And couldnt talk about shakespeare theyd be humiliated to admit it. But if they dont know what exponential growth is they would say oh, thats a technical subject of mathematics. So we have a culture that treats mathematics as something thats okay not to know. That only geeks know. They dont have that culture in much of asia where they do much better. And its a broad cultural thing that goes to an attitude towards science and mathematics. Rose nancy gibbs and Larry Summers when we continue. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Rose Time Magazine has named its person of the year for 2013 it is the individual who in the words of times editors has most influenced the news of our lives for good or ill. Their choice is pope francis. In his first nine months as pontiff, francis has reshaped the image of the church draw platally. As Time Magazine nancy gibbs writes for pulling the papacy out of the palaces and into the streets and confronting its deepest needs and for balancing judgment with mercy Pope Franciss times 2013 person of the year. Im pleased to have nancy gibbs at this table. Welcome back. Thank you. Rose this seems so obvious. Well, the two finalists two people who the vast wrote majority of us have never heard of a year ago, the other being edward snowden, another man with a mission who also brought a crucial conversation, in his case about privacy, center stage and there was a great debate in our own offices and worldwide over which of them was the more important and so in a sense it was a surprise which one we would pick rose was it close . It was close. To the extent that we talked about it quite a lot and and i would be the first to argue that what snowden has done we are probably only beginning to see the impact of it. If you talk to quite apart from the National Security issues raised hes been indicted for espionage by the United States government. Hes a hero to privacy activists. But if youre a u. S. Tech company who might be looking at losing millions, hundreds of millions of dollars in business because your servers are no longer going to be trusted, the implications of his leaks are huge. Rose but i just find that so inconsequential in terms of comparison. Because it seems to me that he did exactly what you said. He started a conversation. Whereas the pope is doing more than start a conversation. The pope is is engaged in a day by day process himself by his actions and his deeds in one of the most important institutions in the world. One of the most important, one of the biggest. One of the oldest, one of the richest. Rose exactly. So this is no contest. But it was well, it was. And i say people tend to have strong opinions about these things. Although ive been struck at the response to naming pope francis. Is it does reflect one thing that motivated chief justice is people are just fascinated by him. And not just catholics. People who are lapsed catholics, whove never been anywhere near the church, who are members of other faiths who are very interested in what hes saying and doing. Count me one. Count me one. You cannot i just find in every way i find in terms of what he says, the way he behaves how he takes on the roman curia, how he said lets not get crazed by dogma, we have to focus on other things without giving ground on doctrine. He talks about the church as a field hospital. He says the world is broken, we have to tend the wounded. You dont a bleeding man about his cholesterol level and i think thats one of the thing that accounts for some of this. He doesnt talk the way we expect popes to talk. Rose you can feel and touch his language also when he gave up the red shoes and gilded cross, he wears an iron cross around his neck, hes not staying in the papal palace, hes staying in a guest house in vatican city. Necessary every way signaling i am going to play by different rules and when i know he goes out into the crowd of st. Peters square and i was there last week and i watched this and he goes out and he hugs and he kisses the face of that terribly disfigured man, that picture goes around the world instantly. But hes using 2 1st century tools to perform a First Century office and hes very aware of the power of those tools in the fact that what he says and down is instantly shared and spread all over the world. Rose but here is a guy you know, who had no experience in terms of what was about to happen to him. He was, in fact, a cardinal in latin america who had been doing what hes doing now on that stage. Yes . First noneuropean nope 1200 years. The first jesuit pope. And i think thats enormously important. The places where the church is growing, where its influence is spreading is outside of europe, its outside of north america by and large and so he has among the things that hes doing institutionally in trying to stir up change in the vatican is he has this council of cardinals. Theyre not from rome. They fear from chile and congo and honduras and india and australia and boston. And its a much broader reach. Who hes will be to, who hes talking to. He feels like a global pope but also a perish priest. The. Rose ive talked to certainly dolan and other cardinals because i was there at the time of the conclave they were surprised a bit. Even though he came in second the previous time. The favorite was not him going in. He was also set to retire. He had picked out his retirement. Hes 76. He had picked out his retirement home and people have known him for a long time are quite struck by the transformation in him personally this year he is animate bid joy. He seems younger. He seems to have a kind of energy. He has a kind of im just going go for it. And that its very clear to him what hes called to do and hes just writing his own rules and dosh do it. Its really striking to see that sense of liberation and joy and lack of selfconsciousness and this pro found humility. When he is photographed washing the feet of a female muslim prisoner, thats an incredible image to be seen. And, again, these are gestures that are right