Meet The Press with David Gregory (04/18/2010)

 
 
This Sunday, an exclusive interview with Treasury Secretary Timothy Geithner. Big questions about new rules for Wall Street. Will reform really mean the end of bailouts? And big questions about jobs. Wall Street rallies, but companies are still slow to hire. What will change that? Plus, will the president ultimately have to raise taxes to tackle the debt?

Pennsylvania Governor and former DNC Chair Ed Rendell; Tennessee Congresswoman and tea party supporter Marsha Blackburn; political director of Atlantic Media Ron Brownstein; and host of the new public affairs program "Enfoque," airing on Telemundo, Jose Diaz-Balart. They will debate the politics of the economy, which party stands to gain in this midterm election year, and what role the tea party will play in November. Finally, a look back during our MEET THE PRESS MINUTE. Astronaut John Glenn defends the race to explore space. But first, the outlook on the economy, the pace of recovery, and new rules for Wall Street. Yesterday I sat down for an exclusive interview with the president's top economic adviser, Treasury Secretary Timothy Geithner. Mr. Secretary, welcome back to MEET THE PRESS.

Good to be here, David.

Always good to have you. Big developments at the end of the week, have to do with Goldman Sachs, the investment firm, in a civil fraud case that has been brought against the firm for allegedly misleading investment -- investors, essentially selling products that they would never themselves buy. If you take a step back, what is the broader significance of these charges?

You know, David, I can't comment on the details of that investigation or on the merits, but I can tell you that I am very confident that we're going to have the votes for a strong package of financial reforms that'll bring derivative markets out of the dark, help protect taxpayers from having to fund future bailouts, and trying to make sure we're giving Americans some basic protection against fraud and abuse. I think it's -- we're very -- I'm very confident we're going to have a strong bill because this is about the basic financial security of the country, about the financial security of all Americans. And I think we're going to see Republicans and Democrats come together and pass strong reforms.

And we'll get into some of that reform. Do charges like this, does a case like this -- you won't talk about the specifics, I understand -- does it help your case, getting financial reform?

Yeah. Why would you need a case like this? You've had eight and a half million Americans lose their jobs, you had millions of Americans lose their house, tens of thousands of businesses fail, worst financial crisis in generations. That is a powerful case for reform. And, again, that's why I'm so confident we're going to see Americans come together and pass reform.

Well, you had all of those things, sure. And in this case, as it's alleged, you have somebody who apparently makes a billion dollars by betting against the market; and a firm, Goldman Sachs, denying wrongdoing but accused of, again, selling a financial product that it would itself not buy. I mean, doesn't this feed what America really resents about how Wall Street is operating?

Well, again, I can't comment on the merits of this case. But, again, in this financial crisis you saw a range of just terrible things happen -- catastrophic failures in judgment by people running these institutions, catastrophic failures in basic protections governments have to provide -- and the consequences were devastating.

Is it time to start teaching some people lessons on Wall Street?

Oh, I think, again, the best thing we can do for the country is to make sure we put in place strong protections, rules of the game, reforms with teeth. You want a system that acts pre-emptively to prevent these things from happening. You don't want a system where we have to come in and clean up the mess later. The best way to protect Americans from these things happening is to put a stronger system in place where people were able to act ahead of the storm, ahead of the abuse, ahead of the crisis.

Let's talk more broadly, then, about financial regulation. Earlier this year President Obama issued a declarative statement, and let me play it for you.

Never again will the American taxpayer be held hostage by a bank that is "too big to fail."

And so, at the heart of financial reforms, new rules for Wall Street. Can you guarantee that these rules will guarantee no more bailouts?

What we can guarantee is that if Congress joins with the president in passing the reforms we've proposed, reforms that passed the House, now working their way through the Senate, then taxpayers will not be on the hook for bailing out these large institutions from their mistakes in the future.

Who will be, then?

Well, the banks are going to be on the hook for paying the cost of any future crisis. That's a simple, basic proposition. And, again, I think that's something you're going to see Democrats and Republicans agree on because it's a basic, fair -- thing of fairness, which is why should we put the American taxpayer in the position ever again where they have to use a penny of their money to pay for the mistakes of large institutions?

But it's not like the government wanted to use their money this go-around. The problem is that if a bank or a firm, a financial firm gets into trouble, what do they need? They need cash to stay afloat. So even if they put some cash on the table, what if they need more? Aren't the markets going to expect, aren't the firms going to expect that the government's going to be there?

Yeah, of course. And that's why it's so important to put in place reforms. Because, you know, it's not just we still have in place today the same system that caused the crisis. Because of the actions we had to take, that we were forced to take to protect the economy, that will leave people, if we don't reform the system, with the expectations...

But I don't see what will be different. You say that they'll have to pay for it, but what if they need more cash still?

Again, the, the two most important things we are going to do and the reforms will do is make sure we can constrain risk taking by these large institutions, prevent them from taking on too much leverage, writing hundreds of billions of dollars in commitments they can't meet with capital, move derivatives out of the dark so that we can bring oversight to them.

Right. You have to stop and tell the people what a derivative is.

A derivative is a way to buy insurance against some risk or to bet on some financial outcome. You can do it in lots of complicated ways, but it's a form of insurance or it's a way to make a, make a bet on some particular financial outcome.

Critics of, of you...

But, but, David, I want to come back to your...

Yeah, I'm sorry. Yeah, please, I'm sorry.

I want to come back to your central thing again.

Yeah.

