Bloomberg News

Podesta Says ’Disaster’ to Delay Fiscal Reckoning (Transcript)

July 06, 2012

John Podesta, a White House chief of staff to former President Bill Clinton, said in an interview on Bloomberg Television’s “Political Capital With Al Hunt,” airing this weekend, that a significant postponement of spending cuts and tax-cut expirations set to kick in Jan. 1 would be a “disaster” for U.S. fiscal credibility and for President Barack Obama’s ability to govern if elected to a second term.

(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)

AL HUNT: We begin the show with the chairman of the Center for American Progress, former White House chief of staff under President Clinton, John Podesta. Thank you for being with us, John.

Let’s start with the jobs report on Friday, another dreary jobs report. This is a really sluggish economy for a president running for re-election, isn’t it?

JOHN PODESTA: Well, certainly a sideways job report. We’ve had 28 months of job growth, and we’ve had private-sector job growth now that’s - that’s outpaced the job loss during Obama’s term. But I think, as I said, it’s sideways. He’s certainly hoping -

HUNT: And a bad number for his re-election prospects?

PODESTA: Well, I think it’s - you know, it’s - this is all about expectations, and I think people had begun to think that we might turn into a recession. And it looks like, notwithstanding the headwinds that the U.S. economy is facing from the global economy, and particularly from Europe, the recovery is still intact and we’re still - and we’re still putting jobs on the board. Manufacturing was up again.

So I think it’s - it’s a kind of middling jobs report from him. He’s got to be concerned about it. I think he would have hoped for more, but - but I don’t think it’s a disaster, either.

HUNT: Republicans say, though, it underscores the point they’ve been making. You cannot increase taxes with this kind of weak economy and it’s a gift for them.

PODESTA: Well, you know, I think that - first of all, it’s the ideas that Romney’s put forward in this campaign and his record in the past that I think will become the issues in the fall. And I think that what he’s suggesting for the American economy would be devastating for job creation, particularly the deep structural cuts in innovation and education and places where, in fact, the economy’s the weakest.

Of course, one of the big overhangs here is we again lost jobs at the state and local government level in this report. And what he would do is to tank that even more. So I think with that level of deep and structural cutting, particularly, again, to state and local government, I don’t think that this economy can ever take off.

HUNT: Well, as you know, fiscal D-Day less than six months away, sequestration, spending cuts supposed to take effect, Bush - all the tax cuts expire on Jan. 1. There are a number of people on Capitol Hill, including some Democrats, who say we don’t need this kind of uncertainty right after an election. We ought to - we ought to postpone those effective dates for three or six months. Should the White House consider that?

PODESTA: Well, you know, I think that the president wants to get a deal - a framework agreement. I think they’re considering whether they can do that in the lame-duck session. You know, I’m skeptical about the timing of that, whether they can actually put that deal together in the lame-duck. But I think what they can’t afford to do is kind of keep putting this day of reckoning off further and further into the future.

HUNT: So it’d be a mistake to take a postponement right now or a delay right now?

PODESTA: You know, if - yeah, I think you have to judge these things by the term of the delay, if you will. I would say, they’re better off trying to use the deadline that’s looming to get a framework agreement along the lines, at least structurally along the lines of - of Bowles-Simpson, but I think that I would definitely not go for a long-term extension. If, you know, the Republicans were talking about nine-month extension, I think that would be a disaster for -for the credibility of the - of the government overall and for the Obama administration’s capacity to govern in - in a - in a post-election framework.

HUNT: Let me go to the health-care ruling. For all the Democratic celebration that affordable health care was upheld, there are some who think it’s a trap. With John Roberts calling it a tax, it has now made Barack Obama look like a big tax increaser. Is it a trap for the Democrats?

PODESTA: Well, what it’s done in the most immediate aftermath has made Mitt Romney look like a flip-flopper once again. He can’t really decide whether it’s a tax or a penalty, whether Massachusetts was a tax or was a penalty. We’re pulling up videotape in which he said both things. So I think in the immediate, you know, aftermath, I think it’s been actually more of a problem for Romney. I think the support for the Affordable Care Act has strengthened to some extent.

HUNT: But the administration -

PODESTA: So Republicans are going to go back at it and try to repeal it as soon as this - as this upcoming week, but then they’re going to have to explain how already the benefits that are in the act are going to be turned off.

HUNT: But the White House still hasn’t persuaded the American people of what - what the good parts from their point of view of the bill are.

PODESTA: Well, you know, I think that they could do a better job of trying to explain what the good parts are, but as I said, there’s a lot that’s already kicked in. Denying coverage to kids with pre-existing conditions, you can’t do that anymore. Kids - the one part of the population where you’ve seen health insurance actually uptick are young people, 18 to 25, where you see an increase in the provision of health care.

HUNT: Because they know - let me -

PODESTA: Because they’re on their parent policy, which has already come in.

HUNT: Let me turn to the campaign, and the Obama team is relentlessly going after Mitt Romney on Bain and outsourcing of jobs. PolitiFact, which is neutral, says that these ads are very misleading, they’re unfair and untrue, and that - and that the - the team Obama has really gone beyond the bounds.

PODESTA: Well, look, I think it was the Washington Post, not the Obama campaign, that said that Bain was a pioneer in investing in businesses that outsource jobs. Now, you can take credit for that or you could try to explain it, but I think that’s just a factual statement of what Bain was doing.

HUNT: They should - they should keep on that? They should keep on that theme?

PODESTA: You know, I think that the real problem for Romney going forward with respect to Bain are this incredibly complex set of financial transactions which have failed to be disclosed fully. AP is just writing on that this week. Vanity Fair had a big piece about these offshore accounts he has in the Cayman Islands. People can’t figure them out. There’s money moving in and out from Bain.

HUNT: Right.

PODESTA: And I think that, in the end of the day, you know, how he got an IRA that’s valued at $102 million, when the limits on how much you can put in was $30,000 a year, people are going to want some answers to this. And so far I think the Romney campaign has been - you know, both they’ve been stonewalling the legitimate reporters’ questions about this, and I think that the American public is going to kind of scratch their head and say, how did he make all that money? Where is it? Why is it in all these foreign offshore accounts? Is he avoiding taxes? Why is his tax rate so low?

And, look, what that says is not so much that he isn’t a good or a bad businessman, but is he going to be looking out for me? And I think -

HUNT: Let me ask -

PODESTA: - they’re going to have real questions about that by the end of this campaign.

HUNT: Let me turn to one question about Afghanistan. You and Stephen Hadley, George W. Bush’s national security adviser, wrote a thoughtful piece about how we get out of Afghanistan. But Dexter Filkins, probably the greatest reporter over there, wrote a piece in the New Yorker last week which said, after 11 years, 16,000 American wounded, $400 billion spent, the U.S. will leave without the mission accomplished, without nation- building, without a counter - the counterinsurgency is a failure, the Taliban is not defeated, corruption is still rampant, civil war likely.

PODESTA: Well, you know, I think what our piece that - that we wrote in Foreign Affairs and our advice to the administration is if you don’t pay deep attention to the political transition that’s going to occur - President Karzai’s term-limited, there needs to be a presidential election in 2014 - if you don’t build support for an institution that could bring forth a leader that has credibility in that country, then everything that Dexter is predicting will take place.

HUNT: Final quick question. Who do you think Mitt Romney will pick as his running mate?

PODESTA: I think Paul Ryan.

HUNT: Paul Ryan? Is that a wish, or is that a prediction?

PODESTA: Both.

HUNT: Both. John Podesta, thank you very much for joining us. .

***END OF TRANSCRIPT***

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