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GRAPHICS: THIS WEEK WITH GEORGE STEPHANOPOULOS

SENATOR KIT BOND (REPUBLICAN): 'Twas the week before Christmas, and all through the Hill, not a creature was stirring, not even a bill.

SENATOR ROLAND BURRIS (DEMOCRAT): People have voted, they mandated reform, but Republicans blew off the gathering storm.

SENATOR KIT BOND (REPUBLICAN): How far away from common sense we've been led. Our kids and grandkids have their futures to dread.

SENATOR ROLAND BURRIS (DEMOCRAT): Democrats exclaimed as they drove out of sight. Better coverage for all, even our friends on the right.

JAKE TAPPER (ABC NEWS): Oh, the Christmas stylings of Senators Kit Bond and Roland Burris. And joining us now to talk about health care reform, which their poems were about, and also other issues are David Brooks and Matt Dowd, Paul Krugman and Ruth Marcus. Thank you so much for joining us. We're going to start with obviously the alarming Christmas attack that almost happened. David, you heard Secretary Napolitano and Robert Gibbs give their answers about why this guy was allowed the plane. Did it, pardon the pun, did it explanations fly with you?

DAVID BROOKS (NEW YORK TIMES): Yeah, I actually don't think it passed the laugh with me. Listen, we all go through the airport. We all go through the TSA screening procedures. And at least I, and I think a lot of people have a sense that it's a jobs program, not a security program. That it's all a joke. People can sneak stuff through. And this sort of reconfirms that. It was the passengers, not the official program that does this. And the second thing is, the guy was actually fitting every single stereotype of a terrorist you can possibly imagine. He was a rich guy, he went to fancy schools, he was a mechanic, he gets radicalized and then he's on the watch list. So it's like a perfect bit of stereotypical profiling would catch this guy and even in this case they couldn't seem to do it.

JAKE TAPPER (ABC NEWS): Matt, when Richard Reid, the shoe bomber, did the same thing, or failed in his attempt to blow up a plane, President Bush - then President Bush did not come out, did not say anything to the nation. President Obama followed that playbook. Is that the right thing?

MATTHEW DOWD (ABC NEWS): Well, yeah, part of the problem here is that all the facts that you think are true at the beginning turn out not to be true as the days go on. Some of the stuff we've learned in the process of this is actually we're learning some of the things we first heard, we didn't, we didn't catch. But how are - the real question is, it's, what are we doing - what are we spending the billions of dollars on, as David says that are really doing the job? Is it a jobs program or is it a government employee program, or is it a terrorist catching program? And I think that's the question.

RUTH MARCUS (WASHINGTON POST): I think one of the really - there's two really alarming things that happened here. The first was, this suspect's father went to the US authorities and said you may have a problem here. He's not a US citizen. He's a Nigerian national. He's got a multiple entry visa to the United States. He has no entitlement to that. Why wasn't he - why wasn't that visa yanked? Why wasn't he, at the very least, moved to the top of a real watch list, not the 550,000? I don't think that this is the Obama administration's fault. This is the way bureaucracies work or don't work. And then second, as David said, the screening processes, clearly, though we've spent billions and billions of dollars, there's simply not enough equipment to find the things that need to be found.

PAUL KRUGMAN (ABC NEWS): I think we do want - I mean someone's head ought to roll over this and something needs to be looked at. But if you read your military history, every major military surprise that ever happened, there were ample warnings. You go back through the record and you find out there was information. The trouble is, there is so much information. You know, there's 500,000 people on this list that we're talking about. Stuff is going to fall through the cracks. Ultimately you do what you can, but someone who's prepared to die while killing a bunch of civilians, that's going to happen now and then. In fact we're quite lucky it didn't happen now. But, you know, I think, I think we are using a lot of 20/20 hindsight on what was the kind of thing that always happens whenever anything goes wrong.

RUTH MARCUS (WASHINGTON POST): Well, our...

