The Federal Reserve announced a new, open-ended round of bond buying to stimulate economic growth. President Barack Obama and Republican challenger Mitt Romney sparred over the Obama administration’s handling of the attacks in Libya and Egypt. And vice presidential candidate Paul Ryan returned to the House to vote on a six-month, stopgap spending bill to keep the government operating. Jonathan Allen of Politico, Jackie Calmes of The New York Times and Michael Scherer of TIME magazine join Diane for analysis of the week’s top national news stories.

Guests

  • Michael Scherer White House correspondent for Time magazine.
  • Jonathan Allen congressional reporter for Politico.
  • Jackie Calmes national correspondent for The New York Times.

Friday News Roundup Video

The panel discussed the significance of the Federal Reserve’s announcement Thursday of a new open-ended mortgage bond-buying program. Time magazine’s Michael Scherer said the action represents a huge shift for the Fed. “They’re basically saying we’re going to go as far as we need to go to make sure the economy recovers,” Scherer said. Jackie Calmes, national correspondent for The New York Times, said it’s important to note the Fed didn’t mark an end to the program. Jonathan Allen, congressional reporter for Politico, said the program won’t affect the unemployment rate.

Transcript

  • 10:06:55

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. The Federal Reserve announced a new round of bond buying to stimulate the sluggish U.S. economy. The House approved a six-month stopgap spending bill to keep the government operating. And New York became the first city in the U.S. to ban super-sized sugary drinks. With me for the domestic hour of the Friday News Roundup: Jonathan Allen of Politico, Jackie Calmes of The New York Times, and Michael Scherer of Time magazine.

  • 10:07:34

    MS. DIANE REHMYou're invited to join the conversation. Call us on 800-433-8850. Send us your email to drshow@wamu.org. Join us on Facebook or Twitter. Good morning, everybody.

  • 10:07:53

    MR. JONATHAN ALLENGood morning, Diane.

  • 10:07:53

    MS. JACKIE CALMESGood morning, Diane.

  • 10:07:53

    MR. MICHAEL SCHERERGood morning.

  • 10:07:54

    REHMMichael Scherer, I'll start with you. How significant was the Fed's action yesterday?

  • 10:08:01

    SCHERERI think very significant. It was basically as much as they could have done at this moment. Whether it rescues the economy from the malaise it continues to be in is a different question. But in terms of their options that were on the table, they basically said they're going to start buying mortgage-backed securities in large numbers, about $40 billion a month. And they're going to continue buying them for an unlimited amount of time until they begin to see the kind of response to the unemployment rate that they want to see.

  • 10:08:32

    SCHERERThey didn't define what that response is so we don't know when this is going to end, but it's basically the Feds saying, we're going to do everything we can. And it's a huge shift from where the Fed was five, six months ago in which Ben Bernanke was saying, look, we're disappointed with where we are, but we're not ready to go further. They're basically saying we're going to go as far as we need to go to make sure the economy recovers.

  • 10:08:55

    REHMBut, Jackie Calmes, doesn't this really take the amount up to $85 billion to the end of the year?

  • 10:09:04

    CALMESRight. Per month, if you count in the amount of treasury securities that the Fed is buying, it does come to about $85 billion a month, which is a little bit more than we've seen in the second round of qualitative easing, QE2, which was about $75 billion. Prior to that, at the height of the financial crisis, it was $100 billion a month. But, like Michael had said, this is important because they didn't put a set ending point on this period.

  • 10:09:37

    CALMESIt is -- this marks the end of the Fed's incrementalism and, I think, a recognition that, when you have two tools at your disposal, monetary policy and fiscal policy, there's nothing to expect from fiscal policy in the short run because they see that Congress and the White House are not going to come to any agreement on further stimulus. So it's up to the Fed to do so.

  • 10:09:59

    REHMSo, Jon, how effective is this new policy likely to be?

  • 10:10:05

    ALLENI think we'll have to see. Certainly, the Fed doesn't see unemployment falling below 7 percent until 2014, which is halfway through the next president's administration. Good news for somebody running for reelection or party running for reelection in 2016. Bad news, I think, for those who are looking for jobs right now. And, of course, the unemployment rate, as you know, doesn't always reflect the real job situation, those who have stopped looking for jobs.

  • 10:10:33

    ALLENLook, this is an action that's being criticized as political by Republicans. They think it's an effort to help President Obama continue some his policies without -- essentially off the books, give him a little more room. We'll just have to see over the next few months and years.

  • 10:10:50

    REHMThe vote was 11-to-1.

  • 10:10:54

    ALLENRight. I mean, I think if you're looking for a partisan angle here, the 11-to-1 vote is the answer to that, that there's only one commissioner there that's saying that, you know, this is a bad idea. So it makes it a harder argument.

  • 10:11:06

    REHMSo what do the latest data tell us about how the recovery is going, Michael?

  • 10:11:13

    SCHERERThey continue to be mixed. So we had retail sales data come out just yesterday that showed slight increase of where economists expect it to be. But if you bore down in the data, there was a revision from a previous month that was down. And also, a lot of the increase was in auto sales and people paying more for gasoline at the pump. It wasn't more back-to-school spending, the kind of basic economic behavior that you want to see that would signal a recovering economy.

