you?

MCCAIN: I think you can reform Medicare and Social Security and not have to do that if you truly reform it. Look at what eats up a greater and greater percent of the federal budget, the -- the Social Security and Medicare.

STEPHANOPOULOS: You’ve also pledged to help -- to work with the president on preserving our national parks. You’re here with Secretary Salazar. And one of the things you’re having a hearing on this weekend is the threat of climate change to our national parks.

I was in Glacier National Park a couple years ago with Governor Schweitzer.

(BEGIN VIDEO CLIP)

GOV. BRIAN SCHWEITZER, D-MONT.: We had over 100 glaciers. Now we’re down to a couple of dozen. And by 2025, 2035, at the rate that they’ve been declining, there will be no glaciers in Glacier National Park

(END VIDEO CLIP)

STEPHANOPOULOS: What’s the threat here?

MCCAIN: I think the threat is serious here. We’ve seen increased temperatures, which has had impact on the wildlife, on the flora and fauna, on the Colorado River itself, which we are seeing less and less of.

We are in serious drought conditions. Our parks have very fragile ecology here. And, frankly, when you’re in this driest area anyway, then they’re even more fragile.

So I think that part of the impact of climate change on our national parks is -- well, you know, they’re going to have to change the name of Glacier National Park because the glaciers are going away.

STEPHANOPOULOS: In the past, you’ve been supportive of legislation to deal with greenhouse gas emissions, with cap-and-trade. What about the current legislation that’s coming out of the House now, moving to the Senate?

They’ve met a lot of your objections about not giving away the allowances. Is this something that you can support?

MCCAIN: Well, to support a 1,400-page piece of legislation to start with is always difficult for me, but I believe that the only way we’re going to truly reduce greenhouse gas emissions effectively is the nuclear power.

We have got to build 100 nuclear power plants in the next 20 years. We can do that. Right now, the administration’s position is against storage and they’re against recycling of spent nuclear fuel. I can’t support a genuine reduction in greenhouse gas emissions, unless nuclear power is a key part of it.

STEPHANOPOULOS: But you’ve been for it in past.

MCCAIN: I’ve been for -- and nuclear power -- assuming that nuclear power would be a key part of it. I mean, you can’t get there from here. The only country that’s really making its Kyoto goals is France, where 80 percent of their electricity is generated by nuclear power.

STEPHANOPOULOS: But you’d be willing to go along with cap-and- trade, if it were part of a comprehensive deal that included more...

(CROSSTALK)

MCCAIN: Well, that would have to be part of it. And second of all, in any 1,400-page piece of legislation, you put in a lot of special deals for a lot of special interests. We know what happened there. The bazaar was open in the House of Representatives, so obviously, I would have to want to do away with a whole lot of that.

But I think climate change is real, and I would be glad to sit down and try to work, as I have in the past, across the aisle on this issue.

STEPHANOPOULOS: I’m seeing all these condors fly around the camera while we’ve been talking. Are you going to make time for a hike while you’re out here?

MCCAIN: We’re going to hike later on. And these condors -- former Secretary of Interior Bruce Babbitt had a big role to play -- as you know and many of our viewers may not, they had disappeared. They took a group of them into captivity and then released them here in Arizona and now they’re doing pretty well. STEPHANOPOULOS: Thank you for bringing us here. It’s a magnificent place.

MCCAIN: Thanks for having me on, George. It’s very interesting times.

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Aug 23, 2009 11:45

ABC-THIS-WEEK -0303

XXX very interesting times.

(END VIDEOTAPE)

STEPHANOPOULOS: Those condors are just amazing. The roundtable weighs in next on health care and the economy, and the question posed in the New York Times this morning -- is Obama courting LBJ fate in Afghanistan? George Will is back, along with Paul Krugman, Robert Reich and David Frum.

And later, the Sunday Funnies.

(BEGIN VIDEO CLIP)

DAVID LETTERMAN, TALK SHOW HOST: You know it’s deserted in Washington. Anybody here from Washington? Look at the shot of the Lincoln memorial. Look at that right there. Get in tight on that. Look at this. Everybody’s gone. Look, even Abe.

(LAUGHTER)

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

(UNKNOWN): Why do you continue to support a policy as Obama has expressly supported this policy?