MATTHEW DOWD (ABC NEWS): Well, to me, so the situation now is, what do we do in the aftermath of this? And so what it looks like we usually do is we profile an article of clothing, not the person. And so we're reluctant because it's from politically correctness to profile a person. But the shoe bomber happens and now we all have to put our shoes on the conveyor belt for it to go through. And we're not going to profile the person. This guy's underwear is on fire on the plane.

RUTH MARCUS (WASHINGTON POST): I was hoping you weren't going there.

MATTHEW DOWD (ABC NEWS): We might next have to profile underwear.

DAVID BROOKS (NEW YORK TIMES): Yeah, everybody is going to have to wear their underwear on the outside.

JAKE TAPPER (ABC NEWS): They're talking about - TSA is now talking about new rules where for international flights, for the last hour, you can't have any personal items in your lap, you can't get up for the last hour of a flight on international flights. So this is going to affect us in the same way. But, you know, one of the other interesting things about this, Ruth, is that this man, apparently, according to the information we have now, and it's early - you point out, a lot of the early information turns out to be wrong. But apparently, he spent time in Yemen and was trained by al Qaeda in the Arabian Peninsula, which - and this is an increasing - I don't want to say that this is necessarily a new front in the war on terror but this is coming up over and over. There was a US Yemen air strike on Thursday morning.

RUTH MARCUS (WASHINGTON POST): I think you could say it's a new front in the war on terror. It's not particularly surprising. And it doesn't mean that Afghanistan isn't a concern and the areas in Pakistan aren't a concern. But it does underscore the new reality that terror is - you know, it's a sort of a floating crap game and you can move to it different locations. And if you have a failed or failing state, as Yemen is, as Somalia is, things can - those are breeding grounds and areas where al Qaeda in the Arabian Peninsula is flourishing.

DAVID BROOKS (NEW YORK TIMES): Let's not materialize it, it's an ideological thing. I mean this guy, as I said, fit the classic profile. He's rich. He's trapped between two worlds, the traditional world of his imagined past and the modern world of being a mechanical engineer. And this, just like the 9/11 guys, sort of like the Fort Hood guy. And so they're trapped between these two worlds and they imagine some pure Islamic ideology of the past which they're going to act out by killing people. And so it's the ideology that matters. And it can happen to somebody living in London, or Hamburg, or anywhere else around the world. And then they find Yemen.

JAKE TAPPER (ABC NEWS): In fact, there are reports, and again, early reports, but reports that he may have been radicalized in London, where he went to school. But I want to turn now to another big issue which is health care reform, which I know has been consuming a lot of your attention. Specifically, Paul, you wrote a recent op-ed saying, in favor of the Senate health care reform measure. And you said those who oppose it fall into three groups. These are your characterizations, not mine.

PAUL KRUGMAN (ABC NEWS): Right.

JAKE TAPPER (ABC NEWS): One would be the crazy right, two would be unhappy progressives who wanted more and three would be what you called the bah humbug caucus of fiscal scolds. Now, I don't want to point fingers but one of your fellow colleagues in the "New York Times" op-ed page is opposing the health care reform measure. I am assuming you don't think David is a member of the crazy right?

DAVID BROOKS (NEW YORK TIMES): Let's not jump to any assumptions.

PAUL KRUGMAN (ABC NEWS): Let me say this. The objection supposedly is it doesn't do enough to control costs. And you have to ask, you know what more realistically could you expect? I know David praised one article of his. There was a later one, a recent one which said, look, they are in fact trying everything that people have suggested in the form of pilot programs. There's a whole list of things that we think might control costs. This is gonna be in the legislation. It's something that's gonna be tried. This is the first serious attempt we have made to control health care costs. And by doing that, it actually proved something to people like me, advocates of universal coverage have been saying which is that the only way to control costs is as part of a package that also covers the uninsured. Because you're not going to be able to just go and say to people and say, okay, we're going to take away some of your health care. You're going to have to go to them and say this is what we need to do in order to provide health security to everybody. And this is a, this is a landmark piece of legislation. Flawed, annoying, underfunded, lots of things are wrong with it. I wish there was a public option. I wish there were lots of things in there. But this is the most dramatic move towards getting rational about health care spending at the same time that it finally fills at least a good part of the hole in our system, the holes in our safety net. So, you know, Mr Brooks?

