‘This Week’ Transcript — 11/14/10

AMANPOUR (voice-over):  Welcome to our viewers here and around theworld.  I'm Christiane Amanpour.  And at the top of the news this week,the Gang of 20.  At the big summit in Seoul, U.S. economic policies comeunder fire from China and Germany.  Are America's woes putting itsglobal leadership in question?

OBAMA:  A whole host of other countries are doing very well.Naturally, they are going to be more assertive.

AMANPOUR:  Former Secretary of State Madeleine Albright andRepublican Senator Lindsey Graham debate America's role in the world.

Then, American austerity.

BOWLES:  The path we're on today is not sustainable.  We are headedfor disaster.

AMANPOUR:  Two members of the president's deficit commission,Democratic Senator Kent Conrad and Honeywell International Chairman andCEO David Cote share some sobering views on tough economic choices theUnited States faces.

And the coming showdown over tax cuts.

BOEHNER:  Making these permanent will be the most important thing wecould do to help create jobs in the country.

AMANPOUR:  That and all the week's politics on our roundtable withGeorge Will, New York Times columnist Paul Krugman, Ruth Marcus of theWashington Post, and Robert Kagan of the Brookings Institution.

And the Sunday funnies.

FALLON:  China is expected to overtake the U.S. as the world'sbiggest economy in the next two years.  Americans couldn't believe it.They were like, "That hasn't happened already?"

(LAUGHTER)

ANNOUNCER:  From all across our world to the heart of our nation'scapital, ABC "This Week" with Christiane Amanpour starts now.

(END VIDEO CLIP)

AMANPOUR:  And hello again.

By the time Air Force One lands in Washington this evening, it willhave flown around the world, a world that is fast changing, as thepresident found out during his 10-day trip to Asia.  ABC's senior WhiteHouse correspondent Jake Tapper has been with the president and bringsus this report.

(BEGIN VIDEOTAPE)

TAPPER (voice-over):  Rebuked by American voters and reminded tofocus more on the economy, President Obama began his Asian trip talkingit up as a sort of international stimulus to open markets to Americangoods and bolster American jobs.

OBAMA:  We're actually doing some business while we're here.  Withevery $1 billion we sell in exports, 5,000 jobs are supported at home.For America, this is a job strategy.

TAPPER:  In Mumbai, India, flanked by American CEOs, the presidentannounced deals between U.S. and Indian companies totaling nearly $10billion in U.S. exports and maintaining more than 50,000 American jobs.

A cause for celebration, as he and the first lady joined in on thefestivities marking the Hindu holiday of Diwali.

(on-screen):  By the end of the week here in South Korea, there wasno cause for dancing.  Some of the world's fastest-growing economiesrefused President Obama's entreaties to alter their economic policies,policies the president needs changed to fully implement his exportstrategy, his job strategy.

OBAMA:  Instead of hitting home runs, sometimes we're going to hitsingles.

TAPPER (voice-over):  And sometimes he struck out, failing toconvince South Korea to open their markets to American beef and cars.At stake:  $10 billion in exports and 70,000 American jobs.

Failing to convince Chinese President Hu Jintao to stop artificiallybuilding up the dollar and holding down Chinese currency.

And failing to convince his fellow G-20 leaders to use strongerlanguage in the joint declaration on China's currency manipulation.

OBAMA:  That is an irritant not just to the United States, but is anirritant to a lot of China's trading partners and those who arecompeting with China to sell goods around the world.

TAPPER:  The president was even forced to push back on attacks thatthe U.S. was engaging in its own currency manipulation, defending a moveby the independent Federal Reserve to inject $600 billion into the U.S.economy.

OBAMA:  From everything I can see, this decision was not onedesigned to have an impact on the currency, on the dollar.  It wasdesigned to grow the economy.

TAPPER:  Criticisms from G-20 leaders who questioned PresidentObama's spending habits were made all the more relevant when theco-chairs of the president's own debt commission put forth controversialproposals to reduce the deficit.

BOWLES:  This debt is like a cancer that will truly destroy thiscountry from within.

TAPPER:  Ones attacked by liberals and conservative, showing howdifficult reducing the deficit will be.  Modesty was forced upon thepresident in this trip full of complications.

For "This Week," Jake Tapper, ABC News, traveling with the president.

