Meet The Press (01/02/2011)

MR. DAVID GREGORY: This Sunday, a new year and new challenges for the president and Republicans as the 112th Congress convenes this week. Can both sides compromise on such tough issues as jobs, the debt, and the deficit? Or does 2011 promise to be a year of gridlock and posturing in advance of the 2012 presidential race? Our lead-in interview this morning, the senior Republican Senator from South Carolina, member of the Armed Services Committee, Lindsey Graham. Then, our roundtable with the political forecast for this new year. How does President Obama try to rebound from the pitfalls of 2010? What is the future of the GOP with tea partiers in Congress and an unsettled presidential field taking shape? What are the prospects for economic recovery in the new year? And snow politics. Tough questions for the politicians when a white Christmas goes wrong. With us, columnist David Brooks of The New York Times; and E.J. Dionne of The Washington Post; Washington correspondent for the BBC, Katty Kay; Senator- elect from Pennsylvania, Republican Pat Toomey; and author of the new book "The Violence of Peace," Yale law professor Stephen Carter.

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

MR. GREGORY: Good morning. A new year and a renewed focus on the economy as the president makes a pledge to the American people in his weekly address this weekend. His new year's resolution? Getting the economy back on track.

PRES. BARACK OBAMA: As President, that's my commitment to you, to do everything I can to make sure our economy is growing, creating jobs, and strengthening our middle class. That's my resolution for the coming year.

MR. GREGORY: The president returns from his family holiday in Hawaii on Tuesday, and the 112th Congress with a Republican House and a more closely divided Democratic Senate convenes on Wednesday. Here with us this morning, a leading Republican in the Senate, the senior senator from South Carolina, Lindsey Graham. Happy new year, Senator, welcome back to MEET THE PRESS.

SEN. LINDSEY GRAHAM (R-SC): Thank you for having me. Happy new year.

MR. GREGORY: So the president talks about a new year's resolution to get the economy back on track. He will face a more Republican Congress. Will he find a partner in the new Congress with more Republicans there?

SEN. GRAHAM: I hope so. I -- well, why did the economy get off track? The policies the president has pursued over the last couple of years with his Democratic colleagues -- the stimulus bill, Obama health care-- I think has made economic recovery more difficult. He'll find a partner if he'll come our way when it comes to creating jobs and controlling spending. The mandate of the last election was pretty clear to me that the Democratic policies from 2008 to '10 were rejected by the American people because they created too much debt and they grew the government too much. So if you want to reduce the size of government, I think you'll find a willing partner in the Republicans.

MR. GREGORY: Well, where do you see the economy right now? You know, holiday spending was pretty good in terms of shopping. But you look at the housing market, it's still a mess.

SEN. GRAHAM: Right.

MR. GREGORY: Prices coming down, interest rates going up.

SEN. GRAHAM: Right.

MR. GREGORY: Do you think economic recovery is still going to be stalled?

SEN. GRAHAM: I think what got us into this mess was the collapse of housing, and it's very -- some bad numbers came out recently about housing. The one thing with extending the tax cuts for two years helped a bit, but the Obama health care is a real burden to small businesses and large businesses. There's been 200 and something waivers. I think one of the best things Republicans do to help the economy is give business certainty, really go after, hard, the Obama healthcare bill, redesign the stimulus bill to make sure it goes to the economy, not to the government. I think it's going to be a, a slow recovery. And 2011 will be a continuation of 2010, probably unemployment still above nine percent.

MR. GREGORY: Let me break that down a little bit. You mentioned housing. You know, back in 2008, Republicans, including Senator McCain and yourself...

SEN. GRAHAM: Yes.

MR. GREGORY: ...were talking about Fannie Mae and Freddie Mac, the big housing giants...

SEN. GRAHAM: Yes. Right, right.

MR. GREGORY: ...that now the government took over as being responsible for the crisis. That's a debatable point. But they now basically support the housing market in this country. Are you with the same Republicans, including your own views, that those should be wound down and privatized?

SEN. GRAHAM: Yeah, they should certainly be reviewed and reformed because they pushed mortgages out to people who couldn't pay their mortgages. The mortgages became exotic, security interests-- instruments sold all over the world. And the financial regulation bill really left unattended Fannie Mae and Freddie Mac. And when you have government entities this large who own this much of housing, who've been pushing mortgages on people who can't afford to pay them, and you do nothing about it, it's pretty hard for me to say you've reformed the, the problem that got us into this mess. So yes.

MR. GREGORY: Well, what's the Republican solution? But what's the Republican solution to housing?

SEN. GRAHAM: To me, is to get Fannie Mae and Freddie Mac in a, in a more privatized environment where risk/reward is, is, is more traditionally accepted. That -- the American dream is to own a home you can afford. And to look at these entities and get more private sector involvement and control who they lend money to and basically wind them down and make them more private.

MR. GREGORY: OK. Let me move on to health care, which you also raised. Is there a chance for actual healthcare repeal, or do you see room for compromise? All this talk about the individual mandate making individuals buy insurance...

SEN. GRAHAM: Right.

MR. GREGORY: ...you had talked about compromise on that early on.

SEN. GRAHAM: Right.

MR. GREGORY: Do you disagree that it's unconstitutional? A lot of Republicans believe that.

SEN. GRAHAM: I think the problem with the individual mandate is that everybody's going to be in a government-run plan. I was with seven Republicans and seven Democrats that required everybody to be covered. You did away with employer deductions and you allowed individuals to buy health care in the private sector across state lines and it was revenue neutral. I think you're going to see the fight on Obamacare across the board in the House and the Senate to try to defund the Obamacare bill and to start over. One thing I'm going to do with Senator Barrasso is allow states to opt out of the individual mandate, the employer mandate, and expansion of Medicaid. The expansion of Medicaid under the Obama healthcare bill is going to bankrupt South Carolina. So I think this fight is going to continue to 2012 and it's going to move from Washington to the States. It will be one big fight over the role of health care and should Obama health care be in existence in 2012 the way it is today.

MR. GREGORY: Senator, we talk about what kind of a relationship this White House is going to have with a more Republican Congress or a Republican House...

SEN. GRAHAM: Right.

MR. GREGORY: ...more Republicans in the Senate. The lame-duck session was where the president finished pretty strong, a lot of bipartisan accomplishment. This is what you said, however, just before Christmas, reacting to the lame duck. You weren't very pleased. Let's listen.

