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Parker Spitzer
Deja Vu All Over Again; Economist's Warning; Is Obama Like Lincoln; The Mandate Debate; The Last Kennedy Leaves Congress
Aired December 17, 2010 - 20:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KATHLEEN PARKER, CNN HOST: Good evening. Welcome to the program. I'm Kathleen Parker.
ELIOT SPITZER, CNN HOST: And I'm Eliot Spitzer. Tonight, the candidate of change has become the president of the status quo. This may turn out to be a good week for President Obama politically but it's a bad week for the principles he ran on. First, he embraced the Bush economic policy of tax cuts as stimulus, he signed his tax compromise plan to law. Then, he issued a report in Afghanistan that leaves the door open for an unending overseas commitment. As Yogi Berra said, it's deja vu all over again, the third term of President George W. Bush.
PARKER: The cynical part of me says, well, he's just doing what's in his best interest. He's the president of self-preservation and he's tacking center so that he can be re-elected in 2012. But the optimist in me, the sort of patriotic optimist sees him as moving center because that's where the country is. And he is trying to be president of all Americans and not just his base. You know, Eliot, people want solutions. And Obama did manage to deliver. He broke an impasse.
SPITZER: I've been in executive positions. I know how tough it can be, but I also know that until you show some backbone, until you say I will fight for principle, as Bill Clinton did, before he would negotiate, nobody takes you seriously. You are being -- he is being circled like a lamb surrounded by wolves right now because he doesn't know how to play hardball.
PARKER: Let me just remind you of one reason Barack Obama was elected is because he spoke about unifying this country. We weren't the blue, we weren't the red, we weren't Democrat, we weren't Republican. We were Americans. And I'm hoping that when he steps up to the plate in January and gives his State of the Union address, that that's the message he will redeliver because I will agree with you --
SPITZER: That's actually not why he was elected.
PARKER: Yes it was.
SPITZER: No it wasn't. He was elected because he gave a beautiful gauzy speech at the Democratic Convention which let us know he's a brilliant orator and a wonderful person. The reason he was elected is because he stood up and said President Bush was wrong on Iraq, I was against it from the start. President Bush was wrong on his economic policy and he spoke forthrightly, as opposed to John McCain, who warbled meaningless nothing.
PARKER: That's why he was nominated by the Democrats but that's not why he was elected by moderates and Independents.
SPITZER: Independents agreed with him on the economics and on the international issues and what he has done now is failure to communicate with the American public over the last two years is cede that territory. Now he's embraced precisely what he ran against.
PARKER: You become so rational when he's losing. Even Democrats who say they don't like the tax cut deal like House Majority Leader Steny Hoyer, are now saying the bill will act like a second stimulus and help create jobs. With all this talk about taxes and job creation, where does the economy stand right now?
SPITZER: Joining us in the exchange tonight is one of the smartest economists in the world. And that's no overstatement. Jeffrey Sachs is the director of the Earth Institute at Columbia University and a special adviser to the United Nations Secretary-General Ban Ki-Moon. Jeff, thank you for being here.
JEFFREY SACHS, ECONOMIST: My pleasure.
SPITZER: Here's the question. We have an economy that is growing a tiny, tiny bit. There is virtually no job creation. Inequality is getting worse. Is this tax bill the right thing to do for the economy?
SACHS: We can't afford it, obviously. We have a huge budget deficit. We have to start getting that under control. And they punted. Basically both sides punted. The Republicans only want tax cuts. That's the only thing on their mind. Obama, the White House, they just want stimulus. And I thought we were past that actually. I thought that was what the last two years showed was do something for the long term but they went for the short term again.
PARKER: Of course Republicans see this bill as a stimulus bill. That's how they've characterized it, that the president actually got stimulus by extending the unemployment benefits.
SACHS: Well, certainly inside the White House that's what they are saying. Oh, look, we got the second stimulus which is what we wanted.
But actually, both sides are so short term in this, it's unbelievable. We're wracking up debt like there's no tomorrow. This is $800 billion extra on the backs of the American people. It's almost $3,000 for each of us in America. What are we doing? When we are going to start looking at the longer term? And so I find the whole thing really disappointing and very perplexing.
SPITZER: I'm with you. We're borrowing money from China to give it to the rich in a way that will not create jobs. What would you have done? What would you prescribe for the economy now not only to deal with the immediacy of the deficit issue, the long-term deficit as well of course, but also to transform the economy because we know every year we are less competitive, vis-a-vis our foreign competitors from China to India to Brazil. What should we be doing?
SACHS: The thing that really struck me in the last couple of weeks it was only mentioned a little bit was this international comparison of test scores, American kids and abroad on 15-year-olds in science, math and reading.
So in math, the United States came out 31st. Who came out number one? Shanghai, China. In reading, we came out something like 17th, if I remember correctly. Who came out number one? Shanghai, China. In science, we came out something like 20th. Who came out number one? Shanghai, China.
