David Axelrod and Chuck Grassley on "This Week"

David Axelrod and Chuck Grassley on "This Week"

By This Week - June 28, 2009


Congress has gone home for their July 4th break and they had better rest up, it's shaping up to be the busiest summer in a generation: health care, energy, the Supreme Court, and the economy. And for the debate on where things stand right now, we're going to begin this morning with the president's senior adviser, David Axelrod.

Welcome back.

AXELROD: Thanks, George. Good to be here.

STEPHANOPOULOS: Let's begin with that vote Friday night in the House, this vote on climate change legislation, very close, 219 to 212. Democrats say it's a major step forward for energy independence, to create green jobs, to control global warming.

But you know the Republicans are saying it's going to cost Americans jobs, going to send jobs overseas. And most important, they say it is a huge tax. And on that they have some backup from one of the president's supporters, Warren Buffett.

Take a look.


WARREN BUFFETT, CEO, BERKSHIRE HATHAWAY: I think if you get into the way it was written, it's a huge tax and there's no sense calling it anything else. I mean, it is a tax. So it -- and it's a fairly regressive tax.


STEPHANOPOULOS: How do you answer that? Republicans say this is the defining vote of 2008. They're going to use that in the 2010 elections.

AXELROD: Well, you know, it's interesting. We're trying to solve a problem that has languished for a decade, the problem of energy that has bedeviled us for a long time. And they're talking about how they can use it as an issue inaction as somehow a strategy. And that's not a strategy.

As for the tax issue, you know, I have a high regard for Warren Buffett, and the president does as well. I think the Congressional Budget Office addressed this issue, and their conclusion was the way the bill was written, the impact on the average American will be negligible over time.

And I think it was written for...

STEPHANOPOULOS: About $150 a year.

AXELROD: ... that reason. In 2020, and for lower income people, it actually will be a net gain because they'll get some help with their energy bill. So I think this is a phony issue.

And the real issue is, what is the Republican strategy for creating jobs? This bill actually, they call it a job killer, it will create millions of green jobs, the jobs of the future. We've lost millions of jobs in the recession that began last year and continues.

What is their strategy for that? What is their strategy for reducing our dependence on foreign oil? And how are we going to deal with this issue of carbon pollution that threatens people's health and the planet?

STEPHANOPOULOS: As you know, you're also facing some resistance from Democrats though in the Senate on this bill as well, senators like Claire McCaskill saying they're going to need some major changes.

And I've been trying to get into the issue of legislative strategy a little bit. The president is also pushing very hard on health care reform. He said he wants the Senate to act on this energy bill as well.

Does he want them to take it up right away or wait until after they finish considering health care in the fall?

AXELROD: Well, I think this energy bill will probably be dealt with in the Senate in the fall.

STEPHANOPOULOS: So after health care.

AXELROD: Health care I think will be the first thing on the agenda. Both the Senate and the House are well down the road on that.

But, George, understand that both of these issues, energy and health care, have languished for a long time. And the president believes that we have to deal with these issues in order to build a stronger foundation for our economy in the future.

And so he is taking the long view about how we get our economy moving, not just in the short term, but the long term. And he is asking Congress to join with him in this effort.


STEPHANOPOULOS: ... with that, especially on health care, excuse me, is figuring out where the revenues are going to come from. And, you know, a lot of talk about taxes in the House and the Senate as well.

And I want to show our viewers something the president said during the campaign back in September.


OBAMA: I can make a firm pledge: Under my plan, no family making less than $250,000 a year will see any form of tax increase, not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.


STEPHANOPOULOS: Not any of your taxes, a firm pledge. Does that mean the president will veto any health care bill that includes a tax increase on people earning less than $250,000 a year?

AXELROD: Well, first of all, George, let's make a few points. The president has said whatever is done has to not add to the deficit. So that's one of the prerequisites for this bill. We've got issue with our budget. Everybody is aware that we don't want to add to our deficit.

