President Barack Obama met with House Republicans yesterday in an attempt to end their budget impasse. No progress was reported, and the government shutdown entered its third day today. Obama also shortened his scheduled trip to Asia, signaling that the White House was not hopeful the shutdown would end soon. There’s growing concern that the failures in Washington are damaging America’s reputation internationally. Moreover, economists and financial experts say if Congress does not raise the debt ceiling in mid-October, the global economic fallout could be catastrophic. Diane and her guests discuss how dysfunction at home could have consequences for the U.S. overseas.

Guests

  • Susan Glasser editor, Politico magazine.
  • Tamara Wittes director, the Saban Center for Middle East Policy at The Brookings Institution; former deputy assistant secretary of State for Near Eastern Affairs (2009 to 2012).
  • Sebastian Mallaby director, Maurice R. Greenberg Center for Geoeconomic Studies and Paul A. Volcker senior fellow for international economics, Council on Foreign Relations.

Transcript

  • 10:06:54

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. House Republicans held firm on the budget stance that forced the federal government to shut down. Of all the consequences of the shutdown not considered by its instigators, the worst could be the damage to America's reputation abroad. That's what USA Today's editorial board has concluded. If lawmakers do not vote to raise the debt ceiling, the damage to the global economy could be even worse.

  • 10:07:28

    MS. DIANE REHMHere to talk about how political dysfunction at home could affect the U.S. abroad, Sebastian Mallaby of the Council on Foreign Relations, Susan Glasser of Politico, and Tamara Wittes of the Brookings Institution. I invite you to join the conversation. Call us on 800-433-8850, send an email to drshow@wamu.org, follow us on Facebook, or send us a tweet. I'm glad to see you all.

  • 10:08:03

    MS. SUSAN GLASSERNice to see you.

  • 10:08:04

    MR. SEBASTIAN MALLABYGreat to be here.

  • 10:08:05

    MS. TAMARA WITTESGood morning.

  • 10:08:06

    REHMAnd, Sebastian Mallaby, I'll start with you. What do you think of the USA Today's editorial board comment? Do you agree that the worst consequences could be to our reputation abroad?

  • 10:08:25

    MALLABYAbsolutely. The president of the Council of Foreign Relations, Richard Haass, just came out with a statement that the biggest threat to U.S. national security interests right now is not actually a foreign country or a foreign organization. It's our own political system which is crippling our ability to act in a unified way around the world. And I think that's a pretty big statement. I think it's true.

  • 10:08:50

    MALLABYI think that if you want to go out and act in a way that's credible to other countries and say, we mean what we say, you need to have the ability domestically to command a consensus around your words. And if you don't have that, as we saw kind of with Syria as the president said he would go to the Congress for a vote and then he had to kind of pedal back -- he had an excuse to do that, but nonetheless if he'd gone through with that vote, he probably would have lost it.

  • 10:09:18

    MALLABYThat was sort of sign number one that we're in a new era of domestic division that undermines our position abroad. And, sign number two, I think, is this. If you can't even keep the government open, if you're willing to toy with the idea of defaulting on international debts to investors all around the world, that is such a fundamentally unserious position that other countries won't take you seriously.

  • 10:09:41

    REHMWhat could happen if that debt ceiling were not raised, if the Congress and the White House did not come to some agreement?

  • 10:09:54

    MALLABYWell, there's two direct economic sort of mechanisms that would come into play. The first is that because the government can't issue any more debt, it can only spend what it takes in in taxes. And that means it would have to cut spending by about 3.5 percent of GDP. When you do that, you are in another recession. There's no two ways about it.

  • 10:10:18

    MALLABYYou can't cut government outlays by 3.5 percent of GDP and expect an economy that's growing at kind of 1.5 or 2 percent. It will just go negative. I mean, the math is just obvious. The second mechanism is that Treasury securities, which are the safe instrument in international finance, will no longer be safe, and that'll cause panic on a scale potentially like the post-Lehman Brothers crash of 2008.

  • 10:10:45

    MALLABYThat'll be a global phenomenon if it's not halted. I suspect that the consequences in the markets would be so dramatic, it'll be like the moment when the top bailout plan was voted down after Lehman Brothers by Congress. The market collapsed by 700 points, and then the Congress had to pass the measure. So I imagine the consequence would be so painful that Congress then would act. But you just don't want to go through that.

  • 10:11:09

    REHMSusan Glasser, there was a meeting at the White House last night. Do you suppose that some of these issues really were talked about, or was it simply the same-old, same-old?

  • 10:11:26

    GLASSERWell, what's particularly striking is that there doesn't seem to be much of a conversation that's really occurring between President Obama and Congressional Democrats and the Republicans in either House of Congress. And I think that's where there's been a real change over the last week. Initially, you said, wow, is this really going to happen?

  • 10:11:45

    GLASSERNow, the conventional wisdom has shifted utterly, and it's now common view here in Washington that these two crises are going to merge, that you could see this much broader consequence of the debt ceiling limit actually colliding with the unresolved issue of the government shutdown. And so I'm struck by that. I also think, look at the timing internationally of when this crisis is occurring, so it's not just a domestic political story.

