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Interview With Leon Panetta

Aired September 05, 2003 - 15:10   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


JUDY WOODRUFF, CNN ANCHOR: We're going to try to bring you now that interview we've told you about a minute ago with Leon Panetta, who has been asked by California Governor Gray Davis to help him come up with a plan to balance the state budget.
Yesterday, I talked with Leon Panetta and started by asking him if he now honestly believes that Davis can beat this recall.

(BEGIN VIDEOTAPE)

LEON PANETTA, FORMER CLINTON CHIEF OF STAFF: I think, as each day goes by and people take a hard look at the issue of whether or not they really want to have a recall election every year in this state, that people are sobering up a little bit. And I think that, certainly, he's got a good chance at making this a close race, which is not what people thought a few weeks ago. So I think it is tightening up. I think there's a better chance that the recall can be beaten.

WOODRUFF: Well, it sounds like you're still not saying he's going to make it, though.

PANETTA: Well, look, in this election, it is something that changes from day to day. It's very volatile. We only have five weeks left to the election.

It's day to day in terms of the stories and what can happen and the emotions that are very high here in the state with regards to the whole recall election. So it is very volatile. But what I sense happening right now is, it's beginning to settle down a little more than I thought before in terms of the appeal to both the Democratic and Republican base. And if it follows those lines, then I think Gray Davis has a much better chance of beating the recall.

WOODRUFF: Leon Panetta, the governor has asked you to head up a bipartisan group to look at straightening out California's terrible fiscal situation. Why didn't he do this before now?

PANETTA: Well, he discussed it earlier in the year. But I think he got caught up, obviously, in the budget fight itself, in trying to see what could be done about what was then a $35 billion, $38 billion deficit.

I think that the fact is that there has been very little kind of a bipartisan approach to trying to deal with some of the fundamental financial issues that confront this state. There are structural reform issues that have to be addressed. It's not just the deficit. It goes to how this state operates on all of its finances that have to be looked at. And I think that, very frankly, better late than never to do this kind of effort.

WOODRUFF: As you know, there are Republicans and even some Democrats out there who are saying, look, what Gray Davis really is going to end up doing, if he stays in office, is, in some way, raising taxes. Is that inevitably going to have to be a part of a solution, whether it's property taxes or some other sort of taxes? How else does California dig itself out of this?

PANETTA: Well, Judy, as you know, I dealt with the federal deficit, which was about $300 billion when I was looking at it. Now, unfortunately, it's a little higher than that.

And the reality is that, when you're dealing with those size deficits, everything's got to be on the table. You cannot take the approach that one area or another is going to be excluded. I mean, both parties tend to lock in. One says no cuts in spending. The other says no tax increases. But the reality is that, if you're serious about confronting those size deficits, as we've seen other states have to do, you're going to have to consider everything on the table, and you're going to have to make some very tough choices.

And, unfortunately, there's been too much partisan gridlock in Sacramento, as there has in Washington, in terms of confronting that reality.

WOODRUFF: But you know very well that Republicans, whether it's Tom McClintock or others, are saying they can do this without raising taxes.

PANETTA: You know, I know the Republicans have their ideology on taxes. And I know that there are Democrats that have their ideology on areas for spending cuts.

But if both sides are serious about confronting this, they're going to have to roll up their sleeves, sit at the same table and make some judgments and have to give a little bit. The reality is, there isn't a package I've ever seen that effectively deals with any deficit that doesn't include both some revenue increases as well as cuts in spending. That's the reality. They've either got to face it or they're going to continue to face recall efforts in the future for their failure to exercise leadership.

WOODRUFF: Spoken like a true former federal budget director.

Leon Panetta, just quickly, former President Clinton is going to be out in California, we're told, the middle of the month. He's going to be doing a little campaigning for Governor Davis. Should President Clinton come out and say yes -- or, rather, no on the recall and leave it at that and have Gray Davis stay in office?

PANETTA: Well, I'm sure that the president of the United States has some very strong views with regards to the recall effort. And I'm sure that he's opposed to it. And I think he'll be asked about that. And I'm sure he'll say that he opposes it. I don't expect that he's going to engage in a lot of active campaigning, nor do I think he should. But I really do think that his view is important, particularly to the Democrats, who are going to be very important to Gray Davis in terms of turning out and opposing this recall election.