So this is going to have to be paid for. Two-thirds of the expenses -- two-thirds of the expense of it under the president's plan and proposal would be done by transferring money within the health care system from Medicare on wasteful spending, giveaways to insurance and drug companies, and so on.

And so we're talking about the final third. He has proposed a plan that would be in keeping with the promise that he made, to cap deductions for the wealthiest Americans on their taxes.

He still believes that's the way to go. And he has made a strong case to the House and the Senate on it.

STEPHANOPOULOS: But he also said this week he was open to compromise on this. And as you know, the Senate is looking especially at this issue of capping the deductions for health care that employers and employees now get. That would get -- would be a tax increase for many families earning under $250,000.

But the president said he was open to it. So that means that the tax pledge he made back in September is no longer operative?

AXELROD: Well, George, first of all, there are a lot of different formulations of that plan. The president had said in the past that he doesn't believe taxing health care benefits at any level is necessarily the best way to go here. He still believes that.

But there are a number of formulations and we'll wait and see. The important thing at this point is to keep the process moving, to keep people at the table, to the keep the discussions going.

We've gotten a long way down the road and we want to finish that journey.

STEPHANOPOULOS: But if you're open to tax increases for people under $250,000, that means that the pledge he made last September in Dover is no longer operative.

AXELROD: George, I think the president has made clear the way he feels this should be funded. And certainly is consistent with what he said during... STEPHANOPOULOS: But he's not drawing a line in the sand.

AXELROD: ... the campaign.


AXELROD: Well, you know what? The -- one of the problems we've had in this town is that people draw lines in the sand and they stop talking to each other. And you don't get anything done. That's not the way the president approaches us.

He is very cognizant of protecting people -- middle class people, hard-working people who are trying to get along in a very difficult economy. And he will continue to represent them in these talks.

But they're also dealing with punishing health care costs, and that's something that we have to deal with

STEPHANOPOULOS: One of the Republicans who is both drawing lines in the sand and still talking is our next guest, Charles Grassley of Iowa. And he has made it very, very clear what he believes has to be in a plan.

One of the things he said is, absolutely no public health insurance plan in the bill. The president has said he has made a very strong case for that this week. And Senator Grassley has also said that we're probably going to have to have some taxation of benefits.

And I guess what I'm trying to get at, is that a price that the president is willing to pay? I know you're saying that the president has laid out his preferences, but what price is he willing to pay to get Republican votes, to get a bipartisan bill?

AXELROD: Well, George, first of all, the bill will be bipartisan by definition. Just this week the Senate Health Committee, Senator Dodd has done a spectacular job in moving this along. And the Senate Health Committee accepted 82 Republican amendments.

Republican ideas are going to be included in this package. We hope it will come with Republican votes as well. But the important thing is that we solve this problem. That we begin to move...

STEPHANOPOULOS: So that's the new...

AXELROD: ... forward on health care reform.

STEPHANOPOULOS: And the chief of staff, Rahm Emanuel , has made the same point you just made. That seems to be the new White House definition of bipartisanship. It's a bipartisan bill if there are some ideas that have been advocated by Republicans, even if Republicans don't vote for the bill in the end.

Senator Grassley says, no way. It is not bipartisanship either if you include just the Republican ideas but not Republican votes, or even if you simply get six or seven Republican votes, he says that's not true, durable bipartisanship. That's not the road he's going to go down.

AXELROD: Look, I don't think we should get consumed by process at a time when health care costs are increasing at -- you know, they've doubled in decade. Out-of-pocket costs for people on health care up 32 percent, punishing families, businesses, banks, you know, ultimately will bring the federal budget down (ph).

We have to act. We can't afford to get ensnared in these kind of Washington discussions. We've got to deal with the issue that the American people are confronting.

STEPHANOPOULOS: And the American people are also confronting the issue of the economy. That is their number one issue. And some of your critics say the president has gone off-course a little bit, has lost his focus on the economy.