What are we doing? If we don't educate the population, if we don't help our kids get through high school and get through bachelor's degree, how are we going to compete in the 21st century? You think tax cuts for the super rich is really going to be the way when we're wracking up the debts to China? Our schools are turning out mediocre performance. Our kids can't afford the tuition for college. We need to take a serious look at our long-term competitiveness and that's what we've not been doing.
PARKER: Clearly, we need to allocate our resources in smarter ways. Recently the president's debt commission tried to find ways to cut spending. Where would you recommend they cut?
SACHS: Well first, I would get out of Afghanistan now and now they are signaling something completely different, which is maybe we'll do a little bit, but 2014, come on. The generals are just playing this along year by year by year. This is going to be the longest war in American history. It's bleeding us, literally. It's killing young American boys and young American women and it's doing nothing good for Afghanistan. It's costing $100 billion a year.
Our military budget is so bloated right now that Congress is voting things the generals are saying we don't even need because the lobbies are so powerful right now that we're spending $800 billion a year on our security sector. This is so overblown, it's also bankrupting us.
So we should be cutting strongly there, but we should be investing more in education, in energy that would get us off of our oil dependency and get us off of our fossil fuel dependency that we have right now. We should be rebuilding our infrastructure for competitiveness.
So we have to not just cut mindlessly, but the rich who have gotten awfully rich in the last 25 years and have seen their taxes cut, have to stand up and say, we're part of America, too. We take some responsibility. Now a number of very rich people said in the last couple of weeks, tax us more. Don't cut the taxes. If only they would be heard, if only what Bill Gates is saying, what Warren Buffett is saying and others, they are saying these tax cuts are ridiculous because we have been the beneficiaries of this kind of globalization over the last 25 years. We don't want our taxes cut anymore.
But there are enough greedy people who are saying there's never enough. So we -- they just keep taking. So we need the rich to be doing their part for America and they have to be helping our young people get through school and instead of being unemployed or being in Afghanistan, they need to be in college.
SPITZER: Of course, the tragedy is that the precise investments you are talking about would have to be funded with the revenue that we just gave away in the tax cuts that the president conceded to the Republican Party without a fight?
SACHS: The thing that really amazes me and disappoints me from the first day of the administration, I supported Barack Obama as a candidate and I want him to succeed as president. He never laid out a plan. From the first moment, it was improvisation. It was that stimulus bill. I was against it then. I'm against the second stimulus. You can't run this country on a month at a time. You have to have a plan. And they have never had a plan from the first moment it's been improvisation.
And both sides are in this conspiracy together because all they are looking at is when is the next election and which campaign contributors can they pull in because campaigns are so expensive right now, everyone is dialing for dollars. Everyone is trying to give tax breaks for their campaign contributors. And who is thinking about the United States, where it's going to be in 2015, where it's going to be in 2020?
PARKER: The areas that you suggest that we need to invest in, education, infrastructure, all these projects, this is the Obama agenda. But what happened to it? And how do you -- these are all long-term distant in the future returns. How do you convince the American people that they need to do these things because right now they are worried, about as you say, taxes. They are worried about the jobs they don't have. It's hard to get people to focus on 20, 30 years down the road. How do you do that?
SACHS: Set some goals. Where should we be in 2020? How are we going to get there? Because if it's just we need to make these changes but they never appear in any policies, they never appear in any budgets, they never appear in any plans, then we don't get it.
SPITZER: Jeffrey Sachs, thanks for being with us.
PARKER: Thank you.
SPITZER: Coming up, payback for the victims of the Bernie Madoff ponzi scheme from an unlikely source. That's next. Stay with us.
(BEGIN VIDEO CLIP)
PARKER: Everybody is complaining about this bill and yet he's getting a lot of things in exchange.
JAMES CARVILLE, CNN CONTRIBUTOR: Yeah, I -- he's getting -- everything he wants he's getting for a year. Everything they want they are getting for two years.
SPITZER: James -- CARVILLE: Somehow or another, that doesn't strike a lot of people as that good of a deal. I'm not surprised you think it's a good deal.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
SPITZER: Chaotic week on Capitol Hill resulted in a supposed win for the president. So why is Kathleen smiling? Joining us now, James Carville.
PARKER: Hi, James.
CARVILLE: How are you doing? Good to see you all.
SPITZER: Always great to have you here. Now I want to get this straight. Today the bill signing of this ugly behemoth they call a tax compromise and I call capitulation, Nancy Pelosi and Harry Reid refused to sign up. They're the Democratic leaders of course in Congress. Mitch McConnell, the Republican leader shows up. Big buddy now of the president. I don't get it. What's going on? Is the president now working closer with the Republicans? Is he completely ignoring the Democratic Party and our priorities?
CARVILLE: Well look, he has reality to deal with, and I don't know very many Democrats who are very enthusiastic about this. People continually point out that all the things that are going to really help the economy are going to expire a year from now. Democrats feel like they're going to be going into an election year and the Republicans, you know, intentionally, things like the estate tax go on for two years, which has absolutely nothing to do with jobs. And things that do have to do with stimulating the economy, don't. So there's not a great deal of Democratic enthusiasm. The president knows this but he also has to deal with political reality.
