Transcript: Rahm Emanuel on "State of the Union"

Full Transcript

KING: We begin this Sunday with one of the most powerful men in Washington. He's President Obama's gatekeeper, determining who gets access to the Oval Office, and he also plays a key role in virtually every decision the president makes. The White House chief of staff, Rahm Emanuel, welcome to "State of the Union."

EMANUEL: Thanks, John.

KING: I want to begin overseas. There are reports that we are getting, hearing from U.S. officials, Western officials who have met with him and also on the ground, that President Karzai is resisting the findings that the fraud in the election was significant enough that there should be a runoff. In the view of the president of the United States, does President Karzai have a choice? Must there be a runoff?

EMANUEL: Well, first of all, what President Karzai must do and the process there is a credible and legitimate election or result, more importantly, for the Afghan people and for that government going forward, whether that's through a runoff, whether that's through negotiations. The process will be determined by the Afghan people. The result, for us and for the president, is whether, in fact, there's a credible government and a legitimate process; the Afghan people then think, this has worked, it's processed through. It's more important for the Afghans to come to that conclusion than what we say they have to do, because it's important for that government, whatever result or whatever process it takes, that the end result has a legitimate and credible government for the Afghan people.

KING: So at this point, since we do not view the prior election and the U.N. does not view the prior election as legitimate, is that then -- is the choice then a runoff election or a negotiated power sharing agreement with Mr. Abdullah?

EMANUEL: John, you've seen in the papers, you see the reports that are coming from Kabul. There is basically two roads there, or two basically processes. One is another runoff election between the two top candidates, or a negotiation between those candidates. But the end result must be a legitimate and credible government to the Afghan people. That's what's important. It's the Afghans making a decision about what type of government they're going to have and what road they're going to take to that point.

KING: And this plays out as the president faces a decision of enormous gravity, whether to send thousands, tens of thousands of more U.S. troops. Will the president wait and delay that decision until after you have a clear picture of the political situation?

EMANUEL: The review's going to continue to go on. That's not in question. The question, and one of the central questions of that review -- so we will continue. We've had five meetings. There's another set of meetings this week and the following week.

The question, though, and one of the questions is at the heart is -- and even General McChrystal's own report says -- the question does not come how many troops you send, but do you have a credible Afghan partner for this process that can provide the security and the type of services that the Afghan people need?

And you know, here in Washington, we want to have a debate, and you can't -- we would love the luxury of this debate to be reduced down to just one question, additional troops, 40,000. This is a much more complex decision. Even the general's own report and General Petraeus' own analysis says the question, the real partner here is not how much troops you have, but whether in fact there's an Afghan partner.

And when you go through all the analysis, it's clear that basically we had a war for eight years that was going on, that's adrift. That we're beginning at scratch, and just from the starting point, after eight years. And there's not a security force, an army, the type of services that are important for the Afghans to become a true partner.

So that is the question. And what I think it would be irresponsible -- and it's clear that as I saw the clip earlier, Senator Kerry said -- Senator Kerry, who's now in Kabul in Afghanistan noted, that it would be reckless to make a decision on U.S. troop level if, in fact, you haven't done a thorough analysis of whether, in fact, there's an Afghan partner ready to fill that space that the U.S. troops would create and become a true partner in governing the Afghan country.

KING: Whether the president sends more troops or not, how are we going to pay for this? Even if he does nothing more, there will be 68,000 U.S. troops on the ground in Afghanistan at the end of the year, maybe a little more than that, without a decision to increase them. Will the president have to request emergency funding to pay for that, or is that (inaudible)?

EMANUEL: It will be part -- I mean, if we did this, it would be part of what we have to do as we've done both for our Iraq and Afghanistan wars in the past. It would be part of that process.

KING: But the president said in April, he had hoped not to do that anymore. The president sent a letter to the House speaker, and he said, "this is the last planned war supplemental." And he said, you know, in the past, after seven years of war, the American people deserve an honest accounting of the cost of our involvement in ongoing military operations. Is this something that candidates can say one thing or a young president can say another thing that you learn that sometimes you can't ...

