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TOM DASCHLE: My pleasure, Charlie.

CHARLIE ROSE: Senator Tom Daschle in Washington. We`ll be back in a moment. Paul Krugman, Nobel laureate in economics, speaks to some of the same issues. Stay with us. We continue our discussion about health care reform with Paul Krugman. He is a "New York Times" columnist, an economics professor at Princeton and a Nobel laureate. In recent weeks, he`s written extensively about the health care debate in Washington. I am pleased to have him back on this program. Welcome. You may or may not have seen anything that Senator Daschle said.

PAUL KRUGMAN: Some of it.

CHARLIE ROSE: So tell me your response, first to what he said, where you disagree with him.

PAUL KRUGMAN: I didn`t catch anything where I disagreed. But I didn`t see it all. So -- I mean, let`s -- there is something I think I disagree with, actually, let me pull that back. He said the only thing that matters is success. And...

CHARLIE ROSE: Quoting Rahm Emanuel.

PAUL KRUGMAN: Right. And I kind of...

CHARLIE ROSE: . who famously said...

PAUL KRUGMAN: All right. But this thing, a health care plan that is so badly flawed that it`s not going to work is not worth getting. It has to be good enough. It doesn`t have to be perfect, but it has to be good enough. But, and it`s really important to get something. I mean, it is -- this is -- I would say what you said, that -- or what "The Economist" said, which is that this is -- this is going to be make-or-break for Barack Obama. If he gets it, he will go down in history as someone who changed America permanently. If he doesn`t get it, it`s hard to see how he can be a success.

CHARLIE ROSE: And you think he`s on the wrong track.

PAUL KRUGMAN: I think -- no, I actually think he`s mostly on the right track, but keeps on veering off. He`ll say -- he gave a beautiful defense -- the public option is something that I think is very important. And he gave an eloquent, crystal-clear explanation about why we should have it, and then said, "But there`s no lines in the sand." He doesn`t need -- you know, he`s got to be hanging tough, because this has to be both -- he has to get a plan, but it has to be good enough to work.

CHARLIE ROSE: And where are they compromising that you disagree with?

PAUL KRUGMAN: Well, I don`t know whether they`re compromising. Remember, we don`t have a plan from the White House. We have various plans in Congress. We have a plan from the House, which I think is terrific. And we have various weaker plans in the Senate. And we don`t know where Obama stands on these.

CHARLIE ROSE: Are you happy that he`s going to let Congress write the legislation? I.e., as David Brooks pointed out and as Senator Daschle agrees, that Congress is writing it?

PAUL KRUGMAN: Well, it largely depends on who in Congress is writing it. And there`s one thing. I think he`s made a good decision not to have a big task force, 1993 style, Clinton-style and say, "Here it is" to Congress, because that`s not going to fly. But he does have to exercise some control. Now, it`s not actually true that there`s a bunch of senators writing this without being in touch with the White House. So the question is whether the outline is good enough. And we have the House outline is -- is -- is not my ideal plan, but it`s very, very good. And we see how close by the end we are to something like that.

CHARLIE ROSE: Just understanding where you come from -- if you were starting from scratch and there was no private system in America, and you were starting from scratch constructing a system, what would you do?

PAUL KRUGMAN: Oh, I would have something for all Americans, like what we have for every American 65 and older. I would have a Medicare-type system with supplementary private insurance allowed. But I would have a core single-payer system.

CHARLIE ROSE: OK, so how is that different from a single-payer system?

PAUL KRUGMAN: No, it is. Medicare -- that`s the amazing thing. People say Americans will never go for single-payer -- every American over 65 is living under single-payer. One of the myths, people say, you know, we have a private insurance system, a private health care system. Actually Medicare, Medicaid, Veterans Administration and a few other government programs pay more medical bills than private insurers do in America. We actually are already in terms of the dollars, we`re 60 percent of the way to a single-payer system. People don`t understand that, but that`s where we actually are right now. Most people are covered by private insurers...

CHARLIE ROSE: Does that mean that the forces for health care reform are not making the right argument?

