Meet The Press (09/12/2010)

(updated 9/12/2010 12:36:07 PM ET )

MR. DAVID GREGORY:  This Sunday, the politics of the economy.  Have Americans lost faith in the president and his party to dig the country out of recession?

.(Videotape)

PRES. BARACK OBAMA:  The hole the recession left was huge and progress has been painfully slow.  Millions of Americans are still looking for work.

(End videotape)

MR. GREGORY:  Can the White House do anything before November to put people back to work?  And who is right in the debate about your taxes?  I'll explore the president's thinking and go inside the White House's campaign strategy with senior adviser to the president, David Axelrod.

.Then, nine years after 9/11, what is behind the new wave of anti-Muslim sentiment in America?  Has the president helped or hurt by wading into controversies about an Islamic community center and mosque in lower Manhattan and a Florida pastor's threats to burn the holy Quran?  An exclusive interview this morning with former mayor of New York City and 2008 presidential candidate Rudy Giuliani.

Finally, our political roundtable weighs in on the legacy of the 9/11 attacks, religious tensions in America, and the economy.  Plus, the outlook for the midterm race.  With us, the best-selling author of "No god But God:  The Origins, Evolution, and Future of Islam," Reza Aslan; former White House press secretary to President Clinton, Dee Dee Myers of Vanity Fair magazine; Republican strategist Mike Murphy; and Ron Brownstein of the National Journal.

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

MR. GREGORY:  Good morning.  After a weekend of start-and-stop announcements, news from Iran this morning that jailed American Sarah Shourd will, in fact, be released on $500,000 bail, along with her two friends, Shane Bauer and Josh Fattal.  She has been accused of spying and detained in a Tehran prison since last summer.  Joining me now from Des Moines, Iowa, the president's top political adviser David Axelrod.

Welcome back to MEET THE PRESS, Mr. Axelrod.

MR. DAVID AXELROD:  Thanks, David.  Good to be here.

MR. GREGORY:  What about this news from, from Iran?  What do we know about when, in fact, she'll be released and will it, in fact, happen this time?

MR. AXELROD:  Well, that's the question.  Obviously, we're hopeful and we're encouraged by this news, but there have been starts and stops in this before, and until that actually happens, you know, we're on a wait-and-see basis.

MR. GREGORY:  As far as Bauer and Fattal and their release, is there any progress there?

MR. AXELROD:  You know, David, I'm not going to comment on any of that right now because we're at a sensitive stage here.  Obviously, we're hopeful that we can get these folks out.  They should never have been in jail in the first place.  They're being held under false pretenses, and they should be released, and, and we're working very hard to see that that happens.

MR. GREGORY:  All right.  Let me turn to politics and the domestic agenda, particularly the economy.  The president has announced plans for some additional infrastructure spending to stimulate the economy, he also would like to give some business tax breaks that the corporate world has responded very favorably to.  Should these become law, should they get passed, what impact do you think they could actually have by November?

MR. AXELROD:  Well, I don't know that, that--look, the goal is, is not to have impact by November; the goal is to have impact and to get this economy moving again.  I know everybody's looking at this--in Washington--is looking at this election at the, at the economy through the prism of the election, but when people are sitting around their kitchen table, they're not looking at the NBC News poll, David, they're looking at bills they can't pay...

MR. GREGORY:  What...

MR. AXELROD:  ...they're concerned about their future, they want to know that we have policies that are not only going to get the economy accelerating in the short run but will lay a foundation for future growth...

MR. GREGORY:  Well, right, but so the White House has an economic strategy...

MR. AXELROD:  ...and that's what the president is after.

MR. GREGORY:  The White House has an economic strategy, but the White House is also tactical and is indeed looking at the November election when you announce some of these policies at a point when most people agree it's not going to get passed by November.  David Wessel in The Wall Street Journal wrote this in his column on Wednesday, let me put it up on the screen, that "Obamanomics Is Recast as `Recovery Summer' Fades.  On both politics and economics," he writes, "the president's moves are late.  There was ample warning earlier this year that economic recovery lacked vigor and that the oomph of fiscal stimulus was about to wane.  Had these policies been proposed in the spring, Congress might have adopted them--and the economy would have been feeling the lift by now.  Instead, the president looks like he checked the economy"...

MR. AXELROD:  Well...

MR. GREGORY:  ..."off the to-do list prematurely, and instead turned to financial reform, energy, immigration, and" the "Middle East peace - and now regrets that." Response?

MR. AXELROD:  I strongly disagree with that.  In fact, we've been doing things all along to accelerate this economy.  Earlier in the year, we passed a higher act to give additional tax breaks to people who hire--to firms that hire unemployed workers.  We passed a bill to keep teachers and firefighters and police who were going to lose their jobs on the job; it was important for the public, important for the economy.  And we've been trying for months, as you know, to pass additional tax breaks for small businesses on top of the eight we've given them and to expand lending.  That has been held up by politics in the United States Senate.  We're hopeful next week we may be able to break the log jam.  Senator Voinovich, a Republican, said it's time to stop playing games, he said to his own party, and we agree with that.

So we've done things right along to keep this recovery moving in the right direction.  We've had eight straight months of, of positive job growth in the private sector.  We need to accelerate that pace, and that's the reason the president has proposed these additional ideas.  Whether they--we're ready to pass them tomorrow, David, if the Republican Party in the Senate allows it, if they pass the small business tax bill.  And if they want to move on others, we're ready to go.  If they want to wait until after the election, then we'll have to wait until after the election.

MR. GREGORY:  When you talk about the economic progress that has or has not been made, there's been some critics who have looked at how the president has talked about the economy, and, and we compiled some of what the president has said about the economy going back to last April.  Let's look at that.

(Videotape, April 10, 2009)

PRES. OBAMA:  What you're starting to see is glimmers of hope across the economy.

(August 7, 2009) That's why we're turning this economy around.  I am convinced that we can see a light at the end of the tunnel.

