Rodney O'Neal (R), Chief Executive Officer and president of Delphi Automotive PLC, listens while Mary Barra, Chief Executive Officer of the General Motors Company, speaks during a hearing of the Senate Commerce, Science and Transportation Committee's Consumer Protection, Product Safety, and Insurance Subcommittee hearing on Capitol Hill July 17, 2014 in Washington, DC.

Rodney O'Neal (R), Chief Executive Officer and president of Delphi Automotive PLC, listens while Mary Barra, Chief Executive Officer of the General Motors Company, speaks during a hearing of the Senate Commerce, Science and Transportation Committee's Consumer Protection, Product Safety, and Insurance Subcommittee hearing on Capitol Hill July 17, 2014 in Washington, DC.

With two weeks to go before August recess, Congress scrambles to craft legislation to address the border crisis. Around the country, more and more communities protest the arrival of immigrant children. Top executives from General Motors testify again on Capitol Hill over the company’s handling of the faulty ignition-switch recall. Senators question why G.M.’s top lawyer still has his job. The House votes to temporarily fund the Highway Trust Fund just weeks before money runs out. And Citibank agrees to a $7 billion dollar settlement with the U.S. government over their role in the mortgage crisis. Diane discusses the week in news with a panel of reporters.

Guests

  • Jeff Mason White House correspondent, Reuters
  • Eleanor Clift political writer, The Daily Beast. She is a regular panelist on the McLaughlin Group.
  • Damian Paletta economic policy reporter, The Wall Street Journal

Watch A Featured Clip: Will The Border Crisis Make Congress Act On Immigration?

Watch Full Video

Watch the full video of our panelists rounding up the week’s top news.

Transcript

  • 10:06:53

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. In testimony on Capitol Hill, GM CEO defends the company during tough grilling from senators. House Speaker John Boehner says there is little hope for a bipartisan solution to the border crisis. And President Obama pressures Congress to pass a long-term highway funding bill.

  • 10:07:18

    MS. DIANE REHMHere for the domestic hour of the Friday News Roundup: Jeff Mason of Reuters, Eleanor Clift of Newsweek and The Daily Beast, and Damian Paletta of The Wall Street Journal. You are always welcome to join us. Call us on 800-433-8850. Send us an email to drshow@wamu.org. Follow us on Facebook or send us a tweet. And good to see all of you.

  • 10:07:49

    MR. DAMIAN PALETTAMorning.

  • 10:07:49

    MR. JEFF MASONGood morning. Good to be here.

  • 10:07:50

    MS. ELEANOR CLIFTGood morning, Diane.

  • 10:07:52

    REHMAnd to you, Damian Paletta, where do we stand on a possible immigration bill?

  • 10:07:59

    PALETTAWell, the large scale immigration bill that the White House wants doesn't seem to be going anywhere. But the more targeted bill to address this crisis at the border now with more than 50,000 children who have come into the country since May, it seems to be moving along slowly. There is a lot of politics that Republicans are very skeptical of what the White House has proposed requesting $3.7 billion in cash to get more immigration judges in to expedite the process for processing some of these cases. But the Republicans are coming up with their own plan.

  • 10:08:29

    PALETTASo it seems like both sides agree something has to be done. The question is how swiftly they can do it. And, actually, there's been some disagreement within the Democratic ranks. We've had the Maryland Gov. Martin O'Malley, who's usually a big White House ally, has separated himself from President Obama and said we need to let a lot of these what he calls refugees into this country, or they'll go back to what he called a certain death in their own countries of Honduras and Guatemala -- so a lot of division with the Democrats as well.

  • 10:08:57

    REHMAnd meanwhile, Eleanor Clift, you've got these demonstrations all over the country.

  • 10:09:04

    CLIFTWell, it's reminiscent of the 2009, 2010 town hall meetings, which was really all about healthcare reform. And that really transformed politics on Capitol Hill and gave the House to the Republicans. And I think both parties are looking in this and wondering if there is political opportunity here. Initially, immigration was thought to favor Democrats as an issue. But now there's a sense that President Obama has lost control of the border that nobody quite knows what he's going to do with these executive orders that he's promised.

  • 10:09:42

    CLIFTAnd you have, I think, the Hispanic community, while they're alienated from the Republican Party, are now looking at the White House and feeling very disappointed in this legislation. The Republican want to change the '08, 2008 law which treats Central American immigrants differently from Mexicans. It gives them more due process. And the White House seems open to that. And Democrats on Capitol Hill, particularly Leader Pelosi, do not like that at all. President also seems to be open possibly to having some National Guard units go down there.

