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In the Arena
President Obama Gives Budget Speech
Aired April 13, 2011 - 20:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ELIOT SPITZER, CNN ANCHOR: Good evening. I'm Eliot Spitzer. Welcome to the program.
Today, President Obama gave what was billed as a budget speech. A plan to reduce the deficit by $4 trillion over 12 years. But it turned out to be something much more. Because the speech was not just about the money, it was about his vision of who we are.
Yes, his deficit proposal lays down two markers that couldn't be more different from the Republican plan. He doubled down on health care reform and called for $1 trillion in higher taxes largely for the rich.
Listen to him here.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: In the last decade, the average income of the bottom 90 percent of all working Americans actually declined. Meanwhile, the top 1 percent saw their income rise by an average of more than a quarter of $1 million each. That's who needs to pay less taxes?
(END OF VIDEO CLIP)
SPITZER: But it's the philosophy underlying the president's proposal that is so important. The government, he said, is an integral part of the greatness that has built this nation, and those who benefit more should contribute more.
This view stands in sharp contrast to the clearly stated Republican belief, cut government, cut taxes. The president and the Republicans set out diametrically different principles. This does not bode well for the hard work of forging compromise in the weeks ahead.
Earlier, I talked to Melody Barnes, who is director of the president's Domestic Policy Council, helped put together the president's budget plan.
(BEGIN VIDEOTAPE)
SPITZER: Miss Barnes, thanks so much for joining us this afternoon.
MELODY BARNES, WHITE HOUSE SPOKESPERSON: Great, it's my pleasure.
SPITZER: First, congratulations on the president's speech. Obviously a hugely important speech for him.
Seems to me there are two fundamental distinctions between what the president has laid out and Paul Ryan's plan set out for the Republican Party. The first is taxes. The Republicans are saying no tax increase. The president is saying $1 trillion in tax increases over the next 12 years.
Can you break down for us exactly where those tax revenues are going to come from and who they will fall on?
BARNES: The president has said, and he said it again in his speech today, he said it consistently, that he is not for raising the taxes of those who make below $250,000. He said, and he said it again today, that he is going to let those high income tax cuts expire, that we can't afford them.
He said it today, and I'll say it again, that we have to simplify and we have to make the tax code more fair. We have to do that both in the corporate context and we have to do that in the individual context --
SPITZER: Melody --
BARNES: And -- and as we both know, because I worked on the Hill for over a decade and you've been in government, too, that people have to sit down together and they have to work on the specs. And they have to do that in a room and that's the process that the president has laid out.
SPITZER: Let's switch over to the other fundamental distinction. The Republican plan does, and I agree with the president 100 percent on this. It ends Medicare as it has existed for many decades. The president wants to build on the health care reform act that was passed last year.
The question I've got for you is, we have yet to see any real savings from that health care act. I know it's not fully implemented. But where is the evidence anywhere that that act is actually saving money?
BARNES: Well, if you talk to the economists, if you talk to the Congressional Budget Office, if you talk to other independent economists, what they say is over the context of the next 20 years, we will see about $1 trillion in savings as a result of the affordable care act.
The president built on that in his budget. And in today's speech, what he talked about are additional ways to find savings both in Medicare and in Medicaid.
SPITZER: Let's talk about the politics of this for a moment. The most recent agreement announced last week to keep the government going was on the easy stuff. The non-defense discretionary spending cuts which is where most of it was. Everybody knows those have to be reined in.
Now we're getting into the tough areas where the ideological lines are much more critically and harshly drawn. So that's why I'm saying this negotiation is basically on a matter of principle and the Republican Party is saying just as firmly, we will not raise taxes.
How are you going to break through that gridlock?
BARNES: Well, the president has said just as firmly -- I'm sure the American people heard it in the speech today -- this is his vision for America. There's certain things that he absolutely will not stand for and will not do. There's a contrast. We aren't going to balance the budget on the backs of the most vulnerable and on the backs of the poor, on the backs of the middle class.
We aren't going to do that. Those -- that's what the president will be fighting for. And that's what we will take into the room when we sit on a bipartisan, bicameral basis with others to hammer this out.
It's part of what makes lawmaking what it is. It's part of the process. And that's what it takes to get the job done and that's the difficult business and difficult process that we're about to enter into and that's what the American people have asked us to do.
SPITZER: Look, again, I don't disagree that that's what the American public want you to do, to go in and negotiate hard. But I also know -- I sat here yesterday with Grover Norquist who says he has a rock solid pledge from 235 members of the House of Representatives that they will not raise taxes, not one penny, nothing, and even if they close loopholes, they will use that to reduce taxes, not even to level the tax code so it's revenue neutral.
So I'm saying, you are running right into a brick wall. $1 trillion of the $4 trillion the president talks about is from tax increases, revenue enhancements, tax loophole closing, or whatever you want to call it. This is going to be I think an impossible sell to a House of Representatives that right now is rigidly its feet stuck in concrete just as dead-set and saying no to that.