What these bills will do, they will make sure if a large institution ever again managed itself to the point where it can't survive on its own and has to come to the government for support, then the government will put its in -- put it into receivership, it will wipe out shareholders, it will replace management and board, and we'll make sure that we wind that firm down. We dismember it. We sell it off so it cannot exist again to make those kind of mistakes in the future. And we'll make sure while we're doing that that the taxpayer themselves are, are not exposed to a penny of loss.

But Republican critics, including Minority Leader McConnell, says in fact these reforms amount to, in his words, "an endless taxpayer bailout of banks."

Well, you know, some...

Why isn't that true?

It, it's absolutely not true. And as some of his members say, it was a bit over the top. I've spent a lot of time with Republicans over the last several months and the last few weeks, even last week, end of last week, and I believe that we are very close on this, that we agree on the vast bulk of the things necessary to end "too big to fail," protect taxpayers in the future, and that's one reason why I'm so confident. Now, we're not together on everything. I think on derivatives and on consumer protection we're still some ways apart. We may not get there. But on too big to fail, on making sure we protect the taxpayer, I think we're very close and we're in broad agreement.

Do you have any Republicans who will vote for this?

Oh, I, I'm very confident you're going to see Republicans vote for this. Again, you know...

Do you have anybody now?

Well, again, that's something that you're going -- you'd have to ask them. You got to ask the minority about that.

But you're working them, right? You're trying to bring them along.

Yeah, but I spent a lot of time with them. And that's -- again, that's why I'm so confident. I mean, you know, how can anyone look at this crisis, look at the damage caused and say that we're going to leave this system in place, not support a strong set of reforms?

You, you have been on different sides of this financial crisis, at the Fed and now as Treasury Secretary. I'm curious to note, do you believe there are any rules for Wall Street that could prevent the kind of collapse that we saw?

Absolutely. Absolutely I do.

That could have prevented it?

Absolutely. You know, we made a series of devastating mistakes as a country. We let large institutions, taking on enormous risk, operate in the dark outside of any basic constraints on risk taking, completely untenable. We let the country come into this crisis without basic tools to put a bank, put a bank into bankruptcy, large institutions like AIG into bankruptcy. Those were terrible mistakes, and they are preventable mistakes. And I'm confident, again, with this bill -- this is a very strong bill Senator Dodd has put together. It incorporates a lot of Republican ideas. And I'm very confident with those protections we can reduce the risk of a crisis like this happening again, prevent this kind of thing from happening again.

Do you think you can really change the culture of Wall Street? Can you change the risk taking, all of the, you know, the, the search for profits that lead to the sort of excesses we saw? Can you really change the way they do business?

Look, if you allow a system to create enormous opportunities for return where people can get the upside without being exposed to the risk, it's going to attract lots of people -- not the, not the best kind of people -- to that business. You can't run a system on the expectation that firms are going to act in any way other than what they think is their best interest. What you have to do is to make sure that the government is setting rules with teeth that prevent them from taking risks that could imperil the economy as a whole.

But you -- but you're sometimes criticized as a containment guy instead of a more hard-charging, roll back Wall Street kind of guy. And I go back to a question I asked in regard to the SEC charges, which is is it time to start teaching some people lessons?

Well, again, the best lesson we can teach and the best thing we can do for American people is to put in place rules that will prevent firms from taking these risks again, make sure we protect the taxpayer, bring derivatives out of the dark. That's what we can do. That's the best thing we can do for people. And again, the American people deserve that. I mean, you've seen a devastating loss of trust and confidence in this financial system, and we have to work very hard to restore their basic sense of trust and confidence that the system's going to provide protections they need.

There are some on Wall Street who have worked with this administration, and some who are critical, who say the view from you, from the president and others in the administration, largely driven by politics, is it's open season on the banks. It's beat up on the banks time. Is that the smart thing to do politically or for the economy?

There's no politics in this. This is not a partisan thing. This is a basic proposition. Things that are important...

It's not good politics to beat up on the banks?

I don't know if it's good politics or not, but we're going to do what's good for the country, what's good policy. That's what the president asked me to come do and...

But you know there's a populist wave in the country against the banks. Jamie Dimon was criticized for going to speak at Syracuse. And a lot of the statements of the administration can contribute to that. Do you think that's unhelpful for the economy?

Again, what the president is going to do and what he's asked me to do is to make sure we are designing reforms that are going to change what was broken, protect the American people better in the future. Our judgment is -- he governs this way, David, the president governs this way. You focus on doing the right thing, you let the politics take care of themselves. Now, it's not always going to be popular, people are going to fight you on these kind of things, but we're going to focus on doing the right thing.

Let's talk about the broader economy and really some encouraging news. This was The Wall Street Journal headline this week, "Dow Breaks Through 11,000. Stocks Rise on Outlook for the Economy, Corporate Earnings; Individuals Still on guidelines." You're out there talking to people; you see so much. What gives you a reason to be optimistic right now?

Well, again, you're seeing in the numbers, and if you talk to businesses across the country in all industries, you see much more confidence today. The economy's growing. It's the private sector that's growing, private investment is increasing, exports are stronger. Americans are spending a bit more of their income. These are very encouraging signs, and I think they should -- they allow us to be much more confident today that we're going to come out of this stronger. But, you know, we have to deal in reality too. And the reality still is that this crisis caused a huge amount of damage. It's going to take a long time to heal that damage. Americans are still facing enormous pressure, enormous financial challenge. And we're going to keep working to make sure we're healing what was broken, reinforce this recovery; and we got some work to do still.