(END VIDEOTAPE)

AMANPOUR:  And to discuss all of this, we're joined now by formerSecretary of State Madeleine Albright and Republican Senator LindseyGraham.  He's just come back from a trip to Iraq and Afghanistan.

Thank you both for joining us.  And let me ask you first, SecretaryAlbright, because you have been to many of these summits, isn't itextraordinary that the president, that U.S. leadership is beingquestioned so openly, not just by China, but by Germany, who called theFed's action, for instance, "clueless"?

ALBRIGHT:  Actually not.  I mean, I think -- I've been to lots ofmeetings, and they are discussions.  And I think the thing that peoplehave to remember is that the G-20 was not set up to solve the world'seconomic problems.  It was, it fact, set up as a way to bring thedeveloping countries in to show what the various disagreements can beand to come to various consensus agreements.

And it takes a while.  I think as the president said, it's anincremental thing.

And I don't know.  Christiane, I was asked by the Obamaadministration during the transition to meet with the G-20 when theywere here, and I met with everybody individually, and you could see thefact that they all have their own interests.  And it is a matter oflistening to the various ideas.  I think that it is a process, and Ithink it's very clear that America continues to be central to the process.

AMANPOUR:  Let me ask Senator Graham.  Certainly China and Germany,as you heard, did question America's global leadership.  Do you thinkthat is, if not actually, at least symbolically and psychologicallydamaging for the United States?

GRAHAM:  Well, I don't want to overreact here.  The currency issuewas disappointing to me.  Clearly, China does manipulate the value ofthe yuan to get an advantage in exports.  They already have enoughadvantages.  I was disappointed with the other nations who would not getbehind President Obama to push the Chinese to change their currency policy.

But, yeah, you know, at the end of the day, we're gettingcriticism.  Does that mean we're losing influence?  Not necessarily so.

But on the currency front and trade front, this was a disappointingmeetings.  We need a trade agreement with Korea. We need to fight backagainst China currency manipulation.  And I think you're going to seethe Congress get more involved on the currency front after this trip.

AMANPOUR:  Well, certainly the U.S. also being accused of trying topush down and weaken its own currency.  You know, you say that this isperhaps just a sort of temporary statement by these countries, butdoesn't -- doesn't America have to get its economic house in order, inorder to be able to lead on a whole number of other issues, Senator?

GRAHAM:  Yes, I think Secretary Clinton -- I think Secretary Clintongot it right that our looming deficit is a national security problem forus, and the only way you can get America's financial house in order isdo a bipartisan agreement on entitlement reform.

Earmark's important.  That's just on the margins.  But if you reallywant to get America back in business, we've got to come to grips withSocial Security, Medicare, and Medicaid, and find bipartisan agreementsto reform entitlements before it's too late.

We're an aging population.  A lot of baby boomers are going toretire.  We've got fewer workers, and we need to do that sooner ratherthan later.

AMANPOUR:  Well, we're going to discuss this later on, but do youthink there will be compromise?

GRAHAM:  There must be.  Look what happened with health care whenyou tried to jam it through on a party-line vote.  We need to get SocialSecurity stabilized before it goes into permanent bankruptcy.  We'regoing to have to increase the age.  We're going to have to manipulatebenefits for upper-income Americans.  We've got to put everything on thetable, including stable revenues.  And I'd like to see this commissionhelp lead the Congress to get some results that have been kicked downthe road for far too long.

AMANPOUR:  OK.  Let me bring up now some of the key foreign policyissues that go to the heart of American prestige and for the president'sprestige, the START Treaty, the New START Treaty.  Do you think that itwill be ratified coming in this lame-duck session?

ALBRIGHT:  I think it's very important that it be ratified.  Thepresident has said it's a priority issue during the lame-duck session.He just finished a meeting with President Medvedev when they were inJapan, and the president restated that it was a priority issue.

And the reason it is, is that it's -- first of all, it's a goodtreaty.  But part of the problem is we remember President Reagan saidtrust, but verify.  And what has happened is that the verificationprocedures have now not been in place for almost a year, so we need thattreaty for that.

Plus, I think that we really do -- the relationship with theRussians is very important.  They've been very helpful on Iran.  And Ithink -- I hope very, very much that the lame-duck session recognizesthe importance of the treaty.