SEN. GRAHAM: When it's all going to be said and done, Harry Reid has eaten our lunch. This has been a capitulation in two weeks of dramatic proportions of policies that wouldn't have passed in the new Congress.

MR. GREGORY: So to your way of thinking...

SEN. GRAHAM: Yeah.

MR. GREGORY: ...the kind of bipartisanship we saw is not what you want to see in the new year?

SEN. GRAHAM: Yeah. I don't want to see bills passed in a lame-duck Congress where you can't amend the bill. "Don't_Ask,_Don't_Tell" was repealed in the lame-duck Congress. No one- -not one amendment was allowed to the bill. We had six versions of the Dream Act brought up in the lame-duck Congress...

MR. GREGORY: That's the immigration bill.

SEN. GRAHAM: ...to make political points. Yeah, that's right. The START treaty could've been made better if it came into the new year. I don't understand why Republicans were pushing through policies in the lame duck that could've been made better in the new Congress. But it's not about us and the president, it's about us and the American people. Will the Republican Party learn from the mistakes of the Democratic Party? If in 2012 we can show the American people we spent less of their money, we went to the heart of our debt problem by reforming entitlements, and we reduced the size of government, I think we will fare well with the American people. If we don't do those things, we're going to be in trouble ourselves.

MR. GREGORY: Well, you've talked about the tea party influence, and you've been skeptical about whether tea party activists who become candidates who become legislators now are actually willing to compromise, actually willing to legislate. Where do you find yourself then?

SEN. GRAHAM: Well, I...

MR. GREGORY: Closer to the tea party after the lame-duck session or closer to the moderates?

SEN. GRAHAM: Well, I hope I'm, I'm enthusiastic about new people coming in because God knows this Congress coming into being needs to learn from the mistakes of the past Congress. So tea party people could provide energy to do something about our spending problems by getting us back to 2008 spending levels. Pat Toomey's on your panel. He's been a real leader on entitlement reform. The debt commission is a bipartisan document that we all should look at about flattening our tax code, increasing the age eligibility for Medicare and Social Security, upper income Americans should have their Social Security benefits means tested simply because we don't have enough money to keep Social Security solvent without change. So I hope the tea party will come to Washington and change the whole dynamic that led to this fiscal mess we're in, starting with spending in the 2011 year, but also in reforming entitlements. And I think a guy like Pat Toomey will be a breath of fresh air for the, for the next Congress.

MR. GREGORY: Let me break a few of those things down because it's an important level of detail. But let me start with this.

SEN. GRAHAM: Yeah.

MR. GREGORY: You talk about the budget, you talk about spending. How will you vote on the debt ceiling? Will you vote to raise it? Which is, which is a vote that'll come up in relatively short order.

SEN. GRAHAM: Right. Well, to not raise the debt ceiling could be a default of the United States' bond and Treasury obligations. That would be very bad for, for the position of the United States in the world at large. But this is an opportunity to make sure the government is changing its spending ways. I will not vote for the debt ceiling increase until I see a plan in place that will deal with our long-term debt obligations, starting with Social Security, a real bipartisan effort to make sure that Social Security stays solvent, adjusting the age, looking at means tests for benefits. On the spending side, I'm not going to vote for debt ceiling increase unless we go back to 2008 spending levels, cutting discretionary spending.

MR. GREGORY: All right, but let me stop you for a second, Senator.

SEN. GRAHAM: I think it's an opportunity...

MR. GREGORY: That's a big condition...

SEN. GRAHAM: Yes.

MR. GREGORY: ...just on Social Security alone.

SEN. GRAHAM: Yeah, it is.

MR. GREGORY: Do you think Republicans are prepared to follow you in two things you said: Raise the retirement age, and means test benefits for older Americans?

SEN. GRAHAM: I would suggest that if we're serious about taking America in a new direction, and you're not putting entitlement reform on the table, you've missed a great opportunity to change the course of America's future. And the last election was about change, Change that really will make us something other than Greece. I think Pat Toomey, Rand Paul, and other candidates who are new to the Congress have said during the campaign, "Everything's on the table when it comes to making America fiscally sound." Let's see if we can find bipartisan reforms in Social Security before we raise the debt limit.

MR. GREGORY: But do you think Senator McConnell, the, the leader of the Republicans, is going to go along with that?

SEN. GRAHAM: I hope so. I know that Speaker Boehner is going to produce spending limitation bills every day. But the question for the Republican Party, for the tea party, for the Democratic Party, beyond discretionary spending, are we willing to look at the debt commission's suggestions in entitlement reform and begin to enact those reforms before it's too late? I hope the -- that, that this new Congress will do something the other Congresses have never done, and that is seriously look at entitlement reform by adjusting the age and means assessing benefits, including Medicare Part D. Obama health care needs to be repealed and replaced. But the Republican Party created Medicare Part D, a prescription drug entitlement that's already gotten out of control. I hope we'll put that on the table for reform.

MR. GREGORY: Would you vote, would you vote to actually scrap that, to take it away?

SEN. GRAHAM: I would vote to means test it. I would vote to make sure that people in my income level and your income level don't get their benefits, prescription drug bills paid by the federal government because we can't afford it. I would vote to make sure that someone in my income level would have their Social Security benefits renegotiated if they're under 55, not in a Draconian way but changes that we can make now for people 55 and under to avoid a fiscal collapse that's surely coming if we do nothing. The president said in his speech he wants to work with us. This is a good opportunity to find common ground; entitlement reform starting with Social Security.

MR. GREGORY: You talked about the president, his leadership style and your own assessment of him. I want to put up on the screen something you said to the National Review last month. "President," -- this is about the government shutdown, but what you talked about was President Obama and his experience. And you said, "I think he's adrift. His instincts, I think, are to be more centrist, since that's the political future for him. But he doesn't feel comfortable taking on his own party. And he sure doesn't know how to cut a deal and sell it. That goes back to experience."

SEN. GRAHAM: Right.

MR. GREGORY: "He's never done this stuff before. I hope the message is, before you elect someone president of the United States, the more experience they have in the real world, the better. He's never sat down with a group of Republicans and Democrats hard-headed right and hard-headed left and hammered out a deal." You don't think what happened in the lame-duck session qualifies?