So -- and that headline refers to individuals still on the sidelines. You have 8.5 million jobs lost in the course of the recession. In March, and something that the, the Fed chairman was concerned about, 44 percent of those unemployed in March have been unemployed for six months or more. Is this a jobless recovery?

I think the economy's just starting to create jobs again. That's going to continue. Just remember, a year ago the economy lost three quarters of a million jobs in one month of March. And last month the economy created 160,000 new jobs, and I think we're now on a path where you're going to see sustained job creation. You're going to see the work week extended, people add hours to their payroll, incomes start to rise again, more people come back to work. And, again, we have more work to do, though, to help reinforce that process.

You don't see the unemployment rate climbing again to, say, over 10?

No, I'm not an economist, David, but if you see that happen it'll be because you have more people come back into the work force now because there's hope again. But, again, I think that we're in a much stronger position than -- now today than we were three months ago, six months ago, stronger than we thought, faster recovery than many people expected because of the actions the president took.

And yet you said recently, you told Matt Lauer on the "Today" show recently that the unemployment rate will be unacceptably high for a long period of time. These are the administration's projections -- we'll put them up on the screen -- for unemployment, all the way out to the fourth quarter of 2012 at 7.9 percent, which is still pretty high. I assume you'd think that would be unacceptably high. So what would incentivize companies to build a new factory now or to look ahead and start adding workers to change and improve upon that outlook?

We're going to work to improve on those numbers. That's what we're working hard to do. And we're trying to get Congress to move to put in place a series of new tax incentives for hiring, for business investment. We're trying to work to make sure you can -- states can keep teachers in the classroom, that we're working to fix schools, fix our roads and bridges, improve infrastructure. There are a range of things we can do like that that'll help make this recovery stronger. And, as we grow again, we see more job creation, not less.

I want to ask you about housing because this is an important area. It's critical in terms of the overall rebound of the economy. The administration had a big program to modify mortgages, to be able to keep people in their homes. You had a congressional oversight committee this week say that the Treasury Department has lagged behind the, the pace of the

"Foreclosure filings rise in spite of aid program's efforts. Home foreclosures are accelerating and many more people are losing their homes more than a year after the government launched a program to aid financially distress borrowers." Mr. Secretary, I've heard you say, "Look, you have to remember how bad things were." Nevertheless, this is a results problem, is it not?

No, I don't think so. The president's program did the necessary vital essential thing, which is to bring stability to house prices that were falling off the cliff. Now, as you know, for most people in the country, their house is the most important financial asset. So, by helping stabilize house prices, we made an enormous difference in people's basic financial security. The president did that by working with the Fed to help bring down mortgage interest rates, which were at historic lows. Four million Americans have been able to refinance because of that, and we've also -- and this program we currently refer to is designed to help the innocent victims of the subprime crisis. And a million Americans today are getting lower monthly payments on their mortgage debt on average $500 a month because of the president's program. And we are working very hard to make sure that program reaches more Americans. We announced a series of programs over the last several weeks...

But...

...that will help the unemployed, help people...

Right, but you're trying now to get, get lenders to reduce their principal for people because you have, and this was always the warning about a mortgage remodification, that people redefault...

Well...

...and end up getting foreclosed on.

Again, but you're right to say that the, the changes we made recently are to help the unemployed, help people who are under water refinance, help make sure that more of the relief comes in the form of principal reduction. And we're -- also gave the 10 hardest-hit states, states at the epicenter of the crisis, the subprime crisis, with high unemployment, we give them a significant amount of resources to help incent pilot programs that'll help address just those problems. And we're going to keep working to make sure we reach more people. But hold on, David, one more thing.

Yeah.

Very important to recognize that we are not going to help, not going to be able to help, and it's not a -- would not be fair for us to ask the American people to help, people who are speculating on resources, on, on real estate or who are basically just irresponsible in their financial decisions. But we're going to reach more people, and this program has been very effective, and bring a measure of stability to a housing market that was in crisis and in reaching Americans who are the, the greatest victims of the subprime mess.

Do you think the worst of the foreclosure crisis is over?

I think it's going to be very hard still. I mean, realistically again, unemployment is very high, as you said. That's the biggest risk now in terms of what's driving foreclosures ahead. And that's why, again, it's so important that we work with Congress to strengthen the recovery and make sure we're creating more jobs more quickly.

This past week was tax day, and I want to talk about taxes and spending. But first I want to ask you what is your level of concern about inflation as you look ahead perhaps to next year?

Again, our biggest challenge now -- and this is a challenge not to just the United States but in all the major economies -- is to make sure that growth is stronger, we have a recovery led by the private sector that could be self-sustaining. That's our biggest challenge.

When we talk about taxes and spending, the debt is a huge concern right now. Right now, America's debt is 53 percent of the total economy. And deficit hawks like Robert

"The basic challenge is political in that we've gotten to a situation where the spending promises we've made can't be financed with the levels of taxation we've agreed upon. Getting out of that dynamic require either cutting back on the spending promises or raising taxes. Those are politically explosive choices." Will the president have to consider raising taxes on the middle class if he's going to be serious about taking on the debt?

David, as you know, the president does not support raising taxes on people making less than $250,000 a year, and the president recognizes that our deficits are too high and they're going to have to come down over time. But look what he's done when he came into office. He came in and cut taxes, as he should have, on 95 percent of working families. He provided substantial tax incentives to businesses to help stimulate private investment. He's committed to bring these deficits down. He's outlined a very hard, ambitious set of proposals that'll cut our deficits by more than half as the share of our economy over the next four years or so. And he's convinced Republicans to join on a bipartisan fiscal commission to make sure that we can propose reforms, identify policies that will take us back to where we're...

