House Republicans propose deep spending cuts. Fed Chief Bernanke faces questions about inflation. And the week brought surprise announcements from members of Congress. A panel of journalists joins Diane for analysis of the week’s top national news stories.

Guests

  • John King anchor of CNN's John King, USA, and chief national correspondent.
  • David Welna congressional correspondent, NPR.
  • Lynn Sweet Washington bureau chief, Chicago Sun-Times, and columnist at politicsdaily.com.

Transcript

  • 10:06:54

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. This week, several members of Congress announced they would not seek re-election. One Republican congressman abruptly resigned. The House failed to extend the Patriot Act, and what the likely merger of the New York and Frankfurt Stock Exchange could mean for financial markets. Joining me for the domestic hour of our Friday News Roundup, David Welna of NPR, Lynn Sweet of the Chicago Sun Times and politicsdaily.com, John King of CNN.

  • 10:07:38

    MS. DIANE REHMI look forward to hearing your comments on the week's news, which has certainly been significant both on the domestic and international fronts. Call us on 800-433-8850. Send us your e-mail to drshow@wamu.org. Feel free to join us on Facebook or send us a tweet. Good morning, everybody.

  • 10:08:11

    MS. LYNN SWEETGood morning, Diane.

  • 10:08:11

    MR. DAVID WELNAGood morning.

  • 10:08:12

    MR. JOHN KINGGood morning.

  • 10:08:13

    REHMJohn King, The Conservative Caucus met this week. How are Tea Party Republicans affecting the whole discussion of the budget?

  • 10:08:31

    KINGHugely. In the House of Representatives, the Tea Party Caucus and some of the other freshmen have essentially told their leadership, nice try. Go back to the drawing board. Paul Ryan, who was viewed as this conservative who would cut more than most, came up with a package of cuts depending on how you score. It's 50-something billion or 30-something billion. And the freshmen, especially the Tea Party people said, no, we said 100 billion. Go back and find more. And so they essentially kicked their own leadership in the teeth and said that's not good enough. And it's a sign of pressure. These are not traditional politicians. And it's clear they are not gonna come to Washington and immediately retreat. We don't know where we're gonna get in the end...

  • 10:09:09

    REHMYeah.

  • 10:09:10

    KING...but it's been fascinating to watch.

  • 10:09:12

    REHMWhat kinds of cuts do they want more of, David Welna?

  • 10:09:17

    WELNAWell, they've targeted the domestic, non-defense related discretionary spending, which is about 14 percent of the budget. And although the total amount of $100 billion doesn't reduce the deficit of $1.5 trillion dollars that much, it would have a big effect on that part of the budget, especially because it would be over a seven-month period rather than a full year. It would come close to 20 percent of that budget.

  • 10:09:52

    WELNAAnd particularly in the crosshairs are the Environmental Protection Agency, the Department of Education, the Corporation for Public Broadcasting for goodness sake and housing programs -- things that are, in some ways, a social safety net. In some cases and in other cases, things that people have just began to take for granted. But I think that the leaders in the House realized that it's one thing to talk about cutting $100 billion from this budget. It's quite another to actually identify the actual cuts and make them.

  • 10:10:29

    REHMLynn Sweet, what about President Obama's efforts to find some meeting ground with Republicans on these cuts?

  • 10:10:40

    SWEETWell, I think you will see some of that. Obama's budget comes out next week. And in meetings with his budgeters and knowing that the House Republicans want to cut out, I bet you are going to see a lot of suggestions to reduce the deficit and to curb spending increases. I doubt if it would come anywhere close to the 100 billion that the most conservative Republicans, who ran on this as a single issue, demand. But I think that the Obama -- White House -- I can't say exactly what it will be but they will not have a budget-busting documents sent up to the Hill.

  • 10:11:13

    KINGAnd I think the Democratic president is about to, in a strange way, become the best friend of Speaker Boehner and Leader Cantor, because they're gonna go back to those Tea Party people and say, look, we can't cut this deep because he's going to veto it. So we need to make a compromise. Because we have a Democratic president and because we have a Democratic Senate, we're going to have to negotiate at some point. But those Tea Party members are saying, maybe down the road, not now. We're gonna put something bold on the table right out of the box.

  • 10:11:34

    WELNAThat sounds too rational, I think, for what's going on in town right now. I mean, I think that Republican leaders in the House are writing a bucking bronco right now with these sort of fire-breathing conservatives who've arrived in the House, and the people backing them. And, really, it's kind of a take no prisoners approach. They're not talking about reaching compromises. They're talking about making good on $100 billion, and the credibility of their whole movement seems to be based on that.

  • 10:12:02

    SWEETWell, also, I think you have members now who don't mind just voting no, no, no, no matter how many incarnations it comes through. I also think that there won't -- there is some movement, especially with the turmoil in Egypt to -- besides talking about cutting domestic spending, the crisis in Egypt -- he has put a spotlight on some of the international funding for Egypt and Israel, because Egypt is either the number one or number two recipient of U.S. assistance.

  • 10:12:28

    WELNAIt's number three right now...

  • 10:12:29

    SWEETThree?

  • 10:12:29

    WELNA...just because Haiti got a whole bunch of aid last year.

  • 10:12:31

    SWEETOkay.

  • 10:12:32

    REHMYou know, here's our first e-mail on this from Marty in Syracuse, N.Y., who says, "I failed to understand why Obama can cut the amount of subsidy for home heating for the poor and elderly. Can somebody explain this to me?" John King.

