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(BEGIN VIDEO CLIP)

OBAMA: I also know that nearly a century after Teddy Roosevelt first called for reform, the cost of our health care has weighed down our economy and our conscience long enough. So let there be no doubt -- health care reform cannot wait, it must not wait, and it will not wait another year!

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CHARLIE ROSE: We have a stellar cast this evening. From Boston, presidential historian Doris Kearns Goodwin. With me here in New York, Paul Krugman of "The New York Times," a Nobel laureate. Steve Coll of "The New Yorker" and Jim Ellis of "BusinessWeek." Joining us in a few minutes from Washington, David Brooks of "The New York Times" and Al Hunt of Bloomberg News. I am pleased to have all of them here. Let me begin with Doris Kearns Goodwin in Boston. Help us understand this moment, Doris, in terms of the presidential moment and a relationship between a president and a crisis.

DORIS KEARNS GOODWIN, PRESIDENTIAL HISTORIAN: I think this was the right speech at the right time with the right tone. People have wondered in the last weeks whether or not he should have been speaking more optimistically or more confidently. But I think he had to lay out to the American public in these last weeks how dire the crisis was. He had to get the stimulus bill through. And then tonight, with that through, he could paint a picture of what we might look like if we really do come through this. You create an image to people. Banks are lending again. We`re going to lead the world again in energy. We`re somehow going to have a higher percentage of college graduates by 2020 than the world has had before. America needs the unimaginable to feel good about what`s imaginable. And I think his voice was stronger tonight than I`ve heard it in many times in the past. It rose and came down, which doesn`t often happen with me. He always has such a clear, strong voice. But there was determination. There was even humor and an ability to relax. So it seemed to me he found his voice tonight. And I think by going for energy, education and health care, it showed that the progressive government that he`s hoping to put in place is on its way.

CHARLIE ROSE: Is it your sense that the country needs this, that they`re waiting for this, that there is a necessity that has not been met?

DORIS KEARNS GOODWIN: I think so. I think he recognized that the country needed to feel, as we always have before, that when you have a crisis, if you come together, with confidence, you really can get through it. And I think to a certain extent, he gave that confidence. He made people feel that government was on their side. Whenever a president can make you feel I am on the government -- and the government`s on your side. He also was able to create enemies a little bit, like old FDR liked to, even though it was somewhat, you know, reduced in anger. But talking about the banks and they cannot lend without knowing what they`re doing. Talking about CEOs with their drapes. FDR loved to do that, which allows people to feel, yes, this guy is on my side. And I think those were really important things for people to feel.

CHARLIE ROSE: Two questions. What do you think he accomplished tonight? And where do you think he is in doing the kinds of things necessary from your judgment?

PAUL KRUGMAN, NOBEL PRIZE LAUREATE: Well, it was a terrific speech. And it left open the possibility of doing everything that needs to be done, but it didn`t actually spell out how he`s going to do that. So I felt the wording on banks -- that`s the thing we were looking at most, right -- what`s we`re doing (ph) about the banks, it was clear. We`re going to rescue the banks. We`re going to make them work. How are we going to make them work, which is the big debate? We know we`re going to throw a lot of taxpayer money at them, but what are the conditions? Are they going to be taken into receivership, temporary nationalization? That was one possible interpretation of what he said, but not the only possible interpretation. We don`t actually have a bank plan. That was the thing. It`s crucial -- we know that we need one. We know they`re trying to get one. There`s a lot of trouble about putting it together, and he didn`t give that, but he said basically -- he promised -- he promised a plan in the future.

CHARLIE ROSE: But is it because they haven`t decided or it`s just simply what? That they had not delivered on the question of what we want to do about the financial sector, because everybody says that`s where you have to start.

PAUL KRUGMAN: Yes. And I think the answer is they have not fully decided. You know, I don`t know that for sure, but my impression is they`re actually thrashing. There are no really appealing answers there. Nobody -- nobody wants the government owning the banks for any extended period of time. If you do take them over, how do we know it won`t turn into that? But on the other hand, everything else you try ends up looking like a way to throw hundreds of billions of dollars to some very undeserving recipients. And I think they`re still a little bit running around in circles, trying to figure out their way through that conundrum.

CHARLIE ROSE: More on that later. Al Hunt, what did you think of the speech, and where do you think this administration is in trying to gather the nation`s confidence and begin to stop the slide?

AL HUNT, BLOOMBERG NEWS: Well, Charlie, I thought he brought his game tonight. I thought he was -- I agree with everything Doris said. He struck all the right notes. It was ambitious. The landscape was there in a whole host of areas. I don`t think this was the venue to talk about the details of the banking plan, which will be forthcoming, I suspect, the next week or two. But he was pretty darn realistic, Charlie. He told people that we are not going to get any quick solutions. He also was inspirational at times. And I think what he really did -- this is Doris` bailiwick -- you can see how he has read so much about FDR, particularly in the last couple of weeks, because that was the model, to try to strike the sense of both realism, inspiration, and also capture that can-do spirit that embodies America and it`s what FDR did so brilliantly. Doris is right, didn`t have quite -- there wasn`t quite the edge with some of the villains, but I thought it was a very effective presentation this evening.

CHARLIE ROSE: David Brooks, what did you think?

DAVID BROOKS, NEW YORK TIMES: I agree. I thought it was outstanding. It`s been a while since I`ve been enthusiastic about an Obama speech, but I was pretty enthusiastic about this. I thought he captured the tone of the country now perfectly, which is angry but sort of resolved at the same time. It`s nervous. And the core thing that runs through all his speeches is the theme of responsibility. There was a sternness in the inaugural address and there was certainly a sternness tonight. Not only looking backward, saying essentially we`ve been an irresponsible nation, we`ve taken out loans we couldn`t afford, we`ve had bankers extend loans they couldn`t afford, we`ve put off problems and self-indulgently rewarded ourselves, but even looking forward, there was an ethos of responsibility, I thought, that went through the speech. We`re going to spend money, but we`re going to watch it carefully. We`re not going to reward people who bought way too much more home than they could afford. If we`re going to have a big expansion of government, we are, you know, the American people are going to want that ethos of responsibility surrounding it. And I thought he communicated that excellently tonight. So I thought this was quite a good night for him.

CHARLIE ROSE: Is the country ready for all the government that it can take right now because of the crisis?

