Meet The Press with David Gregory (08/22/2010)

MR. DAVID GREGORY: This Sunday, our special focus on the midterm race and what it will mean for the balance of power in Washington.

VICE PRES. JOE BIDEN: There will be, in Washington, D.C., a Democratic majority in the House and a Democratic majority in the Senate. That will be the case. And were it not illegal, I'd make book on it.

MR. GREGORY: The referendum on President Obama and the Democrats takes center stage as races heat up across the country. We discuss the issues that may affect how you vote in November -- the economy, jobs, the deficit, the war in Afghanistan, and the withdrawal of troops from Iraq. With us, our top newsmaker interview this morning, Senator Mitch McConnell of Kentucky, the GOP leader of the Senate. Then, a debate on the influence of the tea party on national politics with former House Majority Leader and author of the new book about the movement "Give Us Liberty," Republican Dick Armey; and Michigan's Democratic governor, Jennifer Granholm. Finally, our political roundtable on the fight over that Islamic cultural center and mosque near Ground Zero, the growing controversy, American views about Islam, and uncertainty about President Obama's own religious beliefs. With us, Jeffrey Goldberg of The Atlantic magazine; Paul Gigot, editorial page editor of The Wall Street Journal; Katty Kay of the BBC; and former Congressman Rick Lazio, Republican candidate for governor in New York.

Announcer: From NBC News in Washington, MEET THE PRESS with David Gregory.

MR. GREGORY: Good morning. The president and his family are on day four of their 10-day vacation. But before leaving for Martha's Vineyard, the president crisscrossed the country in campaign mode, making the case for Democratic candidates in some tough races this November. Here with us now, the man hoping to become the new majority leader in the Senate, the current minority leader, the leader of the Republicans, Mitch McConnell of Kentucky. Leader McConnell, welcome back to MEET THE PRESS.

SEN. MITCH McCONNELL (R-KY): Good morning.

MR. GREGORY: We will talk politics, but I also want to talk about the controversy surrounding plans to build a mosque in a community center in Lower Manhattan near the site of Ground Zero. Here is Time magazine, out on newsstands now, with the cover, "Is America Islamophobic? What the anti- mosque uproar tells us about how the U.S. regards Muslims." We know it is their right to build a community center and a mosque near Ground Zero. My question for you is, is it the wise thing to do?

SEN. McCONNELL: Well, obviously this is not about freedom of religion in America. Typically, these kinds of decisions are made by local officials. What's been different about this one is you have the president of the United States weighing in on this issue on -- actually on each side of the issue within 24 hours, which has helped stimulate a great national debate, not about freedom of religion, about -- but about the appropriateness of the location.

MR. GREGORY: What is your view about whether it should be built?

SEN. McCONNELL: Well, ultimately that's going to be decided by the people of New York. But I think we -- because of the, the nature of the attack on 9/11, a lot of people, not just in New York, but around the country, have strong views about this. And I hope the people of New York who can actually make the decision will take into account public opinion, not only locally, but around the country, in making a final decision on the location of this facility.

MR. GREGORY: Well, that would suggest you think it should be moved, because public opinion is squarely against it.

SEN. McCONNELL: Well, I would suggest that, what I said a minute ago, the local officials, in the end, are going to make this decision. It's a symbol to a lot of Americans because of the 9/11 attack. Governor Paterson, I note, is weighing in and trying to work something out. I hope they'll weigh public opinion in the United States in making a final decision about the location of this center.

MR. GREGORY: Do you think the president appropriately stepped in to this debate? Was that leadership?

SEN. McCONNELL: Well, it certainly made it a much bigger issue. It was already a developing issue, but it made it a much bigger issue when the president of the United States decides to weigh in on a local, basically, zoning decision made -- or site selection decision made by local officials in most communities in America.

MR. GREGORY: But, Senator, this is about more than a local zoning decision. I mean, President Bush went out of his way after 9/11 to talk about the way the West, the way America should relate to the, the Muslim world. This is about the wounds of 9/11; it's not simply about a development project. Don't you think it requires Republican leaders like yourself to be the faces of leadership on this, and not the likes of Newt Gingrich and Sarah Palin?

SEN. McCONNELL: Look, I mean, the president's been ignoring public opinion all year long on a variety of things. People were not in favor of the stimulus bill, they were not in favor of the healthcare bill, they're certainly not in favor of the spending, the debt, the Washington takeovers, and they're not in favor of the tax increases that they have in mind in September. I think one of the reasons the president's approval rating is so low now is that he doesn't pay a whole lot of attention to public opinion.

MR. GREGORY: Let me move on to something that seems to be related to this and has gotten a lot of attention this week, and this is the poll about the president's own faith from the Pew Research Center. Eighteen percent of those polled believe that the president is a Muslim. Among Republicans, this is striking, 31 percent believe he's a Muslim. Of course, he's not. Why do you think these views prevail?

SEN. McCONNELL: Well, look, I think the faith that most Americans are questioning is the president's faith in the government to generate jobs. We've had an 18-month effort here on the part of this administration to prime the pump, borrow money, spend money hiring new federal government employees, sending money down to states so they don't have to lay off state employees. People are looking around and saying, "Where's the job?"

MR. GREGORY: Right.

SEN. McCONNELL: The president's faith in the government to stimulate the economy is what people are questioning.

MR. GREGORY: That, that, that's certainly a side step to, to this particular question. Again...

SEN. McCONNELL: Well, no, I -- the -- I -- the president...

MR. GREGORY: ...as a leader of the country, sir, as one of the most powerful Republicans in the country, do you think you have an obligation to say to 34 percent of Republicans in the country-- rather, 31 percent who believe the president of the United States is a Muslim? That's misinformation.

