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In the Arena
Barack Obama vs. Paul Ryan
Aired April 15, 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, IN THE ARENA: Good evening. I'm Eliot Spitzer. Welcome to the program.
Tonight, it's clear. The heavyweight battle for the next six months will not be Donald Trump versus Mitt Romney or Newt Gingrich versus Sarah Palin. It's the matchup of these two Titans, Barack Obama versus Paul Ryan.
And tonight, we see the battle lines have been drawn. Democrats say we'll make cuts to entitlements, but you got to raise taxes. Republicans say, OK, let's cut entitlement, but no way I'm raising taxes.
On the Hill today, political theater, that, by the way, we Americans are all paying for. The House passed Paul Ryan's plan to cut the deficit by $4.4 trillion over the next decade. Of course, this is an empty exercise. The Democratic controlled Senate won't let it go any further. But it does accomplish one thing. Paul Ryan stays front and center and that's to the point. Even Barack Obama has Paul Ryan on the brain. Listen to the president speaking to a friendly audience of Democratic donors with no press around. He didn't know he was being recorded.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: When Paul Ryan says his priority is to make sure we're, you know -- he's just being America's accountant, and you know, trying to, you know, be responsible. I mean, this is the same guy who voted for two wars that were unpaid for, voted for the Bush tax cuts that were unpaid for, voted for the prescription drug bill that cost as much as my health care bill, but wasn't paid for.
(END VIDEO CLIP)
SPITZER: These two guys just don't like each other. Listen to Paul Ryan talking about the president's budget speech.
(BEGIN VIDEO CLIP)
REP. PAUL RYAN, (R-WS) CHRM., HOUSE BUDGET CMTE: We need leadership. We don't need a doubling down on the failed politics of the past. This is very sad and very unfortunate. Rather than building bridges, he's poisoning wells. By failing seriously to confront the most predictable economic crisis in our nation's history, the president's policies are committing us and our children to a diminished future.
(END VIDEO CLIP)
SPITZER: So we have lines drawn in the sand here and the chasm between these guys couldn't be any wider.
Joining me now to talk about this is Gloria Borger, the best source reporter in Washington, and the always incisive CNN Senior Political Analyst David Gergen, he joins me from Cambridge.
Thank you both.
Gloria, let me start with you. Am I right this is now becoming Barack Obama versus Paul Ryan and there's simply no chemistry between these two guys?
GLORIA BORGER, CNN SR. POLITICAL ANALYST: No, you know, Paul Ryan, it's been very easy for the president, has become the poster child now for the 2012 campaign.
I think you have Paul Ryan's plan on the table which does change fundamentally Medicare, itself. Turns it into a voucher program, doesn't raise taxes on the wealthy. You have the president with a diametrically opposed proposal.
But the president did put a proposal on the table this week. So he's got something to battle Paul Ryan with. And I think this week we saw the beginning of a 2012 campaign. It's now going full bore, Eliot.
SPITZER: You know, David, this is, Gloria's right, it's going to be a titanic battle. Each one benefits from having the other as a foil. They're fundamentally different proposals. Is it possible to compromise when issues that are almost theological to each side are on the table like this? No taxes versus taxes? Medicare being fundamentally altered versus not being fundamentally altered? How do you compromise on that?
DAVID GERGEN, CNN POLITICAL CONTRIBUTOR: I don't see how you do in the short term, Eliot. It may be that the bond market is going to ultimately force some resolution of this. Right now they're slugging it out.
I must say, Paul Ryan, it's so unusual that a young congressman goes head to head, slugs it out with the president of the United States. But that's what's happening right now. And I think Paul Ryan has given a very good account of himself in television. He's very good at argument. And he has put forward a bold and courageous plan. But from Barack Obama's point of view, Paul Ryan has given him a gift, and that is he has put forward a plan that's extremely vulnerable to Obama's arguments.
SPITZER: That's exactly right.
And Gloria, tell me in terms of the politics of this, each one -- these are two fighters each of whom thinks he can win the battle with the other side.
BORGER: Sure.
SPITZER: Each will keep pounding away. This is a theological argument for them. They'll keep pounding away at it and saying to themselves, I'm winning this. And so, again, no reason to compromise. Things are going to get worse and worse and more and more rigid.
BORGER: Right. I think they're going to be a lot more skeptical of each other with the question of raising the debt ceiling. I agree with David. You're not going to get serious fundamental reform, I don't think until after 2012. What's interesting to me as a political reporter, Paul Ryan is a new generation of Republican. And he's the face of this new Republican plan for saving the economy and for getting the deficit down.
What's going to be interesting to me is watching the presidential candidates react to Paul Ryan, the Republican presidential candidates. You know, they didn't -- they didn't get to vote in the House on Paul Ryan's plan. But they do get to talk about it in the presidential campaign. It will be interesting to see how some of them run away from Paul Ryan, and how some embrace Paul Ryan. Because they know this is a very, very good issue for Democrats but the deficit is also important to their voters and to independent voters.