PAUL KRUGMAN: I think -- no, I actually think that it is the right argument to say, look, if you have private insurance, and you like it, we`re going to let you keep it. We`re going to have a system that allows people a choice. We are going to give you the possibility of public insurance, but you can stay with private insurance. I don`t think we have to -- if we`re starting from scratch, we probably -- if it was 1947, as it was when Harry Truman tried to get insurance -- he just tried to add health insurance to Social Security. If we had done it then, it would now seem as American as apple pie. But getting from here to there is hard and maybe not necessary, so you`re willing to try something different if that`s what has to happen. But choice is fine. Allowing people to keep private insurance if they like it is fine. You don`t have to make it all -- you know, it doesn`t have to be my ideal system. Perfect is not necessary. Good is necessary.

CHARLIE ROSE: Give me the Krugman analysis of what it ought to include.

PAUL KRUGMAN: We have a basic template...

CHARLIE ROSE: Which is Medicare?

PAUL KRUGMAN: No, I mean, oh, you know, ideally, which -- Medicare with -- Medicare plus cost effectiveness, plus medical effectiveness, you know, plus comparative effectiveness research. So Medicare as if you really care about whether you`re spending the money well would be what it ought to be. There`s -- I mean, there is lots of different ways this works. Actually, you look across internationally. Not only does everybody except the United States manage to cover everybody and do as well on health -- or better on health outcomes as we do at much less cost, but they do it in very different ways. So you have got everything from genuine socialized medicine in Britain, where the doctors work for the government, to France, which has more or less got a single-payer system, with some -- a lot of sort of nanny-state type things that work. And they do terrifically on -- with much less money. Or Switzerland, which -- it`s all privately run insurance, not government-run but privately run, but they`re heavily regulated and -- so that`s a model that works, too. So there are lots of...

CHARLIE ROSE: Which model do you like the best?

PAUL KRUGMAN: Oh, I mean, if we could do the French system, which seems -- we don`t quite know how they do it...

CHARLIE ROSE: Medicare would be best.

PAUL KRUGMAN: Well, the thing about the French system is they do it all through incentives. So you have wide choice, you can choose your own doctor, you can choose your own medicines, but there are different rates of recompense. And somehow or other, while spending not much more than half as much per person as we do, they actually deliver by all accounts top-end care that is just as good as ours, and regular ordinary care that`s better. So no, but there is something -- maybe it`s the red wine that does it, because the French manage to do it really, really well.

CHARLIE ROSE: I know people who`ve lived in France who say going to the emergency room is a much different experience than going to the emergency room in a lot of other places.

PAUL KRUGMAN: That`s right. OK, look, we don`t quite know how they do that. But we know that it`s doable.

CHARLIE ROSE: There`s also this question, which as you know, everybody now talks about this huge deficit we have. And health care is going to be the killer cost.

PAUL KRUGMAN: It isn`t that big a cost. I mean, it`s certainly -- when we talk about a $1 trillion or $1.5 trillion over the next 10 years, that`s not a trivial amount of money.

CHARLIE ROSE: So what`s the right number then, in your judgment?

PAUL KRUGMAN: Well, you can do it. You can do it for $1 trillion. We`re pretty sure you can do it for $1 trillion, but that is cutting it a little close. That`s going to be the financial aid to lower-income people to get insurance will be on the thin side. So I would like -- I prefer an alternative that`s more like $1.5 trillion, but $1 trillion will probably do it. And you know, and all of this is guesswork, of course. It`s not as if these are hard numbers about what it will actually cost.

CHARLIE ROSE: What are the hard choices we have to make? To have the kind of health care that is both universal and cost?

PAUL KRUGMAN: You know, the hard choices are all...

(CROSSTALK)

PAUL KRUGMAN: The hard choices are all political. The economics of health care is really easy. The fact of the matter is, again, every other advanced country has universal coverage and decent quality health care, and spends less than we do. So the problems we face are all about getting the politics together. If we could...

CHARLIE ROSE: But where is the political opposition?

PAUL KRUGMAN: Oh, look...

CHARLIE ROSE: I mean, what`s the basis of it?

PAUL KRUGMAN: Let me give you -- let me be...

CHARLIE ROSE: Let me explain this to you...

PAUL KRUGMAN: No, no, I was going to say that I -- let`s pick a random senator. Chuck Grassley. Completely random choice, right?

CHARLIE ROSE: By the way, a big profile of him today in your paper.

PAUL KRUGMAN: Right. So Chuck Grassley is considered a moderate. I am not -- leave that on one side.

CHARLIE ROSE: He`s not your definition of moderate?

PAUL KRUGMAN: So we look at Chuck Grassley, and he`s in favor of competition and free markets. Look at the state of Iowa. Competition -- actually one insurer, Wellmark, has 71 percent of the insurance market.