SEN. McCONNELL: The president says he's a -- the president says he's a Christian, I take him at his word. I don't think that's in dispute.

MR. GREGORY: And do you think -- how, how do you think it comes to be that this kind of misinformation gets spread around and prevails?

SEN. McCONNELL: I have no idea, but I take the president at his word.

MR. GREGORY: Let's move on to some domestic matters. Here was the headline in a

Washington Post editorial on Friday with regard to policy issues: "With the tax vote, Republicans fail in their attempt to appear fiscally responsible." You and other Republicans would like to see the Bush-era tax cuts extended. The president, of course, wants to repeal them except for those on the wealthiest Americans; in other words, those taxes would go up. What are you prepared to do to pay for an extension of tax cuts for everybody?

SEN. McCONNELL: This has been tax law in, in America for almost 10 years now, existing tax law. What the administration is proposing, and the majorities in the House and Senate, is to raise taxes on the top 2 brackets, which will affect 50 percent of small business income and in -- and impact 25 percent of the work force. For example, if you look at last -- the last quarter of last year, 84 percent of the jobs that were lost were lost in small business. I think it is outrageous to suggest that raising taxes in the middle of a recession is a good idea.

MR. GREGORY: Point taken. But, Senator, my question is...

SEN. McCONNELL: If they want to have -- if they want to have that debate...

MR. GREGORY: But my question is how do you pay for an extension of tax cuts? Because if you're concerned, as Republicans say they are, about cutting spending and the deficit, you have to acknowledge that tax cuts are not paid for.

SEN. McCONNELL: Well, what, what, what, what are you talking about paid for? This is existing tax policy. It's been in place for 10 years. What they're talking about is raising taxes, impacting 50 percent of small business income in the middle of what most Americans think is a recession. That is not a responsible thing to do in my judgment.

MR. GREGORY: It still -- but it's still borrowed money. Alan Greenspan, former chairman of the Federal Reserve, on this program August 1st, said the following. Watch this.

MR. ALAN GREENSPAN: Look, I'm very much in favor of tax cuts, but not with borrowed money. And the problem that we've gotten into in recent years is spending programs with borrowed money, tax cuts with borrowed money. And, at the end of the day, that proves disastrous. And my view is I don't think we can play subtle policy here.

MR. GREGORY: You don't agree with Republican leaders who say tax cuts pay for themselves?

MR. GREENSPAN: They do not.

MR. GREGORY: The CBO, Senator, this week made it very clear that the long-term picture for the economy, for the deficit, is very dark if you extend the Bush-era tax cuts without somehow paying for them.

SEN. McCONNELL: Look, what we're talking about here is, is tax increases in the middle of a recession. We are going to have the third year in a row, under this administration, of an annual deficit of more than a trillion dollars. That is not because we are taxing too little, David, it's because we're spending too much.

MR. GREGORY: But, Senator, with respect...

SEN. McCONNELL: We need to freeze...

MR. GREGORY: ...you're being unresponsive to a question, which is are tax cuts paid for going forward...

SEN. McCONNELL: Well...

MR. GREGORY: ...or is it borrowed money at a time when you and other Republican leaders say we must get serious about the deficit? It's a straightforward question.

SEN. McCONNELL: I -- yeah, I know. And I, and I gave you a straightforward answer. What we're talking about here is raising taxes in the middle of what most Americans think is a recession. That isn't going to produce more revenue. We've, we've got a serious job loss problem in this country. They have primed the pump, they've borrowed money, they've spent money for the last year and a half, unemployment is still almost at 10 percent, and now the job creators, the small businesses in this country they're suggesting they're taxes go up? Look, the president called in a bunch of small businessmen to the White House a few weeks ago, and he asked them why they weren't expanding. And their answer was, "Mr. President, with all due respect, your agenda" -- healthcare mandates, tax increased headed their way, more and more burdensome regulation. I mean, look at the new healthcare bill for example. There's a provision in there that requires that small businesses send a 1099 form to the IRS for every vender they do $600 worth of business with. That's just a massive amount of paperwork and problems. This administration...

MR. GREGORY: But, Senator...

SEN. McCONNELL: ...is extraordinarily anti-business, and raising taxes in the middle of a recession is not the way to go.

MR. GREGORY: For a final time, I'll go back to my question, which is the extension of the tax cuts would cost two point -- $3.2 trillion. That's borrowed money that adds to the deficit. Do you have a plan to pay for that extension?

SEN. McCONNELL: You're talking about current tax policy. Why did all it of a sudden become something that may "paid for." Look, the problem is the spending problem. If we grind down the spending, we will begin to get a handle on this mounting debt, and if you push this economy further backward, we'll get less revenue for the government, not more. Raising taxes in the middle of a recession on the major job generator in America, small business, is a very, very bad idea.

MR. GREGORY: You talk about spending, and that's very interesting. This is what, what's

called "A Roadmap for America's Future: A Plan to Solve America's Long-Term Economic and Fiscal Crisis," written by the conservative congressman, Paul Ryan, of Wisconsin. It lays out some Draconian steps to balance the budget, to cut spending in both Social Security and Medicare. I'm wondering why it is, if Republican leaders are so serious about cutting the deficit and cutting spending, why there aren't more than 13 co-sponsors in the United States Congress for this plan?