But is it enough? First of all, he is cutting taxes for 95 percent of Americans. He's also raising taxes. The Bush tax cuts will expire. There are tax hikes included in healthcare reform. Look, as Pete Domenici...

Well, health, healthcare reform...

Yeah.

...healthcare reform is enormously important and will be enormously important and effective in helping bring down our long-term deficits.

Well, OK, but there's some -- there's debate it about even though that's certainly the assertion...

No, but, no, but...

...about how it was passed.

Again, in our country we turn to the independent...

Right.

...budget analysts in the CBO to make those judgments. And their judgment -- and this is why we have healthcare reform today, because the president wouldn't have it any other way -- in their judgment, healthcare reform will bring down our long-term deficits dramatically over time.

Why don't you have to consider additional tax hikes when you've got the likes of Alice Rivlin who worked for President Clinton, Republican Senator Domenici, and Chairman Bernanke saying, "Look, something's got to give here, and tax hikes have to be on the table in this environment."

But, David, you, you said the important thing, which is the president is going to extend the middle-class tax cuts. But he is also going to let expire the tax, the tax cuts that President Bush put in place for the 2 percent of the most fortunate Americans in our country. That will provide more than $1 trillion -- around $1 trillion in deficit reduction over the next 10 years. That's very important. In addition to that, the president proposed a range of other measures to help close tax loopholes, reform international tax, tax treatment of international companies in the United States. He proposed a fee on banks on risk to help make sure we cover any losses on the TARP, and he proposed a substantial freeze on discretionary spending, reimposed the basic budget rules, PAYGO, that were in place in the '90s, helped deliver services...

But our, but...

Those are -- but those are necessary...

...but are any of these serious enough to really tackle the trajectory that our debt is on?

Absolutely. And, you know, David, let me just step back for a second. this is something we can manage as a country. Again, just think about it this way: A -- even a moderate recovery and a moderate recovery along with the president's commitment to make sure that the recovery act expires, the emergency acts we took expire when the, when the economy strengthens. Those two actions themselves will cut our deficits in half as a share of the economy. Bring them down from 10 percent of -- as a share of GDP to around 5 percent of GDP. Now, that's not far enough. The other measures that you've just identified will take us down below 4 percent of GDP, and we've asked the commission to -- which is a very talented group of people...

This is your debt commission?

...to step back from politics...

Right.

...and recommend additional measures to make sure...

But do you believe painful choices will be necessary by the government?

Well, of course they will.

Without a doubt?

But these -- but of course. These are the things we can do as a country. Again, we are in a much stronger position to deal with these challenges, and it's true for any major economy across the...

What's a painful choice you would advocate to the president if he wants to be really serious about tackling the debt?

Well, the president has, has made some very important, and I think, good policy proposals to the Congress already to consider that are very substantial, and we hope they act on them.

Any specific thing, though, that you would advocate?

Just the ones, again, the ones I highlighted. It's very...

Anything with regard to entitlement spending, Medicare, Social Security, that you would advocate? Tax reform, broad-based tax reform?

We're going to look at all those things, and the commission, of course, the commission and its, its basic mandate is this, is to step back from politics, take a look at all those things, and, and come forward with recommendations...

Right.

...that'll help return us to the point when we're living -- where we're living within our means again as a country.

Two quick points before we're out of time. Would the president support a gas tax if it were part of an overall climate change piece of legislation?

David, that's not something I can address today. As you know, he's working with a number of senators to try to make sure we can put in place the kind of energy reforms our country needs. If you talk to businesses across the country, one thing many of them agree on is we need to bring certainty to what the rules of the game are and how we, how we use energy, make sure we're encouraging greater energy efficiency, not just for climate change but because it's important for energy independence, and the president's going to keep working on that.

So is he looking at a, at a gas tax?

Again, not...

Is he considering it?

...not something that I can help you on today. But we are working on making sure we change how we use energy in this country, both for energy independence and to make sure we're using it more efficiently for climate change.

Finally, before I let you go, as I mentioned, it was tax day. You also saw these tea party rallies around the country. And it seems that their biggest grievance, those that show up to these rallies, have to do with taxes, with government spending, with the size of the deficit. How serious do you take those concerns? How viable a political force to you consider the tea party to be?

Let, let me do the positive side of this, OK? We've just been through eight years where people said, many people said, "Deficits don't matter. We can, we can pass huge tax cuts, pass huge, new programs without paying for them." That debate has changed fundamentally. Now, you don't hear people say anymore deficits don't matter. You don't hear people saying that we can pass enormously -- enormous expenditures of government without paying for it. That's an important change. I think all Americans understand that our deficits are unsustainable, and I think that'll be helpful as we move to try to make the hard choices to bring them down again.

Mr. Secretary, we'll leave it there. Thank you very much. Appreciate it.

Good to see you, David.

And up next, our roundtable. Pennsylvania Governor Ed Rendell, Tennessee Congresswoman Marsha Blackburn, Atlantic Media's Ron Brownstein and Telemundo's Jose Diaz-Balart tackle the economy, the midterm elections, and the impact of the tea party. Plus our MEET THE PRESS minute, defending the race to space, only here on MEET THE PRESS. .JN .JY

The politics of the economy, what role will the tea party have on the midterm election? After this brief commercial message.