  • 10:11:40

    SCHERERThere are some signs that consumer sentiment in increasing. But again, it's sort of mixed. You know, these numbers kind of bounce around month to month. It's clear there's a consensus of what Bernanke said yesterday, which is that we're not where we need to be and it's not clear we're going to get there anytime soon. I think what the Fed move here and then what the European Central Bank did several weeks ago is it kind of -- it takes some of the risk out of the economy.

  • 10:12:05

    SCHERERAnd this is where the political impact will be. It’s much less likely now, between now and the election, that there's going to be a real downturn, an unexpected downturn because you've got both in Europe and in the United States, the Fed coming in and saying, here, we're here to support. It doesn't mean we're going to suddenly start shooting up, but it does mean that investors will feel a little more safe, or the stock market is likely to -- more likely to go up and mortgage trades are more likely to stay low.

  • 10:12:29

    REHMMichael Scherer of Time magazine, Jackie Calmes of The New York Times, Jonathan Allen of Politico. Do join us, 800-433-8850. The Congress voted yesterday in favor of the six-month stopgap measure -- spending measure and Congressman Paul Ryan was there. He voted in favor of it. He had voted against any further stopgap measure previously. What is this all about, Jackie?

  • 10:13:05

    CALMESWell, it's about neither side wanting to have a showdown as we approach the last six -- five to six weeks before an election. And Paul Ryan now has all the more reason to not want to roil the waters because he's on the ticket with Mitt Romney. This stopgap spending bill reflects levels of spending that we're agreed to last year in the compromise that both sides came to after nearly going over the cliff on the debt limit fight.

  • 10:13:36

    CALMESAnd they, you know, Paul Ryan, when he did pass this House budget this year, wanted to cut further, which Democrats and some Republicans in the Senate considered, you know, sort of going back on the debt limit agreement. So he didn't get, you know, he passed his budget in the House, but of course, it went no where in the Democratic-controlled Senate. Now, they have this bipartisan stopgap spending bill. So they can put off the fight until early next year when we'll have -- well, we don't know who we'll have as president...

  • 10:14:06

    REHMYeah, exactly.

  • 10:14:07

    CALMES...and who will control both houses of Congress.

  • 10:14:10

    REHMJon Allen.

  • 10:14:11

    ALLENWell, I think one of the things that's at work here, and it's interesting 'cause it's lost a little bit in the presidential politics, is you've got House Republicans who are adamant that they wanted to cut spending in this round of continuing government spending giving up and going back to that agreement of last year of that spending level. And I think part of what's going on there is they were also facing reelection, and they've spent two years being demonized as essentially crazy, playing recklessly with the country's finances.

  • 10:14:41

    ALLENThis is a situation where they backed off of their aggressive spending-cut message here in the last several weeks before an election. So I think that's something that's a little bit lost here. You know, from a federal agency standpoint, these agencies at least now have the ability to go ahead and plan for the next six months which is important.

  • 10:15:00

    SCHERERThe real action right now is the next fight, the fight after the one that we just passed, which is dealing with the sequester, dealing with the tax increases, the expiration of the Bush tax cuts which will happen at the end of the year. And both parties in Congress and increasingly on the campaign trail for president are positioning themselves for that fight. You've heard House Speaker John Boehner trying to paint the sequester, especially the military sequester, as a Democratic idea. A lot of Republicans are doing that on the campaign trail.

  • 10:15:29

    SCHEREROn the flipside, Democrats are focusing more on the tax increase parts, saying Republicans are preparing to raise taxes on everybody because they want to protect the tax cuts for the very wealthy. And these two dueling messages, I think, will only increase in volume as we get closer to the election. And then after the election, there's going to be a moment of truth. And there's a really good chance that both sides fumble the ball once again and that we get no real resolution or what we get is some sort of let's put it off until another day.

  • 10:15:58

    REHMJackie, are they going to do anything more while they're here in session, the farm bill, for example?

  • 10:16:08

    CALMESIt's hard to tell. They'll do as little as possible. The farm bill is something, you know, I'll defer to Jon on that one. But he, you know, a lot of the Republicans in the House got heat when they were back home during August from constituents. You know, Republicans dominate in these rural districts and farm states, and this has become a big issue in the North Dakota Senate race where Democrats weren't expected to have much of a chance to keep that seat. But the lack -- the failure so far to pass a farm bill is a huge issue there. So there's a lot of pressure on Republicans to get that done.

  • 10:16:40

    REHMJon.

  • 10:16:41

    ALLENRight now, I just don't see the political will to get a farm bill done. What you have, I mean, one of the things about the farm bill is it's a regional issue, and there are so many cross-cutting interests there. And you toss in food stamps and other programs for the poor that are engaged there, it's just hard to see that coalition forming before these guys break for the elections in a lame duck...

  • 10:17:01

    REHMAnd the question of when they're going to break is at issue. Is it going to be Oct. 5? Is it going to be Sept. 21? When is it going to be, Jackie?