SEN. McCONNELL: Well, let me tell you what we are doing right now in the United States Senate. The majority leader, Harry Reid, told me on the floor of the Senate a couple of weeks ago that they're going to come down to the top line that we offered for this year's appropriations bill, which is essentially a freeze over last year. How much money will that save? The difference between that top line in annual spending and what the president asked for over 10 years will be $300 billion, which is not chump change. Number two, the president has appointed a deficit reduction commission. This is not going to be your typical commission. It's going to issue a report, sit on the shelf, and gather dust. I put three members on it, very responsible members. John Boehner's put three members on it. We expect them to send up a recommendation no later than December of this year to deal with our long-term debt problem, and we do know that we have a serious long-term debt problem-- unfunded liabilities related to Social Security, Medicare and Medicaid. I don't think we ought to make what they may be doing a political football between now and November. We'll wait for their report; and I, intend if it's a responsible report that I can support, encourage my members to support it. I think the president will do the same thing. We could, before the end of this calendar year, actually have a significant impact on our long-term debt problem.

MR. GREGORY: Why is it that you need a Democratic president's commission on cutting the deficit to figure out what it is, as Republicans, you think should be cut in federal spending?

SEN. McCONNELL: I don't think that it ought to be a political football between now and November. We've got a bipartisan effort here, a serious bipartisan effort supported by the president, by Leader Boehner and myself. They're going to report later this year. We will treat that report seriously. I hope it is the kind of recommendation that we can support on a bipartisan basis.

MR. GREGORY: Finally, the political question, as you look in -- to the midterm race, the issues that are heating up, we've talked about a few of them, what is your prediction for the Senate in November? Does it remain in Democratic hands?

SEN. McCONNELL: Look, I'm, I'm not going to make a prediction. I will say this, if the election were tomorrow, we'd have a very good day. There are at least 12 seats in the Senate where Democrats are on defense. That's pretty unusual, because we had very bad results on our side in '06 and '08. So we're on offense, American -- the American public has taken a look at this administration. They think it's spending too much, borrowing too much, taking over too much of the private sector, and now raising taxes on top of it. I think we're going to have a very good day.

MR. GREGORY: But you cautioned against irrational exuberance about your chances in the Senate.

SEN. McCONNELL: Yeah, I think irrational exuberance is not appropriate. There are 70 some-odd days been now and the election. I'm optimistic.

MR. GREGORY: The tea party debate, which we'll have here in just a moment with former Majority Leader of the House Dick Armey, is very much a factor in this race. And the tea partiers are talking about a hostile takeover of the Republican Party. What is their impact, do you think, in the fall?

SEN. McCONNELL: I think it's been entirely positive. It's an indication of, of broad public support for doing something about too much spending and too much debt. And this -- the kind of genuine popular uprising against excessive government spending, I think, has been extremely helpful. It's produced a lot of energy in our primaries, and I think it's going to produce victories in November.

MR. GREGORY: Leader McConnell, as always, thank you very much for being here.

SEN. McCONNELL: Thank you, David.

MR. GREGORY: And coming up next, the influence of the tea party on national politics with a little bit more depth, our exclusive debate, former House Majority Leader and early tea party supporter, Republican Dick Armey vs. Michigan's Democratic governor, Jennifer Granholm. Plus, the fight over plans to build that Islamic cultural center and mosque near Ground Zero.

Our round table weighs in: The Atlantic's Jeffrey Goldberg; The Wall Street Journal's Paul Gigot; the BBC's Katty Kay; and former Congressman Rick Lazio, only here on MEET THE PRESS.

MR. GREGORY: The influence of the tea party and government spending on national politics, an exclusive debate coming up right after this brief commercial break.

MR. GREGORY: We're back with our exclusive debate. Here with me now, former House

majority leader and author of the new book, "Give Us Liberty: A Tea Party Manifesto," Republican Dick Armey, and the Democratic governor from the state of Michigan, Jennifer Granholm. Welcome to both of you.

GOV. JENNIFER GRANHOLM (D-MI): Thank you, David.

MR. GREGORY: We are talking about the impact of the tea party, the climate for this midterm race, and what the prospects are for Republicans and Democrats, and I do want to start with, when we think about issues that voters will be thinking about, some of the larger questions that arise out of this mosque debate, about whether it should be built in Lower Manhattan. The president did speak out about this, as Senator McConnell indicated. This is what he said at an at iftar dinner this week.

PRES. BARACK OBAMA: As a citizen and as president, I believe that Muslims have the right to practice their religion as everyone else in this country. That includes the right to build a place of worship in a community center on private property in Lower Manhattan in accordance with local laws and ordinances. This is America, and our commitment to religious freedom must be unshakable.

MR. GREGORY: That was last Friday. The very next day he appeared to hedge his views on all of this. Watch.

PRES. OBAMA: I was not commenting and I will not comment on the wisdom of making a decision to put a mosque there. I was commenting very specifically on the right that people have that dates back to our founding. That's what our country's about. And I think it's very important that, you know, as difficult as some of these issues are, you know, we stay focused on who we are as a people and, and what our values are all about.

MR. GREGORY: Governor, a lot of people felt that this was a hedge, an attempt to walk back his previous support. Has this been an example of strong leadership by the president to wade into this issue and to make statements like that?