We're back now with our political roundtable, joined now by Republican Congresswoman Marsha Blackburn of Tennessee; Democratic Governor Ed Rendell of Pennsylvania; host of the new public affairs program "Enfoque," Telemundo's Jose Diaz-Balart; and political director of Atlantic Media, fellow Washington Capitals fan, Ron Brownstein. Welcome to all of you. I want to talk about this left-right political divide over the economy. But let's talk first, Congresswoman, about Secretary Geithner. You heard what he said.

Yes, I did.

New rules for Wall Street mean no more taxpayer-funded bailouts. Is it case closed?

No, it is not closed at all. And what the American people want to be certain that we do not do is take boom and bust and replace it with fraud and bailout. And they are tired of the bailouts, they want this to end.

But he said the banks are going to pay for it now.

This too big, this "too big to fail" -- and they know better than that.

Right.

They know that this financial regulatory reform bill in its current form that is working its way through is going to institutionalize the bailouts. And this is something that they do not want. Everyone is for reform, but...

But I have to stop you, Congresswoman. What you heard him say, the banks would actually pay for this. Just tell me, why don't you believe that?

Into a fund. Into a fund. Because you can look at history and see that it always gets passed. It's the Reagan thing. Corporations don't pay taxes, people do. They know that they're going to see fees go up. The way community banks are treated...

They could pass it on, in other words, yeah.

...through this consumer financial protection agency is horrendous. It would be the demise of community banking. I know everyone is working to get to reform that is going to be as tough on Wall Street as it is on Washington. And Washington has some responsibility to bear in this, also. And, David, that's what they're wanting to see. They want to see real reforms. Just like they did in health care, they wanted to see reform, what they got was control. They don't want more Washington control coming out on this regulatory reform bill.

Governor, are these rules that can really prevent what we've gone through?

Sure. I think the key thing you heard Secretary Geithner say is that if a bank gets in trouble, they get dismembered, they get taken over, they get -- essentially, they go away. They do away because they're punished for what they do. And I think that's the biggest incentive of all. You know, what the Republican Party is doing now is like the death squad stuff. They think if they say it often enough, "this doesn't end," "too big to fail," people will believe it. But it's not true. And this is a real test for the party of "no."

And wait...

And they have to say yes to something.

We're the party of K-N-O-W.

They have to say something.

Of K-N-O-W. We want people to know what's in this bill.

They have to do something. They can't keep taking money from these Wall Street companies...

Oh, Governor, you know that's wrong.

...and then do their bidding. We have to pass a strong financial reform.

Governor, you know that's wrong.

All right. Well, what's fact and fiction here?

You know that's wrong.

Fact from fiction here on new rules for Wall Street, Ron?

Well, there are two separate issues. First is how you regulate these large, systemically risky institutions. And the bill does establish -- both bills, the House and the Senate bill -- for the first time, distinct federal oversight of the largest institutions whose failure could put the entire financial system at risk. And that is something -- when you said that the public does not want more Washington control, I think the polling is pretty clear that on this front the public does want more Washington oversight of these large institutions which is not available now and would now be through a council of federal regulators in the Fed. The second issue is what you do when one of these behemoths fall over anyway and collapse, and, and that is what we went through in 2008. And if you think of the 2008 as your template for a bailout, where you put a lot of money in a, in an institution and it continues to exist -- same management, stockholders, and so forth -- the, the version of the Senate bill that was negotiated by Democrat Mark Warner and Bob Corker of Tennessee is designed to prevent that. What they both say is that the resolution mechanism in the bill is designed to eliminate the management, wipe out the stockholders, force the creditors to take a haircut, and then that bank would be -- or financial institution would be dismembered. Now, Bob Corker has raised the concern in the last few days that around the edges of that there are other provisions that may allow for more federal intervention without that kind of draconian response. But he has also said that those differences could be resolved in "about five minutes" if there was good will on the part of the two parties, which Mark Warner has said as well.

Jose...

Well...

Jose, one of the issues, you hear about this SEC filing...

That's right.

...and Goldman Sachs has denied any wrongdoing, but, I mean, the way this goes is essentially they're accused of being a middle man on a transaction where you have all these bad -- all this bad debt...

Right.

...that's part of a financial product that Goldman Sachs wouldn't itself buy, and this, this charge of, of misleading people. I mean, this is what drives people crazy around the country.

Absolutely.

And are we really going to change any of that?

Well, you know, I -- we hear "reform with teeth." We hear about "too big to fail." We've been hearing this for so many years. And you know what? A lot of people are watching what's going on in Washington and New York and their eyes are glazing over because it doesn't affect or it doesn't benefit them at all in their communities, you know? We continue with high unemployment. The Hispanic community, almost 14 percent of the men in the Hispanic community are unemployed. And what they see is more investment in government and less investment in small towns and in small businesses. And a lot of people are saying, "You know what? Maybe the government shouldn't be so worried about funding government agencies and government programs, and let's start taking care of the small and large businesses that are in the community, and they're the ones that hire." You know, we hear all this money going into, for example, construction projects. For the Hispanic community, something very important. Then you have E-Verify. E-Verify limits, in certain ways -- because of its -- by the way, it has a high error rate -- the amount of Hispanics that feel that they are in some way drawn into those businesses and into those projects. You know what? Government investment is important, but government investment also has to recognize that the people who generate jobs in this country are the small businesses, are the bodegas or the supermarkets, are the gas stations. And those people find absolutely no help out of Washington or New York.

Well, so here's a larger political question for everybody. Ron, I want to start with you, because you've, you've looked at this analytically.

Mm-hmm.

Who is winning politically...

That's a great question.