DAVID BROOKS (NEW YORK TIMES): I don't oppose it because I want to step on the necks of the poors, as you could say. I oppose it, and it's a close call for me. Because we used to spend 10% of health care - of our GNP on health care. Now it's 17%. Soon it will be 20%, 22%, more on health care, less on education, less on infrastructure, less on investment, less on everything else. This bill will do absolutely nothing. It will slightly increase the amount of money we spend on health care. So what could you do politically to do something about that? Well I wouldn't mind a single payer. Frankly, I'd prefer a single payer to what we have now because that actually would control costs. My preferred option though would be to give consumers choice. There are health economists Alan, there was a bill called the Widen-Bennett bill. And people said oh, it's politically impossible. Well this bill right now, in the NBC/"Wall Street Journal" poll, has 32% support. I think I could get 32% support for some consumer related bill that would be...

PAUL KRUGMAN (ABC NEWS): Can I say something about health care polling? I think this is actually important. A fair number of people who say they don't support it wanted something stronger, wanted something more aggressive. So that doesn't break down that way. And if you ask people about specific provisions by and large, they get public support. I know the example of Massachusetts and this is kind of a Massachusetts type program for the United States. Better than a Massachusetts program, but along those lines. If you ask people do you approve of - now that they have it in Massachusetts, do you approve of it? It's not very favorable. If you ask people do you want to get rid of it or do you want to maintain it and perhaps extend it? Overwhelming support, 79% of the Massachusetts public wants to the program to continue. I think that's the way this is going to work. This bill is going to be - people will complain, they'll say, oh this isn't what I want, that this isn't good. You'll ask, do you want to go back on it, and overwhelmingly, they'll say no.

JAKE TAPPER (ABC NEWS): And Matt, you think, you think you would go farther than - I couldn't really get Senator McConnell to say that Republicans should campaign on repealing Obama-care as they call it. But you think they should campaign on it.

MATTHEW DOWD (ABC NEWS): I think if this bill passes, it's the best thing for the Republican Party in the short run if this bill passes. I think - there's no question about the polling on this is consistent. The majority of the country is opposed to it. The majority of the country thinks their health care costs, their own health care costs will go up. The majority of the country thinks the overall cost of the systems will go up. And the majority of the country thinks their care will get worse. Now, we could argue in Washington or whatever at the capitol and say we know better than the public does on this and we know what they should get, but the country is decided on this. The country is overwhelmingly decided on this. And Congress has proceeded to go against what the public wants and pass a bill, whether it's good in parts, bad in parts, whatever it happens to be, the country doesn't want it. And if it passes in January, and they don't try to - they don't sell it, which I don't think they're gonna do because they're going to figure out it's negative in its entirety. They're going to go on to jobs quickly. It's gonna be an albatross on almost every Democrat in a swing district in the country.

JAKE TAPPER (ABC NEWS): And in fact - I want to come to you in a second, but in fact one of the members of Congress speaking against the health care bill is a former freshman Democrat from Alabama now freshman Republican from Alabama. Parker Griffith. This is what the National Republican Campaign Committee was saying about Parker Griffith last year in a TV ad.

GRAPHICS: THIS WEEK WITH GEORGE STEPHANOPOULOS

ANNOUNCER (NRCC AD): 2000, the USS Cole is attacked. 2001, terrorists attack America. 2008, the Marriott in Pakistan is bombed. But Parker Griffith says we have nothing to fear from radical Islam.

REPRESENTATIVE PARKER GRIFFITH (REPUBLICAN): I think America's greatest enemy is American and its materialism. We have nothing to fear from radical Islam.