We had a new Washington -- ABC/Washington Post poll this week that had some fairly revealing numbers. Number one, it showed on the stimulus package, the support for people who felt the stimulus package was helping the economy: 59 percent in April, down a little bit to 52 percent. Now whether the country is going in the right direction hit 50 percent in April, had been skyrocketing since the election, but for the first time started to slip back.

How concerned are you by this? And how much are you worried about the fact that people don't believe that the president's plans -- are starting lose faith that the president's plans are actually helping the economy?

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AXELROD: George, we lived through several years in which we were confronted with poll numbers that said we were 30 points behind in the race for the presidency. I confront a lot of doomsday questions from people less smart than you in this town.

And, you know, we take the long view on this. Look, when the president signed the stimulus package -- the economic recovery package, he said it's going to take a while for this to work, and we're going to go through some rough times, and unemployment is going to go up, and we've got to work -- we have to work our way through this. So...


STEPHANOPOULOS: But the money is not getting out as fast as you hoped, is it?

AXELROD: ... none of this -- none of this is surprising. What?

STEPHANOPOULOS: The money is not going out as fast as you had hoped, is it?

AXELROD: Well, I think the money -- we would like the money to go out faster in some instances, but a lot has been accomplished, and that should not be diminished. There are 4,000 or 5,000 road projects going on in this country right now that would not have gone on. There are energy projects going on in this country right now, and homes being retrofitted to be energy efficient that would not have happened. There are policemen and firefighters and teachers who are still on the job today because of that package.

So I think it's done an awful lot of good. The fact is that we're in the teeth of one of the worst recessions that we've had since the Great Depression, perhaps the worst, and we're going to have to work our way through that. And I think the American people understand that at some level, and that -- and so we're not sitting there -- the numbers we're worried about are not poll numbers. It's how many people can we get back to work, how do we get this economy moving again in the long run, and mostly how do we build a solid foundation so we're not in this bubble-and-burst kind of economy that we've seen over the last decade that leaves both our country and our families and businesses in jeopardy.

STEPHANOPOULOS: Some economists look at that, including Paul Krugman, who's going to be on this show later in the program, he says you're looking at 9, 10 percent unemployment coming in September. That's going to necessitate a second stimulus package. Is that still on the table for the president right now? And what would that mean for your other plans on energy and health care?

AXELROD: Well, first of all, I don't want to prejudge that at all. You know, as you said earlier, there's still -- most of the stimulus money, the economic recovery money is yet to be spent. Let's see what impact that has. I'm not going to make any judgment as to whether we need more. We have confidence that the things we're doing are going to help, but we've said repeatedly, it's going to take time, and it will take time. It took years to get into the mess we're in. It's not going to take months to get out of it.

STEPHANOPOULOS: Let me turn to the crisis in Iran. The crackdown appears to be working for now. The streets have gone quiet. A huge security presence in the streets. Mir-Hossein Mousavi, the chief opposition leader, has not called for new protests. And President Ahmadinejad is striking back at President Obama and the comments that President Obama made on Friday. He has said -- he's calling on the United State to stop meddling, and then he's gone on and said, "without a doubt, Iran's new government will have a more decisive and firmer approach toward the West. This time, the Iranian nation's reply will be harsh and more decisive to make the West regret its meddlesome stance."

It does appear that the prospects for engagement are diminishing, that Iran is taking a harder line.

AXELROD: Well, first of all, you know, let's be clear that we didn't meddle in the election in Iran. The dispute in Iran is between the leadership in Iran and their own people, and plainly, Mr. Ahmadinejad thinks that by -- by fingering the United States, that he can create a political diversion. So I'm not going to entertain his bloviations that are politically motivated.

STEPHANOPOULOS: Well, (inaudible) entertaining them.

