News Roundup - Hour 1

Transcript for: 
News Roundup - Hour 1

MS. SUSAN PAGE

10:06:55
Thanks for joining us. I'm Susan Page of USA Today, sitting in for Diane Rehm. She's on vacation. There's still no bipartisan plan in Congress to raise a debt ceiling and no Republican plan either. Last night, House Speaker John Boehner pulled back a vote on his plan after failing to win enough support within his own Republican caucus. The Senate says it will try to move forward with its own proposal.

MS. SUSAN PAGE

10:07:20
A U.S. soldier has been arrested on charges of planning an attack on troops in Texas. And a Democratic congressman from Oregon says he's resigning amid allegations of sexual misconduct. Joining me in the studio to discuss the week's top national stories on our Friday News Roundup, Karen Tumulty of The Washington Post, Jeanne Cummings of Bloomberg News.

MS. SUSAN PAGE

10:07:42
And joining the News Roundup for the first time, David Leonhardt of The New York Times. Welcome to our panel, David.

MR. DAVID LEONHARDT

10:07:48
Thank you.

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10:07:48
We invite our listeners to join our conversation later in this hour. You can call us on our toll-free line, 1-800-433-8850. You can always send us an email at drshow@wamu.org. And we're looking for your comments and questions on Facebook and Twitter. So, Jeanne, you know, the assumption has been, for me, that in Washington, if you have to reach a deal, you will reach a deal.

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10:08:13
I don't know if I feel completely confident about that now when we look at Congress and what's happening on the debt ceiling. What happened last night?

MS. JEANNE CUMMINGS

10:08:21
Well, last night, the House Republicans prematurely brought their bill to the floor. They thought they were gaining momentum in the midday and that they would get the votes they need in order to pass it. They have no help from the Democrats, and so they need 216 of their own caucus to pass this bill. And that means they can only lose a couple dozen. And so it's very, very razor thin for them.

MS. JEANNE CUMMINGS

10:08:49
And as it turns out, there was at -- in the 11th hour, they realized that people they thought they could bring over were not coming. They were actually digging in, in a no position. And so the ability for them to pass it vanished despite hours and hours of chaotic talks and efforts to try to bring these leaning no or no people all the way across over to yes.

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10:09:17
You know, the Republican leadership in the House was united on this one. They're not always that way. But on this case, they were all lobbying hard. So, Karen, why couldn't they deliver?

MS. KAREN TUMULTY

10:09:26
A number of reasons. One is that a lot of these freshmen members in particular ran, promising their voters that they were not going to be, you know, becoming part of the permanent power structure as soon as they got here. Another reason is that everyone was fully aware that this deal was not going to go anywhere in the Senate.

MS. KAREN TUMULTY

10:09:46
So why -- in, I think, a lot of members' minds -- should they go out on a limb and vote for something that is only going to die and get renegotiated when it hits the Senate? And, finally, and this is -- as I was thinking back on it -- what has made this negotiation different, too, than other cliff-hanger votes we've seen -- say, trade deals -- is that the leaders didn't have anything to give in return.

MS. KAREN TUMULTY

10:10:09
It's not like you can say, oh, I'm going to go -- a member of Florida. I'm going to go take care of your citrus growers and your tomato growers in this deal. This was basically, you know, all pain. And that is a very hard thing itself.

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10:10:24
And that's because everybody is issued earmarks now, so some of the traditional ways you could deliver a little favor to a member, no longer available.

TUMULTY

10:10:32
And, also, they -- and the whole culture is such that, you know, that this would be a really, you know, a black mark, I think, on any of these new members to have taken a deal for their district and then change their votes.

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10:10:47
So Tuesday, the Treasury Department tells us, is the deadline. David, what's going to happen now?

LEONHARDT

10:10:53
Well, there are two questions. There's the political track and the economic track. I think we have something approaching no idea what will happen in the political track as we're seeing on the Hill last night and today. On the economic track, Aug. 2 is not a firm deadline. There is some room to maneuver here, not long term, but for some number of days probably.

LEONHARDT

10:11:13
So at some point, the United States will basically have to stop fulfilling its obligations. Now, whether that is to Social Security recipients, whether that is to bond holders -- everyone agrees that bond holders would be last, whom we would not honor our obligations to, because that probably would set off a financial crisis.

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10:11:30
You mean we'd pay them first.

LEONHARDT

10:11:31
We'd pay them first. And so one of the questions here politically is what happens when the Treasury starts to announce that it's not going to pay something like Social Security recipients. Does that change the political calculus? Who does the public blame for that? And as a result, does that create new pressure?

LEONHARDT

10:11:49
Is there a situation in which the Treasury says, okay, now, we're not going to pay Social Security recipients -- something similar happened back in the '90s -- and Congress basically realizes, okay, wait a second. We, as incumbents, are going to suffer for this. And that creates some real pressure for a deal. But we really aren't leaving any room in terms of time to deal with that. And we are already doing economic damage through this.

LEONHARDT

10:12:12
The uncertainty is already causing economic damage. You see that most clearly in the stock market.