SEN. GRAHAM: Well, what happened in the lame-duck session was that you had policies that were passed that were sort of liberal agenda policies that got votes or passed that really didn't change the job situation. The president did agree to an extension of the tax cuts, but his initial entry into the agreement was whining. He accused us Republicans of being hostage takers, but he did change. When President Clinton was allowed to talk about the tax extension deal, I think that was a moment of change for President Obama. I hope he will continue to embrace the middle when it comes to spending and entitlement reform.

MR. GREGORY: What about spending and the budget? Back in '95 you defended a decision to, to shut down the government. You said nobody was angry about that. You held to principle.

SEN. GRAHAM: Yeah.

MR. GREGORY: Do you think it would be a mistake for Republicans to pursue that path this time?

SEN. GRAHAM: I think it's smart for Republicans to learn from our mistakes. At the end of the day, the American people do not like the direction that the, the country has been taking the

last two years. We have a chance to go a new way: Control spending, do something about long-term entitlements. You don't need to shut the government down to accomplish those goals, but you need to lead. And at the end of the day, will the Republican Party, with this new lease on life, lead? Will we put a budget together? Will Paul Ryan put a budget together that not only starts reducing the deficit but addresses long-term debt? I think he will. I'm optimistic about the new members of the Republican Party coming in to the House and the Senate. I think we got a second chance on life, and we're going to take full advantage it. And to my Democratic friends out there, if you want to do something about spending and debt, you're going to find willing partners on the Republican side, but it has to be meaningful change.

MR. GREGORY: Final area, with just a, just a moment left. I want to talk about Afghanistan. You've traveled there extensively and you think a lot about the war. Vice President Biden was on this program in the last couple of weeks...

SEN. GRAHAM: Yeah.

MR. GREGORY: ...was emphatic in talking about the endgame for the United States. This is a portion of what he said.

VICE PRES. JOE BIDEN: At the recent Lisbon conference, the NATO conference where we said we're starting this process, just like we did in Iraq. We're starting it in July of 2011, and we're going to be totally out of there, come hell or high water, by 2014.

MR. GREGORY: If that holds, that means there's a level of confidence that the primary challenge can be overcome. Which to you is what?

SEN. GRAHAM: Well, at the end of the day, I think the vice president has walked back that statement. The president rightfully has said, "We're going to start transitioning this year. By 2014, the Afghan security forces will be in the lead." I want an enduring relationship with Afghanistan past 2014, politically, economically, and militarily, so that country never goes back into the hands of the Taliban or al-Qaeda. The two words that will be talked about in 2011 with Afghanistan are "corruption" and " Pakistan." I am hopeful the Pakistani army will be more bold in attacking safe havens across the border that lie in Pakistan. I hope the Karzai government will better address corruption. I hope we can find an enduring relationship with Afghanistan that will make sure that country never goes back in the hands of terrorists. And the idea of putting permanent military bases on the table in 2011, I think would secure our national interest and tell the bad guys and the good guys we're not leaving, we're staying, in a responsible way if the Afghan people want us to stay.

MR. GREGORY: But that's important. You believe a permanent U.S. military presence in Afghanistan is required in order to head off a potential failed state in the future?

SEN. GRAHAM: I think it would be enormously beneficial to the region, as well as Afghanistan. We've had air bases all over the world. A couple of air bases in Afghanistan would allow the Afghan security forces an edge against the Taliban in perpetuity. It would be a signal to Pakistan that the Taliban are never going to come back in Afghanistan. They could change their behavior. It would be a signal to the whole region that Afghanistan is going to be a new and different place. And if the Afghan people want this relationship, they're going to have to earn it. But I hope they will seek a relationship with the United States of where we can have an enduring relationship, economic and militarily and politically. And a couple of air bases in Afghanistan will give us an edge militarily, give the Afghan security forces an edge militarily, to ensure that country never goes back into the hands of the Taliban, which would be a stabilizing event throughout the whole region. That has to be earned by the Afghan people, and it has to be requested by them.

MR. GREGORY: Before I let you go, Senator, do you have a candidate yet for -- a Republican candidate in 2012?

SEN. GRAHAM: Yeah, the most electable conservative.

MR. GREGORY: Who do you think...

SEN. GRAHAM: Whoever that is.

MR. GREGORY: Who, who's the leading contender in your mind?

SEN. GRAHAM: Probably Romney. Mitt Romney has got his problems as a candidate, but so does everyone else. But it's a changing environment. And the one thing you got to prove to the people of South Carolina, not only that you're a conservative, but you can carry the day. That's why we need to be talking about immigration and energy policy as a party. What will we do to break$4 a gallon gas, foreign oil dependency? The one issue we haven't talked about that needs to be talked about is $4 a gallon gas is coming, and we've done nothing to become energy independent. And I want to work with the president and Republicans and Democrats to get a rational energy policy to break our dependency on foreign oil, to create jobs here in America from a renaissance and nuclear power, and try to clean up the air as a noble pursuit of the Republican Party.

MR. GREGORY: Well, we'll start there and on immigration in our next conversation. Senator Graham, thank you, as always.

SEN. GRAHAM: Thank you. Happy new year.

MR. GREGORY: Thank you. And up next, a look at the challenges ahead for President Obama in 2011. You've heard some of them. Will economic recovery be achievable? And will compromise or gridlock dominate the new Congress as both parties set the stage for the 2012 race for the White House? Plus, the political fallout from last week's big snowfall. Our roundtable weighs in: New York Times columnist David Brooks; from The Washington Post, E.J. Dionne; Washington correspondent for the BBC, Katy Kay; senator- elect from Pennsylvania, Republican Pat Toomey; and author of "The Violence of Peace," Yale law professor Stephen Carter.

MR. GREGORY: Coming up, our political roundtable weighs in on what 2011 will mean for the president and a new Congress. Plus, the political fallout from last week's snowstorm. Up next, after this brief commercial break.

MR. GREGORY: We are back, joined now by our roundtable: columnist from The New York Times, David Brooks; from The Washington Post, columnist E.J. Dionne; Brooks and Dionne, together again; author of the new book "The Violence of Peace: America's Wars in the Age of Obama," Yale law professor Stephen Carter. Welcome. First time on the program.

MR. STEPHEN CARTER: Thank you.

