Glenn Hubbard, Austan Goolsbee debate how to get America back on the job

Economic experts debate what it takes


This is a rush transcript from "Fox News Sunday," September 9, 2012. This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I'm Chris Wallace.

There are 58 days until the election, and a new jobs report drives the debate on the campaign trail.


WALLACE (voice-over): With more people leaving the workforce than were hired last month, we'll have a debate on what it takes to get America back on the job between Glenn Hubbard, top economic adviser to Mitt Romney, and Austan Goolsbee, former chairman of President Obama's Council of Economic Advisors.

(on camera): Then, a rising political star from the Republican convention.

(voice-over): We'll sit down with Mayor Mia Love, who hopes to come to Washington.

(on camera): And with the conventions, over the campaign starts the sprint to the November finish line.

We'll ask our Sunday panel how these next two months play out.

All right now on "Fox News Sunday."


WALLACE: And hello again from Fox News in Washington.

With the conventions over and the big debates coming next month, we want to focus on the one issue that will dominate the campaign all the way to November -- getting America back to work.

Joining us now are two former chairman of the White House Council of Economic Advisors -- from New York, Glenn Hubbard, who is now a senior advisor to Mitt Romney. And from Chicago, Austan Goolsbee, who is an Obama supporter.

Gentlemen, let's start with the latest jobs numbers. The economy added 96,000 jobs last month. The unemployment rate dropped from 8.3 percent to 8.1 percent. But that was because 368,000 people stopped looking for work. The percentage of Americans in the labor force is now 63.5 percent, that's the lowest since 1981. If workforce participation was where it was when President Obama took office, the unemployment rate would be 11.2 percent.

Mr. Hubbard, a lot of numbers. They all add up to this question -- why is the job's picture so dismal?

HUBBARD: Well, you frame it very well, and you can add to that, that more than a million more people are unemployed than the day the president took office. There are some structural headwinds to be sure, but largely, this is a story about growth. We have very anemic growth in the U.S. economy. We could do better with much better policy.

Fed Chairman Bernanke argued that 2 million of the jobs created since the recession were actually as a result of the Fed's policy. So, we have very weak policy in the government indeed.

WALLACE: Mr. Goolsbee, why is job creation so bleak? And how can a president who says he is looking out for a middle class when as we say, workforce participation is at a 30-year low?

GOOLSBEE: We'll separate two things. As in good months and in bad months, all economist say. And Glenn said when he was in the White House, you never want to take one month's report. If you look at over the last year, the unemployment rate is down a full percentage point and most of that is from people getting new jobs. It's not from a reduction in the labor force.

The Bureau of Labor Statistics keeps track of people who are discouraged workers and the number of discouraged workers fell. So, I think the fact that some people are choosing to go to school and that shows up in the data at the end of the summer is not a surprise. The fact that the population has been aging, and there are people retiring.

But I do agree with Glenn that the root of the problem is modest growth in the U.S. Faster than in the rest of the advanced world, however, the entire world economy is in a very tough spot, because we're still struggling to get out of the worse recession in our lifetimes.


GOOLSBEE: And I think putting a focus on broad based growth is better than big tax cuts and cut on that --

WALLACE: Well, we're going to get now, let's focused and that's the reason we want to have you two guys here was to talk about who's got the better plan? We heard a lot over the last two weeks, at the two conventions. I want to focus on the Obama and Romney plan to jump start the economy and perhaps the biggest difference at this point is taxes.

Here's what the president said Saturday.


PRESIDENT BARACK OBAMA: Tax cuts when times are good. Tax cuts when times are bad. Tax cuts to help lose a few extra pounds. Tax cut to help your love life.


WALLACE: Mr. Hubbard, Mitt Romney says, you candidate says that he wants to cut the tax rates across the board, 20 percent. Now, per the president says this is more of the same trickle-down economics that got us in this mess in the first place.

Basic question, why is cutting taxes on the wealthy good and why is raising taxes on the wealthy bad?

HUBBARD: Well, first of all, what Governor Romney is proposing is an across-the-board cut in marginal tax rates for households, every household in America by 20 percent. And we'll have to broaden the base to pay for that. Also, a very deep cut in the corporate rate.

Most economists believe that fundamental tax reform, the Romney plan as a variant of that is very powerful for growth.

I can't imagine an argument that says that raising marginal tax rates on high income people, many of whom are business owners, is a recipe for economic growth.

One can debate fairness arguments but I'm just not aware of any argument that would suggest getting back to the growth we'd just talked about in the previous question is facilitated by raising taxes, not tax reform.

WALLACE: Mr. Goolsbee, why does raising taxes at this point -- you just said, we've got weak growth -- why would you raise taxes on anybody, let alone the wealthy?

GOOLSBEE: President Obama cut taxes for 95 percent of America. He's talking about broad based growth. I do not believe that having the rates go back to what they were in the '90s will have any negative impact that is significant on the economy. And you can use the money for things that are important, like cutting taxes for businesses that hire people rather than cutting taxes on the estates of billionaires, or cutting taxes for Mitt Romney's horse, which it counts as a business under their small business definition.