SPITZER: You're so right. It's interesting because a lot of the members of Congress, the House Republicans, seem to kind of resent the presidential candidates and House Republicans, for good reason, want to say, look, we're fighting this battle, keep us in the limelight. You stay in the sidelines, don't try to steal our thunder.
Let me see if I can propose a possible way to compromise this at least on the taxes. Both sides have said, we can close a lot of tax loopholes and lower marginal rates as a consequence. What if they were to kind of say, look, let's close a whole raft of tax loopholes, the devil is in the details. Say they did that and split the difference and said 50 percent of that would be used to pay off the debt, and 50 percent would be to avoid other cuts you needed. So it's not quite revenue neutral. They can both claim, because marginal rates are coming down, the Republicans say we have a tax cut. And the Democrats can say we closed loopholes and used some of it to avoid some of the cuts, and we've accomplished our objective as well. Is that a possible compromise?
GERGEN: Eliot, I think something like that combined with possibly reform of Social Security is something they could do in the next few weeks. And get it done before the debt ceiling expires. They have to have some creative way to do it.
What Gloria and I are both saying is, the more fundamental reform of something like health care or the bigger question of whether you raise taxes on the basic tax rates, I think they're going to be slugging it out. And right through this. And, you know, frankly, both sides start with strengths and both start with weakness.
Paul Ryan has got a plan that is going to be increasingly controversial, as people look at it. And the Republicans have done something really significant today. And that is, it's no longer just Paul Ryan's plan. The House Republicans have voted for this. This is now the official position of the House Republicans. I don't see how presidential candidate for Republican Party can walk away from the Tea Partiers and others in that space.
On the other hand, just one brief little point. Barack Obama's starts with weakness, he is surprisingly low in the approval ratings. Today Gallup, as him out, three-day running average, 41 percent approval, lowest in six months. And ties the lowest of his presidency.
BORGER: But, Eliot, I think your proposal, which is essentially tax reform, is something that the deficit commission has talked about. It's clearly a way out of this. I think, you know, the problem in that solution is the American public doesn't want to lose its home mortgage deductions, or its charitable deductions. And you know, so maybe there's a way to skew that toward the wealthy, and the wealthy would lose their deductions since they itemize. You know, there might be a solution there. But right now there's such bad blood they just have to get past the debt ceiling.
SPITZER: I think you're both exactly right. The political lines are rigid. The conceptual framework that I just outlined is there, but only if you have some chemistry between the parties and each brings a willingness to compromise.
David, to your point, Social Security is off the table on both sides. Neither the president nor Paul Ryan really wants to delve into that. No surprise, seniors vote. Seniors are the biggest bloc of voters that everybody is worried about. And I think it just shows you how much the 2012 election is weighing on the balance of every proposal that is out there right now.
GERGEN: That's true. Both plans are silent on Social Security, in truth. And Paul Ryan has said publicly this is one thing I think we could get done this year, the Social Security reform.
The deficit commission has really put forward a way to do that. The gang of six is likely to endorse that. It is something you could get done in the short term. You don't have to have a Titanic election battle over Social Security. You do when it comes to something as huge as Medicare and the kind of big, big changes that are being called for by Ryan, versus the president's plan which has a lot of taxes.
BORGER: You know, in talking to Republicans, though, it's kind of interesting. They're betting that the demographic terrain is so different right now that younger voters will be more open to actually looking at the kind of fundamental change that Ryan is proposing. And so they're saying, you know what, yeah, we're worried about seniors and they're going into this eyes wide open. But they're also saying, you know, some of those younger voters understand there has to be a different way to deal with Medicare, at least that's their bet.
SPITZER: You know, Gloria, I understand intellectually why they're saying that. Every time you talk about the young vote being outcome determined it never happens.
BORGER: They never go.
SPITZER: Even with President Obama people thought there would be a huge surge in young voters. It really wasn't there nearly as big as people thought.
David, I want to switch the topics on you for a second. We had yesterday what was a fundamental, earth shattering report from Senator Levin, about Wall Street, about Goldman Sachs, in particular, that once again sort of took it on the chin. Is this issue going to come back, or has this been laid to rest? I read that report. It just sent shivers down my spine in terms of the lack of confidence the public should have in what's still being done on Wall Street.
GERGEN: Well, I have to be a little careful here. I'm talking to a star of inside job.
SPITZER: Not hardly.
GERGEN: Well, you came out very well in it.
SPITZER: Thanks.
GERGEN: Look, I think at this point, Eliot, that the public is so concerned about so many other things, like gas prices and jobs, foreign policy, you know, these budget deficits. I tend to think this is as a political manner is not going to cut very deeply in election terms. But at Goldman Sachs, in the financial community, they're upset about a report like this. They just disagree with it. It hit them hard. What's also hard about this about this report coming out of the Senate, it's a bipartisan support.