  • 10:17:17

    CALMESWell, once they get to, sort of, back in town here as they're just getting back and they decide, you know, how little they're going to be able to do, the chances are they'll quit sooner and just set a date for coming back in a lame duck session. And I -- one other thing I wanted to add, we're talking about sequestration. Today, the -- President Obama will, as he's required by law, put out a list of details as to what sequestration would entail exactly. And it's going to be very voluminous, lots of numbers.

  • 10:17:51

    CALMESBut it's really not going to tell us much more than we already know, which is that it would be a huge cut and accounts across the board and fully half of it out of defense. No one wants this to happen, not the administration, not the Republicans. So the likelihood is it won't happen. But how they'll avert it, how long they'll, you know, as they all like to say, kick the can down the road, is yet to be seen.

  • 10:18:13

    REHMJackie Calmes of The New York Times, Jonathan Allen of Politico, Michael Scherer of Time magazine. If you'd like to join us, call us: 800-433-8850. Send us an email to drshow@wamu.org. Follow us on Facebook or Twitter.

  • 10:20:03

    REHMAnd during this week of violence, death in various parts of the world, they certainly have an impact on what's happening here in the United States during this presidential election season. The attacks in the Middle East escalated quickly. Michael Scherer, in the presidential race, what happened?

  • 10:20:32

    SCHERERWhat started with really, you know, no one in Washington was expecting this. No one knew about this inflammatory video that had been produced by obscure and dubious characters probably on the West Coast. And suddenly, we had riots at our embassy in Cairo, a mob at our embassy in -- one of our consulates in Libya.

  • 10:20:57

    SCHERERAnd even as that news was coming in, Mitt Romney stepped in and released a statement -- we're still very unclear what was happening -- attacking the Obama administration for releasing a statement out of the Cairo Embassy that had said, you know, we condemn this video, sort of a statement that heavily condemned the video that was sort of outrageously critical of the Prophet Muhammad.

  • 10:21:24

    SCHERERHe -- Romney said that that statement was the equivalent of apologizing for America. He made the case that this is part of what Obama's foreign policy has all been about. And within hours, that statement backfired on him. And he was forced to call a press conference just to kind of have the double down. But it became clear first not only that an ambassador had been killed in Libya so we had a much larger crisis on our hands, but also that that statement really wasn't the Obama administration's position in any real way, that this really was a time of national crisis and it wasn't a time for politics.

  • 10:21:56

    REHMAll right. Let's hear exactly what Gov. Romney had to say.

  • 10:22:02

    GOV. MITT ROMNEYThe embassy in Cairo put out a statement after their grounds had been breached. Protesters were inside the grounds. They reiterated that statement after the breach. I think it's a terrible course to -- for America to stand in apology for our values, that instead when our grounds are being attacked and being breached, that the first response of the United States must be outrage at the breach of the sovereignty of our nation. And apology for America's values is never the right course.

  • 10:22:41

    REHMJackie Calmes, what do you make of that?

  • 10:22:44

    CALMESWell, he was, you know, they dispute the sequence of events. But he was speaking -- the statement from the Egyptian Embassy, the American officials there, came out before all of the mayhem really started. It was an attempt, in fact, to avoid the mayhem and to point out that the embassy was in solidarity with the, you know, Islamic people, that, you know, in decrying this, you know, amateur video that was so insulting of Muhammad and Muslims.

  • 10:23:17

    CALMESAnd so it was really -- I mean, that's where other Republicans joined in the criticism of Mitt Romney because you have these Americans who are on the frontlines in these embassies in a very, very, you know, sensitive part of the world, where post-Arab Spring, these countries are still, you know, feeling their way through new democracies and not very easily. And there's a lot of anti-American sentiment.

  • 10:23:41

    CALMESAnd so to come out and, you know, both criticize them, and as it turned out, in a statement that, before we even knew that the ambassador of Libya had been killed in separate rioting, was really seized upon by all across-the-board as being too quick to play politics with this.

  • 10:24:00

    REHMJonathan Allen, this whole shift toward violence and protest has now spread widely.

  • 10:24:10

    ALLENAbsolutely. I mean, the Arab Spring is looking like an Arabian nightmare right now and not just Arabian, I mean, the Arab world, the Muslim world -- we were talking about this during the break. You know, you look at the map of Africa. This is not just North Africa anymore. It's spreading across Africa. You know, I think that there is a legitimate question as to whether the United States policy in supporting revolutions across the Arab world was a good one, and we're seeing some of the fruits of that now. And that's a legitimate public policy question.

  • 10:24:41

    ALLENThe idea that this video made in L.A. and promoted by this Florida pastor is somehow indicative of American values is one that, I think, strikes the wrong chord with a lot of Americans who look at it and say, of course, those aren't my values. All you have to do is look at the production quality of that video and the message it in to understand that that's not something that is supported by a lot of Americans or Americans with money or the American government.

  • 10:25:04

    ALLENAnd certainly the folks in Cairo who put out that statement were in a volatile situation inside a compound in Cairo not sitting in an easy place in the United States to make a judgment on it.

  • 10:25:16

    REHMBut at the same time, Michael Scherer, does what's happening in these various countries challenge President Obama's Middle East policy during the Arab Spring uprisings?