(August 8, 2009) This month's job numbers are a sign that we've begun to put the brakes on this recession.  The worst may be behind us.

(End videotape)

MR. GREGORY:  And here is what the White House--the Web site from the White House touted earlier in the summer, it was "Recovery Summer," as it was billed by the White House in campaigning across the country, as the "administration kicks off recovery summer, groundbreakings and events across the country." And yet here is the economic record, which is still quite bleak:  9.6 percent unemployment, you have had 19 months--or 16 months of straight--of 9 percent or higher unemployment; 54,000 net jobs lost in August; 14.9 million unemployed; 6.2 million of which are long-term unemployed.  And just today in The New York Times, a reminder of the real cost of this, a story that we see, "As Economy Tumbles, Numbers of Families in Shelters Rise." You've had a rise in the number of families actually going into homeless shelters.  So it's a question of the president's rhetoric vs. reality; are those things out of sync?

MR. AXELROD:  No, they're not out of sync.  And obviously in April, we were on a slightly greater scheme than we, we were over the summer because you had a Greek fiscal crisis that took 15 percent off the stock market and caused businesses to retrench further.  But the reality remains, David, that when we took office, we were losing 800,000 jobs, in the month of January, when we took over from the last administration.  We lost four million jobs in the last six months of the last administration.  We've had eight months of private-sector job growth.  We have to accelerate.

Listen, the hole that this recession created was huge, 8 million people lost, lost their jobs, and that's on top of a decade in which the middle class was treading water.  And there's a lot of pain out there and a lot of--and people are frustrated.  They deserve to be frustrated.  We're frustrated.  We want to move this economy forward more quickly, we, we would like some cooperation to do it.

But the real issue is, since you raised--put this in a political context, the real issue for people this November is going to be, what direction do we want to go?  Now the other side, and you had Pete Sessions on your show, the head of the congressional campaign committee for the Republicans, said, "We want to go back to the very same agenda we had before this president took office." That agenda was a disaster.  That agenda turned the Clinton surplus into a record deficit of $1.3 trillion, gave free rein to the special interests, and led to the biggest--at the expense of the middle class and the economy--and led to the greatest economic collapse...

MR. GREGORY:  Let me...

MR. AXELROD:  ...since the Great Depression.  Why would we want to go back to that?

MR. GREGORY:  But let me ask you when you think, as a practical matter, when does the economic team think that Obama administration economic policies will have a sizable impact on the unemployment rate in this country?

MR. AXELROD:  David, there was a study that was released just a couple of weeks ago by a couple of economists, one Republican, one Democrat, some of the leading economists in the country, who said the things that we did not only saved--or created three and a half million jobs, in other words, three and a half more million people are working, but we would have lost--if we hadn't taken all the steps we had taken, we would have lost twice as many jobs as we did during the recession.  I--the hole was tremendous, the damage is great. It took 10 years to create that problem...

MR. GREGORY:  Right, but my question is...

MR. AXELROD:  ...it's going to take--nearly 10 years--it's going to take some time...

MR. GREGORY:  ...when is the expectation that the unemployment rate can come down in a meaningful way?

MR. AXELROD:  ...it's going to take some time to fix it.  Well, we're, we're, we're, we're moving toward that with every step that we take.  Obviously, 750,000 new private-sector jobs created this year is a start.  We need to accelerate that, and it will come with growth.  That growth's going to come with the steps we've taken, and it's going to come with a revitalization of the middle class, which is why, of course, we want to extend tax cuts for the middle class.

MR. GREGORY:  But the, the, the fundamental belief of the American people has to be that things are going to get better.  This administration said that with the stimulus plan you'd have unemployment at 8 percent.  That proved not to be the case.  You've had some real big bites of the legislative apple here with successes--healthcare reform, financial regulation, a very large stimulus plan, which the president argued was necessary.  And yet, here we stand, the latest NBC News/Wall Street Journal poll, disapproval of the president's handling of the economy is at 56 percent.  But here is what is in, in many ways more damning than that, the judgment of whether people are optimistic about the future.  And here it is, from the same poll, will things get better or worse or stay the same?  Fifty-one percent think they'll stay the same or get worse.  This was a president, Mr. Axelrod, who was, who was elected on the promise of transformation of Washington and better handling of the economy.  Isn't the lack of confidence in him on the economy the ultimate judgment that you were trying to avoid?

MR. AXELROD:  No.  Look, I'm not worried about the judgment of him, I'm worried about moving this economy forward.  That's what he's worried about. We walked into something that nobody anticipated.  We knew the situation was bad.  No one knew how bad it was.  It was the greatest downturn since the Great Depression.  And our job since that time is to work day in and day out to move that forward.  We are--the economy is growing now instead of shrinking, we're gaining jobs instead of losing them.  We have to accelerate that.  And yes, people are discouraged.  They've gone through, not just a hard recession, but for many people they've been treading water for, for a decade and, and, and, and salaries and wages have flatlined and so on.  But the, the answer is to do the array of things that we have to do to invest in our infrastructure, to give business the incentive to grow, to give middle-class people money to spend to get our economy moving again, to have the best educated work force, to do all the things to--to expand exports.  All the things that we're working on are going to move this economy forward.  But, of course, people are discouraged.  It's been a tough time.

MR. GREGORY:  But if, if this is an election about choices...

MR. AXELROD:  I'll tell you--wait, I'll tell you...

MR. GREGORY:  Wait a minute, I'm sorry.  If...

MR. AXELROD:  Let me, let me, let me just say one thing.  Yeah.

MR. GREGORY:  Well, this is the question of...

MR. AXELROD:  Let's talk about the choices.

MR. GREGORY:  If this is a question about choices, Americans have lost confidence in this president's direction to fix the economy.