BARNES: Well, I would say this. And I'm sure you're a student of history just like I am. There have been other very, very difficult issues. There have been other points in history where people said, I will not do things as Grover Norquist said to you yesterday. And people have come together time and time and time again to get some of the most difficult pieces of legislation done, to pass them and to implement them.
We are working in that spirit. And that is the way we are moving forward. Because that is the commitment that the president has and because that's what he believes it means to be a leader. And that is what we're going to do.
SPITZER: All right. Melody, thanks so much for joining us and putting up with that noise behind you.
BARNES: Thank you.
SPITZER: I gather there's some construction going on at the White House.
BARNES: Yes, it's loud. Exactly.
SPITZER: Is that somebody trying to break in or somebody trying to break out?
(LAUGHTER)
BARNES: You know, probably a little of both.
SPITZER: All right, have a good afternoon.
BARNES: Great, you too. Thank you.
SPITZER: Thanks.
(END VIDEOTAPE)
SPITZER: It didn't take long for Republicans to deliver a fierce critique of the president's vision, accusing him of engaging in class warfare and exploiting American's fears.
Joining us now from Washington for more reaction is Representative Peter Roskam, the fourth House Republican.
Congressman, thanks for joining us.
REP. PETER ROSKAM (R), ILLINOIS: Eliot, thank you.
SPITZER: My pleasure.
Look, you've heard the data that was here in the opening of the show, the president said it very clearly in his -- in his speech this afternoon. The bottom 90 percent of the American public has seen its income decline over the past decade or so even more. The top 1 percent, each of them, saw an increase of $250,000 on average.
As a simple matter of fairness, in order to close this huge yawning deficit, isn't it, therefore, fair to say to the folks at the very top, pitch in a little bit more, fairness dictates we go back to the marginal tax rates that were there when Bill Clinton, when we had an economic boom?
ROSKAM: Well, I think it's a fair question to ask, but I don't think that there's anybody seriously that thinks today that the remedy to moving forward to closing a fiscal gap and creating jobs and buoyancy in the economy is by raising taxes.
You know, the president gave advice to the whole country back in January of 2010 when he came to the Republican retreat and he was asked about taking on entitlements and he said, look, nothing good is going to happen -- and I'm paraphrasing now -- if we demagogue one another's proposals and characterize it as pushing seniors out the front door and so forth.
And yet the president failed to take his own advice even today. I think that there was a great moment that the president could have had to sort of eclipse the entire conversation, Eliot, bring people together, say, look, let's deal with these entitlements, these difficult questions. And let's move forward on them. But then instead, it just seemed to me like a campaign speech. And he fell into some tired old rhetoric that we've heard from him in the past.
SPITZER: Well, look, I think both sides are using a lot of rhetoric. It sounds like campaign rhetoric. But I actually think it's founded upon different philosophical principles. In which case I think people should articulate what they're saying. And that's all for the good. That's what democracy is.
But I want to come back to something you said, because there are a lot of people who are saying, you know what, there is a rational way to close this budget gap. Part of which, and only part of which, not the entirety, but part of which is to say, you know what, those who have done so well over the last couple of years -- and I want to give you an example.
If you go to Paul Ryan's plan, he takes about $800 billion out of Medicaid, which is health care for the poor. It will lead to -- and having been in the instate government as a governor, I can tell you, tens of millions of people will be thrown off Medicaid if that happens. And that $800 billion is exactly what the wealthiest 2 percent will benefit from in tax cuts over the next decade.
Is it, again, a matter of equity, fairness, the wealthiest can say, look, we'll pay that $800 billion, tens of millions of people will get health care? Isn't that a fair trade, just philosophically to you?
ROSKAM: Look. Take Medicaid for example. There's nobody today that's arguing that Medicaid is sustainable. There's nobody that's arguing that Medicare as it currently stands is sustainable.
So as a governor what you would have wanted was the ability to have flexibility that said, OK, Governor Spitzer, here's the money, you're going to get out of the shackles of Washington, D.C., it's going to be indexed by inflation and population. And you have the ability to figure this out.
Isn't that clearly a better pathway moving forward?
And on the tax question, what House Republicans are doing is actually, again, eclipsing the entire old hackneyed tax rate debate and saying let's lower the tax rates for everybody. Let's lower the corporation tax rate to make it so that the U.S. is more competitive globally. And let's lower the individual tax rate.
And I think time and time and time again historically, that shows that there is real growth. But there is zero appetite in this House of Representatives to raise taxes on anybody. And the irony is the president has made one declaration after another over the past several years and months. And he's moved off of those. This is the same president --
SPITZER: Congressman -- Congressman, let me interrupt because I want to go back to something that you said where we have a common view, which is if we can, in fact, close loopholes, lower the marginal rate, and then also get the same revenue or more revenue, that's a win-win for everybody.
This sort of policy everybody stands up and applaud for. The devil's in the details. And I've asked people what loopholes are you willing to close to make that possible? Because it only works if you close off some awfully big loopholes. And somebody's loophole is somebody else's critically important tax incentive.