PARKER: Yes but what is -- when Nancy Pelosi doesn't show up and Harry Reid doesn't show up, isn't that acting a little bit bratty? Why aren't they supporting the president?
CARVILLE: Well, I think that they would say, and I -- support the president, we support the president on health care. We support the president on financial reform. We support the president on recovery act. We support the president at every juncture. We just didn't feel like that the deal that was negotiated while we brought it up and voted for it, was the best deal we could have gotten. And that's -- I don't know if that's being petulant but that's their view and one can -- one can disagree with it but understand it.
SPITZER: I think they did the right thing. I think what happened here now is the story begins to come out. The president did ignore the leadership, Democratic leadership in Congress, didn't bring them into the negotiation to assess how much strength he had because he could have negotiated a better bill. And the press -- his press Secretary Mr. Gibbs is out there saying nobody has outlined a better way to get a better deal. Of course people did. All he needed to do was sit down with Democrats and say we're going to play hardball and force the Republicans on Christmas Eve to see if they'll vote against extending unemployment benefits. They wouldn't have done it.
CARVILLE: Look, the general prevailing view is how do we know we couldn't get a better deal? We didn't try. We just came in. And as I said it seems like this thing was negotiated from Manila because of the folding going on, there was a lot of folding going on before we ever got that. That is a commonly held view that the White House has not beat back very hard.
SPITZER: Look, I know it's after the fact harping. I'm just frustrated that what he's given away is all the money he needs to fund the important things for the next couple of years.
CARVILLE: Look, I have sympathy for how you feel. But they would say, look, this is the best deal we could get under the circumstances. And to be fair to them, there some are people, Charles Krauthammer, to name a name, who think that President Obama snookered them. I don't agree with Charles on that, but --
PARKER: He said it was -- he was the great swindler. He also said that President Obama is the comeback kid and that he fashioned out of -- that he fashioned out of thin air his return to relevance. What do you make of that?
CARVILLE: Well, I mean, look. Again, he looks like he's going to get this deal. It could end up getting a START treaty and they're going to repeal "don't ask, don't tell." So just the way we all operate. We'll say, well, gee, Obama took a shellacking in the election but came back with some major legislative accomplishments.
PARKER: So all things considered, James, it's not so bad. That's what I don't see. Everybody is complaining about this bill and yet he's getting a lot of things in exchange.
CARVILLE: Yeah, he's getting -- everything he wants he's getting for a year. Everything they want, they are getting for two years. Somehow or other, that doesn't strike a lot of people as that good a deal. I'm not surprised you think it's a good deal.
SPITZER: James --
CARVILLE: If I were you, I'd think it's a good deal, too.
SPITZER: They are getting it for more than two years because there's not going to be the political will to raise those tax rates two years from now in an election year when the issue is framed. So they are getting, I think almost in perpetuity and the president is only getting the good stuff for a year and he didn't even need to give it. And so that's what really bothers me.
CARVILLE: What bothers me profoundly is we're doubling down on failure. These things didn't work before and they're not going to work again. What we should have done is try a new approach to the way -- to taxation. And that might have worked. We know that this didn't work. This didn't produce any income growth, it didn't do anything for the stock market. Sure it helped people in the top 1 percent. That's about it. And we got to -- I hope the president will be talking about doing a different way, some kind of tax reform. Let's let him see what he comes up with.
PARKER: James, I didn't mean to interrupt you. What do you think the president is going to do first of the year when he gives the State of the Union address? What do you think he's going to say or what do you think he should say?
CARVILLE: I think he's going to come in with a proposal or two. I think he's going to -- I think he's going to have to put something on the table. I think he's going to be very conciliatory, very everything. There's a lot going on. Last night, we were talking, and all of this is just -- this is just a preliminary. This is exhibition season.
The big game is -- what's going to happen is they're going to start authorizing these spending bills on a two-month basis. And the big battle for them is going to be when it's time to raise the debt limit. I think that's going to be in April is what I understand. I'm not precisely sure.
PARKER: Yeah it's April.
CARVILLE: So we're going to have -- this is all very, very preliminary skirmishing going on here. There's some sort of big battles here. And these Tea Party people have a ton of influence. And they showed it on the spending bill. I don't -- I can't see the Republican House passing spending bills for very long. And I don't see them actually voting on major cuts. But they are going to have to do something to deal with a really invigorated right wing of their party.
SPITZER: Look, the president said something today that was very interesting at the signing ceremony. He said, look. The hard game is still ahead of us when he was talking about the deficits that are going to be confronting us. He said that's where the real hard bargains are going to have to be struck. And of course some of us who think he hasn't negotiated awfully well are worried about what's going to happen especially because he just gave away all the money he would have needed to support the education reform and the infrastructure and sorts of things that you and I agree would actually lay the foundation for that economy. So he's digging his own hole deeper. At the very moment he's acknowledging the tough decisions are still ahead of us.
