Watch this broadcast on Video: Part 1, Green Room (not transcribed)

SYNOPSIS:

GEORGE STEPHANOPOULOS (ABC NEWS): We're going to straight to "The Roundtable" now. And as our panelists take their seats, take a look at the last time a President went to the country to announce a major war escalation. It was January 2007.

GEORGE W BUSH (FORMER US PRESIDENT): The situation in Iraq is unacceptable to the American people and it is unacceptable to me. So America will change our strategy to help the Iraqis carry out their campaign to put down sectarian violence and bring security to the people of Baghdad. This will require increasing American force levels. America's commitment is not open ended. If the Iraqi government does not follow through on its promises, it will lose the support of the American people.

GEORGE STEPHANOPOULOS (ABC NEWS): Substitute Afghanistan for Iraq, you're likely to hear many of those exact same sentences on Tuesday night when the President goes to West Point. Let's talk about it here on "The Roundtable". I am joined, as always, by George Will, Dan Senor, a fellow at the Council on Foreign Relations, also author of a new book called "Startup Nation, The Story of Israel's Economic Miracle" with Saul Singer, Matthew Dowd welcome back, Paul Krugman from "The New York Times" and Princeton and Cokie Roberts. And George, we do know the outlines pretty well of what President Obama is going to announce on Tuesday night. It looks like General McChrystal got most of what he wanted, probably 30,000 troops or so, some NATO troops. Clearly the President didn't take your advice. You were arguing for a much more limited involvement.

GEORGE WILL (ABC NEWS): Not for the first time, yes. For the second time in nine months, he's going to announce a new strategy for a war now in its ninth year. He says he's going to finish the job. His job on Tuesday night is to tell us what the job is that he's going to finish. I think it's going to be, you talked about the familiar rhetoric, it's going to be the Bush program which is, as he used to say, as the Iraqis stand up, we will stand down. He's going to say, as the Afghans stand up, we will stand down. Meaning, we're there to train them and get out. Mr Gibbs said at the White House, the press spokesman, we will not be there nine more years. The problem is the Afghans know that. And they know that the Taliban will be.

GEORGE STEPHANOPOULOS (ABC NEWS): Well that is the problem. And let me bring Matthew Dowd in here on this question. Because the President has got to speak to many different audiences on Tuesday night and it seems on the one hand, he's going to be arguing to the Afghans, the Taliban and the Pakistanis, we are there to stay while at the same time arguing to the American public, no, we are going to go.

MATTHEW DOWD (ABC NEWS): Yeah, he's got a really difficult problem because he's got an international audience, as you say, that he's got to talk to and also a domestic audience that's already flipped on him from where he was at the beginning of his presidency when the majority of people supported what he was doing in Afghanistan. Now the majority of people oppose what he's doing in Afghanistan. The interesting thing I find about this is that all of this thing that people said he's putting all of this thought and decisiveness, he basically - it took him 94 days to reach the same decision George Bush would have done. Exact same decision George Bush would have done probably in two days, or three days or a week. That would have taken Bush...

COKIE ROBERTS (ABC NEWS): Well it took him a long time to come to a surge.

MATTHEW DOWD (ABC NEWS): No, to, to, to the realization that military generals wanted to do this and that's what I think is his biggest problem is the American public has flipped on this and now he's basically going to be advocating a Bush policy that failed in the last administration.

COKIE ROBERTS (ABC NEWS): I think though in the interim between the time that McChrystal asked for this and Tuesday that there's been a lot of heat. They have used this period to put a lot of heat on the Karzai government. And for that election, that peculiar election was going in the middle of all of this. And then when that got solved, as oddly as it got solved, they, they then were in there in full force to try to say look, you know, you want us to do this. But for us to do this, you have to do, you have to do - you have to improve.

GEORGE STEPHANOPOULOS (ABC NEWS): And that is likely to be what is most new in the President's strategy, Dan, on Tuesday. What else, as you look at it, because the President is going to have to argue that this is brand new strategy that he's gotten...

COKIE ROBERTS (ABC NEWS): Right.

GEORGE STEPHANOPOULOS (ABC NEWS): ...something for this. What else should we be looking for there?

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): Okay, whether or not he sets realistic expectations. The reality is even with this troop deployment, summer of 2010 is going to look much worse in Afghanistan than summer of 2009. Casualties, American casualties will go way up. The reality is the fighting season, the sort of kinetic fighting patterns by the Taliban are at their peak between March and November. So that means - and by, by the way, they're doing a slow timeline here. They're deploying about a brigade a quarter. I mean, the Iraq surge it was a brigade a month. So you talk to the Iraq commanders, they say one of the most powerful inputs in the Iraq deployment was within five months you had 5 brigades on the ground.

GEORGE STEPHANOPOULOS (ABC NEWS): But that brings up the question as to whether they can actually speed up this deployment as well.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): Well they - I - they're talking about a brigade a quarter, so that mean summer...

