A compromise tax plan moves forward in the last days of a lame-duck Congress. The House approves a repeal of the policy against gays serving in the military. And the Justice Department files suit in the BP oil spill disaster. A panel of journalists joins Diane for analysis of the week’s top national news stories.

Guests

  • Ron Elving Washington editor for NPR.
  • Jeanne Cummings Politico's assistant managing editor in charge of Enterprise.
  • Greg Ip U.S. economics editor, The Economist, and author of "The Little Book of Economics: How the Economy Works in the Real World."

Friday News Roundup Extra

The panelists discuss the First Responders Bill and Comedy Central Daily Show host Jon Stewart’s devotion of his last show of the year to the topic. Diane received many audience questions and comments about the proposed bill, which would provide $7 billion in benefits to 9/11 first responders who are now suffering health problems as a result of their work at or near ground zero. The bill has passed in the House, but Senate Republicans have filibustered it:

The panelists discuss what Politico’s Jeanne Cummings described as a “pheonix-like” revival in the past week of the prospect of a Congressional repeal of “Don’t Ask, Don’t Tell:”

Transcript

  • 10:06:54

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Congress is set to send President Obama and $858 billion tax package for his signature. The measure passed the House after midnight. It extends Bush tax cuts, renews jobless benefits and cuts Social Security taxes. The $1.1 trillion omnibus budget bill crumbled in the Senate, but a vote on Don't Ask, Don't Tell is scheduled for the weekend. And 20 states, yesterday, asked a federal judge in Florida to find new health care legislation unconstitutional.

  • 10:07:41

    MS. DIANE REHMJoining me for the domestic hour of the Friday News Roundup, Ron Elving of NPR, Jeanne Cummings of Politico and Greg Ip of The Economist. And, of course, we'll be taking your calls, comments throughout the hour, 800-433-8850. Send us your e-mail to drshow@wamu.org. Join us on Facebook or send us a tweet. Good morning to all of you.

  • 10:08:17

    MR. RON ELVINGGood morning, Diane.

  • 10:08:17

    MS. JEANNE CUMMINGSGood morning.

  • 10:08:18

    MR. GREG IPGood morning.

  • 10:08:18

    REHMHappy Friday to you. Greg Ip, talk about what the tax bill actually provides.

  • 10:08:27

    IPWell, the price tag has been put at $858 billion, but well over half of that is stuck. It was probably going to happen anyway. It represents the extension of Bush tax cuts, which were all due to expire at the end of this month. There's about $300 billion in there of what we would call new stimulus. This is additional measures designed to stimulate the economy over the next year to...

  • 10:08:47

    REHMSuch as?

  • 10:08:48

    IPWell, for example, there is a percent -- 2 percentage point cut in the Social Security tax that's worth over $100 billion straight into the pockets of working people next year. There is an investment tax credit. For one year, businesses get to write off against their taxes the entire cost of buying new equipment. And, finally, there is an extension of expanded unemployment insurance benefits, that's worth another $57 billion, which will put money, again, directly in the hands of people who are going to go spend it because these are unemployed people who really are kind of living hand to mouth.

  • 10:09:20

    REHMAnd to what extent is this package actually going to stimulate the economy?

  • 10:09:29

    IPIt's going to help a lot. I mean, economists who've looked at these numbers have estimated that, instead of growing, say, 2.5 to 3 percent next year, the economy will grow 3, 3.5, probably, to 4 percent as a result of this package. But perhaps even more important than just the actual numbers is that it really eliminates some of the biggest downside risks to the economy. There are a lot of question marks about whether the tax cuts were going to be extended and about whether we were going to have anything to offset the contractionary effect of the expiration of Obama's stimulus program. At a stroke, we have eliminated both of those sources of uncertainty.

  • 10:10:04

    REHMSo eliminating doubt is a big deal, Jeanne Cummings?

  • 10:10:09

    CUMMINGSWell, that's what you hear a lot of business advocates say that one of the reasons that investing hasn't occurred, is because of uncertainty about what was going to happen with health care, what was going to happen with the Wall Street regulation reforms and what was going to happen with the tax code, and so all of those issues in the last year have been resolved, removing some uncertainty. However, it's a temporary extension, and so I wouldn't be a bit surprised if within a year that we start hearing again about uncertainty, uncertainty, uncertainty because it becomes leverage for getting something else. And so...

  • 10:10:47

    REHMOngoing uncertainty.

  • 10:10:48

    CUMMINGSAbsolutely. And many economists who are not in the middle of these fights say the reason there is an investment is because there isn't enough demand. And it's just that simple, and that it's not really about the uncertainty of the marketplace, that's just a nicer way to talk about it.

  • 10:11:04

    REHMRon Elving, How do you see it?

  • 10:11:06

    ELVINGYou know, so much of this is psychological. It is the decision making process of individual businesses whether they're run by a few people or by a large board or whether they're run, in some sense or another, by a democracy or stockholders. They're all trying to make business decisions based on what they see coming next. And, psychologically, they need to get to the point that they think that we've turned the corner, and we are really going to see growth and demand pick up. That's what's been holding us back.

  • 10:11:32

    ELVINGThe first stimulus was not enough to break through the psychology. It may have been enough to put a safety net under where we were in the early months of 2009, still coming out of the freefall of late 2008. So maybe that was more a matter of keeping things from getting worse. And, as Greg said, one of the main functions of what just happened is to keep anything from happening that would make things worse again. The double-dip recession that might have come from a big tax increase right now. That's what drove this bill more than anything else, and that's what's certainly made it bi-partisan more than anything else.