  • 10:12:13

    GLASSERBut Sebastian's laid out the potential economic consequences. President Obama also happens to be in the midst of really almost an unprecedented series of diplomatic maneuverings and negotiations. In the five years of his presidency, this is probably the most sensitive moment one could've imagined for a domestic political crisis like this to have spilled over into -- and to potentially affect his diplomatic negotiating hand.

  • 10:12:40

    REHMYou're talking about Iran and Syria and Israel primarily.

  • 10:12:44

    GLASSERIran, Syria, Israel. He's scheduled to go on a trip to the Far East, to Asia, at a time of sensitive negotiations over trade and a trade deal with the countries of the Far East and sit down with China's new leadership. So you really just have really across the globe, President Obama engaged in a moment where undercutting his hand, making him look like a weak negotiator, I think, is exactly the thing he sort of can't afford to do.

  • 10:13:10

    REHMAnd, Tamara Wittes, he has now cancelled part of his trip. How are those countries reacting?

  • 10:13:21

    WITTESInevitably, there's a great deal of disappointment. Now, the White House insists it's still possible that those visits to Malaysia and the Philippines might go forward...

  • 10:13:31

    REHMIf...

  • 10:13:31

    WITTES...if things are resolved here in Washington. But there's another dimension here of the international impact, which is that President Obama's trips to these two places were in part to bolster democratization in these countries at a moment when they're facing their own challenges and the message from Washington is build up your democratic institutions, work on compromise amongst your political factions. We're demonstrating that we're having a lot of trouble doing that here at home.

  • 10:14:02

    REHMAnd if, indeed, those trips are put off or cancelled, does that signal that the president believes, as Susan has just said, that these two crises are going to merge, that and the Affordable Care Act and that of raising the debt ceiling?

  • 10:14:28

    WITTESYou know, I think the White House probably sees it a bit differently. I think it's probably more for them about the domestic politics of a big overseas trip when our economy is still sputtering. When the government looks like it can't get its core business done for the American people, you don't want the president on the road in grip and grins with foreign leaders for days and day on end.

  • 10:14:50

    REHMTamara Wittes, she's director of the Saban Center for Middle East Policy at the Brookings Institution. Do join us, 800-433-8850. Send us an email to drshow@wamu.org. Thus far, Sebastian, how have global markets responded?

  • 10:15:19

    MALLABYYou know, I think it's been remarkably calm so far. In fact, perhaps two weeks before this drama began, I went to a lunch where a bunch of financial markets people were discussing this. And the view was actually, first of all, don't worry because they always fix this stuff at the last moment and, secondly, you know what, this could actually be good for the economy because out of the deal might come an agreement to spend more to relax the sequester and put more spending back into the budget, which would stimulate the economy a little bit.

  • 10:15:47

    MALLABYSo there was this remarkably kind of benign, relaxed view of the whole thing. And I think that's going to be severely tested in the next few days because it's one thing for the continuing resolution not to be passed and for part of the government to shut down, which is a big problem for those people who are losing paychecks, but for the macro economy, it's a fairly small effect, frankly.

  • 10:16:09

    MALLABYAnd it would take about two months of government shutdown to get back into recession. But what matters much, much more is, if this failure to pass the budget, the continuing resolution, bleeds into this debt ceiling thing -- and that comes in two weeks -- and that's the bit where the economic pain will be much bigger and much quicker.

  • 10:16:28

    REHMHow likely do you believe that confluence could be?

  • 10:16:35

    MALLABYWell, I mean, I think, as Susan said earlier, we do see a confluence and the fact that they're not even really talking to each other about this first and smaller problem, namely passing a continuing resolution to keep the government open, if they can't talk about that where the issue is basically the same, i.e. is the president going to put Obamacare on the table and agree to negotiate bits of it? If that's a red line for him and he won't do it, then the Republican position is, fine, then we're going to go over this debt cliff. And that is, as I say, many times more serious than what we've had so far.

  • 10:17:08

    REHMHow has the U.S. economy been affected thus far, Susan Glasser, by this partial shutdown?

  • 10:17:18

    GLASSERWell, I think Sebastian's point is well taken that it's small in scale so far, and you could argue that the market's lack of a bigger response has actually affected the political calculus here. If in a way the Democrats needed the overwhelming pressure of this is a crisis moment, and, look, the stock market is plunging and, you know, to force Republicans back to the table, that so far hasn't occurred.

  • 10:17:44

    GLASSERIn fact, I took it as a very bad sign, reading the tea leaves as everyone is doing here in Washington. There was a story this morning on Politico making the point, well, there's now rumblings of a return to this question of, should we put a grand bargain on the table? And honestly, any time I read a story about a grand bargain and really shouldn't we sit down and negotiate everything about everything, and I thought, wow, that means that things are pretty hopeless if this is what the parties are talking about.