So let's go through a couple. The biggest ones out there, mortgage tax deduction for homeowners. Is that something you would be willing to close?
ROSKAM: Mortgage tax deduction, charitable deduction are all, to your point, incredibly important and incredibly serious. And they're not things to be trifled with.
So you don't even enter into that conversation, Eliot, without an assurance that the tax rate goes down. And that's where you've got to be very careful not to set up a scenario where taxpayers begin to bid against themselves putting things that are on the table and ultimately not getting the tax relief that's promised.
SPITZER: OK. Look, I know we disagree about whether the revenue that comes from closing the tax -- the tax loophole or incentive, whatever you call it, is used to close the deficit or is actually used, in your case, you would -- you know, just as additional revenue.
The question I'm asking you, though, is, are those on the table? You're willing to have those on the table as part of those conversations -- this conversation?
ROSKAM: Look. Any time that you have a holistic conversation about changing the tax code, you do enter into an environment where things that have been off the table historically are on the table. So you enter into the same conversation on the corporate side that says all right, what are you willing to put out, but in an assurance that the rate is going to lower.
SPITZER: OK. Let me --
ROSKAM: Because ultimately we've got the highest corporate tax rates in the world and we're losing the global competitiveness.
SPITZER: Well -- OK, but Congressman, you and I both know virtually no corporation out there of any size certainly, GE, $14 billion in profits, paid zero taxes last year. Nobody pays at that marginal rate. That's why simplification is so important.
We've got to switch away. We could spend a long time on this. Real quick question, the debt ceiling. Even under Paul Ryan's plan, we're going to have to borrow tens of billion of dollars also over the coming months.
So isn't it unfair to the public to hold hostage the vote on the debt ceiling, and creating uncertainty in the marketplace? Isn't that exactly what you don't want to do? And I had to do it, we only got about 25 seconds left to tell me --
ROSKAM: OK. In 25 seconds, the real unfairness lies with the notion we can continue the spending madness into perpetuity. The real unfairness would be not to discipline the federal government to live within its means. And the debt ceiling vote is a very, very important thing. And what we've got to do is literally cut up the credit card. That's the only remedy moving forward.
SPITZER: Look, Congressman, we've got to cut up the credit card but if you do it all at once, you know we will all go bankrupt because right now even Congressman Ryan's plan doesn't permit us to do that.
Look, thank you for coming on the show. We're out of time. Please come back. We want to continue this conversation with you and see if we can find common ground.
ROSKAM: Thanks very much.
SPITZER: All right, now, let's bring in E.D. Hill.
What do you have for us tonight, E.D.?
E.D. HILL, CNN CONTRIBUTOR: Well, I'm hearing a lot about fundamental differences. And coming up, we're going to talk to two people, opposite sides of the aisle. They both are very instrumental in both the military and in business and they have some common ideas that could help the country.
SPITZER: All right. Looking forward. It's going to be dynamic and exciting.
All right. Coming up, President Obama laid out his grand vision for governing. I'll have Simon Schama and David Gergen's unique take on that. Don't go away.
(COMMERCIAL BREAK)
SPITZER: A budget, it is often said, is a moral document, a statement of principles.
So did President Obama in his speech today succeed in defining his own ideas of fairness and shared sacrifice?
To discuss that, I'm joined by CNN senior political analyst David Gergen in Cambridge and by renowned history Simon Schama, author of the new book, "Scribble, Scribble, Scribble: Writings on Ice Cream Obama, Churchill and My Mother."
David Gergen, Simon Schama, thanks for being here.
SIMON SCHAMA, AUTHOR, "SCRIBBLE, SCRIBBLE, SCRIBBLE": Good to be here.
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Thank you.
SPITZER: Let's begin in terms of the president's speech with the sound bite from what he said today talking about the Republican budget plan. Listen to what he said.
(BEGIN VIDEO CLIP)
OBAMA: This is a vision that says even though Americans can't afford to invest in education at current levels or clean energy, even though we can't afford to maintain our commitment on Medicare and Medicaid, we can somehow afford more than $1 trillion in new tax breaks for the wealthy. Think about that.
This vision is less about reducing the deficit than it is about changing the basic social compact in America.
(END OF VIDEO CLIP)
SPITZER: So here's my question. Did the president in his speech lay out a fundamentally different philosophical vision of what our society should look like, one that stands in stark opposition to the agenda and philosophical vision of the Republican Party. Simon?
SCHAMA: Well, for me, it was the first speech of the re-election campaign. And it was an incredible gamble because it is in the manner of Franklin Roosevelt in 1936.
But the answer to your question, Eliot, is, and how he did. Something we thought -- those of us who've been impatient for this thought really he'd never do. He said, look, I honor the tradition of rugged, raw individualism and entrepreneurial inventiveness in America. That is America.
It is also American, too, to be connected, invoking Lincoln. To actually do for those in periods of economic tough misfortune what they can't do for themselves. And for the first time, he said, I'm not going to be lily-livered. I'm not going to pull my punches. There are things that we should not be ashamed that government can do.