out of the gospels and yet theres something about seeing them reenacted in the modern age that has people watching and wondering and things. Rose did you get to see him . I met him briefly after the audience he does on wednesdays but what was most interesting to me was listening to him preach because, of course, hes going to deliver his lesson in italian and there are priests standing by to repeat in the german and french and english and spanish and portuguese but every so often he would just drop the script and start talking. Seven the call and the response to get the crowd responding to him and im thinking this is a nightmare for the people who are having to translate and tweet and keep up with what hes doing because when hes just speaking extemporaneous think theres an energy that comes from him. And it was quite something to see. Obviously hes treated like a rock star. I think he attracted more people when he was in rio for world youth day. It was the Rolling Stones couldnt compete. Rose pretty soon people will be saying they treat him like a pope. That will be analogy. Rose it will be the ultimate kind of the worship. This comes right out of your publication. How do you practice hue mill friday the most exalted throne on earth . Rarely has a new player on the world stage captured so much attention so quickly. Rose placed himself right at the center. He has a point of view on all of that. And its extraordinary. So the impact hes having political, economic, cultural, spiritual, all laid one on top of the other. Rose back to the interview business. Theres a famous quote which you wrote said once there was a boy so meek and modest. He was awarded a most humble badge. The next day it was taken away because he wore it. Here endth the lesson. So they said we cant do an interview because what . Well, it was funny, the vatican issued a Statement Today when after our announcement saying, of course, he is delighted at being person of the year. Rose but he doesnt seek honor. This will call attention to the message of the gospel but he is not looking for any personal honor or aclimb and so its a line they walk where they understand that there is a fascination with him personally. He wants the fascination and attention to be on his message and not on him and so he would not want to be seen as seeking out any kind of special attention or honor but he does obviously want the message to be heard far and wide. Rose the four runnerups were edward snowden, edith windsor, the 84yearold woman who became a matriarch for the Gay Rights Movement after winning her case. Bashar alassad, president of syria and ted cruz. All of those people were on the list. Congratulations. Thank you. Rose for all the reasons, pope francis, Time Magazines personal of the year for 2013. Back in a moment. Stay with us. The truth is that if we grow and actually accelerate the growth rate the debt will get itself managed. And if we dont we can do all these programs and all these cuts and the debt will not get itself managed. Rose Larry Summers is here. He is the charles w. Elliot University Professor at harvard. He was harvards president from 2001 to 2006. He served as treasury secretary under president clinton. He was director of the National Economic council for president obama where he was integral in shaping the nations response to the financial crisis. Today the country appears to be on a rebound. The economy gained over 200,000 jobs last month. The Unemployment Rate is 7 . The lowest reading since president obama took office. The wave of good news comes ahead of a Federal Reserve meeting next week where the central bank may decide to begin rolling back on its bondbuying program known as quantitative easing. I am pleased to have Larry Summers back at this table. Welcome. Glad to be with you, charlie. Rose let me start with the budget. Tell me how you see the budget agreement that was reached between paul ryan and patti murray. This wasnt a grand bargain. It was a little deal. Rose yes. But it was a good little deal. It prevented some mindless cutting from taking place over the next year. It allows some reasonable choices to be made. It creates some grounds for stopping the federal budget from being a big drag on Economic Activity as it has been over the last several years. Rose because of sequestration. Because of sequestration. And charlie it also takes the risk of another bit of foolish brinksmanship where we close the government or worry about whether were going to pay the debt off the table theres not a lot of stuff in it to some level but relative to the budget deals in the past the stuff thats there is honest. Very little accounting gimmickry its a pretty straightforward positive but small step. Im glad to see it happen and i think the way you restore trust and functionality is bit by bit and this is a step on that road. Rose and bit by bit includes a level of bipartisanship. There was cooperation between the between both parties i think both parties are to be credited with that. And were avoiding what could have been quite costly in terms of further deeper sequestration. Now, make no mistake, make no mistake, this is a deal to stop Digging Deeper in the hole were in. This duds not get us out of the hole. This does not provide for substantial Economic Activity in the short run. This does not do anything about the long run deficit issues that concern so many people. But we were in a situation where we were continually digging ourselves deeper and weakening the economy and this puts a stop to that and thats something to be praised. Rose and it adds some level of certainty and expectation which has not been there, resulting in because of the political issue resulting in lack of credibility. I think thats right. I think thats what i was trying to get at in the same way when i talked about taking the risk of a shutdown or Something Like that off the table. Look, i think theres another thing thats positive about this. I think weve exhausted the productivity of debating the budget in