  • 10:12:52

    KINGWell, it's -- that's gonna be a tough question for Democratic...

  • 10:12:54

    REHMYeah.

  • 10:12:55

    KING...president. And the White House's response is that we have to find cuts somewhere. And we're going to look for it...

  • 10:12:59

    REHMEverywhere.

  • 10:13:00

    KING...everywhere. And as David noted, this is the tiniest slice of the pie. To find real money, you have to do Medicare, Social Security and defense spending. And so the first round of this -- I'm gonna use the term charade. That's a bit strong. But you're not going to get the real cuts unless you sit down and have a grown-up conversation about where the real money is. And so, what happens then is that you have to look at these programs that have a popular base out there, that are in many ways a social safety net because that's where there are some money. The president got in trouble last year went to fund one of Mrs. Obama's healthy initiatives. They took some money out of food stamps. Now, what they say was the money was left over. It was not spent, that they put more money and that it was needed, but that's not how it was perceived in the community.

  • 10:13:39

    SWEETRight. And it was...

  • 10:13:40

    KINGPeople said you're cutting food stamps.

  • 10:13:41

    SWEETBut he also -- there is also a pledge to because there is -- he got in trouble with the Congressional Black Caucus on this one. He personally went to a meeting and he pledged that some of that food stamp money would be restored. We'll see what happens next week.

  • 10:13:51

    REHMHere is a posting on Facebook from Shirley who says, "It seems the Tea Party leaders who swore they were only about government spending were not listening to their members who had specific ideas on social issues. Will CPAC bring them together?" David Welna.

  • 10:14:14

    WELNAWell, I think that you do have a certain constituency in CPAC for those social issues, and people like Michelle Bachmann, the Minnesota congresswoman who's the leader of the House Tea Party Caucus yesterday said that's one of the three legs of the stool that they're on -- social issues. And, you know, really, in the House, what we've seen so far from House Republicans is virtually every bill that they've brought up has to do with health issues and -- from the repealing the health care plan to putting all of these new restrictions on abortion. And we haven't really seen much of the budget cutting so far.

  • 10:14:55

    REHMInteresting that at that Conservative Political Action Conference that began in Washington this week, you had more than 11,000 people showing up. And both Donald Rumsfeld and Dick Cheney were there to some support and some booze.

  • 10:15:17

    SWEETThey are selling books, Diane. You know, Rumsfeld's book came out February 8. It was officially published, and Cheney has a book out, so this is a natural audience. I'm not surprised they showed up.

  • 10:15:29

    REHMI'll pick up on that. When Newt Gingrich was elected speaker of the House, he came on this program with his new book followed by a whole cadre of new people. When asked, because he had suggested total cutting of federal funding for NPR and PBS, when asked why he was here on "The Diane Rehm Show" on NPR, he said, because she sells books.

  • 10:15:58

    SWEETYes.

  • 10:15:59

    REHMSo, I mean, that is the way it goes, isn't it?

  • 10:16:02

    SWEETAbsolutely. Because I don't think, you know, Cheney and Rumsfeld have been basically in seclusion. They -- and Rumsfeld has really only surfaced now with his book. He has a house in New Mexico on the shore and, actually, I started reading some of the book. He -- you know, part memoir, part non-apology, part score settling. But if you're going to sell a book, your first natural audience is 11,000 people who are natural potential audience.

  • 10:16:32

    REHMA number of young people including Texas Congressman Ron Paul and his supporters walked out.

  • 10:16:41

    KINGWell, there is a -- it's a very interesting dynamic in the Republican Party right now and in the conservative movement -- a page turning. Anything associated with George W. Bush is off the table. They've all celebrated the Reagan centennial in recent days. Ronald Reagan is still their hero, but most Republicans would agree with the premise that there would be no Tea Party were it not for George W. Bush not following through on being a fiscal conservative that -- the out of control spending in Washington.

  • 10:17:06

    KINGNow, the Bush team would say 9/11 happened, we had to do homeland security. And the conservatives would say, back to you, fine, but what about all the domestic spending growth? What about the Medicare prescription drug benefit? Now, what about No Child Left Behind? What about things that we don't view as conservative programs? So there is a page turning, and Donald Rumsfeld and Dick Cheney equaled George W. Bush to a lot of those young conservative activists who think that it's not the way back to the White House.

  • 10:17:27

    REHMAnd what about walking out on Cheney and Rumsfeld, David Welna?

  • 10:17:35

    WELNAWell, I think that Rumsfeld was never beloved by that many people in the Tea Party groups to start out with. I mean, he is a total establishment Republican. And Cheney, I don't know if people walked out on Cheney, but in some ways I was surprised to see both of them go there even though they do have books to plug because they are establishment Republicans. This was the anti-establishment governing Republicans.

  • 10:18:01

    REHMInteresting. And you had some new indication that Donald Trump may run for president, Lynn Sweet?

  • 10:18:12

    SWEETHe is a tease. He's a tease on this. We've been to -- we've seen this movie before, Diane. Donald Trump is never gonna say never.

  • 10:18:20

    WELNAAlthough he did...

  • 10:18:21

    SWEETBut when the cycle starts up...

  • 10:18:23

    WELNAAlthough he did inform the crowd that Ron Paul was not electable as president to some boos.