GOV. GRANHOLM: Well, I think that any time somebody stands up for the Constitution, which is exactly what he did, I don't think there's any disagreement that they have the right to be able to worship and to build on private property. I don't think anybody would disagree with that. The question is whether it is a good decision on their part, right? What's the imam saying. Now, the imam apparently is overseas and has been overseas on a State Department mission bridge building for three weeks. And so the question is, what is the nature of this particular imam and the sect? It's a Sufi sect, apparently, and that's supposed to be the most peaceful of all the -- that sect is under attack by al-Qaeda. I think the question really is we need to hear from the imam, but it's a real teachable moment for American Islam, for the, for the -- I actually, in anticipation of this question, David, I called, because Michigan has the largest Arab-American population outside of the Middle East. And so I called one of our imams yesterday, and I said, "Do you know this imam? What can you tell me about him?" He said, "He is the most bridge building imam in -- one of the most in the country." And that we as a nation, and he's an American, of course, ought to be holding that kind of leadership close rather than saying -- brushing all Muslims with this brush that affiliates them with al-Qaeda. They're being attacked by al-Qaeda, too. They're just as offended at -- or maybe even more so, because of what the, the splashback is on all Muslims. So I think we ought to be hearing from them.

MR. GREGORY: Leader Armey, back in 2001, after the 9/11 attacks, you went to the floor, and you were outspoken, saying that there are Muslims around the world, Arabs who are as horrified as U.S. citizens, that we ought to treat them with equal respect and decent treatment. In that vein, do you think it's a wise decision to have the mosque here as a sign of living our values?

FMR. REP. DICK ARMEY (R-TX): I believe the folks that want to build the mosque there are making an unwise decision. But I think, when, when I look at the 18 percent of the American people that are enthusiastic about this grassroots movement, we see this as while it's an important issue. It's an issue that ought not to be distracting the president from the critical issues of unemployment, fiscal responsibility, a nation headed for bankruptcy. And the larger issues that affect the future of our children make this issue pale. On the question of should the president be sticking up for the Constitution, our folks say, "Well, great, I love him sticking up for the -- we should have done that on medical -- Medicare," where, in fact, he trashed the Constitution in the view of most of our folks. And in terms of him being here and then there, it reflects again our fear that this president is whimsical and doesn't really quite know where he is on any subject, even the larger subjects that are driving our folks in, in the street trying to make change in America.

MR. GREGORY: Talking about your folks, you're talking about tea partiers around the country and the movement that you've written about. One of the arguments that Democrats make about some of the candidates who are supported by the tea party is that they're, frankly, too extreme for the -- even the mainstream of the Republican Party. And I want to go through some of the top races and have you respond to that.

REP. ARMEY: Yeah.

MR. GREGORY: Colorado U.S. Senate race, Ken Buck, Republican nominee. He wants to eliminate the Energy and Education Departments, says separation of church and state is too strictly enforced. To Kentucky, Rand Paul, tea party candidate in the Senate race, critical, of course, of the minimum wage law, civil rights law, supports cutting back on unemployment insurance, calls Medicare socialized medicine. Nevada, Sharron Angle, for the Senate again, talks about no adoption for same sex couples, the U.S. should pull out of the U.N., privatize Medicare and Social Security. And finally, in Utah in the Senate race, you've got Mike Lee. He wants to repeal the progressive income tax, supports changing the 14th Amendment of birthright citizenship. If this is the tea party's impact on national politics, there's certainly a lot of Democrats who say too extreme for the mainstream of the political country.

REP. ARMEY: Well, first, first of all, each one of these candidates won a Republican primary as a Republican candidate with a variety of different stresses on different issues. I am not going to take the Democrat Party's characterization of a Republican Party candidate's position on any issue as the gospel truth. I don't know if you've noticed, but politicians say insincere things; and, frankly, I don't quite listen to the Democrats on the candidates. But the voters paid attention to the candidates and made their choice. Now, the Democrats are -- they have a guy down in, in South Carolina who wins the primary and, and is then convicted of a felony. They ought to concern themselves with, "What is the quality of our candidates, and can we meet the challenge of trying to race against these candidates?" who are going to beat their person in the, in the fall.

MR. GREGORY: Governor, is this an example of what, what they've called a mainstream political movement, some of these candidates and their views?

GOV. GRANHOLM: Well, you know, no. I think it's far outside the mainstream. In fact, one of the things -- you just held up Paul Ryan's, you know, proposal regarding Medicare and regarding Social Security. I think a lot of which you've jumped onto as well. But there was a recent poll out that said that 85 percent of Americans don't want to see Social Security cut to solve the, the deficit. The reality is, you know, as a governor of the state that has had the toughest economic go-over the past eight years, I'm just really interested in what works to create jobs, what works. And the proposals that are coming from these candidates are not proposals that work. This is the laboratory of the states right here, and I can tell you what has worked. What has worked is the government smartly intervening to save the auto industry; smartly, strategically, surgically intervening to invest with the private sector to create, for example, the electric batteries for the vehicles; smartly intervening with the private sector to be able to do the breakthrough technologies that the private sector doesn't have the funds to be able to do. That's what other countries are doing. And we've got to realize that these economic models that just say, "We've got to cut, cut, cut, cut, cut," you know, who's applauding most is China. They're happy that this movement is happening...

MR. GREGORY: But there's...

GOV. GRANHOLM: ...that's going to continue to cut away.

MR. GREGORY: But there's a broader debate here, and I think the governor gets to it, Leader Armey...

REP. ARMEY: Well...

MR. GREGORY: ...which is the role of government...

REP. ARMEY: Right.

MR. GREGORY: ...is it part of the problem or part of the solution? This is what drives the tea party movement.

REP. ARMEY: Absolutely. And, and, and, and this mischaracterization, once again, of Paul Ryan, who's probably the most creative thinking and most courageous guy in Washington, plan on Social-- all Paul Ryan is saying is let Social Security be voluntary, let Medicare be voluntary. Why -- if these are such great programs, why do you have difficulty with people being free to choose? And I'll tell you what, Paul Ryan and I will give every Social Security recipient in America that chooses to stay in this system a better guarantee that it will be as they know it today than the Democrat Party will...