(CROSSTALK)

CHARLIE ROSE: You say this is a monopoly. (inaudible).

PAUL KRUGMAN: Wait, then look at -- Chuck Grassley, everybody tells me is an upstanding guy, but look at his campaign contributors. And the top four industry categories are hospitals, and basically the top four were all medical-industrial complex. Now...

CHARLIE ROSE: You`re not suggesting it has clouded his judgment?

PAUL KRUGMAN: Well, that`s -- the thing is, look at every one of the swing senators in this. You know...

CHARLIE ROSE: Chuck Grassley is a Republican minority leader from the Finance Committee.

PAUL KRUGMAN: Right. But look at all of the senators...

CHARLIE ROSE: Ranking minority member.

PAUL KRUGMAN: ... who would have to go along and are expressing doubts about reform, or who might be needed. And you`ll find a similar profile. It`s pretty clear that they`re getting a lot of money from the medical-industrial complex. They tend to come from smaller states, where there is only one or two insurers.

CHARLIE ROSE: But I just read to Senator Daschle the David Brooks column today, your colleague on "The New York Times" who said basically they have co-opted the corporate opposition here and brought them into the tent, because they are scared to death and they realize it`s a Vince Lombardi principle.

PAUL KRUGMAN: They have done some of that. And this is part of -- look, we -- you want to -- like I said, there`s a political problem. The economics, if I could completely disregard the political constraints, the influence of the insurance companies, the influence of pharma, then it would be easy to get universal coverage. We could do it overnight. Places have done that. Taiwan, from scratch, introduced a single-payer universal health care system a little over a decade ago. It`s worked beautifully.

CHARLIE ROSE: What kind of bill do you think we`ll end up with?

PAUL KRUGMAN: OK. I do think this is going to succeed...

CHARLIE ROSE: We will end up with a health care reform bill?

PAUL KRUGMAN: I think we will. I mean, I could be wrong.

CHARLIE ROSE: You think?

PAUL KRUGMAN: Look, the history of this, it`s been -- we`ve charged up this hill again and again over the course of...

CHARLIE ROSE: And never gotten to the top.

PAUL KRUGMAN: Yes. Every time it`s failed. I`m not sure whether it`s five or six times that it has seemed within grasp but hasn`t happened. So you can`t be a total optimist. You have to -- but I...

CHARLIE ROSE: But you`ve got to assume we learned from some of the mistakes, or the people who are interested in health care reform have looked at the playing field and said, we made this mistake in `93, we made this mistake in previous times, so let`s get it right.

PAUL KRUGMAN: So, OK. I`ll give you a range. Assuming we get a bill, the bad outcome is it looks like Massachusetts. We do get community rating. Every -- insurance companies have to cover people regardless of preexisting conditions, medical history and so on. Some form of mandate, everyone has to buy. And subsidies to lower-income people, so -- Americans -- so they can afford to buy the insurance that they`re required by law to have, but with the subsidies being kind of inadequate and not very effective regulation of costs. So that would be Massachusetts. And that would be -- make me quite unhappy, and I`d have to look really hard at it to see whether it was even worth passing. But that`s one version. The other version, the high end is something that looks a lot like the House bill, which is the same basic elements, but much stronger bargaining power and a strong public option that competes with the private insurance companies and says to them -- prove that you actually are doing something productive here, that you`re doing something with all of those administrative costs that you incur. That`s the range. It`s probably going to fall -- I am hopeful that it will fall closer to the good option, but that`s the range.

CHARLIE ROSE: Are there hard issues that we have to address in this country about how the most expensive aspects of health care, having to do with the amount of cost of care in the last six months of life?

PAUL KRUGMAN: You want to be careful about that because you don`t know it`s going to be the last six months of life. It`s not that there is a little label -- you know, very sick people cost a lot of money and a lot of them die. So it`s...

CHARLIE ROSE: And what are our choices there?

PAUL KRUGMAN: But we do make choices about -- we do tend to go for maximalist care, and we do it almost regardless of whether -- not just of how much it costs, but even whether there`s any reasonable chance we`ll do any good. And the evidence -- this is what Peter Orszag at OMB is always talking about is, that varies tremendously across different cities in America, depending on sort of the local culture of the physicians, that the incentives that the hospitals for some reason have -- some places spend much more, do much more elaborate care, with no visible results. And there was that wonderful piece Atul Gawande piece...