SPITZER: You know, David, to pick up on what Simon said, there is that strand in American history of rugged individualism but what the president spoke about was the need for us as a community, a society, a nation to invest, to build, and the interdependence, and he was saying let's not forget that, and that's why this government exist.
That I thought was a powerful argument that I have not heard from him recently.
GERGEN: We have not heard it, Eliot, and I do think -- and I agree with Simon. I think the president planted his flag firmly in this sort of FDR/Lyndon Johnson tradition. And that is a tradition that puts his emphasis on fairness, puts his emphasis on a caring government, a compassionate government. You know, and so I think that the left could applaud this speech.
But there is a second basis upon which to judge the speech, Eliot. That is also the question of, does it deal with the deficits in a serious way? And I think the answer on that is much more ambiguous.
SPITZER: You're right. It was -- it was more gauzy rhetoric when it comes to the deficit. Although even there, there is a very stark divide, is there not? He says raise $1 trillion in taxes. The Republicans say no, not a single penny.
So is that not not the dividing line now in terms of whether this budget negotiation moves forward?
David, I --
(CROSSTALK)
GERGEN: Eliot, it's one of the dividing lines. And I applaud the president for two things. First of all, he recognized in this speech that the budget deficit is very serious. And he raised his sights. He was originally trying to cut $1 trillion from the deficit over 10 years. He raised it to $3 trillion over 10 years and $4 trillion over 12.
So he has moved the goal post and I applaud him for that. I personally believe that those of us who are fortunate enough to be in the upper income ranks should pay more taxes. Going back to the Clinton level of taxation. It is fair and it will allow for economic growth as we saw under Bill Clinton in the '90s.
SCHAMA: Yes, he could beyond that.
GERGEN: Go ahead. When you get beyond that on doing tough things, Eliot, I like -- I come from the old-fashioned school and saying, the leadership is about making tough choices. Leadership, especially in the presidency, is trying to take on the tough ones and saying where you stand and leading people there.
I think he ducked on issue after issue. He essentially said on the tough choices, I'm going to leave it to Congress to figure that out. I'm going to leave it to some -- the pay board on Medicare to figure that out. I'm going to leave it to others.
SPITZER: David, I agree with you.
Simon, respond. You're my --
SCHAMA: No, well, I agree with David about -- the piece I didn't like was saying, well, let me have yet another body of wise men who can actually be convened really in order should the thing not work out, and should we have to worry about a way we can finance Medicare.
However, I would say to David that in two respects, he actually tried to take control of the narrative. To say it is not unpatriotic to think really hard about serious military expenditure reductions. It's a long time since we've had a president going into election campaign saying, I don't care, let them say I'm soft on defense, I'll show you I'm not. But we can do better on defense.
And secondly, it's not un-American to ask, as David says, you know, the top earners in the country to actually pay their share.
SPITZER: Simon, you are correct on two of the points but what David is absolutely correct on is the hardest one. The president said raise $1 trillion in taxes. That is a little bit courageous, although he's only saying raise it from the rich.
He was saying save $400 billion over 10 years from defense. Frankly, there's a consensus that that is easily done at this point.
Where the president did not get specific is when it comes to health care costs, health care control, he basically said we passed the bill. It's going to do better. It will work. And if it doesn't, we'll worry about it down the road.
SCHAMA: No --
SPITZER: And, David, is that how you heard his speech as well?
GERGEN: I did. But I want to add (INAUDIBLE) to what you just said. I agree about what Simon said about both the individual taxes and defense. It -- after a decade of fighting wars to have a president talking about cutting back some I think is actually healthy on the defense side.
But when it comes to the tax question, listen, yes, he's very specific, he wants to raise taxes on the upper income. But when it comes to sort of dealing with the home mortgage deduction which is so controversial, or dealing with the health care deduction you get if your employer pay for your health care costs. You don't count that as income, as you know.
The deficit commission, you pointed, dealt with both of those issues courageously. It stepped up to both of them and said, here's what we must do. This president decided, I'm going to let somebody else decide that. Why doesn't Congress figure that out?
SCHAMA: David, you're a tough guy. I mean actually he did enough today to try and do a game changer. To say, hey, I'm also going to propose that we eliminate mortgage deduction. You know, he may be brave but he's not suicidal --
GERGEN: Tell me -- tell me, Simon, one thing he did today that's politically hugely controversial other than raising taxes on the upper income.
SCHAMA: I want -- raising taxes.
(CROSSTALK)
GERGEN: Which is not that controversial. SCHAMA: You know, Gergen, would you actually advise your presidential candidate to set off an election campaign saying, tax, tax rises? Bring them on, hello, George Bush Sr., you know.
SPITZER: You know, actually, Simon, I think you might because when you poll it nationally, raising taxes on the upper income polls 59 percent are for it. All you need is 50 plus 1. Within the Democratic Party it's 78 percent. And even independents, it's 60 percent. And so it's only Republicans votes he's not going to get anyway that he's going to lose on that.