  • 10:25:32

    SCHERERAbsolutely. I mean, the issue for Obama is he's running as someone who's been very successful in foreign policy. And to the extent to which we come close to the election, then that success looks more turbulent and less stable. I mean, if these countries -- and this escalation can continue to happen. You know, President Obama approached the Arab Spring in a very nuanced way, and he sort of cherry-picked where he was going to get involved, where he wasn't going to get involved, and he tried to very delicately handle the situation.

  • 10:26:00

    SCHERERMitt Romney has criticized him for not more -- be more concerned about militants and also for not more aggressively pushing for democracy before the Arab Spring started. I think, you know, the other thing this is pointing out is that the United States now has enormous strategic vulnerability in this part of that world because any one of our citizens, any teenager right now can go on YouTube, say something moronic and potentially put Americans' lives in jeopardy, you know, thousands of miles away. And we don't, in our system, really have an answer for that

  • 10:26:31

    REHMLet's hear what President Obama had to say.

  • 10:26:35

    PRESIDENT BARACK OBAMAThere's a broader lesson to be learned here, and I -- you know, Gov. Romney seems to have a tendency to shoot first and aim later. And as president, one of the things I've learned is you can't do that, that, you know, it's important for you to make sure that the statements that you make are backed up by the facts and that you've thought through the ramifications before you make them.

  • 10:26:55

    MR. STEVE KROFTDo you think it was irresponsible?

  • 10:26:57

    OBAMAI'll let the American people judge that.

  • 10:26:59

    REHMSo foreign policy, up to now, has not been a huge issue in the campaign. Does this now put a whole different light on it, Jackie?

  • 10:27:10

    CALMESI think this campaign -- this election will continue to turn on the economy and issues of economic security more broadly. But I think where this goes through is less the foreign policy issues and the entire area itself as to what sort of leader Americans are looking for, whether they -- whether it shakes their confidence in President Obama, where he's enjoyed his highest marks as president in national security and foreign affairs, will yet to be seen and how this plays out.

  • 10:27:45

    CALMESAnd, conversely, if you're going to turn President Obama out of office, you'd only do so if you think you can be confident that the person you're replacing him with is someone who can fill the job and not just, you know, on economic matters, but on national security as well. And on that grounds, we've already seen that, you know, Mitt Romney flubbed it, and there's no two ways about it.

  • 10:28:12

    CALMESAnd it called into question, you know, this on top of, you know, his going to the Olympics last month and sort of insulting London and the United Kingdom when they're just beginning to host these -- the Games. It's not been good for him, and he needed something to show that he has command of foreign policy where he doesn't have much experience. And he's blown that chance. And he won't -- there will be debate coming up. One of the three debates is on foreign policy. But his chances to sort of give people confidence that he can step into that role is -- are running out.

  • 10:28:48

    REHMJon.

  • 10:28:49

    ALLENI think Barack Obama's going to be judged in terms of foreign policy because this is happening right now, a lot on the response to what's going on across the Arab world right now but specifically in response to the killing of an American ambassador for the first time since 1979. That is not protest. You know, there is a clear line that has been crossed there, and the American response to that is going to be a critical one for Barack Obama. We -- I don't think we're going to know what that is immediately. It's not like three days later, you have an answer. But I think he will be judged by that.

  • 10:29:24

    REHMIt's interesting. You say that the election really is going to be decided on economic issues, Jackie. Gov. Romney had an appearance this morning on ABC television. What do you say about the middle-class?

  • 10:29:42

    SCHERERYou know, he was asked about, you know, how he defines middle-class, and he said it's someone who makes $200- to $250,000 or less, which is probably not an ideal response, but is not out of line with the Bush (sic) administration's rhetoric, which is that we don't want to raise taxes on the wealthy. And they define that by people who make over $200- and $250,000.

  • 10:30:04

    CALMESYou mean the Obama.

  • 10:30:04

    REHMYou mean the Obama.

  • 10:30:06

    ALLENRight.

  • 10:30:06

    SCHERERYeah. I'm sorry. I mean the Obama.

  • 10:30:07

    REHMYeah, right.

  • 10:30:07

    SCHERERIn practice, middle class in politics means people who vote. Almost everybody who votes thinks of themselves as the middle class, unless they are like, you know, a bundler or $100,000 donor. In reality, you know, if you ask the census, you look at actual data, middle-class people -- technically middle-class people are people making close to the median income, which is, you know, $50- to $70,000 a year. It's not people in the $100- to $200,000 range.

  • 10:30:36

    SCHERERSo, you know, it's possible that Romney beginning -- defining the middle class by the higher end point, you know, could be complicating for him. But he's not totally out of sync with his opponent.

  • 10:30:47

    ALLENI think it's also interesting to note that this is a movement toward Barack Obama, that if you were to put in a tax bracket at $250,000 a year, that is different than what our current tax bracket says here, incorporating a whole lot more people into that very higher end. And so what you've got is Mitt Romney actually saying that he wouldn't be opposed, perhaps, to raising taxes on a whole new set of people that George Bush wouldn't have considered to be wealthy.

  • 10:31:12

    REHMAll right. There is a strike, a teacher strike going on in Chicago. We're in the fifth day. Where do things stand between the union and the city and certainly Rahm Emanuel, Jon?