DAVID BROOKS: I think so. Well, maybe not all the government. They`re suspicious of the deficits. That`s a highly salient issue, and he struck that note. They`re suspicious of waste, and they`re skeptical about what can be done. But if I can just erupt on what I just saw after he spoke. They`re going to be with Obama because of what came after. I thought Bobby Jindal gave possibly the worse response to a Democratic speech or speaker in the history of democracy.

(LAUGHTER)

DAVID BROOKS: Since Demosthenes (inaudible)...

(CROSSTALK)

(LAUGHTER)

PAUL KRUGMAN: I thought that the running room that Obama had was demonstrated by Jindal saying government doesn`t work, look at what happened after Hurricane Katrina. Which is no, what you`re exactly saying is government doesn`t work when it`s run by Republicans, right, you know?

CHARLIE ROSE: More on that. Jim, what did you think of this speech today in context of what other people have already said?

JIM ELLIS, BUSINESSWEEK: I think the speech did what it was supposed to do, but I think what was really most important was that he laid out why government should be this involved in the free market. Which I think a lot of Americans are really worried about. I mean, he came out and he said regulation, we have to regulate because if we don`t, we risk losing our system. And he said that government is not the enemy of the free market, but it`s the way to, you know, serve as a catalyst for the future growth of the free market. I thought that was brilliant, in a way, because that`s a lot of people, me included, worry that we`re going down a road that`s very, very dangerous. And instead what he`s saying is that we understand that. We understand why you worry. Because government doesn`t have a great track record of doing things right, but we`ve got to make sure that we have a landscape that allows the market to function correctly, and so therefore we have to step in and do that.

CHARLIE ROSE: Now is the tone -- I know you don`t like this, to the country, I understand we`re doing things that we might not necessarily would have wanted to do. But we have to do it, and let me tell you why.

JIM ELLIS: Yes, I mean, that`s it. I mean, he`s basically saying, OK, hold your nose, but there is a payoff down the way. Things will be rosy and they`ll smell sweet later on, but we have got some very difficult things to do that you don`t like, I don`t like, but we have to. I think that`s the smart way of going, because if he just says we`ve got to do it because -- and not really explain to the American public why, then he`s going to lose. I think a lot of people are afraid of these kinds of numbers. They`re mind numbing when you think about trillions of dollars, but it`s also mind numbing, you know, $2 trillion of retirement assets lost last year. Who would have ever thought that could happen. So we`ve got a public that wants something to be righted now. And if he`s got the answers, they want to follow him.

CHARLIE ROSE: Steve.

STEVE COLL, "NEW YORKER": I thought he was fully in possession of his presidency, maybe for the first time since he became president. It reminded me of the night he was elected in Chicago. Some of it was the setting and the moment. Some of it was the skill with the language and the presentation. But he did kind of control the evening. And even when he came off of his script, he seemed relaxed and fully in possession. If there was a little bit of news lurking in all of the tone setting and confidence building, perhaps it was the insistence that he delivered about health care this year. There was a debate last year lurking around in the White House. Some of it`s been in the papers, about whether or not he would push for fiscal reform, Social Security reform ahead of health care or maybe not emphasize the calendar that Ted Kennedy and Max Baucus have been pushing. He couldn`t have been more forceful. That certainly was a signal to Congress of what schedule he was on. But I think, as Paul says, it was artfully presented even as a forceful mandate. We`ll see exactly how the calendar unfolds over the...

(CROSSTALK)

CHARLIE ROSE: Al, on this question of the banks, is the president saying, look, I know we have -- you`ve already spent $350 billion, and I know there`s another 350 spent -- that`s $700 billion. That`s not going to be enough. Is he signaling that to the Congress and the country?

AL HUNT: Charlie, he said it explicitly. He said we`re going to probably have to ask for more money. I thought that was actually one of two bits of news he made tonight. One was what Steve just alluded to, saying that we`re going to do health care this year. He is actually is talking about a multiple track, doing health care and energy this year, as well as the financial rescue plan. But I think it`s clear that he`s going to ask for more money. I don`t pretend to be any expert -- and I`ll defer to Professor Krugman on this -- it seems to me that in some ways, the nationalization debate has gotten a little bit distorted because I don`t think the question is whether the government`s going to own 100 percent of these financial institutions. I don`t know, it`s going to be are they -- will they control -- will they have a controlling interest for a short term? And I think a lot of people -- again I`ll defer -- but a lot of people think that`s almost unavoidable.

CHARLIE ROSE: Speak to that, 40 percent does not make nationalization as generally understand.

AL HUNT: No, or even 60 percent.

CHARLIE ROSE: Professor.

PAUL KRUGMAN: Well, yes, I don`t think anyone cares whether it`s 80 percent or 100 percent.

CHARLIE ROSE: You`re right about that.

PAUL KRUGMAN: No, it`s really -- it`s a question of whether the government is going to -- it`s not just control, it`s whether the government is going to realize for taxpayers the upside if the banks are rescued. Are you going to pour lots of money in and then let some other people glean the benefits of that? And it`s largely it`s a question also of I think -- of perceived sense of fairness. You have to rescue the banks. This has to be done, but the public hates the idea of throwing money at the banks. And so...

CHARLIE ROSE: Because they think they`re responsible for the problem.

PAUL KRUGMAN: Right. And if you can say, well, it`s not them, you know, it`s actually us, because this is now our bank that we`re rescuing, that`s why in a way you need to do this. And Obama -- he did signal very clearly. I think he`s going to go for TARP two or TARP three, he`s going to go for an additional injection of money, and he`s going to have to make it clear there`s some fairness in handing that money out.

CHARLIE ROSE: All right. Let me just throw open this idea. Are we at the point -- yes, who? Somebody?

DORIS KEARNS GOODWIN: I was going to add something, Charlie.

CHARLIE ROSE: Go ahead.

AL HUNT: Charlie, I think...

(CROSSTALK)

CHARLIE ROSE: Wait, wait, wait. Doris first and then Al.

AL HUNT: I yield to Doris.

CHARLIE ROSE: Yes, you do. Doris.