  • 10:12:02

    ELVINGBut in the end, you've got to break that psychology that's out there in the marketplace where everyone is too cautious and everyone is waiting to make that business gamble. And that's why you've got a couple of trillion dollars. I think it's something like a couple of trillion dollars sitting on the sidelines right now rather than being actively invested in the economy.

  • 10:12:18

    REHMNow, what about the risk of overstimulation leading to inflation, Greg Ip?

  • 10:12:26

    IPI think the risk is close to zero. I mean, we have a 10 percent unemployment rate. Five percent is what you'd expect in an economy that was working at full strength. It would take years -- I mean, I'm talking five years of more of growth of 4 percent before we had to start worrying about running out of capacity. I think the real risk here is that, notwithstanding the bi-partisan's support for this bill, which everybody is encouraged by, it's pretty easy for Democrats and Republicans to come together and give money away. We still have not seen them in a serious way talk about taking anything back from taxpayers in their constituencies.

  • 10:13:00

    IPThere was -- despite all the good work from the deficit commission, there was nothing out of this tax deal that commits either the president or Congress to addressing the long-term debt problems. I mean, this is a good package for helping the economy in the short-term, but there's no getting around the fact that it just added several hundred billion dollars more to the deficit and the debt in the near term. And we still don't have a strategy for dealing with those.

  • 10:13:21

    REHMLet's talk a moment, politically. Charles Krauthammer writes in The Washington Post this morning that, as historians look back on President Obama's presidency, they will see this week as a real turning point that he really won this deal. How do you see it?

  • 10:13:44

    ELVINGThere's a possibility that people will look back on this and say this allowed Barack Obama to set a new course for the second half of this first term and thereby to give himself a good shot at the second term. They will make the comparison to Bill Clinton, as Charles Krauthammer does. The 1994 debacle that caused him control of the House and Senate set him on a course that probably made him a much stronger candidate in 1996, running against the excesses of his party as well as those of the Republican Party. Some people called it triangulation, not in public maybe, but the word got around quite a bit. And he pushed off from both of the unpopularities.

  • 10:14:19

    ELVINGYou know, Democrats and Republicans -- maybe most of Americans fall into one category or another -- but they aren't very popular. Even among people who voted on Nov. 2 for Republican candidates, there was something like a 30 percent disapproval of the Republican Party. So it's a good strategy, in general, not to be too closely identified with either one. And now that Bill Clinton has been -- excuse me -- Barack Obama has been able to pass a lot of the legislation he wanted to pass in his first two years by exploiting his Democratic majorities, now, maybe it makes more sense for him in a really, you know, self-centered sort of political way to put himself in a different part of the political spectrum.

  • 10:14:56

    REHMJeanne Cummings?

  • 10:14:57

    CUMMINGSWell, I think that the president has been on a track to do that very thing since he took office. He talked about wanting to have some deficit reduction credentials. He's talked about that all his -- for his entire presidency. And even when he was running, he talked about a need to make spending smarter in Washington and to reduce it. So this certainly will make it easier. Having at least one Republican partner in such a quest will make it easier for him to do those things, and this is a good first step for his next two years.

  • 10:15:32

    CUMMINGSHowever, we got a long way to go, and it's a very volatile environment. And this could all fall apart in short order. However, we must concede and note that this is hardly a lame duck session. This is a very -- could prove to be quite a robust post election session that we are going to see here. And part of the negotiations that went on between the president and the Republicans was the sequencing of legislation. And we're seeing the fruits of that part of the negotiation as well. The Republicans...

  • 10:16:08

    REHMWhen you say, the sequencing, explain that.

  • 10:16:10

    CUMMINGSThe Republicans insisted that the tax issue be first resolved. Clearly, in exchange for that, they were going to then allow some room for the Democrats to move on some of their other issues and...

  • 10:16:23

    REHMLike?

  • 10:16:24

    CUMMINGSLike Don't Ask, Don't Tell, like START, like the DREAM Act. Now, not all of those may pass, but the Republicans could have stopped any debate and any votes on them quite easily as we saw in the Senate when there were the threats to read these documents and that sort of thing. And Mitch McConnell kept his word. He stopped the filibustering. He stopped the reading of legislation, and that's the only reason that Harry Reid now may be able to schedule these votes on issues that are really important to the Democrats.

  • 10:16:56

    REHMNevertheless, his -- even his Democratic supporters in the House, Greg Ip, were very loud in their opposition to this tax package.

  • 10:17:09

    IPYeah, you know, I think that perhaps a year or two from now, people will look back, and they say that in some sense, Obama and the Democrats lost the battle but won the war. By that, I mean, Democrats were outraged that there were certain highly symbolic, important issues to them -- like the estate tax extension that they lost on -- that got rolled by the Republicans. That's the view. But if you step back and ask, what's the larger story here? Why did Obama push so hard for this in spite of what his own press secretary called these odious elements?

  • 10:17:34

    IPIt's because he wanted to get the economy out of a rut. The thing that's killing Democrats at the polls is the lack of jobs. If the package works as advertised -- as the neutral economists think it will -- we're going to get pretty decent job growth. A year or two from now, that'll be the number one determinant on whether Obama gets a second term.