COKIE ROBERTS (ABC NEWS): Which is how many people?

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): About 3,000 to 5,000 people. So summer of 2010 we won't have that many more troops there. It will be a bitter fighting season. And the real comparison actually, if the President wants to look at progress, will actually be summer - comparing summer of 2011 to summer of 2010. But this is -comes back to something that George said, this will require the President to really explain and educate and inform on Afghanistan. Something he's not been prepared to do. He's really only given two major speeches on Afghanistan. In March when he announced the first troop increase and then this summer in front of the Veterans of Foreign Wars. He hasn't really talked about it.

GEORGE STEPHANOPOULOS (ABC NEWS): He hasn't talked about it that much but of course that is what he's going to be doing Tuesday.

PAUL KRUGMAN (NEW YORK TIMES): Right.

GEORGE STEPHANOPOULOS (ABC NEWS): An expansive speech....

PAUL KRUGMAN (NEW YORK TIMES): At this point - yeah.

GEORGE STEPHANOPOULOS (ABC NEWS): Well he's going to have to define down his goals as well.

PAUL KRUGMAN (NEW YORK TIMES): Yeah, and that's, but, you know, if there's one thing that this president is good at is explaining things. So that's what he ought to be able to do. And look, I mean, you know I feel a little bit sorry for him. This was inflicted upon him. This was - he was left a legacy, as George says, of a basically failed war, a war that might have been won quite easily in 2001 or 2002 if Bush hadn't had his eyes on Iraq instead. And now he has got to play catch-up. I'm sure he would prefer not to be doing this at all. He's kind of in a political box. What can you do?

COKIE ROBERTS (ABC NEWS): I don't think it was so much inflicted on him. After all, he - all through his campaign, he talked about Afghanistan as the war of necessity. I mean he, he, he upped the ante.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): He made it an issue.

COKIE ROBERTS (ABC NEWS): He really did. And I think that he, he, therefore, he has to deliver on Afghanistan and I also think that one of the things that is - that he can explain is that the, the difference it will make for women and girls in Afghanistan if we leave is devastating. And I think...

GEORGE STEPHANOPOULOS (ABC NEWS): But I got to tell you, I bet that's one thing he's not going to do. I mean he might, he might give a glancing blow to it. I think he's going to try to say we're - all we can do is stabilize that country.

COKIE ROBERTS (ABC NEWS): Well...

GEORGE STEPHANOPOULOS (ABC NEWS): We can't create, as Secretary Gates has said, a Valhalla in Afghanistan.

COKIE ROBERTS (ABC NEWS): No, of course not. But, but, people in this country were very excited when they saw those girls going to school for the first time in years and all of that. And the sense that America was doing something good in the world, which we are all over the world. But a lot of people don't realize that. And the idea that those people would just be locked up again and, and, and repressed is something to make a case for.

MATTHEW DOWD (ABC NEWS): I actually, I actually think David Obey actually - going to the politics, has put his finger on the problem.

GEORGE STEPHANOPOULOS (ABC NEWS): The House Appropriations chairman.

COKIE ROBERTS (ABC NEWS): Right.

MATTHEW DOWD (ABC NEWS): The House Appropriations chair who basically came out and said if you're going to do this you need to find a way to pay for it. And I actually think he put his finger on the problem that we ended up with in Iraq and the problem that we have with Afghanistan for these presidents which is we've called for no sense of shared sacrifice by the country. And when we don't ask for a sense of shared sacrifice, whether it's somebody, you know, bringing rubber like they did in World War II...

COKIE ROBERTS (ABC NEWS): Right.

MATTHEW DOWD (ABC NEWS): Then the countries...

GEORGE STEPHANOPOULOS (ABC NEWS): They're less likely to believe to believe in the...

MATTHEW DOWD (ABC NEWS): They're less likely to believe in the goal and they're more likely to flake earlier on. And I think he, he's probably not going to do this, but he would better certainly better off if he called the country to a sense of shared sacrifice on this.

COKIE ROBERTS (ABC NEWS): I agree.

GEORGE WILL (ABC NEWS): We're also asking our allies in NATO to sacrifice, what 5,000 troops. NATO is 60 years old. This is its first war. Never been to war before and it's not really going to war now.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): I think this proposed tax increase is completely - first of all, I don't think the Obama administration is gong to get behind it. But when you think about the math here, they're - Jamie Orszag, the OMB director, is projecting about $1 million per troop. So they're saying it's $30 billion annually if we do 30,000 troops. The reality is...

GEORGE STEPHANOPOULOS (ABC NEWS): 30 more you mean.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): Right. But the reality is that the Congressional Democrats who are talking about their unease with this decision would have probably accepted 10,000 or 20,000 troops. So you're not really talking about $30 billion more, you're probably talking about $10 or $15 or $20 billion more. That's about the size of our entire foreign aid budget. Could you imagine the precedence this will set if every time we have a foreign policy issue, we're going to impose a surtax on it? I mean I just think that it's very dangerous and it's a slippery slope.