  • 10:10:19

    REHMHmm. Hmm.

  • 10:10:19

    CLIFTDemocrats don't like that. So the politics are all over the place.

  • 10:10:22

    REHMJeff Mason.

  • 10:10:23

    MASONThe politics are crazy for the White House. And I think your point, Eleanor, about what it mean for Hispanics who have been particularly large and robust supporters of this president is a key question. Also interesting to see what the White House and what the administration is doing. I mean, this week they sent back a planeload of people to Honduras, mothers and children, to the city that has the highest murder rate in the world. And the president and his spokesman, Josh Earnest, have said this should be a sign to people in Central America that sending your kids here is not a good idea.

  • 10:10:57

    REHMHmm.

  • 10:10:58

    MASONAnd, in fact, they went a step further and said, you are not welcome. So it is -- and those types of messages do not go over well with Latino voters.

  • 10:11:08

    REHMWhat about the detention of Jose Antonio Vargas by Border Patrol, Jeff?

  • 10:11:16

    MASONYeah. That was also very interesting because he's been such a high-profile speaker on behalf of this cause for Latinos. He was detained this week in Texas during a trip to the Rio Grande Valley. He said it was not his intention to be detained 'cause he has gone for many years now, since coming out, as it were, as an undocumented immigrant, without having issues with Border Control.

  • 10:11:39

    MASONHe was released and then told he needs to appear before an immigration judge. But the issue he and his supporters used to really highlight the fact that, look, this just happened to me. Border Control has decided to release me because I'm not deemed a threat. But think of all the other 11 million undocumented workers around -- or undocumented immigrants here. We don't see them as a threat either.

  • 10:12:03

    REHMWell, you know, it's so interesting. How come he was able to stay here for 10 years without arrest, Eleanor?

  • 10:12:13

    CLIFTHe calls himself the most privileged undocumented immigrant in the country. He's traveled to more than 40 cities. Nobody has ever bothered him. There is a lot of discretion in how these laws are enforced. And that's what President Obama has been using with the executive order that he did allowing the so-called DREAMers to stay.

  • 10:12:34

    CLIFTThere is prosecutorial discretion. And it was clearly used with Mr. Vargas. But he makes the point that he didn't necessarily look to be detained there to make any kind of a statement. And I learned a lot about this area around that airport. I mean, it's just a series of police checkpoints. You feel like you're back in, you know, World War II in, you know, East Germany or something. It was really kind of scary.

  • 10:13:01

    PALETTABut he wasn't really trying to sneak around the area either, right? He was tweeting about where he was going to be.

  • 10:13:04

    MASONHe was tweeting.

  • 10:13:05

    REHMRight.

  • 10:13:06

    PALETTAI mean, he's, like Jeff said, very openly in the legal -- came into this country illegally and has stayed here. He won a Pulitzer Prize for The Washington Post in 2008. I mean, this is a public figure. And he's been going around the country making speeches. So it's actually kind of amazing that this hasn't happened previously. The question now is, what kind of a signal does this send? You know, he gets let off. Other people are getting sent back in planes. You know, how do they decide who gets to stay and who gets to go?

  • 10:13:30

    REHMAnd does it help or hurt the administration's position?

  • 10:13:36

    PALETTAYou know, I think the administration's got to come up with a more clearly defined position, quite frankly, because with this crisis at the border right now, like Jeff said previously, they need to send a signal to these children -- at least they believe they do -- that you really shouldn't come here. It's too dangerous to travel all this way to only get sent home. And until that message gets sent, there's still going to be people coming. And I think what a lot of Democrats are saying is they're safer here. We should listen to them. We should hear their stories. We need to have due process.

  • 10:14:01

    REHMAnd we did hear a couple of stories on NPR this morning about 12-year-old boys holding guns to teachers' heads, saying, we want this young man because -- a 10-year-old -- we want him because he's got to deliver drugs.

  • 10:14:21

    CLIFTWell, the gangs are really sort of a parallel government in these countries. And you go back and trace U.S. policy -- you go back to the '80s and the '90s, and there was a lot of deportation of kids who were brought here young who became gang members. And there was a natural inclination of law enforcement in East Los Angeles to want to rid their city of these, you know, young criminals basically. They sent them back. They -- some of them didn't know the language. They didn't know the country. They're alienated there, and they've created this whole criminal structure there. So U.S. policy does bear some responsibility.

  • 10:14:56

    REHMJeff.