MR. GREGORY: Senator- elect from Pennsylvania, the Republican Pat Toomey is here as well; and Washington correspondent for the BBC, Katty Kay. Welcome to all of you, and happy new year.

SEN.-ELECT PAT TOOMEY (R-PA): Happy new year.

MR. E.J. DIONNE: Happy new year.

MR. DAVID BROOKS: Happy new year.

MR. GREGORY: Lots to talk about. We're back, a strong showing for the president in the lame-duck session of Congress. Now it's a new year, a new Congress, and new challenges. David Brooks, you heard the president in his new year's address, he talked about his new year's resolution as getting the economy back on track. What does that mean? Too many people still out of work, economy recovery still too slow. Mixed signals. Holiday shopping was pretty robust, exceeding expectations, people buying a lot of Christmas gifts, spending a lot of money. That was good. But then you saw headlines like this in The Wall Street Journal, about housing, that issue I brought up with Senator Graham. This was the headline, " Housing Recovery Stalls." You've got a fall in home prices, interest rates going higher, that, that bedrock of savings for so many Americans simply wiped away by the loss of housing values. So where does the president go from here to make the, the economy stronger?

MR. BROOKS: You know, you talk to people inside the White House about what they're going to do in the State of the Union, which is the big event in the next two years, and it's all about growth. "Are you going to cut deficit, guys?" "Well, we're going to make growth." So they want to make growth. The Republicans want to come in and restrain the cost of spending. And I've become optimistic, or at least think there's like a 30 percent chance that something real can happen because both parties are right. Obama's right that we need growth, we need the infrastructure spending, the energy research. The Republicans are right, we do need to control spending. And there's actually ways to put these things together. They're not contradictory. And if Obama, in the State of the Union says, "OK, we're going to control spending, and I'm going to trade that for some growth measures," I actually think there's a decent chance we could not have the gridlock that a lot of people used to expect.

MR. GREGORY: Senator- elect Toomey, you're here, you'll be part of this new class in the Senate. What will the president find? He said in that new year's message, "Look, I'll, I'll accept your good ideas." you're a partner, which means you're a partner in being accountable, as well, for the economy.

SEN.-ELECT TOOMEY: Sure. Well, if we focus on the growth side -- and you know, the two big messages from my campaign were about restoring economic growth and the job creation that comes with it and getting spending under control. On the growth side, I think there's some areas where we can work with the president, some areas where it's going to be tough. One area where we certainly can is trade. I think the president's finally gotten where he's happy with the South Korean trade agreement. We certainly should get that done, get Colombia, get Panama done, and move on from there. I think tax policy is a possible area, one with plenty of landmines, but plenty of opportunities. Simplify the code, lower rates. We should be lowering corporate tax rates because we have the highest in the world right now. We should lower the capital gains rate. We should have a territorial tax system, like the rest of the world does, so that we have a more competitive environment. Third thing I think we need to do, and this is going to be confrontational, is deal with the regulatory overreach. There are regulatory agencies trying to impose on our economy the things that Congress has rejected. I'm talking about regulating the Internet, I'm talking about some energy policy, I'm talking about the EPA. So Congress is going to push back on that, and obviously the president's not going to be too happy about that.

MR. GREGORY: E.J., let's talk about the president's leadership overall. You wrote in your column something that caught my eye this past Thursday in terms of how people are feeling about the president. "The energy in our politics has shifted rightward," you wrote, "with an abruptness that was inconceivable in the final weeks of the 2008 campaign, when Barack Obama could call a rally and count on tens of thousands to materialize almost at an instant. "If there is one thing the Obama White House most underestimates, it is the dispirited mood of its troops. This is not just about 'the left,' but more important, about Obama's broader rank-and- file, who expected that he would usher in more change, enjoy more success in confronting his Republican opponents, and prove more skilled in shifting the nation's political dialogue in a progressive direction." You think it's not in that direction now.

MR. DIONNE: Well, I think you look at the election result, and the election result was what it was. And I think when you see organizing in our politics, the organizing during '06, '07, '08, was on the progressive side. In the last couple of years, it's clearly been on the conservative side. So they have a kind of initiative in our politics. Now, I think there's an enormous opening here because one of the jobs in a democratic country is to hold people in power accountable. For two years, we have held the president accountable. Democrats had all the power. Now, suddenly, Republicans control the House of Representatives, and they have more power in the Senate. And I think you're going to have a kind of accountability on the Republican side. What are they actually for? Senator- elect Ayotte in -- of New Hampshire...

MR. GREGORY: Yeah.

MR. DIONNE: ...responding to the president, said, "We have to stop spending money we don't have on programs that are not working." I don't know of no progressive who disagrees with that. What programs are not working? I hope progressives and the president challenge Republicans and say, "All right, what about corporate subsidies, farm subsidies, oil subsidies?" You know, a lot of conservatives say, "We're for the free market. We're for," you know, "for smaller government," but then turn around and support all kinds of subsidies. They say, "No, we need this one." Now, a good free marketeer like the Senator may join with some progressives and say, you know, " Corporate socialism is a problem." And so I think there is an opening to raise new issues now that the Republicans have some power.

MR. GREGORY: Well, Stephen Carter, let's talk more broadly. Something you write about in, in your book in the context of America's wars, is also applicable here, and that is this concept of sacrifice. You know, the lame-duck session featured this bipartisan deal over taxes where it was still about giveaways. You keep in place the Bush tax cuts, you -- there's more stimulus for the economy, that's not the hard stuff. That's not what you say to the American people, "We're taking this away."

MR. CARTER: It's still true that democracy is the worst form of government, except all the others. And when you try to manage an economy in a system in which everything that happens is twisted immediately for partisan advantage, that you run the serious risk that whatever you do, in the end, is going to end up looking like a giveaway. We tend to focus a lot, we're focusing this conversation, on short-term problems. How to grow the economy this month, this year. That's natural. People's home values are declining. People are out of work. But we have long-term structural problems that are enormous. I think if we don't confront, for example, the serious problem of public pensions that are underfunded in an amount no one actually knows because they're not accounted for by ordinary accounting standards, we face very -- we face long- term problems that it's not clear we can afford. E.J. mentioned a moment ago, well, what problem -- where is it we don't have the money and we have bad policies. That's a good example. We don't have the money to pay the pensions that we promised. No one has the money, the federal government doesn't have the money. I don't know where it's going to come from, but the problems are sitting there greatly underfunded. Those are the sorts of structural problems we have to deal with on the long -- in the long-term, and I'm not sure we're ready to face those yet.