SPITZER: You know, David, that exactly is right. Fascinating thing. This was a bipartisan support. Senator Coburn signed on to it. This was not just-it can't be dismissed as one liberal Democrats saying this about Wall Street. This was the Senate speaking in a bipartisan way. Kind of a surprising and powerful document.
All right. Gloria Borger, David Gergen, thanks so very much. Appreciate, as always, your being with us.
Coming up, a guy who voted for the Ryan budget today and would have voted for it twice if he could. Needless to say, I have a few questions for him. Don't go away. We'll be right back.
(COMMERCIAL BREAK)
SPITZER: Earlier I mentioned that meaningless vote on the Paul Ryan budget. The House voted to pass it. But, of course, that's the end of that. The Democratic controlled Senate will have none of it. The president, along with every Democratic senator who can talk, all of them have panned Paul Ryan's opus. Just one more example of how impossibly divided the two sides are. One of the congressmen who strongly supports the Ryan bill is Jack Kingston of Georgia. I spoke with him a short time ago. (BEGIN VIDEOTAPE)
SPITZER: Congressman, thanks so much for joining us.
REP. JACK KINGSTON, (R) GEORGIA: Thank you, Eliot.
SPITZER: Look, I listened to the president's speech the other day. I want to see if we can get a point of agreement between the two of us. The fundamental divide between Congressman Ryan's proposal, which I gather you support, and the president's proposal, which I gather you oppose, is the president is saying, look, that richest 1 percent can afford to pay a little bit more in taxes. Congressman Ryan, on the other hand, balances the budget by putting two-thirds of the burdens on the poor. So I'm asking, just as a matter of simple fairness, simple fairness, doesn't what the president suggesting make sense to you?
KINGSTON: The reality is that 75 percent of small businesses filed their income taxes as individuals, and so it's skewed to make them look like millionaires. That is their gross income, but their net income might be $70,000 or $80,000. They're hardly in there with the Barbara Streisands, and the big time George Soros, and the Democrats that are out there supporting President Obama.
SPITZER: Whoa, whoa, whoa, just to clarify, I don't think the president was suggesting different marginal rates for Democrats and Republicans. I mean, I know that isn't what you were suggesting. I just want to make our viewers clear on that point.
KINGSTON: Well, you never know in this town. I agree with you.
SPITZER: These days it could come out of Washington.
Look, we're talking about people whose net income is $250,000. Pick a different threshold, $500,000. You would agree somebody who is making that much money could afford to pay a little bit more to help out in this case, right?
KINGSTON: I can -- I do want to point out, though, on income taxes, people who make $410,000 a year or more actually pay 40 percent of the income taxes right now. The idea that the rich are somehow skating, that's not reflected in the income tax code.
But one of the things I want to point out is if he puts his proposal on the table, I think it does deserve a vote up or down. But right now he really has not done that.
SPITZER: Look, nobody's suggesting people are skating even though General Electric-- you'd agree that when GE, the company, had $14 billion in profits it didn't pay any taxes. Something's wrong with that. You'd agree with that?
KINGSTON: I'd agree with that. And also the fact he just hired, Mr. Immelt, one of the chief officers of GE to work for him. Maybe there's a coziness there that we need to talk about, but if he wants to worry about GE's taxes he has the right hand man of GE, is now his right hand man. So, he ought to put it on the table.
SPITZER: Look, you and I agree that Jeff Immelt coming in there to run the jobs creation is problematic, but let's not spend time in that. You know, because you're a smart guy, you were in the insurance business, you know that job creation during the Clinton years, when the tax rates were higher, we had 20 million jobs created. During the Bush era, after he had lowered those tax rates, we had virtually no job creation. So, you know the causal link that you and your colleagues are relying on simply doesn't hold up under any sort of scrutiny.
KINGSTON: The Bush tax cuts created about 5 million jobs. Now we had a meltdown-
SPITZER: Where did they-Hey, Congressman, I hate to interrupt. Where, in China?
KINGSTON: No, they created them in the United States of America.
SPITZER: Where?
KINGSTON: A lot were tied into real estate in our area. In Georgia we had a tremendous economic boom, in other states as well.
SPITZER: And it is an article of faith, it is a theology with Congressman Ryan and many of your colleagues. And you know, they agree, they feel this way, I disagree with them fundamentally. They feel that higher tax rate is going to inhibit job growth and the historical record simply isn't there. As you just said, the dot.com bubble had some real problems buried in it obviously. But it shows that that higher marginal rate, of 39 percent, which is what many of us are saying we should go back to, did absolutely nothing to inhibit risk taking, investment of capital, new endeavors. We had an enormous explosion of capital investment during that period. And so if we went back to that, we can certainly help close this budget gap. I'm with you. Let's deal with entitlements. But at least, out of fairness, make taxes on the wealthiest Americans part of that equation.
