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tv   Charlie Rose  PBS  October 7, 2013 11:30pm-12:30am EDT

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test. >> rose: it is day 7 of the government shutdown and we talk to austin gulsby, peter orogue an martin feldstein about where we are and where we might be going. >> my wife, your carolina connection, will you appreciate, my wife refuse, she has use asked me why dow watch th basketball game. it's always going to come down to the last 30 seconds and it will take them an hour to shoot the free throws to figure out who the winner is. i say that's happening here. we're going to come to the last minute. i actually think that the most likely thing to happen is they just punt it for six weeks and they say well, you know, maybe we'll start negotiating. we're not going to do anything. so we'll just put it off so we can all look forward to just doing this again in a month or two months. >> rose: we con yud with
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yair lapid, the finance minister of israel. we talk about foreign policy and domestic policy. >> we will within all the wheeling and dealing of creating the coalition, there are hundreds of rumors flying by am people saying that does he want this does he want that, does he want that. and that was conflicting, i have to admit. and then there was a moment in which i was negotiating with myself instead of someone else am i said okay, why did you go into politics. i mean i think, i don't know that, i think i could be an okay foreign minister. but i went into politics talking about the-- and saying i'm there to improve the life of the israeli middle class. you don't do this as a foreign minister it dow this as finance minister. >> deadlock in washington and the finance minister of israel when we continue it
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>> from our studios in new york city this is charlie rose captioning sponsored by rose communications
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from our studios in new york city, this is charlie rose. the president's refusal to negotiate is hurting our economy and putting our country at risk. this morning a senior white house official said that the president would rather default than to sit down and negotiate. really? >> rose: it is day 7 of the u.s. government shutdown. tensions are rising between democrats and republicans as both sides accuse the other of intransigence. president obama speaking today during a visit to fema headquarters called on john bayne tore end the shutdown. >> right now congress should do what is in the best interests of the economy, and the american people. and that's move beyond this manufactured crisis and work together to focus on growth, jobs, and providing the vital services that americans all across the country depend on. >> rose: markets today reacted it to the contingent shutdown with unease worried that the stalemate could
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prevent extension of the debt limit with dangerous consequences. to take a closer look at the economic fallout austan goolsbee joins us from chicago, a professor of economics from the booth school of business, previously chairman of president o billiona council of the economic advisors and peter orszag. martin feldstein is also here, he is a professor of economics at harvard and formerly president reagan's chief economic advisor. i am pleased to have all of them here. so here we are. we have a president who says i'm to the going to negotiate, even with respect to the debt ceiling, especially with respect to the debt ceiling. we have a speaker of the house saying i'm to the going to bring to the floor a continuing resolution that doesn't involve my own strong feelingses about health care and entitlement reform. so one won't bring anything to the floor. one won't negotiate. how do we get this thing settled? >> you want pie guess of how
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it ends. >> rose: yes, sir. >> i think they will agree to negotiate. that otherwise nothing is going to happen. and i think they will agree to negotiate perhaps about smaller things than mr. boehner and some of his colagues want. but they will agree to negotiate something about the spending side of the budget. >> rose: you mean perhaps entitlement reform, those types of things. >> that would be wonderful. but it maybe the kind of thing that the president had suggested earlier, about changing the indexing of social security. it would be an entitlement reform. >> rose: so people are going to compromise where they are now and find some levels of agreement for temporary -- >> well, it that will be more than temporary. that would be a permanent slowing of the growth of the social security spending. >> rose: what do you think of that? >> not going happen. >> rose: why not? >> first of all t would be desirable if it would but it's not going to. because i think at this point the white house has made it clear that they view thises a repeated game or
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repeated thing that, you know, every year or so we're going to have these kinds of issues. and that if they said they weren't going to negotiate and start negotiating what happens next year or the year thereafter or the year thereafter. so i think the way out of this is likely to be a relatively clean spending bill and clean debt limit, perhaps coupled with a figure leaf of a process. so you know, a tax reform process. or an entitlement reform process but no actual legislation that does anything today. >> rose: okay, but you assume that therefore the speaker of the house will bring to the floor something that will put together enough republican votes and democratic votes to pass it, even though will not get, say, the 20 to 30 people who have been holding up everything in his caucus. >> i think despite what he said, speaker boehner said over the weekend, he could bring a clean debt limit bill to the floor today and it would pass. >> rose: austan what do you think. how is this thing going to, without its i way through? >> well, you know, my wife, your carolina connection,
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will you appreciate, my wife refuses, she always asked me why do you watch the basketball game. it's always going to come down to the last 30 seconds anyway and it will take them an hour to shoot the free throws to figure out who the winner is. i think that is happening here. we're going to come to the last minute. i actually think that the most likely thing to happen is they just punt it for six weeks and they say well, you know, maybe we'll start negotiating. we're to the going to do anything and so we'll just put it off and so we can all look forward to just doing this again in a month or two months. i think the root of the problem is both side its came with a little uncertainty, ultimately who does america really side with. and from the first poll it has looked from the very first poll it's looked like republicans were on the short end of this stick. but i don't quite think that that has moved very much. and it's still the case that a lot of ode people who aren't following it that closely don't understand what the debt limb result is