So I'm with David on this one. What he did there was easy when you state it at the level of generality with which he did. It only gets hard when you add the details.
GERGEN: I thought where he was specific was he had a tough critique against Paul Ryan and the Republicans. And he was very specific on that. They clearly had their argument. I think we heard the drum rolls of 2012 in the speech very clearly.
SPITZER: Well, I agree with that. I think that the -- sort of the attack on the Republican Party and the Ryan proposal which was about two-thirds of the speech was really powerful, it was done in a lawyerly way, piece by piece, and you know, persuasive, then it was only at the end when he began to put the numbers in his own plan on the piece of paper that it began to get a little tenuous and a little ragged frankly from my perspective.
And that was at the very tail end. And so you know, you're right, he's better as a counterpuncher right now than in making his affirmative case. I think that could be a problem going into next year.
(CROSSTALK)
SCHAMA: Well, I think half the way there but this may be the easy bit. I should say it feels and smells -- David would know this -- very much like a kind of big change of tactical atmosphere from Axelrod to Plouffe. Really, really does, at least to me.
However, the real issue they've got which was not answered by this uncertainty about actually how much do you project it, is how do you actually make the speech which you've really hitched your wagon to, have real purchase and bite, in the kind of blogosphere, in the atmosphere of full out conservative -- are we allowed to say this -- FOX Channel bombast actually.
SPITZER: Right.
SCHAMA: Which is unbelievably great at doing what it does. How do you actually change the megaphone this year?
SPITZER: Well, look, I'm not sure he'll be able to. The incoming missiles have been nonstop since mid-afternoon and there's a unified argument from the other side which is the same old Democratic rhetoric of raising taxes. Don't you think that's going to be hard for him to pushback against, David?
GERGEN: I do. But Eliot, to me, the question -- you and I talked about this before, what the United States is going to do -- what the Congress and the president are going to do between now and the debt ceiling deadline.
SPITZER: Right.
GERGEN: And I didn't know where we came out of the speech on that question. It did seem to me that there's huge gaps right now between the party. Paul Ryan has been arguing today that what they really ought to do is settle Social Security and some of the cuts before this deadline. And the president didn't really want to talk about Social Security today. Paul Ryan hasn't really wanted to talk about Social Security today.
But you know the experts all think that that's the one you really could deal with.
SPITZER: You know, David, I think you're exactly right. Social Security, oddly, would be the easiest compromise among the welter of issues that are out there but it is also the one that is least directly related to the momentary deficit that we're running.
Long term, it's huge. The moment -- this moment it is the least related. And frankly, Medicare and Medicaid, which are the tougher issues because they relate to the fundamental delivery of health case, they're the ones that we've got to come to grips with. And then there's the fundamental if through taxes, increased or not.
And you're right . There's a gap, emotional, political, philosophical, between the parties.
And Simon, I don't --
(CROSSTALK)
SCHAMA: But it's just got a lot wider. There is a scary game of chicken going on here because I think actually the undersubtext is you Republicans were getting just a little bit antsy about the possibility of being responsible for government shutdown.
How much more political punishment do you think there's going to be if you send the economy off the cliff actually as a result of respective defaults?
So they are betting in the White House that the Republicans are going to blink first. Whoa. You know. We'll see.
SPITZER: Right.
SCHAMA: It's getting fun but it's getting scary.
SPITZER: As we've said, these are two trains going towards each other on the same track and it could be a very ugly picture.
All right. Simon Schama and David Gergen, thank you both so much.
GERGEN: Thank you.
SCHAMA: Thank you.
SPITZER: Coming up, were you underwhelmed by the president's speech? You're not alone. So was the vice president. In fact, he found it a real snooze when we come back.
(COMMERCIAL BREAK)
SPITZER: For weeks, we've been calling for President Obama to get involved in the budget debate. And today, he did. An exciting moment, right?
Well, it appears that Vice President Joe Biden wasn't all that enthralled and maybe, maybe even dosed off. Take a look.
(BEGIN VIDEO CLIP)
OBAMA: It's a vision that says America can't afford to keep the promise we made to care for our seniors. It says that 10 years from now, if you're a 65-year-old who's eligible for Medicare, you should have to pay nearly $6,400 more than you would today. It says instead of guaranteed health care, you will get a voucher. And if that voucher isn't worth enough to buy the insurance that's available in the open marketplace, well, tough luck. You're on your own.
(END VIDEO CLIP)
SPITZER: Come on, Joe, I know it was right after lunch, but look alive. That's the president talking. President Obama must have commanded the attention of the rest of the room, right?
Well, maybe not. This hurts. What a tough crowd. Take a look.
Boy, this isn't the first time the president has lulled people to sleep. Back in 2009, President Obama spoke after a meeting with credit card executives and put National Economic Council Chairman Larry Summers out for the count. He is gone. Boy.
Now, we all know I love economics and talking about the budget but that's not for everyone. Surely if the president, this great speaker was talking about something else, he would have everyone's attention.