WALLACE: Mr. Goolsbee, back in 2010, the president said that he opposed raising taxes on anyone including the wealthy, because he said the economy was too week. Let's take a look at what he said then.


OBAMA: Potentially, you'd see a lot of folks losing business, more folks potentially losing jobs, that would be a mistake when the economy has not fully taken off.


WALLACE: When the president said that, Mr. Goolsbee, the economy was growing at a rate of 2.3 percent. And he said at that point, the economy was too fragile to raise taxes on the wealthy.

The economy is now growing at a rate of 1.7 percent. It's even weaker. So, why raise taxes now when it was too fragile back then?

GOOLSBEE: Wait, Chris, I disagree with your premise. The predominant thing that he was saying there was not that let's not go raise taxes on the wealthy, at this moment. It was to extend the unemployment benefits, to extend payroll tax cuts, to extend a whole series of things --

WALLACE: Sir, we can go back to January of 2010. Wait a minute, wait a minute, Mr. Goolsbee. It was in January 2010.

GOOLSBEE: They made a deal on 2010, Chris.

WALLACE: No, you're mixing it up. That was the deal that was made in December of 2010. The tape I just played from you was at the Republican retreat in Baltimore in January of 2010, 11 months earlier when the president said not as part of negotiation with Congress, it's too soon and it's the wrong time to raise taxes.

GOOLSBEE: OK. In January 2010, the unemployment rate is almost two full percentage points higher than it is now. So, I think that's a very selective choice. The president never made any secret --

WALLACE: But the economy is weaker now, sir.

GOOLSBEE: That he didn't think that we can afford to cut high income taxes and that hey should go back --

WALLACE: But the economy is at a weaker rate, 1.7 percent.

GOOLSBEE: He's proposed tax cuts.

WALLACE: And it was a 2.3 percent back then.

GOOLSBEE: Chris, your clip is trying to suggest that the president's leading concern for economic growth is that we not raise taxes on high income people. The focus of his program is broad based growth, tax cuts for people that hire, a higher tax cut, rather than abolishing the estate tax, cutting high income people's taxes by trillions of dollars. That just will not work. It didn't work in 2001 when the same people proposed it and used it.

WALLACE: Well, let me bring up Mr. Hubbard. You were part of the team in 2001. How do you respond?

HUBBARD: Well, let's be careful. First of all, Governor Romney is talking about tax reform, not large tax cuts.

And I guess my question for Austan following yours, Chris, is why would we believe that four more years of this policy, or hiring tax credits or whatever else the president has on the table, will take growth to the next level? I just don't know of any economic evidence that that's the case. Each year the administration has forecast that faster growth is around a two-year corner and it hasn't happened and it won't until we change course.

WALLACE: Mr. Goolsbee?

GOOLSBEE: A, the government forecast at the end of 2009, that the unemployment rate at end of 2012 would be 8.2 percent. So since we -- everyone has seen the depth of the recession that we saw at the beginning of 2009, that we have been plugging along at modest growth because we are coming out of the worst financial crisis in our lifetimes. That's what happened.

So, as you look at what will work, A, going back to a policy that absolutely did not lead to growth and would blow a giant hole in the deficit is not accurate.

GOOLSBEE: And, B, we have added more than 4.5 million private sector jobs in the last two and half years.

Now, it's got to be faster and we've got to add more. But going to a policy which in the first term of George Bush created one million fewer jobs than President Obama created in his first term makes no sense. That's not a policy that is going to get us out of this problem.

WALLACE: Let me bring in Mr. Hubbard -- because this is something you heard a lot in the Democratic convention, Mr. Hubbard, which was that no president, given the nature of this particular recession, could have turned things around by this point, basically four years into a term. What do you think of that argument?

HUBBARD: I just don't think it is true. We have seen deep recessions in America's past, both deep past and more recent past where recoveries have been much more vigorous, even with very deep financial holes and deep financial holes.

We pursued the wrong policies. George Bush is not on the ballot. Bill Clinton is not on the ballot. Mitt Romney is on the ballot, and Barack Obama is on the ballot. And Mitt Romney is proposing tax reform, regulatory reform, a wise budget strategy and trade. The president has proposed tax increases.

WALLACE: All right. Let's talk -- I want to move on to another subject and that is that both Romney and Obama say that one of the keys to dealing with the economy is to dealing with this huge and growing debt we have. So, let's take a look at their plans.

The president calls for $4 trillion in deficit reduction over the 10 years. But $1 trillion of that is from the spending cuts he and Congress agreed to last August, $848 billion is from ending the wars in Iran and Afghanistan, which was money we were never going to spend anyway and is borrowed. And $800 billion is from lower debt payments.

Mr. Goolsbee, I've looked at the president's plan. He has almost no top spending cuts. He doesn't shrink the size of government and he does nothing serious about structural reform of entitlements.

GOOLSBEE: Look, the premise of that question is unilateral action and the overriding summary the president has put forward is he put forward a budget in the discussion of the budget and in the debate last year over the debt ceiling that would get to the $4 trillion goal that came from Bowles-Simpson, but do in part with taxes and part with spending cuts.