  • 10:14:57

    MASONAnd U.S. messaging because, I think, as Damian noted, the White House is saying to Central American parents, don't send your kids. But at the same time, the president has said, I'm going to take executive action to make it easier for undocumented immigrants, who are already here, to stay. And that is a contradiction. And that is a messaging problem.

  • 10:15:18

    REHMSo -- but is it that the protests are having an impact on what he is thinking about doing?

  • 10:15:29

    MASONI think it's making it more difficult for them to come up with what they want to do on those executive orders. For sure, it has totally scrambled the politics and the policy.

  • 10:15:37

    REHMSo...

  • 10:15:37

    PALETTAI mean, Democrats saw the immigration issue as a huge advantage in the 2016 presidential elections. I mean, we've had several prominent Republicans saying that there's no way Republicans will win that 2016 election without some sort of immigration bill. Now, Democrats are somehow playing defense on immigration, and they have to come up with some sort of new strategy.

  • 10:15:57

    REHMDo you agree, Eleanor?

  • 10:15:58

    CLIFTOh, I do. I think this -- the White House's handling of this has squandered the advantage that Democrats held. And a lot of Democrats are angry at President Obama. But, you know, our immigration policy has always sent mixed messages. You know, we say we don't want people coming in, and yet the business community relies on them. They take care of our children. There was a movie a number of years ago where -- showed what would happen in California if all the illegal immigrants didn't come to work. It basically shut down the society. So we have exploited these people as much as we feel they've exploited the freedom that we enjoy in this country.

  • 10:16:36

    REHMEleanor Clift of Newsweek and The Daily Beast, Damian Paletta of The Wall Street Journal, Jeff Mason of Reuters. You can join us, 800-433-8850. Jeff, top GM executives testified again at a Senate hearing. What did they hear this time from Mary Barra that was somewhat different from the last time?

  • 10:17:06

    MASONWell, this time, she was really under pressure from lawmakers as to why the top attorney for GM had not been fired because it was made clear that his office knew of the problems with these ignition switches and did not escalate it. So...

  • 10:17:21

    REHMAnd what did she have to say?

  • 10:17:24

    MASONWell, her response to them was, this is a man of integrity, and this is a man who I need. And this is a man who has set up a system that is right for GM, so he -- she absolutely defended him and did not give any ground in terms of saying this is somebody who's on the way out.

  • 10:17:40

    REHMDamian?

  • 10:17:41

    PALETTASo the -- one of the big issues -- and what we heard from lawmakers was a lot of outrage as to how the company could be reaching settlements with people whose cars had these fatal crashes and not notify the engineers to make -- to change the car, you know. And then there was all this confusion about how parts of the cars were being recalled and changed, but they didn't know the specific number or they didn't change the specific number that was being recalled.

  • 10:18:05

    PALETTAI mean, it seemed like a real ham-handed way to do this. And this happened to -- now they've recalled, you know, millions and millions of automobiles. And, you know, the legal liability, I think, facing this company's enormous. And the political liability's just getting worse. I mean, it's clear that lawmakers want some more heads to roll. And, you know, it's just a matter of time before GM's going to have to decide how they're going to navigate this.

  • 10:18:25

    REHMAnd do members of Congress now believe there was a cover-up, Eleanor?

  • 10:18:33

    CLIFTOh, I think they do. And clearly Mary Barra's honeymoon with the Congress is long over.

  • 10:18:42

    REHMShort break. Right back.

  • 10:19:51

    REHMAnd welcome back to the Domestic Hour of the Friday News Roundup this week with Eleanor Clift of Newsweek and The Daily Beast, Damian Paletta of The Wall Street Journal, Jeff Mason of Reuters. Just before the break, we were talking about GM testimony on Capitol Hill, lawmakers questioning exactly why the attorney for GM was still very much on the scene. What do you think, Jeff Mason?

  • 10:20:29

    MASONWell, and we should say his name is Michael Millikin, and he also was -- had a chance to talk this week. And he said that he was not aware of the issues until February of this year, which raised some other interesting questions about how things work at GM. Apparently his direct reports didn't have to alert him about settlements that were less than $5 million, which seems like an awful lot of money for the chief counsel of a big company like that not to be aware of.

  • 10:21:00

    CLIFTYeah, I think the members of Congress -- I think it was actually Sen. McCaskill said it was stunning that this information was kept from him. Why would they protect him? And the company has apparently fired five corporate lawyers that were in that group reporting to him. But, so far, his sin of omission claiming he didn't know this was going on has kept him a good stead with Mary Barra.

  • 10:21:30

    REHMHmm.