  • 10:17:52

    ELVINGYes. I think that's exactly right. And, in that sense, it's a good deal for the Democrats. You know, if they're going to try to go to the mat on a populist issue, arguing over whether you should have a 35 percent or a 45 percent rate on the estate tax and whether it should apply to $3.5 million estates or $5 million estates, that does not sound like a great populist argument. That sounds like an argument over details in a back room among Senate staffers.

  • 10:18:17

    CUMMINGSWell, but in their defense, that -- the income gap between the rich and the poor is something Democrats do, in fact, feel passionately about. And those details matter in that fight.

  • 10:18:30

    REHMJeanne Cummings, she is Politico's assistant managing editor in charge of Enterprise. We'll take a short break. And when we come back, we'll be opening the phones, taking your calls.

  • 10:20:03

    REHMWelcome back. I'm so interested in what went on, or might have gone on, behind the scenes to get this tax bill through. Jeanne Cummings, is it sort of realistic to at least wonder whether those who were protesting the president's plan most loudly -- his own Democrats in the House -- did so, even knowing they were going to go ahead and give the president cover?

  • 10:20:41

    CUMMINGSWithout a doubt. That some of what is going on on Capitol Hill, especially at this stage -- after the -- you know, initially, there may have been plenty that were hopping mad. But where we are today, the writing was on the wall for at least the last three days. They knew where this was going. And so they had to protest and protest so that the progressives had an opportunity to hear their voices in this debate, that -- hear their frustrations expressed in this debate. And at the same time, what it did, that -- you know, all of that fury, certainly, probably made many Republicans feel like, wow, we really did get a good deal because they're so mad about it. And in that respect, I think both sides gave each other some cover to go ahead and pass it.

  • 10:21:30

    REHMIt's interesting who is saying, we should have gotten more. Republicans are saying we should have gotten tax breaks permanently and not just the two-year extension.

  • 10:21:44

    ELVINGYes. Or wipe out the estate tax once and for all.

  • 10:21:47

    REHMExactly.

  • 10:21:47

    ELVINGJust not ever have it.

  • 10:21:48

    REHMYeah.

  • 10:21:48

    ELVINGWe did have a one-year moratorium. Why not make that permanent? That was a popular position among some conservatives and, certainly, among those who are focused on investment-class income earners. And income inequality is a very important issue between the parties. And Democrats do think that, in the long run, that's a winner for them, and they want to get on the side that they're on. And that's a legitimate argument. Notably, all the Republican candidates who have been speaking about this, who are prospects for president -- at least the ones that I've seen -- seem to be all coming out against the deal. Sarah Palin immediately called it a lousy deal.

  • 10:22:18

    ELVINGMitt Romney -- to a lot of people's surprise since you would expect Mitt Romney to be the kind of Republican who would see something in this for the Republican constituencies -- came out and said he didn't care for the deal, thought it should be permanent. Mike Pence, a number of other people -- who are all circling around the idea of New Hampshire and Iowa and South Carolina in the months ahead -- all seem to think that their political bread was buttered on the side of saying, bum deal.

  • 10:22:41

    REHMGreg.

  • 10:22:42

    IPI think it's interesting that, when you look at the breakdown of the vote in the House last night, you had a very small minority of Democrats voting for it and a very large majority of Republicans voting for it. Still, Mike Pence did lead this group of about 36 Republicans, I think, voting against it. Now, those ranks are going to be significantly swelled in the New Year by the freshman class of Republicans, many of whom are infused with the Tea Party, you know, spirit.

  • 10:23:07

    IPI think it's an open question. Whether the extent to which the current Republican leadership was able to hammer out a deal with the White House, that does violate a lot of, you know, the stated concerns about fiscal rectitude that the party has. Whether they'll be able to do the same thing in the coming months -- I think that's why it's an important question whether we continue to fund the government only on these short-term resolutions, which then starts to push us up against the statutory debt ceiling and set the stage for a really giant battle over fiscal policy.

  • 10:23:38

    REHMSo what about this debate over the year-end budget? Where is it going? There was lots of debate over the earmarks. Where do we go, Greg?

  • 10:23:50

    IPWell, the Democratic leadership in the Senate was hoping that -- well, a bit of background first. Half of the government's budget must be re-authorized every year. Otherwise, the government shuts down. And that takes place through what we call 12 appropriations bills. Last year, Congress was unable to pass any of those bills. And so, since the end of the fiscal year on Sep. 30, they've been funding the government through what they call these short-term continuing resolutions. The most recent expires on Saturday. So if we do not re-authorize that spending, a lot of the government has to start shutting down.

  • 10:24:19

    IPSo what the Democratic leadership in the Senate tried to do is bring forth what they call an omnibus bill, which would have jammed all 12 bills into one and get it through. But it happens to be that this was a bill that was put together with the old Senate leadership, and it's crammed with earmarks -- over 6,000. And the problem was that the Republicans now are having buyer's remorse about that, and so they signaled that they were actually not going to allow that omnibus bill to pass.

  • 10:24:44

    REHMAnd, surely, nobody wants the government to shut down again on their watch, Jeanne.

  • 10:24:49

    CUMMINGSNo, I don't think that's where we're headed right now. Where we likely will end is we'll have some short-term resolution passed that will keep the government operating into the next Congress.

  • 10:25:02

    REHMWithout earmarks.