PAUL KRUGMAN (NEW YORK TIMES): Yeah, this is this is a lot of money. The point is we should have been paying for these wars to begin with...

COKIE ROBERTS (ABC NEWS): All along.

PAUL KRUGMAN (NEW YORK TIMES): Right from the beginning. I mean this was - if you want to talk firsts for Bush, this was the first time in American history that a president took us into a war and cut taxes. And it might actually, it would be unpredictable risky but to actually say no, we're going to pay for this because we're in this for, you know, a serious commitment. It might actually...

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): The administration is frustrated. They say the Israelis and the Palestinians are not making enough progress on the peace process track. So we're going to say to them, we're not going to put more money into your foreign aid into the...

COKIE ROBERTS (ABC NEWS): Right.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): ...the Palestinian authority in Israel unless, unless they get serious. And we will, we will impose taxes on this country because this country views that as a high priority. You start to see where this goes if every time there's a foreign policy priority we start raising taxes.

PAUL KRUGMAN (NEW YORK TIMES): There's a big difference between foreign aid and a war. Wars are expensive. Iraq was supposed to be cheap. It's turned out to be at least a trillion, probably well more than that. So...

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): But let's be honest about what it's about. It's about a campaign against the President Obama's troops surge. That's what it's about. It's not really about pay for it, it's about arguing against it.

GEORGE STEPHANOPOULOS (ABC NEWS): And there are going to vote against it.

GEORGE WILL (ABC NEWS): Yeah, and there's going to be no surtax. We all agree on that.

COKIE ROBERTS (ABC NEWS): Right.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): I agree with that.

GEORGE WILL (ABC NEWS): I mean this is not going to happen. Okay, so everyone, relax.

PAUL KRUGMAN (NEW YORK TIMES): Here we go.

GEORGE WILL (ABC NEWS): We're not going to...

MATTHEW DOWD (ABC NEWS): And I agree with you there's not going to be a surtax, but I think this goes to a fundamental value that I think we've lost which is that we can get things for nothing. That we can go to war and not have to pay for it either by cutting...

COKIE ROBERTS (ABC NEWS): No, that's true.

MATTHEW DOWD (ABC NEWS): ...the budget or doing something else. We don't have to - we have a war, we don't have a draft. All of these sort of things, that we, think...

COKIE ROBERTS (ABC NEWS): That is, that is absolutely true.

MATTHEW DOWD (ABC NEWS): ...okay, by way, with can go fight the most important war in the history of our country.

COKIE ROBERTS (ABC NEWS): No, you know...

MATTHEW DOWD (ABC NEWS): But we're not going to have a draft, we're not going to pay for it, we're not going to do anything that will cause anybody to sacrifice.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): If Pelosi and Obey were being intellectually honest about this, they would wage a war against the President's surge policy Wednesday morning as opposed to doing this via some proposed surtax debate.

COKIE ROBERTS (ABC NEWS): Well and also a surtax is not...

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): That's what it's about.

COKIE ROBERTS (ABC NEWS): ...is not the total sacrifice of the whole population. I mean, that's, that's really what you're talking about much more, Matt, is everybody getting in it together.

MATTHEW DOWD (ABC NEWS): Well you can always say Senator Obey's idea I think underlines the problem that we don't ask people.

COKIE ROBERTS (ABC NEWS): Right.

MATTHEW DOWD (ABC NEWS): When we say these things are important, we don't ask the country to come together for them.

GEORGE STEPHANOPOULOS (ABC NEWS): When this is all done the President will probably as we said have about 30,000 more troops on top of the 68,000 to 70,000 there, close to 100,000. 2012, when he's running for re-election, I want to ask you all quickly, how many troops will be in Afghanistan?

GEORGE WILL (ABC NEWS): Including NATO?

GEORGE STEPHANOPOULOS (ABC NEWS): Uh-huh.

GEORGE WILL (ABC NEWS): 100,000.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): I agree. 100,000 and it will be amazing because President Obama will be running for re-election having doubled our presence in Afghanistan and not actually meaningful reduced our presence in Iraq. Who would have thought?

MATTHEW DOWD (ABC NEWS): There'll be 100,000 troops and his polling on Afghanistan will be ten points lower, just what it was with Bush when he left Iraq. When he left the - when he left the administration.

PAUL KRUGMAN (NEW YORK TIMES): I don't have a view. I really don't have a view.

COKIE ROBERTS (ABC NEWS): I'll just stay with that 100,000 too. I just don't see how you get around that.

GEORGE STEPHANOPOULOS (ABC NEWS): I'm going disagree with all of you guys. I think it'll come down to about 80,000. But we will see. That is going to be one of the key questions he faces on re-election. We're going to have more "Roundtable" in a minute. Our Nobel Prize winner is going to weigh in on the economy. We're going to debate the President's trip to Copenhagen amid this climate change e-mail controversy. Plus, those White House party crashers, and again in the spirit we head to break with a bit of the best movie ever on party crashers.