EMANUEL: No, I mean, one of the points is, is, what is the cost if we took this approach? And that's been part of the discussion. The first part of this discussion, John, has been about the fact that, where are we, what is the context, what is the assumptions built into this? One of the things that has been analyzed in all this is that, you know, and people would like to reduce this down and would like the luxury that, you know, send more troops, as if that's all that it takes.

You have to have a policy. It's important -- the policy is as important to protecting the troops as the equipment they have. And an analysis of where we are, what happened.

You have literally got into a situation, is there another way you can do this? And the president is asking the questions that have never been asked on the civilian side, the political side, the military side, and the strategic side. What is the impact on the region? What can the Afghan government do or not do? Where are we on the police training? Who would be better doing the police training? Could that be something the Europeans do? Should we take the military side? Those are the questions that have not been asked. And before you commit troops, which is -- not irreversible, but puts you down a certain path -- before you make that decision, there's a set of questions that have to have answers that have never been asked. And it's clear after eight years of war, that's basically starting from the beginning, and those questions never got asked.

And what I find interesting and just intriguing from this debate in Washington, is that a lot of people who all of a sudden say, this is now the epicenter of the war on terror, you must do this now, immediately approve what the general said -- where, before, it never even got on the radar screen for them. That -- everything was always about Iraq.

This is where Al Qaida is based. Not just in Afghanistan, it's clear that they're based in Pakistan. What is the relationship between the Taliban? Are there different grades of a Taliban? That is what the analysis is going on in the situation room, and I think the comfort for the American people is the president will not be rushed to making a decision without asking firm questions and challenging the assumptions behind those questions.

KING: A quick break with the White House chief of staff, Rahm Emanuel. When we come back, we'll bring the debate home, domestic issue. Will health care reform pass this year, and what about the record federal budget deficit? Stay with us.

(COMMERCIAL BREAK)

KING: We're back with the White House chief of staff, Rahm Emanuel.

You are deeply involved in this health care negotiations on Capitol Hill. Right now, behind closed doors in the Senate -- this is a story from the Washington Post today. "Small group now leads closed-door negotiations." And it quotes the president, from candidate Obama saying, we will have these discussions televised on C- SPAN, everybody will be at the table, we'll do this in an open and transparent way. Why does it have to be done behind closed doors?

EMANUEL: Well, John, first of all, I mean, you know very well that this has been -- the entire health care process has been fully public and...

KING: This is the most important part.

EMANUEL: And everybody is going to continue to be involved. We went up to have the first set of a series of discussions. You saw all the hearings. Many people said, you know, cover the hearings in five separate committees that had those discussions or discussions happening then, both at the hearing level, and also...

KING: So as you negotiate now...

EMANUEL: ... as you negotiate in private. But that doesn't mean that you can't have what's going on.

The key point in this debate about health care, John, isn't what's going on in a sense of just these negotiations -- those are key -- is what, at the end of the day, will the result achieve what I call the four C's. That is, are we going to control cost, expand coverage, give people choice, and competition in the system. And that's the goal the president set out. We went up there. You had two committee chairmen, as well as the Senate majority leader there. Everybody knows these issues that we're discussing.

KING: You have another stop, so I'm going to interrupt you, because you have another stop to make and my time is limited. In the C's, controlling costs...

(CROSSTALK)

EMANUEL: I was actually getting close to be (ph) a senator (inaudible) filibustering for a second.

KING: You were filibustering quite well. You're very good.

One of the controlling cost elements here is competition -- excuse me, here -- is would you have the public option. And on the Senate side, you know, it's harder to sell in the Senate, because you have more centrists involved. Is this an acceptable public option to Rahm Emanuel, the Olympia Snowe trigger plan, maybe with a combination of Tom Carper's proposal to let the states do it?

EMANUEL: Breaking news, John. Doesn't matter whether it's acceptable.

(CROSSTALK)

KING: It does matter whether it's acceptable, because you'll have to sell it on the House side.

EMANUEL: No, here's the deal. As you saw the president say in the joint session to Congress, he believes a public plan, a public option is important to competition. Because in many parts of the country, a single health insurance industry has 80 percent, 70 percent of the market. Let me go -- finish. It is also parts of -- that parts of the country where premiums are the highest. So if you don't have competition, an insurance company has the run of not only premiums, but what kind of health care you have.