(BEGIN VIDEO CLIP)
OBAMA: Derek Jeter wasn't born playing shortstop for the Yankees. He got there through years of effort. I understand your boy's basketball team did pretty good.
(APPLAUSE AND CHEERING)
(END VIDEO CLIP) SPITZER: At least the applause woke him up. Well, if you can't interest kids with a Derek Jeter reference, that's a sad state of affairs. We'll be right back.
(COMMERCIAL BREAK)
SPITZER: A drone strike today in Pakistan killed six militants in South Waziristan, the tribal area along the Afghan/Pakistan border. It comes a day after the Pakistani intelligence agency demanded that the CIA scale back their attacks. And it's the first drone strike since March 17 attack killed dozens of civilians which led to widespread anti-American protests.
I spoke earlier with Imran Khan, a member of the Pakistani opposition and an outspoken critic of U.S. policy in his country.
(BEGIN VIDEOTAPE)
SPITZER: Mr. Khan, thanks so much for joining us.
IMRAN KHAN, PAKISTAN OPPOSITION PARTY MEMBER: A pleasure.
SPITZER: So, can we agree that the United States and Pakistan have a common interest in rooting out the presence of Al Qaeda that is hiding within Pakistan?
KHAN: Absolutely. I think both countries have a common interest there.
SPITZER: So then the question inevitably arises, how do we accomplish that objective? Clearly at this moment, the relationship between Pakistan and the United States is spiraling down over the issue of the use of drones. What would your strategy be to root out the presence of Al Qaeda within Pakistan?
KHAN: Well, what I would do is isolate Al Qaeda and I would isolate Al Qaeda by winning over the tribal people over to my side. You must understand that there are a million armed men in the tribal areas of Pakistan. It is the most unique area in the world, where every man is armed and can use weapons. And it has a history of resisting every -- whether it was British or Russians and Mongols before that. So, what is happening right now is that this current strategy is pushing these people towards Al Qaeda, whereas what it should have done is isolate Al Qaeda because the current strategy is never going to succeed.
SPITZER: Mr. Khan, what you're saying is imminently sensible but it just begs the follow-up question, how do you isolate Al Qaeda?
We have tried. We being the United States have spent a great deal in terms of foreign aid, in terms of cultural, in terms of agricultural assistance. How would you say you can effectively and successfully isolate Al Qaeda, rather than pursue merely the drone attacks that you are so much against?
KHAN: Well, let me just say one thing, the initial mistake was made when Taliban and Al Qaeda were clubbed together. Now, Taliban were fundamentalists but they were not terrorists. And the Taliban never had the capability of hitting western targets because they -- you know, they're just not -- don't have the education. They don't understand the western societies to actually operate there. I think that was the first mistake. But second mistake was that, you know, they should have just -- then once the Taliban were dislodged, there should have been development work done, good governance given. You know, people should have had a stake in the new regime. Instead, the eye was lifted off the bull and all concentration went to Iraq and all the forces went to Iraq. So it is a series of I would say disasters that led to the current situation where it has really got -- where I can say that the solutions are not simple anymore.
SPITZER: So you're basically recommending a strategy of negotiation with the Taliban and a complete elimination of the drones if I hear you properly.
KHAN: It is the only way. Believe me, it is the only way. Are the drone attacks really succeeding in making us win this war on terror? The answer is no.
SPITZER: But the CIA would say that the efforts to use drones has been successful in eliminating the leadership of Al Qaeda in Pakistan and to a great extent that's why Al Qaeda has been -- become a much less significant force with respect to terrorism at a global level. So how do you respond to that argument that in fact this has been quite successful?
KHAN: If it's successful, then they should stop it now. I mean, look, I'm sitting in Pakistan. I'm telling you the impact drone attacks are having in this country. And I'm telling you that the more drone attacks, the more anti-Americanism. The more anti-Americanism, the more radicalization. The more radicalization, there is only one beneficiary and that's Al Qaeda.
SPITZER: Mr. Khan, you make a very powerful argument and I think a very persuasive one. But I would ask you about another aspect of the anti-Americanism that seems to grip both in the society, both in Pakistan and Afghanistan, and that is when leaders and, in fact, you did this once, foment public opinion, just the way President Karzai did in Afghanistan just several weeks ago after Terry Jones who is just a crazy man down in Florida burned a copy of the Koran. Something that is reviled here in the United States, just as it should be reviled everywhere. But leaders and unfortunately, you did this once, use that as a basis for fomenting anti-American sentiment. Isn't that counterproductive? And many people here were upset at President Karzai. And many people were upset at you several years ago when you used a similar incident to generate anti-American sentiment. So how do you respond to that concern?
KHAN: You know, let me explain to you that when I said that and I know where I said it, in the parliament. There was an item in "Newsweek," and in that item -- and was picked up by the Pakistani papers. And that item said that in Guantanamo, the Americans had burned or flushed down copies of the Koran. And you know what I said in the assembly? I said, look, if these -- if this sort of news comes into Pakistan, here we are -- and this is way back five, sick years back. I said, we are supposed to be fighting with the Americans a war on terror. This is going to -- what is this going to do? It is going to give the impression that this is not a war on terror. It's a war against Islam.