  • 10:18:10

    GLASSERWe all know that a grand bargain is what they tried and failed to achieve in many earlier rounds of talks between the Obama administration and Congressional Republicans. That's why, remember, Sebastian referred to the sequester. The sequester was a negotiation that didn't succeed, and we never fixed it.

  • 10:18:28

    REHMSusan Glasser of Politico magazine. We'll take a short break here. I see we have many callers. When we come back, we'll talk further, take your calls, your email. I look forward to speaking with you.

  • 10:20:02

    REHMAnd welcome back. Here in the studio, as we talk about what could become the international impact of not only the partial shutdown of the federal government, but if this shutdown bleeds into the conversation, the negotiations over raising the debt ceiling, Susan Glasser. She's editor of Politico magazine, Tamara Wittes of the Brookings Institution and Sebastian Mallaby of the Center for Geoeconomic Studies. And he's at the Council on Foreign Relations.

  • 10:20:49

    REHMOur first email from Boyd in Baltimore, Md.: "Tea Party Republicans have brought the U.S. government to its knees, something the entire Soviet Union couldn't do in 40 years. I hope they're proud of themselves." How do you feel about that, Tamara?

  • 10:21:12

    WITTESWell, I think there are probably a lot of countries around the world wondering just what it is about our vaunted democratic system that has brought us to this pass. I think though in many ways, the story here is not Republicans versus Democrats. But for foreign policy, it's president versus Congress. The other governments can't rely on this president to take initiatives that will need congressional approval. They can't be sure that he'll be able to get it.

  • 10:21:45

    WITTESIf he can't get Congress to act on the budget or on basic cooperation to keep the U.S. government running, can he count on Congress to authorize military force to protect allies? Can he count on Congress to pass a trade treaty that he's negotiated? That's what's really an issue in terms of our international credibility.

  • 10:22:06

    REHMThat pretty scary.

  • 10:22:08

    WITTESYes. Now, of course, there are times in international negotiations when having Congress play bad cop can be a very useful thing. I think, for example, on the Iranian nuclear negotiations, the fact that Congress has been so tough on sanctions has strengthened the president's hand. But obviously that can go too far. If Iran doesn't believe that there's any sanctions relief the president can offer them, then there's no point to negotiate.

  • 10:22:32

    REHMSo what you're saying is that internationally it's the president who's viewed as weak rather than a Congress and a president who cannot seem to find a middle ground that works for both.

  • 10:22:51

    WITTESThat's right. I think what this crisis does is it constrains the president's flexibility in dealing with international partners, and it constrains the reliability of the commitments he can offer.

  • 10:23:02

    MALLABYThere is a historical point here which is that it's not actually new for Congress to undercut a president in foreign affairs. So there's always been this tradition of trying to pass a fast track authority for trade negotiations or in the 2000s it was called the trade (word?) authority precisely because everybody knew that if the president went and negotiated a complex trade deal and then had it unpicked in Congress, you know, clause by clause, then no other foreign country could want to negotiate with the president.

  • 10:23:28

    MALLABYSo this is a familiar thing, but I think it's got worse for two reasons. The first thing is that actually the kind of polarization and dysfunction in Congress is worse than it was in the past. But the second thing is that the U.S. position globally is different.

  • 10:23:42

    MALLABYIt's one thing to have a dysfunctional and gridlock prone political system when you are by far the dominant economy in the world, when you are by far the dominant military power in the world. But when you lose that sort of relative strength -- because China is on the rise, non-democracies are on the rise -- you can't afford to undercut yourself with this kind of politics.

  • 10:24:04

    REHMSusan.

  • 10:24:05

    GLASSERWell, and of course we're already seeing that as a key theme of the rhetoric around the world as people try to make sense of this. It's not a very strong argument for democracy. You already had the Chinese state news agency coming out with an analysis suggesting, you know, basically, see, we told you so. This is a system that doesn't work. Never mind that -- think about Vladimir Putin who takes delight in skewering the foibles of democracy.

  • 10:24:32

    GLASSERCertainly it's not a new thing but at a moment when we are already in the awkward position of leaning on somebody that we were in such bad terms with -- remember that President Obama cancelled his meeting with Vladimir Putin just two weeks before he basically, you know, put his own credibility in Vladimir Putin's hands. And I think, you know, for a decade you've seen the Russians sort of say, this democracy, if this is what you mean by it, it's not for us. And I think it's a very hard time to be making the case internationally for any sort of American exceptionalism.

  • 10:25:05

    REHMAll right. Let's take worst case scenarios, Sebastian. Suppose the U.S. missed a payment on its debt. What kind of global consequences could that have?

  • 10:25:20

    MALLABYWell, what that would mean is that the supposedly safe asset in the global financial system, the U.S. treasury is no longer safe. You can't count on being paid what you are owed. And so one consequence, for example, is that people use treasuries -- people in the markets, hedge funds, banks and so forth -- they use those treasuries because they're so safe.