KINGSTON: Well, Eliot, there are lessons for Republicans to be learned during the Clinton years, because you are right on that. However, I would say there are lessons to be learned by Democrats because of the Kennedy and the Reagan tax cuts. Both of those created enormous prosperity and new job creation. I think we have models we could say, what can we learn from both of these? How can we avoid the mistakes both of them had?
SPITZER: Look, I don't want to be outsourced more than anybody else. But here is the thing, very few companies, I don't know about CNN's tax problems. Very few companies actually pay that marginal rate. You and I understand that. But I'm with you. If we can find a way to lower that marginal rate by closing loopholes, that's the thing to do.
Let me switch gears a little bit. Yesterday Senator Levin came out with a scathing report about what happened on Wall Street. It's devastating. If you read it, it just confirms your worst fears about the games that were being played by the investment banks, the failed regulators, the whole-across the board. You have been vocally opposed -- I'm pretty sure I'm right about this -- against imposing some--what I viewed as-common sense but tough regulations on Wall Street. Why?
KINGSTON: Well, keep in mind the president supported the TARP when he was a member of the Senate. I oppose it as a member of the House, even though it was a proposal by Hank Paulson and the Bush administration. I felt like we were bailing out Wall Street at the expense of American taxpayers.
And you know, you can argue if TARP was a success or not. And I agree with that. I will say this. That you do agree that internationally as American companies have to compete against Asian and European countries, having the same rules and regulation is important to us, otherwise they transplant overseas, which is something the Democrats and Republicans don't want.
SPITZER: Look, there's no question we need to maintain a competitive advantage or at least maintain an equilibrium in terms or our international competition. But the one thing that we can't let happen is to let these banks, which are global in nature, to use the boogie man of international regulation that is weaker to drive down our capacity to ensure simple integrity in the capital markets. The American taxpayer has been fleeced, you and I agree on this, by Wall Street games. They're going to go back to those same games unless we demand of them simple integrity, simple transparency, no leverage. They're heading back in that direction. If it's not derivatives it's going to be ETFs, it is going to be something else. The only way to prevent that is to impose on them simple obligations of honesty. That's what we have to do.
KINGSTON: The only difference between you and me, Eliot, I want everybody to jump in the pool at the same time. That's my big concern. Also have some definitions. But as a guy who is a pro- market capitalist, I just believe that the big businesses and Wall Street is big enough and the pockets are deep enough, they can play both sides, both parties, any time they want to. And I think what we need to have in Wall Street, and internationally, is more competition. Often the government has to step back to let the market work and where that balance is, that is very difficult to define. But I do think that sometimes we are rewarding bad behavior with these bailouts.
SPITZER: Look, I agree. We can't reward bad behavior. I'm also a pro-market capitalist, but I just want the other guy to jump in the pool first. That's the only difference.
(LAUGHTER)
KINGSTON: Well, I agree you there. But right not it looks like we're going to jump in first.
SPITZER: Congressman, it has been a pleasure chatting with you. Thanks for joining us.
KINGSTON: OK, Eliot, thanks a lot.
SPITZER: My pleasure.
SPITZER: Up next, they laughed when he said gas would hit $5 a gallon. Now it's not so funny. John Hofmeister knows the oil business inside out. I'll ask him if prices will go even higher and what he would do about it, when we come back.
(COMMERCIAL BREAK)
(WEATHER REPORT)
SPITZER: Gas prices are skyrocketing past $4 a gallon in many places. Way back in December before Egypt, before Libya, my next guest predicted we'd all soon be paying 5 bucks a gallon. Folks were skeptical. Not anymore. What can be done? Former Shell Oil president John Hofmeister joins us again from Washington, D.C.
Welcome.
JOHN HOFMEISTER, FMR. PRESIDENT, SHELL OIL: Good evening.
SPITZER: John, yesterday President Obama acknowledged gas prices have become an ongoing problem and that nobody wants to address it. Take a listen to this.
(BEGIN VIDEO CLIP)
OBAMA: Every time gas prices spike like this, and the last time it happened is when I was running for president, is politicians get up, we have to do something about gas prices. When they two back down, we do nothing. This time has to be different.
(END VIDEO CLIP)
SPITZER: You know, John, he's right. There is this amazing attention to the issue as long as gas prices are above 4 bucks a gallon. If it hits $5 as you predict, it's going to be there. How do we change this? Give us the energy plan you would prescribe for President Obama. Lay it out, each part of it.
HOFMEISTER: In the first instance you have to think of energy in the short term which is zero to 10 years. Then medium term 10 to 25, then long term 25 plus. You can't cram an energy plan in a Congress in a two-year cycle and expect it to take root. Because the next two- year cycle there could be a different Congress. That's not good enough. In the first instance, over a see zero to 10 years, you build on what we know.
SPITZER: OK, what does that mean? Tell me exactly what that means.
HOFMEISTER: We should go back to the 10 million barrels a day we used to produce. We're down to 7 million. We're on our way to 6 million because of the anti-drilling mindset in the country.