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10:12:18
You know, Jeanne, we saw Harry Reid, the majority leader in the Senate, go to the floor about half an hour ago. And he said that his compromise bill, his Senate plan, was now our last chance to save this nation from default, our last best option. So what is the Senate option that Harry Reid is talking about?

CUMMINGS

10:12:37
Well, essentially what the Senate is -- has on the floor, or will have on the floor at some point, is a legislation that includes a lot of the $900 billion in cuts that Speaker Boehner had in his legislation. It adds to it a trillion dollars in savings that would come from the end of the Afghanistan and Iraq war. People debate about whether that's a real savings or not, but the Congressional Budget Office gave them that point.

CUMMINGS

10:13:10
So basically, his is a package of about $2 trillion in cuts and savings on the financial side. And then what -- most importantly, what it does is that it pushes off the next moment we'd face a debt ceiling issue until after the presidential campaign. It will lift the debt ceiling enough to get through 2012.

CUMMINGS

10:13:33
His legislation, like Speaker Boehner's, also creates a new committee commission, a bipartisan group of people, lawmakers, who would then try to deal with entitlements, Medicare, Medicaid, Social Security, changes in those, where we could get some savings and tax reform, again, with the goal of trying to find either -- more revenue so that we could then show to the credit rating agencies that Congress is prepared to deal with, really, the engines behind our debt. And that's -- those are those programs.

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10:14:11
So what's going to be the final thing resolved? What is the toughest nut to crack, Karen?

TUMULTY

10:14:16
You know, at this point, I'm trying to figure out who's negotiating with whom. Is this going to be a play where Boehner actually needs some Democratic votes? Is it going to be a House versus Senate negotiation? Is this one where President Obama is going to come back in? There's another -- out there another fallback plan with Mitch McConnell. And until we know who the negotiators are, I don't think we know what the toughest nut to crack is.

CUMMINGS

10:14:46
Well, one thing that has come up now in these discussions is what in Washington we call a trigger. And what's -- that's going to be a thorny issue for them to figure out. And, essentially, what it does is, if Congress passes legislation that they're going to -- that says -- commits themselves to doing these deep cuts, then they have to put in something to make sure they actually do it.

CUMMINGS

10:15:12
Because we've seen plenty of times where promises are made, legislations passed, and then the next Congress or even the current Congress just ignores what they -- these targets they've set for themselves. So they -- the Republicans and the White House, they really want some kind of penalty if Congress does not follow through with the commitment.

CUMMINGS

10:15:30
And this is also very important, again, to the credit rating agencies who set our AAA credit rating, that they see that there is going to be some kind of automatic backup plan if they don't meet the cuts. So what we've seen before is you have a target, a spending cap, and then if they don't -- if they go -- if they don't meet that cap, then automatic tax -- automatic spending cuts go into place, across the board cuts, things like that. That trigger is going to be an important part of the final negotiations.

TUMULTY

10:16:00
And yet the history of those things, triggers, is they don't get pulled. I mean, the infamous Gramm-Rudman trigger in the 1980s, it, you know, sort of held together for a little while, maybe a year or two. And all those automatic cuts that everybody was talking about, as though they would be doomsday, never really happened.

CUMMINGS

10:16:02
Oh, yes. Indeed.

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10:16:19
You know, Karen asked about who's going to do the negotiating. I've got to say that we -- and President Obama is now scheduled to come out, make a statement about the debt ceiling in just a couple of minutes. We'll be monitoring that. But, David, it's hard to avoid the impression that President Obama has become -- has been sidelined in these talks and is no longer really the key negotiator to be watching. Do you think that's true?

LEONHARDT

10:16:43
I do. And I think it's true of Speaker Boehner as well. I mean, President Obama and Speaker Boehner basically negotiated something approaching a deal that, economically, I think, had a lot to recommend relative to what we're now talking about. And that's for two reasons. One, it did a lot more to cut the deficit, a lot more, with a combination of not only these discretionary cuts but also cuts to Medicare and Social Security and some tax increases on the affluent.

LEONHARDT

10:17:11
Two, it did less to cut the deficit in the short term. And economists say that's actually the combination we want because if you look at today's GDP report, which was terrible, what you see is that one of the reasons that GDP grew so slowly was that the government was cutting back. And so if we have a situation which the government continues to cut back, when consumers are cutting back as well, it sort of worsens the recession. But Obama and Boehner don't have control over the Congress.

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10:17:38
So if the president doesn't really matter, and the speaker of the House doesn't really matter, who should we be watching?

LEONHARDT

10:17:44
Well, they matter, but it's a question of how much they matter. And so, clearly, what you want to watch are the freshmen in the House to see how much they stay with Boehner and how much they don't. And, clearly, you want to watch the Senate. I mean, at what point can the Democrats attract moderate Republicans or can the Republicans in the Senate attract enough Democrats through basically making them feel like they've got to do this or the economy suffers? Unless the Democrats suffer, then it could happen.

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10:18:07
Jeanne, does this threaten Boehner's speakership? Could he -- his position as speaker actually be threatened by the fact that he's been unable to deliver the deal he said he could?