MR. GREGORY: All right.

REP. ARMEY: ...because the Democrat Party is going to start making changes that will, in fact, deny individuals their benefits.

MR. GREGORY: Let me ask you this, though. We -- there's certainly a separation debate to be had about how to deal with Medicare and Social Security. But I wonder, you heard my questions to Senator McConnell, he certainly doesn't appear to be on board with what Paul Ryan is talking about. There's 13 co-sponsors to strict spending. When you talk about a hostile takeover of the Republican Party, are the leaders of the Republican Party today part of the problem?

REP. ARMEY: First of all, the fact that they -- he only has 13 co-sponsors is a big reason why our folks are agitated against the Republicans as well as the Democrats. The difference between being on -- a co-sponsor with Ryan and not is a thing called courage. And we have watched American public policy dominated by Democrats that don't care and Republicans that don't, don't dare for a long time. So we're saying to the Republican Party, you know, "Get some courage to stand up for the things that are right for this country. Don't stand there and, and, and hide from the issue because you're afraid of the politics. The issue of public policy that governs the future of my children is more important than your politics, and if you can't see that, we'll replace you."

MR. GREGORY: Go ahead, Governor.

GOV. GRANHOLM: If you care, if you care about democracy and what the everday citizen believes, and you want to empower them, and they don't want the Social Security system to be dismantled and they don't want the Medicare system to be dismantled, because you're picking and choosing, and this is a compact between generations to be able to make sure that all of our seniors have the funds when they retire that they're not going to be homeless, so they're not going to have to go to a shelter.

REP. ARMEY: Well...

GOV. GRANHOLM: I'm not kidding you. You -- the idea that, that 85...

REP. ARMEY: No, no, you, you just crack me up. You get it wrong again.

GOV. GRANHOLM: Well, you're cracking me up, too, man.

REP. ARMEY: Now, there's nobody that's talking about dismantling these systems.

GOV. GRANHOLM: Eighty-five percent of people -- well, but if you do that, every actuarial who's looked at it says that you effectively dismantle the system.

REP. ARMEY: OK, let me...

GOV. GRANHOLM: And if 85 percent of Americans wanted it...

MR. GREGORY: All right.

REP. ARMEY: Let, let me ask you a simple question. If you happen to be a Christian Scientist and have never seen a doctor in your life and never intend to go to a doctor in your life and never bought insurance in your life, is it right to, to be told at the age of 65 if you don't buy -- sign up for Medicare, we'll take away your Social Security? That's not in the law. It's not even a regulation.

GOV. GRANHOLM: Well...

MR. GREGORY: I want...

REP. ARMEY: It's some whimsical thing that is enforced by this government in the aftermath of policy.

MR. GREGORY: I want to get one other question in.

REP. ARMEY: That is not, that is -- I mean, that -- you can certainly afford to give that little provision up, can't you?

GOV. GRANHOLM: No. No.

REP. ARMEY: And let the, let the Christian Scientists be free to choose...

GOV. GRANHOLM: Let's go at it. But I know we want....

MR. GREGORY: All right. But this, this debate to continue. We've got about a minute left. I want to, I want to address the tax debate. And what you hear from Republican leaders is an unwillingness to pay the bill as you move forward to extend the Bush tax cuts.

REP. ARMEY: Not at all.

MR. GREGORY: Is that wrong? You heard Alan Greenspan say that it's borrowed money...

REP. ARMEY: No. Right.

MR. GREGORY: ...and that they do not pay for themselves.

REP. ARMEY: Where has Alan Greenspan been? John -- I, I was a young undergraduate watching all my faculty celebrate the genius of John F. Kennedy as he taught us you cut taxes, revenues increase. Reagan cut taxes, revenue doubled. What -- the first, most important, critical thing for the American economy is to cut the size of the federal government. This is a big, fat, sloppy, inefficient, obstructionist, Porky Pig that's standing in the way of economic progress for the American people. It is counterproductive. It's an extra weight. It is -- and it needs to be cut or this economy can't carry the weight. This is no thinking...

MR. GREGORY: This is the argument.

GOV. GRANHOLM: Just quickly -- this is the argument, and it's a 20th century argument, it's not a 21st century argument. When we're competing in a global economy, the government has to partner with the private sector to create jobs. If you just slash spending, you slash the investments in the things that are going to move our economy forward, we miss out. Just very quickly, last year, the vice president came to Michigan, said we were going to get all these battery grants; we created -- we have 16 companies now in Michigan just in the past year because we partnered with the private sector creating 62,000 jobs. Strategic investment with the private sector is what works in the 20th century.

MR. GREGORY: But should the Democrats be raising taxes on the wealthiest Americans during a recession?

GOV. GRANHOLM: It's -- the question is, should the tax cuts expire for the wealthiest 2 percent so that we can make the investments that will grow jobs? Yes. That's the most effective way of creating job growth. The CBO has said that cutting taxes for the wealthiest 2 percent is the most ineffective way of creating job growth.

REP. ARMEY: I'll give you, I'll give you anywhere from -- a minimum of $2 trillion to a possible $8 trillion worth of real stimulus of the economy from the private sector if we can just relieve the private sector that's sitting on its cash from the fear that this administration's going to screw up the future of this economy. Let them understand this administration's going to stand down from any new cockamamy ideas and not raise taxes and take away the return on an investment, and they'll put that cash to work in America.

MR. GREGORY: I'm going to make that the last word.

GOV. GRANHOLM: Ah!

MR. GREGORY: I suspect this debate will continue as we go into the fall campaign.