CARVILLE: The criticism, I think, that we would make is that we have blown almost $900 billion on pursuing failure. And if we -- and so people are going to say, gee, we can't do anything else. We just spent $900 billion. And the criticism, and you are hearing this a lot, is, you know, well, we are out of ammo. Interest rates can't go any lower. We're almost at negative interest rate territory. And we should be spending this money better. That's the argument. And it's an argument that, obviously, the Spitzer/Carville wing of the party is somewhat sympathetic to.
SPITZER: I'm honored to be your wing man, let me say that.
CARVILLE: I don't think it's a liberal thing. I think it's just kind of common sense. SPITZER: I'm with you.
CARVILLE: I don't think it's moderate, liberal, or conservative. There's got to be a better way.
SPITZER: I'm with you.
PARKER: James, I agree with you. We're delaying the pain that is going to surely come. We've got to have more revenue. We've got to cut spending. We've got to do all of those things and we have to do them as a united nation. And that's why I was sort of pushing you to see what you think Obama -- President Obama would say in his State of the Union, how he gets people to face the harsh reality of what we've got before us and how we're going to tackle it as a united country?
CARVILLE: Exactly right. And look. It's something like 17 percent of the GDP in taxes in 24 in spending. My numbers could be somewhat off but not by that much. The gap is going to have to close on both sides. So it's going to be interesting to see how he does and how the Republicans react to this. It's going to be some fascinating times coming up in American politics because you got a lot of invigorated people out there. You have some really tough choices on both sides. And let's see what happens.
PARKER: All right, James, hold that thought please. We've got to take a quick break. And we're back in a minute.
(COMMERCIAL BREAK)
SPITZER: We're back with James Carville. James, I've got a question. The bizarrest thing happened last night when Harry Reid, who was the Senate majority leader of the Democratic Party, of course, had the spending bill ready to pass the Senate, pulled it at the last minute. The Republican votes, they need to get it through, disappeared. And then as we now know, we got a two-month continuing resolution that is going to just carry over government finance for the next couple of months. So having controlled the tax side, now are the Republicans also moving in to control the spending side?
CARVILLE: Elections have consequence. And the people in power, in the Republican Party, these guys are scared to death to be primaried. And you saw that. The deal fell apart. I think it already lost nine Republican votes. And you are looking at -- I think you are going to see another two-month extension and every time this comes up there's going to be a big fight. There's going to be a big fight on the debt limit. You know, if people think that there's a lot of fighting going on in Washington, wait until 2011. It's going to be continual.
PARKER: James, it's obvious that you're upset with the president. A lot of Democrats are. They're not quite coming out and saying it. What do you really feel about President Obama right now?
CARVILLE: Well, you know, I -- he's my president. He's the leader of my party. I certainly think it would be dumb for anybody to primary him. Unlike Governor Spitzer and other people, I'm not particularly elated by this deal. Not because of anything else other than I don't think that it's the most effective way to combat the worst economic recession we've had since the '30s.
PARKER: James, just to fast forward six months, a mere six months, the first Republican primary debate will be held. I know, it's horrible to think about. And they are going to be about 40 people in the stage. Is there anything in that great big, you know, herd of people that you think could present a real serious challenge to the president?
CARVILLE: This is going to be just a fascinating primary. I wish we could break it off and have like two or three debates. We can't. There's going to be so many. As it goes on, the field will pare itself down. I think the 2012 Republican nominating process is going to be one of the great political events in modern political history. There's too many people and it's just going to be too much fun. By the way, if Palin doesn't run, I'm going to be nauseated.
PARKER: That would be a great disappointment?
SPITZER: It is going to be fun to watch. Talk about symbolism for a minute. In the presidential race in '08, one of the most important moments was when Senator Kennedy embraced and endorsed Barack Obama, almost passed the baton and said you are now the face and vision of liberalism, progressive politics. Here we are about two years later on this very day, the only remaining Kennedy in Washington is packing his bags to go home, leaving Washington at the same moment the President Obama who had been the -- ordained as the next voice of progressive politics is there with Mitch McConnell. Who could have predicted that? Is that bizarre?
CARVILLE: You know, people can't, you know, people can't predict a lot of things. I'll go ahead and predict there will be more Kennedys coming to Washington in the future. This is kind of, you know, interlude in the Kennedys being involved in Democratic politics.
PARKER: All right James Carville, thanks so much for being here.
CARVILLE: Always a pleasure, thank you. Thank you, Kathleen. Thank you, governor.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Lincoln was not an abolitionist. He never claimed to be one but had a deep moral hatred of slavery and he made that very clear. And I think another perhaps difference between him and President Obama is, you know, what everyone thinks about the specific policies, and you can debate, I don't think Obama has made clear sort of where he draws the line. What is his moral bottom line that he will not compromise on?