...on the economy? Whether it's regulation, whether it's jobs, whether it's stimulus, who's winning, Republicans or Democrats, in this election year?

Well, by and large it feels as though Republicans are driving the argument, and that they -- look, they're -- the construct that Republicans have made is that what is impeding recovery is primarily big government at this point. After -- which -- and to a large extent, they have succeeded in that argument. You look at all the trend lines -- Democratic advantage over Republicans on the economy, Obama approval on the economy -- those are all declining. I mean, this is rather striking after the largest failure of the market economy in 2008 probably since the Great Depression. Democrats, I think, have been losing control of the macro argument here. Wall Street, though, is a place that really -- and the, and this financial regulation is a place where these two contending visions collide. Because I think the -- as you heard from the congresswoman, the Republican argument primarily is that more government intervention is the problem. And Democrats, I think, want to make the case that what led to this disaster was the hands-off approach that the Republican administration took, the Bush administration, the low tax, low regulation approach that their agenda was built around led to this. And I think you are going to see these contending both policy and political visions very clearly on display if this bill comes to the Senate floor next week.

Governor, on the economy, taxes are a big piece of this. And here was a provocative thought. It was, it was reported by the Los Angeles Times this week. "A key question in this closely contested midterm election year is whether Democrats will get cold feet over raising taxes during hard economic times. `They are in a push-pull situation,' said Roberton Williams, a tax policy analyst at the nonpartisan Tax Policy Center. `They really want the money [from raising taxes]. But they don't want to quash the nascent recovery. How do you thread that needle?'" At a time when they're preparing to let the Bush tax cuts expire.

Well, I think the most important thing -- and I think what was said about small businesses, crucial. The tax cuts in the stimulus were one-third of the stimulus bill. Nobody knows that. In Pennsylvania 2.7 million taxpayers got cuts because of the stimulus bill. Small businesses have received a ton of incentives both in the original stimulus bill and in the recently passed jobs bill. I think you've got to take your tax cuts and target them to job creation. And I think the Obama administration has done a good job and is doing a better job of that recently, and I think we can do more to do that. In terms of the Bush tax cuts itself, the focus, again, has to be directed to the people who are -- we're letting the tax cuts expire. Those people can afford to pay more taxes. After the Bush tax cuts expire, the tax rate will still be the same as under Ronald Reagan.

All right, Congresswoman, before, before we move on, make the case for why, as Ron suggests, the Republican Party is on the right side of this economic debate in this election year.

The reason the Republican Party is on the right side of this economic

The election is going to be about freedom, and the American people know that being dependent on the federal government for home loans, for your health care, for your education, for your jobs, even for the kind of lightbulb that you want to put in the fixture is not the aspirations of a free people. And because of that, we are on the right side of this argument. Everything that we're discussing here affects every...

What -- but hold on, Congresswoman. What did freedom get the American people during -- that led to the financial collapse? Is that not a fair question about the limits of, of the free capitalist system?

We know, we know that if you let free markets work -- there is no expiration date on the free market. There is no expiration date on the American economy. What the American people do not like is the overreach of government, and they are seeing it time and again.

I'm sorry, Congresswoman, my question was what did the free, what did the free market get us, what did freedom get us in the economic collapse? You had an absence of government regulation, and you had the free market running wild. Look what the result was.

And you need, and you need more oversight. We all agree with that.

Mm-hmm.

And the financial bill that Senator Corker and them are working on would lead to more oversight. The Goldman charges that have come forward now, David, they have come forward under existing SEC rules.

Right.

More oversight, which I have always been a proponent of, would have helped us with this.

Well, let me just move on for a second. I want to -- I'm going to -- I want to get another piece of this in here, Jose, which is the tea party movement. It was just tax day, a big tea party rally on the mall here in Washington, and tea party rallies across the country. The focus here, taxes, spending, the deficit.

Right.

The question is, what is the political impact of the tea party come fall? Ron

"The tea party's making a lot of noise, but the angry-at-government movement has yet to establish itself as a force that can determine the outcome of November's congressional elections. The key could be forging alliances with GOP candidates, but tea partiers in nearly every state are leery of that if not downright opposed. `The day there's an organized tea party in Wisconsin,' says Mark Block, who runs tea party rallies in the state, `is the day the tea party movement dies.'" Politico did some exit polling after the, the rally that we just showed you in Washington on Thursday, and a couple of interesting views of what tea partiers at this particular rally believe. Seventy-five percent scared about the direction of the country, 73 percent want to send a message to both parties. And then look at this, in terms of views of President Obama himself, 76 percent agree that Barack Obama's "pursuing a socialist agenda." What's the impact?

Yeah. I don't think a lot of people, for example, in the Hispanic community, to be very specific, think that Barack Obama's a socialist. I do tell you this, that there is a lot of anger and rejection after what Washington's been doing. And I think that this feeling that we sense throughout the country is the exact same feeling that I'm sensing in my community. They are sick and tired of government taking them for granted. And politicians owe their jobs to our votes and they've gotten them, and now it's time for them to say, "This is what we're doing for you -- not for us, not for the big corporations, and not for government."

I, I should say that, that poll from Politico will be available in its entirety on Monday at politico.com. Speak to that.