  • 10:25:03

    CUMMINGSAnd the earmarks will be stripped from it. I'd imagine there's a fair amount of negotiation going on about whether the Democratic earmarks will stay in or not. They will probably fight to try to keep some of them in. Republicans may block any earmarks at all. The whole earmark debate, then, will be revisited next year. And the spending -- the level of spending on the government will be revisited next year.

  • 10:25:31

    CUMMINGSAnd I have to -- I'm a little perplexed by the Republican strategy that they've embraced right here with these short-term resolutions because, as Greg said, there's going to be a fight over raising the debt ceiling very early next year. The freshman class coming in is very animated by the idea of the debt and spending, and that fight is going to be a wicked one. And John Boehner has already -- the incoming House Speaker has already said that his freshmen may well have to just sort of suck it up and vote for an increase in the debt ceiling pretty early in their terms because to not do so would shut the government down.

  • 10:26:16

    CUMMINGSAnd they would certainly not be ready in February to have that particular fight, a government shutdown fight. They won't be ready for it yet. So I am perplexed that they don't embrace the idea of a long-term continuing resolution that would allow them six months or seven months to establish themselves, to get their caucus up and running before they end up locking horns with the White House, potentially. I don't want to presuppose -- but potentially.

  • 10:26:45

    ELVINGJeanne's right. I mean, this is a real torpedo in the water out there. Just a few months away, we're going to exceed the debt limit, and we're going to have to do something about it and lift it. And it is the majority party's responsibility to do it in each chamber. That's the Republicans in the House. And there's a real war going on. This is what killed the omnibus in the Senate. The reason that collapsed is that nine Republicans who had told Harry Reid they were okay with it -- appropriators, by and large -- had changed their minds because they had been so embarrassed by their own earmarks in the bill, in some cases having to say, well, I'm going to vote against the bill because it has earmarks in it.

  • 10:27:14

    ELVINGBut the $100 million in earmarks for my state -- John Thune, South Dakota -- well, those are good projects. I support those projects. That's terribly embarrassing for them. They took a beating over it. They backed off on the bill, and that's why we don't have an omnibus and why we need another continuing resolution.

  • 10:27:27

    REHMAnd Mitch McConnell had his own $113 million...

  • 10:27:33

    ELVINGThat's a lot of money in Kentucky.

  • 10:27:34

    REHM...earmark in there. We've had several e-mails this morning. Clearly, people were watching Jon Stewart. And this one is from Trey in Denton, Texas, who says, "What's the status of the 9/11 First Responders bill? Jon Stewart made a passionate appeal on his last show of the year with several 9/11 first responders, asking for the Senate to take action now. Will this happen before the New Year?" Anybody?

  • 10:28:11

    CUMMINGSIt's not on the agenda right now.

  • 10:28:12

    REHMIt's not.

  • 10:28:12

    CUMMINGSIt was -- no, it is not. It was early in the lame duck session. It was blocked. And I don't...

  • 10:28:21

    REHMWho blocked it?

  • 10:28:22

    CUMMINGSWell, it was blocked by Republicans. And there are -- I'm not totally up to date on all the details of that particular fight because it came and went so quickly. Given the fact that the Senate will stay in, probably until next Wednesday, might it revive, have a phoenix-like return, like Don't Ask, Don't Tell? Potentially, but it is not on the agenda now.

  • 10:28:49

    REHMWhat would it do?

  • 10:28:52

    CUMMINGSI believe that it provides enhanced health benefits and coverage for those who suffered from particular illnesses in New York caused by the terrorist attack.

  • 10:29:07

    REHMSo we don't know what state this is yet. I would say 75 percent of our e-mails this morning, thus far, are on that first responders issue.

  • 10:29:22

    CUMMINGSWell, they should send those e-mails to the Senate.

  • 10:29:26

    REHMExactly.

  • 10:29:26

    CUMMINGSThat's the way to shake up that piece of legislation.

  • 10:29:29

    REHMExactly.

  • 10:29:30

    ELVINGThere are hundreds of bills that have been considered by this Congress in the last two years and that had not been passed, probably thousands of bills, many of which are highly worthy, many of which would involve spending a certain amount of money by the federal government and may not have been paid for in the calculus by which legislators decide whether or not something is adding to the deficit or not. Many bills have been blocked on a blanket basis because they're not paid for. And this is only one of many, many meritorious things that the government could do in these last days but probably won't.

  • 10:30:00

    REHMAll right, Ron. What happens to Don't Ask, Don't Tell?

  • 10:30:04

    ELVINGDon't Ask, Don't Tell does appear to have had, as Jeanne said, a bit of a phoenix rise. They didn't have the 60 votes to get the authorization bill through -- that it was attached to for the Defense Department. Sensibly enough, it's a military policy. And this was part of the reason, but not the whole reason, they had problems with the Defense Authorization Bill. So, surprisingly, Joe Lieberman and Susan Collins -- former Democrat, now independent Lieberman and Republican Collins -- got together as the two people who run the government affairs and antiterrorism committee, essentially, and said, look, we really want to get this done. We want to get it done.

  • 10:30:37

    ELVINGWe think we have the votes. We think we have 60 votes just for this individual policy. Forget the rest of the Pentagon and all the other policies. Let's just bring this up free standing. Well, that didn't look like it had much of a chance to fly, but they have held together virtually all the Democrats. Maybe one defection, maybe one person will be unable to come for medical reasons. They think they can get 54 Democrats, 56. We didn't count the two independents. And then they think they've got four Republican votes, Collins and her colleague from Maine, Olympia Snowe, Scott Brown, the new senator who replace Ted Kennedy from Massachusetts and Lisa Murkowski...