CLIP: "WEDDING CRASHERS"

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MARINE (WHITE HOUSE): Mr And Mrs Salahi.

REPORTER (FEMALE): A pair of Washington socialites actually crashed President Obama's first state dinner.

REPRESENTATIVE PETER KING (REPUBLICAN): You can't allow anyone, uninvited who has not gone through a security clearance to be walking into the White House. The potential here could be catastrophic.

DAVID MUIR (ABC NEWS) (Voiceover): The Secret Service is acknowledging a huge security blunder.

DAN MCDERMOTT (WARREN COUNTY REPORT): Folks who know them aren't as surprised and just sort of roll their eyes and chuckle, and say I can't believe this is the latest thing in this couple's, you know, rise to, to fame.

GEORGE STEPHANOPOULOS (ABC NEWS): And surprise, surprise. They're trying to sell their story. Now we'll to the Salahi party crashers in just a minute. First let me bring "The Roundtable" back. George Will, Dan Senor, Matthew Dowd, Paul Krugman and Cokie Roberts. And I want to begin though, a lot of economic news this week. And since we have a Noble Prize winner here, this Dubai sovereign wealth fund, in midweek says they want to reschedule their debt payments. Stock markets around the world start to drop. Recover a little bit on Friday. What's going on here?

PAUL KRUGMAN (NEW YORK TIMES): Well, the question is, by itself, Dubai is not that big a deal. It's a fairly big - you know, if it's a bankruptcy in the end it's a fairly big bankruptcy, but not a huge one. So it's the - it only matters to the extent that people see it as an omen or an indicator. And the first reaction was, oh, my god, this is a sovereign government defaulting on its debt, and therefore everyone's at risk, because, you know, we're all running deficits. We've all got bigger debts than we did a couple of years ago. That has mostly faded out now. The second thought was, basically, this is not a country. First of all, the company is not a country but basically this is Dubai world - is not, is actually is not a legal obligation of the Dubai government to, to back it. Everyone thought they would but it's not their obligation. And secondly, Dubai itself is - you know, looked at economically is basically a highly leveraged investor in commercial real estate, right, which is - and all highly leveraged investors in commercial real estate all around the world are in big trouble. So Dubai is just looking like some developer, somebody who put up a bunch of shopping malls.

GEORGE STEPHANOPOULOS (ABC NEWS): But I think you hit on the key point. I think what worried everybody and Dan Senor, I know you've done some work there as well, is the idea all of a sudden that the government might not back up its own sovereign wealth fund.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): Right. And look, I agree with Paul. We have limited exposure, the US has limited exposure. The European banks have exposure. The US banks have very little exposure. I think the real problem here is you're looking at the cost to insure other sovereign debts from emerging market economies exploded over the weekend. Bulgaria, Hungary, Russia, Greece.

GEORGE STEPHANOPOULOS (ABC NEWS): Greece.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): I mean you - what if one of these economies implodes? So you could, you could argue what you argued that Dubai is a glorified like shopping mall and it's not a real country and/or a real emirate. But the reality is if you start having these emerging markets start blow up left and right at a time when there's already such insecurity, a little blip like this can cause panic.

COKIE ROBERTS (ABC NEWS): Right.

GEORGE STEPHANOPOULOS (ABC NEWS): And that's what we saw on Thursday.

GEORGE WILL (ABC NEWS): Right. Paul used the magic words from 2010, that's commercial real estate. We have in the next two or three years about $1.5 trillion of commercial real estate loans that have to be refinanced. They're being refinanced on buildings that are worth 30-40% less than they were when the loans were taken out. This week, we revised downward from 3.5 to 2.8 the growth in the third quarter. "Wall Street Journal" reports that one in four Americans with a mortgage are under water. That is, their mortgage is bigger than the value of their house. So the signs out there are still ominous.

GEORGE STEPHANOPOULOS (ABC NEWS): And the biggest one...

PAUL KRUGMAN (NEW YORK TIMES): I mean - sorry just to say...

GEORGE STEPHANOPOULOS (ABC NEWS): Go ahead.

PAUL KRUGMAN (NEW YORK TIMES): That the question was, whether Dubai triggers another wave of financial crisis and the answer is almost surely not. The question is, is the economy okay? That's very different.

GEORGE STEPHANOPOULOS (ABC NEWS): And then of course the number one indicator there is the one we have focused on for so long...

COKIE ROBERTS (ABC NEWS): Right.

GEORGE STEPHANOPOULOS (ABC NEWS): ...unemployment about 10%. And Cokie, as we wait for the President's jobs summit on Thursday, we're already seeing the House of Representatives say we want to vote on something this year.

COKIE ROBERTS (ABC NEWS): They, they are desperate.

GEORGE STEPHANOPOULOS (ABC NEWS): About another $200 billion.