AMANPOUR:  And, Senator Graham, Senator Kerry has already said thathe believes it can happen in December.  President Obama said it musthappen in the lame-duck session.  Do you believe that it will be votedon and ratified in the lame-duck session?

GRAHAM:  I don't know.  I'm very open-minded about the treaty.  AsSecretary Albright indicated, it's an important relationship between theUnited States and Russia.  I think Russia could do more, but they havebeen more helpful.

You've got two impediments.  Modernization.  Not only do we need aSTART Treaty; we need to modernize our nuclear force, the weapons thatare left, to make sure they continue to be a deterrent.  And we need tomake sure that we can employ -- deploy missile defense systems that areapart from START.

So you've got two stumbling blocks, the modernization program andhow missile defense works apart from the treaty.

AMANPOUR:  Will you vote for it?

GRAHAM:  Jon Kyl is -- in its current condition, no, but Jon Kyl isworking with the administration to get better modernization to make surethat missile defense is not connected to START.  If you could get thosetwo things together, I would vote for the treaty.

I'd rather have a treaty than not have a treaty, but modernizationand missile defense have to be better dealt with before we get there.

AMANPOUR:  Let me ask you about some news today.  You've just comeback from Afghanistan and Iraq with a congressional delegation.  Andthere's a story in the Washington Post about how President Karzai seemsto be at odds fundamentally with U.S. policy there.  Did that come up atall in your conversations with him?

GRAHAM:  You know, Christiane, I'm just stunned.  We had a greatmeeting.  We had dinner with Senator McCain, Lieberman, myself,Petraeus, Ambassador Eikenberry with President Karzai.  The focus of thearticle is the night raids.

We were briefed by our military commanders that the night raids are-- we own the night (ph) militarily, are making huge impact on theTaliban, the insurgency as a whole, and we're having Afghan partners.This didn't come up at all.

We talked about, quite frankly, looking long term with Afghanistanabout having two air bases in a permanent fashion in Afghanistan toprovide stability, so at the end of the day, there was no discussionabout a difference between Petraeus and Karzai, in terms of strategy.

And I would just add this:  If we cannot use night raids with ourAfghan partners, then that's a big loss in terms of gaining security.

The Petraeus plan, the Petraeus strategy must be allowed to goforward for us to be successful.  The security gains are -- areobvious.  We're not there yet, but we're moving in the right direction,and to take the night raids off the table would be a disaster.

AMANPOUR:  Well, let me ask you quickly and briefly on this issue ofAfghanistan, also.  Was President Karzai -- or, rather, do you believethat the U.S. troops will stay in significant numbers post the summer2011 deadline?

GRAHAM:  Yes, I do.  I think in summer of 2011, we can bring sometroops home, but we're going to need a substantial number of troops inAfghanistan past that.

2014 is the right date to talk about.  That's when Karzai suggeststhat Afghans will be in the lead, and I'm very pleased to hear PresidentObama talk about 2014.

What I want to talk about is winning, having the ability tostabilize Afghanistan and be a good partner with the United Statesforever.  That means we're going to need military force for quite awhile.  Post-2014, when the Afghans hopefully get in the lead, it willbe great to have a couple of air bases there in perpetuity to help theAfghans to send the right signal to the regions, but none of this ispossible unless you have a reliable partner in the Afghan government, sothey need to do more quickly on corruption.

AMANPOUR:  Do you think, Secretary Albright, that the president isgoing to move beyond this deadline?  I know it's always condition-based,but the acceptance now is it is going to be significant troops for muchlonger than next summer.

ALBRIGHT:  Well, they are definitely doing a review, as we --they've begun it as we speak, and they are going to do a review again, alarger one in December.

I think that the president has said that we're not just going toabandon, that we're in a transition strategy, not an exit strategy, andthat it's going to be very important for there to be training of theAfghan police forces and the military forces.

And part of the issue, in reading what President Karzai said, isthat he keeps saying he wants to take over, but part of the businesshere is they have to be trained properly and the NATO -- there's goingto be a NATO summit, and one of the things they're going to be talkingabout is how to do this transition policy.  And President Obama andSecretary Gates and Secretary Clinton have said that this is going to beconditions-based.