Now, if we have --


WALLACE: But you'd agree that the spending cuts he's talking about, you'd agree --


WALLACE: If I may, Mr. Goolsbee -- you'd agree that the spending cuts that he's put forward that are in his budget plan are largely bogus.

GOOLSBEE: No, you just added largely bogus and I do not agree with that. Look, we've had major cuts on various part of the defense, the discretionary, of 10-year freeze. The budget window is a 10-year window.

The alternative that Mr. Romney is putting forward is no specifics. He's proposed specifically $5 trillion of tax cuts, you heard Mr. Hubbard saying what Mr. Romney says, which is -- I will go find some loopholes to close to pay for that. Mr. Romney --

WALLACE: Let me interrupt, because I want to go if I can, because it's a very legitimate point, to Mr. Hubbard on that. And let's look at what Romney's plan is. He says he wants to cut $500 billion from the deficit by 2016 and balance the budget by 2020. But he offers no details and, in fact, he would actually increase defense spending by as much $2 trillion over the 10 years and he would rescind the $716 billion in Medicare cuts that the president gets over ObamaCare.

So, the question Mr. Hubbard and this is also true about not detailing what tax deductions, what loopholes you're going to close. Why not level with the voters and say how you're going to achieve these admirable goals?

HUBBARD: Well, I think Governor Romney has a two-part budget plan that very much levels with voters far more so than any candidate in my lifetime. The first is to bring government spending down to 20 percent of GDP.

WALLACE: But he didn't say how he's going to do it, sir.

HUBBARD: He's been specific on things like block granting the Medicaid program, which is hardly a non-bold claim. On the tax sided, fundamental tax reform and a healthier economy will produce a revenue share of GDP, much into that range.

Longer term, it's about entitlements. Governor Romney has said on Social Security that he would raise the retirement age gradually. He would reduce the rate of growth of benefits for upper income households and reduce the rate of growth for benefits for upper income households and Medicare 2. That is a program, one can disagree with it, but it is a program that leads to lower deficits and debt and higher growth.

WALLACE: I'm going to give you 30 seconds, Mr. Goolsbee.

GOOLSBEE: Look, objective people that have sat down and looked at what Mitt Romney has proposed suggest that it will increase the deficit by trillions of dollars and if they wanted to even cover the income tax cut portion of what he's proposed for high income people, they would have to raise taxes on the middle class quite substantially.

My point is very simple in 2001, when George Bush comes into office, he gets the condition of a recession that he didn't create and the response --

WALLACE: All right. Mr. Goolsbee, I'm going to have to interrupt and --

GOOLSBEE: -- was worse.

WALLACE: OK. That's good. We'll leave it there. It won't work.

I want to thank you both so much. Mr. Hubbard and Mr. Goolsbee, thanks for coming in today. We'll have you back. We're going to stay on top of this debate over how to get Americans working again. Thanks again both of you.

Up next, she brought the house down at the Republican convention. We'll talk with rising GOP star Mia Love when we come right back.



MAYOR MIA LOVE, R - SARATOGA SPRINGS, UTAH: Mr. President, I'm here to tell you that the American people are awake and we are not buying what you are selling in 2012.


WALLACE: Mia Love and her debut on the national political stage at the Republican convention. She is mayor of Saratoga Springs, Utah, who is now running for Congress. And she joins us from Salt Lake City.

Mayor Love, welcome to "Fox News Sunday."

LOVE: Thank you for having me, Chris.

WALLACE: You are a black Mormon who is a favorite of the Tea Party and you're running to be the first female black Republican ever elected to Congress. For a lot of people who don't know you, how did you turn out the way you did?

LOVE: Well, my parents immigrated to this country from Haiti with $10 in their pocket. And they worked hard for everything that they have. My parents taught me that we weren't entitled to anything that we didn't own, earn, work for or pay for ourselves.

I have taken those principles everywhere I've gone. And that's how I ended up where I am.

WALLACE: I want to ask you about that, because there's a story that when you went to college, when you were starting college, your father gave you some marching orders which have become kind of a guiding principle for you. What did he say?

LOVE: Well, I took my dad with me because he's the fun parent. And he said, Mia, your mother and I have done everything we could to get you here today. We worked hard. We've never taken a handout, you are not going to be a burden to society, you will give back.

And thank goodness it didn't go in one ear and out the other, and it resonated with me and I -- it stuck with me.

WALLACE: Let's go through some of the positions that you're advancing in your campaign for Congress, Mayor Love. You want to cut federal spending $759 billion by 2021, including cut food subsidies by 50 percent, or $53 billion, and K-12 subsidies, another $53 billion and end college assistance $33 billion.

Question, what happens to all of those millions of people, including a lot of minorities who depend on those programs?

LOVE: Well, there are different things. There are different approaches. First of all, that program I put out to start a discussion. I haven't set it in stone. I want to make sure I hit the ground running. So, we have to start the discussion.

But if you take for instance, education, we're having -- we're trying to see how much debt we can actually give people and the option that I'd like to look at is bringing the cost of tuition down so that we give more people the opportunity for higher education.