GOV. GRANHOLM: Thanks.

MR. GREGORY: Governor, Leader Armey, thank you both very much. And you can keep the mug, by the way. Coming up next, the growing controversy over plans to build an Islamic cultural center and mosque near Ground Zero. American views about Islam, and uncertainty over President Obama's own religious beliefs. Our roundtable sorts it out: Jeffrey Goldberg of The Atlantic magazine, Paul Gigot of The Wall Street Journal, Katty Kay of the BBC, and former Congressman Rick Lazio, a Republican candidate for governor in New York, after this brief station break.

MR. GREGORY: And we are back with our political roundtable. Joining us this morning, The Atlantic magazine's Jeffrey Goldberg; a Republican candidate for governor of New York, former Congressman Rick Lazio; the BBC's Katty Kay; and editorial page editor for The Wall Street Journal, Paul Gigot. Welcome to all of you. I want to explore this, this mosque debate in some greater depth. I think it is striking that one of the more powerful Republican figures in the country, Mitch McConnell, does not want to take a stand on it. But, Rick Lazio, you're running for governor in New York, and you have taken a stand. In fact, you have made a point of politicizing this issue. You've got a Web ad, and I want to play just a portion of it on the screen here.

MR. GREGORY: You've been criticized by the firefighting union, police union, for using those images of 9/11. Why have you felt strongly enough to make this a part of the campaign? Why is it that the mosque does not belong where they say it should go?

FMR. REP. RICK LAZIO (R-NY): Well, first of all I would say, David, there are millions of peace-loving, good Muslims in America. This Imam Rauf is not one of them. He's not a bridge builder. This is a man, the very same month that people were burying their loved ones that were lost in 9/11, he said that America was an accessory to the crime of 9/11. He said that Osama bin Laden was created in the USA. He refuses, only months ago, to, to distance himself from Hamas, in fact, protecting him -- protecting them, and only recently one of the developers said that they would consider taking money from Iran. Now, I don't know exactly what we think we're talking about, but 70 percent of the New York-- people in New York believe that we are, we are not supportive of having this mosque, this imam in this location. Let's be very precise about this. We're not talking about a whole religion, we're not talking about prayer. There are over 100 mosques in New York City, there are a couple of thousand in America. Nobody's arguing for a cap on mosques. Nobody's saying that people shouldn't have a place to pray. What we are saying is that this person, this imam, we want to open up the books, show some transparency, where is this money coming from? And that's what we've been calling on Andrew Cuomo-- as the attorney general...

MR. GREGORY: Right.

REP. LAZIO: ...he's got the jurisdiction over registered charities, which is what the Cordoba Initiative is, to impose some transparency here.

MR. GREGORY: OK. Jeffrey Goldberg, you've reported on this extensively, you know the imam. You have a different view.

MR. JEFFREY GOLDBERG: Look, this imam, in 2003, spoke at a memorial service for Daniel Pearl, the Jewish Wall Street Journal reporter who was killed by al-Qaeda in Pakistan, and, and he got up there and said, "I am a Jew." He got up in a synagogue and said, "I am a Jew. I identify with Judaism." And he was, was, was declaring in front of an audience, which is very dangerous, by the way, for a Muslim cleric to do, he is, he is saying that, "I stand against al- Qaeda and what they've done." He's done this repeatedly. I know him from different, different venues, different dialogue groups. The man, in, in my personal experience, is, in fact, a bridge builder.

MR. GREGORY: This is an issue where there is a debate about this. Paul Gigot has been thrust into the, the, the political debate. Newt Gingrich using language, comparing this episode to putting a swastika outside the Holocaust Museum; Sarah Palin weighing in. In fact, Karen Hughes, who was counselor, of course, to President Bush, has among the more thought out responses to this. And she writes this in an editorial this morning in The Washington Post. "A mosque at the edge of Ground Zero would be much more than a house of worship; it would be a symbol, interpreted differently by different audiences. For some it would be the ultimate expression of the freedom of religion we enjoy in America; for others a searing reminder of terrible deaths at the hands of murderers calling themselves Muslims. I suspect that the terrorists might celebrate its presence as a twisted victory over our society's freedoms." How is this being used politically all -- on all sides?

MR. PAUL GIGOT: Well, on both sides it's being, I think, abused, and it's a destructive debate. It's an unfortunate debate. That's why I wish the president hadn't elevated it above a local issue. I don't know the Imam Rauf, I don't really -- he's said some things about Hamas that I wish he hadn't said, for example, that he won't condemn it as terrorists. He's also said the things that you said he, he has. And so he's been in between, but the one thing that I think this mosque is not doing right now is achieve his goal of cross- cultural, cross-religious understanding. And if that's the case, then I think he should try...

MR. GREGORY: But it's not built yet. I mean, Katty Kay, who's fault is it that they're not achieving understanding when what's happening is a fierce response from people who think, "This is salt on the wound, don't do this. We don't want this so close to the, the site of 9/11 of Ground Zero."

MS. KATTY KAY: Right, David. I mean, it's been striking, during the course of this week, how few really outspoken public defenders there are of Muslims in America, at the moment. When you have Newt Gingrich come out and effectively equate Muslims with Nazis, you wouldn't get away with doing that with any other minority group in America. Newt Gingrich couldn't have said that about gays or womans or Latinos and, and had any political future in this country. There would have been a huge public outcry. There hasn't been that, and it does lead some Muslims to question what America's relationship with Islam is. And if -- and the risk for America here is that the war against Islamic extremism will be won partly with intelligence on the ground and partly by persuading wavering Muslims that the path of religious tolerance and openness is preferable to the path of intolerance.