AMANPOUR:  Let me ask you a broader question, Secretary Albright, onAmerican engagement.  Now that you've got the Republicans in control ofCongress, you've got the Tea Party influence, do you think America willkeep engaging and keep its leadership roles in so many of these areas?Or will there be a period of turning inwards, whether it's protectionismor in any other foreign policy?

ALBRIGHT:  Well, I certainly hope not.  And President Obama spokeabout the problem of protectionism and the fact that we do have to beengaged internationally.

Every single problem that we are looking at -- whether it's fightingterrorism or dealing with a broken nuclear nonproliferation system orthe climate change and energy issues or the gap between the rich and thepoor -- requires American leadership, but it also requires being engagedin partners.

And so I hope very much -- we don't know what the Tea Party'sforeign policy is.  And I think that Senator Graham has stated veryclearly what the role of the Republicans is in looking at it.

AMANPOUR:  Do you think -- because you've been quoted, SenatorGraham, just recently -- that there are two wings now of the RepublicanParty when it comes to foreign policy, that you will look inwards oroutwards.  And I also want to ask you about your trip to Iraq.

GRAHAM:  Well, let me tell you, I think -- I'm in the wing thatwants to look outward and have effective engagements throughout theworld, so that's why I'm glad to see that President Obama is backing offthis idea we're going to leave in 2011 and talk about 2014 and makeeverything conditions-based.

You know, I worry that we're going to fumble the ball in Iraq.President -- Mr. Allawi, the biggest vote-getter in the recentelections, who is a Shia who married up with Sunnis to give a differentvision for -- for Iraq, has said that this the new government is ajoke.  If he feels that, that's disappointing.

It's very important we get a government formed in Iraq that'sinclusive, that represents the results of the Iraqi election, and thatis a reliable partner with the United States and the region.

So I've got concerns about this new government.  But we need to stayinvolved -- effectively involved.  And I'm in the camp of the RepublicanParty that wants to work with President Obama to end it well in Iraq, toget it right in Afghanistan, contain Iran through effective sanctions.

And to my friends in the Republican Party who want to withdraw, youdo so at your own peril, but the administration has to do their part.They're not being as effective as I think they can be in Iraq andAfghanistan.  And when it comes to Iran, our sanctions efforts are notworking as well as I would like, so I'd ask them to step up their game,as well.

AMANPOUR:  And, Secretary Albright, do you think Iraq is -- I mean,you just heard Senator Graham saying he's worried that it's notinclusive and it's not reliable, this -- this new government.

ALBRIGHT:  Well, it's a work in progress.  I mean, there's noquestion about that.  And every day brings a somewhat different story.

I -- I do think that the American government is very involved.  VicePresident Biden has been talking to them, as have our ambassadors, in avariety of places, so I do think that it is a difficult process.  We doneed Iraq...

AMANPOUR:  The Sunnis just walked out.

ALBRIGHT:  Well, no, they came back.

AMANPOUR:  Right, but...

ALBRIGHT:  But I think that we are going to be watching this, butthey understand that we will be there, and I agree that we need to makesure that the place works.

I think that the administration is committed to that, and it iscommitted, also, to making Afghanistan work.  I think the issue is -- asSenator Graham said, winning, I don't know what that means at themoment, but I do think that we need to have stability in both thosecountries, and I see the administration as looking outward.  We are thestrongest country in the world, and we do need partners, and that iswhat diplomacy's about.

AMANPOUR:  Discussion to be continued.  Secretary Albright, thankyou very much for joining us.

And, Senator Graham, thank you very much, indeed, for joining usthis morning.

AMANPOUR: And as we've heard, America's growing debt is having an impact on the international stage. The draft recommendations released by the co-chairs of the president's deficit commission add up to nearly $4 trillion in deficit reduction through 2020.

But the proposed spending cuts -- Social Security and Medicare cuts-- and tax increases are getting a chilly reception from Democrats andRepublicans, a sure sign of the difficult task ahead, while deepspending cuts in Europe are bringing people to the streets in protest.

Two members of the commission appointed by President Obama are withus this morning: David Cote, chairman and CEO of Honeywell andDemocratic Senator Kent Conrad.