MR. GREGORY: Hm. Katty Kay, there's just -- there's also the politics of the right, right now, and the cross currents in the Republican Party. And the senator- elect can speak to this as well. A lot of tea partiers feeling like, "Hey, wait a minute. We just saw this lame-duck session. Did they miss the message of the election? There's a lot of accommodation there, and you heard Senator Graham say it as well, that they didn't bargain for.

MS. KATTY KAY: No, absolutely. You've had tea partiers already saying that "We're disappointed with what Washington is doing," even since the election. And, of course, they're going to face now two new challenges on raising the debt ceiling and spending levels for the federal government, and it's going to be a test of tea party purity and of the new members that are coming in. Are they actually going to make the decisions that are unpopular with the American people? I thought what you said, David, about you sacrifice...

MR. GREGORY: Hm.

MS. KAY: ...is, is a critical issue of this. You cannot have it all. You cannot balance the budget, give people large tax cuts, as we have just done, and carry on with the spending programs that you've had. And, you know, if you're not really going to address entitlements or the defense budget, then that's going to be tricky. And it's very interesting to hear the senator- elect saying that he would go far on that and Lindsey Graham putting his neck out and saying he would address entitlement.

MR. GREGORY: Right.

MS. KAY: But a lot of Republicans wouldn't. You push them on what they would actually cut, and they're reluctant to do it.

MR. GREGORY: And, Senator- elect, I mean, here, here's the thing. When Senator Graham says, "I won't vote for the debt ceiling until there's agreement to deal with means testing Social Security and raising the retirement age," is he really suggesting he's going to hold out for Republicans to do that? I mean, do you see the political will to do something that dramatic in the next couple of months before you have to cast that vote on whether to raise the debt ceiling?

SEN.-ELECT TOOMEY: I'm not sure that it has to be that specific...

MR. GREGORY: Mm-hmm.

SEN.-ELECT TOOMEY: ...but I think it has to be very, very meaningful, with teeth. My, my suggestion is that when we contemplate raising the debt limit, we do it in small increments and we do it periodically, and every time we do it, we make sure we get a major concession, concession in the direction of limiting spending so that we can get this fiscal train wreck under control. We are on a disastrous path, there's just no question about it. And so we need to take serious measures. And I, and I for one couldn't vote for an increase in the debt ceiling unless we are making really substantive progress on it.

MR. GREGORY: David-- yeah.

MR. DIONNE: Although it's really strange that we say we want sacrifice and we want to get the deficit under control, yet Congress in this lame duck just voted to add about -- almost $900 billion to the deficit. I think sacrifice is something legitimate to ask of all of us. We decided to wage two wars and cut taxes at the same time. And the only people really sacrificing are the men and women in uniform. But there are a lot of people out there who have sacrificed a lot in this recession. And so the instant you raise the word sacrifice, the question is, who are we going to ask that from? Who is it fair to ask that from?

MR. GREGORY: Well...

MR. BROOKS: I...

SEN.-ELECT TOOMEY: Can I...

MR. GREGORY: Go, go ahead, David.

MR. BROOKS: Yeah. I, I think the Republican Party has changed from say '95 or even last couple years when they weren't willing to sacrifice. This is a Republican Party more dedicated to asking and to toughing -- talking about issues like entitlements, to really asking these kind of questions. And one of the issues that we're going to face just chronologically in the -- in, in February and March and April, Paul Ryan's going to produce a budget that will have some serious budget cuts, and we will have a big debate over that. At the same time, states all around the country are going to be going quasi bankrupt. So we're going to have a huge debate about the size of government. And I think the Republican Party's actually much more willing to ask for the joint sacrifice than they were, say, under Tom DeLay.

MR. DIONNE: Except no tax increases.

SEN.-ELECT TOOMEY: I, I just, I think this is the wrong -- personally, I just think this is the wrong way to construct this discussion and, and focus so much on the sacrifice. Let's remember, for instance, that under the current tax rates for the first four years in which they were fully in effect, from '04 through '07 inclusive, total government and federal spending was just below 20 percent of GDP, revenue was 17.5 percent on average, and we had deficits that were just barely over two percent of GDP, and half of that time below two percent. This was not excruciating suffering that the American people were going through in these years. And yet with these rates, we had deficits that were really quite manageable. We can do this again. Secondly, earmarks. I mean, I said from the beginning of my campaign, "I will not ask for earmarks. This is a corrupt system, this is broken, this is wasting money." And, and I got elected. I got almost no pushback on that issue. Now, some would say, "Well, that means a great sacrifice." Right? Well, evidently I think the public understands this is what you need to do. And the last point, on the entitlement reform, nobody's talking about making it go away. We're talking about changing the structure. So, for instance, the kind of reform of Social Security that I've advocated, give younger workers the opportunity to accumulate savings.

MR. GREGORY: But, Senator, but -- and, Stephen Carter, you speak to this. There's still so much focus on taxes. Valerie Jarrett was here last week saying the president wants to make the tax cut issue an issue in 2012. Mitch McConnell saying, "Yeah, bring it on. We want to have that debate in 2012." We have a temporary truce here, but tax rates are still going to be a major debating ground. And again, we haven't taken anything away yet.

MR. CARTER: Well, it's true. I don't want to say -- I, I think it's awkward to talk about asking for sacrifice. Government doesn't ask for sacrifice, government tells people to sacrifice. But putting that aside, I do think there's actually room for compromise even on the tax issue. I think that most economists would agree. Our corporate taxes are the highest in the world. Our capital gains taxes unusually high compared to our competitors. And capital is fluid, it flows over borders, it'll go where the rates are low. But our personal rates are relatively low compared to the rest of the world, and our tax base is shrinking. So it may be that the room for compromise is over time, not while the economy is still soft. As the economy strengthens, reducing corporate tax rates, reducing the capital gains tax rate, adding the tax base-- that is, taxing more people at, at a lower rate, the way the deficit commission wants to do that. Something like that, a compromise fashioned that way, I think, would help put our tax system in a rational, nonpartisan way.

MS. KAY: That's what they're debating.