  • 10:18:29

    KINGPot meet kettle.

  • 10:18:32

    REHMJohn King, he is anchor of CNN's "John King, USA," chief national correspondent. Lynn Sweet, Washington bureau chief for Chicago Sun-Times. David Welna of NPR. Short break. Right back.

  • 10:20:03

    REHMWelcome back to the domestic hour of our Friday News Roundup this week with David Welna of NPR, Lynn Sweet of politicsdaily.com, John King of CNN. Here's another e-mail on the spending from David in Grand Rapids, Mich. "I haven't heard anything about cutting farm and ethanol subsidies by the Tea Party." Why not, Lynn Sweet?

  • 10:20:36

    SWEETWell, I think as we get into the budget cutting season, you will hear about cutting of these always controversial subsidies. What's interesting, as we come into the 2012 election cycle -- where the Democrats do not have a primary, but the Republicans do -- is how seriously they will tackle it since Iowa, which is the first test state, test presidential vote state with its caucus, is the nation's biggest, often biggest corn producing state.

  • 10:21:03

    REHMHere's an interesting one because I think it may raise some hackles. It's from Josh in Oklahoma. "Has there been legitimate and substantial consideration of cutting our international aid and international government subsidies? It seems domestic cuts could be taken off the table if the above were seriously considered." John King?

  • 10:21:34

    KINGIt's not that much money. So if you cut deeply -- if you cut everything from the international aid budget -- whether it's USAID and food programs, whether it's foreign assistance to Israel and Egypt and Haiti and other governments around the world, if you closed a lot of consulates around the world -- you'd save some money. But, again, you would not make -- it would be pennies on the dollar when it comes to getting into serious deficit reduction.

  • 10:21:53

    KINGBut there is an interesting debate about this now. There are people like Rand Paul, the new Tea Party senator from Kentucky, who says, cut it all or cut most of it, anyway. And he's willing to say, look, I'm a big supporter of Israel. We can't afford it. He's at least willing enough to put that on the table and talk openly about it. It's not gonna go anywhere.

  • 10:22:09

    KINGBut there is a debate now in the Republican Party just on the question of Egypt and others. You have sort of the Buchanan, America first, keep all our money inside the borders. We're reliving that debate again with people who say, A, the money, a lot of it is wasted, B, we just simply can't afford it. And I might -- some people say, I'd love to do it, but we can't afford it. And other Republicans -- like John McCain, for example -- are saying, whoa, you have no idea how dangerous that would be if you did that.

  • 10:22:32

    WELNARight. And I think that because they're targeting non-security spending, there's a big question about whether foreign aid is non-security, because if you look at the Middle East, especially, giving that money to those various countries increases U.S. leverage in the region, too. And especially when you're at a moment such as we are in Egypt, having that billion and a half dollar pile of money there is one way to talk to the military and say, you know what? There's a lot riding on this.

  • 10:23:03

    REHMYou may be able to talk to them, but I'm not sure at this point you can actually influence them, Lynn Sweet. But you may have another view.

  • 10:23:13

    SWEETWell, I think if we're talking about the turmoil in Egypt right now, we know how the White House is not on -- the White House is as befuddled as we are. Last night, the White House issued a statement that basically said, Egypt, please clarify and let us really know what President Mubarak meant in his speech because it's not clear what his next steps are gonna be.

  • 10:23:35

    REHMAll right. And we've got to leave our Egypt talk for the international hour. I want to ask you about the latest resignation announcement from Sen. Jon Kyle, the second ranking Republican in the Senate. He's not gonna seek a fourth term in office. Do we know why, David Welna?

  • 10:24:00

    WELNAWell, Kyle, of course, being the whip, would aspire, you would imagine, to be the leader someday. But Mitch McConnell is showing no signs of stepping down. And even though Republicans do stand a reasonably good chance of getting control of the Senate in next year's elections, Kyle does not have very good prospects of moving up from the position that he's been in for some years now. And he may want to make some money before he hangs up his hat.

  • 10:24:31

    REHMSo Sen. -- Texas Sen. John Cornyn, chair of the Republican Senatorial Committee, is going to make a run for that number two position?

  • 10:24:45

    KINGAnd I believe Lamar Alexander as well, the former governor of Tennessee, now senator from Tennessee. John Thune is the number three, I believe, in the Republican Senate leadership right now, and he's thinking about running for president. Will he decide to stay in and move up? Will that be his rationale, saying, you know, it would be hard to run for president? I'm gonna move up in the leadership. You will get -- when you have a senior official like this step aside, you'll have some turmoil and jockeying. And John Cornyn's will be, in some ways, a referendum on his performance as the, you know, fundraiser for all those candidates back in the 2010 elections, and Texas trying to get a stake at the leadership table when, right now, you have Kentucky and Arizona and South Dakota.

  • 10:25:18

    REHMAnd, Lynn Sweet, why is Jane Harman resigning?

  • 10:25:23

    SWEETThe job that she's going to go take as the chief of the Woodrow Wilson Center to replace Lee Hamilton is a very good job, rarely available. And I think she just took an opportunity that might not give a repeat opportunity to present itself. She is a specialist in intelligence and foreign affairs, everything that the Wilson Center centers on. So I take her at her word that this is just a very good opportunity for her to move on to.

  • 10:25:48

    REHMAnd, unfortunately, Congressman Christopher Lee took another opportunity, which was...