And so the president believes in it as a source of competition. He also believes that it's not the defining piece of health care. It's whether we achieve both cost control, coverage, as well as the choice that...

(CROSSTALK)

KING: Is a trigger good enough for the president?

EMANUEL: The president of the United States will obviously weigh in when it's important to weigh in on that. There are key members of the Senate that want a public option. The Senator Snowe, who's also important, would like to see a trigger. But what's implicit in the notion of a trigger is that you should always have available that option of having a public plan to bring the type of competition that brings downward pressure on prices and price-effective health care costs.

KING: The way the Senate Finance Committee bill is paid for is a fee on these Cadillac insurance plans. And your friends in the labor movement say, no way. That what happens is you'll put a fee on the insurance companies, and they will backdoor that by passing the costs onto the consumers. Gerry McEntee, the president of the American Federation of State, County and Municipal Employees, says we "all worked for these people. We worked for Obama. What do we get for it? We not only don't get anything for it, we get a slap in the face." They say that it's a backdoor way of violating the president's promise not to raise taxes on the middle class. Will that be in the final bill?

EMANUEL: First -- one of the first things the president did when he got into office, was ensure the largest middle class tax cut in history. Because middle class had basically saw their incomes...

(CROSSTALK)

KING: But why does a labor leader call it a slap in the face?

EMANUEL: Well, that's his position. In fact, he spoke -- the president spoke to this in the joint session.

But I want to go back. Remember this -- the middle class received the largest -- one of the largest tax cuts in one of the first things he's done in the 45 -- in the first 45 days of his office.

Second, this is basically one of the ways in which you basically put downward pressure on health care costs. The president believes, as he said in the joint session, that while he opposed this originally, thinks that -- and based on the analysis -- it is helpful in getting costs under control. And it hits the insurance companies and the high expansive and expensive plans.

KING: We have a $1.4 trillion deficit this year. I know the president has said he will cut it in half in his first term. Health care reform will be deficit-neutral is the president's position, and yet...

EMANUEL: More than deficit-neutral, John.

KING: And yet...

EMANUEL: John, wait a second. Wait a second. More than deficit-neutral.

KING: You say it will help bring the deficit down.

(CROSSTALK)

EMANUEL: Also, let me make a point up here, which I think -- I really want to make this point. When the prescription drug bill was passed, in the '80s -- I mean, rather, in 2005.

KING: In the Bush administration.

EMANUEL: Yes, in the Bush administration, there was no pay-for. It was charged on the credit card. And it run up costs as far as the eye can see, basically for about $850 billion. This bill, somewhere will be about $850 billion, $900 billion, fully paid for, done within the health care system, and it brings down the deficit. And it's the first step, if you want to control...

KING: Except...

EMANUEL: As you know, John...

KING: The administration has asked the Senate to do this...

EMANUEL: ... if you want to control health care costs...

KING: ... $250 billion Medicare fix to doctors. The administration has asked the Senate to do that outside of health care reform. And right now, there is no way to pay for it.

EMANUEL: Yes, but, John, in fact is -- the president -- this is one of the gimmicks that was done year after year in Washington...

KING: So why do it now? If it's been done year after year, why not end it?

EMANUEL: And the president's budget, in fact, he included it in his budget when we negotiated that and we passed the budget. The first year, it's paid for.

What happens is, everybody says, you know, don't worry about it, and then they just pass it on. We've made a difference.

But the first piece of controlling the deficit is health care. I will also say the next step, is also important, is paying pay as you go. In the 2000 era, starting in 2001, the discipline of the '90s that led to a surplus was pay as you go. That was eliminated, basically allowed to lapse. And we passed three tax cuts, a prescription drug bill that led to $5 trillion of red ink run up -- the biggest red ink run-up in the shortest period of time in American history. Literally over half the nation's debt is accumulated in the last eight years.

KING: I traveled 40 states in the last 40 weeks, and people often use language for which you and I are known for using, mostly in private, not often in public, when they come to the issue...

EMANUEL: I didn't know you were a fellow traveler, John.