REP. BARNEY FRANK (D), MASSACHUSETTS: I’m going to revert to my ethnic heritage and answer your question with a question. On what planet do you spend most of your time? My answer to you is, as I said before, it is a tribute to the First Amendment that this kind of vile, contemptible nonsense is so freely propagated. Trying to have a conversation with you would be like trying to argue with a dining room table. I have no interest in doing it.

(END VIDEO CLIP)

STEPHANOPOULOS: Congressman Barney Frank letting loose at a town meeting this week in Massachusetts. Lot of emotion unleashed by this health care debate all across the country. We’re going to talk about it now here on “The Roundtable.” I am joined again by George Will, welcome back from vacation. David Frum of newmajority.com. Robert Reich from the “American Prospect” and UCAL Berkeley and Paul Krugman from the “New York Times” and Princeton. Let’s start on where this health care debate stands right now, George. You just heard John McCain say, basically, it’s time for a new start. Let’s start all over again. The president should bring Republicans and Democrats into the Oval Office, write up a new bill.

WILL: Well, Olympia Snowe, one of the Republicans, she’s from Maine, the administration’s counting on to give them him a patina bipartisan coloration on this said the other day, what we’ve learned in the August tumult, is that a lot of Americans are happy with what they’ve got. Now actually we knew this long before that a large majority of Americans have health insurance. And a large majority of that majority are satisfied with it.

However, the president, therefore, is trying to get radical change, without the propellant of underlined, broad-based, and deep- seeded discontent. To compensate for that absence, he has been ubiquitous and often shrill. Ubiquitous to the point that he’s kind of like elevator music in American life. Shrill in the sense that is that he said I’ve been opposed by scare tactics and fear-mongering, but he says be afraid, be very afraid of your insurance companies because they’re dishonest. Be afraid of your pediatrician because he or she would yank out the tonsils of your child for no reason other than a big fee. And be afraid of all doctors because they will cut off your limbs, rather than counsel you on cheap, good, sensible living.

STEPHANOPOULOS: Bob and Paul are both waiting to get in here. Why don’t you go first, Bob.

REICH: Well, first of all, I don’t think the president’s been shrill. In fact, if anything, maybe he hasn’t been shrill enough. But let’s be clear about what’s at issue here. For 70 years in this country, we’ve tried to deal and grapple with the subject of universal health care. As recently as 1980, it was 8 percent of the entire economy. Now, it’s 16 percent of the economy. Something needs to be done. Americans are satisfied, George, with their doctors. But they’re not satisfied paying huge amounts in co-payments, deductibles and premiums. So, now is the time to act.

STEPHANOPOULOS: But let me pick up there because you both talk about where the American public is right now. I want to bring in one statistic from our poll this week showing what the insured think about the president’s health care plan.

Let’s put it up right now. By 40-14, they think their coverage is going to get worse. These are people who have health insurance -- 41-19, they think their costs are going to go up under the president’s plan -- 33-19, they think they are going to lose some quality of care. So, Paul Krugman, let me get your response to that because that seems to be the core political problem for the president right now.

KRUGMAN: Well, it shows that the fear tactics have been very effective. I feel like it’s 2004 again, where saying what is undoubtedly true is shrill, as George would put it. I mean, this is true. You could say right now, most insured Americans are still OK with the care they’ve got. And then of course they’re scared about what will happen.

But this system is unraveling. One thing that I think the president has not been very good at getting across, actually I don’t think he’s done a very good job altogether on this issue, but he has not gotten across the fact that this thing is coming apart. That premiums have, more or less, doubled in the past decade. And that more and more companies are dropping health coverage for their workers. And yes, you may feel you have decent insurance now. But there’s a high risk that it won’t be there five years from now.

STEPHANOPOULOS: David, if the president made that case, there could pose a problem for Republicans if they actually succeeded in blocking any kind of reform.

FRUM: In the beginning of the summer, before all of the frenzy, it was already true that by 2-1, Americans said, when asked, this is mostly something that will benefit other people and not me. That’s been the president’s problem all along. He has -- there is a problem. There’s a financial problem, as Bob and Paul said. But the president’s not offering a solution to that problem. He’s offering a solution to a completely different problem, which he is not talking about. The problem, he says -- what he thinks is the big problem, is the uninsured. And his answer to that, is a state system of some kind. But that’s not --

STEPHANOPOULOS: Well, a state component of a broader private system.