  • 10:25:57

    SWEETOh, yay, yay.

  • 10:25:58

    REHM...just nutsy.

  • 10:25:58

    SWEETOh, yay, yay.

  • 10:26:00

    SWEETOh, yay, yay.

  • 10:26:02

    REHMReally? Go ahead, Lynn.

  • 10:26:03

    SWEETWell, what can you say about somebody who -- a married man who decides to have a fling, but does it in the most public possible way, where he takes off a shirt, puts a picture of himself shirtless on the internet?

  • 10:26:16

    REHMFlexes his muscles.

  • 10:26:18

    SWEETWell, I don't care if he's flexing or not. Just the shirt alone -- shirtless alone, who does that? I mean, how many ways were there bad judgment here? And then, you know, sends e-mails to somebody who he barely knows. And then...

  • 10:26:29

    REHMOn Craigslist.

  • 10:26:30

    SWEET...then it gets public, that he meets in Craigslist. What else can we say?

  • 10:26:35

    REHMJohn King, what can you say?

  • 10:26:38

    KINGThe only thing, I think, I want to say is that he made his leadership -- after making his leadership very unhappy with him for doing something so stupid, he made his leadership somewhat less displeased with him by at least very, very, very quickly resigning.

  • 10:26:52

    REHMHe had no choice, I would gather, David Welna.

  • 10:26:56

    WELNAI think he would have been under gigantic pressure from his leadership to leave if he hadn't done so on his own. And leadership claims that this was his own decision, but it followed a meeting with the GOP leadership.

  • 10:27:11

    SWEETRemember, people have -- there are members of Congress who have been involved in serious scandals that have not left, and they're still there. So it's isn't...

  • 10:27:18

    KINGBut this is a new majority trying to prove it can...

  • 10:27:21

    REHMOf course.

  • 10:27:21

    KING...govern in the House. They've had a number of technical and procedural missteps this week. They're off to a pretty rough start over in the House, and they did not need this.

  • 10:27:28

    REHMAnd what about the surprise announcement from Jim Webb, David Welna?

  • 10:27:35

    WELNAWell, I don't know how much of a surprise it was that Webb decided not to seek another term in the Senate. He really never seemed to be quite a creature of the Senate. He was...

  • 10:27:44

    REHMNot quite comfortable.

  • 10:27:45

    WELNAHe was kind of a solitary senator, kind of a prickly senator, one whom I would approach to ask questions of and sometimes be rebuffed in a very sort of peremptory way. And, I mean, it's not the kind of way you deal with many of the senators. I think also that he has other things that he wants to do in life and that -- he did accomplish one big thing in the Senate, which was to expand the GI Bill more than it's been expanded since World War II. His next big project is to have a thorough review of the American judiciary system and especially the laws on mandatory punishments and review that. We -- he says we are -- 5 percent of the world's population, we have 25 percent of the world's prisoners, and something has to be fixed.

  • 10:28:45

    KINGI talked to him two weeks ago and I asked him, you know, all your people are worried about you. You're not raising money. You're not raising your profile...

  • 10:28:51

    REHMInteresting.

  • 10:28:51

    KING...back home in the state. And he shrugged and he said, yeah, they're mad at me. They're yelling at me. But I'm not gonna ask people for money if I'm not sure I'm going to campaign. And he raised the point. He said, look, I just have to make a decision. Do I wanna stay here for another eight years? He viewed the two years of the campaign another six-year term.

  • 10:29:03

    REHMSure.

  • 10:29:04

    KINGI take him at his word. He -- you know, he wants to do something else. It's just not -- he's not comfortable. Been the Navy secretary. He's sort of a guy who likes to think he's in charge. And he's in a club of 100. I don't think he found the work all that enjoyable.

  • 10:29:15

    REHMAll right. We've got lots of callers waiting. I want to ask you about the prospect of a German company buying the New York Stock Exchange. What do you think about that?

  • 10:29:29

    KINGThis is the last thing I understand from a technical standpoint.

  • 10:29:32

    REHMRight.

  • 10:29:32

    KINGI'm no financial expert, but what you hear again is the, wait a minute, what happened to too big to fail? Is this a good thing? Who's it good for? And most of the analysis seems to be that it's good if you're a financier, if you're a big money person in these markets. And is it good for the little guy, though? That seems to be the narrative that's emerging.

  • 10:29:49

    REHMDavid?

  • 10:29:49

    WELNAWelcome to the global economy and the digital economy. I mean, we don't have ticker tape machines anymore. We don't have, you know, on-the-floor trading necessarily for huge exchanges of stocks. This is all done electronically now. And so, and it's become almost just another commodity, the whole exchange business. In fact, you know, shares are traded on exchanges themselves.

  • 10:30:13

    REHMAll right. We've got a lot of folks, and many of them want to talk about the budget. So let's open the phones, 800-433-8850. First to Dayton, Ohio. Good morning, Ann. You're on the air.

  • 10:30:32

    ANNHello. I just like to know, where -- in all this discussion about the need to drastically cut $100 billion that the House Republicans are demanding, where in all this discussion is what happened two months ago when it was Republicans who demanded that we extend the Bush tax cuts even for people over $250,000 a year, which would have saved us $70 billion a year, which gets pretty close to that 100 billion?

  • 10:30:57

    REHMJohn King?

  • 10:30:58

    KINGIt's a great point on the math.