AXELROD: It's just an opportunity to say "bloviate." (LAUGHTER)

AXELROD: No, I'm not -- the point is this. We are going to continue to work through the P5, through the multilateral group of nations that are engaging Iran, and they have to make a decision, George, whether they want to further isolate themselves in every way from the community of nations, or whether they are going to embrace that. And understand that whatever Mr. Ahmadinejad says, everyone understands that in Iran, he is not the person who makes decisions on foreign policy, on defense policy. So this is political theater.

STEPHANOPOULOS: But the invitation is still open. If the Iranians want to come to Paris and sit down with the United States and the Europeans on the nuclear program, that invitation is still open.

AXELROD: Well, yes. And understand, you say it's an invitation. It is not a reward. We are not looking to reward Iran. We are looking to -- the nations of the P5, the five-plus-one, they want to sit down and talk to the Iranians and offer them two paths. And one brings them back into the community of nations, and the other has some very stark consequences.

STEPHANOPOULOS: Final question. I was talking to an ambassador from the region this week, who said now, if you sit down with the Iranians after everything we've seen in the last couple of weeks, you're going to be crushing the hopes of the young people in Iran and across the region, who listened hard to the president's Cairo speech and thought he was striking out in a new direction.

AXELROD: I think the president's sense of solicitude with those young people has been very, very clear, and we're very mindful of that. We are also mindful of the fact that the nuclear weapons in Iran and the nuclearization of that whole region is a threat to that country, all countries in the region, and the world. And we have to address that. We can't let that lie.

STEPHANOPOULOS: David Axelrod, thanks very much.

AXELROD: Good to be with you.

STEPHANOPOULOS: And as we bring in Senator Grassley, here is a look at how supporters of the president's plan are trying to pressure the senator in his home state of Iowa.


(UNKNOWN): That's the president's plan -- keep the coverage you have now or choose from a range of plans, including a public health insurance option to lower costs and keep insurance companies honest. Why is Senator Grassley opposed to giving you a choice? Tell Senator Grassley it's your health, it should be your choice.


STEPHANOPOULOS: And Senator Grassley joins us now from Waterloo, Iowa.

Thanks for joining us this morning, Senator.

You heard that commercial, the president's supporters trying to pressure you in your home state. You also heard David Axelrod on the president's preferences for what should be in the plan.

Bottom line, is there any kind of public health insurance option you can accept?

And will the plan you negotiate meet the president's pledge not to raise taxes on people earning under $250,000 a year?

GRASSLEY: Well, a Democratic senator has come forth with a co-op plan, that, if it's along the lines of what we have known co-ops in this country for 150 years, and that would definitely bring additional competition into the insurance industry, I think that, if it's structured along those lines, that we could have, yet, a different option than what we presently have.

And we're looking at that and we're trying to get a bipartisan agreement on that. And if it doesn't touch the concerns that we have about federal control of health and leading toward a Canadian-style single-payer system, then I think it can get bipartisan support.

But let me assure you that we're trying to find a bipartisan compromise in this area, as well as every other area. And I'm not so sure that the competition is a major thing that we have to deal with in order to get a bipartisan compromise.

George, if I could say what the overall view of my party and most everybody in Congress is, is to make health insurance affordable and accessible.

And when we say accessible, we mean taking away the discrimination that comes from preexisting conditions. And when we say affordable, affordable for people that have preexisting conditions, and also affordable for low-income people; and, lastly, to bend the curve of growth of health care. Because we can't keep on this gigantic increase in health care costs that we have.

STEPHANOPOULOS: But how about this question of how to pay for it?

You know, you saw the president, during the campaign, said he's not going to support any tax increase for people earning under $250,000 a year. But you and other senators, including some Democratic senators, are working on this plan that would take away some -- or cap the tax (inaudible) for some health insurance that employers provide.

Can that commitment the president made be kept, or will you have to raise taxes on people earning under $250,000?

GRASSLEY: From the standpoint of the president, saying that he doesn't want to do that, I think it's going to take presidential leadership to get people of his party to see that we shouldn't be subsidizing high-end health insurance policies that drive up inflation in health insurance, maybe, one or two percentage points of the seven or eight that it goes up every year.