TUMULTY

10:18:18
I don't think that this legislation threatens his speakership. I think it's the next piece of legislation. It's the one that follows this. It's the Senate-negotiated piece of legislation that could threaten his speakership because the only way that bill gets through the House is if Boehner gets in bed with the Democrats and brings along Democratic votes. And then it's the Democrats -- Boehner and his stable base of leadership on one side and 87 freshmen on the other side.

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10:18:47
We're going to take a short break. And when we come back, we're going to talk about those dismal growth numbers that we got early this morning. And we'll also take a look at what President Obama is saying to the nation right now. Stay with us.

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10:20:05
Welcome back. I'm Susan Page of USA Today, sitting in for Diane Rehm. It's our Friday News Roundup. And with me in the studio, Karen Tumulty, national political reporter for The Washington Post, David Leonhardt, the incoming Washington bureau chief for The New York Times, and Jeanne Cummings. She's deputy government editor at Bloomberg News.

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10:20:24
Well, David, as you mentioned in the previous segment, we got new GDP numbers for the second quarter of the year this morning. What did they show?

LEONHARDT

10:20:32
They showed that our economy is in really bad shape, which, to some extent, we already knew. But these added some new details. And they told us that if we weren't downbeat enough, it's even worse than we thought. So what -- this had two main things. They told us what happened last quarter, the second three months of the year, and it also revised some numbers for earlier on.

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10:20:49
The economy grew by 1.3 percent last quarter. That's lower than what economists had projected.

LEONHARDT

10:20:55
Yes, it's slightly lower from -- than what economists had projected. And what we've now been through is we've been through this stop-start recovery twice. So we were in this terrible recession in late 2008, early 2009. And then for the rest, for the second half of 2009, we really started to come out of it. And we actually had some fairly decent job growth by the end of '09 and, really, the start of 2010.

LEONHARDT

10:21:18
And then some combination of things -- the Greek debt crisis, among other things -- seemed to short-circuit growth. And then we got growth going again, and a new combination of things this year seemed to do the same: high gas prices, the Arab Spring, more troubles in Europe. And so what we now have had is six months of growth that is too weak to add enough jobs to put people back to work.

LEONHARDT

10:21:39
And once you dug into the numbers, in today's report, what you see is, A, consumer spending basically stopped growing at all. Consumers are still deeply in debt. B, business spending was pretty good. It actually picked up speed. And, C, state and local governments really shrunk. And so those are the three main forces in the economy right now.

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10:21:58
These revised numbers that you mentioned actually show us that the recession, which felt bad enough already, was actually worse than we had thought before.

LEONHARDT

10:22:05
Yeah, yeah, and, I mean, we just have an incredibly big hole to dig ourselves out of. That is not unusual for a financial crisis. In a financial crisis, the unemployment rate typically rises for four or five years after the crisis begins. So by that timetable, we should actually still just be getting worse. Now, we're doing better than that, thanks to really aggressive action by the Fed, aggressive action by the Bush administration in its final months, aggressive action by the Obama administration and by Congress.

LEONHARDT

10:22:32
But, I mean, to connect the two themes here, we're now not seeing aggressive action by the government to try to deal with the recession. If anything, we're seeing the opposite. And so not only does the economy have an enormous amount of ground to make up, but it's facing some pretty stiff headwinds.

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10:22:47
So let's say Congress manages to do what we hope they can do, which is put together some kind of deal that raises the debt ceiling. It's likely to commit to cut spending, one way or another, Jeanne. So will that have an impact on the economy itself, on economic growth?

CUMMINGS

10:23:03
Well, that's certainly the hope in Washington, and that is certainly the promise that we're hearing from the business community in Wall Street. They have -- they want -- they've said they need some clarity. They need the uncertainty removed from -- and Washington is creating more uncertainty with this sort of gamesmanship. And if the House bill now -- you know, it could create -- if it were to pass, it could create another debt ceiling crisis at Christmastime, which typically is a good time for the economy.

CUMMINGS

10:23:37
And if that were to happen, economists are saying if there was another debt ceiling crisis on Capitol Hill at that same moment, that would be a negative thing. So what economists are saying is that if they don't do it, things will get a lot, lot worse. If they do do it, things won't get a lot, lot worse, and they might actually get better if there is a signal that Washington is serious about getting the debt down and there is some sort of stability in terms of what's going to happen with the debt ceiling.

LEONHARDT

10:24:08
Businesses made a big point about the uncertainty that's holding back the economy, and I think there is a lot of uncertainty. People kind of disagree about exactly what the sources are. But one thing to keep in mind about this debt ceiling is it adds to the uncertainty. And so not only are we now facing the prospect of doing it all over again in December, as Jeanne mentioned, but we also are going to have a new budget fight on the continuing resolution later this fall.

LEONHARDT

10:24:30
So we really are looking at the prospect of Washington continually going through -- every few months, going forward -- for a while, these kind of debates in which there is gridlock and there's paralysis and there are potential government shutdowns. And that is another reason to be really worried about the medium-term state of the economy.