COKIE ROBERTS (ABC NEWS): They are desperate to have a jobs vote. And one of the reasons, one of the impetuses behind the health care bill is to get it done so they can get a jobs bill. Because, you know, going into an election year with double-digit unemployment is obviously a terrible problem for the majority party. But they don't really know exactly what to do. I mean they've already extended employment. They've already extended tax credits for first-time home buyers. Now they're talking about trying to lean on lenders on mortgages. But their solution there is to make them feel shame and it doesn't seem to be working for any - the Wall Street people don't seem to feel shame.

GEORGE STEPHANOPOULOS (ABC NEWS): And the President's going to push on them again tomorrow, the banks.

MATTHEW DOWD (ABC NEWS): This is, this is - I think this is the President's political problem that he has. And I don't think this job summit is going to do anything to solve that problem. I actually think the American public thinks that the stimulus package that was passed eight months ago was supposed to be a jobs bill. And that never actually has created any jobs that the American public has seen. So, now, he's going to have a meeting, a summit, an event, he's going to have a meeting and say oh here's some stuff we're going to do. And I think the public sits there and is going to say, well I don't have a job, my brother doesn't has a job, what have you been doing for nine months?

GEORGE STEPHANOPOULOS (ABC NEWS): Well but I mean, but according to - the White House's political problem there is that they're arguing it could have been worse.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): Well and it could have been worse.

COKIE ROBERTS (ABC NEWS): Right.

MATTHEW DOWD (ABC NEWS): But see nobody, nobody, nobody out there in America is saying oh, yeah, we would have lost more jobs if you hadn't done that. All they're thinking about it where their family is...

GEORGE STEPHANOPOULOS (ABC NEWS): So what would make a difference right now?

PAUL KRUGMAN (NEW YORK TIMES): If you could get $300 billion...

GEORGE STEPHANOPOULOS (ABC NEWS): Raising the ante over here.

PAUL KRUGMAN (NEW YORK TIMES): Right. No, if you could get some, some significant amount of money, it's not - it doesn't have to be as big as the first one. There are things you can do that create more jobs more cheaply than the kinds of things they did before. You can have tax credits for businesses that hire more people. You can have direct employment programs, WPA type stuff. You know, short term employment things that are quite cheap per job created. Of course they create poor-paying jobs but it's better than nothing. You can provide another round of aid to state and local governments which are going to be in desperate straights. They're going to be really laying off a lot of people.

GEORGE STEPHANOPOULOS (ABC NEWS): Prevent teacher layoffs.

COKIE ROBERTS (ABC NEWS): Right.

PAUL KRUGMAN (NEW YORK TIMES): So, there's - you know, you could put together - the Economic Policy Institute has a plan that's going to be announced tomorrow that is a $400 billion thing. And there it looks plausible. It could create quite a few jobs. It would make a big difference.

GEORGE STEPHANOPOULOS (ABC NEWS): Do you think tax credits would work? That the businesses wouldn't just eat them?

PAUL KRUGMAN (NEW YORK TIMES): There is some mixed evidence. But what we know is that - what everybody talks about is Germany which basically has a system of subsidizing, subsidizing companies to keep workers on. Not to - reduce their hours, but don't lay them off which has been spectacularly successful. The Germans have had as deep a recession as we have had, but with hardly any increase in, in unemployment. And that suggests that yeah, provide some financial incentive to keep workers on, to add more workers for those companies that are expanding would work.

GEORGE WILL (ABC NEWS): It's an old axiom, but in Washington, the title of legislation is like the title of a Marx Brothers' movie. It tells you nothing about what's in it. Duck Soup, Horse Feathers. We will have a legislation that will try, and this will be the challenge to not use the "s" world, stimulus. Because we've had - I keep saying this and no one...

COKIE ROBERTS (ABC NEWS): I know you keep saying we've had three, right.

GEORGE WILL (ABC NEWS): This is our third that is coming up. Because we had the one in February 2008 that was bipartisan, Pelosi, Bush, stimulus, didn't work. The second one didn't work. Now, the administration is saying...

COKIE ROBERTS (ABC NEWS): Actually...

GEORGE WILL (ABC NEWS): ...the second one...

COKIE ROBERTS (ABC NEWS): It did work.

GEORGE STEPHANOPOULOS (ABC NEWS): It didn't solve the problem.

COKIE ROBERTS (ABC NEWS): I mean the...

GEORGE WILL (ABC NEWS): Well that's the administration's problem. They're saying the stimulus worked but we need another one.

COKIE ROBERTS (ABC NEWS): But, but, I mean, Dan was citing the, the, the growth rate. That growth rate in the third quarter was because of the stimulus. I mean the biggest problem we - that we are looking at now is without a stimulus, what happens to the economy? Is it all just temporary? And, you know, I mean, there are so many major economic problems still facing us, that aside from the jobs issue that the...