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and they say well, i can't raise my credit card limitment so maybe you should make the fight about the debt limit. and until somebody really starts losing in public opinion, in really starts moving against them from where it was at the start of this, i think they're just going to sit there and wait. >> rose: and how long can they wait without doing damage to the economy? >> well, there is damage and then there's damage. i think it's doing some damage. but the damage that it's doing is relatively moderate. if they literal ledefaulted on the bonds, it would be catastrophic collapse. if they tried to do some pry priorization of payments as the republicans call it where they would promise to pay the bondholders but then start issuing, i don't know, ious or delays on social security or somethinging i think that wob pretty devastating to the economy. i think you'd see a collapse of consumer confidence as well as some pretty significant immediate negative impacts. >> the things that's changed
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is the country has grown more polarized. the last time we had a shutdown there were almost 80 republican was came from districts that bill clinton carried. today there are under 20 that come from districts that barack obama carried. fundamentally different. so to austan's point about who gets punished, if you are from a deeply conservative red district. >> rose: redistricting. >> and it's actually, the political science literature suggests that redistricting is a little part of it. there are underlying forces ongerry manned aring. the point is if you come from that kind of district and holding frl to your principleses you are not getting punished and the same from the other side. you have this this pulling apart. the middle is getting a lonely place to bement and it makes these kinds of things much more dangerous. >> i think there's an awful lot of foolish talk about defaulting on the debt. and the fact that we hit the debt ceiling and that's going to mean not paying the interest on the debt, not paying social security, that's very dangerous stuff to say. and it's not going to happen.
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if we hit the debt ceiling-- . >> rose: so people who say look, if we have to default we have to default, are just simply not recognizing reality of what it would mean. >> exactly. if we get to the debt ceiling, and the government doesn't have the right to borrow more, we still collect taxes. the government still collects taxes. enough taxes to pay the interest on the debt, to pay the social security benefits and to pay other things. can't pay for everything but it can certainly avoid defaulting on the debt. it can certainly avoid not paying social security checks. and so that's going to happen. and i think -- >> i don't know. you have to be a little careful with that. because the money comes in but it's 30 to 40%, the burn rate is 30 to 40% above what the money would go out on. treasury has always held to the position that they are not allowed or they are not able to prioritize who would get paid. nobody has obvious seniority. if they decided hey, we're
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going to pay social security, we're going to pay interest on the debt, then they can't pay the military. or some major, major economic and social impact thing is to the going to be paid. that's just the reality. >> i think there's no question that we will pay the interest on the debt. that they have the technical ability to say those accounts are going to be paid. that's a contractual obligation, to delay paying others, that's something that wouldn't be a good thing for the economy. >> the treasury secretary says not possible. >> to the on that but, you know, there is a limited ability to do that. if we're starting to issue script to you know military providers and to medicare, to hospitals and what have you, it can-- at most that can go on for a short period of time. by the way, if you are a bond hold are and that is happening you can be nervous anyway it is not like that is a perfect solution. >> if you were the head of management budget, and so you had some responsibility for this, and you must have
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thought about whether in fact mechanically you could pay the interest on the debt and whether mechanically you could pay social security. >> it's much-- because the systems are different, if one were to go down this path, and i'm not saying that this is a desirable path to go down. but the system that pays debt services different from the system that kind of pays everything else. social security is a lot harder to take out relative to medicare payments and other payments. so pulling out social security beneficiaries is harder than just debt service payments. >> so you're saying you could pay the -- >> you know -- >> you wouldn't like it, it wouldn't be good. >> i. >> rose: go ahead. >> that seems plausible. >> some major, major group, either the military or payments to nursing homes or to the sick, i mean somebody has to not be paid or to be given ious or delayed payments. i mean it's going to be massively, massively disruptive. even if they figured out a way to pay the debt holders and social security, there would be hundreds of
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billions of dollars of people not being paid. >> right, and best-case scenario even if that were feasible that enough to throw the economy back in recession at that point. so that the best-case scenario and it could be much worse than that. >> rose: and what is the impact of the credibility of the american financial system and the devastating effect, would be called default, at least by some, would have in the eyes of the world and markets? >> if we actually didn't pay the interest on the debt, that would have a disastrous effect on our credibility and our ability and on the interest rates that we pay going forward. and that's a further reason why i'm sure that if we actually ran into the limits, the treasury would find a way to make sure that all those interest payments get paid. and then the contractors, the hospitals, the universities and others would understand that for a matter of weeks, they won't get benefits. they won't get the cash on time. >> you know, you teach at
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harvard and you served in government. and you know-- are you amazed we're having this conversation about the possibility of default? >> amazed? well, of default, yes. because i think it's a nonissue. i think it wouldn't happen. i'm also amazed that we're having this conversation about running into the debt ceiling and not being able to deal with it. but i think default as such is a scare tactic. >> are you amazed that 20 to 30 members of one party can seem to be holding a process hostage and what do you think that says, a for the political process? >> i think it's as unusual. we haven't seen anything like this before. i think you know, i served as you said in the reagan administration. president reagan was a negotiator. >> rose: and negotiated debt ceilings, and said to hold them in hostage was -- >> but he negotiated. >> we. >> so that's the point. i mean he negotiated with tip o'neill.