  • 10:31:10

    REHMInteresting.

  • 10:31:10

    ELVING...who was just miraculously elected by write-in in Alaska. She would be here anyway as a sitting senator in this lame duck session. But she appears to be providing that magic 60th vote by which they can invoke cloture and apparently approve a repeal of Don't Ask, Don't Tell.

  • 10:31:26

    CUMMINGSI think, when you look at this grand bargain that was struck regarding this lame duck, this is amazing. This is an amazing journey for a piece of legislation. And talk about a victory for Barack Obama if he can get rid of this. And Secretary of Defense Bill (sic) Gates, he is so anxious to get this passed so that he can manage any transition himself in the Pentagon on his timeline and that is best and appropriate for the troops.

  • 10:31:59

    REHMI want to clarify what you've just said. You're saying that once Bill Gates leaves -- Bob Gates leaves, that Barack Obama will be able to manage things on his own terms? Is that what you're saying? You're conflation of adjectives there, I wasn't sure of.

  • 10:32:25

    CUMMINGSI think that the Pentagon -- I mean, obviously, the president could intervene if the president wants to intervene.

  • 10:32:32

    REHMSure.

  • 10:32:33

    CUMMINGSBut the leadership of the Pentagon wants to have control of this process. And it it's done by the courts, they won't have control of it, and they -- so they need -- that is, I think, the driving force in the Senate that is moving this piece of legislation along. Gates came out with that study that reassured some senators that objections amongst the rank and file, while present, are not overwhelming, that they might be managed. And, you know, Gates is the one who's pushing and pushing the Republicans to get on board.

  • 10:33:09

    REHMJeanne Cummings of Politico, and you're listening to "The Diane Rehm Show." So, the START Treaty is finally what we need to talk about here and whether -- or how close it is to ratification, Ron Elving.

  • 10:33:31

    ELVINGIt appears that it has almost if not all of the 67 votes that it would need to be approved. Now, this is astonishing. How long have we been talking the last two years about how tough it is to get to 60?

  • 10:33:41

    REHMAnd what would it do, Ron?

  • 10:33:43

    ELVINGWell, this essentially continues the regime that we've gotten used to over decades, really, going back to the '60s, the '70s, the '80s, with respect to this -- at that time Soviet Union -- now Russia and their nuclear weapons. And it also is a basis by which we can talk to other countries around the world about restricting the proliferation of nuclear weapons. It's extremely important to have some kind of international regime by which some kind of control of nuclear weapons is established, and this is a long negotiated treaty. We've had all the secretaries of state from both parties coming out very strongly, Henry Kissinger, George Shultz from the Republican side and so on, saying this is an important, continuum. We need this, and, really, it should be about the most bipartisan piece of foreign policy.

  • 10:34:29

    REHMAt the same time, you've got opponents like Sen. Kyl objecting to considering the treaty in the waning days of the Congress, Jeanne.

  • 10:34:41

    CUMMINGSWell, the arguments against it are murky to me. They say that there hasn't been enough time to review it...

  • 10:34:47

    REHMRight. And debates.

  • 10:34:48

    CUMMINGS...that there haven't been enough hearings, and there hasn't been enough debate. But this treaty has been sitting around for a long time. There have been hearings on it. Some of the people who have criticized or complained about the lack of hearings have been attacked because they skipped the hearings that were actually held. So that argument, I think, is just one we often hear. We also hear that it's going to somehow undermine missile -- our missile defense program, which is a priority to the Republicans in the Senate, some of them.

  • 10:35:19

    CUMMINGSAnd the White House has signaled that if they want to pass addendum amendments, they can't attach it to the treaty 'cause we've had to take it back to Russia. But if they want to, you know, play on the margins, that they're not going to object to that. So I think that, you know, in Washington, nothing's easy, that everybody has got to complain at some point. And so I think those issues can be overcome. However, you know, time is short.

  • 10:35:49

    REHMYeah.

  • 10:35:49

    CUMMINGSWe'll see.

  • 10:35:50

    REHMAnd this would really represent a huge victory for President Obama, Greg.

  • 10:35:57

    IPOh, absolutely. I mean, Obama has tried to make one of his signature foreign policy initiatives as ridding the world of nuclear weapons. He's not going to get that, but this is, you know, not having a successor to the first START Treaty was obviously a major problem. Now, in fairness, the opponents of the treaty do have some substantive concerns. One is that they're afraid that the so-called preamble language somehow limits the United States' ability to deploy missile defense. And if that the United States goes ahead with that, the Russians can pull out. Another concern is that it doesn't address the Russian superiority in tactical as opposed to strategic nuclear weapons.

  • 10:36:28

    IPAnd the final concern is that there -- there's doubts about the administration's willingness to spend the money necessary to upgrade the U.S. nuclear force. But these are not new concerns. They've been around since it was signed, you know. As Ron and Jeanne were saying, you know, Republican and Democratic secretaries of state have looked at this, and they said, this should be ratified. I think, really, the reason the Republicans might be trying to run out the clock is that in January their numbers will be bolstered, and it will be easier to stop it altogether.

  • 10:36:56

    REHMSo is the clock going to run out before Christmas or not? Is the Congress going to be here through Wednesday? Or is it going to be here through Christmas, Ron?