And so I urged our government that they should ask the Americans that as these sort of acts take place, not only is the U.S. going to lose the battle for hearts and minds, here's an army in the forefront. And how is our army going to be fighting a war which will be perceived as a war against Islam? Because the moment you got that news item -- and it was at the "Newsweek." And as a parliamentarian, I was telling our government to tell your government.
I wasn't trying -- I didn't hold any demonstrations or anything. I didn't go out to the public. I was in the parliament telling the government that if it's battle for hearts and minds, news like this makes us bold. Because Pakistan -- remember, we are going to pay the price here.
SPITZER: Mr. Khan, in your assessment, is Al Qaeda today more or less powerful, its presence in Pakistan more or less powerful than it was one year ago?
KHAN: Well, we never saw any Al Qaeda. All we heard about Al Qaeda. All we were told was that there were about 200 or so Al Qaeda in the tribal areas.
Surely the drone attacks should have finished them off because the drone attacks have killed far more people than that. But I don't know about Al Qaeda. Sitting in Pakistan, we have no idea. All we know is that the reaction to the drone attacks leads to violence within Pakistan.
SPITZER: Mr. Khan, thank you so much for joining us. You make very powerful points. And I look forward to continuing this conversation with you in weeks ahead.
(END VIDEOTAPE)
SPITZER: Coming up, we'll see how the president's debt speech played on Capitol Hill. E.D., what do you got?
E.D. HILL, CNN CONTRIBUTOR: Well, you know, the president mentioned some cuts, some hikes. But can there be agreement between the two sides? We're going to have two representatives both with very strong backgrounds in military and business and see if they can find some common ground.
SPITZER: And did you force a compromise right there on live TV?
HILL: We might.
SPITZER: You might. All right.
Stay right there. We'll be right back.
(COMMERCIAL BREAK)
HILL: We continue our discussion about the president's speech today. And we're really fortunate to have two members of the House both deeply committed to our nation's security and both with business experience. Joining me now, Loretta Sanchez, Democrat from California, and Michael Grimm, Republican from New York.
Thank you both for being with us.
REP. LORETTA SANCHEZ (D), ARMED SERVICES COMMITTEE: Thank you.
REP. MICHAEL GRIMM (R), NEW YORK: Thank you.
HILL: The president -- I think this sounds really good. He called for a $3 spending cut for every $1 in tax increases. Yet a huge part of the deficit is Medicaid, Medicare, social security. And they're only become more onerous. So what specifics did you hear for cuts, real specifics?
GRIMM: Well, that's the problem. We didn't. And here's the reality.
This country does not have a problem of taxing too little. The problem is that we spend too much. And the role of government has expanded exponentially.
We need to shrink the size of government and make it more efficient, more effective, but smaller. And the reality of this idea of taxing the rich is going to save our problems is absurd. Seventy- five percent of all small business owners personalize their taxes. And right now, almost 68 percent of all jobs are being created by small business owners.
HILL: Yes.
GRIMM: So why would we want to tax them and prevent them from creating jobs? It simply doesn't make sense.
HILL: Is there an issue though that at this point when we're just starting to feel like we're coming out of the slump, then we go back into a double-dip if we start hitting up the rich to an extreme -- you know, to an extreme point?
GRIMM: There's no question about that. Again, the job creators cannot be punished. We got to stop demonizing the rich and those that create the jobs. And I want to make a very clear point. I do not agree with my colleague that we should be raising taxes on anyone. Not the low, middle, not the high. No one should be raising taxes on. We should allow this economy to grow. And we do that by giving incentives to those that create jobs. That's the answer. We have to stop the spending and grow our economy. That's the only equation that is going to get America back on its track.
HILL: Well, you know --
SANCHEZ: It sounds good, but it rarely works. I mean, that's the reality of the situation.
HILL: So what's flawed?
SANCHEZ: And President Reagan, we saw that in that time. We saw, again, with President Clinton, a raise in taxes, bringing down of the debt, a boom in economy. We saw a gift of tax cuts from President Bush. And we start going down. And the Republicans continued to spend. And then when President Obama came in, we had to put in a stimulus to keep people working and to create --
GRIMM: Yes, Bush, by the way --
SANCHEZ: -- and to create the jobs.
GRIMM: -- was a stimulus of a trillion dollars that failed to create any jobs.
SANCHEZ: Oh, it created lots of jobs in California. Maybe now where you live, but where I live we're very grateful for that.
GRIMM: Well, I live in America, and it did not create the jobs that it was expected to create. And I want to add one other thing. We cannot even have an honest discussion about our debt crisis if we don't get involved with dealing with the entitlements, the largest driver of our debt and what's bankrupting our entire country. And the president has abdicated his leadership to deal with these entitlements. Paul Ryan has put something on the plate that even Democrats have to admit is real and tangible, and the president hasn't been able to do that.
HILL: Do you admit that?