  • 10:25:39

    MALLABYAnd they go to lenders and they say, if I give you these treasury bonds for the next three months as my collateral, as my security you'd lend me $10 million. And so that's a way of getting a loan. Now, those loans have been used to buy all kinds of assets and so forth. If you can't get the loan, you have to dump the stuff you've been buying. So then you get fire sales, and that's exactly the kind of spiral of financial contagion that can go global.

  • 10:26:14

    REHMAnd do you believe, Susan Glasser, that Republican members of Congress truly understand the potential global ramifications of their actions?

  • 10:26:28

    GLASSERWell, clearly it's not -- this crisis isn't about that. And whether they understand it or not, one thing that's clear is that this is not driving the politics of it.

  • 10:26:35

    REHMDo they care about it? Do they care about it?

  • 10:26:39

    GLASSERYou do see -- you see a concerted effort on the part of the Obama Administration to emphasize this wherever possible. You just had James Clapper yesterday, the director of National Intelligence, coming out and saying the shutdown is going to be a field day, I believe was his quote, for foreign spies.

  • 10:26:54

    REHMNational security.

  • 10:26:54

    GLASSERWe've shut down 70 percent of our national security agencies. We have those people at home. They're not busy, you know, ferreting out threats against the homeland. So, you know, this has been a theme that of course the Obama Administration is trying to use in its fight with the Republican Congress. But remember again, that's not what's driving the politics of this.

  • 10:27:12

    REHMTamara.

  • 10:27:13

    WITTESAnd, in fact, I think for the Tea Party Republicans, the domestic politics are great. If it shrinks America's role abroad, particularly in the defense realm, if it prevents the United States from going down a road of coercive diplomacy that might lead to a use of force, this is what their base would be happy to see in many ways.

  • 10:27:36

    WITTESAnd so I think actually they have a greater incentive. But I think we've also seen some Republican members of the Senate who are more internationalist in their own tradition and history speak out against this. And it just speaks to the broader division within the Republican Party on foreign policy right now that has yet to be resolved.

  • 10:27:58

    GLASSERWell, that's true. But look at how Rand Paul, the sort of potential libertarian standard bearer in the next presidential election, how he's played this. He's been wary, in fact, of embracing the shutdown for exactly the reason that Tamara said, which is he doesn't want it to be seen as a sort of libertarian cri de Coeur, America should get out of adventures abroad and, you know, basically shut down the government in order for the government not to do anything too harmful.

  • 10:28:23

    GLASSERSo he's trying to play both sides of the fence here, which is very interesting. It suggests an awareness on his part that this is a risk for the Republican Party. But in the House, you don't see any of that sort of subtlety and nuance, I think, right now.

  • 10:28:37

    REHMSebastian, as with our other relationships abroad, how do you think the current crisis is affecting the U.S. stand vis-a-vis Iran?

  • 10:28:52

    MALLABYYou know, I think if you're sitting in Iran and you're watching this crisis and you see the way that the president can be undercut by Congress, you're thinking to yourself, so if I talk to this president and do some kind of deal on our nuclear program and we can seat that, and in return we want those sanctions to be lifted, will the sanctions be lifted?

  • 10:29:10

    MALLABYBecause that's something that Congress will have to act on. And so, you know, the Iranian incentive to actually come to the table and negotiate is undermined by the sense that president cannot deliver the Congress.

  • 10:29:22

    REHMAll right. We've got lots of callers. Let's go to the phones. First to Terre Haute, Ind. Hi there, Tom, you're on the air.

  • 10:29:33

    TOMHello, Diane. Thanks for taking my call...

  • 10:29:36

    REHMSurely.

  • 10:29:36

    TOM...and I listen to you every day.

  • 10:29:38

    REHMThank you.

  • 10:29:40

    TOMI want to make a point. I think that every member of Congress has to take an oath of office to protect the constitution. It seems to me they're violating that oath. I mean, we're supposed to promote the general welfare and provide for the common defense. And we got a small minority that is restricting those very activities.

  • 10:30:05

    REHMHow do you feel about that, Susan Glasser?

  • 10:30:08

    GLASSERWell, you know, I'm struck by -- Sebastian made the point that the macro economic effects of this are not yet so ground. But, you know, we're talking about a pretty reckless attack on sort of people's basic livelihoods. You know, there are millions of federal workers and their families involved by this. I drove over Connecticut Avenue, big police car flashing its lights in front of the National Zoo. Children, don't you dare go into that zoo because Congress can't get its act together. I mean, I think that this is the kind of stuff that makes your listeners in Indiana shocked really.

  • 10:30:40

    REHMAll right. Let's go to Mark in Pensacola, Fla. You're on the air. Go right ahead.

  • 10:30:49

    MARKAll right. Good morning, Diane.

  • 10:30:50

    REHMHi.

  • 10:30:51

    MARKOne point that I have is that I don't think it's ever a good time to be in this situation. And that's a balanced budget isn't a dirty word. Both sides must come to the table and negotiate. And if they negotiated, they would have plenty of votes to pass some sort of a resolution.