CUMMINGS

10:24:48
And beyond the uncertainty, you know, businesses do their thing 'cause they want to make money, and so this -- the fact that consumers are not out there yet, consumers are still saving, which is a good thing, generally, for our country. The timing of it isn't so hot. We could really use some people to go out and buy things. But I think that is just as much an engine for the lack of growth in the jobs market and in the economy and in the business sector because demand is just not there yet. It's not where they need it to be.

LEONHARDT

10:25:20
Businesses literally don't know when their customers are coming back, and that's the biggest source of uncertainty if you're a business person.

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10:25:26
You know, we talk about the uncertainty of when and whether Congress -- when and whether and how Congress will raise the debt ceiling. But I wonder, Karen, if there's a broader question that gets raised by this remarkable scene in Washington over the last several weeks, and that is the question of whether our government is able to respond to any crisis, to deal with big problems, to, you know, make a deal, to reach a compromise, to act.

TUMULTY

10:25:51
You know, I might reframe that question just slightly, and that is whether our politics is able to respond to any crisis. And one thing that strikes me -- I mean, we've all talked for over a decade of, you know, Congress is broken and Washington is broken. But what seems to have happened even more recently is that there is no political reward for fixing a problem, for even putting forward a solution to fix a problem. There's only pain, and I think that has become a real problem in and of itself.

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10:26:28
We've got an email from Lindsey, who asked, "What will happen if a deal is not reached? Will the federal government close? As a federal employee, we haven't heard anything about closing procedure like we did during the federal budget debate earlier this year." Now, we assume that the Treasury Department and the Obama administration has been making contingency plans for if the debt ceiling is not raised in time. Do we know, Jeanne, what those plans are?

CUMMINGS

10:26:51
We don't know a lot of the details. They do have a plan. It's -- they -- our reporting suggests that we should hear what that plan is perhaps as early as today. Bloomberg did find out yesterday, basically what confirmed David -- what David has already said. Bondholders come first. So they will be paid. And then after that, it's a series of choices. You can bet Social Security recipients are very close behind those bondholders, and so are soldiers.

CUMMINGS

10:27:24
So you've got those three priorities sitting right there at the top of the list. Then the question becomes, all right, do you pay farm subsidies? You know, which offices do you shut down? I mean, it could lead to a partial shutdown of the government, certain departments, certain offices being closed that are deemed nonessential. I mean, basically, we're going to have, when -- if this continues on, the government is going to have about 56 percent of the amount of money that it's got -- the day before, the next day, that's all they've got.

CUMMINGS

10:27:56
So they've got half the cash. And so, you know, drastic things are going to have to happen in terms of the operations of the government itself while we try to avoid a real default by -- and we get to a default when we don't pay the bondholders.

LEONHARDT

10:28:12
One of the things that I think is important to say about the politics -- and this is really just amplifying Karen's point. And you couldn't say this and run for office, but I don't have to run for office. I think part of the paralysis from the politics stems from public opinion. I think the American people are deeply in favor of a big deficit right now.

LEONHARDT

10:28:29
I understand that, if we went out and asked them a poll question, what do you think of the deficit, people would say, I'm against it. But they don't want their taxes raised. They don't want Medicare changed. They don't want Social Security changed, and they don't want the military cut, or at least not cut by much. And that combination means you're in favor of a big deficit.

LEONHARDT

10:28:45
And so the problem is, is that politicians want to go do what might be called the responsible thing, right, and in the long-term cut the deficit, setting aside the short-term, don't really have a place to go politically because they know if they do it, they will get hammered by the other side, whatever the other side is. And the other side will have popular opinion on their side. And I think that -- a big political question is, how do we get out of that really difficult situation?

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10:29:13
So in looking at who gets paid and who does not get paid, do members of Congress get paid if there's a -- if the debt ceiling isn't raised?

CUMMINGS

10:29:19
Well, the fun thing is that Treasury -- the Treasury Department gets to decide. So it's, you know -- I mean, they could decide that, you know, the budget for the legislative branch is one of the ones that's going to take a hit. And, frankly, I think members of Congress, if it comes to it, should raise their hands and, you know, say whether or not they are willing to forego their own paychecks while this crisis goes on.

CUMMINGS

10:29:43
And I am certain that all of our colleagues will ask them that question when the -- if and when we get to that moment.

TUMULTY

10:29:49
And, by the way, it's probably worth pointing out that there a few people -- conservatives, Tea Party people -- who are arguing if there's a default, it's no big deal for -- at least for a while, that the government will continue to collect cash, you know, in terms, you know, in the form of taxes. Money will still be coming in.

TUMULTY

10:30:07
But I was -- you know, as I've been sort of trying to figure out for myself what this really means if we find ourselves in this uncharted territory, I was struck by a Credit Suisse estimate this week that if the U.S. defaults, stocks will fall 30 percent and GDP will drop 5 percent. Now, that is a pretty big hit.

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10:30:31
But, you know, last -- a week ago, last weekend, we were all watching to see what the Australian markets would do when they opened. I had not previously cared. But we were all concerned that...

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10:30:41
…the Asian markets opened first. And there would be chaos because they had not reached a deal last weekend, and not very much happened, some erosion in the U.S. stock market, but not the cataclysm that people had talked about. So I wonder if, David, you think people like Sarah Palin and Rick Perry have a point when they say, listen, it's really alarmist to talk about the consequences.

