Transcript from The Situation Room with Wolf Blitzer
Aired February 26, 2010
BLITZER: Secretary of State Hillary Clinton is raising some eyebrows with something she has said here in Washington. Let's bring in our senior political analyst David Gergen.
David, thanks very much for coming in. She was very critical of the economic situation, and in testimony yesterday she made it clear she's upset with the former Federal Reserve chairman Alan Greenspan for the economic policies that he saw through, saying in effect this undermined U.S. national security around the world, because it weakened the U.S. economy. Listen to what she said.
HILLARY CLINTON, SECRETARY OF STATE: I do not like to be in a position where the United States is a debtor nation, to the extent we are with the projections going far into the future, the kind of disadvantages that implies for our ability to protect our security, to manage difficult problems, and to show the leadership that we deserve.
BLITZER: She named names, David. She wasn't shy. She said -- she went on to say, "I remember as vividly as if it were yesterday when we had a hearing in which Alan Greenspan came and justified increasing spending and cutting taxes, saying we didn't really need to pay down the debt. Outrageous, in my view." She was recalling her days as a U.S. senator. Those are pretty strong words from her.
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: They were indeed. She's recalling -- as best we can tell there were twice when Alan Greenspan testified in front of her, when she was on the Senate budget committee a new member of that committee back ten years ago, January 2001, just after George W. Bush had been inaugurated. At that time her husband, Bill Clinton, along with the Republican Congress had left behind the country with substantial surpluses. It's hard to remember that then, but Alan Greenspan came up and testified and said basically we have surpluses as far as the eye can see, and think of this, he said in 2011, that's the year we're in now, fiscal year, we're going to have a surplus of $800 billion. So the real question at that time oddly was, well, what to do with all the surpluses? He testified and he endorsed the idea of tax cuts. It was seen -- the Democrats took umbrage because here was the Federal Reserve chairman endorsing tax cuts just after George W. Bush was proposing a trillion almost $2 trillion worth of tax cuts over 10 years. She was fundamentally right about one point. He did endorse tax cuts, and those tax cuts have been a part of the deficit problem, and indeed we have become a large debtor nations. We've gone from being the biggest creditor nation in the word.
BLITZER: And she says that undermines the U.S. national security with enormous debt, whether it's to Japan, China, Saudi Arabia or whatever.
GERGEN: I think the foreign policy community increasingly agrees with that view. Larry summers raised this question, how long can the world's biggest borrower remain the world 'biggest power? That's a very and profound question.
But I do want to say this. I shy she got one thing wrong. She accused Alan Greenspan of saying, we can raise spending and cut taxes. That's not what he said, that we can cut taxes, he is a spending hawk, has been all his life, did not want to raise spending. The deficits we now have are a product, yes, in part of the tax cuts, but they're also part of a whole lot more spending since then, so it's a combination. I don't think you can -- I don't think it's fair to hold Alan Greenspan accountable for the fact that we're the world's largest debtor.
BLITZER: We've been spending a lot of time this week on broken government. Is this an example of broken government?
GERGEN: I'm glad you raised that. This goes an opportunity to say there are also things in government that do work. This is an opportunity to say there are also things in government that do work and one of them is the Federal Reserve board. Sometimes it makes mistakes. You can argue about Alan Greenspan on this but if you look over a long period of time, the Federal Reserve board has been an enormous asset for this country, the most respected central bank in the world. There are other parts of government that work that we should bare in mind. The U.S. army, the military is a part of government. It words extraordinarily well, the best fighting force in the world and best in our history. If you look back at other programs civil rights, Medicare, Medicaid, fundamentally those have been successes. So I think as we talk about what's broken, it's important to remember there are institutions of our government that do work well.
BLITZER: Good point. David Gergen, thanks very much.
GERGEN: Thank you.