MR. GREGORY: Well, and let me challenge you, Rick Lazio, on this, Congressman Lazio. You know, General Petraeus, who we spoke to in Afghanistan last week, tells his soldiers, American soldiers fighting for America, to live our values. That's what they're going when they're in harm's way. Are we living our values in this debate?

REP. LAZIO: I think we're saying absolutely that the people of the, of the Islam faith or the Muslim faith, absolutely we want people here. We want to make sure they have places to worship, we want to have -- we want to make sure people understand they are great Americans, that they are patriots, there are Muslims that lost their lives in 9/11. It is not about religion. It is about this location and this imam. Why don't people question it? Why aren't they offended when someone will not characterize Hamas as a terrorist organization? And, in fact, one of the leaders of Hamas came out recently, this last week, to support this, this Ground Zero mosque. Doesn't that raise some -- I mean, I have just questions. I'm saying let's get behind this, let's understand where this money is coming from. It is -- are they from foreign governments? Are they from radical originations? We don't know, and why can't we find out? It seems to me that, again, if Andrew Cuomo had done his job as attorney general, we wouldn't be having this contentious debate right now.

MR. GREGORY: Jeffrey.

MR. GOLDBERG: Look, look, there's a broader issue here, and the broader issue is this, we, we have serious problems with aspects of the Muslim world. We have, we have a problems with Sunni extremism as personified by Osama bin Laden. We have a problem with Shia Muslim extremism as personified by Ahmadinejad and the regime in Iran. We -- but, but those people don't represent the majority of Muslims in the world, and what we're doing here is signaling to the majority of Muslims, who don't like those people, who sometimes actively work against those people, who even fight on our side against those people, we're saying to you, "It's, it's -- your religion is somehow not as good as our religions." And, and, and that is a terrible message to send. This is -- this is an actual -- this is an actual national security problem.

MR. GREGORY: All right, Paul, Paul, Paul Gigot.

MR. GIGOT: We're not saying that they can't build mosques all over the world, all over the country. They're saying, "We don't want it at that spot." The analogy thinking -- hold on-- I think the analogy here is what John Paul II did with the Carmelite nuns when they wanted to build a convent at Auschwitz. He said, "Look, this is a special place with special meaning for a lot of people, and it offends them to do so. Stand down." And nobody says the Carmelite nuns had anything to do with the Nazis.

MR. GOLDBERG: See, this is the largest Jewish graveyard in the world. There was a very specific reason that the Pope...

MR. GIGOT: The World Trade Center's a graveyard for Americans.

MR. GOLDBERG: ...but -- a graveyard for everybody, including, by the way, Muslims.

REP. LAZIO: But why...

MR. GREGORY: But why -- but here -- but, Katty Kay, why is it inappropriate to say, "Look, religious freedom is protected in America, but it's not wise if you consider that in -- you had terrorists in a perversion of Islam who committed this atrocity in the name of Islam and, with respect to the victims of 9/11, it's just not appropriate to put it there?" Maybe 30 years from now, OK. Right now we just can't get there.

MS. KAY: But, David, isn't that the point that you're saying that there are terrorists, extremists, a very small group who acted in the name of Islam. The risk for this country is that you -- and it has been a risk since 9/11, Muslims here, moderate Muslims in America have felt this, that you start lumping all Muslims in with that group. And that's a very dangerous strategy, not just in moral terms for America, but in political terms for America.

MR. GOLDBERG: Try to -- try to think how an American-Muslim soldier...

MS. KAY: Another point is that Rand Paul has come out and said that America's foreign policy is partly to blame for the war on terrorism against America. Now would you say that Rand Paul supported terrorism? Of course not.

REP. LAZIO: I would say...

MS. KAY: And he said it's not just what America is, it's what America does.

REP. LAZIO: I would say that any time that the developers of this 9 -- this, this Ground Zero mosque say that they might consider taking money from Iran, every person ought to be concerned. And we ought to say, "Where is this money coming from? Let's have a full accounting, and let's open up the books." Why are we not outraged by that? I don't understand it. And what does it say about the intent of the developers of this one mosque by this one imam?

MR. GREGORY: All right.

REP. LAZIO: I think we need to be very precise about this.

MR. GREGORY: Jeffrey, final point on this, and I want to move on to a couple of other things. Go ahead.

MR. GOLDBERG: No, the, the point is I, I try to put myself in the shoes of an American Muslim soldier in Iraq or in Afghanistan right now. He's risking his life to bring democracy, to bring American-style values to these Muslim countries. He's working hand in hand with Afghans and Iraqis who are risking their lives to advance legitimate American interests in the -- in those cases. And he looks back and he reads the papers, he goes on the Internet and he sees that politicians are equating his religion to Nazism. How does that -- how, how that person going to feel?

MR. GREGORY: All right.

MS. KAY: And where is the public defense. I think that's almost what's more alarming about this debate...

MR. GREGORY: Right. The...

MS. KAY: ...is the subsequent conversation.

MR. GREGORY: If this is a defining moment in terms of our relationship with Islam, with the Islamic world, there are other areas of conflict, like Iran and like Iraq, and let me take those in turn in a couple -- just -- for a couple of moments. Jeffrey, you've written the cover story on this month's Atlantic magazine, and we'll put it up on

the screen. "Israel is Getting to Bomb Iran: How, Why and What it Means." This may be, in fact, one of the legacies, this threat of the Iraq war. You write this: "Based on months of interviews, I have come to believe that the administration knows it is a near-certainty that Israel will act against Iran soon if nothing or no one else stop the nuclear program; and Obama knows - as his aides, and others in the State and Defense departments made clear to me that a nuclear- armed Iran is a serious threat to the interests of the United States, which include his dream of a world without nuclear weapons." Where are we?