DORIS KEARNS GOODWIN: I was just going to say, I thought an important part of the speech, given the fact that people are not happy about the idea of putting more money into the banks was when he really explained what would happen if the banks started lending again, or what happens if they don`t lend. An economy -- the economic situation cannot get recovered, that people can`t get loans, they can`t buy houses, people aren`t building the houses, they don`t have jobs. They can`t finance college education. That kind of painting a picture of why we have to help the banks when a lot of people don`t want them I think will give him some leeway now to do what he needs to get done.

CHARLIE ROSE: Al, go ahead.

AL HUNT: Well, I also was going to say, I think there will be conditions. I don`t think that any of those bank CEOs or directors are going to stay in place if the government takes over a controlling share, nor do I think the public would put up with them staying in place, frankly.

CHARLIE ROSE: David, what about the auto companies? What is he saying is his intent with respect to Detroit?

DAVID BROOKS: First of all, if I could talk about the banks a little...

CHARLIE ROSE: Absolutely, you can. Please.

DAVID BROOKS: I interviewed Tim Geithner a week or so ago, and two things that came through in that interview, which was, A, he`s much more resistant to nationalization than a lot of people, including my colleague Paul or even Alan Greenspan or a lot of free-market economists, mostly because he just thinks the government would just do a terrible job of managing. And second, I got the impression from him he thinks the financial sector as a whole is a lot more healthy than a lot of people -- a lot of economists that I`ve read think that -- think. Clearly, some of the big banks are practically insolvent, but he was more upbeat about the system as a whole. So one gets a sense from the public debate that there is a near consensus almost about some sort of nationalization, with some sort of federal control. But resistance from Treasury, and maybe even in parts of the White House as well.

CHARLIE ROSE: But do people who are in favor of nationalization intend for the government to run the banks? No.

PAUL KRUGMAN: Not for any length of time, no. I mean, nobody -- you know, it`s -- although I will say that when Geithner says that, you know, government does a terrible job of running the banks, so do the bankers. That`s how we got into this mess, right?

(LAUGHTER)

PAUL KRUGMAN: But this is -- but in a way, there is a distance here because Obama`s telling us if we don`t do something about the banking sector, then we`re going to have a lost decade. He didn`t say Japan, but we will turn into...

CHARLIE ROSE: Zombie banks.

PAUL KRUGMAN: Right. And then on the other hand, you have this Treasury secretary saying to David, well, you know, things aren`t really that bad. So this is kind of a dissonance between the message we got from the president and the message we`re getting from some of the president`s top economics people.

CHARLIE ROSE: His secretary of the Treasury.

PAUL KRUGMAN: Right, yeah.

CHARLIE ROSE: Yes. David, can I just go to the auto company thing, because it`s also part of this idea, what is the role of government right now, and what do they -- my impression is he clearly says, you know, whatever the -- whatever the means, we cannot let these companies fail.

DAVID BROOKS: Listen, that`s an unpopular thing to say right now. The bailouts of Wall Street, very unpopular. The bailouts of the auto industry nearly as unpopular. And so he`s got a hill to climb there. But I thought he had just rhetorically a fantastic line, which was -- I`m going to paraphrase it -- the country that invented the automobile can`t walk away from the industry. That is a line that plays on patriotism, it plays on nationalism. It`s the best line I`ve heard in explaining why we have to do that. Now, again, how you`re going to do it and then how you`re going to reward the executives and the unions and all that, that`s a problem. But rhetorically, he really pushed pretty hard tonight and very effectively.

CHARLIE ROSE: Speaking of compensation, that`s been swirling around this thing, and it is a hot button issue for politicians.

JIM ELLIS: It`s the thing that unfortunately motivates quite a lot of people, particularly in certain industries like Wall Street and financial services. I`m not certain that the administration truly understands what an important motivator compensation and outsize compensation actually is on Wall Street. And I think that they may not understand just how difficult it`s going to be to change that culture. I mean, it`s not just CEOs. I mean, the bonus culture goes all the way down to the secretary level in that business. It is an amazingly motivating factor. It`s what people -- the best and brightest often leave our best B schools to go there. Not because they want to make a difference in life; they want to make a lot of money. Nobody likes to put it that way, but that`s what it`s all about.

CHARLIE ROSE: The other side of that argument is these are the people who know how to fix the problem, and therefore you can`t have that brain drain that they -- I think the "New York Times" or "Wall Street Journal," one of them...

JIM ELLIS: I guess in the near term, I mean, where are they going to go? No offense to them...

DORIS KEARNS GOODWIN: Maybe the hope...

JIM ELLIS: ... but it isn`t exactly...

CHARLIE ROSE: Say that again, Doris, what?

DORIS KEARNS GOODWIN: Well, maybe the hope is that the best and brightest now will see another era, as we saw in the `30s, as we saw in the progressive era at the turn of the 20th century, where people go into public life, where they really want to go into government and make this government work, where they want to become teachers. I mean, maybe that that material ethos that we`ve seen in the last couple of decades -- and this is really optimistic -- will now create a newer generation that wants to do something in a larger sense rather than just make private gains through a lot of bonuses on Wall Street.

CHARLIE ROSE: Maybe they`ll become professors.

(LAUGHTER)

DORIS KEARNS GOODWIN: Heaven forbid!

PAUL KRUGMAN: (inaudible) school of public policy, and we`ve had this problem that our best have been going into investment banking. And we just solved that problem.

CHARLIE ROSE: Right, hedge funds and all that, can make a lot of money...

(CROSSTALK)

STEVE COLL: ... dissonance. The same week, if you`ve been reading inside the papers, Andrew Cuomo`s investigation into the circumstances under which John Thain...

(CROSSTALK)

STEVE COLL: Yes. The circumstances in which he paid out several billion dollars in bonuses in the teeth of the crisis, at a time when they were, what, three or four weeks from closing the Merrill Lynch-Bank of America deal. The assets on Merrill Lynch`s books were deteriorating by the hour. And both groups of executives spent quite a lot of deliberate time figuring out how to hand out bonuses that really -- they have -- they should have obviously not been distributing in a way that they were. There`s quite a lot of information about what really happened in November and December that has yet to come out that I think will outrage the American public appropriately once it comes on to the record. So there is still -- I thought the president did a good job of getting ahead of some of this outrage, which the Republican Party had successfully exploited during the debate about the stimulus. But this narrative is far from over. We don`t even really know what happened in the period from October to the first of the year yet. Those facts are going to come out.