  • 10:37:10

    ELVINGI think there's every chance they'll be here through Wednesday. I believe they may be around a little closer to Christmas Day as they were, of course, last year -- the famous Christmas Eve votes on health care. I don't think it's impossible, although unlikely, that Harry Reid might try to drag people back in here after Christmas because the Congress still has authority through the end of the year.

  • 10:37:28

    REHMRon Elving, he is Washington editor for NPR. When we come back, we'll talk further and take your calls, your questions, your e-mail. Stay with us.

  • 10:40:03

    REHMWelcome back. It's time to go to the telephones, 800-433-8850. First to Karen in Gainesville, Fla. Good morning to you. Thanks for joining us.

  • 10:40:18

    KARENGood morning. How much of this tax cut will help small business, which is the most important part of our economy?

  • 10:40:26

    REHMGreg Ip.

  • 10:40:27

    IPIt'll help small business indirectly in that, if it's successful at boosting demand by giving people, through their paychecks, more spending power, some of that demand will come back to small businesses. The administration has already done a couple of things that were more specifically designed to help small businesses, such as a $30 billion fund that would essentially subsidize loans by community-size banks to small businesses. But most of the benefit of this will go to businesses indirectly.

  • 10:40:54

    REHMAll right. To Woodstock, Ill. Lydia, thanks for joining us.

  • 10:41:00

    LYDIAWell, good morning. Thank you. I would like to give voice to the independents, and I think a key word to this whole discussion is the word, believe. Ronald Reagan's trickle-down strategy of economic theory is on test here, and I think Bernie Sanders did a wonderful job for eight hours. And I'd like to put it in context with Ronald Reagan's famous favorite story. It's very short. Two men walking to a barn. They see a pile in the corner. One of them said, this is terrible. We have to do something about this. The other one, the optimist, said, well, that just means there's a pony in there somewhere.

  • 10:41:38

    LYDIABernie Sanders took a long time, and he stood there, pitchfork ready. And he basically said, look, folks, it's not a pony. There hasn't been a pony in there, not now, not 10 years ago. And President Obama, "unless he was smoking something, there ain't going to be a pony in there in the next two years or maybe not even a donkey."

  • 10:42:01

    REHMRon Elving.

  • 10:42:02

    ELVINGWell, Bernie Sanders did, in fact, hold the floor a week ago today for eight-and-a-half hours. That was an extraordinary performance. He had some things to read from, but a lot of it came straight from the heart. It was a moving speech, an eloquent speech, and it did not move, ultimately, many votes in the Senate. But I think it did move a lot of people around the country, whether they saw it all on C-SPAN or not. Of course, not many did. But many others have seen it on YouTube. Many people have seen it written and talked about.

  • 10:42:29

    ELVINGI think that that speech may begin to crystallize a different kind of debate about some of these tax and spending issues that have been driven for 30 years back to '78, 1980, when the Ronal Reagan revolution was taking place, largely by conservatives. They've been able to label the estate tax, relabeled it in many people's minds a death tax. As though it were paid for -- paid by everyone instead of only multimillion dollar estates. They've been able to do a lot of things with the language. And this, I think, is what frustrates Bernie Sanders and other progressives in Congress, that they have so much lost control of the message.

  • 10:43:04

    REHMChris Van Hollen was saying on this program that that raising of the estate tax would affect no more than 6,000 people in this country, so it was interesting to see that argued for. Thanks for joining us, Lydia. We have an e-mail from Nora in Chapel Hill, N.C. who says, "It seems that in the past two years, moderates like Susan Collins, Olympia Snowe, have voted a party line when they might have been inclined not to. Well, the fact that there are more Republicans in the Senate now free, those moderates have to vote with Democrats more often. Is the party pressure on them likely to lessen?" Jeanne Cummings.

  • 10:43:58

    CUMMINGSWell, I think I'd take a little issue with the premise such as -- for a second here. Sen. Snowe and Sen. Collins, in particular, pride themselves on their independence, and they are under a lot of party pressure. They both are being threatened with potential primary candidates. But Maine is a funky state. It's its own little place up there, and they like their senators having streaks of independence. They like their senators getting in the middle of bipartisan discussions and being relevant to the debates in Washington. And both of those two senators have very strong standings in their home state, so the threats don't work very well on them.

  • 10:44:43

    CUMMINGSSo, now, getting back to the question at hand, there -- I don't think that either one of those women would say that they caved because of party pressure. They tried to negotiate deals, and they didn't get what they wanted. And that's why they didn't vote the way they -- some might have expected them to vote. Will they vote with Democrats more in the future? It's possible. But that may well be because they're looking at different legislation. They are going to have much more influence in the next Congress and an ability to work with Democrats and shape legislation in ways that is more acceptable to them.

  • 10:45:19

    REHMAll right. To Black Mountain, N.C. Good morning, Cindy.

  • 10:45:24

    CINDYGood morning. Thank you for letting me be on your show.

  • 10:45:27

    REHMSure.

  • 10:45:28

    CINDYAnd, yes. I'm one of the over 75 percent of listeners who was going to send you an e-mail about the 9/11 first responders health bill. And what I understand about it -- and I've been following this for a while. I'm a registered nurse. And if I had been anywhere on the East Coast when that happened -- and I was in Arizona -- I would have been there to help myself. I'm a veteran. And to think that this enhanced medical coverage would not be supported by Congress, especially the Senate, is astounding to me and really, really disappointing. I wonder if they even have hearts, really.