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>> rose: austan why shouldn't the president negotiate. and do you believe in the end he will? >> i kind of don't on the debt ceiling i done think he's going to negotiate. and i think what the complication that happened here over the previous three months were most republicans were saying things that were along the lines of what marty said there, of let's make this about the size of government spending or let's try to turn it to be about entitlements. and then there was a deliberate effort to steer the truck on to the side road which is let's make this all a fight about forcing the president to give up obamacare or to delay obama care for a year. will not do that. that will not work. and they perceive quite correctly that if you had a one-year delay in obamacare than in 1 year we'll be in the same fight and they'll say let's delay obamacare for another year. so they view this as let's have the fight now. 's going to just keep having this fight over and over, let's have it about
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this. and i think now we're going to have a hard time trying to put if back on to, well, let's make it about the size of the budget or about enfight elments. >> rose: i-- you have heard people argue even this past weekend, you know, about that the deficit is not the real issue. that growth is the issue. where do you come down on that? austan? before you go, i know you have to go. >> yeah, okay, i'm going to cut out. look, i think for sure growth is the issue. i mean you may have seen the poll just came out today from bloomberg where they asked people, do you think the deficit is getting bigger or smaller. in fact, the deficit is shrink at the fastest rate ever, even as fast or faster than at the end of world war ii. but you've got almost two-thirds of people who think the deficit is going up. so i think in the short run, what we should be mainly focused on is how do we get the growth engine back going and you know, we can have a debate about that. there are a lot of different views but for sure in the short to medium run that is
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the overwhelmingly most important thing, not the how do we get the deficit to shrink faster. >> rose: what do you think about that argument, that austan just made, the deficit is shrinking. >> the deficit is shrinking temporarily. the debt is as a share of gdp is down. but the absolute size of the debt as opposed to the deficit, the total amount that the government owes is not shrinking. it's growing. but the key thing-- . >> rose: what percentage of gdp is about now. >> about 73%. >> rose: what do you think about all of this. >> i think austan is right that the deficit is coming down, for three reasons. one is the economy is recovering. the second is there was a bunch of temporary things that were done, the stimulus bill, for example. that on purpose were designed to fade as the economy started to recover. and then finally and most importantly, health-care costs have decelerated dramatically. the congressional budget office has taken medicare and medicaid costs for the next decade and marked them down by $1.2 trillion because health-care costs are growing so slowly and
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they expect that to continue. that is by far the most important thing that we could invest in in order to maintain a sustainable or to get back on to a sustainable long-term fiscal path. >> the problem with growth as a solution to this impasse, to this impasse is you can't just do it. you can't see it. it takes time. so we could think of a number of policies that would help. but the only thing that you could imagine coming out of a congressional presidential negotiation is about the deficit, about entitlement spending, ask about stuff like that which are concrete, measurable in the short run. >> by the way, in the meanwhile i think there is plenty that we could be doing to try to, if you are worried about the deficit as opposed to growth, and we need to be worried about both. but if you were worried about the deficit even in the absence of legislation, i again returning to the health sector where the most important piece of our long-term fiscal imbalance
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arises. >> rose: right. >> you could be doing a lot more to encourage the shift away from fee-for-service payment and towards alternative payments even without new legislation. and we should be doing that. because give then polarization in the congress, it's not likely in my mind that we're going to have any major pieces of legislation. >> rose: why is it so hard to have, in a sense, is it simply negotiations the reason that people have not been more frank about what they would consider in terms of reforming entitlements, in terms of revenue enhancement and all of that, you know, in terms of what you would trade, in terms of taxes for elimination of deductions and that kind of thing? >> i think the basic problem here is frankly democracies don't deal well with gradual long-term problems. they deal with crises. and we don't have a crisis right now so it's very today say i'm in favor of tax reform but oh, i -- mean all these little details. or i'm in favor of long-term deficit reduction but no, i