ANNOUNCER (NRCC AD): Parker Griffith, wrong for Alabama.

JAKE TAPPER (ABC NEWS): Now of course the Republicans say Parker Griffith is right for Alabama. But there are those who think that this is something of a canary in a coal mine. Parker Griffith's defection. Among them, the former commerce secretary, William Daley who said in an op-ed in "The Washington Post".

GRAPHICS: THIS WEEK WITH GEORGE STEPHANOPOULOS

GRAPHICS: DALEY ON DEMOCRATS

JAKE TAPPER (ABC NEWS) (Voiceover): "While it may be too late to avoid some losses in 2010, it's not too late to avoid the kind of rout that redraws the political map. The leaders of the Democratic Party need to move back toward the center."

JAKE TAPPER (ABC NEWS): Is Daley right? Do the leaders of the Democratic Party need to move more toward the center?

RUTH MARCUS (WASHINGTON POST): I thought he overstated the case. And I think Parker Griffith is gonna turn out to be a pretty lonely canary in that coal mine. There's no indication that I can find from talking to the people who would know that any other potentially squishy Democrats are thinking about morphing themselves into Republicans. And I think that - to get back to Matt's point about the potential albatross of the health care bill, absolutely they're going to pivot to jobs, jobs, jobs. Absolutely if they don't start to also, simultaneously, sell this health care bill. We were all talking about it as if it's a fate accompli, but it will be eventually I think. Senator McConnell's desire is notwithstanding. If they don't find a way to also sell it as a positive transformation it is going to be an albatross.

JAKE TAPPER (ABC NEWS): How? How? How do they do that?

RUTH MARCUS (WASHINGTON POST): By talking to people - well it's both doable and complicated. The complicated part is that the things, many of the things that it will achieve will not start until 2013 or 2014. So it's a little hard to say to people, life is going to be great two elections from now if you don't have health care or if you're nervous about your health care. But there's going to be a lot of talk about the immediate deliverables which is one of the terms the administration uses. So, for example, senior citizens, senior citizens who are A, nervous about what's happening to their Medicare, witness grandma will have their doughnut hole filled or somewhat filled very quickly. And people will be able to keep their kids on their insurance policies after they're out of college until age 26 or 27. So there's gonna be some focus on that. It is hard to talk about legislation that is promising something in the future as, and inevitably they will, as people's health premiums continue to go up.

JAKE TAPPER (ABC NEWS): Paul, can the Democrats sell this?

PAUL KRUGMAN (ABC NEWS): Some. I mean I'm waiting for the first poll that asks, do you want to repeal this, which is very different from whether you approve of it. And I bet you're not going to find anything like those numbers. Let me also say about Parker Griffith. As I've looked at it. I think the correct description of him is he's a living fossil. He's sort of the last Dixiecrat. All of those conservative Democrats in the south are now Republicans and here's this one guy whose left over. It isn't necessarily an omen of very much. I don't think health care is gonna be a big sell for the Democrats. It's something they have to do. To go through - you know this was something that they - that was a core issue during the campaign, it's a core promise to the base. Even if part of the base is temporarily, at least, really riled up that is isn't what they wanted. So it was something they had to check off. It's a little bit in a way like the Medicare drug benefit back in 2003, which didn't phase in for a long time. It was something that Bush had to do in order to just shore up that front. So I don't think this campaign is going to be about health care. I think it is going to be about jobs, the economy, and just do you want those guys back in? Which is basically what the Democrats will run on.

DAVID BROOKS (NEW YORK TIMES): When FDR did the new deal, 70% to 80% of the American people basically had a good view of government. Now, like 15% or 20% of the American people have a good view of the government. So if you have a whole series of things that look like big government and a lot of spending, their going to take it out on you. And I don't know if more people will switch, but 20 House members, House Democrats are going to lose in all those states, North Carolina - they're just going to get wiped out. Harry Reid might get wiped out. People will get wiped out across the country.