  • 10:31:29

    ALLENWell, I'm certainly not in the middle of the negotiation right now, so I don't know exactly where they stand. But what I can say is that, you know, you've got unions that have been beleaguered for the last several years. You've seen it across the Midwest in particular. And this is ground that may be shaky for them, the one place where the public may not be with the union more than in any other places where the teachers union that's asking for demands that may not be seen as particularly reasonable. You're not talking about pay that is seen as unreasonable by average folks.

  • 10:32:02

    ALLENWhat you are talking about is kids that are out of class, kids that may not have recommendations written for them, that kind of thing. I can tell you locally here in Washington, D.C., when teachers say we're going to work to the rule, which isn't even a strike, just we're going to work from, you know, 8 a.m. to 3 p.m. or 4 p.m. or whatever it is, that's when parents start getting really upset because it means their kids aren't getting college recommendations. This is an area that's very potentially explosive for unions, I think.

  • 10:32:26

    REHMJackie.

  • 10:32:27

    CALMESI would agree. There's a lot of talk whether this will be -- enter into national politics this close to an election. I'm not so sure it will, but it is a problem for Democrats in that the teachers unions are a huge part of their base and greater than even their numbers suggest because teachers get out. They organize, they volunteer, and, you know, they provide contributions. But it's, you know, a Democrat, Rahm Emanuel, former White House chief of staff who's leading the fight in Chicago against the teachers union to get more accountability, longer school days, longer school years.

  • 10:33:07

    CALMESAnd, you know, the punditry across the board has been pretty much on his side and against the teachers. The Chicago Teachers Union in particular has taken a beating, and teachers unions in general are, so it's a tightrope for Democrats to walk. But I think, you know, knock on wood, I think this one is going to be settled soon, and it will be largely forgotten as this election campaign goes on.

  • 10:33:30

    REHMI hope so. Jackie Calmes of The New York Times, and you're listening to "The Diane Rehm Show." There are several voter ID situations going on around the country. In Pennsylvania, the hearing was yesterday. Michael Scherer, what did we learn?

  • 10:33:54

    SCHERERWell, there are a number of different issues in different states. In Pennsylvania, the issue is that the state has put in place a pretty stringent voter ID law. So you're not going to be able to vote under the law unless you have certain identifications, state-issued identification that identifies you as the voter at the polls. Republicans have said, some Republicans -- they probably wish they could have taken it back -- that this could help them in the election because a lot of these voters who don't have ID are likely -- more likely to vote Democratic.

  • 10:34:25

    SCHERERThe case there, though, is whether -- before the state court -- is whether there's a legitimate state interest here and whether you're harming voters by doing this. In other states, such -- these voter ID laws have been blocked by the court. So far, in Pennsylvania, it hasn't been blocked. And the issue is you have to be able to demonstrate harm, and it's not clear that they've been able to demonstrate harm.

  • 10:34:48

    SCHERERIn Southern states like Texas and South Carolina where there's a history of voter right abuse, there's a different standard used. You have to show that you're protecting voters. In Pennsylvania, that's not the standard. In Pennsylvania, the other thing is that it's right now no longer a swing state. It's traditionally been a swing state. It's always been a closely fought election, presidential years. Right now it's moved out of that category.

  • 10:35:11

    REHMInto?

  • 10:35:12

    SCHERERInto Barack Obama's column, so neither campaign is advertising there right now. Barack Obama is expected to win the state. It doesn't look like this kind of a disagreement could swing that election, but it's a very important one. And then you have other cases going on in Florida and Colorado and Ohio where the issue is when polls should be open or not open, or whether polling lists, registration lists, should be cleansed to make sure that there are none -- that all the voters on the list are legitimate voters.

  • 10:35:39

    SCHERERWhat happens often in most cases is you clean the database and you end up tossing off people who should be legitimate voters, and it becomes complicated.

  • 10:35:47

    REHMJon.

  • 10:35:48

    ALLENWell, I think, obviously, as you point out, there's a huge difference between Pennsylvania and Florida, and Florida is really the intriguing one where there seems to be an agreement now in terms of the early voting. There was an effort at the state level to reduce the number of hours and days where people can early vote. That was seen as a -- an attack on African-American voters who tend to vote in higher numbers or higher percentages early on.

  • 10:36:11

    ALLENIf Barack Obama wins Florida, this election is probably over. And so there's a -- there was a lot at stake there, but it looks like the state of Florida and the Justice Department have come to an agreement there to go ahead and allow early voting that was similar to past early voting. Look, there's a huge argument that goes on between the parties about voter fraud, which brings up these voter ID laws and voter discrimination, preventing people from voting.

  • 10:36:38

    ALLENI think this country has a long history of denying people the right to vote en masse, whereas instances of voter fraud tend to be very localized, and that's why you've got laws on the books that Michael was talking about from the 1965 Voting Rights Act.

  • 10:36:53

    REHMIs the compromise in Florida going to please everybody?

  • 10:36:58

    ALLENI don't think it's going to please everybody. I don't think in this country everybody is pleased over anything, ever. But I do think it seems you have created a peace, at least, between the state officials who are generally Republicans and the federal officials who, at this point, are Democrats.