So I'm -- I'm asking, and I think the White House knows my view and the view of a lot of other Republicans. Since the president denigrated John Cain's -- John McCain 's effort to move in this direction during the campaign, it's going to take, in order to win over Republicans, presidential leadership in that direction.

Let me give you the overall view, though, for financing.

GRASSLEY: I -- we Republicans and most Democrats believe that it ought to come from within the health care industry. So if you read about a trillion dollars, we're talking about reshuffling dollars within health care to make health care affordable for people that don't have it and for high-end, high-cost health insurance.

And we want to bring money from within health care, reshuffle it. So we're going to get money from the high end health insurance policies and then we're going to save hundreds of millions of dollars within Medicare that's being wasted.

Just as one example, we just -- the administration announced that they just arrested a dozen people that were involved in $52 million of fraud within Medicare. We've got to do things about that. And shifting money from it being wasted to more useful sources within health care is the direction that we're going to go.


GRASSLEY: But all from within health care, not from outside of health care.

STEPHANOPOULOS: Let me turn to the issue of energy. You heard Mr. Axelrod talk about the House passage of the cap and trade legislation. Here he said that this Republican charge that this is a broad-based tax increase is a phony issue. And he challenged Republicans, including you, to come up with an alternative.

GRASSLEY: Yes. Before I answer that question, I want to comment one thing on Mr. Axelrod said about Republicans input into the Health Committee's bill. He said they put in 83 amendments. Let me assure you, those were no policy -- changes in policy, those were strictly technical. And Republicans are not going to be hoodwinked into that being a bipartisan bill.

STEPHANOPOULOS: So you don't buy...

GRASSLEY: Now to answer your question...

STEPHANOPOULOS: Well, let me just follow up on that.

GRASSLEY: But -- go ahead.

STEPHANOPOULOS: You don't buy the White House definition of bipartisanship? GRASSLEY: You stated my position accurately when you were interviewing Mr. Axelrod. That when we're restructuring 16 percent of our economy, that's what health care is. And when we're affecting every person in this country because this is every person in this country, then we ought to have bipartisan support.

Senator Baucus, my chairman that I'm working with on a bipartisan proposal, wants it to be overwhelmingly passed in the United States Senate. And that means bipartisanship, just not three or four Republicans going along with 58 Democrats, but a sizable number of Republicans.

And I think we have the capability of doing that if people put policy ahead of politics. And remember, policy is the best the politics. Now I forgot your other question.

STEPHANOPOULOS: It was -- he said that the issue of taxes on the energy plan is a phony issue, that it's a negligible tax increase. And he did point to these Congressional Budget Office numbers which show it's only about a $150 in 2020 for an average family.

GRASSLEY: Well, you have to give the Congressional Budget Office, because they're like God around Washington when they say something, but I'll tell you, earlier this year, we had economists telling us that when you filter all of these increases in energy through every step of the economy, manufacturing a product or whatever services might come, we have come out with about $3,000 for a family of four.

Now I won't argue $175 versus $3,000 because that's not the most important issue. You've got to look at what is happening to our economy if we put this very strong tax on energy. The people that have been complaining for 10 years about the outsourcing of manufacturing jobs to China are the very same ones pushing cap and trade.

And you're going to find signs on manufacturing doors, if this bill passes, that says moved -- gone to China. So what we have to do is make sure China, the number one emitter of CO2, not the United States, China is. And India right along with them.

We've got to have an international agreement so that we have a level playing field for American manufacturing so we don't outsource any more jobs. This should be done in a way that affects China the same way it affects the United States.

Because if the United States moves ahead by itself, we're not only going to lose those jobs, but the point is, after 30 or 40 years, we're going to reduce CO2 by less than 1 percent.


GRASSLEY: So we've got to do it on an international basis, George.

STEPHANOPOULOS: Senator Grassley, thank you very much for your time this morning. I appreciate it. Good to have you back.

GRASSLEY: Thank you.


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