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don't want to reduce benefits or raise taxes. so it's apple pie to say i'm in favor of tax reform and i'm in favor of fiscal balance. but then any of the details which are painful, because change is hard, there's a natural tendency to just delay because you are not forced to deal with it right now. >> you know there is good evidence for it and good evidence on the other side. in the reagan years. social security was about to run out of money. and they agreed that with a delay they would start raising the retirement age and that got on the books. and it did the job. it substantially reduced the cost of social security over a 30 year period. and you needed a crisis to move that. but the other thing that reagan and o'neill, the leader of the democrats in the congress agreed to was the tax reform that broadened the tax base, took the top rate down to 28%. >> rose: do all people who
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have served in democratic administrations including you, regardless of whether you are the weather, left or right, agree that lowering the corporate tax rate would be a positive thing for the economy? >> generally yes, as long as it's coupled with the base broadening, eliminating the dedxs f is it is just a deduction in the rate. >> i think that deal of a broader base and lower rate is probably one of the very few things that pretty much every economist would -- >> is that right. >> i think so, right. >> oh, i have create add agreement here between people from very different places. >> if it were just up to marty-- we could get it done quickly. the problem is that is not the problem. >> rose: thank you, great to see you. >> good seeing you. >> thank you for coming. back in a moment. stay with us. (applause)
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>> rose: yair lapid is here, israel's minister of finance, his political party stunned the country in january when it became the second largest in the parliament. his campaign tapped into domestic israeli concerns including economic fairness for the middle class. many saw his victory as an electoral rebuke to the right wing politics of prime minister benjamin netanyahu. he was for many years a come up nist and popular television host before any politics. mi pleased to have him here at this table for the first time. welcome. >> thank you, thank you for having me. >> rose: so do you see journalists different today than when you were among us? >> yes, of course. first of all it took me about three des before i started talking about how superficial journalists are and how they take things out of context and-- . >> rose: yes. and how cynical they were. >> how cynical they were. well,, i any it's
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interesting for me because i think i moved out of journalism in the exact time that journalism is transforming for something else. i mean this is-- this is-- we are in the midst of the revolution of this facebook twitter social metrics era. and journalism is fighting for what might be a lost cause. your kind of journalism. >> rose: my kind of journalism. >> yes, which is the journalism of the able to finish a sentence. to go in depth into subjects. this is-- . >> rose: very depressing for to you say this. >> you know, i'm a bit depressed about this i mean i'm looking now at the journalistic arena from the outside. and i am quite unhappy with what i see because the kind of journalism i like and the kind of journalism i want to think i was, is disappearing. so for me it created a frustration.
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i mean after a while, after 30 years of journalism. i kept telling myself you are sitting there and you're writing and talk approximating about the fact that things are not going the right way. and you are unhappy and just being unhappy doesn't seem to be a way of living. and then i went and did something about it. for better or worse. i at least tried, or am still trying and will try forever. d this is very satisfying. with all the agonies and pains and it is satisfying. sometimes i don't know why. i mean i am making now, i don't know, a quarter-- i work twice as hard. and but at least everybody hates me. >> there is also this. do you find that you admire politicians more because you understand them more? >> well, i-- i-- interestingly
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enough, i found within the good politician, you know, the bad politicians are like bad journalists and bad-- i don't know, construction workers, within the good politicians i found less cynicism than i expected. less cynicism than there is in journalism, i'm afraid. and some sort of constant willingness to ago according to, yes, principleses. and this was surprising for me. i thought i'm going to be-- hi this vision, the one saying i am not going to become a cynic. i'm going to say, i mean what i say. and then it turned out there are a few people around me who kept a sense of killing knit within the line of work which is not known for dignity. >> rose: there is also this, as you well know.