  • 10:37:14

    REHMJonathan Allen of POLITICO, Jackie Calmes of The New York Times, Michael Scherer of Time magazine. We'll come back after a short break and move to your calls, your comments. I look forward to hearing from you.

  • 10:40:03

    REHMWe'll go right to the phones during this hour of domestic stories of our Friday News Roundup, first, to Arlington, Texas. Good morning, Ken. You're on the air.

  • 10:40:17

    KENHello, Diane.

  • 10:40:18

    REHMHi.

  • 10:40:19

    KENHi. I have a question and a comment.

  • 10:40:21

    REHMSure.

  • 10:40:22

    KENThe comment: we can't yell fire in a crowded theater, so freedom of speech is limited in some aspects. This -- the guys that put this film on, they should be both thrown in jail. Now, the next point: Why is it President Obama not asking for a Democratic Senate and Congress? If he doesn't do this, he will still have divided governance, and his policies won't be pushed through. So I'll take my -- I'll just listen for...

  • 10:40:56

    REHMAll right. Thanks for calling. Jon.

  • 10:40:59

    ALLENThe whole country hates Congress. So anytime President Barack Obama talks about Congress, talks about Democrats in Congress, he is lowering himself from the above the partisanship that he wants, I would say, first of all. Second of all, you're in Arlington, Texas. Good luck to the Rangers. I hope you're enjoying their season this year. And, third of all, in terms of throwing people in jail for making movies, we don't do that. I mean, it just -- that's -- there are limits on the freedom of speech, but people may think...

  • 10:41:24

    REHMBut the Justice Department is looking into this...

  • 10:41:28

    CALMESAs a hate crime.

  • 10:41:29

    REHM...as a hate crime.

  • 10:41:31

    ALLENI think that there's a very, very fine line that has to be walked there. They can look into it as a hate crime. It's possible that they'll prosecute it. I cannot imagine that if you went through the legal process and got to the Supreme Court of the United States, which is -- I mean, I just -- I can't imagine that they would look at this and say, you can't make a film like this. By the way, if you watched that film, it's perhaps the worst film I've ever seen, and you shouldn't waste your time on the trailer. In fact, I'm not even sure it's entire film, looks like it's just a trailer.

  • 10:42:00

    CALMESAnd if it weren't for -- that we've seen such tragic consequences, I think people would have this -- laughing at it. It's so bad. But, you know, he...

  • 10:42:10

    REHMIt has resulted in the deaths of at least four Americans. We don't know how many other individuals both in Libya and elsewhere. Something has to define what it is to yell fire, something. And, you know, I understand your point about Supreme Court. I understand freedom of speech. But when a film is put on YouTube specifically designed to ignite some kind of wrath in return, something needs to be done.

  • 10:42:56

    CALMESWell, anytime you get into trying to define speech and what's allowable or not, you run up against the First Amendment. And that goes to what people in other counties, especially these countries across North Africa and the Middle East who have not had experience with democracies, don't understand about us. They think as bad as this little video was -- is, that it can't be out there without having some sort of tacit approval at the highest levels of our government.

  • 10:43:23

    REHMThey think it comes from us.

  • 10:43:24

    CALMESThey think -- yeah, exactly right. And it's -- and, you know, maybe it takes President Obama going on television saying as he -- he has said, but in a more, you know, high profile way, somehow trying to reach people and saying that this is not, you know, this just -- as a reflection of free speech in our country, as hard as that may be to understand, it is not a reflection of our values. But if he were to do that, you could see some on the other side coming out and saying he's apologizing for America in some way.

  • 10:43:54

    REHMHere is an email from Sarah, moving the discussion a little bit. She says, "Without Rev. Terry, no one would ever have seen this stupid video. He is the troublemaker this time, not for the first time. He is the Florida preacher who burned Qurans." Michael.

  • 10:44:18

    SCHEREROr threatened to burn Quran. I think he backed off the last minute. But we did have -- am I wrong on that? I think he backed off the last time he's...

  • 10:44:25

    REHMI think he -- go ahead.

  • 10:44:28

    SCHERERBut he -- but that was a scenario we had just about a year ago, I think, where he was threatening to have this big show of burning a Quran. And there were riots in Afghanistan as a result of it. I mean, the issue here is, given our legal framework, the only solution that I can see is education, not only in the Arab world and the Muslim world to make them understand how our system works, but also in the U.S. so that people like Terry Jones, people who even sympathize with, you know, real distaste for Islam, understand that they are putting their country at risk when they express themselves in this way.

  • 10:45:05

    REHMAnd in the age of the Internet, maybe we're going to have to move these rules somehow, Jon?

  • 10:45:15

    ALLENI'm not a constitutional lawyer, and I didn't know Oliver Wendell Holmes, who I believe is responsible for the fire at a crowded theater. But my understanding is that that is an attempt to stop an immediate violent reaction. This is a video that's been online for a long time.

  • 10:45:32

    ALLENI think if you're talking about American values both here and worldwide, the idea is shoot all the film that you want and none of the people and that, I think, if we are to export our values across the world -- and I think that's a lot of what we're trying to do in supporting democracy in a lot of these countries -- that's got to be the emphasis.