CHARLIE ROSE: And you think the public will demand some kind of...

STEVE COLL: I think part of the case for receivership is political, which is that if the Treasury secretary has a plausible pragmatic alternative that avoids temporary government management of these big complicated banking institutions in order to cleanse them of their toxic assets, terrific, but he`s been working on this problem since the fall. He hasn`t been able to come up with a plan in which he has confidence yet. The alternative, temporary receivership on the FDIC model, on the Resolution Trust Corporation model, it`s not without successful precedent, and it does have the advantage of clarifying that this group of executives and the shareholders around them, you know, are not part of the solution anymore.

CHARLIE ROSE: Go ahead.

PAUL KRUGMAN: You could fix the banks` problem by throwing maybe $2 trillion of public money.

CHARLIE ROSE: And do what with it?

PAUL KRUGMAN: Just basically give them money, so that they are suddenly well capitalized again. But that would be politically completely unacceptable. Because it would -- I mean, also, I`m not sure we can afford it, but that, you know, assuming we could afford it, that it would be politically unacceptable because of exactly the things that Steve is talking about. People won`t stand for it, which is why receivership is as much a political as an economic thing.

CHARLIE ROSE: All right. Talk to me, David, for a second about where Republicans are and whether they have a common mind on this, I mean, and is it reflected in the votes that have been taken so far?

DAVID BROOKS: Well, as I expressed earlier, I`m a little exasperated tonight with a party I often agree with quite often...

CHARLIE ROSE: I thought that was primarily about the speaker and not about the party.

DAVID BROOKS: Well, no, it reflects the debate in the party, and the debate in the party is did the Republican Party lose its way because it got too moderate, which is I gather the Jindal position, or did it get too corrupt or -- even -- is the Goldwater message the wrong for the times? And Jindal`s speech flows out of that debate. And his argument is that back to Goldwater, back to a more free market, more government is the problem. And to me, the problem with that speech is reflected in I would say about half or two thirds of the Republicans on Capitol Hill and especially on the House side, which is they`re in insular districts, we`re in this moment of crisis. The people are upset, nervous. They know the government is really basically the only big show in town that can actually create some stability and order in their lives. And they may not like the big spending programs that Democrats had in the stimulus package -- I didn`t like it myself -- but I do think government should be somewhere. And for Bobby Jindal to come out and say government is the problem, we shouldn`t waste money on volcano testing -- that is just insane. It is a total misreading of where the country is. It`s a total misreading of where independents are. It is a path to permanent minority status. A lot of people like me who hated the stimulus package -- then you look at what Jindal`s saying, that basically we should do nothing, or just we should cut some taxes here or there -- that is a horrible set of choices. And to me, that was the best thing that happened to Barack Obama tonight, for all the excellence of his speech, was that that response from the most promising Republican politician was just to me just an unmitigated disaster.

CHARLIE ROSE: All right. Al Hunt, is whatever battle that might have been for the mind of Barack Obama over? I mean, he clearly knows now what he wants to do and has simply to articulate it, rally the party behind it, and get America on his side?

AL HUNT: Charlie, I think this is a self-confident man. There are always going to be little battles, and sometimes there will be major battles, whether it`s on an area that Steve knows so well, like Afghanistan or whether it`s the question of the bank rescue plan. But I don`t think this is an indecisive man who is being torn by different advisers, and I think that he conveyed that tonight. What I found so impressive was the range of emotions that he really exhibited tonight. He was the explainer in chief at times. He was very conversational at times. There were a few moments where he soared. And I think that`s Obama. This was a great venue for him, and I thought he took full advantage of it. I thought David`s observations about the Republicans are so on the mark. They`re just so off-key right now. I`m not sure, David, that Bobby Jindal was the worst ever. Doris could tell us about what was it, Barton, Martin and Fish, whoever it was.

(LAUGHTER)

AL HUNT: But Bobby Jindal was certainly on the all-star team of worsts. And it really conveys a larger message, as David said, about a Republican Party that`s going to try to recreate days that no longer exist, nor does the public want that.

CHARLIE ROSE: Doris, did FDR become more the role model to follow rather than Abe Lincoln?

DORIS KEARNS GOODWIN: Oh, there`s no question. I think that FDR`s ability to speak at those fireside chats, to explain things in simple, everyday language, with quiet metaphors that people understood. The interesting thing is the fireside chat today wouldn`t work in the sense that nobody`s just going to listen to a speech on a radio. You needed this magisterial venue of this memorable speech before a joint session to really mobilize the country. That`s why I think he chose the right time to give this speech. And I do think it`s important -- in a weird way, I think he finally found his voice tonight. I mean, he`s had a great voice all along, but you know, they used to say that Churchill could roar like a lion and then he`d bring it back. He did all of those things tonight. He really was able to shift it up, to shift it down. At that moment when he had everybody clapping for the deficit, he said, well, I see we have consensus here. But then he comes right back to say, the deficit that we have inherited. So there was a huge degree of confidence. And maybe having gotten through this terribly hard time, still standing, still seeing that the country basically supports him by a large majority, has given him even increased confidence in his own powers and his own voice, because it certainly showed tonight.

CHARLIE ROSE: The deficit. He says he`s going to cut the deficit in four years from $1.3 trillion or whatever it is to half of that. If he does that, either by taxing people over $250,000, raising their income tax, or whatever he does about spending programs, what`s that going to do to his majority, what`s it going to do to the next four years?

JIM ELLIS: If he does it, he would be king of the world. I mean, I think it`s highly unlikely it can be...

CHARLIE ROSE: That he can do that.

JIM ELLIS: That he can do it. And -- but I think that that in a way is next year`s problem or the year after. Because basically what you have got to do is get people behind some sort of plan that`s going to effectively save the financial system as we know it. I mean, I think that a lot of people don`t want to be alarmist, but we came damn close to the wheels of commerce stopping, simply because credit is the sort of grease in this machine. And credit came to a screeching halt, and people don`t understand how quickly we could have just sort of gone over the edge. In a modern society, you cannot live without credit. Hard assets are not what makes this world work anymore.

