>> what do you think a tree can be? can it be stronger than steel? can it be by a degradable plastic? can it be fuel for our cars, or clothing, or medicine that fights cancer? with our tree cell technology, we think it can. weyerhaeuser, growing ideas. >> while we have fought back in the worst of this recession, we still have got a lot of work to do, we still have a long way to go. >> a long way to go. this week on "inside washington," wall street jokes on fears of a double-dip recession. >> these things are needed to prevent officers from losing their jobs.

>> the house approved a $26 billion spending bill for cash strapped states. >> we do not have the money to bail out the states. >> to the pundits and the talking heads, i have a simple message -- welcome to colorado . >> democrats take heart from primary election results. >> there are not too many good election nights coming their way t. >> the secretary of defense announces major belt-tightening. and charlie rangel fights for his political life. >> if i was you, i may want me to go away, too. i am not going away. captioned by the national captioning institute --www.ncicap.org-- >> thursday morning's headlines giving you the flavor of the

week's economic news. "market's swoon on fears," "wall street journal." "investors rattled by economic surprises," "washington post." "troubles abroad lead to raise on economic recovery," "new york times." yes, some of those still read newspapers. the federal reserve announced it would buy back treasury debt, and the dow dropped 275 points. the world's biggest economy still needs extraordinary government help. add to that a wider trade gap and lousy news on the jobs front and people are talking about a double-dip recession according to a new poll, 2/3 of the american people think that the economy has yet to hit bottom. i hate to be crass about such bad news, but should republicans take heart from it, mark? >> yes, republicans should take heart.

as we meet here today, the prediction by economists is that unemployment will not drop until the middle of next year to 8.5%. household spending is probably the most fearsome indicator, down 1.2% from 2009. that is what generates -- drives our economy. that is the largest drop since 1942 in the middle of world war ii. it is not good news. >> charles? >> i think the fed action, repurchasing the debt, was a signal that it is worried about the economy but is out of bullets, and that, i think, is what sent the market into this wound. >> good news for republicans, jeanne? >> any bad economic news is an argument they can make that we need change in leadership. that is good for them. but you go deeper into that

hole, the republicans -- deeper into that hole, voters only give republicans a two- or three- point edge when it comes to the economy. they still need to develop a strong message on how they would fix things, instead of just saying you need somebody new. there would benefit if they provided an answer or road map. >> congressmen paul ryan has a road map. colby? >> people who don't have jobs don't spend money. you also have a lot of liquidity in the system. banks have money to that, but they are not lending money because they don't find good borrowers out there, but also, they are being cautious. the other thing that is happening is globally -- you have the chinese will bring their purchase of imports -- lowering their purchase of

imports. if the chinese economy is slowing down as well, that will affect us as well. >> nancy pelosi brings the house back from vacation to pass a jobs bill the republicans say we cannot afford. >> the bailout's must stop. >> we cannot stand by and do nothing while pink slips are given to people who take our children and keep a community is safe. >> john boehner says we do not have money to bail out the states. is there a new normal? laura tyson says there is, and it means that recoveries are much slower. >> recoveries have been slower. if you go back to the early 1980's and the recession that president reagan was dealing with, there was a long lag before the jobs came back. with each recession, the same thing has happened. what many economists believe is

that with the recession, businesses are becoming more efficient and they are not hiring back as quickly as they did before. also, you have to remember where we were before this recession. we were in a bubble, a fake economy. in some ways we cannot go back to that because then we will be in trouble again. >> maybe for the first time i am going to disagree with something that jeanne cummings said. prior to this downturn, this recession, we went through basically 25 years of uninterrupted low inflation and low unemployment. it was really unprecedented. the new normal meaning unemployment at 8.5%, that will take a helluva lot of adjusting to bridge the part where i dissent from jeanne is where she says the republicans have to come up with ideas. they really don't.

we are facing a mae west election. she said that when forced to choose between two evils, i choose the one i have not tried before. >> what about congressman paul ryan's wrote that for america's future? it has high praise from people like charles krauthammer, but not from paul krugman. >> he is a guy who says that a trillion-dollar stimulus was not enough. not exactly short -- he is keynesianism squared, and i am not sure that is a prescription for our recovery. paul ryan is the only person i have heard of who offers an honest program on entitlements, which is where we are going to cure or destroyed our economy. but he understands it will have to happen eventually. -- everybody understands it will have to happen eventually.