  • 10:30:59

    REHMYup.

  • 10:31:00

    KINGThe ideology of tax cuts though was the Republicans are still of the belief that lower taxes will eventually lead to economic growth. So that one was taken off the table into short term that will be one of the defining arguments in the 2012 campaign.

  • 10:31:14

    WELNAAnd the mantra of Republicans is we do not have a revenue problem. We have a spending problem.

  • 10:31:20

    SWEETWell, one of the things that you'll see is raising questions about whether or not you use this tax code to do social engineering and to give different classes of people breaks. That's part of where you might find compromise with the Obama White House in their quest to simplify the tax code, which is something that Republicans are interested in too.

  • 10:31:37

    REHMAll right, to Big Pine, Mo. Good morning, Jerry. You're on the air.

  • 10:31:45

    JERRYYeah. My -- I'm a little confused about the Social Security issue. They talk about, you know, making cuts in Social Security for the budget, but the Social Security is currently in the black and supposed to be in the black for several years. So when they say cut Social Security, are they talking about taking Social Security funds and using the for non-Social Security budget item?

  • 10:32:06

    REHMDavid?

  • 10:32:06

    WELNAWell, a couple of things. One thing is that they are not going to go after Social Security. That's a sacred cow, even for Republicans who question the wisdom of the program overall. The other thing is that -- I reported this week that Social Security, for the first time since it was founded in 1935, took in less money than it paid out. It was cash negative as they say.

  • 10:32:32

    WELNANow, it has a $2 1/2 trillion trust fund, the bonds that it bought from the Treasury over the years. And the Treasury took that money and spent it to -- for deficit spending. And now that money is gonna have to start to be repaid because they're expecting that there is going to be an ever-greater shortfall of revenues coming into Social Security over the coming years and a greater need to go to the general fund to make up the difference and cash-in those IOUs.

  • 10:32:59

    REHMJohn King?

  • 10:33:00

    KINGIt's a very bad combination at the moment of -- when you have high unemployment, fewer people are paying in…

  • 10:33:04

    REHMRight.

  • 10:33:04

    KING...their Social Security taxes, and the baby boom generation is starting to retire, so you have that math happening. But this is one of the -- one of several adult conversations that have to happen in Washington. But most people say, do it separately. Let's raise the retirement age, maybe do a couple other tinkers to help Social Security, and then have a separate conversation about Medicare and the bigger budget issues.

  • 10:33:22

    REHMJohn King of CNN. And you're listening to "The Diane Rehm Show." Let's go to Sycamore, Ill. Good morning, Hamish. (sp?)

  • 10:33:35

    HAMISHYes, good morning. We need to reform the tax code. We spend over $100 billion a year. There is 14 volumes of over 1,500 pages each. It's just -- it's too complicated. It needs to be simplified. The Department of Education has $70 billion. They have $4,400 employees. They're not getting the job done. These are places where we need to cut. And we need to quit looking at Social Security. They need to quit looking at the easy ways out.

  • 10:34:12

    REHMAll right, sir. Thanks for your call. Lynn Sweet, how much effort do you see going in to reforming the tax code in this session of Congress?

  • 10:34:25

    SWEETI think it will be done. Let's put aside your comments from lovely Sycamore, Ill., which is a lovely place, on whether or not the Department of Education is worthwhile. You have forces at work to make simplification from both parties. You have Elizabeth Warren heading up the financial consumer affairs bureau. So I think this is something that people wanna do. You had suggestions of it in the fiscal commission report that came out. So I think this is a time where people are looking at simplification, yes.

  • 10:34:56

    WELNAI would say the spirit is willing, but the flesh is weak, because every one of those special provisions in that gigantic tax code is there because there is some special interest group, many of them very powerful, that makes sure that those are -- there are things such as the deduction for mortgage interest that's paid. You know, the banks that lend all that money want that there because it's a real incentive for people to take out those loans.

  • 10:35:23

    KINGAnd both the president and the House Republicans say they wanna do it -- I'm just not sure they wanna do it together -- and they need to do it together. So I suspect there might be some tinkering with the corporate tax code this year. But again, this will be a 2012 campaign issue, probably for the next president, whether it's a re-elected Obama or somebody else.

  • 10:35:39

    REHMAnd to Birmingham, Ala. Good morning, Mark.

  • 10:35:44

    MARKI love your show, Diane.

  • 10:35:45

    REHMThank you.

  • 10:35:46

    MARKHey, guys. The Social Security withholding went from 6.2 percent to 4.2 percent this year, which is actually 26 percent reduction in what we pay in. I'm a 57-year-old baby boomer, and I'm wondering, what are they thinking?

  • 10:36:01

    REHMI don't blame you.

  • 10:36:03

    SWEETThat was one of the temporary. This is not forever so don't count on it in the long run. Breaks that the Obama administration...

  • 10:36:10

    REHMBut how are you gonna pay it back?

  • 10:36:12

    SWEETBut...

  • 10:36:13

    REHMThat's the question.

  • 10:36:14

    WELNAWell, it's the same question of how are we gonna pay back $2.5 trillion dollars that's been taken from the Social Security surplus.

  • 10:36:19

    REHMRight.

  • 10:36:20

    SWEETBut remember, there was a reason. This was to help stimulate the economy, create jobs. I'm just wondering, sir, did you spend that money on anything special and what was it?