  • 10:21:31

    CLIFTNow they're both long-term employees of GM, more than 30 years, and she's up from the ranks. So there's some sort of a bond there, and yet you have a number of senators led really by Connecticut Sen. Blumenthal who's been very aggressive, you know, really wanting his firing. The same time, I think these senators have a grudging respect for how tough she is. I mean, she really held her ground -- no more documents, I'm not expanding the compensation program. It's -- kind of the gender dynamics are interesting.

  • 10:22:08

    PALETTAWell, also with GM, I mean, this is not just any American company that makes widgets, right? I mean, this is a huge company that's really tied to the lifeblood of U.S. manufacturing. They got a tremendous amount of support during the financial crisis. We don't even know where they'd be right now if it wasn't for government support. So I think there is a sense on the Congress among some that, you know, the politicians have a say in the decisions that this company makes, rightly or wrongly, and that's (unintelligible).

  • 10:22:32

    REHMThey also heard from Ken Feinberg. What'd he have to say?

  • 10:22:37

    PALETTAThat's right. So Ken Feinberg has become sort of the de facto American individual who pays out, you know, reparations or whatever to -- you know, he did it for 9/11. He did it -- he also was involved with the financial crisis as well. And so he has to draw a tough line here about deciding who was going to get paid, who's going to get compensated, who are the victims of these crashes. And then, you know, maybe if it's a little blurry about whether something was related or not to these crashes, he has to draw lines to say no.

  • 10:23:09

    REHMWhat do you think this has done for or to the company, Jeff?

  • 10:23:15

    MASONWell, it's not good PR obviously.

  • 10:23:18

    REHMFor sure.

  • 10:23:18

    MASONAlthough it's interesting -- I haven't seen the most recent numbers. But their sales have not taken a hit. The car company itself is still doing well in terms of selling products to consumers that consumers want. But to be in the news this often about deaths, to be grilled by lawmakers on a fairly repeated basis over the last several months is not what you want if you're the head of any business, let alone one that is so consumer oriented.

  • 10:23:46

    REHMBut if Mary Barra says, we're not going to expand the payout, we're not going to give you any more documents, couldn't the Congress subpoena more documents?

  • 10:24:03

    CLIFTThey kind of left it open at the end of this hearing. They didn't suggest they were going to bring her back.

  • 10:24:08

    REHMHuh.

  • 10:24:08

    CLIFTAnd -- but I think the ignition switch problem is not going to go away. The company likes to think it's confined to the smaller models. But there's evidence that it's in some of the other bigger lines as well, and that's where you get the conflict over they don't want to expand the payout program. So they're really not acknowledging it as a major fatal mistake with other lines. So this could still -- I don't think this story is over.

  • 10:24:34

    REHMAnd it's fascinating to me that, exactly as you say, Jeff, sales are up. What does that say?

  • 10:24:43

    MASONWell, the big question's going to be, is this going to continue? I mean, if you -- lots of Americans drive GM automobiles, and there have been -- a lot of cars have been recalled. So when you have to make the decision about the next car to buy and you think, well, my last GM was recalled 'cause possibly the airbag wasn't going to work or the car was going to stall, maybe you think twice, and you buy something different. So I think we're going to see how this plays out over the next few years...

  • 10:25:04

    REHMInteresting.

  • 10:25:04

    MASON...'cause there could be longer (unintelligible).

  • 10:25:05

    REHMAll right. And, Eleanor, let's talk about transportation funding and the short-term measure the House passed -- short-term fix.

  • 10:25:19

    CLIFTRight. They sort of cobbled together enough money to fund projects through next May. And they did it -- really, it's despicable. I mean, they transferred money from pension funds. They took money from the general fund, anything to avoid something that could be called new money or taxes.

  • 10:25:41

    REHMOr a tax.

  • 10:25:41

    CLIFTThat's right. That's right. And in transportation, you -- I think people involved in this area say you really do need some long-term guarantees. You know, a bill that only takes us through May really does cripple the construction industry, leaves a lot of uncertainty. And everybody talks about how important uncertainty is and sort of stalling the economy.

  • 10:26:06

    CLIFTSo the president is out there, you know, standing at bridges and tunnels or wherever he can go to try to give the visual image to the problem that we're facing.

  • 10:26:17

    REHMOne…

  • 10:26:17

    CLIFTAnd everybody acknowledges we have a huge problem with decaying infrastructure, and yet nothing is done.

  • 10:26:21

    REHMAnd one bridge that actually had slanting supports that he was standing in front of.