SPITZER: Tell me what needs to be done to get from 6.5 million, or wherever we are right now, to 10 million. Who needs to act? And what needs to be done in the next 30 days to make that happen?
HOFMEISTER: Congress needs to see themselves as enablers of future energy, not disablers. And it can set requirements on land, water and air pollution, so we can have both more energy and cleaner energy at the same time.
SPITZER: Excuse me, because in terms of the drilling, John, I just want to be clear. If I were an executive, I'd say, look, what are the 10 things I have to do, who do I call, what do I get done? Does Congress need to specify we want this production and say to the Interior Department or Energy Department, issue these licenses, where is the impediment right now?
HOFMEISTER: The impediment is with Congress' unwillingness to open up offshore oil production and federal land oil production as well.
SPITZER: So, number one, is you want increased production offshore and onshore and that can be done by congressional enactment. That's one piece of the short term. What's piece two of the short term?
HOFMEISTER: Number two, we have got to look at alternative fuels that could have material effect quickly. Methanol is such a fuel. You can make a liquid fuel called methanol out of natural gas. We could ramp that up. We've had capacity in the past. We've dismantled that capacity. We could add that to the biofuels mix. We need an open fuel standard. We need engines that can adapt to the multiple kinds of fuels.
SPITZER: John, how long would that take? In terms of millions of barrels a day that would be the equivalent of?
HOFMEISTER: I think if we look over a three to five year period, that's another -- 1 million to 2 million barrels a day. So we are up to 4 million, 5 million barrels a day in three to five years. In addition to that, we are making progress on higher miles per gallon vehicles. That's good. But what we also need to do is address the electrical system. This is not just about transportation.
SPITZER: OK, let me stop you. You transitioned now from production to efficiency. But we're still within the one to 10 year time frame that you are talking about?
HOFMEISTER: That is correct.
SPITZER: OK.
HOFMEISTER: We have a dying, aging electrical infrastructure that has to be addressed as well.
SPITZER: Does that improve efficiency in terms of the transmission system and therefore we need to produce a little less?
HOFMEISTER: Yes, it does. And along with that are all kinds of domestic and commercial changes that can be made so that consumers use less electricity along the way.
SPITZER: I hate to interrupt, but you're talking now cars, obviously miles per gallon. Everybody understands that. Are you talking air conditioners?
HOFMEISTER: Talking all the appliances that we use, all of the ways in which we transmit electricity. That is a huge energy sink. We really need to modify how we transmit electricity from AC to DC. That will take time. That's not in the short term. That's more now let's move to the medium term.
SPITZER: Wait, let me stop. I don't want to leave this one yet, because I want folks to understand because I don't feel we get every little piece of this. Is that something that would be paid for by the utilities that own this transmission system or would it be paid for as a federal project? How would that be paid for?
HOFMEISTER: Everything that I'm talking about is without any taxpayer subsidy. All private investment which ultimately pays a return on investment because the efficiencies that are obtained and the return on investment is very attractive to private investments.
SPITZER: OK. So in terms of the efficiency zones that you're talking about, eight miles per gallon, everybody understands that. Congress has to let the president do what he wants to do on that one. Terms of air conditioners and other sorts of home appliances, that can be done through standards promulgated by the federal government and then consumers pay for it or not but there's a payback. Three, the transmission system, you're saying it pays for itself for the utilities or the companies that own the transmission system that may be separate from the utilities right now.
HOFMEISTER: That's correct.
SPITZER: OK. So that's also part of the short-term program we're talking about.
HOFMEISTER: That's all in the zero to 10 year.
SPITZER: OK.
HOFMEISTER: In the 10 to 25 year period, that's medium term.
SPITZER: Right.
HOFMEISTER: Now we get serious about completely rebuilding the electric generating systems of this country. The old coal plants transformed to new clean coal plants. The nuclear plants are phased out and replaced with new nuclear which is smaller, safer, more powerful and could be commoditized because we need many more of them instead of the custom designs.
SPITZER: OK. Now, let me stop you --
If you had said new, clean, small, safe nuclear two weeks ago, you would have an audience around the nation that would have said, yes, we buy into that. This has not been a good month for nuclear. Do you still believe having seen what we've seen over in Japan that those adjectives apply to the nuclear power you're talking about?
HOFMEISTER: Absolutely. And the reason is we have to communicate the facts, the facts of the Japanese disaster, 40-year-old plant, 50-year-old construction technology, 50, 60-year-old nuclear technology. My goodness, we don't use anything 50 or 60 years old anymore.
SPITZER: You hurt me. I'm 51.
HOFMEISTER: Sorry about that. But with new technology, new construction techniques, new safety regimes, new electronic systems, we've got a whole different ballgame out there for nuclear in the future.
SPITZER: OK. But let me ask you this, just to stay on nuclear for a minute. Because I've been a fan, I'd buy into what you're saying with a little more hesitancy now than a month ago for sure. But we still have a lot of nuclear plants in this nation that are 20, 30 years old. You're saying we decommission those over the next 10, 20 years and build in their place these new nukes that you're talking about?