(END VIDEO CLIP)
(COMMERCIAL BREAK)
SPITZER: Time for the culture of politics. We just heard James Carville complain about President Obama's current failings. But what was the historical perspective? When Obama was elected, many were quick to liken him to Abraham Lincoln. Both were eloquent intellectuals who became president during national turmoil, without much political experience.
PARKER: So halfway into Obama's term, does the comparison still hold up? We know the best person to answer that question is Eric Foner, the author of "The Fiery Trial: Abraham Lincoln and American Slavery." He stopped by our studios earlier for a conversation.
(BEGIN VIDEOTAPE)
SPITZER: Many folks don't remember that President Lincoln also had a bad mid-term election.
ERIC FONER, AUTHOR, "THE FIERY TRIAL": Absolutely.
SPITZER: How did he react to it, compared to how President Obama...
FONER: In 1862, the Republicans suffered serious setbacks. They didn't lose a house...
SPITZER: The 1862 elections are not foremost in most people's mind.
FONER: No, but it was very important to Lincoln.
PARKER: Was it a shellacking?
FONER: It was a shellacking for the Republicans. They lost the key governorships, like New York. They lost the legislature in Indiana. They lost many seats in the House of Representatives. And Lincoln did not change his view. Many people said that's because you had said you're going to emancipate the slaves. He had preliminarily issued an emancipation proclamation, and some people said, Well, you better withdraw on that, Lincoln, because, obviously, people have reacted against that. There were all these fears. You know, you free the slaves, they're going to come up north and take the jobs of white people, et cetera. Lincoln did not retreat from his basic views because of losing the 1862 elections, and that's another interesting lesson.
SPITZER: One of the fascinating things about your book is it tells the story that not many people -- certainly, I did not appreciate that President Lincoln was not the leader, for most of either his tenure or certainly during the abolitionist movement, of the anti-slavery argument. He was sort of brought along almost hesitantly, and yet, of course, we remember him for the Emancipation Proclamation as the great emancipator.
FONER: Lincoln was not an abolitionist. He never claimed to be one. But he had a deep moral hatred of slavery, and he made that very clear. And I think another perhaps difference between him and President Obama is -- you know, whatever one thinks about the specific policies -- and those are -- you know, you can debate -- I don't think Obama has made clear sort of where he draws the line. What is his moral bottom line that he will not compromise on?
All politicians have to compromise. There's nothing unusual about that. But Lincoln in the secession crisis, even at the cost of perhaps war, made it very clear, I'm not compromising on the westward expansion of slavery. Even to preserve the union, I am not doing that. And you know, he's a pragmatic politician, Lincoln, but he also makes it clear what he will and will not compromise on. And I don't know that President Obama has quite done that.
PARKER: In the South, where I've lived a good part of my life, there's still a debate. There are still those who say the Civil War was about states' rights. It was not about slavery. So can you just give us the final word on this?
FONER: I think most historians today would say, as Lincoln did in his second inaugural, slavery was somehow the cause of the war. We've been debating that "somehow" for a 150 years. But take away slavery, it's impossible to imagine the Civil War taking place. States' rights -- that's an issue all the way through American history up to the present day, obviously, on the health care issue and others. But...
PARKER: Well, it was about the Southern economy.
FONER: But slavery was the basis of the Southern economy.
PARKER: Of course. Of course. But they can claim states' rights because it was going to be a threat to their economy, and they were invaded.
FONER: Well, you know, when Southern states seceded -- and 150 years ago next week, South Carolina seceded -- they made it very clear. They said, We are seceding because we don't trust an anti-slavery president. We don't think we're safe under the leadership of an anti- slavery -- they didn't talk about states' rights. They didn't talk about the tariff. They said slavery is endangered.
PARKER: But even Lincoln wasn't convinced that slaves deserved to have full rights.
FONER: Much of his life, he didn't. He shared many of the prejudices which were very common, North and South, in that society. But I think the key to Lincoln -- and you know, Obama is only in the second year of office. After two years, Lincoln was not the great emancipator, either. And he grew enormously in office, and you know, Obama perhaps will do that also. But at the end of his life, he understood that black people are part of American society and they're going to have to enjoy the rights of free citizens. Earlier on, he didn't. And I think it's that process of growth that's critical.
PARKER: It took a good bit longer for people to think that way about women, interestingly.
FONER: Took 50 years longer for women to get the right to vote, as you well know.
SPITZER: Well, there are at least two of these trends, maybe conflicting, maybe not. But it is that evolution of Lincoln that you describe in the book, but also, he pointed out that he drew rigid lines and said, Here is the line in the sand. And President Obama -- maybe he's evolved and we don't know. But he has not drawn, as you point out, any of those rigid lines that permit us to understand him better and consequently permit people to support him. Does that have to change for him to come back?
FONER: Well, I would like to see a change. You know, I'm not saying he should become a total ideologue and refuse to compromise on anything. You're not going to get very far in that. But I think he does need to communicate better what his absolute priorities are that he's not willing to compromise on. And Lincoln did that all the way through the Civil War, even though his views changed. And you know, he was not for emancipation at the beginning of the war, as you well know. But then by 1864, when people said to him, Look, you may lose the election if you don't pull back the Emancipation Proclamation, he said, Absolutely not. I cannot do that. We've made this promise. I'm not compromising on that.