Thank you both for coming. Welcome to both of you. You were juston President Obama's trip abroad. How does this deficit and the bigtroubles and problems ahead with this play in trying to gin up businessabroad, jobs?

COTE: Well, I think everything ends up being interconnected. Youcertainly, in my view, want increased trade. Trade, I'm -- you mightexpect I believe is a good thing, and it benefits both sides, and youwant to have countries arguing about commercial issues, not geographicissues. I think it makes a lot of sense.

AMANPOUR: You know, Americans are worried that their jobs are goingoverseas. You've said that it can't be seen as a zero-sum game.

COTE: Well, that's one of my issues. And, quite honestly, I thinkthe media helps to perpetuate this, is that economics is viewed as azero-sum game, my loss is your gain, my gain is your loss.

And the only reason you do things economically is because both sideswin. When you go to the store and you buy something, the store's happy,you're happy. You both benefit. And that seems to get lost when westart talking about economics on a grander scale.

AMANPOUR: Senator Conrad, there has been so much talk now about therecommendations by the co-chairs of the -- of the -- of the deficitcommission, the fiscal commission. Is there any area you think thatthere's going to be any compromise on this? I mean, they're attackingand talking about really sacrosanct parts of the American politicalsphere here.

CONRAD: You know, a certain amount of this is shock therapy. Youknow, there are different options. And, of course, what everybody hasfashioned -- fastened on are the most extreme of the options.

But, look, the important thing for people to know is we areborrowing 40 cents of every dollar we spend. That's utterlyunsustainable; it can't continue much longer, so it's got to be dealtwith.

If you look at our spending, it's the highest it's been as a shareof our economy in 60 years, revenue is the lowest it's been as a shareof our economy in 60 years, so we're going to have to work both sides ofthe equation.

It's critically important we do or we will become a second-rateeconomic power. That is the hard reality.

AMANPOUR: But in terms of things like mortgage interest and allthose things that the panel is recommending, these are things thatAmericans have really relied on forever, just about, and so many ofthem. Is that even a starter?

CONRAD: Well, there is -- as I referenced earlier, there is oneproposal that eliminates all the tax preferences, all the taxdeductions, all the tax exclusions, and uses 90 percent of the revenueto reduce rates, only 10 percent to reduce the deficit. I don't favorthat approach.

I think we need something that represents a continuation of themortgage deduction, although reformed, to apply only to primaryresidences, for example, but we need to continue the child credit, weneed to continue the earned income tax credit.

But fundamentally, if we're going to raise revenue, I don't thinkthe way to do it is to raise rates. I think the way to do it is toeliminate some of the loopholes that exist in the system. We have a taxsystem now that is just loaded -- chockablock full of preferences,loopholes. We're allowing $100 billion a year to be lost to offshoretax havens, another $50 billion to abuse of tax shelters. That can't beallowed to continue.

AMANPOUR: And on another -- well, on the same issue, but PaulKrugman, the economist, Nobel Prize-winner, who's going to be on ourroundtable, has written this week that it really is basically tax breaksagain for the rich and more onus on the -- on the middle class dressedup as something new.

COTE: Well, in my view, democracy seems to be uniquely suited toputting a traffic light up after the fourth accident. Now, we can'twait for the fourth accident here.

And that's why I applaud Senator Conrad, for Senator Graham, when --his comments, trying to get out in front of something, because it's tooeasy for the demagogues and the polemicists to respond to something,just kind of go into their neutral corner and screaming, as opposed tosaying there's a time to pull together.

This is one of those times. There are times when we should pullapart and pluralism and all that good stuff where people argue theirpoint of view, but there are times when we have to pull together, andthis is one of those times.

And it scares me that as a financially conversant CEO, I didn't knowhow bad this was going to get in the next 10 years. I could see whereit was today, but I couldn't see what was going to happen in the next 10years, because people want to point to stuff like Obamacare, stimulus,Bush tax cuts. And the thing that everybody misses is it's mygeneration, the baby boomers, who are going to flow through SocialSecurity, Medicare, Medicaid. It's going to crush the system.

And I think the American public is ready for this discussion, but Idon't see anybody having that discussion with them, and that needs tohappen.

AMANPOUR: Well, are the Democrats going to allow these cuts thathave been suggested in Social Security, Medicare?

CONRAD: Well, I'm a Democrat...