(END VIDEOTAPE)

WOODRUFF: Leon Panetta talking to me yesterday.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com








Aired September 5, 2003 - 15:10   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JUDY WOODRUFF, CNN ANCHOR: We're going to try to bring you now that interview we've told you about a minute ago with Leon Panetta, who has been asked by California Governor Gray Davis to help him come up with a plan to balance the state budget.
Yesterday, I talked with Leon Panetta and started by asking him if he now honestly believes that Davis can beat this recall.

(BEGIN VIDEOTAPE)

LEON PANETTA, FORMER CLINTON CHIEF OF STAFF: I think, as each day goes by and people take a hard look at the issue of whether or not they really want to have a recall election every year in this state, that people are sobering up a little bit. And I think that, certainly, he's got a good chance at making this a close race, which is not what people thought a few weeks ago. So I think it is tightening up. I think there's a better chance that the recall can be beaten.

WOODRUFF: Well, it sounds like you're still not saying he's going to make it, though.

PANETTA: Well, look, in this election, it is something that changes from day to day. It's very volatile. We only have five weeks left to the election.

It's day to day in terms of the stories and what can happen and the emotions that are very high here in the state with regards to the whole recall election. So it is very volatile. But what I sense happening right now is, it's beginning to settle down a little more than I thought before in terms of the appeal to both the Democratic and Republican base. And if it follows those lines, then I think Gray Davis has a much better chance of beating the recall.

WOODRUFF: Leon Panetta, the governor has asked you to head up a bipartisan group to look at straightening out California's terrible fiscal situation. Why didn't he do this before now?

PANETTA: Well, he discussed it earlier in the year. But I think he got caught up, obviously, in the budget fight itself, in trying to see what could be done about what was then a $35 billion, $38 billion deficit.

I think that the fact is that there has been very little kind of a bipartisan approach to trying to deal with some of the fundamental financial issues that confront this state. There are structural reform issues that have to be addressed. It's not just the deficit. It goes to how this state operates on all of its finances that have to be looked at. And I think that, very frankly, better late than never to do this kind of effort.

WOODRUFF: As you know, there are Republicans and even some Democrats out there who are saying, look, what Gray Davis really is going to end up doing, if he stays in office, is, in some way, raising taxes. Is that inevitably going to have to be a part of a solution, whether it's property taxes or some other sort of taxes? How else does California dig itself out of this?

PANETTA: Well, Judy, as you know, I dealt with the federal deficit, which was about $300 billion when I was looking at it. Now, unfortunately, it's a little higher than that.

And the reality is that, when you're dealing with those size deficits, everything's got to be on the table. You cannot take the approach that one area or another is going to be excluded. I mean, both parties tend to lock in. One says no cuts in spending. The other says no tax increases. But the reality is that, if you're serious about confronting those size deficits, as we've seen other states have to do, you're going to have to consider everything on the table, and you're going to have to make some very tough choices.

And, unfortunately, there's been too much partisan gridlock in Sacramento, as there has in Washington, in terms of confronting that reality.

WOODRUFF: But you know very well that Republicans, whether it's Tom McClintock or others, are saying they can do this without raising taxes.

PANETTA: You know, I know the Republicans have their ideology on taxes. And I know that there are Democrats that have their ideology on areas for spending cuts.

But if both sides are serious about confronting this, they're going to have to roll up their sleeves, sit at the same table and make some judgments and have to give a little bit. The reality is, there isn't a package I've ever seen that effectively deals with any deficit that doesn't include both some revenue increases as well as cuts in spending. That's the reality. They've either got to face it or they're going to continue to face recall efforts in the future for their failure to exercise leadership.

WOODRUFF: Spoken like a true former federal budget director.

Leon Panetta, just quickly, former President Clinton is going to be out in California, we're told, the middle of the month. He's going to be doing a little campaigning for Governor Davis. Should President Clinton come out and say yes -- or, rather, no on the recall and leave it at that and have Gray Davis stay in office?

PANETTA: Well, I'm sure that the president of the United States has some very strong views with regards to the recall effort. And I'm sure that he's opposed to it. And I think he'll be asked about that. And I'm sure he'll say that he opposes it. I don't expect that he's going to engage in a lot of active campaigning, nor do I think he should. But I really do think that his view is important, particularly to the Democrats, who are going to be very important to Gray Davis in terms of turning out and opposing this recall election.

(END VIDEOTAPE)

WOODRUFF: Leon Panetta talking to me yesterday.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com