WALLACE: Yes. But how do you get these colleges, and I know as a father of six kids who I put through college, how do you get the tuitions down?

LOVE: Well, because federal government has just drowned out the private sector, we've got to do everything that we can, because the price of tuition has gone up over 500 percent since the '80s. If you think about it now, there are people that can't go to college today because the price of tuition is way too high, unless they're completely indebted.

And so, what we have to do is we can bring some of these things to a state level. We can start letting the private sector come in and compete. And I think that those will help drive the price of tuition down. That way, we give more people opportunity for higher education.

WALLACE: Democrats said you are being hypocritical in this calls of ending subsidies for college education, noting that you left between $15,000 and $50,000 in outstanding college loans? How do you respond?

LOVE: I respond by I wish I had more option, because we are still trying to pay some of those things off. And what I would love to do is be able to be in a position where I'm not -- I don't have that debt. I want my children to be able to have a college education without having as much debt. And many people are leaving college right now. They are completely indebted and they can't find work to pay off some of those loans. So, what's going to happen with the college education is the same thing that happened with the housing market.

We are going to end up being in big trouble when people can't pay back those loans.

WALLACE: Let me talk about another subject. Democrats are accusing your party of waging a war on women, wanting to take away choice on abortion, wanting to cut federal funding for Planned Parenthood, wanting to limit access to insurance for birth control. How do you respond to these charges that the Republicans are waging a war on women?

LOVE: Well, think about this -- under President Obama, I think women have suffered a little bit more. If you think about it, 5.7 million women are out of the work. We've gone from 7 percent unemployment to 7.8 percent unemployment. And I would like federal government to let me keep a little bit of my own so I can pay for my own contraceptives if I want to.

WALLACE: That's one of the criticisms that Republicans level back at Democrats and say, oh, they are not talking about women's reproductive rights, they're not talking about the economy.

LOVE: Well, again, I -- to me, it's about choice. And I want more free choice and more liberties than anything else. So I think that federal government trying to get and bring the so-called war on women, I think it's just a way to distract from the fact that they're not talking about their failed policies, which is again --

WALLACE: When you say choice, Democrats would say your party would want to take away the choice when it comes to abortion?

LOVE: Well, I -- the role that government does play to protect life, liberty and pursuit of the happiness. And I think that we should be protecting life. I am a pro-life person. I believe that you have more choices before somebody ends up getting pregnant, and I think it's important that we are able to have the freedom to exercise that choice and it's up to you how you want to do that.

But I think that we should be getting into the weeds on all of this because I think that these are things that we teach in my home. These are things that are private. We should just focus on the economy and what's happening with the economy.

WALLACE: Let's talk about your record, because you have been the mayor of Saratoga Springs since 2010. Before that, you were member of the city council. I want to ask you about your record.

On the council, you voted to double property taxes. We should point out -- Saratoga Springs was a very small town, of about 3,000, huge growth to about 60,000.

LOVE: Right. WALLACE: You voted to double property taxes. Now, as mayor, you voted to cut them back some. But are there times when it's just necessary to raise taxes?

LOVE: Look, our city was an agriculture city. We never set a municipal tax ever. When the housing market dropped, we were faced with major shortfall. And so, what we had to do was first, we cut spending. We made sure that we cut 30 percent on some of the lower levels, 67 percent on the higher levels, and then our property tax when we set it for the first time, we made sure that it pays for nothing but public safety.

There is a role that government plays, and that is to make sure that we are keeping our city safe. So, with that being safe, we hold the highest bond rating available. I was able to lower taxes as the first year as mayor. And we are firm on financial standing. Our city is doing very well and I think Washington can take a note from that.

WALLACE: Well, OK, we got to a couple of minutes left and you led me in the direction I wanted to go, which is -- from your vantage point of Saratoga Springs, what do you think of Washington?

LOVE: I think Washington is broken. Look at the problems that we have today. Household incomes, down $4,000. Gas prices doubled. Unemployment, 8 percent; 14 percent among black Americans. Sixteen trillion dollars of debt. Health care premiums are going up.

And so, we've got two choices when it comes to presidential candidates. We've got a president that wants more tax, more regulation, bigger government. And we've got somebody else, Governor Romney, who wants to champion small business. He wants to create 12 million jobs through the private sector, lower the tax rate, broaden the base, affordable education, energy independence.

I think when you ask yourself two questions -- am I better off than I was four years ago? Am I happy with the direction is going? If it's no and no. Then the clear choice is President Romney.

And Utah supports President Romney, and so do I.

WALLACE: If you are elected, if you are fortunate. You are in a tough race right now with a Democratic incumbent congressman. You say Washington is broken. How would you like to change Washington if you come here?

LOVE: Well, again, we're going to have to lower the debt. We're going to have to try and do what we can to lower deficit spending.

WALLACE: But if I may, Mayor, I'm less talking about policy and more the way business is done in Washington. How would you try and change that?

LOVE: Oh, I think one of the things is I'd like to see a plan from both parties. We've got a plan that comes from the Republican Party. But it's been three years since we've had a plan come from the Democrat Party. We've got to start working together. You have to understand, where I come from, we run nonpartisan. I don't look at my fellow council member and say, what party affiliation are you before I figure out what their plans are. We've got to be able to come together and find solutions instead of rhetoric and being -- setting people up against each other in terms of dividing this country.