MR. AXELROD:  Listen, you look at your same poll, and I've looked at your poll, obviously, and the thing that people said that made them most uncomfortable with a candidate was whether they supported the economic policies of George W. Bush.  And you listen to--and the policies that existed before, before this president took office.  You listen to what John Boehner, the man who would be speaker, has said about what he wants to do about the economy.  He says he wants to restore those tax cuts for companies that ship our jobs overseas, he wants to cancel the Obama tax cuts that were part of the Recovery Act for the middle class and raise taxes on 110 million families. And yet, he wants to borrow $700 billion to give millionaires and billionaires another tax cut and add to our deficits.  And then this morning we read that the lobbying community has rallied to his Boehner for Speaker campaign and spent millions of dollars so that they can go back to writing the rules themselves.  They say, "We don't need to buy access to Mr. Boehner, we already have that."

MR. GREGORY:  OK.

MR. AXELROD:  "We want him in power so that we're in power." We don't want to go back to the same policies and the same practices that drove our economy into a ditch, that punished the middle class, and that led us to this catastrophe.  We have to keep moving forward.

MR. GREGORY:  All right, so let me ask you a more specific question about this debate about tax cuts, for instance.  You mentioned Leader Boehner for the Republicans, who is saying in an interview that, in fact, he would support the middle class tax cuts if--the extension of which, which is what the president wants.  He said on Friday, don't hold those hostage.  What I'm asking is, is there any room to compromise with Republicans to extend, even if it's for two years, as your formerly departed budget director called for, those on upper-income Americans, those tax cuts from the Bush era?

MR. AXELROD:  Well, if you read carefully what our budget director said, he said he'd prefer we didn't move forward on the upper-income tax cuts because he doesn't believe that they're really stimulative and he doesn't believe we can afford it, but he thought for political reasons we might have to accept it.  So, you know, that--let's, let's lay, let's lay that aside.  But Mr. Boehner, no one believes that Mr. Boehner--you know, they called the last set of tax cuts temporary.  They're going to continue.  I think we have to assume that they're going to keep pushing this forward.

But let me make one point clear.  What we're proposing is a tax cut for 100 percent of Americans up to $250,000 of their income.  So if you make under $250,000, you'd get a tax cut on all your income.  If you make more than that, you'd get it up to $250,000.  So if you're a millionaire, you'll get what everybody else gets up to $250,000.  Not the $100,000 a year that Mr. Boehner wants to give it.  David, we just can't afford it.  And really, what we ought to do is, as the president said, we agree on the middle-class tax cuts.  Let's not hold them hostage while we debate whether we're going to give this very small number of people at the top a, a tax cut that we can't afford.

MR. GREGORY:  It was striking to me hearing the president on Friday, when he talked about the economy and the choice in this election, he did not mention anything in his opening remarks about healthcare reform, which he and you and others have, have billed as a signature achievement of this administration. In fact, you have said that once people know more about health care, the more popular it will become.  And, in fact, we see reporting this week in Politico that, in fact, there aren't any Democrats who supported this who are out there touting that vote.  Only those who opposed it are touting it in the election. And it's striking because in March Senator Chuck Schumer was on the program, and this is what he said about health care.

(Videotape, March 28, 2010)

SEN. CHUCK SCHUMER (D-NY):  So I predict, David, by November those who voted for health care will find it an asset; those who voted against it will find it a liability.

(End videotape)

MR. GREGORY:  The opposite has turned out to be true.  Why is it that the president has failed to win the argument about the benefits of healthcare reform?

MR. AXELROD:  Well, first of all, I don't think health care is driving this election, David.  And I think the economy is driving this election.  People have anxiety about that economy.  I'll tell you what they don't want, though. They don't want to go back to a...

MR. GREGORY:  Then why did you do health care and spend so much of last year on health care?

MR. AXELROD:  They don't want to go back.  They don't want, they don't, they don't--well, you know why we worked on health care, because health care was a huge--is and was a huge problem in this country in terms of the cost of it to people and the government, in terms of the relationship between people and their insurance companies.  No one wants to go back to a situation where, if you have a pre-existing medical condition, you, you can be deprived of coverage.  No one wants to go back to a situation where, if you get seriously ill, you can get thrown off your insurance.  Seniors don't want to go back to paying more for their prescription drugs.  No one's calling for that, David. And if the Republican Party wants to make the argument that that's what we should do, then they should make it openly and honestly.

MR. GREGORY:  But this administration made the argument that part of economic recovery was passing healthcare reform, part of getting the economic fiscal house in order in the government was healthcare reform.

MR. AXELROD:  Yes.

MR. GREGORY:  And yet Democrats are not campaigning on it because it's so politically toxic.  You said that wouldn't be the case.  You said it would get more popular...

MR. AXELROD:  Well, listen.

MR. GREGORY:  ...not less.

MR. AXELROD:  I, I think it, I think that health care over time is going to become more popular.  But people are focused on this economy right now. They've got anxiety about this economy.  That's what's, that's what's driving the vote right now, David.  And, at the end of the day you, you mention the fiscal, the Congressional Budget Office and every objective observer who's looked at it has said that this will save a trillion dollars over the course of the next couple of decades or more in our, in our--in budget deficits.  And that's an important part of this.  So we have to think long as well as short.

MR. GREGORY:  Before you go, Rahm Emanuel, chief of staff, whether he's eyeing the mayoral run in Chicago.  If he were to take some early steps toward that, maybe raise money, look into it, can he do that with the president's blessing while he's still chief of staff?

MR. AXELROD:  Well, I think the president's been clear that while the--Rahm is chief of staff, he's going to be focused on his duties as chief of staff. He's looking at it.  He loves the city of Chicago, there's no question about it.  And he's going to--and he has a hard decision to make because he has a, he has a lot of responsibilities here and he enjoys working with this president, he enjoys serving the country in this capacity.  But he's going to make a decision, and after he makes his decision, I'm sure that he'll make subsequent decisions about, about when and, and, and--when it's appropriate to begin doing that campaigning.

MR. GREGORY:  All right.  David Axelrod, as always, thank you very much. Enjoy the steak fry this afternoon in Iowa.

MR. AXELROD:  Good to be with you.  Looking forward to it.  Thank you.

MR. GREGORY:  OK.