JAKE TAPPER (ABC NEWS): In fact that's - well I was just going to say, this is an end of year show so it's a good time for predictions. And you've just offered yours. Charlie Cook, the respected political prognosticator predicted that Republicans will pick up 20 to 30 seats in the House, and 4 to 6 in the Senate. You've said 20 in the House, how many in the Senate?

DAVID BROOKS (NEW YORK TIMES): I'm with Charlie. 20 to 30 at least.

JAKE TAPPER (ABC NEWS): And 4 to 6 in the Senate?

DAVID BROOKS (NEW YORK TIMES): And look at states like Illinois which is a Democrat state, got a moderate, very impressive candidate, Mark Kirk has a chance to win there. You'll see some unexpected places. I think assuming things don't change, Republicans do well. And they will repeal half of health care, the only painful half.

MATTHEW DOWD (ABC NEWS): Well I agree with that. I think they're gonna probably pick up 25 seats in the House and they're probably gonna pick up 5 seats in the Senate.

JAKE TAPPER (ABC NEWS): Still not enough to control?

MATTHEW DOWD (ABC NEWS): No, I think that range. But I think one prediction I have in the aftermath of that, which I think will happen, the Republicans will misread the mandate. The Republicans will think it was because of something they said or they did as opposed to the Democrats went off tangent and wasn't in line with the American public. And the Republicans will do something, which actually in my view, could be a benefit for Barack Obama going into 2012 if he has to deal with a more Republican Congress. And then he can pivot against what the Republicans are doing.

DAVID BROOKS (NEW YORK TIMES): Can I just say mega dittos to that?

JAKE TAPPER (ABC NEWS): Prediction for election 2010?

RUTH MARCUS (WASHINGTON POST): So my prediction is slightly rosier. Let's remember that...

JAKE TAPPER (ABC NEWS): Rosier for Democrats?

RUTH MARCUS (WASHINGTON POST): Rosier, slightly rosier for Democrats. And let's remember the President's party always is going to - almost inevitably loses seats in the midyear election. And I think the answer to the question depends on what Paul can tell us about where the economy and particularly where the unemployment rate is going to be in next spring heading into the fall because that will really determine how people feel about the incumbent party. I would say some in the House, somewhere in the 20s, anything under 20 will be viewed by Democrats as a huge sigh of relief for them. In the Senate, I think it's a little bit more complicated. There are more Republican senators retiring than Democrats. And in more divisive, divided, swingy-type states and so I would say closer to three.

JAKE TAPPER (ABC NEWS): Okay, we are getting close to short on time. But I do want to ask you a question about the economy for 2010. Your fellow laureate, Joseph Stiglets has said that there's a significant chance the US economy will contract in the second half of 2010. He's calling for the government to prepare a second stimulus. Do you think that's possible?

PAUL KRUGMAN (ABC NEWS): Yeah, it's a reasonably high chance. I don't think it's more - it's less than 50/50 odds. But, you know, what we've got right now is a recovery that it's first of all not showing up very much in jobs yet. It's being driven by fiscal stimulus which is gonna fade out in the second half of next year. And by inventory bounce. You know production was low, because companies were running on their inventories. They're stopping doing that so now you get a bounce in the economy. But that's also gonna run out. So the things we know about are all going to be negative in the second half of next year. Now the financial markets, the last month, the financial markets have gotten really optimistic. If you look at things like, all right, the term spread on bond rates. They suggest that the financial markets really think there is going to be a much more vigorous recovery. I don't know see where it's supposed to come from. But, so, you know, the range is huge here. I would basically go with Joe Stiglets. I'm really worried about the second half.

JAKE TAPPER (ABC NEWS): Okay, I'm going to have to wrap there. "The Roundtable" continues in the green room on ABCNews.com.

JAKE TAPPER (ABC NEWS) (Voiceover): And you can get political updates all week long by signing up for our newsletter, also on ABC.com. Coming up here, "The Sunday Funnies".

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Originally broadcast, 12.27.09