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you know, you find yourself to the being able to, because it's about elections, and it's about winning. you find yourself having to couch what you can say. >> yes. >> rose: you find yourself to compromise. and you find yourself in a sense having to deal in order to achieve. >> yes. but this is-- this comes as the package, i guess. i don't find all those things necessarily bad. >> rose: nor do i. >> because i think, i mean the problem we have now in politics is people, well, look at the situation in the united states right now. >> rose: yes, it's not a pretty sight. >> the problem is people are not compromising. people are not talking to each other am people are not making the right deals. and people are not being able n ways, i don't want to be too-- i don't want to criticize the united states. but people tend to think about, you know, i don't know, party interests put them in front of the country
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or the need of the people they're supposed to serve. so i don't want-- would you rather now see american politicians compromising. >> absolutely. >> so -- >> but also i always viewed politics as the art of compromise in part because -- >> yeah, and deal making, yes. >> it's part of it. >> and that's also a quality of leadership. >> yeah, well,s there's always the temptation. and it will always be on the short term more popular to be a purist. to y you know, and but then you don't get things done. i want to get things done. i went into politics because i felt israel middle class do not have a voice. they didn't have a voice. we were considered by this blanket of the endless discourse about the israel israeli-- palestinian conflict or israeli arab conflict. and nobody talked about, you know, housing and all those
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semi boring stuff, you know, housing and standard of living and how expense difficult is to live in is rel and all those, all those issues that you don't want to talk about this on american television because this you have, your own. but i'm telling you, a whole generation felt mute, an needed a voice. so this is why i came into politics. and this is the things i wanted to express. >> rose: actually there are yearnings of that in american politics in some sense, there is talk that the middle has lost its power. and it's the extremes in a sense are dictating the politics of our time. >> there's a world phenomenon in which if you look at the last 20 years, when there is growth it moves to countries but this growth doesn't get to the people who are making it, which is the middle class. i mean i mean here they call it the 99% which is a good name, in israel they have a different name for it. but basically what people were saying, okay, if-- i
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give you israel as an example. in israel in the last decades, 2002 to 2012, the growth was about 24 something percent. but salaries went up only 2%. so the people who are making this world, the trickle down economy that everybody liked so much during the '70s, all this chicago school going to meeting reagan-- . >> rose: milton freedman,. >> this didn't work for the people who were making-- so i would rather have a trickle down economy where the health-- wealth is going to the middle class and trick elling down from there, to the week. >> i will come back an talk. >> when you ran how much of your election do you believe is because you spoke to concerned in the middle class and issues beyond simply national security. and the fact that you were a celebrity and a popular filling-- figure in israeli society. >> well, of course, i don't
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know. i mean, i mean i would like to think people are revolting only on issues. we both know this is not completely true. i would, i don't know if i'm referring to myself as a celebrity. i was known but i was known mostly as a writer. so i was phone-- . >> rose: a columnist. >> a columnist. i was known for expressing views. and i think the majority of people who voted for me, for us, for the party were people who had some sort of relationship with the views. so this is not only the celebrity game. >> rose: what? >> i'm just reminded of the fact that you said what you find out when you go into government is that opinions are not facts. >> yes, yes. what i said, yeah, i said that i had so many more opinions when i didn't know the facts. so yeah. and but you know, the kind of values i've been talking
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about for 30 years,. >> rose: you think that say core principles. >> i think this is what is appealing during the elections. people kept asking, you don't have any experience. >> exactly. >> and i said yes, but look at what-- of the-- on the way that the experienced people have handled our lives. so maybe experience is not as important as leadership. >> you said more than that. you said look, my biography may not be the biography of someone who served as a general in the army or had a brilliant ago dig record. but your biography spoke to you and should be measured, you know, without any particular reference t to-- perceived notionss of experience. >> yeah, i think what happened, you know, the goal is to talk about its fact that, you know, leaders should be mysterious. this is long gone. leaders are not mysterious any more. so since you are out there
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constantly. you are totally exposed. so you better have a very, very strong set of values to offer, that people can look upon and see what they think about. so this is what we brought into the table. instead of this glory glory hallelujah, of you know, i don't, of course i have total respect for somebody with-- military power. but this is not the only path that counts. not any more. >> rose: shimon peres didn't have that kind of experience and he was the first person you went to see after you were elected. >> yes, yes. i-- he is a sort of a mentor in ways. he encouraged me for years now to go into politics. telling me put your money your mouth is. and so i went to him after the election. and i said okay, give me one piece of advice. and he gave me actually two. he said first you always
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choose who you want to be insulted by. he says if somebody insults you this doesn't mean you have to be insultedment make sure he's important enough for you to be insulted. and this was very good advice. >> rose: or as franklin roosevelt said, i loved every one of my enemies because the enemies hi made pleased me because i knew i was doing something against their interests. >> fantastic. and the other thing he said to me, he said listen, small changes and great changes takes the same effort. go for the big ones. just go and do something. >> rose: one question about israeli politics today, i mean and we've seen the far right parties and religious parties and different parties. and yet we see centrist parties that seem to fall by the wayside. i mean kadima is not as strong as it was perceived to be when it-- without including sharron who was likud as likud could be i