  • 10:46:17

    REHMJust to clarify a little bit, it was -- this 9/11 Health and Compensation Act was introduced in the Senate earlier this month. It would provide $7.4 billion to cover health care and compensation. It was defeated in the Senate largely because of Republican vote. And it will be -- John Feal, one of the first injured responders, was told that the act will be introduced again in Congress, where if it passes before Dec. 31, it would proceed to the Senate. Kirsten Gillibrand said the idea that tax cuts for millionaires would derail this legislation is simply outrageous and defensive. Greg Ip.

  • 10:47:18

    IPI would let them know a little bit more about why the Senate Republicans filibustered this. On other similar initiatives, they've said in principle, they support some of the stuff, such as extended unemployment insurance benefits, but they want it paid for. I don't know whether we have any information to that effect, whether this had pay-fors in it. If it didn't happen, then that, perhaps, is something that the Senate has to address.

  • 10:47:40

    ELVINGAnd it has not been part of the global deal. Now, we don't know all of the dimensions of this global deal. We're still guessing at some of the things that Joe Biden and Mitch McConnell may have agreed to when they put together the tax deal and some of these other things that have apparently cleared away for some legislation. It's not inconceivable that this could be part of that global deal...

  • 10:47:58

    REHMIndeed.

  • 10:47:58

    ELVING...and we'll still see it on the Senate floor before they go home.

  • 10:48:01

    REHMThanks for your call, Cindy. I want to ask you about these 20 states who are asking a federal judge in Florida to find the federal health care overhaul unconstitutional. On what grounds, Greg Ip?

  • 10:48:19

    IPWell, this is interesting because, as we know, the Republicans were basically two -- a man and woman -- opposed to Obama's health care reform. And one -- they've sort of taken a two-track approach to trying to push it back. One is to -- they know they don't have the ability, the votes to repeal it, so they may try and defund it through the appropriations process. The other is to go through the courts and to try and find certain provisions unconstitutional. And the most important is the so-called mandate that essentially requires anybody who doesn't have health insurance to pay a penalty or tax depending on who you're asking. It's designed to -- that's actually central to the whole health care reform.

  • 10:48:56

    IPThe fear about the insurance companies is now that we're required to give everybody health care, regardless of their conditions. We're afraid that people will only buy insurance once they get sick. So for us to -- for this to work for the insurance companies, there also has to be this mandate. However, there are question marks as to whether the government can compel people to actually buy insurance.

  • 10:49:18

    IPNow, the administration's point of view is that interstate commerce clause of the Constitution allows them to do quite a few things in order to regulate business that, you know, crosses borders between states. But what the opponents say is that clause has never been able -- used to justify people not doing something, that is to say, not buying an insurance. And that's essentially the essence of that case.

  • 10:49:40

    IPNow, the court history to date is that we've had essentially three federal judges rule on this. Two have said, yes, it is constitutional, and one in Virginia said, no, it's not. It's not constitutional. Interestingly, those judges' vote, basically, ruled on party lines. The two who held it up had been appointed by a Democratic president, and the one who, basically, ruled against it was appointed by a Republican.

  • 10:50:05

    REHMBut hasn't the Republicans' ruling been called into question because of conflict of interest, Ron Elving?

  • 10:50:14

    ELVINGWell, this particular Republican judge in Virginia has political background and has been involved in political activities in the past. But, you know, there's really nothing unique about that. There's no requirement that judges have no political background and never have been involved to either commerce...

  • 10:50:28

    REHMBut it's more than that. He's an investor in a political consulting firm that has done work for Republicans, including Virginia Atty. Gen. Ken Cuccinelli, who brought the suit...

  • 10:50:46

    ELVINGThat's right.

  • 10:50:47

    REHM...challenging the law.

  • 10:50:48

    ELVINGThat's right.

  • 10:50:48

    REHMSo it does raise questions.

  • 10:50:50

    ELVINGIt's a conflict of interest...

  • 10:50:51

    REHMYes.

  • 10:50:51

    ELVING...in the sense that he clearly has been a political ally of Ken Cuccinelli in the past, as one would not be too surprised to find in a federal judge who had been appointed by George W. Bush, in an era when Ken Cuccinelli and a number of other people now in power in Virginia were rising through the ranks. But, you know, we've had federal judges over the years who had been governors prior to becoming a federal judge. They have been absolutely political figures who have had very strong and pronounced political views before they became federal judges. Earl Warren was governor of California and been a nominee for vice president of the Republican Party before he went on the Supreme Court.

  • 10:51:26

    REHMSo any chance that his decision would be overturned, Jeanne?

  • 10:51:31

    CUMMINGSI don't think it's a big chance, but I also don't think that it's all that relevant. Some judge somewhere is going to say it's unconstitutional, and this thing is going to the Supreme Court. And so, you know, it's inevitable. And the path of getting there may be short, might be long. And it may have only three rulings or four, and it may have seven. It doesn't matter. It's all going to the Supreme Court. And so we (sounds like) just started waiting and taking a ride there. And this is not, actually, uncommon at all for a major transformational piece of legislation.

  • 10:52:03

    CUMMINGSThe New York Times this week had a really interesting article about, Social Security was challenged, Medicare was challenged, and it took six, seven years, 10 years for those programs to firmly root themselves both socially, politically and legally into our society. And so it may take some time for this one as well.