We turn now to a Republican candidate for the 2008 presidential election and, of course, the mayor of New York City at the time of the September 11th attacks; Rudy Giuliani joins me now from 30 Rockefeller Plaza in the heart of Manhattan.

Mr. Mayor, welcome back to MEET THE PRESS.

MR. RUDY GIULIANI:  Good morning.  How, how are you, David?

MR. GREGORY:  I'm very well, thank you.

I want to talk about a tumultuous week leading up to the ninth anniversary of the 9/11 attacks.  As you look at the controversy surrounding what happened, this debate over the mosque and community center in lower Manhattan, the threat to burn the Quran by a Florida pastor, and this anti-Muslim sentiment in the country on the ninth anniversary, what's happening?  What's behind that?

MR. GIULIANI:  I can't, I can't tell you exactly what's behind it.  I mean, something like this probably could have happened at any time.  It's--these controversies happening right now I don't think necessarily are connected to each other.  But if you had told me, you know, four years ago someone wants to put a mosque up near Ground Zero, I would have told you that 80, 90 percent of the family members would be very offended by that and very hurt by that for a whole host of reasons having nothing to do with Islamaphopia, but having all to do with how they feel this is sacred ground, that a Moslem center there would not be appropriate, someplace else would be perfectly appropriate.

If you had told me that people would have gotten very upset if somebody wanted to burn the Quran three, four, five years ago, same thing would have been the case.  So why these things are happening together right now, they could be connected, they could be unconnected.  And I analyze them both the same way. The, the imam has a right to put the mosque there.  Freedom of religion gives him that right.  The minister has the right to burn the Quran.  The same amendment to the Constitution gives him that right, the First Amendment.  In either case, common sense and a real dedication to healing that these men of God would theoretically have would tell you not to do it because you're hurting too many people.

MR. GREGORY:  You mention Imam Feisal Abdul Rauf, who is imam who wants to build a community center in lower Manhattan.  He appeared on CNN this week and, and issued a warning of sorts about this debate moving forward and its impact.  Let me play a portion of that.

MR. GIULIANI:  Yeah.

(Videotape, Wednesday)

Imam FEISAL ABDUL RAUF:  If we move from that location, the story will be that the radicals have taken over the discourse.  The headlines in the Muslim world will be that Islam is under attack.  And I'm less concerned by the radicals in America than I'm concerned about the radicals in the Muslim word.

(End videotape)

MR. GREGORY:  Are you concerned about that warning?

MR. GIULIANI:  I'm concerned about the imam doing that.  I think that tactic is not the kind of tactic I would have expected from an imam who's featured as a man of conciliation.  You know, I analyzed this imam's history pretty carefully, and I hate to simply it, but it's the only way to do it.  There's the good imam and the bad imam.  The good imam is about reconciliation.  He's about being open and transparent about what he's doing and how he's doing it. Then there's the bad imam who said America is an accessory to September 11. America has more Muslim blood on its hands than vice versa.  He can't condemn Hamas as a terrorist group.  And he will not be transparent about where he's getting the money, how he's getting the money, and has virtually not been open at all about this.  And now we have the imam who tells us if doesn't get his way there could be significant and very dangerous violence.  Look, those are very, very strong words, and to enter a sort of a suggestion of a threat into this, I worry about this as the kind of tactics he, he pursues.

MR. GREGORY:  You, you talked in rather stark terms, however, about moving forward with this community center and mosque, saying that if you are in fact committed to being a healer, you don't go forward with the project, but if you were a warrior you do.  Are you actually suggesting that he's a warrior...

MR. GIULIANI:  No.  I'm...

MR. GREGORY:  ...because of his interest in building this?

MR. GIULIANI:  I'm suggesting he's--seems to be--he seems, by his actions to be more interested in confrontation than in healing.  Actually, if you go on with the rest of the that quote, I was talking about the pope and the issue that he faced several years ago with a convent outside of Auschwitz.  There was a convent there, perfect right to have it.  Many people in the Jewish people felt it was insensitive.  The pope and the nuns could have said, "We're going to stay there.  We have a right to do it.  Let's have that confrontation.  Bring it on." The pope, being a man of healing, wanting not to make things more painful for people that have already had way too much pain, said, "Let's withdraw.  Let's pull it back." I say he has the same kind of choice.

The people he's hurting here most are the families of, of--the families that have lost loved ones down there.  And they don't all feel that way, but 80 or 90 percent feel extremely hurt by this.  It's making them relive the pain. They should be the ones to get the most consideration, not the imam, not me, not the president, not the mayor.  They're the ones that are the most affected by this.

MR. GREGORY:  Let me move on to the legacy of the 9/11 attacks and our war over two administrations now against terrorism.  You said back in 2001, after 9/11, "I think the sooner and the faster we find Osama bin, bin Laden..."

MR. GIULIANI:  Right.

MR. GREGORY:  "...then the safer the world is going to be." He still has not been captured.  He's an iconic figure, for sure.  Is he more than that?  Are we not safe after 9/11 until he's captured?

MR. GIULIANI:  Well, I, I would still say the same thing.  The fact is, we will not be safe even after he is captured.  There's a little more symbolism to it now than there would have been then.  There was a little more reality to it then.  But, but by that I mean at that time he was much more active and had much more flexibility to conduct further attacks.  We've kind of pinned him down a lot more.  Efforts of both the Bush and the Obama administration, I think, in this area have been both effective in kind of circling him in.  But there is a tremendous symbolic value in catching him and bring him to justice, including his ability to recruit.  And, you know, the--in any war--and however you want to describe this war, it's a different kind of war, but it's a war--you capture a significant leader and you have affected the morale of the other side, and maybe that's even more exaggerated in a situation like this.