We have to come together as Americans and fix the problems that we are facing today and we need leadership. Not someone who is going to follow from behind -- but leadership and saying these are the solutions. Let's look at this and try and see what we can do to get this country back on firm financial standing.

WALLACE: Mayor Love, I want to thank you so much from coming in and talking with us today and we'll see how things go for you in November. Thanks for coming.

LOVE: Thank you, Chris. Thank you.

WALLACE: With the conventions over and the fall campaign officially underway, we'll ask our Sunday group to look ahead to the next 58 days.



OBAMA: The path we offer may be harder but it leads to a better place. And I am asking you to choose that future.

MITT ROMNEY, R - PRESIDENTIAL CANDIDATE: He doesn't have a plan. He doesn't have any ideas. And we have got to make sure he doesn't have any more days in the White House after January.


WALLACE: President Obama and Governor Romney going after the votes on the campaign trail Saturday. And it is time now for our Sunday group. Brit Hume, Fox News senior political analyst; Mara Liasson of National Public Radio; Kimberley Strassel from The Wall Street Journal; and Fox News political analyst Juan Williams.

Well, we have got some new poling numbers and they seem to show that President Obama got a bit of a bounce from the Democratic Convention. Let's put them up on the screen. On Thursday, Gallup seven-day rolling average had Obama leading Romney by 1 point, 47 percent to 46. But now as of Saturday, that lead has now grown to 4 points, 49 percent to 45.

Trust me. I guess we are not going to see those. But -- there we go. Brit, what do you make of that?

BRIT HUME, FOX SENIOR POLITICAL ANALYST: I do think that the Democrats got more out of their convention than the Republicans got out of theirs. And it suggests a couple of things. One is that going second is better. We really saw that four years ago. That the convention held right on the heels of the end of the previous one can step all over the effect of that and re-focus the audience.

It was a better week, I think. You know, the Republicans were in the last week before Labor Day, Democrats started after Labor Day when I think more people are at home and watching.

And I think, you know, that there is something about Barack Obama. There is still a certain magic about him that people will tune in to see. It was notable that the audience ratings were higher for the Democratic Convention than for the Republican. And that it strikes me that his speech, combined with the other presentations at the convention, had some power. And how long this bounce will last, I think it is still essentially a tied race, is anybody's guess. But I do think the Democrats got more out of their convention.

WALLACE: We're going to talk more in detail about the convention in the next segment. But, Mara, does this president enter these final eight weeks, do you think, with, however small, however tenuous, a lead both in general popular support and maybe more specifically in terms of the key electoral swing states?

MARA LIASSON, NATIONAL PUBLIC RADIO: Yes, I think there is no doubt about it. I think he has a small but significant lead. It has been really consistent. And I think we are entering into the phase of the race where the national horserace numbers doesn't really matter much. Everybody needs to just click on those maps and take a look at the eight to 10 battleground states.

And he has been consistently up in those states for a very long time. And I think this bounce is going to help him, because don't forget, the Obama campaign wasn't predicting a bounce. What they were predicting was a turnout benefit.

This was a convention that was aimed at their base and what you do see, not only does he have a lead in the battleground, but has more ways to get to 270 electoral votes than Romney does.

Romney has more must-win states than President Obama. He has got to get Ohio and Virginia and Florida.

WALLACE: You know, Kim, a number of political observers thought that the bad jobs numbers that we saw, and they certainly were bad by any definition on Friday, would blunt whatever advantage that the president had coming out of the convention.

We should point out that the Gallup poll we have seen, all of those numbers were taken before the Friday jobs report came out. So we don't know what the effect of that will be.

But some folks are now suggesting that maybe people have already factored in the fact this is a weak recovery, that we're just going to have 8 percent unemployment, and they may, to some degree, be discounting that. That it may not have the dampening effect that they talk about.

What do you --

KIM STRASSEL, THE WALL STREET JOURNAL: I find it very hard to believe that if you are getting up every day and you are struggling to find a job and you are one of those huge number of people who have now just given up trying to find a job that you are discounting and decided that this is a new normal.

I think the thing to watch, by the way, is -- and because this is what Democrats are going to be watching out of this convention. One of the main things they were trying to do there was energize all of these subsectors that were so important in 2008 to the president's election.

When you look at these polls, including that Gallup one, one of the thing Democrats are so concerned about is not all likely voters are as likely to go vote. And what you are seeing in these polls again and again, week in and week out, are, when you ask Republicans how likely they are to vote on a scale of 1 to 10, they're saying 7, 8, 9. When you ask Democrats, they are saying 3, 4, 5.

Those are the numbers that Democrats are going to be watching after this convention to see if they actually convinced women, Hispanics, the youth vote out there to actually get up and go out and vote on Election Day.


JUAN WILLIAMS, FOX POLITICAL ANALYST: Well, I think the key thing that strikes me coming out of this week is the swing states. When you look at the bounce right now, if you look at Pennsylvania, right now the Republicans are saying they have pretty much given up, that is out of reach.