PARKER: The Tea Party.
FONER: Right.
PARKER: The Tea Party today invokes our Founding Fathers and says if only -- they want to be constitutionalists. If only people understood what the Founding fathers wanted, then we would live a different way. What would the Founding Fathers think about the Tea Party?
FONER: I think they'd be very surprised to hear, A, that they were infallible or that they were divinely inspired, as some people say. I think they understood that they were sort of creating an experiment. They did not think the Constitution should be the same forever. That's why they allow it to be amended. And they differed among themselves on fundamental issues, slavery being one of them. So to say this is the original meaning of the Founding Fathers really is historically, you know, kind of very simplistic because the Founding Fathers held enormously varied views on many, many important issues.
PARKER: Let me just be clear here because I think you're maybe bordering on heresy. Are you saying that Glenn Beck is not the final word on the Founding Fathers?
FONER: You know, he's a very effective TV personality, which is a good occupation, but I wouldn't put him in front of a history class. Let's put it that way.
(LAUGHTER)
PARKER: Eric Foner, thank you so much for joining us.
(END VIDEOTAPE)
(BEGIN VIDEO CLIP)
PREET BHARARA, FEDERAL PROSECUTOR: Under the terms of the settlement agreement, Barbara Picower (ph) has agreed to forfeit to the United States a little over $7.2 billion, a figure that represents every last dollar of the Picowers' profit from Madoff's epic fraud.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
SPITZER: Tonight, our person of interest is Bernie Madoff. You remember him, the perpetrator of the biggest Ponzi scheme in history. Federal prosecutors and the trustee of the Madoff bankruptcy reached a record settlement today. Madoff bilked at least $20 billion from investors, some with famous names like Steven Spielberg, other less famous people who simply trusted him with their money.
Today the federal prosecutor, Preet Bharara, and Irving Picard, the bankruptcy trustee, announced a settlement with the estate with one of Madoff's biggest investors. The widow of the late Jeffrey (ph) Picower agreed to the largest forfeiture payment in American history. Take a listen.
(BEGIN VIDEO CLIP)
PREET BHARARA, FEDERAL PROSECUTOR: Under the terms of the settlement agreement, Barbara Picower has agreed to forfeit to the United States a little over $7.2 billion, a figure that represents every last dollar of the Picowers' profit from Madoff's epic fraud.
IRVING H. PICARD, BANKRUPTCY TRUSTEE: As of today, we have jointly recovered, as Mr. Bharara said, approximately 50 percent of the currently estimated cost (ph) of the losses.
(END VIDEO CLIP)
PARKER: Seven billion dollars, and it's still not all of the money. If you're wondering what Jeffrey Picower did with his profits, take a look at his Palm Beach mansion. Jeffrey Picower died of heart failure back in 2009 while swimming in his pool. He made billions from his investments in Madoff's scheme, but there was no clear evidence that he was involved. Still, today's deal recouped half of that money.
There are other tragic circumstances, of course, surrounding Madoff. Madoff's son committed suicide just last week. Friends said the shame of his father's crime and suspicion that lingered about the family drove Mark Madoff to take his life on the second anniversary of his father's arrest.
SPITZER: You know what, Kathleen? Fifty percent of the money is a beginning, but the families that were destroyed, the charities that were destroyed, the trust that was destroyed -- and this, of course, merely emblematic of what went on when the market crashed, when, back in 2007, 2008, everything began to fall apart. Lives were destroyed. Real human tragedies there.
PARKER: No question about it, Eliot. And you know, even if you get some of your money back, you never are able to completely recover the sense of betrayal -- the trust, really, because it's a betrayal on such a -- you know, not only is it money, but you have put your faith in somebody. And then you feel like you've been not only...
SPITZER: There's nothing left. PARKER: Yes. There's nothing left.
SPITZER: You know, it was no surprise Warren Buffett, who is this brilliant guy when it comes to human nature, as well as finance -- he was talking about Ponzi schemes -- and the way a Ponzi scheme works, of course -- you invest with me, and because I'm pretending to give you a big return, even though it may be a game, I need to give you money back from stealing it from other people.
PARKER: Of course.
SPITZER: So you need an endless supply. What he said, Warren Buffett said, when the tide goes out, you see who's swimming naked. Ponzi schemes fall apart when the market drops. That's exactly what happened here.
PARKER: All right, when we come back, the health care bill may have passed, but the battle has just begun. We'll go to "The Arena" to follow the winding road that leads to the Supreme Court. Stay tuned.
(BEGIN VIDEOTAPE)
ILYA SHAPIRO, CATO INSTITUTE: Studies show that diet and exercise are more closely correlated to health care outcomes and taxpayer health care spending than the ownership of health insurance policy. So if anything, there's greater constitutional warrant to require people to join gyms and buy broccoli than to buy health insurance policies.