MR. GREGORY:  I want to ask you more generally about America's fight against terrorists.  And there's a provocative view by Ted Koppel, former anchor of ABC New's "Nightline," that's out in The Washington Post this morning.  I want to put a portion of it on the screen.  He writes:  "Nine years after 9/11, let's stop playing into bin Laden's hands.  The goal of any of organized terrorist attack," he writes, "is to goad a vastly more powerful enemy into an excessive response.  And over the past nine years, the U.S. has blundered into the 9/11 snare with one overreaction after another.  Bin Laden deserves to be object of our hostility, national anguish, and contempt, but much of what he has achieved we have done, and continue to do, to ourselves.  Bin Laden does not deserve that we, even inadvertently, fulfill so many of his unimagined dreams.  ...  Through the initial spending of a few hundred thousand dollars, training and then sacrificing 19 of his foot soldiers, bin Laden has watched his relatively tiny and all but anonymous organization of a few hundred zealots turn into the most recognized international franchise since McDonald's.  Could any enemy of the United States have achieved more with less?" How do you respond to that?

MR. GIULIANI:  Well, it's, it's--there's a bit of a, of a policy problem for the United States here that if, you know, if you do, you're damned and if you don't, you're damned.  The reality is, in the period of time when we weren't paying as much attention to bin Laden and al-Qaeda, they were attacking us almost every other year.  I'm talking about in the, in the '90s, culminating in the attack of the USS Cole, in which we didn't respond because we weren't clear enough about who the, who the enemy were.  Since we've had those kind of change in policy, call, call it going on offense against Islamic terrorism, which Bush began and which, in the case of Afghanistan, the Obama administration, and I support them in this, are, are continuing, at home, at least, we've been able to avoid a repetition of the September 11 attack, which I have to tell you, nine years ago today, which would have been the day after September 11, when I was still mayor, I was being briefed we were going to be attacked numerous times.  So I can't tell you all the reasons that we haven't been attacked in the way in which everyone predicted, but I think part of it is that big response that Ted is, is talking about.  That's keeping them on defense.  And I wouldn't, wouldn't pull that away without analyzing it very closely because, in my view, the more you have Islamic extremism on defense, the safer we are.  The more you give them room to plan, maneuver, and work out a tax, the more dangerous we are.

MR. GREGORY:  The president said on Friday this is a threat that will be with the United States for a long time, but he said something notable, it doesn't have to dominate our foreign policy.  Do you agree or disagree with that?

MR. GIULIANI:  Agree with that completely.  And it better not dominate our foreign policy because this is an enemy.  It's a significant enemy, but it's not an enemy like Nazism and communism in a sense that it is a worldwide conflagration.  It can create horrible attacks, maybe worse than Nazis or communists, like September 11 was the worse attack in our history.  But it's not an all-encompassing enemy; and therefore, we have to be able to deal with it with strength, but we also have to be equally willing to give attention to the issues with Asia, the issues with Africa, the issues with, with Europe, South America.  We can't have people in South America feeling that we're not paying attention to South America because we're so concentrated on this terrorism issue.  And there's a--that's a real difficult thing for both the Bush administration, the Obama administration, or any administration to carry out.

MR. GREGORY:  I want to ask you a quick...

MR. GIULIANI:  But I'm, I'm, I'm glad the president said that because that becomes like a warning to his administration, please pay attention to these other things with equal force.

MR. GREGORY:  Finally, I want to ask you a political question, an economic question.  Back in 2004 on this program, this is a comment you made about your Republican Party.

(Videotape, March 7, 2004)

MR. GIULIANI:  The Republican Party is a much bigger tent than people give it credit for.  We have a lot of what I guess you all call moderate Republicans.

(End videotape)

MR. GREGORY:  Do you still think that's the case?

MR. GIULIANI:  I love when you go back.  I love, boy, you can find me saying almost any--I think, you probably find, find me contradicting everything I said today on your show at one time in the past.

MR. GREGORY:  But do you believe that that is still case for the Republican Party?  Do you think Republicans as a minority party in Washington have acted constructively and responsibility during this president's administration?

MR. GIULIANI:  I do.  I do because the president gave them not much choice. I think Republicans did suggest changes in health care that the president rejected out of hand.  I'm pretty, pretty, I'm pretty conversant with that debate.  Like, for example, tort reform.  If the president had of included tort reform, which he took off the table immediately in health care, he probably could have gotten eight, 10 Republicans, you know, on board.  I, I had dinner the other night with...

MR. GREGORY:  Right.  But that, but hold on, but hold on, Mr. Mayor, that's a big assumption and that's a much bigger debate.  My more narrow question is whether you think what you said in 2004 holds, which is, is the Republican Party still a big tent party with moderate Republicans in its ranks?

MR. GIULIANI:  I'm still here.

MR. GREGORY:  But you tried to run for president...

MR. GIULIANI:  I'm still here.

MR. GREGORY:  ...and you couldn't do it successfully.  Do you think that the tide has turned in the Republican Party, and it's become something different?

MR. GIULIANI:  No, I think the Republican Party has always had this tension, as the Democratic Party has, which you have a, a group of people that are significantly ideological, and then you have other people that are more center, center right.  And I think we have a significant number of those. We've got candidates running right now that are easily described that way.  So I think we're, we're, we're as broad a political party, if not broader than the Democratic Party, just in a different political spectrum.

MR. GREGORY:  Who's the most dominant voice in the Republican Party today?

MR. GIULIANI:  Probably--right, right today, the next couple of months, John Boehner would be the most, most prevalent voice because he's the one that has the best chance of becoming a national leader in an official way over the next two to three months.

MR. GREGORY:  All right.  I have to try to pin you down before you go on this point:  The standings are a little tight in the American League East after the Yankees...

MR. GIULIANI:  Yeah.

MR. GREGORY:  ...dropped a game to the Rangers last night, up by half a game over the Rays.  What's going to happen here, Mr. Mayor?

MR. GIULIANI:  Well, I have to confess to you, my wife went to high school with the manager of the, of the Rays, so this is an issue even in my home.  I think we take it.  I think we're going to be in the playoffs with them, so we're--one way or the other, we're, we're the winner and they're the wild card or they're the winner and we're the wild card.  And we're going to be playing five or seven games with them and I think our experience and our pitching staff and our playoff-hardened players like, like Mariano and Jeter and A-Rod, I think we win.