HOFMEISTER: Every nuclear plant in the nation today reaches its 40-year end of permit except for the plants that have had a 20-year extension. I'm suggesting, let's get rid of all of them, let's replace them and the efficiency of new nuclear essentially reduces the cost to the consumer overtime. Yes, there's an upfront capital cost but it will pay back over time.
SPITZER: OK.
HOFMEISTER: As with clean coal.
SPITZER: Look, I don't want to start talking about a balance sheet and putting numbers up on the screen here. But everything I hear from people who are in that field tells me that -- they tell me nukes are incredibly expensive. They can't make it without federal loan guarantees and pretty significant federal subsidies.
HOFMEISTER: I think you have to make some legal reforms in there to deal with the liability issue. Is the liability on the utility or is the liability on the government? And I think if you deal with some of those issues, if you commoditize the design and the manufacturing of the parts, you can take all kinds of costs out of the system.
SPITZER: OK, look, we only have 30 seconds left. I want to touch on two sources you haven't much. Solar, what's the prospect for solar? You just don't see it plays big in the next 10 or 15 years?
HOFMEISTER: Not in the next 10 or 15. But in the 25 to 50-year period, absolutely. Now we start getting serious about wind and solar and tidal sources of electricity.
SPITZER: OK. Very quickly, natural gas. You haven't mentioned natural gas which is what everybody is looking at these days with all those shale deposits.
HOFMEISTER: Well, it laces throughout. It is the bridge fuel. That's why it's not a function. It's not all by itself. It aids and abets the supply, the reliability of the supply as we transition all these other sources.
SPITZER: OK, John. Here's what we're going to do. That's the agenda. I thank you for laying it out. It's specific. It gives the sense that things can be done. I want you to come back sometime in the next couple days. We're going to discuss the political opposition to what you just laid out and why it isn't happening.
HOFMEISTER: I'll be glad to.
SPITZER: All right, John. Thanks so much.
Coming up, Moammar Gadhafi's new tactic against the opposition, fire wildly banned cluster bombs indiscriminately into residential areas. That story when we come back.
(COMMERCIAL BREAK)
SPITZER: Take a look at this weapon. And now look at the damage it caused.
This is evidence that Moammar Gadhafi is using cluster bombs in the crowded city of Misrata. The cluster bomb is a vicious weapon, a big bomb that shoots multiple smaller bombs. It is simply designed to kill as many people as possible, which is exactly why the weapon is banned by most countries. And after weeks of a brutal siege of Misrata by Gadhafi forces, this is what the city looks like now.
CNN's Fred Pleitgen has been following developments all over Libya. He joins me now from Tripoli.
Welcome, Fred.
FRED PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: Hi, Eliot. And, of course, the thing about the cluster bombs was a main topic here in Libya as well. Of course, the thing that Human Rights Watch alleges that apparently Gadhafi used these weapons inside Misrata firing them apparently from 120 millimeter mortars and then this, of course, rained down in central Tripoli.
Now one of the things that these things do, as you said, is they kill as many people as possible in a very widespread area. But the other danger is that some of these smaller bombs that get ejected out of these mortars, they don't explode immediately. They lay on the ground there. And then when children especially start playing with them, that's when they explode. And that's why they're so very dangerous.
And I can tell you I was in Misrata about a week and a half ago and we did see the Gadhafi forces using some very heavy weapons in that town. We didn't specifically see cluster bombs, but it is a town that has absolutely been smashed by a lot of heavy weapons, Eliot. SPITZER: You know, Fred, this sounds like that horrific issue of landmines that have been placed all over the world in other conflicts that just sit there unexploded and cause devastating damage to kids and families when they actually are triggered. In Cambodia, there was a problem with that. Does the Gadhafi regime acknowledge that it has been using cluster bombs?
PLEITGEN: By no means. And in fact, I was just talking to the spokesperson for the Gadhafi regime just a couple of minutes ago and I put the question to him whether or not this was in fact true? And he said absolutely not. He said that his forces are taking great care not to harm any civilians, which, of course, the use of heavy weapons seem to indicate otherwise from the get go. But he certainly said that there were no clusters bombs or cluster munitions being used by the Gadhafi forces in Misrata. He says the world is watching Misrata right now and he says that Gadhafi would never use munitions like these against his own people, Eliot.
SPITZER: You know, he is right about one thing. The world is, in fact, watching Misrata. And what I gather we're seeing is human casualties in the hospitals that would suggest there really is rather extensive, significant casualties on the civilian side and that would sort of belie what they are claiming. What is from your sense, you're there in Tripoli, you've been to Misrata, you've traveled all over, what is your sense of the state of the military confrontation? Are we coming into a stalemate at this point?
