This is a rush transcript from "On the Record," October 12, 2009. This copy may not be in its final form and may be updated.

MARTHA MACCALLUM, FOX NEWS GUEST HOST: Thanks, but no thanks. That's how the White House responded to a letter from GOP lawmakers who claim the stimulus was, quote, "unsuccessful," and they asked for some new ideas, like tax cuts for businesses. In a response letter to House majority leader John Boehner, White House economic adviser Larry Summers says that the $787 billion stimulus package is working just fine, and thanks to it, quote, "We have walked a substantial distance back from the economic abyss." So have we?

Joining me now is Steve Moore, senior economic writer for The Wall Street Journal editorial page. Steve, welcome. Good to see you here tonight. So Larry...

STEPHEN MOORE, WALL STREET JOURNAL, "THE END OF PROSPERITY" CO- AUTHOR: Hi, Martha.

MACCALLUM: ... Summers is basically saying that nothing else is needed, right, that this package is in the works, we don't need to talk about tax cuts. You know, we're on the way back and we're doing a good job.

MOORE: Yes, the stimulus is working, and that's the White House story and they're sticking with it, Martha. It's getting a harder -- to be a harder story to believe with each passing week as we don't see the jobs that were promised. Remember, the White House told us the unemployment rate would be less than 8 percent if we passed the stimulus bill. As you know, we're near 10 percent.

And what's sort of frightening, Martha, is a lot of economists, liberal and conservative, think that it's not going to get below 9.5 percent for at least another year, and those are catastrophically bad numbers. So I think it's a little hard for the administration to continue to cheerlead for a program that, in my opinion, isn't working. It's not creating jobs. In fact, Martha, we've lost about 2.8 million jobs since those shovel-ready projects started four or five months ago.

MACCALLUM: But wouldn't they say, Steve, that, you know, you can't prove that there would have been more job creation if they had gone the GOP route and they had cut taxes and given small businesses breaks? You know, there's a lot of evidence for the fact that those companies still might not feel loosened up enough to start hiring workers. They might still be in the cost-cutting mode.

MOORE: Yes, it's true, Martha. We never know if things could -- you know, it could -- things could be worse if we hadn't passed the stimulus, but it's hard to believe that this has been a big job creator when we continue to lose jobs at a record pace. In fact, you know, we lost more jobs in September, as you know, than we did in July and August, so we're not even losing less jobs than we were previously.

The other thing that was interesting about the Larry Summers letter was he kept talking about how, you know, we've got to get back to the policies of the 1990s. Now, look, I'm a big fan of what we did in the 1990s. We balanced the budget. We did Welfare reform.

MACCALLUM: Right.

MOORE: We got spending under control. We cut the capital gains tax. And in fact, the problem with Larry Summers's argument is we're doing all the opposite things right now, Martha. We're running the deficit through the roof. We're putting more people on Welfare, we're not reforming Welfare. And the president wants to increase the capital gains tax. So the policies that worked in the '90s we're moving away from right now, in my opinion.

MACCALLUM: Yes, I mean, it was during that period that we had the Welfare-to-work programs, that there was a limit on the time for those kind of programs, and the idea was that it gave people incentive to try to take jobs that were out there and to, you know, improve the situation. Why doesn't Larry Summers, you know, remember that?

MOORE: Well, he was there in the Clinton years. He was, obviously, Bill Clinton's Treasury secretary. We had a good combination back then, Bill Clinton in the White House and Republicans running Congress. They kept control of each other. The budget did not go up. We actually had a budget surplus at the end of those years.

The problem is, now we've got, you know -- basically, Barack Obama inherited a trillion-dollar deficit and he's basically increased it to $1.6 trillion. And the problem I have with this fiscal policy, Martha, is there's no exit strategy. If you look at the projections, we're supposed to be running trillion-dollar deficits for at least the next 10 years. Those are pretty frightening levels of debt, especially, as you know because you've covered this, the dollar has been collapsing...

MACCALLUM: Right.

MOORE: ... in the last three or four weeks. That's a frightening proposition, too.

MACCALLUM: Yes, that is a big concern, too. Steve, thank you very much. We'll see you soon -- Steve Moore from The Wall Street Journal...

MOORE: See you soon. Take care.

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