PAUL KRUGMAN: I don`t think the deficit really matters politically. I mean, eventually something has to be done. Let me say, there is something that -- there is a bit of a paradox here and it troubles me. Which is this was a very confident guy that we saw, and it was a very clear vision. And I think, you know, progressives could not have asked for a better statement of their position. The actual policy measures are all half measures, two-thirds measures. They all fall short by most economists` estimates of what would he needed. The stimulus is going to help, but it`s not -- you know, it`s not going to be enough. All these things are a little bit -- in a way, it`s like FDR, by the way. You know, we now look at FDR, we say, you know, he did not do enough New Deal stuff, and the same thing is being repeated.

CHARLIE ROSE: OK, but is that because he doesn`t think it`s politically feasible to do it right now, or because he wants to see whether it works before he comes in full bore, or what?

PAUL KRUGMAN: The stimulus seems to have been a political calculation. They thought they could not get more, and by not asking for more, they ensured that they didn`t get more. The banks it looks more like they are not -- they`re in some ways less radical than a lot of the country is, than a lot of the economic profession is. They are still -- they`re still -- the phrase people use is cognitive regulatory capture. That they`ve got all these guys who know Wall Street and they`ve been kind of...

CHARLIE ROSE: What does that mean, David?

(CROSSTALK)

PAUL KRUGMAN: They still think like Wall Street guys, even though they are not themselves part of the problem.

CHARLIE ROSE: All right. Let me -- I want to go to foreign policy. Steve is here, as Al mentioned, that`s his expertise and where he wins all those Pulitzer Prizes. But David, you wrote recently about the great experiment, this sort of liberalism. Give me the moment as to what you see we`re going through right now with respect to that. And you may have referred to it when you talked about Goldwater and Jindal, but more.

DAVID BROOKS: Well, you know, you looked at the agenda. This is going to be the biggest expansion of government certainly since the Great Society, probably a little more, maybe since the New Deal. I mean, the agenda is incredible. You know, you`ve got health care, you`ve got energy, you`ve got education, you`ve got stimulus, you`ve got housing, you`ve got finance, you`ve got the regulatory regime. It goes on and on. And let me tell you, when you walk through the buildings to go to an interview in the Obama administration, there`s no aide to walk you to the office, because they don`t have people. They have no undersecretaries, they have no deputy secretaries. The security guard checks you in and you wander through the building. It`s all empty in there. You know, there are people with their secretaries in different buildings. They don`t know how to use the phones. They`re redesigning half the economy. And so that`s why I think this is just a huge moment. If they can pull it off, then people like me, who are skeptical, will look foolish. And people will say, see, you can have top-down change dictated by Washington experts. If it mostly comes a cropper, then they will not look so good, and then we`ll have a big test. But this is the real -- the choice we see in front of us.

CHARLIE ROSE: But if I read you, you do not -- you do not know of or think of a better idea right now in the short term.

DAVID BROOKS: Well, I would do things differently. I agree that big things need to be done. On the stimulus, I would have done things that put less stress on the system. I would have done sort of big grants to the states. I would have been a much bigger payroll tax. I would not have married the temporary stimulus, which is absolutely necessary, to the long- term baseline projections, the permanent programs they all jammed in there. So I think big things need to be done, and I think the intelligent conservative position is big things, but A, nothing that will long-term ramp up the size of government. We will tackle this problem and we will not try to do everything at once because we do not believe in minute technocratic planning. And the one other thing. I really do think the deficits do matter. I call it the Cheney doctrine, because I think it was Dick Cheney who said deficits don`t matter. I think both psychologically and I think both for the economy and where the economy is headed. And just the one thing in tonight`s speech which I thought was the low point for Obama, was when he said we will not raise taxes on anybody earning under $250,000 a year. If he`s in office for eight years and we don`t do that, then we`re just not going to solve the problem of health care costs and entitlements. We will be on a long-range and pretty dangerous trajectory.

CHARLIE ROSE: But is it wise politics to say that or not? Politics?

DAVID BROOKS: Well, the way that people said "read my lips, no new taxes," I guess that`s good politics in the short term. But finally reality hits.

CHARLIE ROSE: All right. Let me just go quickly to foreign policy in terms of the secretary of state`s been in China and saying to the Chinese, help us. You know, are you going to continue to loan us money? Are you going to help us on climate control? And by the way, we`re not going to talk a lot about human rights, because we know what your response is.

STEVE COLL: Well, I think the secretary recognizes that the Chinese have to be partners if we`re going to find our way out of the global recession...

CHARLIE ROSE: On all these issues.

STEVE COLL: Global recession, on all these issues. And that right now, their surplus in trade and treasury is critical to any global response to the recession, and the G-20 coming up. There`s I think not just the United States, but Europe and others are trying to do everything they can to bring China to the table as partners, because a coordinated response -- Chinese demand is one of the possible ways that the global economy will find a direction over the next year or two. And even if the Chinese stimulus isn`t all that it`s cracked up to be, domestic demand in China and Chinese coordination in global macroeconomic policy obviously very, very important. What was striking about foreign policy in the speech, of course, was that it hardly appeared, in comparison to the ambition that was present in his discussions of domestic policy, social insurance, energy...

CHARLIE ROSE: Are people even thinking about foreign policy these days?

STEVE COLL: Well, he is. You know, he comes in every day...

CHARLIE ROSE: And (inaudible)...

(CROSSTALK)

CHARLIE ROSE: ... Holbrooke is and Mitchell is.

STEVE COLL: It`s extraordinary, because one aspect of the speech was to diminish foreign policy as an element of his own ambition as president. But I think my impression from talking to people around him is that day to day, his experience of the two wars he`s inherited is quite intense. He`s got all sorts of generals with stars on their shoulders giving him urgent advice, things he must do now, 17,000 troops next week or all is lost. And he`s coping with these kinds of demands, similar to what Kennedy faced when he came in, while inheriting the worst economic crisis in a generation. So it`s -- that he was able to seem so in possession of his presidency with that on his desk every morning I thought was pretty impressive.

CHARLIE ROSE: Al...

DORIS KEARNS GOODWIN: Don`t you think...

CHARLIE ROSE: Go ahead, Doris.

DORIS KEARNS GOODWIN: I was going to say, don`t you think that he realizes that even though in his inauguration, one of the best moments I thought was when he said America`s ready to lead the world again, which seemed to be in foreign policy by dealing with our values and changing the way we were allies in the world, but now he recognizes that the American economic strength is absolutely essential for the global strength, and the global strength is essential for ours. So the economy has to be first and foremost, even as a foreign policy tool for the future.