You look at Ohio, Obama, again, strong lead. Virginia, Nevada, Colorado, Wisconsin, Michigan. So North Carolina is the one swing state where I think Romney has a slight lead right now but it's not beyond the margin of error. So it is still highly competitive.

So if you look at that, what you come back to is money. Where is the advantage here for the Republicans? The advantage is in terms of not only Romney and the Republican National Committee's fundraising, Chris, but also in terms of a super PAC, Karl Rove's and Crossroads GPS and those groups. They have a substantial advantage.

And there is going to be a deluge of advertising from the Republicans through September and October that I don't think the president is going to be able to match. As you know, Rahm Emanuel, the mayor of Chicago, resigned from the president's campaign, an honorary, so he can help Bill Burton and the Democratic super PAC to raise money to try to match it.

But what will be the impact of all that Republican advertising? Can it change some of the favorability numbers that also bounced up for the president at the convention.

WALLACE: Brit, I want to go back to this question of the economy, because people have certainly seen that the economy is lousy for a long time now. And Mitt Romney has been making the case non-stop that the president hasn't fixed the economy.

Is that enough? Because so far it doesn't seem to be enough to get him up over the top against Obama. Is that enough or does he have to do something else?

HUME: Well, he leads now on the economy and has lead consistently. And if that turns out to be the principal motivator of the vote, that will make a huge difference.

WALLACE: But he doesn't lead in the horserace.

HUME: Well, I hear you. But in the end, I mean, that's -- we still have got some time to go here. I still think that the decisive factor in this race, like almost any other presidential race, will be the conditions in the country and how they are perceived.

But let's -- let me just touch on those job numbers for a moment. I don't think that the bad jobs report materially changes the way people feel about the economy. The president needs people to begin to feel differently about the economy, at least to have more hope.

If you think about the message that he transmitted during the convention, it was, give me more time, we're on the right track, it is a hard, long road but we are going to get there.

Think of what he would have been able to do with a really good jobs report, late though it may be in the game in terms of his message and his advertising. That would put some evidence under his convention appeal. He didn't get -- in fact he got an exceedingly weak jobs report, which I think does deflate his message to some extent.

LIASSON: He has only got two more jobs reports. And one of the things that the Obama people have said over and over again, the numbers don't matter, it is the trend, the direction. Well, this one went backwards. And I think that is really tough.

One thing that the president has been trying to do and he got some help from Mitt Romney, I think, is that he wants to focus this on the future, not on the present. You know, what are your plans for the future? And I think Romney left a lot of that on the table in Tampa, put on more and --

HUME: Yes, but Obama said nothing.

LIASSON: I agree, but I think that the answer -- to me, the mystifying question of why -- if Romney has been ahead on the economy all along, why isn't he doing better in the horserace, has to be because people are not quite sure what he would do.

They know the economy is bad. They don't need the Romney campaign to tell them over and over again. But I do think they need him to fill in the blanks about what he would do.

STRASSEL: Yes, I mean, I think one of big problems that they had at this convention is that their decision to focus the entire convention on this argument that it was--

WALLACE: Which convention?

STRASSEL: The Democratic convention. That their decision to make the entire convention about how -- the argument that these were Republican policies that had led to today's economic malaise, and if you choose Mitt Romney, things will go backward, is that it really underlined and highlighted the president had no message of his own. People were waiting for it throughout his entire speech, saying what are you going to do next? Instead the message was, well, we are kind of going to keep doing the same thing we are doing. And if I am not sure if you are an American voter out there that -- who is suffering, if you want to hear, well, just give it some more time.

WILLIAMS: No, I think to the contrary. I think what you saw at the convention was for the Democrats, a clear enunciation of values and vision from the Democrats. And when you talk about steps they are willing to take in order to bolster the economy, they are talking about investing in, for example, education, re-education, infrastructure, training and the like. I think it is a very clear vision. What we saw from Mitt Romney was a contrary vision, and people made it out to be that he's about profits, about cutting debt more so than he is about caring for the American people.

I don't think that was, if you think about framing arguments, I don't think that was to the Republican advantage, and I think that is why Mitt Romney didn't get any bounce versus the Democrats, you know, the Bill Clinton's business about they made a mess and said, their argument is, well, you didn't clean it up fast enough, so you got to give us a chance to get back. I think that was a tremendously strong framing argument.

WALLACE: All right. We'll have to take a break here, but we'll continue this discussion. And when we come back, with both conventions now on the books, how did each party set up their campaigns for these last eight weeks? And a look ahead to the next big event on the calendar, the October debates.



ROMNEY: This president can ask us to be patient. This president can tell us it was someone else's fault. This president can tell us that the next four years, they'll get it right. But this president cannot tell us that you're better off today than when he took office.

OBAMA: You elected me to tell you the truth. And the truth is, it will take more than a few years for us to solve challenges that have built up over decades.


WALLACE: The two nominees in their convention acceptance speeches, each delivering his central message on how voters should see the economy. And we're back now with the panel.