FRUM: But the problem of the solution and his identified problem, do not --

KRUGMAN: We know that the United States has the most privatized health insurance system in the world. We also know that we have, by far, the highest costs in the world. So, there’s every reason to believe that a reform that makes us look more like Switzerland, as I put it last week, that makes us look more like the systems that work elsewhere, would also open the door to cost-savings. So this is not wrong.

REICH: Can we be a little bit more optimistic about where we have come to the right now? For the first time in 70 years, we actually have a consensus with regard to no use of pre-existing conditions, no dropping, as John McCain said, of people because of their ill health. Also, there is a consensus that every employer has got to get in or at least pay something, if they’re not already covering employees. But George, a lot of Republicans agree to that and that everybody’s got to get in. And there are going to be some subsidies.

STEPHANOPOULOS: Shouldn’t the Republicans agree to that kind of deal that John McCain indicated he might be for although it was hard to pin him down on it.

WILL: Perhaps that is, clearly portability I think worries most Americans because we have a dynamic economy usually in which one in about nine or ten Americans changes jobs every year. Some people are worried about this understandably.

Bob, look. Americans obviously want 2009 medicine at 1959 prices. The trouble is 1959 medicine, it wasn’t very good. You’re right. Costs have gone up. But 50 years ago, the American people spent on four things. Food, shelter, health care and energy, 53 percent of disposable income. Fifty years later, they spend 55 percent, essentially the same. Now, the composition of that’s changed. Much more on health care because health care is much more competent and expensive.

KRUGMAN: Just -- we are now at a point where the insurance premiums for typical, employer-based insurance, are on the order of one-quarter or more of the earnings of the average worker. This is a situation in which more and more companies are going to drop coverage, which is happening. Something unique happened during the period from 2003 to 2008, which is, that for the first time ever, health insurance coverage deteriorated during an economic recovery. This is not supposed to happen. This is a system that’s coming apart at the seams. Once we get the numbers for what’s been happening in this recession, it’s going to be horrific.

FRUM: Republicans should be for health insurance reform. I think John McCain is right at least in where he was going. Although he didn’t take a full step there. The price for health insurance reform, should be the Democrats to jettison their attempt to nationalize the health care system. They’re not doing anything approaching it. That is where I think the president has put us on the wrong track.

I think the -- what John McCain was pointing to, one of the last times that Congress did something big, 1986, the tax reform that year. Essentially, the Senate took that proposal away from the president. President Reagan had a proposal. It was not going anywhere in Congress. The Senate, Bob Packwood, in particular, took it away, rewrote it and produced something that was broadly acceptable and got a better result than the president himself accepted it. That should happen here.

STEPHANOPOULOS: Isn’t David getting to the heart of the issue there? Now it’s pretty clear if you look at the votes in the House and the Senate, while there’ significant polarities of Democrats for the public option, majority of Democrats, you can’t get it through either one. Why not give up the public option?

REICH: But George, here is the problem. In terms of negotiating, a president needs to have a very strong base behind him in order to give him maximum negotiating strength for the other side. Also, a president cannot engage in preemptive negotiating. That is simply giving in before he gets anything back from the other side. And unfortunately on both of these counts, the White House is not doing it in a way that actually pushes the ball forward.

KRUGMAN: And can I say something about bipartisanship? There’s this notion that we ought to have bipartisanship, but what people usually mean by this, is we ought to get the centrists. We ought to get, let’s say, the middle 20 senators to agree on something. The middle 20 senators are now all Democrats. The Republican Party is now a rump on the right which, thanks to the arcane rules of the Senate, has the ability to stop things.

STEPHANOPOULOS: But that gets to the problem and that, not quite 20, but middle 10 Democrats in the Senate, are not for the public option.

KRUGMAN: Well, the public option, again, this is something that there’s question, whether they’re for it or are they willing to actually vote against cloture to stop this really quite modest but helpful piece of the reform being in there. Right? I mean -- well, they know they have no intellectual basis to stand on. Right? There’s the argument against the public option is sheer nonsense. We know that is nothing except the insurance lobby.