he said it early. today even the republicans don't want to embrace his agenda because they are going to win in november and they don't have to have a program with an economy this lousy and with this of action with the president this i. all you have got to be is the party of no. it is our referendum on the democrats. it is bad advice to present an alternative. but after this election, when we have to get together at some point and work together, i think it will be on the paul ryan outline or blueprint eventually. >> seven of five years ago this weekend, president roosevelt signed social security into law but would be here 75 years from now, 10 years from now? >> it will be here 10 years from now. >> in what form? >> sort of in its present form. it will get fixed. it has to get fixed. what are they going to do about medicare? the measures that we have been

posing -- those things have to be changed. that will take a political earthquake to make it happen, but it has to happen. >> charles and i have been doing this program for 20 years and for 20 years we've been talking about fixing social security. >> it can be fixed and we agree on this. you can do it on the back of an envelope. a gradual increase in the retirement age, because it does not ever been indexed to life expectancy as it should have been, a change and the formula -- complicated, but the inflation formula now, which is slightly exaggerated -- if you lower it, it helps a lot -- and lastly, some kind of means testing. rich will get less, which everybody understands this is just it is roughly what happened in the greenspan commission in the 1980's and have a solution

double loss for 50 years. it is the medical staff, medicare and medicaid, that is killing us and nobody has a good answer as of yet. on social security, the answer is clear and obvious. >> define rich. >> anybody within income over $100,050. >> what about medical stuff? >> the reality is that it can be fixed, but let's be honest about -- it was fixed in 1983 in a different political climate. it was the greenspan commission -- give alan greenspan enormous credit -- but it was the political operation that changed it. the operation was done by a guy named dan rostenkowski, and tip o'neill. what we're talking about is a

political year in 2010 were the driving, organizing principle of conservative candidates is no compromise, no coalition in any way. that in itself is an act of treason. the candidates they nominated already from nevada, colorado, across the board. this is what you are talking about, not the kind of climate that is necessary to make that kind of compromise. >> i think the system will have to break before it will get fixed. neither side is going to compromise in the way that they did in the good old days, just 20 or 30 years ago. that is particularly so for the held side of things. -- health side of things. on the health care reform law that was passed, it took a shot at trying to fix those costs. we will see if those do any good. they don't, we will have to wait until the system just collapses

upon us, and that will be the time they acte. >> colby, charles fixed social security for us. can you fix medicare? >> in a minute? >> i will need a minute and a half. we need the prospect of hanging that will concentrate our minds wonderfully. we have imposed more and more mandates without the capacity to paper these things. this is the reality we have to face. we are at a point where we are spending what we don't have, we have a huge debt overload. it is not just a political argument. it is a major financial issue of the country is facing, and we are not stepping up to it at all. >> 30-second cure for health care -- tort reform, a full

taxation of benefits you get in employment, and allow people to purchase insurance across state lines. all three are essentially left out of obamacare. >> the reality is this -- we spend 24% -- 245% of gdp and tax 13%. -- 24.5% of gdp and tax 13%. that is our recipe for financial calamity. >> we have primaries this week with interesting results. >> they don't want to send at the same politicians to washington and get the same politics out of washington. they want someone who was an outsider with a real-life business experience, and really hope that someone who has built a business and created jobs on small businesses -- and created

jobs and understands the impact of taxation on small businesses can have an impact on the economy. >> that is linda mcmahon, a former ceo of world wrestling entertainment, spent grown money -- spent her own money to win the nomination for the republican senate in connecticut. democrats have a good night with michael bennet. >> republican primary voters are really angry. if there is anger out there, the epicenter of it is in the days of the republican party. they threw overboard more established candidates that had the backing of the u.s. chamber of commerce and leaders in washington and instead nominated outsiders, newcomers, and very strong conservatives who have got some flaws. democrats are hoping that they can exploit those and eke out

victories that might of been a hard or not even possible before the nominees were selected. >> is that wishful thinking, mark? >> not in all cases. jeanne is right. peter hart, democratic pollster, says that this is a jetblue election, everybody is frustrated and headed for the emergency exits. [laughter] four consensus, establishment candidate choices for republicans -- i don't think there is any question that they would be competitive or ahead in the races now. instead, they chose people who are far to the right and have flaws, like sharron angle in nevada, who wants to abolish social security, or privatize social security, get rid of social security is the word she used.

>> we heard someone saying at the beginning of the broadcast that democrats are whistling in the wind. >> i heard very loud whistling here. on nevada, sharron angle is an iffy candidate. this is a really winnable seat and it should not be closed, but it is because she is not mainstream. i am not sure about rob simmons in connecticut, who i love. he was my choice for republican senatorial candidate. but linda mcmahon has a lot of money, and that may be ending. that rob simmons did not have -- that may be an ingredient that rob simmons did not have and handicap him in the election. the only thing about the nickname is that if we can elect a professional -- only thing about linda mcmahon is that if we can elect a professional wrestler as governor of minnesota, we can have his boss, essentially, as a senator from connecticut.