You know, Brit, I think the common theme there was patience. The president is saying it's -- we are on the right track, but it is going to take more time, be patient. And Romney is saying, time's up. Who has got the better side of that argument?

HUME: I think, look, by any normal standards, if you have got four years to get an economy growing again, by this time in every recession that we can remember, going back to the Great Depression, the economy is growing briskly, robustly by this time. Four years is more than enough time, and I think most people would probably agree with that. So I think on that point, Romney has the better argument.

Just looking at him there, though, I'm thinking, you know, how do people take him? He looks presidential enough. He is very dignified, he is a rather handsome guy, and he looks like an adult. He does not look like there's anything wrong with him. But, you know, it's -- something is keeping him from breaking through, and it is interesting to speculate about what it is. I'm not sure I know.

WALLACE: You know, Mara, back to this question of patience. You had Bill Clinton, and a lot of people think it was the single most effective moment in the convention when he said, "no one, not even me--"

LIASSON: Not even me.

WALLACE: Yes. I know. And knowing what we think Bill Clinton thinks of Bill Clinton, that's quite a testimonial -- could have turned things around in four years. What about this question? Time's up as opposed to give me more time?

LIASSON: Well, first of all, you would think that Mitt Romney would have the better argument. The economy just stinks. No one has ever won, let alone run, with an economy this bad. But he's not. So you have to think, OK, why isn't he? Well, one of the reasons, I think, is for some reasons, the Republicans have decided to husband their resources towards the end, and the Democrats took a page out of George W. Bush's playbook and decided to use their money early, and they really tried to define Romney in that space between the primaries and the conventions when Romney was a blank slate. People didn't know who he was. They knew he was a rich and a businessmen, but they didn't know much else. And you heard a story told about Bain Capital that Romney didn't counter, and he did not even counter it at the conventions, really. He didn't really explain what Bain did.

HUME: He didn't. He personally didn't. Other speaks did.

LIASSON: He didn't. Yes, they tried, but in a way that would say I am going to do for you what I did for all these wealthy investors. Somehow I'm going to make you better off. And I think that the Democratic advertising has helped. Now, hasn't helped that much, because Obama is not much ahead in the horserace either, but I think it did help suppress Romney.

STRASSEL: I think Mara has got a good point, which is that Romney has done an excellent job of talking about everything that the president has not done well. What he has not managed to do is rebut the attacks on him, in particular this argument that the president has hit on the last two months, that it were Republican policies that got us into this mess. And that he is a return to that. He needs to have a story about what actually happened that led up to this recession and about why it was not necessarily--

WALLACE: You really think that's what people are going to -- they really want to relitigate the Bush years?

STRASSEL: No, I don't think they want to relitigate the Bush years, but they want to hear an economic argument about -- that makes the case that this was not Bush tax policy that got us to where we are, which is one of the sort of bizarre arguments that you get from Democrats these days, but that free market policies are actually the way to revive the economy. And he's got to go out there more forcefully, defend them and promote them.

This, by the way, is where I think his money is going to help. I don't think the Romney campaign is going to be sending most of it attacking the president. They are going to be out there trying to make the positive case, which is something they were not able to do--

WALLACE: Let me just, before I bring Juan in, ask about another idea, which is that he may have convinced people that Obama's policies are wrong and he may even have convinced them that I can make businesses and profits. But has he convinced them that for the average, middle-class American, he is going to make their lives better?

STRASSEL: No, I think that that is part of the problem. And you know, and that gets into a lot of different areas, not just a story about what happened, but he's going to talk about his tax plan. He's got to present it as tax reform. Americans like the idea of tax reform. The Democrats are trying to present this as a tax cut, a straightforward tax cut, that doesn't poll as well, doesn't do as well. Romney actually is presenting, as it happens, a tax reform. Those are the things that Americans want to hear. They do think it will have a positive impact on their life, but he hasn't necessarily done it well yet.


WILLIAMS: Well, I think there are two things that are to be said. One is, I think when I look at the polls, Americans don't think that the economy stinks. They think, you know, we went into a terrible situation and we're slowly making progress. Which helps President Obama in terms of the patience argument that you were talking about, Chris, because if you look at GDP--

WALLACE: Right track, wrong track? Isn't that pretty negative right now?

WILLIAMS: Yeah, but it is negative in the last election. It's been negative for a long time through the last decade. Right track, wrong track has been overwhelming -- over 60 percent, it's been up as high as 80 percent. There's no change there. People don't like Washington, they like congress even less than they like the president.

So I am just telling you, right track, wrong track is not the indicator here. When Americans are asked about the economy, even in focus groups they start talking about well Wall Street is doing pretty good, my pension is doing okay. Then they start talking about things like GDP and the president's argument about slow, anemic, but steady job growth up, up, up, does carry some potency here. So I would say some of this economic -- the economic numbers are baked into the argument at this point. I don't think the next two job reports, unless they're dramatic, are going to make that much difference.

So what you come back to, then, is what is it that Mitt Romney has to say would convinces people? And I think the argument coming from the president is it would just be going back to the Bush years, and that is not a winning argument for Romney.