PLEITGEN: Well, absolutely. I mean, it certainly looks like there's a stalemate looming at this point in time. And if you look to the eastern front, places like Ajdabiya, you don't really see very much movement there. I mean, you saw the rebels saying that they were trying to advance on Brega. They said they took Brega. We don't have confirmation of that yet. But certainly, the going is very slow there as well. And, of course, we also know that without NATO air strikes, they wouldn't be making any advances at all. And even with the NATO air strikes, Gadhafi's forces for a very long time were advancing on the rebel position.
In Misrata, the situation is somewhat different because the rebels obviously can't pull back from there because it's a city under siege right on the sea. And that really is one of the reasons why it's so tragic. This city is being shelled by very heavy weapons. They said the port area which is the lifeline of that city is being shelled as well. The commercial port as well as the steel port, which is an important industrial area as well, you have foreign workers that are still stranded there and the humanitarian situation is absolutely devastating. The latest that we've gotten from the rebels, themselves, is basically 15 people were killed in Misrata today and, of course, several dozen wounded as well. That really is the focal point right now and one where even the U.N. says there could be an absolute humanitarian disaster going on there, Eliot.
SPITZER: You know, it really does seem as though civilian casualty counts are mounting every day. And NATO today came out with a very powerful statement. It's really from the three presidents -- President Obama, President Sarkozy and then Prime Minister Cameron who said basically NATO is going to stay at this until Gadhafi's gone, no matter what. It was a rather dramatic and ironclad statement of purpose. Has there been any response to that from the Gadhafi regime?
PLEITGEN: Yes, there has. And it came last night by Gadhafi's daughter. There was a big rally in the Gadhafi compound with a big celebration. They have that every night, but it was especially big last night. And then Gadhafi's daughter, Aisha (ph), she came on the stage and she held a speech and in that speech she said it was absolutely absurd for anyone to believe that Moammar Gadhafi would step aside any time soon. She said that simply was not in the cards. And that's actually something that on background we've also been hearing from other members that are very close to the government here in Libya. They're telling us at this point in time they don't feel very much threatened by the rebels. They don't feel very much threatened by NATO. They feel like they still have a lot of reserves also in their military.
One of the interesting things they told me is that, of course, Libya also has military reserves like any other country. They haven't called those up yet. So it looks like stalemate really is the right word in all of this because there's very little movement on the front in Misrata, even as that city is pounded. The armies aren't making or the forces there aren't making very much movement in either direction. Very little movement also on the eastern front. So it seems like all of this is just going to keep going on in a very, very bloody manner and causing a lot of carnage obviously, Eliot.
SPITZER: All right. Fred, thanks for that analysis. It certainly is not encouraging. As you say, stalemate is not what anybody hoped for when this began several weeks ago. Thanks so much for joining us.
Next up, we all know about the nuclear crisis in Japan. But a situation at our own nuclear power plants could turn out to be just as big a problem. We have the second in our two-part series. You won't want to miss it.
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SPITZER: One in 70,000 tons of spent nuclear fuel are currently being kept at locations scattered around the country. This despite federal government promises more than three decades ago that it would be moved to a single safer place. Last night, CNN's Drew Griffin told us about the taxes Americans have been paying for this broken promise and explained what dangers remain in storing nuclear fuel on site at plants. Tonight, he's with us again for the why part of the equation -- Drew.
DREW GRIFFIN, CNN SPECIAL INVESTIGATIONS UNIT CORRESPONDENT: Eliot, this was and is all about politics. Politics at the very highest levels. But now, Japan's nuclear nightmare could be making some big-time campaign promises look very shaky.
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GRIFFIN (voice-over): Even political allies of President Obama are now saying out loud, U.S. policy on those thousands of tons of spent nuclear fuel now stored across the nation has to change.
SEN. DIANNE FEINSTEIN (D), CALIFORNIA: We need to reconfirm these facilities are designed to endure the threats we can foresee and prepare to respond to scenarios we never imagined.
GRIFFIN: And Republicans are winding up as well.
SEN. LAMAR ALEXANDER (R), TENNESSEE: It's important to ask, what about Yucca Mountain? We do need to eventually dispose of it. We have collected $30 billion to pay for an eventual disposal. Why don't we do it?
JAY SILBERG, PILLSBURY LAW: Rather than let the science take its course, the politics has interfered and the plug has been pulled on Yucca Mountain at least so far.
GRIFFIN: Washington attorney Jay Silberg represents many of the nation's utility companies who use nuclear power and he's talking about a political deal. Abandon plans to store the nation's commercial nuclear waste in Nevada's Yucca Mountain in favor of leaving it where it is, the ultimate not-in-my-backyard deal.
SILBERG: Government's part of the bargain was that they were going to take our spent fuel starting in 1998. That part of the bargain they have not kept.
GRIFFIN: Not kept because Senate Majority Leader Harry Reid was locked in a tight re-election battle and blocking Yucca Mountain was a key campaign promise. He enlisted President Obama to help ensure it would never happen. How? Senator Reid convinced the president to appoint Gregory Yaczko, Reid's chief of staff, to the one job with total oversight over the entire project, chairman of the Nuclear Regulatory Commission.