MR. BROOKS: That's exactly what they're debating.

MS. KAY: But the debate over the last few weeks suggests that there is such an allergy amongst Republicans to even discussing any kind of a tax increase that I wonder if there really is room for compromise on it. You know, compromise, when you poll people, they all say they want to compromise, or the majority of Americans say they want to compromise. When you push a little bit further, what they really mean is they want the other side to start agreeing with them. We heard Lindsey Graham saying exactly that.

MR. GREGORY: Can I get one thought in here? I want to ask one question to E.J., where we began on the, on the president. You know, I still speak to liberals who feel this sense of betrayal in the sense they don't feel like the president has fought the fight that they expected he would fight. Yes, he had some gains there, but he's still been too reactive, has not been -- promised the kind of leadership -- or hasn't delivered the kind of leadership that he promised. What does he do to deal with that sense among his core supporters?

MR. DIONNE: Well, I think there's a dysfunction between the president and his core supporters. He gets so impatient at people on the left, and there isn't a very big left in our country, who are doing their job, which is pushing him to test the limits of the possible. The left looks at him and doesn't sort of -- focuses so much on what wasn't done, like the public option, that it -- in health care-- that it forgets that, wait a minute, 32 million people are going to get health care. I think what he needs to do is to pick some arguments where he can make a case that economic growth and fairness go together. He's got to talk about innovation. He's got to talk about investment, infrastructure, education, and say there is a place for the public sector to make the economy grow and to help people advance in the economy...

MR. GREGORY: Get -- getting the balance right. Right.

MR. DIONNE: ...and get that balance right. And that can appeal to middle of the road people and to his political base.

MR. GREGORY: All right, let me get a break in here. I want to take a break here. We're going to come back to talk more about Republicans and why 2011 is going to look and sound a lot like 2012 in a lot of quarters. More from our roundtable right after this.

MR. GREGORY: We are back, joined again by our roundtable, and we're talking about the politics of 2012. Yes, it's January 2011, but by this point in the 2008 cycle, we were well on our way. The president's also thinking about Republicans. Here's his reading list from his Hawaiian vacation. What was first on the list there? Lou Cannon's book about Reagan, "Role of a Lifetime." David Brooks, how do you see this Republican field shaping up? If there was any -- ever a volatile time in, in a Republican nominating process, this is it.

MR. BROOKS: Well, Ron Brownstein in the National Journal had the best way to formulate the field, which is it's divided between the managers and the populists. So the managers are guys like Mitt Romney and Mitch Daniels, who are sort of elitist types, if you want to put it that way, though that's unfair, but who manage well, who are good managers. Then the populists: the Palins, the Gingrichs, the Huckabees. And that's sort of the division. I happen to think the Republican Party's still a manager party, that they'll lean more toward that way. The thing the Republican Party has to figure out is, and this goes back to the debate we just had, what is the role of government? If they're strictly going to be, " Government should get out of the way," that's a 38 percent party. If they're going to be, " Government should do what it can to make us more productive and to achieve more, using government in, in positive ways," that's a 55 percent party. And they have to figure out, now that they're in some power, how to not have not only a negative role to cut back government, but a positive role.

MR. GREGORY: This was interesting, Senator- elect, this is how The New York Times put it. Matt Bai in a piece on Thursday wrote this. "Without any odds-on favorite... Republican voters will spend most of the next year sorting through some difficult and divisive questions about where the party is headed, in a way they haven't really had to do in decades. How conservative can a nominee be, in the post- Bush era, and still be electable? Does the party choose an insider with Washington credentials, like a Senator John Thune of South Dakota, or an outsider like" Sarah " Palin, who trades governing gravitas for searing populism? ... "Do Republicans need a kindly granddad like Mr. Barbour or even a stern headmaster type like Newt Gingrich to reassure a jittery electorate who may fear we've lost our way? Or do they need to nominate someone who embodies the post-boomer," rather, "ethos in the same way that Mr. Obama does maybe a governor like Tim Pawlenty of Minnesota or Mitch Daniels of Indiana?" What do you see out there? You'll be worried about doing your own job.

SEN.-ELECT TOOMEY: That's right.

MR. GREGORY: But certainly Republicans are trying to get elected.

SEN.-ELECT TOOMEY: It's a wide open field, I think. And I think that the divide that David eluded to is essentially right. I think of it as establishment wing of the party and the tea party wing of the party. And the successful nominee, if he's going to be, or she, is going to be successful in the fall, as well, is going to have to be acceptable to both wings. The, the tea party movement is, is a powerful source of energy, and if the Republicans generally and the Republican nominee in particular is not acceptable to that, to that wing of, of the electorate, then I would be worried about a third party movement that could undermine the center right coalition.

MR. GREGORY: Do you really think Sarah Palin, if she were the nominee, could carry a state like Pennsylvania?

SEN.-ELECT TOOMEY: I, well, I, I think it is possible. I think it's -- you know, we, we went into this election cycle with a 1.2 million voter registration deficit and with a Republican brand that was in a really bad way, and I still won this election. So I, I think the, the electorate wants a return of economic growth, wants serious fiscal discipline. If they believe they've got a candidate that's going to deliver on those things, then it's possible.

MR. GREGORY: How about the reporting, E.J. Dionne, from Newsweek magazine this week about Jon Huntsman, the president's ambassador to China, seen here with the president. He's been the ambassador to China, but in this interview does not rule out the possibility of running in 2012, a more moderate Republican serving for a Democratic president. Pretty interesting.

MR. DIONNE: I think that was a fascinating story, whether or not Huntsman actually is going to run, because I think what it says is there is a sense in the Republican Party that this field they have so far may not be good enough. They're looking for someone else. And so I think there will be interest in Governor -- Ambassador Huntsman. The fact that he's thinking about it also suggests that he may think President Obama is more vulnerable than he thought when he took this job. The idea was Huntsman was going to wait until 2016. There's one -- I was rummaging around for historical metaphors. The one that I could think of is Henry Cabot Lodge in 1964. The -- it was Rockefeller against Goldwater. There was a draft Lodge movement in New Hampshire. Lodge actually won the New Hampshire primary partly because of dissatisfaction with Goldwater and Rockefeller. Now will that happen this time? No.

MR. GREGORY: But, but Lodge is dead.