  • 10:36:30

    MARKI'll say more, I wouldn't mind paying 2 percent more, you know, or 26 percent more. You know, I'm a baby boomer. If they said, hey, you guys, you're old enough, you're coming into the thing, pay more, I would be glad to do that. But this befuddles me that I'm paying less to a system that's got a death march.

  • 10:36:46

    KINGThere's another thing about that too, which is that 2 percent reduction and -- or the two percentage points off of what's paid, that's on income only up to $106,000. After that, there is no Social Security tax on income beyond $106,000. And there's some talk of lifting the cap or possibly having a doughnut hole and having an income after $500,000 possibly be taxed, again, to make up the shortfall. That's under discussion. I asked several senators from both parties about it this week. They all sort of said, well, I got to look at that one.

  • 10:37:19

    SWEETReal quick. What's interesting is how little the Obama administration has been able to highlight the break that almost everyone who gets a paycheck for a living has gotten.

  • 10:37:29

    REHMLynn Sweet, she is Washington bureau chief for the Chicago Sun-Times, a columnist at politicsdaily.com. Short break. And when we come back, we'll hear from Doug in Fort Myers, Fla., and Annie in Friendship, Ind.

  • 10:40:02

    REHMAnd here is an e-mail from Renee, who says, "I'm very tired of hearing politicians and reporters saying this portion of the budget really doesn't add up to that much. If you add up all those things that are not all that much, it would add up to a lot." What do you think, Lynn Sweet?

  • 10:40:26

    SWEETIt's sad to say, it probably won't. This is why we're not saying it to be frivolous. It's just that when you're dealing with such gigantic numbers things, you need massive cuts from the massive programs to really make a significant dent in the fiscal situation.

  • 10:40:42

    WELNAIf you got rid of every bit of non-security domestic discretionary spending from the budget, you would only reduce this year's deficit by one half. Not spend one penny on anything that's not security related.

  • 10:40:57

    KINGI do think the e-mail, though, is reflective of the impatience in America...

  • 10:41:00

    REHMSure.

  • 10:41:00

    KING...more impatience in America because every family in America, rich or poor or in the middle have had to make very tough choices over the past three or four years because of the tough economy. They have had to set priorities. And they don't see their government doing that.

  • 10:41:11

    REHMNow, what about that very thing, David, in design -- where is he? I'm not sure where he is. David says, "I believe Congress is serious about budget cuts when they begin to reduce their own operating cost, reducing their salaries, also their staff per diem for travel, everything for the operation of Congress ought to be on the table. Also, didn't Jim Moran complained this very morning on NPR about the amount of space he has and the amount he's able to pay his staff?

  • 10:41:53

    WELNAYes. One of the things House Republicans did do, one of the very first things that they did when they took back power in the House was to reduce the budget for all House expenditures, offices, staff and so on by 5 percent. That didn't save a lot of money, but they said that was a good faith gesture on their part.

  • 10:42:13

    REHMAll right. To Friendship, Ind. Good morning, Annie.

  • 10:42:19

    ANNIEGood morning. Because we are all in this together, what would be impractical with the idea of cutting everything by 10 percent? The president could lead the way by putting 10 percent of his salary. Congress could do that just to get off dead center. And this...

  • 10:42:35

    REHMWhat do you think? Is that a possibility that would have any impact? You take 10 percent off every program out there starting with salaries?

  • 10:42:48

    SWEETIt would be symbolic. Obama has already frozen the salaries of the...

  • 10:42:52

    REHMOf government workers.

  • 10:42:54

    SWEETAnd -- but he started with -- even before that, just people within the executive branch. You know, it's hard to not agree with somebody who wants to see some change and see it now. But sometimes, a symbolic cut that doesn't amount to much is just that, which is why you, yeah, do it. They could cut across the board, but all programs are not equal. And one of things that you do want from your government and elected officials is to look at each program and situation and apply experience, intelligence in what local needs are about instead of having an across-the-board cut. But I understand this urge of just saying we wanna do it and we wanna do it now.

  • 10:43:30

    REHMDavid.

  • 10:43:30

    WELNAIt would also be the elimination of many, many, many jobs at the time of high unemployment. I think this really is coming down to an argument over whether government intervention, government spending is helping the economy or hurting the economy. And economists generally say that government spending at a time like we're in right now actually is keeping things from getting worse. Republicans insist that its government spending is the cause of the problems right now.

  • 10:43:57

    SWEETThat is a core argument that the Obama administration is making. I went to a briefing this week with Transportation Secretary LaHood, who is talking about the money poured into road and transportation construction as the biggest jobs program in the United States.

  • 10:44:13

    REHMJohn King, as a non-member of anything associated with the Corporation for Public Broadcasting or any of the other big programs out there, what do you see happening? Do you see Republicans and Democrats coming to agreement over cutting back or do you see the strong push to eliminate such as CPB? Do you see that succeeding?

  • 10:44:45

    KINGI think the House budget will eliminate federal funding for the Corporation for Public Broadcasting and programs like that, that the House Republicans would say, it's not the right place for the government to spend money or some of them would say, we can't afford it right now. Maybe in boom times, I would be open to it. That would be the House Republican budget. Then you'll get a Senate. Then you have to -- if we get a budget, mind you. We don't have a budget right now.

  • 10:45:04

    REHMRight.

  • 10:45:04

    KINGWe're operating under this mythical continuing resolution...