>> michael bennet had a lot of help from the obama people. when george stephanopoulos asked him if he would have them help in the general election, he took the fifth amendment. why is that? >> he needed a good ground operation and he got it from the democratic party. gov. tim kaine takes great credit for having put the team in place to help him with the get-out-the-vote campaign. when you go head-to-head against the other candidates -- >> it does not mean an obama visit. >> he is busy campaigning. >> what a way, though, to get a sense of what happen -- one way to get a sense of what happened on tuesday night -- charles is right. the democrats are not going to have a good year. they had a good night. when you look at linda mcmahon

and rob simmons, richard blumenthal's weakness was his vietnam war record. rob simmons was a combat officer. that is what the democrats were facing. now he is gone, and richard blumenthal and fire away using all the muck out of world wrestling to stick it, linda mcmahon. >> jethe president is flying all over the country and a few states are letting him land. [laughter] >> the secretary of defense announces major cutbacks to defense spending as the american combat mission in iraq winds down. >> we are on target by the end of the month to end our combat mission and turnover bases to the iraqis and transition our

role there. >> the plan is to have 50,000 american troops by the end of the month. five months after iraqi elections, we still don't have a government there. electricity in baghdad, i don't know, three or four hours a day? shouldn't that were the people? >> it should worry the iraqis. look, we are getting out of there, no doubt about it. well, to be doesn't is not exactly a skeleton crew -- 50,000 is not exactly a skeleton crew. but this is the iraqis' now. it is up to them to learn to carry on from here. we've done our job. we have made the sacrifices. they have to take it on, as will the afghans at some point. >> what you think, charles? >> it is still problematic no government at this time is our real issue.

the chief of staff of the armed services says this week they will need american help until 2020. it tells you that the people in charge of keeping the country together are worried about america's leading entirely at the end of 2011, which was in the agreement that bush and maliki side. the issue of what is going to happen after the -- i think colby is right. it will probably be a situation like in korea, where the war ended 60 years ago and still at a huge contingent of american troops as a deterrent. i am not sure the president has said that we will have no troops after december of next year. that, again, was what has been agreed. the iraqis understand that if that happens, it could be catastrophic. >> meanwhile, the secretary of defense is talking about huge savings, talking about closing

the u.s. joint command in norfolk. admirals' and in general are going to be going. -- and genreals are going to be going. >> the defense budget has doubled in the past few years. 6700 jobs in the norfolk area. the tire virginia congressional delegation, understandably and legitimately, objecting to it. just one point on iraq and korea, iraq is not korea. the united states defended korea against an invading army and drove in out and negotiated the peace united states troops are not subjected to sniping and ied's anywhere in korea. >> on the defense cuts, good defense is a good offense, and that is what robert gates is doing. he is trying to get ahead of congress said that the cuts were he wants to and gets things were he wants them rather than having

politicians do it for him. >> there must be those that the pentagon who are nervous when they hear this. >> that is all right. they have got their stars. that is it. i found the governor of virginia, bob mcdonnell, a very interesting on this. he was on tv on sunday talking about government spending, if we could do something about government spending then maybe we could get the country on the right track. as soon as they talk about reducing government spending in virginia with the joint force command, and he is willing about the need to keep the defense posture -- wailing about the need to keep the defense posture up. politicians want to have it both ways. >> one. on iraq and korea, yes, they are not the same. americans lost 4000 troops in iraq, 10 times as many as in korea. in iraq, we installed a government that is a friend of the united states as opposed to

an enemy in korea, exactly the status quo as it had been on day one of the board. -- the war. >> to hell with politics. to what is right for alaska. >> former republican senator ted stevens died in a plane crash this week. a corruption conviction was later overturned. democratic congressman dan rostenkowski spent 30 years on the hill. died of lung cancer this week at age 82. now charlie rangel is fighting to save his career from charges of corruption. what happens to these guys when they stay around so long? >> no question that an attitude of entitlement sets in. to her credit, and nancy pelosi has repealed many of those perks as speaker.

but on danny rostenkowski, just one word -- i have already spoken positively and emotionally about charlie rangel and i will not do that again -- danny rostenkowski was a throwback, he was a guy's guy, he liked stake and to tell a good story. he worked across the aisle. there was no ideology to him. you want to know how politics has changed? danny rostenkowski used to go back to chicago by car. you know who went with him? bob michel, the republican leader, and henry hyde, a conservative leader, and they were friends. >> gaddy like a good -- danny like a good steak but did he bring home the bacon? >> bob michel went with him and

i am sure they had a good time and the stores, but that is why the republicans were in the mminority for 40 years until newt gingrich and the contract with america. when you or a democrat, aids is lovely working across the aisle if you all -- or a it -- it is lovely working across the aisle if you are in charge of the aisle. >> the chairmanship of the ways and means committee is the kiss of death. danny rostenkowski, charlie rangel. who wants that drop? -- that job? >> sandy levin wants input -- >> if you look at the eulogies for ted stevens and rostenkowski, you understand why charlie rangel is fighting as hard as he is. stevens' conviction was overturned, rostenkowski was part in the, but one of the first things that was said about

both men is that they had these corruption convictions. that is what the reasons charlie rangel will not lay down, because he does not want that asterisk. >> dan rostenkowski told mark shields and robert novak in 1998 that what will say in his obituary was that he went to prison. >> he was aware of it, in spite of the part in that bill clinton gave him -- pardon bill clinton gave him. >> last word. see you next week. for a transcript of this broadcast, log on to insidewashington.tv. vo:geico, committed to providing service to

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