MR. GOLDBERG: Well, where we are is, is we're -- we're at an interesting moments, sort of pre-crisis. I can't see a way that this does not become a bigger crisis over the next year, year and a half, unless Iran takes one of the off-ramps that, that Obama has built for them. I think the Obama administration's program right now is the prudent and smart program. They are using both the, the, the promise of engagement and the threat of sanctions to try to change Iranian behavior. And, and the Obama plan has been criticized from, from, from the right, certainly, but, but it, it makes sense. The problem is, we don't know what happens if this Obama plan fails. And Secretary of Defense Gates says that Iran is about a year to three years away from reaching a nuclear thresh -- reaching a nuclear threshold. The Israelis hear that as nine months. So if Obama can't change Iranian behavior, and he's worked very, very hard at this -- I mean, one of his greatest foreign policy successes so far is building this multinational coalition to, to really have some strict, strident sanctions on, on Iran. But if those fail -- and I don't think many people really have great hope that they'll succeed -- if those fail, we would like to know what happens next. He has said he is determined -- that's a quote, "determined" to stop Iran from going nuclear. And, and this is the big looming question in foreign policy over the next year. What does that mean? How far will he go to stop Iran?

MR. GREGORY: And this is moving forward at a time when U.S. combat forces are withdrawing from Iraq. Our own Richard Engel reported exclusively on that withdraw. This is

in part how it looked: The troops scan the roads, weapons armed. But mostly it's a precaution. The threat is considered low. At sunrise we first see the road. The troops are driving down Iraq's main north/south highway -- smooth, wide blacktop. What a difference to how American troops entered Iraq. In the 2003 invasion, U.S. forces crashed through the desert to surprise Iraqi forces. As they exit Iraq, the Strykers navigate through traffic on a road protected by Iraqi troops trained by American forces. Unlike the invasion, too, the helicopters over the convoy aren't providing protection, but carry reporters taking pictures.

RICHARD ENGEL reporting: Such a striking, striking scene that was captured by Richard Engel. And here's The Wall Street Journal editorial on Friday with the headline " Victory in Iraq." Somewhere down the road the editorial writes, "We trust that August 18, 2010 will be remembered as victory in Iraq day." There it is, Paul Gigot. Victory as defined how?

MR. GREGORY: Oh, I think as defined as the United States leaving with honor, leaving with dignity, leaving with a -- leaving a stable, relatively stable government behind, not to say they don't have problems, not to say that they're not disagreeing. This government, disagreements between the two factions, the two people who've figured so closely in the election, is troubling. On the other hand, they're debating, they're not killing one another. We've given them a chance, in the words of Benjamin Franklin, about our own revolution, "You have a republic, gentlemen, if you're willing to keep -- if you can keep it." And so I think that the -- we can still get some strategic benefits from this in terms of a, a democratic government in the Middle East, one that is allied with our interests and can serve our purposes over there if things go down the road in the future-- well in the future. But consider where we were three years ago.

MR. GIGOT: Mm-hmm.

MR. GREGORY: We would have been leaving with defeat and having been seen as driven out. Instead, we did put a defeat on al-Qaeda, which tried to take over that country. And we can leave, I think, with honor.

MR. GIGOT: Congressman Lazio, are there circumstances under which we send more troops back? We've got 50,000 still there, and there's a lot of uncertainty about the security and political future of that country.

MR. GREGORY: I think probably not, but depending on what Iran does, what the surrounding area -- surrounding nations do, you've got a situation which, I think, is still a fragile situation. You continue to see people -- I mean, we've got 50,000 troops there. They will be in combat- type roles. You'll still see pilots up in the air, American pilots up in the air. You'll, you'll still see counterterrorist activity going on by American troops. How they get drawn in, I -- you know, nobody can say for sure. But I do believe it's more likely that we're seeing an important step toward progress and a validation of the fact that there is a democracy that is beginning to take hold. And to Paul's point, I think there's a lot of, of good here in terms of having an honorable withdrawal from Iraq, which was always the plan by two presidents, two different parties, a consistency of approach that we can learn something about.

REP. LAZIO: Right. But, Katty Kay, if the notion in Iraq is similar to what the, the hope is in Afghanistan, which is an Iraq that's good enough to leave, an Afghanistan that's good enough to leave, is that really how we went into this conflict?

MR. GREGORY: No, it's not how we went into this conflict. And it's interesting that, you know, The Wall Street Journal is probably feeling more triumphant than the White House is certainly sounding at the moment, that they realize that there are still big risks in Iraq itself. And, if you remember, the neoconservative ideal was that you would have a democratic Iraq and then you'd have a domino effect throughout the rest of the Middle East. That certainly hasn't happened. Jordan is, in some ways, a, a more authoritarian country than it was seven years ago. You have not had the progress of democracy by any means in Saudi Arabia. So, no, it's been a limited success, and there are still big questions about the political future of Iraq.

MS. KAY: All right. I'm going to make that the last word. A lot to debate. Thank you all very much. We will leave it there. We'll be right back with some news about our guests for next week's program right after this.

MR. GREGORY: That is all for today. I will be away next week, but Brian Williams will be here for a special edition of MEET THE PRESS, live from New Orleans on the fifth anniversary of Hurricane Katrina. Among Brian's guests, Louisiana Senator Mary Landrieu and her brother Mitch Landrieu, the mayor of New Orleans. If it's Sunday, it's MEET THE PRESS.