CHARLIE ROSE: Right, exactly, "New Yorker" magazine...

PAUL KRUGMAN: ... in "The New Yorker" about this...

CHARLIE ROSE: ... showing that different regions have very different costs, and why is that?

PAUL KRUGMAN: It can be two similar looking counties of Texas, and one of them is spending several times as much, without better results. And so, sure. So this is -- we need to bring those things in line, and that`s going to be very, very hard.

CHARLIE ROSE: This is the so-called rationing argument, too?

PAUL KRUGMAN: Well, the funny thing -- sure, we actually had Mitch McConnell and three other Republican senators introduce a bill that would prevent Medicare -- this is taxpayers money -- prevent Medicare from taking comparative effectiveness research into account, right? So Medicare, because that would be rationing, so we can`t actually look at what really works. But no, but we always do rationing. The fact of the matter, right now actually we have a system which is kind of the worst possible way of doing rationing. If you have really good insurance, then you get everything possible, everything that the physician can think of. But the price of insurance keeps on rising, so more and more people don`t have insurance and fail to get even the most basic kind of care, can`t afford the preventive care that might prevent them from getting to into a really severe illness. So this is crazy rationing, and at some point we have to have a system that makes more rational choices.

CHARLIE ROSE: What do you think is the biggest myth about systems that work?

PAUL KRUGMAN: Oh, the big myth in America is that we have this belief that government health care is a failure, that government insurance is a failure...

CHARLIE ROSE: Or doctors paid by the government are not any good.

PAUL KRUGMAN: Yes. And it`s the most amazing thing. People believe that -- well, there`s a famous story about Senator John Breaux, who, when there was a Medicare commission in the `90s, and a constituent accosted him in the airport and said, "Senator, don`t let the government get its hands on Medicare." Right? Because people don`t understand. Actually, we actually have a very...

(CROSSTALK)

CHARLIE ROSE: ... talking about the Medicare system, though, he was talking about ...

(LAUGHTER)

PAUL KRUGMAN: Well, but you know, the point is...

CHARLIE ROSE: And by the way, they have a very good system in the Senate, don`t they?

PAUL KRUGMAN: They do. But it`s -- the point is that people have these fear (ph) stories that have been spread when in fact we`ve got in America, we`ve got Medicare which works. We have the Veterans Administration, which actually does a very good job on a very limited budget. People have these horror stories about Canada, but they should, you know, actually try talking to a Canadian. They almost speak the same language, eh? So it`s really, you know, why don`t we do this...

(LAUGHTER)

CHARLIE ROSE: And if we talked to a Canadian, we would find out that the single-payer -- quality of the single-payer care -- see, this is the debate.

PAUL KRUGMAN: Right.

CHARLIE ROSE: Is the quality of single-payer care...

PAUL KRUGMAN: It is comparable.

CHARLIE ROSE: ... as comparable.

PAUL KRUGMAN: The...

CHARLIE ROSE: Because the demagoguery on this issue is high.

PAUL KRUGMAN: Sure. The -- look, perfect example of this stuff. People talk about hip replacements, Canadians have to wait relatively long, several months, compared with Americans for a hip replacement, which is true. Who pays for the hip replacements here? Turns out to be Medicare. So actually what people think...

CHARLIE ROSE: Most people have hip replacements over 65.

PAUL KRUGMAN: That`s right. And the difference between the two systems is not single-payer versus private enterprise. They`re actually both single-payer systems. Ours has more lavish funding. So the one story people use most often to show that single-payer doesn`t work actually has zero bearing on the question, because in fact it`s single-payer here, too.

CHARLIE ROSE: Let me turn to finally the economy. Where are we in your judgment in terms of the, quote, "economic recovery"?

PAUL KRUGMAN: Wow. Look, we were staring into the abyss three months ago. It really was looking like Great Depression II. Actually, the first 14 or 15 months of this crisis actually bear a strikingly strong resemblance to -- in terms of numbers -- to the beginning of the Great Depression. But the pace of descent seems to have slowed. We are not falling as fast. Things are not getting as worse as fast as they were, which means as I see it that we stepped about six or nine inches back from the edge of the abyss. That`s not a recovery. We`re still in a very grave economic situation. There`s nothing that looks like an actual recovery in the things that matter to people most, which is jobs. We`re still losing jobs. We may not be using them quite as fast, but we`re still losing them.