FRUM: This general of liberals, when you read their health writing again and again point to the Nixon administration and say President Nixon administration had a proposal that was actually pretty good. But we opposed it because it wasn’t left wing enough. And if we only had it to do all over again, we will never make that mistake again. And now, they have it do all over again and they’re making that mistake again.

REICH: The public option is such a modest, such a modest -- it’s not even intrusive.

FRUM: Then, why not give it up?

REICH: It is an option. But at the end of the day --

FRUM: If it’s not important to you -- it is important to conservatives, why not give it up?

REICH: At the end of the day, the question is, is it essential? And the answer is probably no. But it is crucial to making the system work much, much better, to containing costs.

WILL: We’ve been talking about this for about five minutes and the subject of cost, which is tiresome and depressing, has not come up.

REICH: I just mentioned it.

WILL: When we began this debate a few months ago, the costs were going to be paid primarily by two things. One, the proceeds from selling under cap and trade, the permits to emit carbon. And “B,” Medicare cuts. “B” is never going to happen. And we’ve given away what should have been sold, or so we say, the rights to emit carbon. Where are we going to pay for this?

KRUGMAN: Medicare stuff, I think, will, in fact, happen if anything passes. If you want to think about the utter, utter hypocrisy of the Republicans on this. We just heard John McCain . And early on in your conversation, he said basically Sarah Palin was right in saying death panels because the Democrats want Medicare to take into account the actual medical effectiveness --

STEPHANOPOULOS: They weren’t in support of the policy.

KRUGMAN: Right. And then later in the same conversation, he said, we have a terrible problem with entitlements with Medicare. We really need to do something to cut Medicare spending. And what possible way -- we should cut Medicare spending without any regard for the medical effectiveness of what it’s paying for? So, this is, you know, we have the Republicans actually standing fully against any sort of rational control of costs.

REICH: The Republicans are also against competition. I mean, having a public plan that competes with private insurers is not taking business away from the private insurers. In other words, there’s a fundamental...

WILL: That’s the point of it.

REICH: There’s a fundamental contradiction at the core of the Republican critique, which is, either the public plan is like the Post Office, and it’s going to be totally ineffective, or it’s going to be so effective that it drains business away from the private insurance.

FRUM: Nobody wants to have to compete with their regulator. The Post Office does not have power over its competition. And the Post Office is now an independent corporation. It’s not an arm of the government anymore.

But this talk of competition really means that you’re going to be having the same entity, or very close to it, making rules and also applying the rules to its competition. It’s not a competitor.

And when you say that the president wants to focus on the inefficient part of Medicare, I mean, he has made it very clear what he’s coming after, the Medicare Advantage programs. And that is, for the...

STEPHANOPOULOS: Explain what they are, quickly.

FRUM: For one-fifth of American seniors, you have an option of having a Medicare program organized by or run by a private insurance company. They -- now there are some problems with this, that the private insurance companies pick the healthiest seniors.

But it offers what senior experience as a superior alternative.

(CROSSTALK)

FRUM: The statistics may not match up. But that’s how seniors experience it. And the president wants to take it away from them.

KRUGMAN: In the ‘90s, Medicare Advantage was a flat fee per recipient. And so, the insurance companies cherry-picked the healthy people. In the late ‘90s, they started risk-adjusting the payments so that if you picked only healthy people, you only got -- you know, you got less. At that point, Medicare Advantage started fading out. Turned out that in a head-to-head competition, level playing field, Medicare -- the insurance companies could not actually match the public program.

Then in 2003, they increased the payments, so the federal government now spends 14 percent more per recipient on Medicare Advantage than on straight Medicare. And now, it’s expanding.

So this is -- it makes total sense. Why would a Republican support subsidizing excess payments, something that purely inflates the cost of Medicare? Yes, it provides some extra benefits...

WILL: But there is a larger...

KRUGMAN: ... but I thought that was what they were supposed to be against.

REICH: There’s a larger question here, and that is whether Medicare and also this putative public option, are going to have an opportunity to negotiate, to use their bargaining leverage to get drug prices down.

This is a critical part of cost control over the long term. And, George, for people who are concerned about cost control, for the Republicans who are saying, we have got to control costs, it seems to me that this is absolutely essential, using this bargaining leverage.