  • 10:52:25

    REHMJean Cummings of Politico. You're listening to the "The Diane Rehm Show." And to Cynthia in St. Charles, Mo. Good morning.

  • 10:52:36

    CYNTHIAOh, good morning. Thank you for taking my call. I have a question about the 2 percent payroll tax holiday. How will it affect the Social Security trust fund? And knowing the Republicans and how they hate to turn down a tax holiday or tax break, could the Democrats use that if they don't restore the 2 percent? You know what I'm trying to say?

  • 10:52:56

    REHMSure. Greg Ip.

  • 10:52:57

    IPWell, the way it will work is that the 2 percent payroll tax cut will cost revenue for the Social Security trust fund. So the government will simply replenish that dollar for dollar out of general revenues, which basically means they're going to borrow the money. So the trust fund will not be affected. But it does raise an interesting question. Because a year from now, what if the economy is not really booming? There's going to be a question mark. Should we actually extend this thing? And does this lower payroll tax then become like the Bush tax cuts...

  • 10:53:22

    REHMPermanent.

  • 10:53:22

    IP...you know, permanent by virtue of having been renewed so often? And then the concern that a lot of people have is that they're going to look at Social Security, and they're going to say, well, we've got to reform this program, but we can't raise the payroll tax now. We've agreed that it's going to be lower. That's going to have to come through lower benefits.

  • 10:53:38

    REHMAll right.

  • 10:53:39

    ELVINGYeah, but here's a thought, what if they would've just raised the amount of money that this is applied to, so that instead of cutting off at $106,000 in income, it kept going on up to 120 or 150, 175? Or what if there were no cap on how much earned income was subject to the Social Security tax? That could balance off that two-point cut pretty fast.

  • 10:53:56

    REHMWouldn't that make it a lot easier to accept?

  • 10:53:59

    ELVINGWell, it would make it a great deal more progressive.

  • 10:54:00

    REHMYeah, all right. And what about the Justice Department lawsuit as far as BP is concerned? What is the Justice Department charging as far as BP?

  • 10:54:16

    ELVINGThe Justice Department is charging that BP and a number of other companies that were involved in this particular oil drilling of this particular well violated federal laws in some of their apparently, or allegedly, negligent activities in the way that they did it, in the way that the cementing was done. We've all kind of pushed back this whole well story and all the details that we had so much in our minds back five, six months ago when this seemed to be the biggest threat to the nation. And yet there have been lawyers grinding down, too.

  • 10:54:47

    ELVINGAnd there have been lots of interrogatories issued. There had been lots of hearings on Capitol Hill. People have been looking deeper and deeper into who did what. And, eventually, all of this is going to be going through the courts for years. Interestingly, Halliburton, which was very much involved in this particular disaster, has not yet been named. They're not in there. We haven't got a civil charge against Halliburton with all these other companies that were sued along with BP.

  • 10:55:13

    REHMHow come?

  • 10:55:14

    ELVINGWell, that's a wonderful question. I think the general assumption is not that they're off the hook, but that there is something special coming for them. Now, there could also be criminal charges following this. This is the civil part of the process. There could also be criminal charges brought against some of the companies that were involved in the blowout.

  • 10:55:33

    CUMMINGSThe case is interesting on several levels. Clearly, what the Obama administration wants to do is hold everyone accountable for their actions and for this disaster. And, you know, BP has written gigantic checks to, hopefully, put this behind it. And this lawsuit certainly suggests that that strategy is not going to work for them. They are now going to have to live with this disaster and pay through legal fees and otherwise for quite some time.

  • 10:56:07

    REHMUp to...

  • 10:56:07

    CYNTHIAThe lawsuit...

  • 10:56:08

    REHM...perhaps as much as $20 billion.

  • 10:56:11

    CUMMINGSAbsolutely. I mean, this...

  • 10:56:12

    ELVINGWell, $20 billion is what they committed to already.

  • 10:56:14

    CUMMINGSThat's what they -- and this is just going to make all their costs go up exponentially because now it's a legal fight. But the other thing that would be interesting if this proceeds is that it is one of the biggest tests of our environmental laws. Because that's a lot of what we're finding the violations are embedded in, various provisions deep in our environmental law that are now going to, you know, go through a real rigorous legal test.

  • 10:56:40

    REHMWell, I must say, we live in interesting times, ladies and gentlemen. And that's good for "The Diane Rehm Show..."

  • 10:56:51

    REHM...Friday News Roundup. Thank you all so much. Jean Cummings of Politico, Ron Elving of NPR and Greg Ip, he is U.S. economics editor for The Economist and author of "The Little Book of Economics: How the Economy Works in the Real World." Merry Christmas to all of you.

  • 10:57:15

    ELVINGAnd to you, Diane. Thank you.

  • 10:57:17

    REHMThanks for listening all. I'm Diane Rehm.

  • 10:57:19

    ANNOUNCER"The Diane Rehm Show" is produced by Sandra Pinkard, Nancy Robertson, Susan Nabors, Denise Couture and Monique Nazareth. The engineer is Tobey Schreiner. Dorie Anisman answers the phones. Visit drshow.org for audio archives, transcripts, podcasts and CD sales. Call 202-885-1200 for more information. Our e-mail address is drshow@wamu.org, and we're on Facebook and Twitter. This program comes to you from American University in Washington. This is NPR.

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