(END VIDEOTAPE)
(COMMERCIAL BREAK)
SPITZER: This week, a federal judge struck down a key part of President Obama's health care reform law which says individuals must have health insurance. It could be from the government, from your employer, or you can pay for it yourself, but you've got to have it. The court says the government can't force individuals to buy health insurance. It comes down to the commerce clause, which gives Congress power to regulate anything that affects interstate commerce.
PARKER: Here to discuss much -- how much the law allows Congress to do are two career court watchers. Dahlia Lithwick writes on legal affairs for Slate and is a columnist for "Newsweek." And Ilya Shapiro is a senior fellow at the Cato Institute, and has filed two briefs on their behalf in Virginia's lawsuit challenging health care reform. Welcome to you both.
SPITZER: Ilya, what's your view? You agree with the judge? You say (INAUDIBLE)
ILYA SHAPIRO, CATO INSTITUTE: I do because our Constitution gives the federal government a certain list of finite, enumerated powers. And if the government doesn't act pursuant to the Constitution, then it is without authority to act at all. And here, if the decision not to buy health insurance is something the government can regulate, then there are no principled limits on what the federal government can do. DAHLIA LITHWICK, "NEWSWEEK" COLUMNIST: And Ilya's point is really important. That's the cornerstone of Judge Hudson's ruling is this slippery slope argument that there's no limiting principle here. If we say that we can force people to buy health insurance, can we also say we can force them to buy cars to prop up the ailing auto industry? And so this is the question that I think the Obama administration is going to have to find an answer to going forward, is What is the limiting principle?
I would just say that for commerce clause purposes, for looking at the commerce clause, it's certainly the argument here is this is novel. It's not like any other congressional effort to regulate interstate commerce because you're forcing someone, so they say, to purchase something. And that's different from anything...
(CROSSTALK)
PARKER: To a layman like me, the non-lawyer at the table, that makes sense to me. Let me back up to Eliot's argument, as well. We're forced to buy auto insurance. So -- and that makes sense to me, too. You have to buy auto insurance. So what's the difference?
SHAPIRO: Driving is a choice. That's uncontroversial in the law. You only have to buy insurance if you choose to drive on public roads, which is very different from having to buy insurance by dint of being alive.
SPITZER: Well, I would actually disagree fundamentally with that latter distinction. We'll get to the state-federal distinction in a minute. We are all part of the health care system. And the notion that we can opt out of the health care system I think is a little bit of a canard. The moment we're born, we are participating in the market for health care. We are given inoculations. We're required to have certain inoculations. And therefore, the question of how we pay for those inoculations that we benefit from and we participate in is very much a failure point in an obligation we all assume. And therefore, I think we are part of a market, just as we are part of every other market that Congress has regulated through the commerce clause.
And I think, Dahlia, you would agree. If this is different conceptually in some ways, it is very much like the other areas where the Congress has regulated from every commodity, every equity, the capital markets, the environment, food quality. Congress in the New Deal era -- and granted, it may change, but since the New Deal, Congress has extend that regulatory apparatus to all of these areas, and there's a very solid foundation of commerce clause jurisprudence to support that.
LITHWICK: I think the point -- I think the important point is this is a dramatically different lawsuit. If you had asked me in March, when it was filed, I would have said -- and court watchers, I think, would have pretty much agreed -- 8-to-1 chance that this thing gets upheld by the Supreme Court because the commerce clause has been used to regulate everything.
SPITZER: But the...
SHAPIRO: But it's never been used to require people to engage in economic activity, not even during the New Deal. There was a big case about regulating farmers growing their wheat and delivering it to -- meeting their quota. But nobody had to buy wheat. Nobody had to become a farmer. This is different.
PARKER: Can you just give me a real life example of what you fear? I mean, what's a scenario that's feasible?
SHAPIRO: Studies show that diet and exercise are more closely correlated to health care outcomes and taxpayer health care spending than the ownership of a health insurance policy. So if anything, there's great constitutional warrant to require people to join gyms and buy broccoli than to buy a health insurance policy.
SPITZER: Actually, I think Harry Reid is proposing that tomorrow.
(LAUGHTER)
SPITZER: It was actually in the...
SHAPIRO: In the omnibus?
SPITZER: It's in the omnibus bill that is...
LITHWICK: The most amazing part of this conversation is the vegetable-centric analogy because Ken Cuccinelli, who brought this on behalf of the commonwealth of Virginia, the attorney general, made the point about asparagus just the other day. If the government can force you to purchase health insurance, they can force you to purchase asparagus.
SPITZER: I thought he said broccoli. I'm not sure that it matters, but...
(CROSSTALK)
LITHWICK: Well, broccoli is less likable...
(CROSSTALK)
SHAPIRO: You can see the different vegetable producers lobbying to get their vegetable to be the approved one.