LEONHARDT

10:31:00
We don't actually know what's going to happen, and I think it's important to say that. I think a -- the U.S. not honoring its debt obligations strikes me as highly likely to be a very significant economic event. If you were to run down the list of problems and advantages our economy has right now, at the very top of the list of advantages -- and it's not that that long a list, at least in the short term -- is the fact that international investors remain very willing to lend us money at incredibly low interest rates.

LEONHARDT

10:31:30
The idea that we would voluntarily risk and, in all likelihood, give up that advantage would be economically, according to all the people who've tried to estimate it, a very bad thing.

CUMMINGS

10:31:41
It has been interesting to watch the patience of the market throughout this debate. And, you know, no one knows for certain why the market has been patient. But I think that for many people, and I think many in this town, it's sort of inconceivable that this really won't get resolved. As the time gets shorter and the level of resistance in the House becomes apparent, you know, you got to start to wonder, maybe, indeed, they won't make it until Tuesday.

CUMMINGS

10:32:15
But I think if -- certainly, a week ago, people thought they'll get there. And the leadership on the Hill -- Speaker Boehner, Mitch McConnell, the Republican leader in the Senate and the Democratic leadership -- were all saying the same thing. And that is, we'll get it done. We're not going to default.

LEONHARDT

10:32:35
There's this funny feedback loop in which Washington points out that the market isn't worried. The market isn't worried 'cause it assumes Washington will get something done. Eventually, that feedback loop could switch, and we could see the kind of thing we saw when the TARP bill failed and the market really, really plunged.

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10:32:50
I'm Susan Page. And you're listening to "The Diane Rehm Show." Well, Karen, thinking about the 2012 Republican contenders, we had some of them, like Michele Bachmann, say she wouldn't vote for this deal. We had -- some of them say they would. Jon Hunstman, for one, has supported the Boehner proposal. But the front-runner for the Republican nomination, Mitt Romney, who sells himself as somebody who really knows how to make the economy work, what has he said?

TUMULTY

10:33:16
He has said that Barack Obama is not doing a good job. He has refused, and he has been asked to say, you know, whether he would vote for any of the plans that are out there. I think, at this point in the presidential campaign, the candidates don't -- are pretty leery of differentiating themselves from each other on this, in part, because if you go one way, you freak out the establishment Republicans, and if you go the other way, you freak out the Tea Party people.

TUMULTY

10:33:47
So a lot of them have been trying to sort of have it one way or the other but not, you know, definitively. It's interesting, however, that of everybody who is running, at least at this point, only two of them actually have to vote on this thing. One is Michele Bachmann. The other is Ron Paul. And those two were two of only nine members of the -- of Republican members of the House last week who voted against the so-called cut, cap and balance bill.

TUMULTY

10:34:17
Michele Bachmann, because she said it didn't go far enough, and Ron Paul, because he said it was just an empty promise anyway. So I think these candidates are going to be out there trying to dance on a pretty thin line.

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10:34:32
Let's go to the phones. We'll talk first to David. He's calling us from Charlottesville, Va. David, hi. Thanks for joining us.

DAVID

10:34:39
Hi, Sue. Hey. What's missing up there, kindness and common sense. I talk with people all around the country every day. That's what I do for a living. I'm on the phone. We often talk politics. People just want common sense. And I'm a bottom line kind of guy. What's going on here, money and politics, the people that get in, they play games for their own side. They're not thinking about hardworking Americans out here, regardless of what they say.

DAVID

10:35:10
It's all just a game. So until we can get money out of politics, this is what we're going to deal with. Lack of common sense, this has been going on for years. We didn't dig ourselves into a $14 trillion hole overnight. It's Republicans and Democrats. They both play the game. And, you know, everybody wants lower taxes, and we want to have the programs that we want to have. But you don't hear -- only recently do you hear people talking about the debt. I've been chatting about it forever.

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10:35:40
Mm hmm. Right. All right, David. Thanks so much for your call. Well, is it -- are there, at the moment, any political winners when you look at the debate that's going on in Washington?

LEONHARDT

10:35:49
It's hard to know. I mean, my colleague on The Times op-ed page, David Brooks, thinks that the Republicans face real risks here of looking irresponsible. I don't doubt that they face risks, but I think the risks may be more for the Democrats. I mean, there is only one economy, and there's only one president. And to the extent that this does damage to the economy, I think it does damage to the president.

LEONHARDT

10:36:11
And so, to me, the risks are bigger for Obama, and that is why you see him in a relatively weak negotiating position because, I think, most people have a sense for that.

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10:36:23
Here's an email from Chris in Dallas, who asks, "Is there any type of executive order the president can exercise to keep paying our debt if Congress doesn't get any legislation through?" What do you think? Is there something President Obama could do by himself?

CUMMINGS

10:36:37
Well, there's been discussion about invoking the 14th Amendment, which requires, or some say allows, the president to lift the debt ceiling in an executive capacity. The president has said his lawyers tell him that he does not have that authority. That's not how they read the amendment. And you don't see the White House preparing in that fashion.