WILL: First of all, do drugs cost too much? I don’t know if they cost too much. We’re told that pharmaceutical companies make obscene profits. I hope so. Because it sometimes takes a billion dollars to get a drug from conception, through research, development, through the regulatory process, and on the market.

And if you subtracted all of the profits of the pharmaceutical industry from our health care bill, it would shrink from 10 percent to 8 percent of our health care costs.

STEPHANOPOULOS: Let me pull this out to a broader discussion of the economy right now, because that -- the condition of the economy will probably do more to affect President Obama’s political position, whether he can get health care through, than anything else right now.

And, Paul, we heard Fed Chair Ben Bernanke come out on Friday and say that the economy is leveling off, the prospects for growth are pretty good. Give me your take.

KRUGMAN: We have got a problem with terminology, because we usually say either the economy is in recession or the economy is recovering. Either you’re in hell or you’re in heaven. And the trouble is, we’re actually in purgatory.

We’re actually in a situation, almost for sure, GDP is growing. Almost for sure, the Business Cycle Dating Committee will eventually decide that the recession ended this summer. But almost surely also, we’re still losing jobs.

The unemployment rate is going to continue to rise. So we’re in that infamous jobless recovery state. It’s not -- it’s a lot better.

STEPHANOPOULOS: So, to borrow phrase from Alan Greenspan, is the stock market showing irrational exuberance by popping up 50 percent in the last four months?

KRUGMAN: Well, remember how far down it was. It’s still way down from where it was. So I’m not sure that the stock market is wrong. But the point is that what we have now is a whole lot better than seeing the end of the world six months down the pike, but it’s not good enough, not remotely enough.

REICH: Yes. George, you know, anybody who says that we are out of the woods or even moving out of the woods has got to be lost at sea. I mean, there’s no evidence that this economy is doing much better. The best that can be said is we’re getting worse more slowly. And that is small consolation to people who are losing their jobs. This is the biggest...

(CROSSTALK)

STEPHANOPOULOS: So you don’t buy that we’re starting to grow, actually?

REICH: Well, no, no. The biggest problem for the administration in 2010, and you put your finger on it a moment ago, is that we’re looking at double-digit unemployment, very likely, in 2010.

And the administration, and I would say also Republicans who are incumbents, have got to show the public that they are actively taking...

STEPHANOPOULOS: And then here is the problem, the biggest problem is actually the double bind.

REICH: ... some movement on this.

STEPHANOPOULOS: Double-digit unemployment, George Will. But also, we just learned this week, a $9 trillion deficit over the next 10 years.

WILL: Yes, a $2 trillion oops from the people who keep the books. Part of the problem, surely, Bob, is that the American people, in their native perversity, have lapsed into the virtue of thrift.

Which is to say, five years ago, we almost had a negative savings rate in this country. Now, people, chastened by excesses, we have something like a 5.2 percent savings rate. Well, that takes out of consumption about $400 billion.

So the thrift at this point may be a nuisance.

REICH: So you’re in favor of an even larger stimulus?

(LAUGHTER)

WILL: Well, I noticed that the stimulus, which has sent out, what, about 10 percent of what has been voted on this, that most of the stimulus spending will be not this year, not next year, but in 2011.

And in the so-called shovel-ready infrastructure, less than $1 billion has been spent already. A rounding error on the automobile bailout has been spent on the so-called saving infrastructure programs.

KRUGMAN: Some of those aren’t -- those numbers aren’t right. But, OK.

FRUM: No, they’re going to spend about half of the stimulus in the 12 months leading up to the November 2010 congressional elections. I’m sure that is totally coincidental. I’m sure that is driven entirely by economic considerations. But it sure does look funny.

STEPHANOPOULOS: Meanwhile, with all of this talk of the economy and health care, The New York Times this morning brings up a comparison I assume was going to be made eventually, Barack Obama and Lyndon Johnson, as we talk about all of this as he his domestic agenda, facing this war in Afghanistan.

And the president addressed it this week at the VFW, the war in Afghanistan.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The insurgency in Afghanistan didn’t just happen overnight. And we won’t defeat it overnight. This will not be quick, nor easy. But we must never forget, this is not a war of choice. This is a war of necessity.