SANCHEZ: Paul Ryan has put on the plate to shift the burden of finding health insurance for older Americans on an individual basis. The reason we have Medicare is because private health care plans do not want to insure older people because they cost money. That's why the government is in Medicare. And now, he wants to push that aside. He wants to give a paltry sum of money and say go out on the private market --
GRIMM: That's not true.
SANCHEZ: -- and find, and find a health care policy.
GRIMM: That's not true. If I may --
SANCHEZ: You cannot find a health care policy when you're 73 years old.
GRIMM: What my colleague is saying is that there's a voucher system. That simply is not true. This is not a voucher program.
And I want to also emphasize something because we keep hearing how it's going to hurt seniors. This does not apply to anyone that is 55 or older -- 55 or older. So those current seniors will not be affected by this. That's first of all. What it does is it gives an opportunity to preserve Medicare and Medicaid for future generations. That's a real answer. And the truth is the Democrats don't know what to do with that answer.
SANCHEZ: It doesn't preserve Medicare. It does away with it.
GRIMM: Absolutely not.
SANCHEZ: It's private health care plans. Health care plans don't want to insure those who have more problems.
GRIMM: It's actually -- it's actually simulated like Medicare Part D. Medicare Part D is the only program that actually came in 40 percent under budget and that's why it's being modeled after a program that actually works. We're not recreating a wheel here. Paul Ryan did something that is smart. He found something that worked and he emulated it. That's what we're doing here. To give seniors the exact choice that we have in Congress and every federal employee has. More choice is always better for any of the patients, whether they're seniors or not.
SANCHEZ: I will just remind those Medicare people who have Part D that when you get at a point in the year and you're paying your premium every month, the government at some point is not helping you pay. There's about a $5,000 cost that comes directly out of your pocket --
GRIMM: I have one question --
SANCHEZ: -- even though you are paying your premium. So if you think that's a good program --
HILL: I've got to end it there.
SANCHEZ: -- then believe this guy. He's wrong.
GRIMM: Well, here's one question though.
HILL: One last question, hold on. Is there any chance that you two were married in a former life? Because I'm telling you, this sounds like dinner conversation at our table at our house.
GRIMM: You know what I think is important --
SANCHEZ: This is my son.
GRIMM: -- we're at least having the debate. You know, generations before for decades, Congress wouldn't have this debate and that was a big part of the problem.
SANCHEZ: It's a good thing.
HILL: Yes, it is.
SANCHEZ: It's something that we're talking about it.
GRIMM: And that's -- that's a big step forward. HILL: Talk is always good.
SANCHEZ: and it's a good thing that we're listening to each other. We may not agree, but we're listening to each other.
GRIMM: That's true.
HILL: Representative Sanchez and Grimm, thank you very much for being with us.
GRIMM: Thank you.
SANCHEZ: Thank you.
HILL: Well, while they were debating, talking, Eliot's getting the popcorn. I'm buying the beer. We're going to hop in the bleachers and talk baseball but there is more than just a game at stake. We'll explain when we come back.
(COMMERCIAL BREAK)
SPITZER: Finally, yesterday was opening day for baseball. Stay with me here.
Flags were flying. Crowds were cheering. People were eating salted soybeans. Yes, I said salted soybeans.
It was opening day in Japan. After the earthquake, tsunami and nuclear disaster, the flags were at half-staff. The stadium had cracks in the walls. The scoreboard was dark and the night game became a day game to save electricity. Some spectators and players found themselves homeless. The Rakuten Eagles can't use their own ballpark. That's because it's in Sendai, one of the areas hardest hit by the disaster.
The Eagles opened their season in Chiba City against the defending champs. In the fourth inning, an aftershock hit. But after a time-out, the game went on and the Eagles beat the home team 6-4. It was just one game but for the 22,000 in the stands, the fans back in Sendai, and thousands more in shelters watching on TV, it was much more. It was normal. And normal may be the rarest thing in Japan these days.
We've seen how sports can inspire and heal. Ten days after 9/11, the New York Mets played their first home game after the terror attacks. It took courage to play that game, just to be in the stands. But when Mike Piazza hit the game winning home run, people all over the country stood and cheered.
A month later, the New York Yankees won in the World Series. President Bush wore a bullet-proof vest when he threw out the first pitch. But even die-hard Mets fans cheered the Yankees that day. Some of us remember the Yankees went on to lose the series, but no one will forget how baseball lifted a city and a nation's spirits.
E.D., here's hoping it still can. HILL: You know, after disasters, a lot of experts say that the best thing you can do to move past that is to do something that is very normal, very familiar. And in many countries from the time you're, you know, a little kid, sports is what is so normal and so it's wonderful to see that and hopefully it's healing.
SPITZER: You know, it is amazing because the same emotional response over in Japan that we had here, it is that return to normalcy, playing the games, the rituals, saying we can go forward one step at a time one foot in front of another.
All right. Thanks so much for joining us IN THE ARENA tonight. Good night from New York.
"PIERS MORGAN TONIGHT" starts right now.