STEVE COLL: I think that`s right. I also think the reality is that he doesn`t see a path to an ambitious, declaratory foreign policy right now that makes any sense to him. That he`s inherited a foreign policy, essentially, in the form of these two unfinished wars. They put his presidency at risk. He needs to manage them into some kind of stability before he articulates an ambitious global agenda. If he`s around for a second term and the economy is stabilized, I think we will hear a very different kind of rhetoric about America in the world from him.

CHARLIE ROSE: Al, the president in the last week has done two things. He had all the mayors in, then he had all the governors in, and someone said it was a refreshing difference, because rather than having one Republican and one Democrat ask a question of which they had already indicated what the question would be, here the president was much more fulsome and open and engaged both with the mayors and with the governors. How is he doing on that level in Washington, of reaching out and being able to proselytize with constituencies that can make a difference?

AL HUNT: Charlie, I thought some of those sessions were quite effective. I thought the fiscal responsibility session on Monday was a little bit of a PR frivolity, and I didn`t think was terribly effective, even though he`s always very, very good in those settings. I also want to pick up on just something that Steve said for a moment. It may well be that any ambitious foreign policy agenda that he initiates will have to wait until a second term, but I suspect that events are going to force -- are going to force things on him much sooner than that. I just don`t think if he wasn`t ready to really talk about the bank plan tonight, he certainly wasn`t ready to talk about Afghanistan or some of the vexing problems that he has inherited.

CHARLIE ROSE: So when do you think he will talk about the bank plan, Al?

AL HUNT: Oh, I think within the next week or two. I think Timothy Geithner, who was by all accounts -- and I only met him once or twice -- an enormously bright, capable fellow, he hasn`t gotten off to a good start, Charlie. And I don`t think they can wait any longer. I think they really -- they need some sort of specificity imminently, and one hopes that they`ve figured out exactly what they want to do. Because I don`t think they have the luxury of waiting weeks more.

CHARLIE ROSE: Why do you think that is, David, why do you think he stumbled at the beginning?

DAVID BROOKS: Well, the White House`s line is they oversold him. He told what he was going to do, and then he didn`t have the details. I think what we know is that there were some last-minute shifts in policy they couldn`t decide on. I think he also had a sense which I don`t think is a totally stupid sense, is that we will have this debate in public and then we`ll have a policy. I mean, as I`ve emphasized, one of the things that terrifies me is that six propellerheads sitting there in the White House -- and this is Obama`s name for them.

CHARLIE ROSE: For Larry Summers.

DAVID BROOKS: Larry Summers and Peter Orszag and Tim Geithner and Christina Romer, just sitting around there, and they`ve got these legal pads, and they said, OK, finance. Let`s redesign Wall Street. And they take some notes and then they ship it out. That`s just not going to work. That`s just a terrible idea. And if Geithner had some influence -- some instinct, which he expressed to me that he did, that he was going to have sort of public forum and Paul could weigh in and people could I weigh in, to me that`s not a totally stupid way to do this.

(LAUGHTER)

CHARLIE ROSE: They suggested they want you to weigh in?

PAUL KRUGMAN: No...

(CROSSTALK)

CHARLIE ROSE: ... whole line, we didn`t ask Paul because we know what he thinks.

PAUL KRUGMAN: That`s right.

(LAUGHTER)

DAVID BROOKS: I will say, Charlie, they are very acutely aware of what Paul thinks.

(LAUGHTER)

CHARLIE ROSE: What`s your best example of that, David?

DAVID BROOKS: Well, all you have to do is ask them about the pressure they`re getting to do more, and Paul`s name comes up.

CHARLIE ROSE: Was it Rahm Emanuel who said...

AL HUNT: Charlie, Charlie, I would give you an example...

(CROSSTALK)

(LAUGHTER)

AL HUNT: I was going to say, I can`t quote Rahm.

(LAUGHTER)

PAUL KRUGMAN: No, it`s -- yes, words we can`t use in my newspaper.

(CROSSTALK)

PAUL KRUGMAN: It is a little upsetting that Geithner keeps on coming out with plans that leave everybody sort of scratching their heads, saying what did he say? I mean, he`s got to get past that pretty soon.

JIM ELLIS: I mean, the markets right now are really worried...

CHARLIE ROSE: Speak to the markets.

JIM ELLIS: ... about the total lack of specifics here, particularly in the banking plan. And that`s one of the reasons we had so much volatility, almost all on the down side, over the last few weeks. They keep saying, OK, so when are they going to unveil this, when are they going to pull the rabbit out of the hat and show me what it is? And that`s why we don`t get any details, we can`t have any confidence in banking stocks, we can`t have any confidence in business` ability to keep funding itself, and so people just keep bailing out of the market.

CHARLIE ROSE: So the markets are looking for what?

JIM ELLIS: They`re looking for something. Right now -- markets hate uncertainty.

(CROSSTALK)

JIM ELLIS: They just hate uncertainty most of all. They can deal with almost anything, but they can`t deal with the unknown. And a complete unwillingness by the government to go ahead and say these are the rules, these are the rules going forward for bank capital; these are the rules going forward for whether we`re going to nationalize the banks, whether we`re not going to nationalize them, or what nationalization means. And as long as that`s there, nobody really wants to commit money, and they also are really worried about their availability of capital. It also hurts us, you know, since we depend on foreign governments to basically, you know, bankroll us in the short term, and in the long term. Let`s face it, I mean, that`s the great thing about globalism is that now, we can have other people help us pay for our mistakes. And that`s a good thing right now, but what I would like to see is just some sort of specifics out there to calm the markets down, because once this thing gets out of hand, it`s hard to stop on the down side.

CHARLIE ROSE: There is this, and I`ll ask Steve this. There is this notion that with the arrival of President Obama, America`s image and America`s opportunities vis-a-vis either bilateral or regional relationships changed, but has the economic crisis challenged that notion at all? That somehow how America appears and the benefit from Obama is somewhat lessened by blaming us for the economic mess the world is in?