GEORGE STEPHANOPOULOS (ABC NEWS): Well let's pick one that could be - end up being in conflict with what the House and Democrats want to do on, on jobs and that is the question of the deficit and debt. An interesting cover of Newsweek this week.

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GEORGE STEPHANOPOULOS (ABC NEWS) (Voiceover): Neil Ferguson from Harvard, cites it called - says how great powers fail. And he goes on and says it begins with a debt explosion. It ends with an inexorable reduction in the resources available for the Army, Navy and Air Force. If the United States doesn't come up soon with a credible plan to restore the federal budget to balance he says in the next five years, a debt crisis could lead to a major weakening of American power.

GEORGE STEPHANOPOULOS (ABC NEWS): And he cites you throughout the piece as someone who's not paying enough attention, Paul Krugman, to the deficit.

PAUL KRUGMAN (NEW YORK TIMES): You know, the first thing to say is people are putting their money where their mouth is which was the bond market. Things were fine. You know, the US government is able to borrow long term at 3.2% interest rate. So, obviously, you know, the market is, is not convinced. Now, the market has been wrong. But, then if you do the arithmetic, these numbers look huge, the America economy is huge, the debt burden even after five years is going to be well below, as a share of GDP, well below levels that lots of industrial countries have reached in the past, including ourselves after World War II. And we were able to handle that just fine.

GEORGE STEPHANOPOULOS (ABC NEWS): But we are pushing the levels 100%.

PAUL KRUGMAN (NEW YORK TIMES): We're not going to hit 100% until a decade from now. And countries have gone above 100%. I mean if you actually ask about the interest cost, particularly inflation adjusted interest cost, you know, we're now paying 1.2% real interest rate on federal debt. Even if you add 50% of GDP in debt, which I don't think is going to happen, that's still only a fraction of a percent of GDP in additional debt service cost.

GEORGE WILL (ABC NEWS): But even on reasonably cheerful assumptions about economic growth and interest rates, we're apt to spending in ten years, $700 billion a year servicing our debt.

PAUL KRUGMAN (NEW YORK TIMES): That's in a, in a $20 trillion economy. It doesn't sound as bad as it is. As a share of GDP...

COKIE ROBERTS (ABC NEWS): Well except that it has, it has a political and policy implication. Excuse me, because what happens is, members of Congress will sit there and say, we can't do "x" because of the deficit.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): Right.

PAUL KRUGMAN (NEW YORK TIMES): Well that's...

COKIE ROBERTS (ABC NEWS): And, and so there are, there are huge implications.

PAUL KRUGMAN (NEW YORK TIMES): "The Times" had a front-page story about the debt bomb. And it had a chart which was meant to be very scary. And it showed that on current projections by 2019, the share of the economy, spent on debt service, will be up to the levels not seen since the first George Bush was president.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): The Republicans in Congress are not going to evaluate this based on that it's just a jobs stimulus. Even if it were to be proposed as high dollars, we're going to say look, we spent $160 billion on AIG, we spent $400 billion on saving the GSEs, Freddie and Fannie, we spent $3 trillion in Treasury and Fed support and guarantees, on top of that the stimulus, I mean at some point, the notion...

PAUL KRUGMAN (NEW YORK TIMES): The Republicans are going to vote against anything.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): But I think you're going to get a lot of Democrats, too. I mean these numbers are going to become astonishing.

COKIE ROBERTS (ABC NEWS): The fact that we had Ron Paul's amendment pass in the House of Representatives in committee this week tells you that there's a huge upset in both parties with the financial institutions, with the Fed, with everything that is going on economically.

GEORGE STEPHANOPOULOS (ABC NEWS): Well Ron Paul and we had Bernie Sanders...

MATTHEW DOWD (ABC NEWS): Politically, politically in the end, politically in the end the deficit doesn't matter if the economy is growing and jobs are getting created. It matters when the economy is bad. So if the deficit continues to grow and the economy stays bad, Republicans, the American public can say we're messed up, the government isn't doing what it's supposed to. Look at the deficit. Look at this. This is the problem. So if the economy started growing and we had a deficit, then I think politically, he's fine with that.

COKIE ROBERTS (ABC NEWS): Right.

MATTHEW DOWD (ABC NEWS): But that's the problem.

PAUL KRUGMAN (NEW YORK TIMES): There's an important political fact which is that whatever you do with the deficit, the public won't notice. In 1996, a majority of Republicans thought that the deficit had increased under Clinton even though he had in fact...

COKIE ROBERTS (ABC NEWS): Balanced the budget.

PAUL KRUGMAN (NEW YORK TIMES): ...been over an incredible run. So no, I mean the deficit doesn't matter, the economy matters. And that's why somehow or other, Obama has to get jobs being created.

GEORGE STEPHANOPOULOS (ABC NEWS): And meanwhile, he is also going to dealing with health care right now on the floor of the Senate, going he announced this week to Copenhagen to deal with climate change. And it comes at a time when the politics seem to be changing a little bit in this. I want to show our latest ABC News/"Washington Post" poll.