  • 10:31:14

    REHMHow would you see a negotiation going forward, Tamara?

  • 10:31:20

    WITTESOne of the interesting things about this confrontation is how radically the House Republicans shifted from a focus on overall budget questions to a fixation with Obamacare. And in many ways, this painted them into a corner because they have one and only one demand, which is either to delay or defund this program which Congress did pass.

  • 10:31:45

    WITTESSo they don't have a lot to negotiate with unless they are willing to relax that demand and put some other ideas on the table. Now, Sebastian was talking earlier about the sequester. And I think once you get to the idea of loosening the sequester in certain areas, there's a lot more possibility for tradeoffs with the president.

  • 10:32:06

    REHMSebastian.

  • 10:32:07

    MALLABYYeah, I mean, the last time we had a budget battle in Washington, it was about biggest use to do with the fiscal solvency of the nation and what you do about the fact that you've got an entitlement program that, you know, can't be paid for in the long run. The country is aging, all these big issues. And those, I think, are things where difficult decisions about tax reform and about entitle reform do, in the end, need to be made.

  • 10:32:30

    MALLABYBut that's not the debate we're having this week. As Tamara says, it's been reduced just to this question of health care which has been passed by Congress where the president effectively got a renewed mandate for it by being reelected. And it feels to me that it can't be painted as an honorable attempt to debate big issues.

  • 10:32:48

    REHMSebastian Mallaby of the Council on Foreign Relations. And you're listening to "The Diane Rehm Show." Let's go now to Saul in Cleveland, Ohio. Let's see if he's there. Saul, are you there? Let's try that again. Saul, are you there? One more time. Good morning, Saul, you're on the air. All right. I'm afraid that's not working. Let's go to Daniel in Charlotte, N.C.

  • 10:33:30

    DANIELYes, hello. I just wanted to float through your panel the idea that -- or even if someone's listening out there -- the suggestion that Harry Reid can go to the nuclear option as he just used not long ago and hopefully help that get us out of the shutdown that we're in. If the Republicans don't want Obamacare so much, maybe they don't want that even more, and that might be a leverage we could use.

  • 10:33:53

    REHMExplain what you believe to mean the nuclear option.

  • 10:34:00

    DANIELThe nuclear option where getting rid of the filibuster -- if I understand it correctly -- that that would eliminate the filibuster, which is something both sides don't want, but Republicans seem not to want even more.

  • 10:34:10

    REHMAll right. Susan Glasser.

  • 10:34:11

    GLASSERWell, it's a very interesting proposal that the caller's just put out. Remember, we just had Ted Cruz the other day -- and not technically a filibuster -- but commandeering the Senate floor all night to make his point in a way that triggered you could argue and crystallize Republican support for this maneuver. But remember also that Harry Reid is in a delegate position right now. It's in his interest, it seems to me, to foster the idea that there's a Senate Republican point of view and there's a House Republican point of view.

  • 10:34:40

    GLASSERSo he doesn't necessarily want to alienate and blow up the relationship between the House and Senate Democrats -- I mean, sorry, between the House -- the Senate Republicans and Democrats. Because right now the Senate Republicans have more or less climbed on board with the idea with their Democratic colleagues that we should get a clean continuing resolution and end this shutdown fight. So he doesn't necessarily want to make that maneuver. His issue is how do you bring the House Republicans to the table?

  • 10:35:09

    REHMTamara, what are leaders in the Middle East saying, thinking, seeing as they watch what's happening in Washington?

  • 10:35:20

    WITTESI think they see this shutdown crisis as part of a narrative that was crystallized for them in the debate over the use of military force in Syria and President Obama's last minute decision to go to Congress on that issue. For a long time, a number of leaders in the region have been concerned about the rebalancing or the pivot to Asia.

  • 10:35:45

    WITTESWhat does it mean about American withdrawal, relatively speaking, from the Middle East? And they've sensed that this is a president who has wanted to focus his attention in other regions of the world. So in many ways they've seen him push issues onto Congress where they would prefer to see him act decisively. And it has reinforced questions there about the credibility of his commitments in the Middle East.

  • 10:36:12

    REHMBut of course there was so much backing and forthing on whether the president has the right without Congress to begin military action in Syria. And then when he finally turned to Congress, another backlash.

  • 10:36:33

    MALLABYWell, I think when he turned to Congress over Syria, he said in the same breath that he believed he did have the authorities to do it without Congress. It was a political decision to try to share the responsibility for the action with the Congress. And it was a miscalculation because then, you know, what was assumed to be a case where, you know, you'd get somebody to come into the driving seat with you, they were refusing to do that. And so it pointed out the division within the American political system.

  • 10:36:59

    MALLABYI think what we've seen, you know, backing up a little bit, is that it's always been the case that in the Senate individual senators have operated as sort of checks and balances unto themselves. They haven't had party discipline, and they've operated as individuals. But they've been fairly responsible, and they've done it well. In the House, we have the same thing, and it's less responsible.