AMANPOUR: Well?

CONRAD: ... and I'm saying to my colleagues...

AMANPOUR: And the liberal wing of the party?

CONRAD: ... it is absolutely imperative that we take this on forthe country's sake. And are we going to have to make some changes toSocial Security? Certainly we are. Social Security is going to go cashnegative in five years. It's going to go broke in 2037.

Medicare, we've just extended the life of it by the health carereform package, which has gotten almost no attention, but still it'sprepared to go permanently cash negative in just 10 years. So,obviously, those things have to be reformed; there have to be some changes.

AMANPOUR: Let me talk about the international implications of thecurrency wars that we were just talking about that came up during theSeoul trip. Alan Greenspan, the former chairman of the Fed, has saidthat America's pursuing a policy of weakening its currency, and this iswhat the current treasury secretary, Tim Geithner, said in response tothat.

(BEGIN VIDEO CLIP)

GEITHNER: I have enormous respect for Alan Greenspan, of course,had the privilege of working with him for a long period of years, butthat's not an accurate description of either the Federal Reserve'spolicies or our policy. We will never seek to weaken our currency as atool to gaining competitive advantage or to grow our economy. It's notan effective strategy for any country, certainly not for the UnitedStates.

(END VIDEO CLIP)

AMANPOUR: I mean, how do you assess, first, what the QE2 is, whichis what he's talking about, quantitative easing? And isn't that viewedas -- certainly overseas -- as an attempt to weaken the currency, justas they're accusing China of doing?

COTE: Well, I would say managing currency is beyond my pay grade,so I don't normally get into that one. But I would say, in my view...

AMANPOUR: But the affects thereof in business is your pay grade.

COTE: But I would say -- well, I was one of the guys -- I've beenin favor of everything. So when they were talking about stimulus, homemodification, the Federal Reserve is doing what they needed to, I don'tthink the country realized how close we were to a depression.

And I've said to the senator several times: I don't think anypolitician ever gets credit for the problem they avoid. They get a lotof credit if they're in the middle of the crisis and start screaming andyelling, but avoiding a problem doesn't get a lot of merit. Thisdeficit is one of those situations.

AMANPOUR: Were you -- were you shocked that -- that the presidentcould not close a trade deal with Seoul, a major ally? The UnitedStates has propped up South Korea, troops there. I mean, how is thispossible?

CONRAD: No, I'm not at all shocked. In fact, I think the president-- what he did is a show of strength, rather than weakness.

AMANPOUR: How?

CONRAD: Because he refused to take a bad deal. Look, I've beendeeply involved with negotiating with our Korean friends, and they haveused every stratagem to avoid previous commitments they have made. Andthe president called them on it and said, look, you said you would openour market, your market, and you've got an obligation to do it, and I'mnot going to accept just any deal in order to have a deal.

Thank goodness we've got a president now who is standing up, even tosome of our allies, and saying we're insisting on fair treatment.

AMANPOUR: And what did you think when some of our allies calledAmerican policy clueless, economic policy?

CONRAD: Well, this was separate...

AMANPOUR: That doesn't show a huge amount of respect.

CONRAD: Yeah, this was separate from...

AMANPOUR: Right.

CONRAD: ... separate from the Korean deal. This -- this involvedthe question of what the Federal Reserve was doing, which is not thepresident.

AMANPOUR: Right

CONRAD: This is the Federal Reserve policy to inject liquidity intothe economy, given the fact 1 in every 6 people in this country iseither underemployed or unemployed, so certainly additional steps needto be taken. I think it's very clear on the fiscal side we've about runthe course. There's not going to be another stimulus package.

So if there's going to be more liquidity, it's going to have to comeon the monetary side from the Federal Reserve. And to say that they'reclueless, I think, frankly, demeans those who make the charge.

Look, we have -- I would be quick to remind them -- we have savedtheir bacon over and over and over all across Europe. They need toremember who's been there for them when they needed help.

AMANPOUR: On that note, Senator, Mr. Cote, thank you very much,indeed, for joining us.

And coming up next, analysis on our roundtable, with George Will,Paul Krugman of the New York Times, Ruth Marcus of the Washington Post,and foreign policy analyst Robert Kagan of the Brookings Institution.

Thank you very much.

END.