SILBERG: I think it ultimately is politics. If it were science, we would have let the decision makers, the Nuclear Regulatory Commission staff, the licensing board members, the commissioners and the courts make a determination based on science. That process was not allowed to go forward.
GRIFFIN: In the spring of 2009, I asked Senator Reid about Yucca Mountain and all that nuclear waste being stored around the country.
SEN. HARRY REID (D), MAJORITY LEADER: Leave it on site where it is. You don't have to worry about transporting it. It saves the country billions and billions of dollars.
GRIFFIN: Senator Reid's office tells CNN he still holds to that opinion. As far as Gregory Yaczko, we wanted to ask him about Yucca Mountain as well. But after testifying before a Senate Committee, the NRC chairman wasn't in any mood to talk.
UNIDENTIFIED MALE: Chairman, about Yucca Mountain?
UNIDENTIFIED MALE: Thank you. GRIFFIN: An NRC spokesman tells CNN the chairman had another appointment and couldn't stay to talk but says spent fuel is safe right where it is, scattered across the U.S. in 65 different locations, 11 of them on active earthquake vaults.
(END VIDEOTAPE)
GRIFFIN: And as for all that money that's been collected, Eliot, by the government to pay for the storage of the fuel that they're not storing, it is actually being used to pay down the federal debt. So there's a little more incentive not to use that money.
SPITZER: You know, Drew, first of all, an amazing report. And it makes you realize after what's gone on in Japan at the Fukushima plant where one of the real crises has been the spent fuel pools and the fact that they overheated, lost their water. Sixty-five of them around the United States, as you point out 11 on faults, seismic faults, something has got to be done. Aren't those communities getting together now and saying OK, we understand Nevada's politics, but, hey, we don't want this sitting in our backyard either.
GRIFFIN: And that is the big problem for Harry Reid right now, because he's got those two Democratic senators in California with plants on the ocean, on faults that are saying, hey, we have got to find a solution.
SPITZER: Now, did the president put together this commission to come up with alternative ideas? Where are they?
GRIFFIN: Well, the alternative ideas is just that. He's thinking big picture, not alternative sites. This Blue Ribbon Commission is to come up with a better idea of how we get rid of, reprocess, recycle, forward thinking.
SPITZER: Right.
GRIFFIN: But as you know, Eliot, forward thinking is decades down the line.
SPITZER: And expensive. Look, nuclear power has taken a big hit recently. Everybody loved it for a while, was going to solve the energy crisis. But now in terms of cost, the risk of a meltdown, the tragedies, and then disposal, disposal which is what we're talking about here, sounds to me like we've gone to NIMBI, not in my backyard to not in anybody's backyard and this may just be an impossible problem to overcome.
GRIFFIN: It's going to take a very strong political backbone to do what is right. We have this waste. There's nothing we can do about it. We've got to put it somewhere.
SPITZER: Let me ask you this very quickly on the science. Is Yucca Mountain safe according to most scientists? Would it work if there was not a political impediment to this?
GRIFFIN: That's what the studies were all about for decades. They came up with this site. They came up with the engineering and they say it is safe. It is absolutely safe given all the science we have. It's just socially unacceptable.
SPITZER: It's going to be fascinating to see what happens when in course, you know, of necessity. Harry Reid is not the majority leader 10, 12 years from now. Do the politics change anyway?
Drew Griffin, thank you so much for that fascinating report. We'll be right back.
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SPITZER: And finally, it's April 15th, tax day, a date engrained in the American mind just like the Fourth of July. Only this year, taxpayers get a slight reprieve. The deadline was extended until midnight on Monday the 18th.
When you file this year, you'll be answering to a 72,000-page U.S. tax code that is so thick and complex it could sink a battleship. Not to mention a country struggling to come out of an economic meltdown. Take a look at it right there.
But it wasn't supposed to be this way. When the 16th amendment was ratified in 1913, it gave Congress the power to establish for only the second time in our history a federal income tax. The first time was back in Abe Lincoln's day to pay for the civil war. And when the war ended, so did the tax. So how did that 1913 income tax look?
Well, for starters, you weren't even taxed until you made over $67,000 in today's money at a rate of only one percent. It stayed that way until you made today's equivalent of $375,000, when the rate doubled to two percent. It maxed out at seven percent if you made 11 million in today's dollars. That's what we call a progressive tax. You pay more when you make more. The trouble is, our tax code has so many loopholes that some of the richest people and corporations, like General Electric, can make billions in profits, but pay nothing, zero, nada.
And then there's Warren Buffett, one of the richest guys in the world who says he pays a lower tax rate than his receptionist. That sounds fair. And one more thing. That original 1040 tax form, it was only four pages long. Think about that when you're signing that check to the government this weekend.
Thanks so much for watching. Good night from New York. Send in your taxes.
"PIERS MORGAN TONIGHT" starts right now.