  • 10:37:19

    REHMSebastian Mallaby of the Council on Foreign Relations. Short break here. More of your calls, your email when we come back.

  • 10:40:02

    REHMAnd welcome back. We've got lots of emails. This first from Barbara in Maryland who says, "The effect this has on our ability to sell democracy abroad is way overblown. The argument can be made we have these very serious discussions about how we run our country. We can even shut down the government, but there's no use of tear gas. There's no one being put in jail. This is democracy at work. There is no bloodshed or chaos because of this. That is the benefit of democratic institutions. That is how you answer Vladimir Putin." Sebastian.

  • 10:40:50

    MALLABYWell, I mean, there's some truth in that, right. So it's true that there isn't, you know, violent coercion going on on the streets, and we should be grateful for that. But there are, as Susan said earlier, you know, a million or so federal workers who are not getting a paycheck through no fault of their own, and their families are suffering.

  • 10:41:08

    MALLABYAnd there's a sense moreover that the government, you know, can decide on something, debate something, pass something, reaffirm it in another election and then still can't do it. And in the end, you know, you need government to do some things and do them properly. It's not that big government is necessarily good, but totally inefficient government is clearly bad. And that's what we're seeing.

  • 10:41:30

    REHMTamara.

  • 10:41:31

    WITTESAs someone who was involved in democracy promotion for the Obama Administration, I can say that you often find yourself caught in these discussions with foreign officials where they point to deficiencies in our own system. But I would actually agree with the person who wrote in in saying that to the extent that we can be transparent about our disagreements and we can demonstrate to the world how we resolve them, then we are stronger for it, and it is a good model for democracy.

  • 10:42:02

    REHMHere's the affect that Joe in Holiday, Fla. is writing about. He says, "According to Sen. Rand Paul, only 15 percent of the government is shut down, and if we don't raise the debt limit, we will pay our debts first and be OK." Is that correct?

  • 10:42:28

    MALLABYWell, no. It's not correct because, you know, if you pay debts first, you won't be OK because you'll have a 3.5 percent of GDP cut in government spending. When you cut spending by that much, guess what, you get, a major recession.

  • 10:42:40

    REHMAnd no money coming in.

  • 10:42:42

    MALLABYRight, so -- well, no, you have some tax revenues coming in. So you don't have to cut, you know, every single thing going on in the government, but you will have to cut about one-third of the things going on in the government, which could include Social Security checks. It could include the military. It could include all kinds of things, and there will be a serious recession. It won't be painless if that happens.

  • 10:43:03

    REHMAll right. Let's go to Lafayette, Ind. Let's see if I can make this -- are you on the air? Good morning in -- hi. Go right ahead.

  • 10:43:18

    TODDYeah, my name is Todd. I'm in Indiana. And does anybody realize the most far reaching question? If we allow 30 senators to hold up everything, especially they have a backing of religion behind them -- your base religion. You've got basically to take over the government.

  • 10:43:36

    WITTESYou know, Jake Carney, the White House spokesman, said in his press conference earlier this week that the situation here is a minority trying to blow up the system because it doesn't like the will of the majority, and that's not democracy. And, of course, there's a certain element of truth in that, but our democratic system does not rely simply on majority rule. We've built into the system all of these ways for minority groups not to get railroaded. And so we have to take the bad along with the good, I guess, as that system works its way through.

  • 10:44:11

    REHMAll right.

  • 10:44:12

    MALLABYI mean, there have periods in American history where you have a president who had a bully pulpit, and there are other times when it looked the bullied pulpit. And it's a question of balance. And right now we're very much on the bullied end of the spectrum, and I think it's gone too far.

  • 10:44:24

    REHMAnd do you feel it's President Obama who's being bullied?

  • 10:44:29

    MALLABYYeah, I do. I mean, I think his -- the institution that he occupies, the presidency, the executive branch, faces, you know, checks and balances are good, but when you're checked and balanced so much that you can't do anything, it's too much. And there is some aspect, you know, there is a great reverence in this country, and I, as a naturalized American, respect that a lot that, you know, the founders did this amazing job in the 18th Century.

  • 10:44:52

    MALLABYThey came against the background of absolutist monarchy, and they created something so much better. And that's our civic religion, and I believe all that. But since the founding, it's been taken a lot further with mechanisms like the filibuster, like the redistricting of House seats that have allowed more extreme people, more polarization to take place within the House. These are things which are not baked into the original Constitution. These are things that have been added on and sort of loopholes that have been exploited to make the thing grind to a halt. We don't need that.

  • 10:45:22

    REHMAll right. Let's go now to Carl in Norfolk, Va. Are you there? Carl, are you there? OK, I'm afraid we're having just a little difficulty. Peter in Dallas, Texas, you're on the air.

  • 10:45:42

    PETERHi, Diane. Thanks for taking my call.

  • 10:45:44

    REHMSure.