MR. GREGORY:  All right.  Mr. Mayor, we'll leave it there.  Thank you very much.

MR. GIULIANI:  All right.

MR. GREGORY:  And up next, the legacy of the 9/11 attacks, religious tensions in America, the economy, and the outlook for the midterm race.  Our roundtable weighs in on all of it.  Author of "No god But God:  The Origins, Evolution, and Future of Islam," Reza Aslan; former White House press secretary to President Clinton, Dee Dee Myers; Republican strategists Mike Murphy; and Ron Brownstein of the National Journal only here on MEET THE PRESS.

(Announcements)

MR. GREGORY:  Coming up, 51 days until the midterm elections.  Can President Obama help Democrats retain control of Congress?  Our roundtable weighs in on the politics of 2010 after this brief commercial break.

(Announcements)

MR. GREGORY:  We are back and joined now by our roundtable.  A lot to get to with author of the best-selling book "No god But God:  The Origins, Evolution, and Future of Islam," Daily Beast contributor Reza Aslan; editorial director for the National Journal Group, Ron Brownstein; Republican strategist Mike Murphy, all the way in from L.A.; and former Clinton White House press secretary and contributing editor to Vanity Fair, Dee Dee Myers.

Welcome, all of you.

I want to talk politics, I want to talk the economy, but I do want to talk about 9/11 and this tumultuous week, a surreal week in many ways, with the threats from the Florida pastor and this ongoing debate about what's going on in lower Manhattan.  And, and we look at this, the views of Islam in The Washington Post poll, unfavorable now at 49 percent.  Look at that, eclipsing even the unfavorable rating in October of 2001.  And you look at the, the flag burnings, some of the reactions that we've seen to the debate we've been having here going on in the Middle East, in Afghanistan, in Pakistan, burning flags, you see this kind of thing.  This is a hearts and minds campaign that General Petraeus is waging in Afghanistan and elsewhere in Pakistan, and there are setbacks to it.

Reza, you wrote this as part of an NPR commentary at the end of the summer, "The fear is that this [Islamaphobia] may lead to the same kind of radicalization among Muslim youth in the U.S. that we've seen in Europe.  It has already played into the hands of al-Qaeda, which has for years been trying to convince American Muslims that the unfettered religious freedoms they enjoy is a mirage.  ...  Are we in danger of proving al-Qaeda right?  I am a liberal, progressive, secularized American Muslim.  But when I see that bigotry against my faith - my very identity - has become so commonplace in America that it is shaping into a wedge issue for the midterm elections, I can barely control my anger.  I can't imagine how the next generation of American Muslim youth will react to such provocations." What's behind this?

MR. REZA ASLAN:  Well, look, I think part of it has to do with the controversy surrounding the Islamic community center in lower Manhattan.  And while it's true that there are those who oppose the project because they do believe that it will disturb the sensitivities of some 9/11 victims--though I, I, I do want to remind everyone that in this country we do not define our constitutional rights by how they disturb people's sensitivities--you only had to spend a few minutes at Ground Zero yesterday and to take in this international cabal of anti-Muslim zealots that had gathered together to spout the most vile racist bigotry to know that this is about something more. Anti-Muslim sentiment in this country is at unprecedented levels.  We all know this.  But what's truly disturbing is how mainstream it's becoming with politicians on both sides--and I would have to include the former mayor in this, in this category--openly and explicitly associating American Muslims with al-Qaeda.  I mean, what I'd like to know from, not just the former mayor but from, you know, the people who, who keep talking about this Islamic community center, is that what is it that this multifaith, multistoried community center being led by an American imam that two presidents, Republican and Democrat, have used as a--as an ambassador to the Muslim world, cultural ambassador to the Muslim world, what does that have to do with al-Qaeda?  The answer is kind of simple, actually:  Islam.  But let's call a spade a spade for a moment.  If you are painting 1.5 billion people with the same brush of violence and, and, and extremism, you're a bigot.  And I think what's, what's disturbing is the way that that's become part of the, the, the natural discourse now.

MR. GREGORY:  Well, and it's become, Ron, it's become politicized, 9/11 has...

MR. RON BROWNSTEIN:  Absolutely.

MR. GREGORY:  ...in these debates in a way that, I mean, 9/11 has been politicized in different ways, you can argue, since then, but in a different way now.

MR. BROWNSTEIN:  We have a lot of threats tangled together here.  Both President Bush and President Obama, for the reasons you cited in your article, have said that--have viewed it in our interest to make clear, and no one more forcefully than President Obama in the last few days, that the U.S. is at war with terror, but we're not at war with Islam.  That has been viewed as essential to send that message to the world.  I think the, the lesson that we're seeing in this controversy over the mosque is that not all Americans agree.  And, in fact, with President Bush out of office, Bush expressing those sentiments sort of suppressed that kind of argument in the Republican Party. If you look at polling that came out recently by Time magazine, a plurality of Republicans said that a Muslim should not be allowed to run for president.

Now, the flip side of this is that to some extent this sentiment is being driven by what you're describing perhaps already happening.  The successor to the Kean-Hamilton group, the 9/11 commission, the National Security Preparedness Group, came out with a, a powerful study this week that talked about these individual, one-off cases of terrorism really being part of a new pattern in terms of becoming the major security threat to the U.S., and that in many cases it is radicalized American Muslims.  Still a fringe element of the, of the overall population, but nonetheless real.  And things like the Times Square and the, and the Texas shooter, those kinds of things fuel the sentiment on the other side, which may, in fact, produce kind of a downward spiral here.

MR. GREGORY:  But, Dee Dee Myers, is some of this the demonization of the other because of what the country's going through right now?  I mean, we are in an economic situation, as I pointed out, it's on the cover--front page of The New York Times, more and more families going into homeless shelters.  I mean, this is just not a policy debate about taxes and spending, this is about real impact on real lives around the country.  Is that in part what's fueling this?  And can President Obama make a gesture like going to a mosque, saying he--that's something he admired about what President Bush did, saying that it's not a war against Islam.  Can he do something like that?