MR. BROOKS: Henry Cabot Lodge, Henry Cabot Lodge has...

MR. DIONNE: He is.

MR. BROOKS: Henry Cabot Lodge has a better chance of winning of the Republican nominations this year than Jon Huntsman does. The guy is in the Obama administration. That's not going to fly.

MR. GREGORY: Yeah.

MR. DIONNE: Well, I think, I think he's a fascinating man and, that given dissatisfaction with the field, there's an opening for him that might not have existed otherwise.

MR. BROOKS: Got it.

MS. KAY: It's not just dissatisfaction. It's also going to be a messier process than perhaps the Republican Party is useful -- is use to. And one of the biggest differences of 2012 over 2008 is going to be the voice that ordinary voters have through Facebook and Twitter. It has, it has revolutionized people's access to a megaphone. It has given them a very strong possibility to say, "Actually, we're not satisfied with any of the people that the establishment in Washington is presenting to us," and that we can mobilize and say who we want, and we can say it with this extraordinary medium that they have. And I think that's going to change the way that the nomination process happens and make it much easier for a populist to come in from the outside.

MR. GREGORY: Stephen Carter, we, we talked about Haley Barbour, The New York Times, in that piece that I just referenced. And he's had an interesting week. There was the case of...

MR. CARTER: That's one way to put it.

MR. GREGORY: ...of the Scott, the Scott sisters in Mississippi, who were incarcerated on, on robbery charges. A lot of people thought the sentences were way too harsh. And because of a kidney situation with one of the sisters, with Jamie Scott, could be donated by her sister, that the sentences were suspended. Governor Barbour saying there's too much of a medical cost to the state of Mississippi and that this wasn't necessary anymore. He got a lot of praise from the NAACP for doing this, but this comes on the heels of all the criticism he got for talk of the citizens councils when he was growing up in Mississippi. Where does this leave him?

MR. CARTER: I don't know where it, it'll leave him. I'm not, I'm not even sure that, that he's the most electable candidate out there, maybe is the way to think about it. I, I think that something's happened in politics in national politics in the last couple of election cycles. Both the one that brought the Republican House to power now, and the one that brought Obama to power in 2008, that there's a kind of, of, it was referred to before as dissatisfaction. It's a formulist anger out there in America. And this anger will manifest its way in each election in ways that are very difficult for experts sitting in Washington to predict. Hillary Clinton had that locked up in 2007. People thought Obama was running for -- he'd be a vice president or he would one day run. And certainly, although some people were talking about this huge Republicans gains, the massive size didn't become apparent really until the last few weeks before the election. The candidate who can ride that anger-- from either party, I might add, because Obama road that anger in 2008. He rode it. The anger isn't just the left, it isn't just the tea parties. There are angry, frustrated people right in the center.

MR. GREGORY: Right.

MR. CARTER: And riding that frustration and anger and disappointment of the people in the center is what's going to get someone elected.

MR. GREGORY: Well, it is interesting, David, that, that we talk about role of government. What we've talked for many, many months here. But it is this searing populism. Because if you go back to 2008, that was in part what Obama was about. Yes, it was change, but it was about this anger at what Washington had become and what Republicanism had become at that moment that led to that. And then we see that again in 2010.

MR. BROOKS: Look, I always say the most important political factor of our lifetime is this

poll number: Do you trust government to do the right thing most of the time? Through the '30s, through the '70s it was 80 percent. Now it's like 19 percent. So people want a government that will work, and they feel their institutions are failing them. So the question is -- and it's partly because we've been stuck in trench warfare. World War I, big governments vs. small government debate. And the president and Republicans aside have to decide whether they want to continue that debate or whether they want to have a new debate and ask a new question. And

the new question is: Does government help us achieve and produce? Once you ask that question, you get out of the big government/ small government debate, and you actually have a newer debate.

SEN.-ELECT TOOMEY: But, but actually I...

SEN.-ELECT TOOMEY: I, I think, if I could, the, there's a lot of data and I think there's a lot of evidence that less government leads to stronger economic growth. And at a time right now where economic growth is such an important premium, I think the people's opinion have -- they, they acknowledge that at some level, and there's a majority that does want less government for that reason.

MR. BROOKS: I think that's largely true. But what about infrastructure spending? I think basic scientific research, I think energy innovation, I think there are, education, early childhood education...

SEN.-ELECT TOOMEY: It's not to say no government.

MR. BROOKS: Right.

SEN.-ELECT TOOMEY: I'm not suggesting no government.

MR. BROOKS: But, but, we're having this, we're going to have this debate right on the mark...

MR. GREGORY: About getting the balance right.

SEN.-ELECT TOOMEY: But...

MR. BROOKS: Right. Exactly. That's right.

MR. GREGORY: Katty:

MS. KAY: One thing I was going to say, on top of what David has said, about not trusting government is, there, there is this sense that the pyramid is flattening, whether it's in the world of business or in the world of politics. And that the, the top has less say, less influence over what the bottom wants. And I think that's a function of people having less trust in what happens in government.

MR. GREGORY: Mm-hmm. We have this huge debate about the role of government. And yet the debate is likely to get more robust about the role of government in Afghanistan because of the enormous amount of money that the government is now paying and that our troops are paying in their own lives. Professor Carter, you wrote this in The Daily Beast before Christmas about Afghanistan. "...if President Obama still believes the Afghan War to be one of necessity, he needs to tell us exactly what it is that is necessary to do and how we will know when we have done it." Which is a question that I'd like to ask, which is, what do you win if you win?

MR. CARTER: That's the question that, I think, the president has to answer. President Obama has said several times, this is a war of necessity, it's war that was forced on us, it's a war of self- defense, it's a war that must be won. Those are very powerful statements. And one balances those statements, it seems to me, with an account of what counts as a victory. It's very difficult to talk about a war that must be won and that has a deadline at which you're going to stop pursuing it. I think one of the reasons that the president has, I think, correctly become-- backed off somewhat of this nation of a deadline, even the most recent White House white paper, is precisely for that reason. But I think that we need a more clearly articulated vision -- and this was true of the last administration as well -- of exactly what count as victory.

MR. GREGORY: Quickly, E.J., you heard Senator Graham say a permanent U.S. military presence will be required in Afghanistan. That would be important, and that would engender a big debate here.