  • 10:45:45

    PETERI'm really distressed and concerned about the lack of press accuracy in how this is all being portrayed. To me, you know, the Republican Party, which has been on a very long term course of whenever the Democrats occupy the presidency there seems to be a relentless, unending effort to obstruct and attack and nullify those elections. And it's progressed to the point that we are in now where, you know, we have this, what is in my lifetime an unprecedented situation where, you know, due to, again, Republican activities at the local and state level with the gerrymandering.

  • 10:46:35

    PETERYou've got, you know, a Congress where, even though the Democrats won the popular vote by a huge margin or a significant margin, you've got these radical Republicans basically attempting to nullify a law that was passed and worked through the system according to the way it's supposed to be. And to portray this in the press as some kind of equivalency between Democrats and Republicans, I think, is completely false and misleading...

  • 10:47:07

    REHMAll right. Thanks for your...

  • 10:47:08

    PETER...and keeping the people from really seeing the truth about what's going on right now.

  • 10:47:12

    REHMOK, Peter, thanks for your call. We're back to who is going to get the blame for all of this, Susan.

  • 10:47:22

    GLASSERWell, I think that's exactly the period we're in right now. People are going to be scrutinizing the poll members. They're very likely and already do show that, broadly speaking, the Republicans are getting more blame than the Democrats for this. I think it's -- if you look at it analytically it's not a partisan statement to say that Republicans chose to go ahead with the course, but I want to go back to something that Sebastian said on the question of bullying, who's bullying and who's the bullied right now.

  • 10:47:49

    GLASSERThe challenge for President Obama in laying down and finally saying, as with anyone, by the way, if you take at face value the idea that he's being bullied, OK. He's saying he's not going to negotiate now, but clearly in the past he has negotiated at points that bear resemblance to this. And so House Republicans are not totally on another planet to think, OK, well, this the way that we can engage with President Obama.

  • 10:48:14

    GLASSERAnd just as with Syria and laying down a red line, he faces the challenge of saying, no, I really mean it when, in fact, he allowed chemical weapons to be used earlier having laid down the red line. Guess what? He faces a credibility problem there that is not entirely of Bashar Assad's making...

  • 10:48:31

    REHMBut...

  • 10:48:31

    GLASSER,It's of his own making as well. And so the challenge is, when did he really mean that red line? And so now certainly on its face it is a very reasonable position to say, you people are putting a gun to my head, and I'm not going to negotiate with people who use those kinds of tactics. The problem is, however, that there's a record. President Obama doesn't come to this situation out of nowhere. He has five years of history with these Republicans in a way that, unfortunately, makes it a real challenge for everyone to figure out, does he really mean the red line this time?

  • 10:49:04

    REHMSebastian.

  • 10:49:04

    MALLABYYeah, Susan is the political expert, and I'm really just more focused on financing the economy. But that account sounds to me not quite what I remember, so I mean my sense is that, when the President was first elected, he had a huge mandate. He came into the office in 2009 and the first thing he did was that he was criticized a lot for handing over the design of various reforms like healthcare, like, the Dodd-Frank financial reform to Congress to saying, come on guys, you step up. I want to be your partner. I don't want to dictate to you by laying down what we think the law should be.

  • 10:49:33

    MALLABYWe want to bring Congress into this. And he was criticized for not being forceful enough in his leadership. So I think he's been willing to talk and cooperate, and, you know, when it came to the last debt ceiling fight, it was a little bit different because the issues were to do with entitlement reform, tax reform, things that you could have a decent debate about. It wasn't about saying, you know, we passed a law, but we should just defund it.

  • 10:49:56

    REHMExactly.

  • 10:49:56

    MALLABYSo I think being tougher now could be consistent with being softer earlier because the earlier issues were different.

  • 10:50:05

    GLASSERLook, Sebastian, I do agree. I just wanted to make point that, in fact, that is my point that President Obama, because he's negotiated before on these various issues Congress, has been emboldened in a way.

  • 10:50:15

    REHMBut this is a law. This is a law.

  • 10:50:20

    GLASSERAbsolutely.

  • 10:50:20

    REHMAnd that makes it different at least in the eyes of many in the public. To Anthony on Long Island, N.Y., you're on the air.

  • 10:50:31

    ANTHONYHi, Diane, so I love your show.

  • 10:50:34

    REHMThanks.

  • 10:50:34

    ANTHONYThank you very much for letting me get on the phone.

  • 10:50:36

    REHMSure.

  • 10:50:36

    ANTHONYI have a quick point to Sebastian. Thank you so much for being financially sound, sir. I don't know if you are left or right or whatever, but please keep spitting the math because you are speaking 100 percent truth. And I agree with everything that you say.

  • 10:50:48

    MALLABYThank you.

  • 10:50:49

    ANTHONYOther than that, I'd like to bring up the point that there's this big media biased towards painting the Republican Party as a party that doesn't want to do something for the people -- doesn't want to do something for the average guy. Especially President Obama who said something along the lines of what the Republicans are doing is they're setting themselves up to not give you healthcare, and that's just false. Nobody does that.