CUMMINGS

10:37:01
Instead, what you see inside the administration is them preparing to have to sort through the bills that come in and pick the ones that have to be paid first and those that can't. So it does not appear. So they think that they have something that they can do with a stroke of a pen and solve the crisis.

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10:37:21
Jeanne Cummings, she's with Bloomberg News. And we're also talking this hour with Karen Tumulty from The Washington Post and David Leonhardt from The New York Times. We're going to take a short break. When we come back, we'll talk about the resignation of yet another congressman accused of sexual misconduct.

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10:37:35
We'll talk a little more about the 2012 race on the Republican side and about that soldier who was arrested at Fort Hood yesterday. We'll take your calls and questions. Stay with us.

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10:40:03
President Obama has just spoken to reporters at the White House. He was about 17 minutes later than he said he was going to be. He's called the talks increasingly urgent. He said the Boehner plan does not solve the problem, has no chance of becoming law. He says there are multiple ways to resolve this problem, and he says it's clear that any solution will have to be bipartisan. Any surprises there, Karen, in the message from the president?

TUMULTY

10:40:27
No, I don't think so. He is -- he, I think, is trying to say, okay, the House plan is gone. Let's move on, and let's move fast. That's sort of all he probably can say at this point.

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10:40:40
We talked about whether Speaker Boehner can survive this situation if you don't have a resolution in which he seems to play a role. How much damage do you think this does to President Obama, just the fact that he's been unable to get something through after weeks of effort? Does this reflect on his leadership, David, do you think?

LEONHARDT

10:40:59
I think the bigger problem for him is the economy. I mean, I do think there was this period a few weeks ago where he looked good politically because the phrase the White House liked to use was the adult in the room. It's a little bit of a silly phrase, but that was clearly their goal. And so he was able to hold himself out as the compromiser.

LEONHARDT

10:41:18
And I think that helped him a little bit. But I think in the end, less important than the individual twists and turns in this debate are going to be what this does to the economy.

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10:41:28
This week, we saw Congressman David Wu, a Democrat of Oregon, announce he will step down as soon as the debt ceiling debate is over. That may keep him in Congress longer than he thought at the time he made that announcement. He is, stunningly, the fourth member of Congress to have to resign this year because of accusations of sexual misconduct. What's going on, Jeanne?

CUMMINGS

10:41:49
Well, it seems that they learn slowly, and they don't learn a lot. And so what they have learned after years of these sorts of scandals, you know, put Washington in spasms, is that you don't hold out anymore. You get out. And so we've seen four episodes, and we've seen three really quick resignations. And then this one has taken a little bit longer than the others.

CUMMINGS

10:42:16
But still, it's nothing like we've seen in the past where people think, you know, they can hang on for months and it'll just go away. Wrong. So they've learned that lesson. But they have yet to learn the lesson to keep them -- their hands to themselves and to behave properly. I mean, you've got to keep in mind there are, you know, over 500 elected officials here in Washington.

CUMMINGS

10:42:36
And you know, they are a collection of Americans like any other, and there going to be some, you know, bad apples in the lot. That's just the way, you know, it's going -- the numbers work. But still, you know, they have really responsible positions, and they all need to, you know, cut this out. But ...

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10:42:56
Here's one thing. David Wu has been a congressman for seven terms. It's not like he's a newcomer.

TUMULTY

10:43:03
Yeah, but within the last year or so, there have been reports of concerns among his staff about bizarre behavior. I think anybody who's looked his name up on the Internet has seen a picture of him in a tiger costume. So you know, this is...

CUMMINGS

10:43:19
And not subtle tiger costume, we're talking Tony the Tiger.

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10:43:23
Is there such a thing as a subtle tiger costume?

TUMULTY

10:43:27
Well, that one you're wearing, Susan.

CUMMINGS

10:43:30
Quite tasteful.

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10:43:34
Do we know what the prospects are for his seat, whether Democrats will hold that seat or whether Republicans have a chance of picking that up?

CUMMINGS

10:43:42
I believe it is a Democratic seat in terms of the makeup. But the way the cycles have gone, you know, it's almost like anything goes these days. And if we get, you know, caught in another wave and it's an open, you know, it's an open seat or a weak incumbent replaces him, then, you know, it could happen. But it is a drawn debate a Democratic seat.

LEONHARDT

10:44:05
To me, one of the interesting parlor games here -- and I'd be interested in all of your thoughts -- are what sets David Vitter apart? Sen. Vitter is a Louisiana Republican, who is the exception to Jeanne's rule, which is, he was linked to a prostitution ring pretty closely. And unlike the other Democrats and other Republicans who've been caught up in their seats, still serving in Congress and seems to be not in any risk.

TUMULTY

10:44:26
Well, he is -- one thing that makes him very different is he's a senator. And senators come from sort of much broader basis. He comes from a fairly red state. And, you know, there is also the excruciating scene of his wife standing next to him through this. And, you know, I don't know if that provides some insulation. Also, he -- his came first.