GRAPHICS: THIS WEEK WITH GEORGE STEPHANOPOULOS

GRAPHICS: GLOBAL WARMING OCCURRING

GEORGE STEPHANOPOULOS (ABC NEWS) (Voiceover): It shows whether people believe global warming is occurring. That number is going down. July 2008, 80% of the public, down to 72% now. And there's been sort of a real partisan shift.

COKIE ROBERTS (ABC NEWS) (Voiceover): Right.

GEORGE STEPHANOPOULOS (ABC NEWS) (Voiceover): Look at Republicans, 74% believed global warming was occurring back in July 2008. Now, a 20-point drop to 54%.

GEORGE STEPHANOPOULOS (ABC NEWS): George, there's been a partisanizing of this issue and then you throw in one more complication we've had over the last week, this Climate Research Institute at the East Anglia University, someone hacked into their e-mail account and showed a bunch of e-mails between scientists which opponents of climate change legislation has said proves that they are rigging the science and trying to hide information that runs counter to their theories.

GEORGE WILL (ABC NEWS): Well what it - it raises the question of we're being asked to wager trillions of dollars and substantially curtailed freedom on climate models that are imperfect and unproven. And the consensus far from being as solid as they say it is, and the debate as over as they say it is, the e-mails indicate people are very nervous about suppressing criticism, gaming the peer review process for scholarly works and all the rest. One of the e-mails said it is a travesty, his word - it is a travesty that we cannot explain the fact that global warming has stopped. Well, they shouldn't be embarrassed about that. It's a complicated business and that's why we shouldn't wager these trillions.

PAUL KRUGMAN (NEW YORK TIMES): That's not, it's, you know, part - all of these e-mails, people have never seen what academic discussion looks like. They don't - there's not a single smoking gun in there. There's nothing in there. And the travesty is that people are not able to explain why the fact that 1998 was a very warm year doesn't actually mean that global warming has stopped. I mean that's, that's loose wording, right? I mean everything is about this - we're really in the same situation as if there was one extremely warm day in April and then people are saying well, you see May is cooler than April. There is no trend here. And that's what - the travesty is how hard it has been to explain why that...

COKIE ROBERTS (ABC NEWS): But the fact is that...

GEORGE WILL (ABC NEWS): One of the e-mails, Paul, said he wished he could delete, get rid of the medieval warming period. That lasted 600 years.

PAUL KRUGMAN (NEW YORK TIMES): It's not if you read the - this has all been explained. What he meant is they want to put a start on it. We have an end to it. We don't have a start on it. And what the - you know, there's a lot of use - loose use of language when you're just talking among your - each other. And what the deleting really meant, deleting really meant that, you know, we need - we don't know when this thing started because we don't have very good data, you know, back then, there weren't any weather stations. And that's what the context was.

MATTHEW DOWD (ABC NEWS): Well the interesting thing about this is, which goes back to our previous discussion is, and having done a lot of this polling during the Bush administration, which is when you give people a choice between improving the economy and jobs, and improving the environment, at times of economic prosperity, the numbers for improving the environment go above jobs. At a time when there's a recession or a time when there's difficulty in economy, people say let's focus on this. Let's not focus on the economy.

COKIE ROBERTS (ABC NEWS): I know, but the difference here...

MATTHEW DOWD (ABC NEWS): Let's not focus on the climate. The best route to passing climate change legislation is creating jobs and then he's more apt to get the American public behind it.

MATTHEW DOWD (ABC NEWS): But the difference, the difference between that kind of polling, and what George just showed in our ABC poll is that, is that people are not agreeing on the facts. It's not a question of what - asking about the legislation. It's people saying...

MATTHEW DOWD (ABC NEWS): Well people have a tendency, people have a tendency then if they want to go to a different position, they have a tendency to then doubt the facts.

GEORGE STEPHANOPOULOS (ABC NEWS): Well that's what might be happening here is people who are opposed to cap and trade are changing their minds on global warming.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): In June of this year, the House voted, a close vote on cap and trade....

COKIE ROBERTS (ABC NEWS): Right.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): 219 to 212 votes. One out of five every - one out of five congressional Democrats voted against the cap and trade bill. If that vote were held today against the backdrop of this news, plus even worse economic numbers to Matt's point, I guarantee you, you would have 2 out of five and you'd probably lose those eight Republicans.

COKIE ROBERTS (ABC NEWS): Which is why it's not happening in the Senate.

PAUL KRUGMAN (NEW YORK TIMES): That's why Nancy Pelosi was very clever to get that in her pocket when she could.

COKIE ROBERTS (ABC NEWS): But for the President to then be going to Copenhagen with all of this going on, becomes somewhat problematic for him I think.