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think the reason katima coulds ladding i'm so impressed by the fact that you know all the nitty-gritty of israeli inner politics. katima was never centrist party it was just a fraction of the likud. it was the same faces, similar faces, just was a new arrangement. musical arrangement, conducted by sharon who was the lover of classical music so it wasn't something new. i came into the arena with, we had 19 parliament members. all of them are new. all of them, all 19. we didn't have one -- >> new to politics. >> new to politics and government. we didn't have a single professional politician. we still don't have a single professional politic politics-- politician in our party because we felt if you want to talk new, make sure this is really new. so we had people with a lot of experience, educational, so on, so forth, mayors, people who did, you know,
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who put boots on the ground in several fields of expertise but no one was, you know, moving from another party or we didn't steal anyone. and it worked for us. and it allows us, there was nothing opportunist about the way this party was created. >> so once you're elected, and you have 19 membs. your part has 19 members of the knesset, you do a coalition. >> yeah. >> and so you therefore because you are a leader of your party, have the power to have a cabinet position. >> uh-huh. >> you end up in finance. >> yeah. >> you wanted foreign affairs. >> well, this is a myth. >> okay, fine, that's why you are here, we want to -- >> well, there was, we were-- we were, of course, you know this, we were within all the wheeling and dealing of creating the coalition, the hundreds of
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rumors flying by. people are saying does he want this. does he want that, does he want that. and that was conflicting, i have to admit. and then there was a moment in which, and i was negotiating with myself, instead of someone else. i said okay y did you go into politics. i mean i think i don't know that. i think i could be an okay foreign minister. but i went into politics talking about an israeli middle class and saying i'm there to improve the life of the israeli middle class. you don't do this as a foreign minister. dow this as finance minister. the israeli political system as you know is built this way. that when are you minister of finance you are not just a branch of the prime minister, you can do things on your own, and be very proactive. so, so i said to myself, you know what, even politically, when somebody is only noble,
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never believes you so, what was my self-interest in it. my self-interest-- . >> rose: dow not have self-interest. >> yeah, i do have a self-interest. my self-interest was, or the thing i told myself was, i said to myself, they will never forgive me. if they will-- they are going to feel that i cheated them and got a post, which is-- it's fantastic to be, you know, foreign minister. great cocktails. you travel around. >> rose: so much so that the prime minister is also the foreign minister. he kept both jobs he liked it so much. >> he had such a terrible job on one hand that-- that it is okay for him to have a better one on the other. it is a difficult, difficult job. job to be the israeli prime minister. so if he is the foreign minister i give him credit for it anyways, so the majority of conflicting with myself and i am-- i am really happy. it was an unpleasant time going into the ministry of finance because we had to do
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all the things that are never popular, raising taxes. >> rose: and austerity. >> well, it wasn't real austerity. i mean especially-- not anything close to what happened in europe or even here. >> rose: ed other thing they say is you don't know anything about finance. >> yeah, this is-- . >> rose: and the first pen to have said that was you in an interview on your own show when you said i know nothing about economics. >> true. and but i know something about leadership. and i know something about what kind of values you bring to the table. i don't need to be an economist. i have hundreds of economists working for me. what i need is to show them the route we're taking. you know, this is exactly the difference between macro management and micromanagement. and microyou bring them all to the table and say listen, no more trickle down economy. no more giving the money to the wealthy and hoping this will work.
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the middle class is our only, almost only goal because then we believe that we will get some of it. and you tell them, well, listen, what we need to do is right now, this answers your first question, what you need to do is right now do all the hard things. while the crisis in europe and the united states is still processed. and then in a year from now we're going to have -- >> there is a history. >> we'll be better off. >> rose: there is historical reference in this country to the very idea, when ronald reagan came in inflation was up at way, way high. and he and paul volcker then federal reserve chairman just squeezed the economy to squeeze the inflation out. and it was terribly unpopular. >> rose: true. >> but three or four years later once they a cheered it and he was up for re-election, you know, things were much better. and also reagan is interesting, hey, he came out of entertainment. >> true. >> rose: and he understood how to make sure that there were three or four big ideas
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he was in favor of, and one was against the soviet union and two was balancing the budget, he achieved one and didn't achieve the other. but that he understood and he convinced people what he stood for. and therefore there was a sense of what he wanted to do, in the big ideas he had. >> and it's about, decisions, decision-making. do you know how to make decisions? >> and, and i think if you go today, i'm seven months into office. the corridors of the ministry of finance and you ask around, the people will till, you know what, he knows how to make decision. he knows what his goal is. and he knows how to make decisions, which is the important thing. still, there is, of course, you know, a learning curve that you have to follow. and i understand when people say why is that that we are paying for his tuition. but if you look -- >> is that what they say. >> yeah, yeah, yeah. but if you look at the