TUMULTY

10:44:51
And as these things sort of build one on the other, people do seem to be getting dispatched more quickly, with the exception of Anthony Weiner.

LEONHARDT

10:45:02
There's a parallel there to Tom Daschle during the Obama transition, which was he wasn't the first official to have tax problems, and so he was the one who had to go.

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10:45:09
Let's talk about a really very sobering topic yesterday. We know that a soldier, U.S. soldier, was arrested on charges of planning an attack on soldiers at Fort Hood. Jeanne, what happened?

CUMMINGS

10:45:23
Well, this soldier -- he was -- he came to authorities' attention because he went to buy guns and the sort of -- we don't know exactly what he said to the gun dealer. But he said enough that the gun dealer became concerned with the guns he was purchasing. And the purchase itself was perfectly legal. But the gun dealer did tip off the FBI, and they did arrest him.

CUMMINGS

10:45:49
And they found, and he has said, that his plans -- he has confessed that he wanted to go to Fort Hood and -- in the area of Fort Hood and kill American soldiers. He was a conscientious objector, but he believes that the military, in some way, mistreated him in the process. He was thinking about -- he had also purchased explosive materials, and he was thinking about blowing up a nightclub or a restaurant that was popular with the soldiers.

CUMMINGS

10:46:16
So, you know, another really close one, and thank goodness that that gun dealer had the good sense to make that phone call because he probably saved a lot of lives.

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10:46:25
Kudos to him. I mean, it does underscore, Karen, the lone-wolf threat that now seems to be a problem here, in Norway, everywhere.

TUMULTY

10:46:34
Well, sort of yes and no because the accused soldier has told the investigators that he was acting in support of the army psychiatrist who's been charged with killing 13 people at that very same base in 2009. So there is -- you know, he does appear to be one individual, but it is not a sort of an isolated motive here.

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10:46:57
Let's go back to the phones and let some of our listeners join our conversation. From Baltimore, Md., we've got Sue. Sue, hi, you're on the air.

SUE

10:47:06
Hi. I feel pretty strongly. I agree with the previous caller who said that you got to take the money out of the election. That's a long way off. But there is something happening with -- in Thomas Friedman's column Americans Elect. There's going to be a whole new wave of people -- of government by the people, for the people. And that is going to happen. I'm not going to really talk about that because that's down the road.

SUE

10:47:32
And it's going to work, and it's going to change election process. The money out of it is going to have to -- all the elected officials are going to have to agree with it. But what I'm talking about is the John Q. Public, like me, I believe if the -- all -- if the government would put back in place the Bush tax cuts on the super wealthy at the top 1 1/2 percent or one quarter of 1 percent of the country, everyone of John Q. Public would go with whatever else they're looking for, whatever else the government does, the Congress does.

SUE

10:48:13
But they want that tax to go back on the rich so that they'll feel that they're not being raped by -- and the rich people at the top, I believe, would be happy to do it.

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10:48:27
All right, Sue, thanks for your call. Karen.

TUMULTY

10:48:28
Yeah, that's right. This is the second call we've had suggesting that money in politics is behind this. But I would suggest that it's a different kind of money in politics. Because if you go to sort of the traditional big donors, the bankers, the lawyers, those are all people who would probably be telling these members of Congress, get this deal done. Don't -- you know, these are the guys who have the most at stake if there's a default.

TUMULTY

10:48:53
But there's a different kind of money in politics now, and it's an unregulated kind of money. And it tends to go to very ideological causes. And I do think that is what a lot of members fear is attack ads.

LEONHARDT

10:49:06
I guess the question I would have about this notion of a sensible center emerging is, okay, so maybe the sensible centers for restoring the Bush tax cuts on the high end, but that is only relatively small share of our medium-term deficit problem, and an even smaller one of our long-term deficit problem. It's not nothing. But it's small. So what else is the sensible center for?

LEONHARDT

10:49:25
Are they for cutting Medicare? Are they for cutting Social Security? Are they for cutting the military? And I think it's hard to see it really emerging until we see people actually getting specific and seeing whether that actually has any resonance once people do get specific.

CUMMINGS

10:49:38
I think that we got to this point -- it's been a long time coming, but I think it's much more complicated than just, you know, the rise of these outside groups that tend to disrupt elections and go with very ideological candidates. I think we have many forces at play. We have the number of House seats that are in so-called swing districts that -- they would be the middle that would represent the middle of America -- is now less than 100.

CUMMINGS

10:50:10
That means more than 300 members of the House only play to their base. There is no incentive for them to bargain. And, in fact, there are disincentives now for them to bargain because we saw, in the last couple of cycles, the rise of the primary challenge. Yet longstanding Republicans in the Senate and in the House who suddenly had ideological challenges from their right in a district dominated by only their party, that became the general reelection.

CUMMINGS

10:50:42
And so the members of Congress have yet another disincentive for cooperating with the other side because of the threat of a primary challenge that is out there today. So I think we have lots of issues that have driven us to this place. And as for remedies, if there is this sensible center, then they have to vote in primaries because the primary turnout has been going down, down, down, down, down, which has left these raises to be decided by the most ideological and active members of the party. So if there is this middle, they need to get out and engage in the election process in a different way.