Yeah. I -- well, I'm going to say, when the congresswoman said this election is going to be about liberty, there is probably about 40 percent of the electorate for whom this election is about liberty. And one of the things we know is that there is going to be a big turnout of conservatives who are antagonized and animated by what the Obama administration has been doing. But for most of the electorate, this election is going to be about results. And that's why even though I said that the Republicans have won the economic debate, I think, over the past year, there are more rounds left in this fight. What the administration is hoping is that there will be enough good news of the sort that Secretary Geithner was talking about that by November they can make the case that "Look, things have been tough, but we are beginning to move the economy in the right direction. And do you want to go back?" Because there is a tremendous amount of overlap between the policies that Republicans are advocating now and those that were implemented by Bush, George W. Bush, during his two terms that produced, you know, one quarter as many jobs as under the eight years as Clinton and a decline in the median income over a two terms of a president, which we haven't seen for any other two- term president in modern times. So even though I think Republicans, all the polls suggest that amid these hard times, because they have, I think, had the upper hand, the argument isn't over. And, and there are beginning to be some positive economic signs that I think Obama is going to be able to marshal to argue that even if times are still tough, at least he has, he has begun to turn the corner.

Well, Governor, let's take a case of -- a real-live case of potential tea party impact, the Senate race down in Kentucky. Congressman -- your district there on the line with Kentucky. There you've got Trey Grayson seen as more of the establishment candidate endorsed by Mitch McConnell and Dick Cheney, the former vice president. He is the secretary of state. And Rand Paul is the opponent. He's an eye surgeon, he's the son of Ron Paul, the former presidential candidate. He's been endorsed by Sarah Palin and Jim Bunning. He's actually ahead in the primary race. This is going to be a test for whether a tea party sentiment or movement has real political power.

Right. I think, David, the first thing that we have to define is, well, what's the tea party itself? If you say it's the anger that people feel about the economy, etc., that's giving the tea party too much credit. We had two recent tea party demonstrations in Washington. One, a week before the healthcare vote, drew about a thousand people. The tax day rally by the organizer's own estimate was 1,500 people. If I organized a rally for strong laws to protect puppies, I would get 100,000 people to Washington. So let's -- I think the media has blown the tea party themselves out of proportion. That's number one. Well, and what about those attendance figures? Secondly, secondly...

All right. We'll let you respond to that in a minute.

Secondly, there is anger out there at Washington, at Wall Street, and it's anger that's justified. We, the American people, were handed a bad deal by Wall Street. Washington didn't do it...

Right. Well, you may diminish the tea party, but there's a real thing here, whether there's the culture wars being replaced by the government wars, and people really angry about whether government can manage its own affairs when a lot of governments are broke around the country, and whether it can really deliver on whether, you know, competently fight wars, protect the American people, do these kind of things. I mean, this, this is a driving sentiment, is it not, Congresswoman?

Yes. Tea parties are very loosely knit organizations. I describe it as kind of like an amoeba the way that they work, Governor. And if you came with me to one of the tea parties, what you would see is bill-paying moms and dads who are hardworking, and they finally have said, "You know, we are going to do something about this." The nation is on the right track. And it's not just directed at the president or this administration or this leadership, it's directed at both parties. What they want is leaders who are going to say, "Look, you may not agree with us. We're going to tell you the truth. We're going to tell you where we stand. We're going to stop spending taxpayer dollars on programs you don't want." People know they're overtaxed and government says....

Let me ask you about, let me ask you about some of the sentiments, though.

Yeah.

Because we -- earlier, we talked about this view that Barack Obama is a socialist. Michele Bachmann, who is a colleague of yours in the House, from Minnesota, was at that tea party rally on Thursday, and she talked about that anti-government sentiment, and this is

We're on to them! We're on to this gangster government.

Gangster government, Congresswoman.

It's disgusting. Disgraceful.

Are those, are those views that you would stand behind, that kind of rhetoric?

You know, I choose a different rhetoric, and I choose to address this -- to address the issues a little bit differently, David. But I am very concerned about...

But, are -- so listen, is that over the line? Because it's -- that's important. I mean, this is a rally, this a politician. Is that over the line?

Those are, those are words that she chose in statements that she made. What we have to focus on is tea party individuals. Individuals who are activists, who are coming to these tea parties are very, very, very concerned about what is happening with this country. They know that their taxes are high; they know that government has overspent. They're not looking at government today. They're looking at what's going to happen 20, 30, 50 years from now with our unfunded liabilities.

But, Congresswoman, is that -- do these kinds of words, we are -- April 19th is coming up, is the anniversary of the Oklahoma City bombing, where an anti-government, you know, person, who was arguably a sociopath...

Absolutely.

...attacked the federal government. When you describe a gangster government, do you think that's over the line and inappropriate in our political discourse?

It would not have been a choice in words that I made.

Right.

And what we have to realize is anytime you have large public gatherings, whether it is a group from the left or the group from the right, you're going to have lots of individuals with different opinions that show up.

Jose, let me get you into this. Broader perspective here, then, in terms of the, the overall impact of this kind of discourse right now. I mean, it says something about what's resonating...

Yeah.

...for some people in the country in terms of their views of what Washington is doing, right or wrong.

Can I interrupt you, David...

Yeah.

...because there's something that's resonating in our community that I don't hear enough about here, and I thank you for the opportunity. Immigration reform. Immigration reform is fundamental for the Hispanic community. Let me tell you something. You don't have to be an undocumented alien or an illegal immigrant, however you want to call them, to want immigration reform in this country. It's something that everybody in the Hispanic community is asking for. And we want to know what the conservatives and what the liberals and what the tea party and what the Democrats are thinking and saying. Because you know what, words do matter. And I've got President Obama, 19 -- in 2008, saying, "I can guarantee you we will have an immigration reform proposal during my first year." Words matter, we haven't seen it. Then we have on the right, people that trash Hispanics by saying, for example, that Hispanic -- what we see in Arizona, what we're seeing in Arizona, for example, that, that if you look like you could be an illegal worker, you could be...