(END VIDEO CLIP)

STEPHANOPOULOS: Yet, as I brought up with Senator McCain, George, I want to bring you in after I show you these poll numbers, for the first time this month a majority of Americans now say, you see the lines crossed, that the war in Afghanistan is not worth fighting.

And when you ask the question about more troops, going back to January, 34 percent of Americans thought there should be more troops. Now, it’s down to 24 percent. Waiting for -- there we go. And then the number who think that the number of troops should be increased (sic) has actually increased a lot. So, we’re seeing now a real flip in where Americans are.

They -- by about two to one, they don’t want more troops.

WILL: But our strategy is troop-intensive, that is, is to clear, hold, and build. Build means nation-building. There is a story in the paper this morning, Afghans coming up to Marines in Helmand province. There are 11,000 Marines in a province the size of West Virginia. And they’re saying, we want you to fix our irrigation systems.

That’s not what the Marine Corps does. The Marine Corps isn’t a nation-building outfit. They’re hold, build -- they can’t hold it because they can’t stay there. And when they leave, the Taliban comes back. Therefore, what’s the point in clearing? I think the American people are right about this.

REICH: I don’t think the American people have focused on Afghanistan at all. I mean, health care and the economy dominate the agenda, which is good for Obama. I mean, he has some time because they haven’t focused.

What worries me is that you have here in Afghanistan all of the elements of a potential political and real disaster in terms of an escalation. There were, what, 20,000 troops three years ago now 60,000 troops. And McChrystal wants to go up to 70,000 or 80,000.

STEPHANOPOULOS: We don’t know exactly how many he wants. But...

REICH: And you have a civil war. And you have a corrupt administration. And you have a lack of clarity about what exactly it is we are doing here. Where have we seen this before?

FRUM: And the Americans are arriving as all of the allies are leaving. There is a terrible bout (ph) of sickness, which is, those are not -- those numbers don’t represent a net increase, as big in the allied presence, because the Canadians and the Dutch and the others are going.

And meanwhile, the Afghan police and army projects have been pretty much failures. The army -- there is, in fact, starting all over again, and there’s beginning to be some progress there.

But here’s where the Johnson parallel I think really does hold. That what we saw from George Bush was when a president wants to turn around a bad war, it requires almost all of his time and all of his energy. The president has the same number of hours in his day as everybody else, and he has to sleep sometimes. They sleep less and less, unfortunately.

If the president is giving an hour a day to Afghanistan, that is going to be a big difference, in -- as opposed to giving four hours or five hours. It signals to everybody what is important. It signals to everybody, what must succeed, if nothing else does.

STEPHANOPOULOS: But is he on the right course, intensifying this effort?

FRUM: He is going to -- as John McCain said, he’s doing the middle option. I fear it’s also like Johnson, that when you saw what happened in Iraq, by the culmination of the surge, the United States had achieved that fabled one to 30 ratio of troops to population, both Americans plus Iraqis.

In Afghanistan, we are so far away from that. And the Afghan army is in its infancy.

KRUGMAN: The only I’ll say is, politically, I think it matters a whole lot less. This is not LBJ. This is not 500,000 American troops who are drafted. This is not your son, your neighbor’s son, being sent off to the war. This is not every college student terrified about that letter arriving, saying,, greetings from the president of the United States.

So although this could work out very badly, I’m very nervous about it, I don’t think it has all that much political relevance. And the polls, you know, I’d like to ask how many of those people who don’t approve of the war/do approve of the war, you know, where is Afghanistan on the map?

I don’t think people are really very...

REICH: Politically, I think the problem here is that Democrats are not behind the president. The base is not behind the president right now on health care. Republicans are behind the president on Afghanistan.

STEPHANOPOULOS: Some are.

REICH: Some are. But this is a political problem.

STEPHANOPOULOS: Ten seconds.

WILL: The president says this is a war of necessity, not of choice. If it’s a necessity, that is because we dare not have a failed state in Afghanistan that becomes a camp for Al Qaida. The same argument would have us in and fighting and nation-building in Yemen and Somalia.

STEPHANOPOULOS: Debate it more in the roundtable in the green room. You can catch that later on abcnews.com.