CHARLIE ROSE: But that`s progress if you`re not losing them quite as fast, because everybody knows unemployment is a lagging indicator.

PAUL KRUGMAN: Yes, but that`s -- there are degrees and degrees of that.

CHARLIE ROSE: What does that mean, there are degrees and degrees of that?

PAUL KRUGMAN: You can have -- sometimes unemployment takes a few months to start falling out after the recession is over. But like in 2001, we had a recession that supposedly ended after eight months. But it was another year and a half before unemployment started to come down. Unemployment rose for 18 months.

CHARLIE ROSE: So professor Krugman says we`ll have unemployment of 10 percent.

PAUL KRUGMAN: I would be very surprised if we managed to stop short of that level.

CHARLIE ROSE: And that it will stay for a year at that level?

PAUL KRUGMAN: Oh, easily.

CHARLIE ROSE: Easily. If we get to 10 percent by when?

PAUL KRUGMAN: This month, next month. Maybe three months out.

CHARLIE ROSE: OK. So in the next -- before...

PAUL KRUGMAN: Before the end of this year, for sure.

CHARLIE ROSE: Before the third and fourth quarter -- before the fourth quarter?

PAUL KRUGMAN: That`s right. And it very likely stays above 10 percent through all of next year.

CHARLIE ROSE: Does that have political consequences for the president and his party in the congressional elections?

PAUL KRUGMAN: It might. A lot of other things can matter (ph)...

CHARLIE ROSE: And is there anything that the president can do about that?

PAUL KRUGMAN: Yes, he can...

CHARLIE ROSE: Or the Democrats or the country?

PAUL KRUGMAN: He can get -- the stimulus package was too small. I told him that. A lot of us told him that.

CHARLIE ROSE: You did. You did.

PAUL KRUGMAN: We believe -- I believe, though I don`t know this -- that his own economists thought it was too small. And they can start getting ready for...

CHARLIE ROSE: That would be Larry Summers? Who would that be?

PAUL KRUGMAN: Maybe -- or Christie Romer.

CHARLIE ROSE: Right, right.

PAUL KRUGMAN: They were sitting there with the same spreadsheets I was. I am pretty sure, so they probably...

CHARLIE ROSE: And they told him the stimulus program, you believe, was not -- you would know. They talk to you.

PAUL KRUGMAN: Yes, but they don`t talk to me about what they tell the president. Right? So no, I literally -- this is honestly, I do not know this, but my guess is that there was a back-and-forth about what was politically wise.

CHARLIE ROSE: You know what`s interesting to me is, I thought when all the green sprout stuff was first beginning to be heard, that there was generally some kind of -- and Larry Summers -- some kind of recovery on the way, or at least a contraction was slowing down.

PAUL KRUGMAN: Yes.

CHARLIE ROSE: That. You agree that`s happening.

PAUL KRUGMAN: I agree that`s happened. Sure. But that`s a long way from turning around. So new claims for unemployment insurance is something that comes in every week. So you get a pretty quick read on it. But it`s really -- what it`s showing is the rate at which things are getting worse. Right? And it was at 650,000, which is really bad. It`s now sitting at around 600,000, which is not as bad, but we won`t start seeing job growth until that gets down to something like 400,000 a week. And so we`re still in a world which looks like the jobs picture is continuing to get worse.

CHARLIE ROSE: There`s also this. People cast aspersions over the number of people involved in the process now who had previous connection, you know. Do you buy that argument?

PAUL KRUGMAN: It worries me. Now, I understand...

CHARLIE ROSE: What is it worries you about it?

PAUL KRUGMAN: There is -- I don`t think -- although I`m not sure even about this -- I don`t think we got a lot of raw corruption here. But we do have a lot of -- this is a phrase that people throw around -- cognitive regulatory capture. You`ve got all these people who are -- sorry, this is economists, right? These are people who have been in the industry, they think like the industry, they...

CHARLIE ROSE: What does that mean, though? I mean, does it mean that...

PAUL KRUGMAN: It means that you have a lot of people who tend to think that what`s good for Goldman Sachs is good for America, right?

(CROSSTALK)

CHARLIE ROSE: ... maybe they believe that, but what`s the proof in the pudding that a decision they made was wrong because they think like that?

PAUL KRUGMAN: You know, all of this stuff is kind of where do you draw the line. It was clear there had to be a lot of bailouts.

CHARLIE ROSE: Right.