  • 10:45:52

    REHMAll right. To Miami, Fla. Malone, you're on the air.

  • 10:45:58

    MALONEGood morning. I got three quick points. Number one, I want the panel to respond to this. Number one, in -- Greer, a former Republican leader in Florida suggested that -- in a meeting that Republican leaders were talking about making sure that black folks would be limited. Would you be -- could you respond to that?

  • 10:46:17

    MALONENumber two, could you explain the math that the Republicans are trying to do with the economic -- Paul Ryan and Mitt Romney's economic plan and explain the math of $55 trillion in tax breaks and a 14 percent GDP in revenue? And, number three, do we really want to go back to words like or terms like Islamic fascism to describe what's going on in the Mid East? I'll take my questions or comments...

  • 10:46:44

    REHMAll right. Thanks for calling. Michael Scherer.

  • 10:46:46

    SCHERERThose are big issues. It is definitely true. I'm not familiar with the comments you're talking about specifically in Florida, but it's definitely true that Democrats and even academics who study it say that these sort of voter ID laws disproportionally (sp?) affect minorities and disproportionally hit on not just minorities but impoverished people. And so the impact of these laws, of voter ID laws is expected to diminish turnout for minorities.

  • 10:47:12

    REHMThere was a quote in Pennsylvania from someone.

  • 10:47:16

    SCHERERYeah. In Pennsylvania, there was a lawmaker who said that this will help us win the election, this voter ID. He didn't -- I don't think he pointed out African-American voters in particular, but he was suggesting that it would help Republicans.

  • 10:47:27

    REHMHe said you've just given Pennsylvania to Gov. Romney.

  • 10:47:31

    SCHERERTo Gov. Romney, right. And -- which is unlikely to actually happen. I mean, the polls just aren't that close. There's not that many people in play. In terms of the math, Mitt Romney is playing a very delicate game here. He has proposed significant tax cuts, but he says those tax cuts will be revenue neutral. So you have something like $4 trillion in tax cuts he's proposing. And then he's saying he's going to make up for those tax cuts by increasing other kinds of -- or by eliminating other kinds of tax breaks.

  • 10:47:58

    REHMLoopholes.

  • 10:47:59

    SCHERERAnd closing loopholes. And he says he's going to do it in a balanced way so that the economic tiers of the country still continue to pay about the same share of tax as they do.

  • 10:48:09

    REHMBut we don't know what the loopholes are.

  • 10:48:12

    SCHERERHe won't say what the loopholes are, and not only that, but it's very difficult and probably impossible to cut the amount of taxes he wants to cut in the way he wants to cut it and then find loopholes that he can close and still keep the distribution of taxation the same as it is today.

  • 10:48:30

    REHMJon.

  • 10:48:31

    ALLENBill Clinton didn't talk about reading or writing but he talks about arithmetic in trying to describe the Romney plan. He said, look, the math doesn't add up. The Obama people have jumped on that. The truth is that nobody has a plan right now that would close the deficit or really address the debt and also keep taxes low for most Americans and keep services at the same level. And the truth is when there's a small pike to go around, it's hard to be a politician. We're seeing that in Washington right now with the paralysis.

  • 10:49:00

    REHMJackie.

  • 10:49:01

    CALMESThe -- for all of our talk of tax deductions and tax breaks in the tax code, the only ones that get you the amount of revenue that would offset the cost of additional $5 trillion in tax cuts over 10 years would be to do -- virtually, do a way with the current breaks for interest on our mortgages, charitable donations and deductions for your state and local income taxes, all of which are hugely popular with people and greatly bring down their tax liability.

  • 10:49:33

    CALMESThere -- the Tax Policy Center had shown that the math -- which is a nonpartisan research organization, had shown this is impossible math to do without, in effect, raising taxes on the middle class because you have to do away with so many of the deductions. Now, Martin Feldstein, a conservative Republican economist, has said it is doable.

  • 10:49:56

    CALMESBut even he says, it's only doable -- it would only be doable for a President Romney to do this if he wiped out these deductions I talked about for mortgages, charitable deductions, state and local taxes for everybody over $100,000 a year. And as we have seen from earlier discussion, Mitt -- even Mitt Romney thinks that that's a middle-class person.

  • 10:50:18

    ALLENAnd the other item that you didn't mention, of course, is the tax breaks that we all get for our employer-based health insurance...

  • 10:50:23

    CALMESOh, yeah, the big one.

  • 10:50:23

    ALLEN...which is sort of the big one, along with the mortgage deductions. That is a political third rail. We've seen that people do want their health insurance paid for at some level through our political system, so all of those options were unrealistic.

  • 10:50:40

    REHMAll right. To St. Louis, Mo. Good morning, Mike.

  • 10:50:45

    MIKEGood morning, Diane, and thank you. This whole economic thing is really much simpler than all the economists we have meshing about different -- this -- it's a giant trickle down period, this new quantitative easing. And here's just a couple of simple numbers. In 1971, the price of gold was officially $35 an ounce, market wise, probably about $40. At $40, that's 45 times what it was in 1971 today.