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10:51:24
But, you know, we see one other possible remedy, which would take a long time to show some effect. But there have been efforts in some states, including California, our biggest state, to try to change the process of drawing these congressional lines, so you don't get these crazy districts designed to protect one side or the other. But districts that are contiguous and make some sense and tend to be the kind of swing districts they're talking about.

CUMMINGS

10:51:46
And California also changed its primary process, in that everybody runs at the same time. So you have all the Democrats and all the Republicans, everybody is in that primary together, and the top two people come out of it. Again, that was an attempt to try to break down the ideological trend that's been going on in our congressional races. And they -- that's how they ran the special that was out there in California just a month or so ago.

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10:52:11
And how did it work?

CUMMINGS

10:52:12
Well, that -- it was a Democratic seat. It was a Democratic council -- local councilwoman who won. But we don't know what her voting record will prove to be. We'll find out.

TUMULTY

10:52:22
If I could just add one more factor in here -- and I think it's a big one -- is the brutal media culture that we are in. And by media culture, I'm not talking about the sort of traditional newspapers and networks and that sort of thing. But just the fact that, you know, it's -- it become so partisan and the reaction comes flying at these members, even before they have a chance to do anything.

TUMULTY

10:52:47
So there really isn't the time they used to have to go out and have conversations with their constituents and explain things and hear the nuances of a subject. There is nothing nuanced.

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10:52:58
I'm Susan Page. And you're listening to "The Diane Rehm Show." Let's take another caller. We'll talk to Gray, who's been holding on from Winston-Salem, N.C. Hi, Gray.

GRAY

10:53:08
Hello. My comment is, is that I think that the whole concept of the way that the budget is scored is scandalous. The Budget Act of 1974 put in place a baseline increase that has to be scored in any of these plans that going forward. I think most Americans will be stunned to know that it's counted as a cut going forward if the rate of growth declined, say, from 6 or 7 percent to 5 or 6 percent.

GRAY

10:53:41
I've heard of a plan -- I believe Connie Mack is one of the parties, and maybe Rand Paul, but I'm not sure it's the senator. They're calling it the Penny Plan, where if we just reduce government spending by 1 percent across the board for the next six or seven years, we would be on a glide path to a balanced budget in seven or eight years. The plan that they have calls for Congress to get together and agree to cuts. But if they were unable to agree, it would just be across the board.

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10:54:11
All right. Gray, it sounds like you know a lot about the budget. So does David Leonhardt, so we'll turn to him.

LEONHARDT

10:54:15
Baseline questions are inevitably thorny. But what I would say is that we shouldn't think the norm is no increase because over time our population is growing, over time our economy is growing, and over time there is inflation. And so, if you just say, well, all we need to do is keep it constant, what you're basically saying is, is that as our population grows, we don't send the new kids in our population to school.

LEONHARDT

10:54:33
We leave them at home. And so it just doesn't seem like that's the best solution to the budget problem.

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10:54:39
Here's an email that we got -- actually, a comment we got on Facebook from Mike. He writes, "Is there a clear proposal from the Tea Party about what they actually want?" Is there, Jeanne?

CUMMINGS

10:54:48
There – no, there's not. I mean, the Tea Party doesn't want to deal. They held a rally up on Capitol Hill, and their message to members of Congress was, no deal. Go ahead. Default is not going to be that bad. We'll still have money coming in. I mean, basically from their perspective, if there are still taxes coming in, but it's only 50 percent of what -- or so, approximately, what we get in, then fine. Let's have a budget that is that big.

CUMMINGS

10:55:16
Let's just have that. And so they take a very -- they don't have a formal position. You know, the Tea Party is a very, you know, complex organization. But some of the most vocal leaders, that's the message that they're giving to Congress.

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10:55:30
Karen, Gallup poll put out some numbers this week on the Republican field. Of the top five Republican candidates for president, three of them are not now running for president. And I wonder what you make of that? And, also, of the announcement from Sarah Palin -- who is in that top five, but is not, of course, not running for president -- that she is going to be speaking at a rally over the Labor Day weekend that, by the way, just happens to be in Iowa?

TUMULTY

10:55:52
Well, I think we are going to see Sarah Palin doing this political fan dance for as long as she feels like it because she is Sarah Palin. But there is -- these poll numbers do speak to this idea that the Republican field is as unsettled as we have seen it in a very long time, that there is a level of dissatisfaction among Republican voters with the choices they have. But that is one of these problems that usually sorts itself out once the primary season begins in earnest.

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10:56:24
Karen Tumulty, she is national political reporter for The Washington Post. In this hour, we've also been joined by Jeanne Cummings, deputy government editor of Bloomberg News, and David Leonhardt, with us for the first time, the new Washington bureau chief for The New York Times. Thank you all for being with us this hour on "The Diane Rehm Show."

LEONHARDT

10:56:40
Thank you.

TUMULTY

10:56:40
Thank you.

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10:56:41
I'm Susan Page of USA Today, sitting in for Diane Rehm. She'll be back on Monday. Thanks for listening.

ANNOUNCER

10:56:47
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