MS. DEE DEE MYERS:  Well, there's no question that throughout our history when times have been bad and economic declines and depression or in times when we're--we've been at war we've been susceptible to vilifying some group of people, whether it's, you know, interning the Japanese--Japanese-Americans during World War II, or many other instances across our history.  So that's no question that there--that that's fueling it.

The other thing that's fueling it and that is so disturbing is that certain people saw political opportunity in fueling it.  People are economically uncertain.  But there's political opportunity, and that's why we're seeing the politicization yesterday for the first time in nine years of the commemoration of 9/11.  And so, you know, you have sort of economic downturn meets political opportunity, and it's created this really unfortunate...

MR. GREGORY:  Isn't it true, Mike Murphy, though, that, you know, Rudy Giuliani, in the past several months, has been so critical of this administration's orientation toward fighting the war on terror, and yet now he's agreeing with President Obama when he says it can't dominate our foreign policy?  There's no substantive opposition to what the Democrats are doing right now in terms of fighting terrorists.

MR. MIKE MURPHY:  No, no.  I--look, I think the country's united in fighting terror.  You can argue about the tactics, you can argue about foreign policy emphasis because there are a lot of other problems in the world, rise in China, many things.

MR. GREGORY:  Yeah.

MR. MURPHY:  But yeah, Islamofascism is something there's a national consensus on.  And I think that's part of the problem with this debate now on, on Islam.  The elections aren't about Islam.  But one of the problems is, I think there becomes a phony moral equivalence that sometimes we hold ourselves on a nutty standard to.  Many of our enemies are places where the state, they're theocracies.  So religion is a weapon to them.  We're trying to still be a civil society.  And so I, I think we have to be careful to keep our consensus of, of no bigotry.  Some nut in Florida with a press release and a Bic lighter becomes a moon launch.  I blame the media for some of that.  There ought to be control on the oxygen on all this.  But I think we are still a very tolerant country, and we're the good guys in this.

MR. GREGORY:  Let's talk a little bit more about the midterms and, and, and the economic power of this recession.  Dee Dee Myers, I take you back to 1993 and the documentary "The War Room." This was James Carville--while we have that, first we'll show you this, which is seven out of 10 Americans know somebody who his currently out of work in this recession.  This is the, the poll that the National Journal, Ron Brownstein's group, has worked on.  But this was "The War Room," and this was that famous message from James Carville back then.

(Videotape)

MR. JAMES CARVILLE:  Stay focused.  Talk about things that matter to people, you know?  It's the economy, stupid.

(End videotape)

MR. GREGORY:  "It's the economy, stupid." Here we are again.

MS. MYERS:  Right.

MR. GREGORY:  And yet people's connection to the recession, people who've been laid off, is the president connecting on this issue?

MS. MYERS:  I, I think he's trying to.  But I, I think the results sort of speak for themselves.  He's having trouble connecting on, on it.  He's having trouble making people believe that he's done enough.  And he, he starts every conversation by saying, "Look, we've done a lot, but we haven't gotten where we need to be, and we need to keep working." And people are frustrated.  You know, one of the things Clinton--in 1994 we had a terrible midterm, lost both houses of Congress.  And the economy was improving, and yet people were still feeling...

MR. GREGORY:  Right.  And that's a key point here...

MS. MYERS:  ...vulnerable.

MR. GREGORY:  ...because part of the problem in '94--you've talked about it, Ron--the chaos theory.  Democrats couldn't get anything done.  Mike Murphy...

MS. MYERS:  Yeah.

MR. GREGORY:  ...Democrats have gotten a whole lot done, right?

MS. MYERS:  Well...

MR. GREGORY:  Financial reform, healthcare reform, a big stimulus.  I mean, this is a point I was, I was asking David Axelrod about.  There is a lack of confidence now after they've seen what the president has done...

MR. MURPHY:  Mm-hmm.  Mm-hmm.

MR. GREGORY:  ...in things getting better.

MR. MURPHY:  Well, yeah.  I think they've gotten a lot of things done, they haven't gotten a lot of results that the American people have been--think have been effective.  So what happened when the president ran as a centrist and then became kind of a more doctrinaire, you know, liberal, particularly with the House Democratic definition of that, he's lost the country.  He's lost the independents, he's lost some of the working class, you know, white voters he had.  People now think that, after two years of almost complete power in Washington--I mean, he's had more power than many presidents have had because he's had all the houses, he's had a tremendous mandate, he hasn't delivered. People are feeling more pain, and so they want a change, and so the data's pretty clear that there's going to be a change.  Now, we don't know the scope, but...

MR. GREGORY:  And, Ron Brownstein, here's a sense of history.  We'll put it up on the screen.  Midterm history for first-term presidents, it's mostly pretty bleak...

MR. BROWNSTEIN:  Yes.

MR. GREGORY:  ...for a president in power, as we see it revealed here.  A lot of losses across the board in our recent history; 2002 the exception after 9/11.  What's happening here?

MR. BROWNSTEIN:  Pretty wide distribution there.  Well, I think the first thing I learned this morning is an absolute rule of politics when you rule--from your interview with David Axelrod, which is if you're at 9.6 percent unemployment and it's not going down, there's not a good answer to any question.  And, in fact, people are--we're looking at over 60 percent of the country saying we're on the wrong track.  What's really changed in the last few months is not people's report of their own current circumstances, what's really changed is their level of optimism about the future.  And you, you talked about the NBC/Wall Street Journal poll and our Heartland Moderate poll down from 55 percent saying the economy's going to get better over the next year.  Seventy percent were saying that in the spring.  That is the real cloud hanging over Democrats, and it could be very bad.