SPITZER: But can we raise this to a different level? Not too abstract, but really, what is at stake here is a pivot point in how powerful the federal government's going to be. And ultimately, the Supreme Court's going to resolve this. You know, these lower court opinions are interesting. They don't matter until the Supremes get their arms around this. And really, the Supreme Court is going to point us in a new direction or not.
And this is where the sort of much more conservative Constitution, by which I mean the members on the Court right now, will have their opportunity to say the past 50 years is being rewritten. And that's why this is so important, I think.
LITHWICK: And I would just add it's early days. I think it's a mistake for anybody to take this to the bank in any way, shape or form. This is going to play out for a long time.
SPITZER: There's going to be a lot of screaming and shouting and confusion until it gets to the Supreme Court. There will almost necessarily be conflicting circuit court opinions. And that's why the nine Justices and that's why the Justices always say the magic number in this world is five. You need five Justices to determine what the Constitution means. And whether or not it points to expansive power or not is going to really determine our future on this. And it's going to be mayhem until then.
LITHWICK: And it's so important to see that we're talking about in the last 60 years two, three cases at the Supreme Court that have interpreted this. In other words, this has been a march of history, a march of -- you know, this is how we regulate Civil Rights. This show we regulate environmental control. This has been an uncontroversial -- almost uncontroversial proposition for decades.
The Supreme Court had something called the federalism revolution (ph) that seemed never to have quite taken off as a resolution (ph). But I think that there were a handful of cases where the Supreme Court said, You know what? Maybe Congress has overstepped in a handful of areas. But to say -- to dramatically strike down a piece of national legislation on this principle really is a radical, radical return to...
(CROSSTALK)
PARKER: I asked him to give me a real-life scenario. Give me one where if this thing is reversed and the mandate is eliminated and Congress is denied this control, what happens? Give me a real-life example of what could happen?
SPITZER: Well, environmental protection regulations. They would say Congress perhaps doesn't have the capacity to tell individual auto drivers how many miles per gallon their car has to get. They could say, you know, We don't believe that power exists anymore.
SHAPIRO: There's a difference between regulating the auto industry and requiring fuel efficiency and seatbelts and telling you you need to buy a Chevy because of our plan to bail out the auto industry. As Dahlia said earlier, it doesn't work unless there's the individual car mandate.
PARKER: Dahlia Lithwick and Ilya Shapiro, thank you very much for being with us.
LITHWICK: Thank you.
(END VIDEOTAPE)
SPITZER: Coming up next, the end of an ear in Washington. We'll tell you why Capitol Hill soon will be missing one bold-face name for the very first time in a long, long time.
(COMMERCIAL BREAK)
(NEWSBREAK)
SPITZER: Time for "P.S.," our postscript. Today marked the end of an era as Rhode Island congressman Patrick Kennedy, Teddy's youngest son, packed his bags, the last Kennedy still in office in Washington, D.C.
PARKER: It seems unimaginable. Since 1947, when John F. Kennedy became a congressman at age 29, there has always been a Kennedy serving on Capitol Hill.
SPITZER: It's not just their political dynasty that seems to be ending but also what they stood for. Remember when Teddy and the rest of the clan so memorably endorsed Obama as the inheritor to their legacy? Take a look.
(BEGIN VIDEO CLIP)
SEN. EDWARD KENNEDY (D), MASSACHUSETTS: But he also has an uncommon capacity to appeal to the better angels of our nature. I'm proud to stand with him here today and offer my help, offer my voice, offer my energy, my commitment to make Barack Obama the next president of the United States!
CAROLINE KENNEDY, DAUGHTER OF PRESIDENT KENNEDY: I have never had someone inspire me the way people tell me my father inspired them. But I do now, Barack Obama!
(END VIDEO CLIP)
PARKER: Even though the Kennedy dynasty started with money, lots of money, they were rich people with a conscience, and they cared about public service, as well as helping those less privileged.
(BEGIN VIDEO CLIP)
JOHN F. KENNEDY, PRESIDENT OF THE UNITED STATES: Ask not what your country can do for you, ask what you can do for your country.
SEN. ROBERT F. KENNEDY (D), NEW YORK: What we need in the United States is not division. What we need in the United States is not hatred. What we need in the United States is not violence and lawlessness, but is love and wisdom and compassion toward one another, healing of justice toward those who still suffer within our country, whether they be white or whether they be black.
SEN. EDWARD KENNEDY: For all those whose cares have been our concern, the work goes on, the cause endures, the hope still lives and the dream shall never die.
(END VIDEO CLIP)
SPITZER: All of those just unbelievable political moments. It's sadly fitting then that Patrick packed his bags on a day when the president, President Obama that is, sat next to Mitch McConnell, the Republican leader in the Senate, and capitulated to the wealthy on tax cuts.
PARKER: As Norm Ornstein points out in today's "New York Times," to go from the Kennedys to the Pauls -- that's a pretty big difference.
SPITZER: Indeed, it is. Thanks so much for being with us tonight. Please join us again on Monday.
PARKER: Good night from New York. Larry King starts right now.