STEVE COLL: I think probably not enough to undermine his potential. Just the transformational message that his election sent is still resonating all over the world, and his emphasis on alliances and partnerships as he tackles the list of multilateral problems that he enunciated during his speech, those are all reinforcing signals. He`s going to have to now go out and finish that script in the world itself. I think he will be slower to travel, he will be less active over the first year or two, for understandable reasons. He`s got to concentrate on the crisis that the country faces at home. What`s interesting about Secretary Clinton is that she`s already made clear that she sees foreign policy as interconnected with the global recession, and that she wants the State Department to be a partner with the Treasury, if not taking the lead in connecting the first generation of Obama`s foreign policy...

CHARLIE ROSE: I think it`s pretty much because Hank Paulson had a reputation of being so close to the Chinese, I mean, she pretty much said this ball is back in State`s court.

STEVE COLL: Right. And there`s a lot of bureaucratic maneuvering for authority and for seats at the table and so forth. But I think that`s important, because obviously the first generation of Obama`s foreign policy, apart from the inherited wars and the crises with clocks that can`t be changed like Iran, that foreign policy revolves fundamentally around the global recession. This is a global economic crisis, it`s not just an American crisis. And the solution lies globally in the same way.

CHARLIE ROSE: And how are we doing on that issue of global coordination?

PAUL KRUGMAN: Pretty badly so far. I mean, there`s really been very little cooperation. There`s been some summit meetings, people have said good things, but you know, we`re seeing...

CHARLIE ROSE: This is the same complaint the Republicans have.

PAUL KRUGMAN: Well, yes. It`s -- but no, the fact is, the Europeans can`t even coordinate among themselves, let alone with us. I will say one thing. The United States might have taken a bigger hit in terms of our reputation from this crisis if it hadn`t turned out that everybody else messed up almost equally badly. If the Europeans...

CHARLIE ROSE: In terms of toxic assets and the rest of it?

PAUL KRUGMAN: That`s right. So yes, we had our, you know, subprime and all of that. The Europeans have got their holiday homes in Spain, the Hungarians borrowing in Swiss francs. So all of that has turned out to be almost a perfect counterpart to ours. They didn`t make the same mistakes we made, they made different mistakes, but they`ve all come due at the same time.

CHARLIE ROSE: Doris, you have got to go, but I want to ask this one last question. You don`t have to go, but I`m told you do, so...

(LAUGHTER)

CHARLIE ROSE: ... if you can stay, we`re thrilled to have you stay. I made that mistake once before. As a leader, speak to Obama so far. Are we better off because, as David and everybody else said, his command of language, his ability to inspire, his ability to be explainer in chief, puts the White House in a very, very different place than it`s been in a while?

DORIS KEARNS GOODWIN: There`s no question about that. I mean, a leader`s ability in a democracy to explain to the country what is happening, why it happened, where we`re going, is an absolutely essential resource of that leader. I mean, if you`re going to have the people behind you in difficult times, your ability to articulate it and to emotionally connect to the people is the central thing you have going, to have credibility, to have trustworthiness. And I think so far, it seems he`s been able to establish that. You know, the weird thing I think of as myself as an historian, it may be that 50 years from now, if he does accomplish what he laid out today in terms of energy and education and health care reform and getting us out of the crisis, this speech may well be remembered. It all depends on the action that flows from the words that we heard tonight.

CHARLIE ROSE: And who will determine that, the Congress, or...?

DORIS KEARNS GOODWIN: And the country. The country may be pressing the Congress to do what it might not want to do, and maybe getting the Republicans to move toward the Democrats in some ways, or giving a greater majority to the Democrats if the Republicans don`t come along in two more years. Yes, it depends on the future, which is what history always does on the past.

CHARLIE ROSE: If you do have to go, thank you very much, Doris, as always.

DORIS KEARNS GOODWIN: You`re so welcome. It`s always great.

CHARLIE ROSE: Let me go back to David and the notion of Republicans and bipartisanship. Has the president try to play that hand and it does not work, and so he`s pretty much said, you know, I`m just going to go ahead and do what I think I ought to do?

DAVID BROOKS: It didn`t work on the stimulus package, but I thought the stimulus package was written in the House of Representatives in a way that most Republicans couldn`t support. There`s a lot of other issues on which there could be Republican support. You know, I was up at one of the Banking Committee hearings, and a lot of Republicans were talking about banking interventions that were far more drastic than what the Obama administration has come in. So there`s room there. And certainly on entitlements and deficits, there`s a lot of room for bipartisanship.

CHARLIE ROSE: So the danger that came from -- or whatever, the fact that the bill apparently was written by Speaker Pelosi and members of the leadership of the House, even though the White House will say that they pretty much gave us what we requested.

DAVID BROOKS: Well, you know, you hear wildly different things. I`ve had a lot of Democrats on Capitol Hill told me that they regret the White House lost control of the bill.

CHARLIE ROSE: Right.

DAVID BROOKS: So you hear a lot of different things about that, but I do think the stimulus package is not the way to measure bipartisanship. I will say there`s a danger here. And I`ve heard this from people in the White House and a little from people, Republicans on Capitol Hill. There are some people in the White House who assume that all Republicans are out to destroy them, that they don`t really believe in bipartisanship, and there are some Republicans who think those folks in the White House are out to destroy us. I think they are both mostly wrong about that, but they`re impugning motives on the other, which is not fair, and that by itself destroys bipartisanship.

CHARLIE ROSE: Now, the president is the only person that can eliminate those fears, is he not?

DAVID BROOKS: Yes, and I think he`s doing a good job. I think there`s one thing that he`s left out, which is getting actual experts to execute these policies. If I could have written one line in that speech, it would have been, hey, I said during the campaign that we`re not going to be lobbyists in this administration, and I`m not going to have lobbyists setting policy, but it turns out to actually administer these incredibly difficult policies, I need experts, and a lot of those experts happen to be lobbyists. I`m going to hire them, because we actually do have to execute that well.

CHARLIE ROSE: There`s a columnist, I know, David, who once said that lobbyist is another word for expert.

DAVID BROOKS: Yes, I think that that`s a very wise columnist.

(LAUGHTER)

DAVID BROOKS: Deserves the Nobel Prize.

CHARLIE ROSE: All right. So we`ve been here spending a lot of time praising this president and looking at his challenge. Where is he -- what`s wrong with this equation? I mean, your answer to that I think is, he ain`t doing enough.