washington for a while. And this puts an end to those debates for the next couple of years and i think we can focus on more fundamental questions, frankly. More fundamental questions like how were going to grow the economy faster. More fundamental questions like what were going to do about inequality. More fundamental questions like assuring the containment of Health Care Costs or that we get to the Energy Independence thats now possible as rapidly as we can so i think this puts the budget in a box for a little while and while im sure thats disappointing to the people whose whole lives are around negotiating budget deals i think its basically a positive thing. Rose you are constantly in speeches and columns looking forward to say what we need is growth. We need to stop obsessing over the debt, yes . Thats right. Rose what makes you so sure youre right . In part its a judgment that the the morality of future generations depends on many things. Yes it would be better not to leave my karen lot of debt at a 2 interest rate. It would also be better not to have inferred all the maintenance on the infrastructure they inherit. It would also be better to assure them and their children an adequate education. It would also be better to preserve americas scientific leadership in the world. It would also be better to pay Government Employees in a way where theres an effective, is functioning, competent set of people running the government. So the first part of it is that there are actually multiple deficits that we as a country face and the financial deficit is only one of them and probably not the most serious. The second part of it is just simple arithmetic, charlie. Whether you believe in keynesian stuff about demand and stimulus or all of that. I dont know of any economics class where they dont tell you that if you can borrow money at 2. 5 or 3 or 1 , to invest in something that will pay at a rate of 5 or 8 or 10 that thats not a good thing to do. And i look at our country right now and we can borrow money, if we borrow short at 0 , if we borrow long at less than 3 and it defies belief that we dont have projects to have a payoff return thats much greater than 3 . So thats the second thing that leads me to emphasize growth and the third thing is the simple knowledge that the most important determinant of what economists call debt dynamics, how debt moves relative to income, is going to be how fast the economy grows. And that if we can accelerate our growth rate by only. 2 , that will be enough to eliminate what people what the Congressional Budget Office estimates is the fiscal gap over the next 75 years and growth is also whats most important for middleincome families, is whats most important for american competitiveness, its whats most important for americas example in the world. Thats why i keep coming back to growth. Rose you also emphasize the deficit is declining a bit on its own. The deficit, according to the Congressional Budget Office and the best forecasts we have is projected to decline as a share of g. D. P. For the next ten years. After that it is expected to increase but the truth is that the c. B. O. Admits this although maybe not as clearly as they could that we dont our ability to estimate deficits 10 or 20 years out is frankly nonexistent. Rose if you look at the predictions that were made ten years ago by japan or whatever just turns out not to be true. Not close. If you look at the budget forecast just five years out and you look for a confidence interval, that confidence interval is 10 of g. D. P. Wide. And so we dont know where these numbers are going to be. And theres a question as to how much and how aggressively you should pretzel yourself over something you cant forecast with any accuracy at all. Of course we should be trying to control Health Care Costs because thats the right thing to do whatever exactly budget picture is going to be. But i worry about those who would make austerity and a focus on the 2030 budget deficit the driving preoccupation of american politics rather than raising middleclass incomes today which seems to me to be at the root of what it is zens want at the root of restoring citizens faith in our country and its government. I come back any economic question and try to relate it to what can we best do to raise middle income families rose and what you come up with is investment in the future . The right public investment, the right movable barriers to private investment, the right promotion of exports, the right steps to increase business confidence. Look, we had a harvard has a football stadium. Its in the middle of an urban area. It was built a hundred years ago. They didnt have bulldozers then but still it took 18 months from the time the stadium was conceived until the time the first game was played. Can one conceive of anything like that happening in the United States today . Weve got to regulate wisely, there are all kinds of protections we need to make but we need to make our decisions much more quickly and in much more streamlined ways that reduce uncertainty than we have i want to come to doddfrank and the volcker rule in a moment but staying with this idea, is it possible when you look at the growth of the u. S. Economy that we have lost some of our productivity potential . In other words, have people been out of the labor force not going to have the skills for the jobs that come up in 2013, 2014, 2015 . I think theres no question that there are what economists call historesis effects. That refers to history dependence. People who have been unemployed for two years often have a very hard time going back to work. Thats why its very interesting if you look at what the Congressional Budget Office thought the american economys potential was in 2014 as of 2007 and you look at their estimate today its declined by close to a trillion dollars. That are trillion dollars, thats more than 3,000 for every american. And thats not what we are producing. Thats what they think our potential is to produce. And thats because