MR. DIONNE: Right. And I don't think that is where the Obama policy is. This war turns 10 years old this year. We Americans, and I think it's true of democracies generally, are not great at winning long, long wars because people in democracies get impatient and they say, "Why must we keep having our soldiers die? What are we getting out of it?" I think President Obama has been trying to redefine this war as he goes along. He clearly does not want a long commitment that goes past 2014. Having said that, there is some progress, at least in this war, I think, in weakening the Taliban and some of these forces. But it's a mess because you've got, not only Afghanistan, but also what's going on over the border in Pakistan. I still think the Biden policy of trying to focus this on terrorism is going to become more and more attractive as time goes on.

MR. GREGORY: All right. Let me take a break here. We're going to come back. It was a white Christmas. We're going to talk, however, about the politics of snow that came after the holiday, and a word about hockey, as well, with our roundtable.

MR. GREGORY: We're back with our last few minutes with our roundtable. A white Christmas is beautiful, but sometimes a white Christmas goes wrong politically. Look at the scenes that played out over Christmas. This was New York City, up and down the East Coast, a monster storm leaving so much snow, and then a lot of questions about the government's response. Mayor Bloomberg in New York had to answer questions on Tuesday, had a particular tone and changed by Wednesday. Have a look.

MAYOR MICHAEL BLOOMBERG: ...cannot be every place at all times. But if you look around, the people behind me are the people that are the best in this country to lead this city and to provide the services we need.

MAYOR BLOOMBERG: We did not do as good a job as we wanted to do or as the city has a right to expect.

MR. GREGORY: And you saw the Daily News with one of its covers here, the tabloids really giving him a hard time, "Snow Excuses!" for Mayor Bloomberg. Katty Kay, we know how tough this can be. Chris Christie, over in New Jersey, was in Disney World with his family, who took some criticism for that. Weather can be awfully damaging to a politician.

MS. KAY: Weather can be extremely damaging. And it's really a test of the balance between, I think, competence and empathy, and both are needed. And it's probably one part empathy and three parts competence. If you can actually clear the streets, you are going to win over your public. If you don't clear the streets, the worst thing that you can do is come out and sound unempathetic. I mean, you had the difference between Michael Bloomberg and Cory Booker...

MR. GREGORY: Right.

MS. KAY: ...tweeting his way through actually shoveling snow.

MR. GREGORY: Right, look at the pictures of Cory Booker...

MS. KAY: And he's come out of it very well.

MR. GREGORY: ...he was out there shoveling by hand.

MS. KAY: It's much easier to come out badly, probably, from a snowstorm than it is to come out well. But Cory Booker showed us how a politician can turn something around to his benefit because he made that mix between actually getting out there and shoveling...

MR. GREGORY: Yeah.

MS. KAY: ...which showed that he was on top of it and had the competence factor, and having the empathetic factor.

MR. BROOKS: You know, we can make -- you know, I'm for Bloomberg One. You know, we can pay for equipment that we're going to use one day a decade. This was like the sixth biggest snowstorm in New York history.

MS. KAY: But coming out and saying...

MR. BROOKS: Or we could suck it up for a few days and stay inside and watch television.

MS. KAY: But David, David.

MR. BROOKS: So I think New Yorkers just suck it up.

MS. KAY: If you, if you'll...

MR. BROOKS: You don't want to pay for those snow shovels.

MS. KAY: If you're the elected leader coming up and saying...

MR. GREGORY: Brooks, Brooks to New York. We just had a moment there. What about this, though? Let's take it back, E.J., because I know you wrote about this week. 1969, another New York mayor running for re- election having to account for another real big storm. This was John Lindsay in 1969.

MAYOR JOHN LINDSAY: I guessed wrong on the weather before the city's biggest snowfall last winter and that was a mistake. But I put 6,000 more cops on the streets and that was no mistake. The things that go wrong are what make this the second toughest job in America, but the things that go right are what make me want it.

MR. GREGORY: How about that?

MR. DIONNE: It is one of the greatest ads in American history because it began -- David Garth, the late David Garth, was the guy who made it and it was a politician being smart and humble enough to say, "All right, there is no way I will ever spin my way out of this mistake, so I'm going to admit it, and then try to focus people's attention elsewhere." But, you know, on snow, we had an abstract argument about government. I think government is much more important to the economic growth than Senator Toomey does. But we expect government to do certain basic things right. And I think that Mayor Bloomberg made a mistake by, on the first day, when he knew it was a mess out there -- and I was stuck in the snow. I was visiting my family in New York, and there was an access lane to the Belt Parkway that looked like a country lane in Vermont, which is very pretty, but it was hard to drive on. You don't just sort of go out and tell people to suck it up. You say, "I'm trying to get the job done." Best line of the week, both about Governor Christie being in Disney World and Mayor Bloomberg, from my colleague Gene Robinson, the role for politicians is "Be there. Do something." And I think that's right.

MR. GREGORY: Senator?

SEN.-ELECT TOOMEY: Well, you know, according to Mayor Bloomberg, the best people in the country couldn't clear the snow from the streets. Do we really want to trust them to regulate the Internet? I think this is, this is, this is why I want to run for mayor.

MR. DIONNE: Always bringing it back home.

MR. GREGORY: Yeah. How about Governor Rendell? I think we have those pictures...

SEN.-ELECT TOOMEY: Yeah.

MR. GREGORY: ...you know, when they moved the game and there was...

MR. BROOKS: He was not happy.

MR. GREGORY: Governor Rendell, he actually went to that Philly game, and he put the snow out there and he -- you see, empties the bucket. He puts the sign, "This seat reserved for non- wussies." He said that we're becoming a nation of wussies because of the snow. What can I tell you, I'm from Los Angeles so I don't even understand this snowfall. We're going to leave it there. Thanks to all of you, and we've had a great start to the new year here. Speaking of great starts on the weather, how about those Washington Capitols? They start the year with a 3-1 win over the Pittsburgh Penguins-- sorry, Senator -- in the Winter Classic, outside last night. Weather was a factor there. And it was Eric Fehr with the Caps-- look at this -- on the breakaway all alone. Two goals on the night and he scores, getting it done. We're taking on the Pens. We're coming strong. It could be our year. All right. That's it for me and sportscasting. That is all for today, we'll be back next week. If it's Sunday, it's MEET THE PRESS.