  • 10:45:06

    REHMRight.

  • 10:45:06

    SWEETIn March 6 is the showdown vote or the first week...

  • 10:45:10

    KINGMarch 4th.

  • 10:45:10

    SWEETMarch 4th, on the old budget which is still continuing. So it gets -- will also get more confusing as the two budget cycles overlap.

  • 10:45:18

    KINGSo you'll have a -- you know, you'll have the House Republicans will put their marker down. You'll have the Senate then put its marker down, which is a very much more confusing because it's almost parody. And you also -- the most important people in Washington right now when it comes to these kind of decisions, big decisions, are the Senate Democrats up in 2012 from states they're worried about. And they are a lot of them, a lot of them in states. Republicans just did very well in 2010 all across the country.

  • 10:45:41

    KINGA lot of Senate Democrats say, uh-oh. What's the climate going to be like in the presidential year of 2012? And then you have a president who has a veto pen who's going to have his piece in this, and he will say no. We're gonna have the money for the Corporation for Public Broadcasting. But then the Republicans are gonna say, okay. If you want that slice, where do we get it? Where else? Where is the tradeoff? And that's what we're gonna go through for the next several months.

  • 10:45:58

    REHMAnd the other question becomes the line-item veto, David Welna.

  • 10:46:03

    WELNAYes. There is the push. It's a bipartisan push, actually, to give the president line-item veto or rescission authority.

  • 10:46:09

    REHMRight.

  • 10:46:10

    WELNAThis is something, of course, that the president wants. But I think that in terms of trying to reconcile what the House and Senate are going to do, one group could be a key player. It's a quartet of Senators from both parties. The four of them were on this deficit and debt commission. And they have been meeting fairly regularly for the past two weeks to talk about how to come up with some kind of a plan that Congress can follow...

  • 10:46:39

    REHMA realistic plan.

  • 10:46:40

    WELNAA realistic plan, but one that would have no sacred cows, where they would go after entitlements and also after military spending as part of the solution. And I think that maybe one path that this could go down because it's still bipartisan. They don't have any House members as part of this group, of course, but they do have two Democrats and two Republicans were talking.

  • 10:47:04

    REHM"It's interesting," Jeremiah writes, "I think it's interesting when I hear about cutting the budget that we don't hear the Tea Party discuss cutting our outrageous and bloated Defense Department."

  • 10:47:21

    KINGSome do, some don't. Some Tea Party members have said let's look elsewhere first. But I would say actually many or most Tea Party members are willing to look at defense spending. That's not their first place to go, but they would say, yes, of course, something has to come out of there. It is not -- they don't start by saying, we're gonna cut the Pentagon and then we’re gonna go here. They start by saying cut the education department and eliminate this program and don't give Corporation for Public Broadcasting money. Most of them, if you ask them three or four, five questions into the conversation will say, of course, there's some money at the Pentagon. But it's not their reflex.

  • 10:47:50

    REHMAll right. To Greensboro, N.C. Hi, Randy. You're on the air.

  • 10:47:57

    RANDYYes. I made $1,500,000 last year. I don't mind if you go ahead and tax us. I mean, we don't have -- I don't have that problem. But you've got -- it's like the high of the financial scale, the more complaints you get. They're just the folks that are doing five and 10 and $20 million. They just don't wanna give back anything. And that's my comment.

  • 10:48:23

    REHMAnd what's your comment, John King?

  • 10:48:26

    KINGNothing frustrates liberals more than President Obama seeding this ground. They believe he had the moral high ground. They believe he had the substantive and the mathematical high ground. And he seeded this ground in the debate and nothing frustrates them more.

  • 10:48:40

    REHMAnd here is another comment along that line from Richard in Charlotte, N.C. "Why has the administration completely lost control of the debate? It seems the entire discussion of the economy is focused on the Republican and Tea Party points of cutting discretionary non-military spending. Where are the Democrats? No wonder they lost in November. They're just chirping us too.

  • 10:49:15

    SWEETWell, part of it is that the Democrats are on the defensive because the job rate has been over -- at 9 percent and over for the last 20 months. So some of these other discussions from a Democratic perspective just seems like commentary because you can't really have this kind of discussion about moving budget items, cutting -- if it doesn't have an impact on what now is the number issue -- I think, for Obama's 2012 re-election prospect is jobs -- it's just harder for them.

  • 10:49:42

    REHMAll right. To Fort Myers, Fla. Hi, there, Doug.

  • 10:49:47

    DOUGHowdy. As a religious conservative, I'm offended that consistently for decades we jump to cut things that would help people like education and health care, and don't focus more on the military budget. If 50 percent of our tax dollars go to the Defense Department and a fraction, like 1 percent goes to diplomacy, we'll always gonna have security problems. It seems like what the United States is known for is having the best ability to kill people around the world, not the kind of diplomacy and education health care that we should be known for.

  • 10:50:23

    REHMDavid.

  • 10:50:24

    WELNARight. We -- you know, if you take all of the military spending on the planet, the U.S. accounts for nearly half of it, and we're 5 percent of the population. So I think that there is questioning that's going on about what are we getting back for this? We're getting more and more entangled in more and more places. And I think there is -- questioning both on the left and the right about, is this where we wanna go? Where is the peace dividend? Are we ever gonna have peace?

  • 10:50:51

    REHMAll right. Then to Cleveland, Ohio. Maria, good morning.