WALLACE: Let's turn to the next big event on the campaign. And of course there is a drama going on every day as these two guys, four guys including the running mates are on the campaign trail, but the next big event are going to be the four debates in October, starting, and we've got the calendar here with the presidential debate, then the vice-president debate and two more presidential debates.

The conventional wisdom, Brit is, with the exception I think of Kennedy in 1960 and Reagan in the 1980 that debates don't make that much of a difference and don't swing the general trend of the campaign.

How important are the debates?

HUME: Well, that conventional wisdom is rooted in fact. I mean, if you go back and look at the effect that these debates have had rarely have they proved to be decisive. Most of the time what happens is that people who are for candidate A think that candidate won, people for candidate B think -- and the state of the race is left in place by the outcome of the debates. It could be a little different this year. President Obama is on the same stage with this businessman for whom he apparently has personal disdain. How that plays out might have an effect.

I mean, these things -- I mean -- but I still say that in the end people are going to vote on whether this man they believe can change the conditions or whether he's too risky in some way. So my guess is that Romney, who has been debating all year, and is a much better debater than he was four years ago will do well in the debates, but I am not sure that will makes the difference.

LIASSON: Well, it is the only potential game changer we have left barring some unforeseen event, you know, some external event.

WALLACE: If somebody said we have still got Dukakis in a tank.

LIASSON: Yeah, right, right.

But I think that they're the only -- this is the only show in town. And I think the Romney campaign is counting on it being a little bit like 1980 where people were in the mood to fire the incumbent and they weren't so sure about the challenger. All of sudden, Reagan stood up there in that one and only debate and he seemed kind of reasonable. But I don't know if Romney can pull that off. He is the better debater, he is the more experienced debater. He had a lot of debates. And I think Obama is rusty and has the risk, as Brit pointed out, of being...

WILLIAMS: You think he's a better debater than Barack Obama?

LIASSON: At this moment he is a more experienced debated. He's fresher. And he's...

WALLACE: OK. We've got less than two minutes left and I want to use this time to take a trip down memory lane over these wonderful two weeks and I've asked you all for a favorite moment. I'm going to start with you Brit and go down the -- your favorite moment from these last two weeks.

HUME: Well, it was Debbie Wasserman Schulz, the chairman of the party, came out and she'd had a wonderful makeover. And look at her. I mean, I -- at first I looked at her I didn't quite recognize her. She looks fabulous. I thought she looked great. And I thought hooray for her.

WALLACE: Here's the funny thing, I saw her on the floor and I said, you know, I don't know about your politics but you look great. She acted like it was the biggest compliment I'd ever delivered.


LIASSON: Gabby Giffords leading the Pledge of Allegiance .

WALLACE: Hear, hear. I mean, we've got to show this. And I will say as somebody who was on the podium, everybody stood, everybody cheered, and frankly there weren't a lot of dry eyes in the house to see her come back from this awful shooting and so bravely to lead the Pledge of Allegiance.

Kimberley your favorite moment at either convention?

STRASSEL: Susana Martinez, the governor of New Mexico speaking at the GOP convention. I just thought she was endearing, she was smart, and she's exactly the sort of person the GOP needs to put up that told a story that a lot of people can identify with and needs to be sort of highlight of the GOP party these days.

WALLACE: And Juan.

WILLIAMS: Three year old Karina Castro, Julian Castro the mayor of San Antonio's daughter, as the mayor was speaking in his big breakout moment she decides to flip the hair and it went viral. It went -- everybody in America thought what a cutie pie. And you know with her and her grandmother just wonderful story.

WALLACE: The funny thing is, the crowd was seeing it and laughing, because it was up on the screen. Castro didn't know why people were laughing at him. Anyway, thank you panel. See you next week . Don't forget to check out panel plus where our group picks right up with the discussion on our website We'll post the video before noon eastern time and make sure to follow us on Twitter.

Up next, the convention video you didn't see this week in Charlotte.


WALLACE: The political convention featured stirring videos of the two presidential candidates, but we prefer this approach the folks of the "Daily Show" came up with called "Barack Obama: It Could Have Been Worse."


LARRY DAVID, WRITER/COMEDIAN: They put in place an economic stimulus that definitely didn't ruin the country and the results spoke for themselves.

OBAMA: People say well, you know, the stock market didn't fully recovery. Yeah, but it's recovered more than people expected last year. Things are still tough, they just aren't as bad as they could have been...Unemployment is still at 9.6 yes but it's not 12 or 13 or 15...

DAVID: Or 19 or 80. There's no limit to how high numbers can go.

JARED BERNSTEIN, WHITE HOUSE ECONOMIC ADVISOR: By helping to make things less bad, the Recovery Act is helping.

DAVID: It was the Obama doctrine, that less bad was better than more bad. And so the president would use the power of his office to lessen badness.

...Look what he still go done. Did we get universal health care? No. But, the thing we did get was the insurance pools for coverage of -- I don't know the details. The point is, it is it better than cancer.


WALLACE: Now that is a campaign video.

And if you are wondering it was Larry David who did the narration.

That's it for today. Have a great week. We'll see you next "Fox News Sunday."

You have to watch it.

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