I would say quickly, though, there are two distinct strains of disenchantment that are emerging here.  There is an ideological backlash going on in around 40, 40-something percent, low 40 percent of the electorate.  Beyond that, Obama has a problem with performance and result.  And that is affecting, as Mike said, even groups that were into the core of his coalition in 2008 and are not necessarily drawn toward these Republican solutions.  So if they have any hope of avoiding full-scale disaster in November, which seems to be diminishing, it may--it really is in trying to make this more of a choice than a referendum, which is difficult to do in a midterm election.

MR. GREGORY:  Reza, healthcare reform.  I brought this up with Axelrod as well.  They have not won the argument there.  You can look at the polling. John Podhoretz wrote this in The New York Times--the New York Post, rather, on Friday, which I thought was interesting.  "The [Health Care] bill united the GOP in opposition, gave a party in sore need of a defining issue its marching orders for the next several years.  And even before its passage, it landed a Republican in Teddy Kennedy's Senate seat whose central campaign promise was doing what he could to prevent it from happening." I mean, this was a signature achievement.  Really tough if you're a president and Democrats who can't run on that achievement in the midterms.

MR. ASLAN:  They didn't win the, the, the argument over health care, they didn't win the argument over financial reform, and obviously, the president wants to make this election about either moving forward or moving backward. But, as Ron was saying, most people feel like we're, we're actually standing perfectly still.  So they don't see either backwards, forward as the two options.  And, you know, there's not a lot of room here for the Democrats to, to think about this.

MR. GREGORY:  Well, so, Dee Dee, eight weeks, what can the president do to save the House?

MS. MYERS:  Well, I think he can--first of all, he's going to have to contribute to the Democratic effort to target pretty carefully.  And it's a, it's a brutal and ugly time in, in the party when you have to triage.  I think he can raise money, which he's already done quite effectively.  And I think he can campaign in a few select districts, but, you know, that isn't the silver bullet.  He isn't going to be able to save the House by campaigning for various members, although he can save, if they target carefully, they can save a few members.  They can spend a little more money to help save more.  And he can focus on the economy, as we've seen him do more aggressively, particularly this week.

MR. GREGORY:  But--Mark--Mike, you said on this program last year, you described the Republican Party as Russia 1919.  I don't forget these quotes. You said...

MR. MURPHY:  I said a lot of warlords were running around.  Yeah.

MR. GREGORY:  Yeah.  Yeah.  Yeah.  Twenty warlords of the Republican Party are running around...

MR. MURPHY:  Yeah.

MR. GREGORY:  ...and nobody is really in charge.

MR. MURPHY:  Yeah.

MR. GREGORY:  Is that still the case, or do you think Republicans have united in a way that can really return them to power and have them be effective?

MR. MURPHY:  Well, they don't need to unite to return to power because President Obama has become a great savior.  If he'd stayed in the center, he could have put us back for a long time.  Instead, he went hard left.  Now there's been a reaction to his policies across the board and they're going to lose.  Now, I've been telling Republicans to brag a little less and organize a little more.  Let's not get the expectations out of control.  But every poll now is historic, and I think the only thing the president can do is build a time machine and go back in time to save an outcome that I don't know how bad it'll be for the Democrats, but people are mad.  They don't believe this administration has delivered, nor their allies in Congress.  They want a change.  It's going to be a different Washington.

MR. GREGORY:  I, I want to look at one specific race that, of course, you have a connection to, that's out in California.  We all have California connections.  I'm an L.A.  native.  We can go around the table, we all have a California connection.  The governor's race in California, Mike Murphy, you're working with Meg Whitman, the Republican, former head of eBay.  And here's the poll, it's a tight race.  She's ahead 2 percentage points over Attorney General Jerry Brown, a former governor, of course.

This is, Ron Brownstein, a tight race in a state in a lot of economic trouble.

MR. BROWNSTEIN:  Right, absolutely it is, and has, and has been the biggest blue state in the country, overwhelming margin for President Obama.

MR. GREGORY:  Yeah.

MR. BROWNSTEIN:  I believe he won by more than Lyndon Johnson did in 1964. But, look, it is easier for a Republican to win at the statewide level than it is at the federal level because some of these polarizing social issues and wedge issues like abortion and gun control that could trip up Carly Fiorina, at the state level, aren't--at the federal level, aren't is relevant in state elections.  And Meg Whitman also has steered a more centrist course on them. On the other hand, she has spent a lot of money this summer and not put away Jerry Brown.  I'd say--you have to say she's the favorite, but the fact that he is hanging around where he is with all the negatives that he carries shows that he is, he is really in this.

MR. GREGORY:  What's your view of the race, Mike?

MR. MURPHY:  I think Meg's going to win because she fits California well.  I mean, look, the election...

MR. ASLAN:  (Unintelligible)

MR. MURPHY:  The election is not--yeah, no, I, she...

MR. ASLAN:  (Unintelligible)

MR. MURPHY:  It's a jobs program, and she's contributed to it.  People know she knows how to create jobs.  That's the number one issue.  And they know she's from the Silicon Valley world of delivering results, which is what we need in Sacramento.  Jerry Brown is a time machine to failure.

MR. ASLAN:  My question, Mike, is, why does Meg what to be governor of California?  Why would anyone want to be governor of California?

MR. MURPHY:  Because...

MS. MYERS:  Let alone spend 140 million of their own money to get it.

MR. MURPHY:  Yeah, but the money is about getting--California is so expensive, $3 million a week for television, it's about getting a message out against the entrenched public employee unions.

MR. GREGORY:  OK.

MR. MURPHY:  I'm mean, I'm...(unintelligible)...but I believe it.  I live there.  I care about it.

MR. GREGORY:  All right, we got to leave it there.  We'll see what happens. We'll be watching in California and around the country.  Thanks to everybody. We'll be right back after this brief station break.

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MR. GREGORY:  And before we go, a quick programming note, tune into MSNBC this afternoon at noon and 3 PM for a special rebroadcast of "Brian Williams Reports:  New Orleans, an American Story." And be sure to join us right here next week.  I'll be joined live by former Secretary of State Colin Powell for an exclusive interview.

That's all for today.  If it's Sunday, it's MEET THE PRESS.