PAUL KRUGMAN: Yes. There`s this abyss and he`s trying to build a bridge across the abyss, and as a compromise he`s only building it two- thirds of the way. And that`s exaggerating it, but that`s basically what I`m saying. That it`s -- and there`s a great risk here. Right? A stimulus bill that helps but doesn`t actually produce a recovery can be politically denounced as a failure, even if it actually has done some good. A bank rescue that is not enough can actually be destabilizing, create uncertainty. So no, I think there`s a real risk here. Now he may, you know, the public is behind him. He can take a second cut at a lot of these things. I wouldn`t be at all surprised if there`s a round two of the stimulus this summer, for example. So more...

CHARLIE ROSE: They need more.

PAUL KRUGMAN: Yes, they will need more.

CHARLIE ROSE: Where does he step (ph) (inaudible)...

STEVE COLL: I may have an idiosyncratic view, but almost from the beginning, when it seemed apparent that he would be elected, to me the measure of his presidency, the measure of his opportunity has been health care reform. That this is a chance to complete a project that has an economic and a moral imperative embedded in it, and it`s the most important of his priorities, to my mind. And I`ve seen throughout the period since he won the office, both a determination to seize that opportunity, but also some mistakes along the way. Lost Daschle. It seemed as if he wasn`t certain at the pace that he was -- how much he was going to commit to this project. And I think to my mind, his presidency will be remembered substantially around whether or not he completes the project that Lyndon Johnson left off with Medicare.

CHARLIE ROSE: (inaudible) become a crisis.

STEVE COLL: Yes. But it`s essential to-- it`s truly essential to managing the next generation of this country`s economy. And the fiscal crisis, generational crisis, the crisis of generational equity is inseparable from the problem of health care costs. And if you don`t seize the political moment that`s available now -- and it`s rare. It`s been gathering for years and years. He`s got to seize it, and it`s here now, and it may not be here even in 2010.

CHARLIE ROSE: And my impression is, Senator Kennedy is encouraging him on and encouraging him on.

STEVE COLL: Yes, but his -- but where is he? Because why was he wavering last week, if he was? The language today was quite forceful, but there`s clearly debate around him, and I still -- I wonder where he is about this priority.

CHARLIE ROSE: What questions ought to be raised by now about...

JIM ELLIS: I think...

CHARLIE ROSE: ... a president only less than a month in office.

JIM ELLIS: Right. I think one thing that`s been surprising -- recognizing it`s only a month -- is for a person with as much sort of rhetorical abilities as he showed during the campaign, that until tonight`s speech, I don`t think he took full advantage of his ability to actually get the American public behind something. Whether that something is the stimulus plan, whether that something is, you know, sort of recognizing that we have to save the financial system, which puts quite a lot of pressure on Congress, but more importantly it sets the national psychology such that we can actually start spending again. I know that a lot of people don`t want to talk about that. They want to talk about bank reform. They want to talk about financial structure. But a big part of what he needs to get done is to get people to start opening their wallets again. Not just people, but also businesses. Businesses who are more confident about investing. A lot of people say you can`t do that if there`s no credit. But there are still a lot of companies that have cash on hand, and they`re afraid to do it. There are a lot of investors who have cash, they are afraid to invest it. And one of the things that he can do with the rhetorical ability he has is to get out there and say, we will get through this, we can make this happen, and therefore there`s not as much risk or fear in actually going ahead and committing funds. Tonight, he did that. He has not done that a lot in the last four weeks. I`ve been really surprised by that.

CHARLIE ROSE: OK. David, you said -- go ahead, David -- you have said you liked the speech tonight, it`s the Obama that you know and believe in. You didn`t like the stimulus bill. Clearly, you`ve written about that. What else about Obama that either should be changed or grown?

DAVID BROOKS: Well, the big thing is, he`s only done 2 percent of what he needs to do to become a successful president. He`s passed a $700 or $800 billion stimulus bill in which he gives away money we don`t have. There`s no trick to that. He gives away borrowed money. That`s not hard. The hard part is actually executing the policies. Say Paul`s right, that he`s not doing nearly enough. That will lead to a lot of problems and failures. Say I`m right and it`s really we should be far more skeptical than I think Obama is of top-down, technocratic change, of trying to reorganize six or seven huge parts of the American economy all at once. That will lead to huge problems. So you know, the speech was great tonight, but as a number of people have said, he didn`t actually have plans there. And a lot of the plans that are out there are vague, or many people insufficient, some people think over-sufficient. So you know, a lot of this is still to play, and it`s the actual execution of policy that will determine things. And you know, Doris is now gone, but frankly, designing a big New Deal type expansion of government now is a lot more complicated than doing it in the days of the CCC. And so, it`s just much, much tougher, and we should be extremely skeptical of it.

CHARLIE ROSE: All right. Al.

AL HUNT: Well, I`ll split the difference and I`ll say that both David Brooks and Paul Krugman are wrong about the stimulus package.

(LAUGHTER)

AL HUNT: Paul Krugman in that he got what he could get. It takes 60 votes in the Senate. If he had asked for more, I don`t think he would have gotten it. And David, I don`t believe this was a pork-laden, House-created bill. That was largely what Obama wanted in the first place. But I also don`t think it`s a model for other things. You mentioned earlier, Charlie, that Ted Kennedy`s staff has been hosting a bunch of very private sessions with all the health care interest groups. They have really made some progress in that, and I think there`s a number of business and other -- insurance industry -- and other interest groups that are more receptive to what Steve said is an absolutely essential mandate for this year. And on energy, I think there`s more of a consensus than people, across parties on renewables and on the use of gas and other things. So I don`t think you should take this economic stimulus -- David`s right, it`s a little bit easier to spend money than it is to ask for any kind of sacrifice or make choices. But I don`t think this is a model necessarily for some of those other issues.

CHARLIE ROSE: Al, thank you very much. That`s the last word. My thanks to Al Hunt, Bloomberg; David Brooks, columnist, "New York Times"; Jim Ellis, "Businessweek"; Paul Krugman, columnist, "New York Times"; Steve Coll, who writes for "The New Yorker." I thank you all. This is an interesting evening in which I hear each of you saying, and many of you saying that the president one more step in terms of trying to explain to the American people the hard choices and restoring some sense of confidence. Thank you and good night.

Originally broadcast, 2.24.09