  • 10:51:16

    ANTHONYThe point that the Republicans are making in large is one that is in the macro believe it or not and the Democrats in the micro. The Republicans are looking macro because they know that doing certain things like this healthcare, which, as you know, or not as you know, my small company healthcare costs have doubled. The Republicans are thinking macro. They're trying to save the bubble before the bubble bursts. And that's something that the mainstream media is tainting as being a bad thing.

  • 10:51:43

    REHMTalk about the economics of the healthcare plan for small business, Sebastian.

  • 10:51:50

    MALLABYWell, look, it's definitely true, as the caller says, that, you know, if you mandate that smaller companies have to provide insurance and they raise conditions around that, that's going to cost real money to provide the insurance. If you don't provide people with healthcare, guess what, you do save money at least in the short term calculus, but it's a cost benefit calculation you have to make.

  • 10:52:11

    MALLABYThere's definitely cost as the caller says. There might also be benefits to society, to the health of the workers, to their ability to actually show up for work on a consistent basis over many years, and so it's a complex balance. And, I mean, I think, you know, I've read papers that have tried to figure out on a cost benefit basis for the economy whether the healthcare reform is a positive or a negative.

  • 10:52:33

    MALLABYFrankly, I think that they have a hard time, you know, proving one point or the other. So I think the economics will only be clear once we've done the reform. If we do do it, enact it and then enforce it -- implement it, we can look back in some years and say, well, was it a positive or negative? But the point, I think, right now is that, you know, the nation has made a choice and it made it -- it has made it definitely democratically and it's time to, I think, implement and not try to undo it.

  • 10:53:01

    REHMAnd according to the attempted numbers of people trying to get on and find their way through this healthcare maze, there are lots of people who are interested. We'll see how it goes. And you're listening to "The Diane Rehm Show." Let's go to Muhammad who's in Indianapolis. You're on the air, sir.

  • 10:53:31

    MUHAMMADYes. Let's propose that we get past this crisis and in the next election that the same people who hold the House of Representatives win, and then they take over the Senate and also win the presidency. What happens to our country then?

  • 10:53:54

    REHMAre you -- you're posing that question which is certainly one that's, at least, a couple of years off, but what's your reaction, Tamara?

  • 10:54:06

    WITTESYou know, I guess I would say that, as a country, we have a history or preferring divided government, and it usually doesn't last very long that the White House and the Congress are of the same party. But the other thing, I think -- and I was really struck by Sebastian talking about his meeting with the financial folks and how calm they seemed. It seems to me that, as a country, we've grown accustomed to brinksmanship as the way of doing business. And we almost don't take political conflict seriously until we're right at the edge of the cliff.

  • 10:54:40

    REHMBut those business leaders yesterday said that they are very, very concerned.

  • 10:54:49

    MALLABYYes. I think sentiment is shifting, and I think Susan was saying earlier, you know, the White House is clearly trying to recruit the specter of financial panic as part of its negotiating tactics. The President said yesterday that, in fact, he thought the people in the markets ought to be more worried, and so I guess it's healthier to have a mini panic now before we get to the debt ceiling, which might send a signal, then wait another 10 days and get a maxi panic which would really cost the economy a lot.

  • 10:55:17

    REHMAnd, by the way, Tamara, what's happening with our embassies abroad with this federal shutdown?

  • 10:55:25

    WITTESYou know, there are a lot of day-to-day services and day-to-day business that the U.S. government does around the world that can go forward only as long as the money is there. So if it's something like visas and passports that are paid for through fees they can keep that going as long as they have a positive balance.

  • 10:55:45

    WITTESBut other consular services for U.S. citizens who run into trouble overseas, for example, the ability of the U.S. to have official meetings with foreign counterparts or just having someone on the other end of the phone when a foreign official calls to get information or to raise an issue, all of that is impaired.

  • 10:56:05

    WITTESAnd I think in many ways the biggest impact is not just the day to day, but on foreign policy you have to think long term. You can't just deal crisis to crisis and even if we get a three-month continuing resolution or a six-month continuing resolution the federal government simply cannot strategize if it doesn't know what its budget is going to look like.

  • 10:56:27

    REHMAnd I wonder, as you're all three looking at this place we are in, do you believe we're going to come out of it anytime soon, Sebastian?

  • 10:56:42

    MALLABYWell, I'm afraid that the incentives amongst the Republican members of Congress who are driving this standoff, you know, if you're a Republican member of the House in your district, you probably do not have a high concentration of government workers who are being furloughed or losing income. So you don't have that incentive, and you're probably facing more of a challenge from the right in a future primary election than you are from the left if your district is heavily republican. So I'm afraid the incentives don't point to a quick resolution.

  • 10:57:11

    REHMSebastian Mallaby, Susan Glasser, Tamara Wittes, it's not a very happy outlook, but thank you for being here.

  • 10:57:24

    GLASSERThank you, Diane.

  • 10:57:24

    MALLABYGood to be with you.

  • 10:57:24

    WITTESThank you, Diane.

  • 10:57:24

    REHMAnd thanks for listening, all. I'm Diane Rehm.

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