Who are these...

Well, yeah, but both sides. Both sides have...

Who are those people out there trashing...

Yes, yes.

You know, one thing to keep in mind about the tea party is that it is an overwhelmingly white movement.

You talking, you talking about immigration reform right now?

And about the tea -- no.

OK, because that's what I wanted to bring up.

Tea party, the tea party -- yeah, talking about the tea party in general is overwhelmingly white. John McCain, almost 90 percent of his votes in 2008 came from whites. We are living through a fundamental demographic change. Hispanics were 2 percent of the vote when Bill Clinton first got elected, they were 9 percent of the vote in 2008.

That's right.

And not only is their absolute number growing, they're dispersing. It's not only in Miami, Phoenix, LA anymore. There are now 99 congressional districts in which at least 20 percent of the vote is Hispanic. And one of the questions I think the Republican Party faces is not only on immigration but, more broadly, on the role of government. The nonwhite community, the Hispanic community, the African-American community, is much more open to an activist role for government.

I think you're right.

Thirty percent of Hispanics do not have health insurance, 30 percent, and that...

So let me, though...

When we focused on immigration, and all of a sudden...

But, Jose....

I'm sorry, it's just that it never gets talked about. Can we focus on it for a second?

I want to go back to it at some point.

Hey, I'm...

Well, hold on. We're talking about it.

I know you are.

OK. But my point about immigration reform.

Yeah.

How much of this has been sidelined by all of the concentration on health care?

That's exactly right, and that's the question we're asking on, on "Enfoque" today, later on Telemundo. A gentleman from Casa de Maryland, who was meeting with President Obama at the White House on the afternoon where they were talking about immigration reform, and at that same time, they were picking people up in different places in......or you know, they pick them up for deportation, says that. He says, "We understand that he's got other priorities. But when you promise something, you have to at least deal with it."

But, but how can we...

They...

...how can you argue that health insurance reform is not a significant priority?

I'm not arguing that.

If 30 percent of the Hispanic community, according to the census...

Sure, you're absolutely right.

...lacks health insurance, much more than -- double the share among whites.

You're absolutely right.

So, I mean, in terms of a material impact on the Hispanic community, it's hard to think of anything that could be more direct than that. Now, the issue of whether immigration reform comes up, Harry Reid has said in the last few weeks he does intend to bring a bill to the floor.

Right.

Unlikely to have 60 votes to get through in this kind of quasi- parliamentary, parliamentary system without majority rule that we live in. But certainly no community had more of a stake. And if you look at the polling, Hispanics are much more likely than whites to say that healthcare reform will personally benefit me and my family.

Why are those things...

Final words.

They're not incompatible.

Yeah, they're not incompatible at all.

Right. But...

I don't know why we can't talk about them...

No, I'm just saying...

...at the same time.

...that to say that, to say that the Hispanic community was ill-served by putting health care in front of immigration reform, I think, is...

I was...

All right. I'm going to have to make, I'm going to have to make that the last word. There's so much more to discuss, but we're out of time. Thank you all very much. We're going to have more with Jose, the soft-spoken Jose, about his new program and important issues facing the Hispanic community in the U.S. and around the world in our MEET THE PRESS Take Two Web extra. It's on our Web site this afternoon at mtp.msnbc.com. Up next, our MEET THE PRESS MINUTE. President Obama defends his new plans for NASA this week. We look back nearly a half a century ago to a very similar debate on the race to space with Colonel John Glenn, right after this brief station break.

And we're back. President Obama visited the Kennedy Space Center this week to defend his decision to revamp American's space program. His ideas included sending an astronaut to an asteroid by 2025, while at the same time ending government-funded missions to the moon. Critics accused the president of shortchanging NASA, which they fear could undermine the country's competitive edge in space. Questions over funding the space agency and the need for space exploration were also raised at the dawn of the space race when astronaut John Glenn, the first astronaut to orbit the earth, appeared right here on MEET THE PRESS in 1963.

Colonel, as you know, there's a growing controversy in and out of Congress over the question of whether it is really worth the time and the money, the $20 billion to $40 billion to get a man to the moon. Have you ever had any doubts about the importance of getting to the moon?

I don't think we know really until the exploration is completed whether it's going to be completely worthwhile or not. I, I certainly think it will be, but I don't think we can really pinpoint every answer until we complete the exploration.

You risked your life and you've devoted your energy and your time in this race to get to the moon. Are you yourself convinced beyond question that it's worth doing and why?

Well, yes, I, I am or I wouldn't be in the position I'm in.

On July 16th, 1969 Apollo 11 hurtled toward the sky. Four days later Neil Armstrong, followed by Buzz Aldrin became the first men to set foot on the moon. Aldrin traveled with President Obama Thursday to show support for the administration's new plans, while his fellow astronaut Armstrong has remained one of the administration's most vocal critics. We'll be right back.

A few programming notes before we go. Two important specials coming up on MSNBC. Today at noon Eastern, a discussion, "Debating the Black Agenda" hosted by Tamron Hall and Ed Schultz of MSNBC. And tomorrow night at 9 PM Eastern, Rachel Maddow

Confessions of an American Terrorist." As for us, the Sunday afternoon MEET THE PRESS re-air on MSNBC will now be simulcast on satellite radio, Sirius Channel 90 and XM Channel 120. We can be everywhere. That is all for today. We'll be back next week. If it's Sunday, it's MEET THE PRESS.