  • 10:50:57

    MARIAGood morning. Thank you. My concern is about the Republicans and their judgment and their performance. And what it is -- they've been known as a party of no. The party of no mean they act like 2-year olds. Two-year olds only know what -- that one word, no. No for good, no for bad. And what I'm seeing is the Republicans are failing to address or trying to meet the needs of plain American people, the next door neighbors. The one thing they want to do and then they don't have an answer for.

  • 10:51:37

    MARIASomeone was saying this past week, what do you want to put in this place? Oh, I we wanna do this. They don't even know why they're there. They're just up in Washington to keep up mess, to keep the United States divided. Now, they're not concerned about moving -- being number in education, health. What they say is just no, no, no. And why are you there? To -- so they can have the best health care. One man said over the radio -- he says, I pay $1,300-some a month for insurance. I pay my insurance, after that in the program. Well, who -- where is he getting that money from? He's getting it from the government.

  • 10:52:19

    KINGAnd being the party of no -- emotionally no, anyway -- helped them politically in the last election year. There's no doubt about that. Now, because they have the majority in the House, they do have the responsibility to put proposals forward and we're seeing that it's messy at the beginning. Think about Thanksgiving or Christmas or any holiday dinner. The more people at the table, the more feisty the conversation, that's what the House Republicans are going through right now.

  • 10:52:37

    WELNAAnd we are headed for a real hour of the truth early next month when this continuing resolution, the stop-gap spending measure, runs out. And if there isn't agreement between the House and the Senate on what to replace it with, there is the very, well, prospect of a government shutdown.

  • 10:52:55

    REHMDavid Welna, he is congressional correspondent for NPR. And you're listening to "The Diane Rehm Show." Of course, David Welna, we heard Ben Bernanke this week talking about concerns on Capitol Hill over the risk of inflation and fears of shutting down the government.

  • 10:53:18

    WELNARight. And Bernanke sent a letter last month to Congress, warning that it would be disastrous not only to have a government shutdown but also to have a default on the foreign debt. And this something that is gonna be an issue, probably later this spring. There are going to be many Republicans who will be unwilling to raise the debt ceiling because government spending is going to rise to the point where it is gonna have to be official raised. If that doesn't happen, there's a prospect that the government could, at least, in part, have to stop making payments and they'd have to start prioritizing who will get the money.

  • 10:53:54

    REHMSurely that's not gonna happen there. Republicans are not foolish enough to let that happen.

  • 10:54:00

    KINGMost Republicans say it is the last thing they want to happen.

  • 10:54:03

    REHMExactly.

  • 10:54:03

    KINGThere are a few Republicans, Diane, who say, we get pilloried. Everyone says, remember Newt Gingrich and the Republicans shut down the government? There are some Republicans, including Jeff Sessions, the ranking Republican in the Senate Budget Committee, who says, but what happened after that? We balance the budget. So some of them think it's a last resort, but they don't want to take it completely off the table. It is part of their leverage in trying to get cuts attached to the debt ceiling.

  • 10:54:25

    REHMAll right.

  • 10:54:25

    WELNABut one other thing about Bernanke, too, is that Republicans have been warning that this quantitative easing, this selling of treasury notes on the open market to keep interest rates down, is going to lead to inflation. And Bernanke tried to shoot that down in testimony this week, saying that, in fact, that really isn't happening. In fact, interest rates have actually been rising, which holds down lending. So I think he's prepared to do battle with these arguments that, you know, part of the warnings about inflations have to do with the idea that that is the prize of having government deficits, that prices are gonna go up, when, in fact, that hasn't happened except with food and fuel. It makes it a harder argument to make.

  • 10:55:13

    REHMAll right. I want to take a last call from Palmyra, Va. Good morning, Priscilla. You're on the air.

  • 10:55:22

    PRISCILLAGood morning. My comment is -- I've listened to the ladies and gentlemen talk. And every time someone mentions cutting something from a certain agency, they say, no, that wouldn't make a difference. Well, maybe that little bit won't make a difference. But I know from my own experience, you add up all the pennies, it does make a difference.

  • 10:55:50

    REHMJohn King.

  • 10:55:51

    KINGIt does. And if we're leaving that impression, that's not the impression we're trying to leave. Yes, it makes a difference. If you're trying to save a dollar and you cut all those programs that we've talked about, you'll save maybe 8 or 10 or 12 cents of that dollar. You'll still have a lot more to get to your goal, is the point we're trying to make. You could cut all that non-defense discretionary spending and get 14 cents on that dollar that you're trying to save. The only way get the other 86 cents is to have a grown-up conversation about Medicare, Social Security and the defense budget.

  • 10:56:18

    REHMLast comment, David Welna.

  • 10:56:20

    WELNARight. And I think that you have the prospect that you could cripple a lot of government operations by even pairing them back 10 or 20 percent. But you would not solve the problem that everybody is complaining about that we have such a huge deficit. It's only going after the entitlement and defense spending that you really get big reductions.

  • 10:56:38

    REHMDavid Welna, he is congressional correspondent for NPR. Lynn Sweet, Washington bureau chief for Chicago Sun-Times, also a columnist at politicsdaily.com. John King, he is anchor of CNN's "John King, USA," and chief national correspondent for CNN. Have a great weekend, everybody. Thanks for listening. I’m Diane Rehm.

  • 10:57:07

    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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