GEORGE WILL (ABC NEWS): What the President is going to say there is that the United States pledges to reduce its carbon emissions 83% below the 2005. That will not even be seriously attempted and here's why. That would mean we would have total carbon emissions equal to the United States in 1910, when there were 92 million Americans. Furthermore our per capita carbon emissions in 2050, when he says this is going to happen, when there's going to be 420 million Americans, would be on a per capita basis what we had in 1875.

GEORGE STEPHANOPOULOS (ABC NEWS): He may face a credibility problem as well. I mean I think the issue is I think the President had to go to Copenhagen. It was the only way to get the Indians and the Chinese to go as well. But, but Paul, as he goes, he'll be making a commitment that he can't necessarily keep unless the Senate follows through.

PAUL KRUGMAN (NEW YORK TIMES): I think everyone understands that.

COKIE ROBERTS (ABC NEWS): I think he's going to not like Copenhagen.

PAUL KRUGMAN (NEW YORK TIMES): Everyone understands that. And I just want to say, I'm surprised George, that you lack faith in the power of the marketplace. All of these cap and trade is about putting a price on carbon emission and people will do amazing things given a market incentive.

GEORGE WILL (ABC NEWS): Speaking of the marketplace, the biggest industry in the world right now may be fighting climate change. There is - there are billions, trillions of dollars on the table. And when you say well this - the academics or they're scientists and they talk funny ways - academics are human beings and the enormous incentive to get on the bandwagon on global warming, the financial incentive the market driving this is huge.

PAUL KRUGMAN (NEW YORK TIMES): Let me tell you there's tremendously more money in being a skeptic than there is being a supporter. It's so much easier. Come on, you've got the energy industries behind it. There are 20 times as many believers as there are skeptics in the scientific community. They get almost equal time in the media. It's much more pleasant to be a skeptic.

GEORGE WILL (ABC NEWS): Is there a larger venture capital firm in this country than the energy department of this government which right now is sending out billions and billions of dollars in speculation on green energy?

COKIE ROBERTS (ABC NEWS): Well, but I, but I think that's something that the American people want. I mean we want green jobs. We don't want to see those polar bears, you know, on those ice floes without any ice around them, all that. I think that, you know, finding - coming up with ways to have the energy that we use without causing global warming and polluting the air is something that is something desirable.

MATTHEW DOWD (ABC NEWS): I agree the public wants that unless Uncle Joe doesn't have the job. If Uncle Joe doesn't have a job, they say let's don't worry about the polar bears right now.

GEORGE STEPHANOPOULOS (ABC NEWS): So you got to get unemployment down to a lower percent. We just have about, about a minute left. And just quickly on this pretty crazy story at the Indian state dinner. A couple was able to crash the gates. And George, at first, you know, you laugh at it. How can they possibly do this? You know these guys are going to go sell the story. But it is a pretty serious security breach.

GEORGE WILL (ABC NEWS): At the end of the day, it's not funny. And there's an old axiom that applies elsewhere but not in Washington, that when there's no penalty for failure, failure proliferates. Now this was a failure of security of major proportions. And let's see whose job is lost.

COKIE ROBERTS (ABC NEWS): Well, I feel sorry for the Secret Service. Look, you know, you're in this situation that at a White House gate, it's raining. People are pushing in. And they're all, they're all somebody fancy. And you're more likely to get in trouble if you hold them up and question them and have them be, you know, all uppity with you.

GEORGE STEPHANOPOULOS (ABC NEWS): Well that may be why that person shouldn't have - the Secret Service should not have been unaccompanied at the gate by someone with the actual list.

PAUL KRUGMAN (NEW YORK TIMES): You know, and I was going to say and this President receives I believe a record number of death threats. Let's just say, this is - we don't know how seriously to take it but you should not be taking any - cutting any corners on protecting this president.

MATTHEW DOWD (ABC NEWS): To me it's a bigger commentary on society when that basically people now seek fame for fame and celebrity sake. They're not going to like invent a vaccine. They're not going to like run the mile in under 4 minutes. They want fame. They have a Bravo Televison camera film and the whole thing is now about gaining celebrity not doing something substantive and getting celebrity after it.

DAN SENOR (COUNCIL ON FOREIGN RELATIONS): I would say this is probably not the administration's fault. And I agree with you, also, that the Secret Service is probably going to get a bum rap here. But to the extent that there is a big discussion going on right now, people starting to question the competence of this administration, certainly on the heels of this China trip that people are raising big questions about the competence, how this Afghan review strategy was run. This is not the administration's fault but it's...

GEORGE STEPHANOPOULOS (ABC NEWS): I think that's a stretch. Let you guys continue this in the green room.

GEORGE STEPHANOPOULOS (ABC NEWS) (Voiceover): And all of you can watch it later on ABCNews.com. While you're there, check out Foreign Policy magazine's 100 top level thinkers. You can weigh in with your own picks on my "Bottom Line" blog. Coming up here, "The Sunday Funnies".

ANNOUNCER:"This Week" with George Stephanopoulos brought to you by...

Originally broadcast, 11.29.09