PAUL KRUGMAN: But probably there were substantially more bailouts than there needed to be. You had to...

CHARLIE ROSE: What is exhibit one for that?

PAUL KRUGMAN: Exhibit one is that Goldman Sachs seems to have done very well out of a lot of these deals. Seems to have done very well out of the AIG payments.

(CROSSTALK)

PAUL KRUGMAN: So, the -- but just in general, that there doesn`t seem to have been any spreading of the cost of these bailouts to the counterparties, to the people down the line. Also, the banks were in effect given -- I was calling for probably nationalizing a couple of the biggest ones. That hasn`t happened. The banks seem for the time being to be earning their way out. But you know, that was very much -- that was a heads they win, tails we lose.

CHARLIE ROSE: OK, but were you wrong on that? They shouldn`t have nationalized...

PAUL KRUGMAN: Oh, I think they should have in the end.

CHARLIE ROSE: ... Citigroup. OK, even now you say that.

PAUL KRUGMAN: Even now, but obviously the adverse consequences have not been as bad as they turned out to be, as I worried they would be.

CHARLIE ROSE: So you worried about things that didn`t turn out to be that bad?

PAUL KRUGMAN: Right. But you have to do that, right? You worry about what might happen, not about what you know is going to happen.

CHARLIE ROSE: Yes, exactly, expect the worst.

PAUL KRUGMAN: Yes.

CHARLIE ROSE: At least -- I`m not sure that`s true about an economist, but it`s certainly true about a policy maker.

PAUL KRUGMAN: You have to bear in mind the downside, and a lot of the downside didn`t materialize. But if the downside had happened, that would have been -- you and me, the taxpayers, bearing the burden. And the way it`s worked out is that all of the upside is going to other people.

CHARLIE ROSE: Last time you were here, right after this, this is what we had.

PAUL KRUGMAN: Yes. In real life, I have two eyes.

(LAUGHTER)

PAUL KRUGMAN: That`s right.

CHARLIE ROSE: So then here is what I hear. The president saw this, and he said, "Let`s have Krugman in for a little dinner. And so they had you and Joe Stiglitz, another Nobel laureate in economics, in for dinner." So my question is, what was his question? I believe you can tell us something about somebody by the questions they ask.

PAUL KRUGMAN: But I think I still have to honor the off-the- recordness of the conversation...

CHARLIE ROSE: Oh, no...

PAUL KRUGMAN: He talked about ...

CHARLIE ROSE: These things have a term limit on them.

PAUL KRUGMAN: But he asked about...

CHARLIE ROSE: You have a term limit. So you know, the term is...

PAUL KRUGMAN: He basically says you have some critiques of my policy, what do you -- you know, explain them. He said, what -- asked about some other issues, what would you do about this, that and the other thing. You know, Obama is incredibly impressive in person. He doesn`t sound like somebody who was prepped an hour before the thing and given a few catch phrases. He sounds like somebody who has actually understood the issues. He also sounds like somebody who is very, very cautious, which is sort of new. So what can you say -- it was a reassuring, high-quality discussion, with the president very much part of that high-quality discussion. Unfortunately, if being smart was enough, then a lot of people -- so I still have high hopes for Barack Obama.

CHARLIE ROSE: You do?

PAUL KRUGMAN: He`s smart, he`s well intentioned. He`s got very smart people around him. And he understands the urgency. So I came away feeling better after that dinner, because it`s nice to have in-person confirmation that the qualities that people say he has, he does in fact have. But beyond that, let`s see.

CHARLIE ROSE: Well, you did say to me that as "The Economist" magazine said, health care reform will be the test of his presidency for all the reasons we said.

PAUL KRUGMAN: Yes, it`s almost -- obviously if he screws up on rescuing the economy, foreign policy, all of those can destroy the presidency...

CHARLIE ROSE: If Iraq goes bad...

PAUL KRUGMAN: But the only thing that can make him a great president is success on health care. That will be -- if he doesn`t do that, actually I think he`ll be considered a failure if he doesn`t do that. But if he does do that and nothing else terrible goes wrong, that will be defining. That will make him -- when he was elected, there were all of these, Obama is FDR. This is where we find out if that -- anything like that is remotely appropriate.

CHARLIE ROSE: Thank you for coming.

PAUL KRUGMAN: Thank you.

CHARLIE ROSE: Paul Krugman. Thank you for joining us. See you next time.

Originally broadcast, 6.30.09