  • 10:51:14

    MIKESo the market is telling us why the top corporate leaders are making 100 times more than the average guy, and why the average guy has been stuck for 30 years. I think inflation, which is an arbitrary artificial thing, based on the Federal Reserve, accommodating the wealthy. And I like your comment -- your guests to comment on that.

  • 10:51:37

    SCHERERIt's definitely true we've had significant amount of inflation since the 1970s. And the price of gold, on top of that, in the last few years, has gone up significantly as there's been more economic instability. In the last few years, though -- and Bernanke pointed this out yesterday -- there hasn't been much inflation. And that's because people aren't borrowing. People aren't spending their money.

  • 10:51:57

    SCHERERAnd so you don't have -- even though the Federal Reserve is effectively printing money in very large amounts, you don't have more money circulating actively. And so people aren't charging more for products. The fear is that in several years, once the economy rebounds with all this extra money out in circulation, that you'll have inflation. And Bernanke is saying, look, we have the tools to control this.

  • 10:52:20

    SCHERERAnd in a few years -- and we're watching it very closely. In a few years, if inflation does start to happen, we are going to respond. The other thing I would point to is that, you know, there are ways in which this policy actually hurts the very wealthy. If you make most of your income from savings, from money you have in the bank or you're investing in bonds, interest rates now are basically nothing.

  • 10:52:38

    SCHERERThe only place you're really making any sort of a yield is in the stock market, and there's quite a bit of risk there. And if you talk to hedge fund people, they despise this policy because it's making it so difficult for them to do their job.

  • 10:52:49

    REHMMichael Scherer of Time magazine, and you're listening to "The Diane Rehm Show." What happened with Health and Human Services Secretary Kathleen Sebelius, John?

  • 10:53:03

    ALLENWell, it appears that she has violated the Hatch Act. At least, that's the finding of the special counsel looking into a speech that she gave into -- in Charlotte in which she essentially said that the progress made for the LGBT, lesbian, gay, bisexual, transgender community, would be wiped away if Mitt Romney were elected president, if Barack Obama was not. I mean, the big issue here is that the Health and Human Services secretary and an official isn't supposed to talk about elections, period. And this was a pretty clearly political event.

  • 10:53:37

    REHMSo sent out as a clear warning to anyone within the administration not to say such things? What's going to happen to her?

  • 10:53:50

    SCHERERWe don't know what her punishment will be, but she has apologizes effectively. She has offered to repay for the cost of the events. You know, people like Kathleen Sebelius are allowed to speak out about politics or allowed to address things like elections and their support of the president. They're just not allowed to do it in their official capacity. And so the problem here was this was an official event. If she had gone to a campaign rally with the president, she will be more than welcome to do this.

  • 10:54:14

    SCHERERAnd so, really, it's a sign for everybody who works in government to be careful, to know the rules of the event they're at and the format they're -- that they're speaking from.

  • 10:54:23

    REHMHere's an email from Nick, who wants to know whether there's a depressive effect on the economy from the GOPs' political ads, which work to convince people that America is in decline, in order to convince them of a need for change in the White House. Jackie.

  • 10:54:49

    CALMESOh, I don't think so. You know, you have both one side saying it's -- America is in decline, but they're also saying, elect me, and it won't be. And meanwhile, the other side, the incumbent side, in this case, President Obama, is saying, you know, is taking the other side of task by saying, you know, they're playing to Americans' patriotism and sense of, you know, superiority that we are, in fact, a great country.

  • 10:55:19

    CALMESThat's a standard line in President Obama's stump speech that, you know, anybody would trade places with the United States. No one should ever bet against the United States, and anyone who ever has has lost. So it's -- I see the standard election-time rhetoric.

  • 10:55:33

    REHMAnd finally, if you want a 16-ounce drink or more, I guess, you can go to 7-Elevens in New York, John.

  • 10:55:43

    ALLENAs someone who has the combined weight of all three of the other people in this room right now, I am interested to see, what I would term, the assault on fat people by Mike Bloomberg in New York. Look, it's a fascinating issue. They're basically saying, people will be healthier if they can't drink large sodas. But they've carved out a lot of exemptions for people who do business in New York, the convenience stores, the 7-Elevens, et cetera.

  • 10:56:06

    REHMOK. And I just want to let people know, especially those news stations that have come on, you've obviously noticed I have a voice problem. I'm going out to Portland, Ore. for a treatment on Sunday. I am then going on vacation. I'll be back on the air Oct. 1, which is the Supreme Court's opening day. I'll look forward to being with you again on that day. John Allen, Jackie Calmes, Michael Scherer, thank you for joining me.

  • 10:56:50

    ALLENThank you.

  • 10:56:50

    SCHERERThank you.

  • 10:56:50

    CALMESThank you, Diane.

  • 10:56:51

    REHMThanks for listening, all. I'm Diane Rehm.

  • 10:56:54

    ANNOUNCER"The Diane Rehm Show" is produced by Sandra Pinkard, Nancy Robertson, Denise Couture, Susan Nabors, Megan Merritt, Lisa Dunn and Rebecca Kaufman. The engineer is Tobey Schreiner. Natalie Yuravlivker answers the phones. Visit drshow.org for audio archives, transcripts, podcasts and CD sales. Call 202-885-1200 for more information. Our email 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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