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numbers. >> take the salary of finance just so he with get an education in finance. >> yeah, but you know what, it turned out if you look at the numbers now, it's still-- i don't know if people feel it on a day-to-day basis but if you look at the numbers now, maybe some of the decisions were the right decision. unemployment is down to 6.1%. and growth in the last quarter was 5.1%. these are numbers i think the united states will buy into in a second. i mean the kind of-- foreign investment in the country, are the highest in a decade. so we're-- this, these were the right values to invest in. >> rose: one other question about you and your style. you use facebook. >> yeah. >> rose: as much as any leader, political leader i know. >> yes. >> rose: . >> i enjoy it, maybe too much, by the way. my-- my pr people are dying daily about this. because the-- i got into
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some mud fights in the face which not something you do at 2:00 in the morning. so i -- >> in front of a computer screen, a lone. dow not want to be -- >> i'm a bit of a -- insomniac so at 2:00 no one in the minister of finance is willing to talk to me any more even though i'm in the boss so then i go and get into some mud fights. so i stopped that. almost stopped that. but i really enjoyed it. i think it's an important tool. i think being accessible, listening in, i mean i done get to travel around as i used to. so this is a tool. and the people say you know this is-- say what is this facebook. this is so, this is-- i mean -- >> okay, but -- >> i mean it's a tool. >> let me remind you what
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you do on facebook. you write letters to god, and you say please forgive me. what did you want forgiveness for. >> for the things i haven't done yet. >> ah. >> i did this on yom kippur which is a time every jew talks to his god in person. this is the beautiful part of yom kippur is this is-- i mean usually prayer is some sort of a group session, you know, you go to the synagogue. you pray. i don't go much but this is the concept. yom kippur, the whole dialogue with your god is very private and intimate this is the beauty of the day. so in this day i or before this day, it is a holy day, i didn't write on my facebook on yom kippur. so i was, you know, i was conflicting a little about the things i have done. and the said dear lord, and every jew does this on yom kippur, dear lord, you know what, i am not going to apologize for the things i have done but i feel i have the need to apologize for the things i haven't done
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yet. which is, you know, and then there was a whole list of things that i want to do or we are doing and it will take time for us to achieve. and well, if i get god to be patient with me, i think the people will be too, yeah. that's the concept of talking to him. >> rose: if you can do that, then you are ahead of most of us. let's talk about your differences with the present government. >> uh-huh. >> rose: of which are you part of but you're not the prime minister, and you are of a different party. the idea that is now often pronounced by the prime minister and de it here, talk about a two state solution, is a jewish state. >> uh-huh. >> rose: do you agree with him as he uses that term? >> well, we have-- of course i agree with him on one part, which is-- . >> rose: it has police call implications as well as -- >> well, i will go to lead in for a second if i may. there is one part of it
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which is yes, i want israel to be a jewish state. i mean of course all minorities should have the right. but basically the reason i think the two state solution is the only, the one and only game on the table is because if we were continued to rule 3 or 4 million palestinians, the identity of israel as a jewish state, as the safe haven for jews around the world, as, i don't know, a symbol of our comeback, to our-- . >> rose: comeback. >> to our national home, will vanish. so we need to separate ourselves from the palestinians. it is not marriage that i'm seeking. it is divorce. we should give the palestinians their own state and we should have a definite border and have a jewish state. so on this i agree with him. i disagree with him publicly and privately because we
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talk a lot, about the fact that i don't need, i don't feel we need declaration from the palestinian s that they recognize israel as a jewish state. my father didn't come to hyfah from the budapest ghetto in order to get recognition from, mr. azin. the whole con september to me of the state of israel is that we recognize ourselve, that after 2,000 years of beg dependent on other people, we are now independent and make our own rules. so this, on this we are conflicting. and i guess i am not willing to spend any political-- . >> rose: so in your judgement the palestinian does to the have to recognize israel as a jewish state in terms of negotiation. >> yeah. >> rose: number two, would you insist on israeli idea
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of forces on the jordan river. >> i'm if the going to go into details because they're negotiating now. there is an agreement that is saying only secretary kerry is the one who is saying anything in public. i would tell you this. security arrangements are the most important thing for the israelis. listen, the problem with this negotiation is that israelies and palestinians want two very different things. the palestinians want peace and justice. the israelis want peace and security. and we will always conflict-- be in conflict there. so without getting into details, people have to understand-- . >> rose: are you saying that you can't have justice for the palestinians and security for the israelies? >> well, i am-- of course we can. but this is the part, the problem with the dialogue. the problem with the kind of-- with this negotiation is that we want different things. and therefore it takes time and therefore did didn't happen, up until now. >> rose: the what is the palestinians interest in
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justice that you are not prepared to give them, if you are prime minister or you were king david. >> well, listen, the the thing is when two people want two different things and they have to negotiate and make sure everybody-- you know, in a negotiation you want to make sure that everybody is either happy or unhappy -- >> but i'm trying to get at you and what you believe. in you can talk all about negotiation and all that which is being evasive of the question which you know how to do very well. >> thank you, thank you, i've been training quite a bit. >> so but, and again secretary kerry has done a very good job because i've been trying to get at this for a while and no one has sort of said why is it that heads of state in the region have said to me they somehow believe that they're on the right track but they can't say what it is because they promised secretary kerry they would to the dsclose what the track is. >> i think one of the best things that happenedthings that happened to this negotiation, and this, these negotiations are extremely important to me.