KING: They're watching Wall Street and they see the stock market going up, and many of them think that's a good thing, but they also see 9, 10 percent, if you go to Michigan, 15 percent unemployment. And they see this past week Citigroup gets $45 million in government bailout money, pays $5.3 billion in bonuses. Bank of America gets $45 billion in their taxpayer money, pays out $3.3 billion in bonuses. Is there anything the president can do about this?

EMANUEL: Well, one -- yes. And the level is -- and one of the issues is -- I mean, I think the American people have a right to be frustrated and angry, in this sense -- when the financial markets and the financial system had frozen up to a point that literally one of the reasons the economy was literally going towards a depression, literally head first. There's a one out of three chance we were going to get a depression. That basically the system came, and they only people -- the only place that you could actually resolve this situation was the government, which required the taxpayers putting up $700 billion. That as soon as stability was achieved, and things had a sense of normalcy, what are some of the titans in the financial industry do? Is they're literally going and fighting the very type of regulations and reforms that are necessary to prevent, again, a crisis like this happening.

And it's -- you know, as somebody who has literally sat once and was in Congressman Barney Frank's committee, the Financial Services Committee, that they're literally in that short of order, they assume everybody else has, you know, basically short-term memory problems around here.

The notion that they came, and I -- and I -- and the president understands, and it's why he's spoken to this, why the American people are frustrated. Not only do they come for a bailout, but in this short period of time where they have a level of normalcy because of what the government did to help them, they're now back trying to fight consumer offices and the type of protections that will prevent another type of situation where the economy is taken over the cliff by the actions taken on Wall Street and the financial market. And that is what's frustrating people. What's also frustrating to the American people, and the part on the bonuses, and I understand, as a former member of Congress representing people, is that while they see these bonuses going back and three see that as part of what the banks pay, is in fact -- there was an article the other day in the USA Today, incomes are at their 18-year low.

So while they're struggling to try to make ends meet, save for their retirement, pay for health care costs that are going up 10 percent next year, according to the Hewitt Associates, provide for their children an education -- while they're struggling to make ends meet, Wall Street is back doing what Wall Street did.

They have a responsibility to the whole system. And it starts with not fighting the financial regulatory system and the reforms that are necessary to protect consumers, homeowners, and others. They have a responsibility to come to the table and understand that taking -- that the risks that they took, took the economy to a place, it was near a depression, which we hadn't seen since literally the '30s.

They have a responsibility to be part of the solution, not part of being the obstacle and the forces, which is what the president is facing both on health care and the financial system, is fighting the very special interests that have vested interests in keeping the status quo and their friends up on Capitol Hill, who have actually been their advocates in keeping the status quo.

KING: You need to go, and so I'm going to ask you one more quick question. I let you answer that because I could see how important it was to you and I didn't interrupt you. I've known you for...

EMANUEL: That's so much like a family discussion.

KING: I've known you for 17 years, and we've been through a lot of campaigns together, you practice hardball politics with relish. I'm trying to get behind the curtain and understand why your White House has decided that it is in its interest to have this, boom, with our rival, FOX News, Anita Dunn, one of your staff, calls it the -- the communications director, the wing of the Republican Party. why?

EMANUEL: Well, no, it's not so much a conflict with FOX News. But unlike -- I suppose, the way to look at it and the way we -- the president looks at it and we look at it, is, it is not a news organization so much as it has a perspective. And that's a different take.

And more importantly, does not have -- the CNNs and others in the world basically be led and following FOX, as if that -- what they're trying to do is a legitimate news organization in the sense of both sides and a sense of value (ph) opinion.

But let me say this. While it's clear what the White House and what Anita said, I mean, the concentration at the White House isn't about what FOX is doing. Its concentration is about, what does it take to make sure the economy is moving, creating jobs, helping the economy grow, making sure that we responsibly withdraw from Iraq, making sure what -- the decisions we make on Afghanistan, we ask the questions before we go ahead first into putting 40,000 more troops on the line and America's reputation, its most treasured resources, its young men and women, and its resources. That's what's occupying the decisions and the time in the White House.

KING: I know you would rather be home with your children, I will let you go.

EMANUEL: Absolutely.

KING: Rahm Emanuel, the White House chief of staff, thanks for coming in to STATE OF THE UNION.

EMANUEL: Thanks, John.

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