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it wouldn't happen without my party, okay. is the fact that there are low expectations am i love low expectations, low expectations are the best thing for this. this helps us, progress in a silent way. and you have to understand people are going into this room, and the thing, the first thing they have to seek for is trust. now trust is not prerequisite t is something you gain when you have, you know,-- and small wince. and we didn't get this yet. so we're building the trust. while we are building the trust we have to make sure the outside world will not interfere too much. >> but tell me what you would do about the settlements on the west bank and settlements in eastiors lem. would you essentially dismantle them in the search for peace with palestinians? >> i would-- there is a
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great definition between jerusalem and the settlements on the west bank in general. jerusalem is not to be divided. and people tell me then there will never be peace. yes, there. i will give you an example. for years and years everybody thought that without the right of return the palestinians will never, never do anything. and then abu mazin six months ago, 8 months ago i don't know, sits on an interview on israel channel 2, and says i understand now that i will never go back to my home, israel, which is mainland israel. and so what happened? what happened was that the palestinians realized there is a total consensus about, against the right of return. and if they really want to have a state, they will have to give up on this. it's the same about jerusalem. the question is, do the palestinians want their own state. i think they do. >> rose: but come on this is
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a huge this is not like the rite-- it's much more powerful issue than the right of return. i mean the idea of jerusalem as a center of your-- being. >> yes, yes t is the center of our being. >> rose: your religious. >> how many-- do you know any country that is considering giving up on its own capitol? i don't? i don't think this makes-- . >> rose: are you saying this is why israel cannot agree on this because it's giving up its own capitol. >> yes, and besides people have to remember, jerusalem was never a palestinian capitol. never in its history. >> rose: it was aeligious center. >> it was a religious center. listen, the problem is-- what, go ahead. >> rose: i just don't want to interrupt. therefore -- >> okay, i'm not used to this. i'm used to -- listen, the thing is this is the judo
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christian heritage, that the strong, its mighty is always evil and the weak is always just. this is not the case. this is david and goliath and robin hood and the sheriff of nottingham and i don't know. madonna and lady gaga. >> rose: you got-- i don't know who is the mighty and-- but basically, and david copperfield an mr. -- okay s so this is the mits that if you are the mighty you, must be wrong. we are the-- maybe we are the stronger part of this equation, but we are right about jerusalem. jerusalem is our capitol. and we will not negotiate about this. well, we will negotiate about this but we will never give up on it. >> rose: it remains to be seen, doesn't it. >> everything. >> rose: how much of your victory in the election had to do with your very strong views that everybody had to be in the israeli military, no exceptions. >> i think quite a bit.
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>> rose: because people sensed it was unfair. and they sensed that there was a demographic thing taking place. so that half of the israeli youth would not serve. >> yeah. and this has huge influence also about the israeli economy. not only, not only is it unfair, and when something is fundamentally unfair, you know, it's like termites. that is biting into the spine of the nation. so by you cannot have i don't know a quarter of your citizens-- living off the other three quarters. so we are changing this. this is changing. israeli, i mean this is-- i don't want to bother you with economics but israeli, because of it, is an extremely interesting economy. we have two things. one is think of it, the israeli army is the best-- human
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resource factor in the world. we screen everyone. all the 17, 18-year-old children. not only the ones with, you know, top of the classes, all the steve jobs and jobs an bill gates of, all the misfit, all those geniuses that their parents gave up, we screen them, we bring them to the table. they gain experience. they are dealing with something really important. they come out so every american company now has to spend fortune on the top ten class of mit understands now that there are dozens of people like this by the age of 21, 22 in israeli. so this is, a, and the other part is now we're forcing into the labor force, the orthodox and they are a fascinating group. because it turned out that even if they don't have what we call proper education, when you teach somebody the tall moud starting at the age of 3, if at the age of 20 you started teaching him high-tech and technology and advanced, innovation, he's going to do wonders.
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so all these things come together in the israeli economy. >> rose: if you read the talmud then will you be very good at technology later in life. >> think of it. the tallmud is a web site of jewish letter taj. >> rose: i thank you for coming. i will see you later this evening. we'll have a long conversation there. >> thank you. >> rose: their for coming to the table. >> thank you for having me. i enjoyed that. thank you. >> rose: thank you for joining us am see you next time. captioning sponsored by rose communications captioned by media access group at wgbh
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