  • 10:26:30

    MASONYeah, I mean, there are so many. There are, like, 65,000 bridges that need repair in the United States. It's an incredible number. And the president has spent the week sort of focusing on infrastructure. I was on his trip yesterday when he went to Delaware, but his speech ended up being very much overshadowed yesterday by this horrible crash of the Malaysian Airline in Ukraine.

  • 10:26:53

    MASONAnd -- but that foreign policy piece aside, the White House is very eager for Congress to have a longer-term solution on transportation funding. And it's interesting that, despite some of the crazy math that they used to make this happen, the White House did support it. They wanted this extension to happen even though it wasn't the longer-term piece that they wanted.

  • 10:27:13

    REHMIt wasn't what he wanted.

  • 10:27:15

    MASONExactly.

  • 10:27:16

    REHMBut he's hoping in the Senate.

  • 10:27:17

    PALETTARight. That's right. And so when you buy a gallon of gas, 18 cents of that goes to pay the federal gas tax. And that adds up to about 30 to $35 billion. And it goes into this Highway Trust Fund. Now, the Highway Trust Fund pays, spends about 45 to $50 billion a year, right? So, like Eleanor mentioned, they use these budget gimmicks to get us through to May. They're going to run out of budget gimmicks eventually if they can't cover $10 billion deficit a year.

  • 10:27:41

    PALETTASo this federal gas tax of 18.4 cents hasn't been increased since 1994. A lot of Democrats and some Republicans want that to be increased. States also have a gas tax, but they've mostly spent all their money on, you know, operations, administration, pulling deer off roads, that sort of thing. So they're really relying on the federal government to fix their roads. Both parties know there has to be a longer-term fix. They're just not ready to have the debate right now.

  • 10:28:03

    REHMSo what is likely to happen in the Senate, Eleanor?

  • 10:28:08

    CLIFTOh, I think they'll go along with the Band-Aid…

  • 10:28:10

    REHMWith what the House did.

  • 10:28:11

    CLIFTOh, yes, it's better than nothing.

  • 10:28:14

    MASONIt's also interesting to me, and perhaps to your listeners, one of the reasons that the Highway Trust Fund is running out of money is because more fuel-efficient cars are now riding on the -- or driving on the roads. And so that very effect, which is something the Obama Administration absolutely supports and has pushed, is one of the reasons why there is less funds, less funding to pay for crumbling roads and bridges.

  • 10:28:42

    REHMSo the fix has got to be something rather new, doesn't it?

  • 10:28:50

    MASONIndeed. And one of the interesting things that the president talked about yesterday in terms of that fix is pushing for more private sector investment saying that that's not something that can replace public investment in roads and bridges and infrastructure but wanting to have a greater influx of money from the private sector because it's in the private sector's interest as well to have these things fixed and running well.

  • 10:29:15

    REHMBoy…

  • 10:29:15

    CLIFTMaybe then you can get a bridge or a tunnel named after you. I mean, how…

  • 10:29:18

    REHMYeah, exactly.

  • 10:29:19

    MASONIndeed, and rent it out.

  • 10:29:20

    CLIFTNaming rights.

  • 10:29:21

    REHMRight. I mean, you do have some of these -- this highway is sponsored by, you know, out in Maryland. But who knows how much a highway repair would cost? Sounds like a lot of money to me. Damian, House Speaker John Boehner is pursuing a lawsuit against President Obama. There was hearing this week. What's going on?

  • 10:29:53

    PALETTASo the Republicans -- this is very complicated, and it's hard to figure out how much is politics and how much of this actually might turn into a real thing. But House Republicans led by Boehner are filing a lawsuit against the president. And at first they didn't say what they were going to be suing him for, but it turns out they're going to be suing him for his delays of parts of the Affordable Care Act, OK?

  • 10:30:13

    PALETTAIt is parts of the Affordable Care Act they didn't like and they don't want to be enforced in the first place, but they think they have a good legal strategy here to sue him. I think the broader point is they believe this president's been too -- as they call him -- imperial. He makes decisions willy-nilly about what laws get enforced and what doesn't. This has been one of the reasons that the immigration stuff is bogged down. They don't sort of trust him to follow through on his word.

  • 10:30:33

    PALETTASo the House Rules Committee, you know, which is one of the first kind of stepping stones to getting this process through, Democrats said, you know, this is a big political stunt. Republicans said, we're going to move forward with this. So the question is, you know, are they going to -- how far are they going to take this?

  • 10:30:50

    REHMFirst, Sarah Palin wanted to impeach the president, and then it moved to John Boehner.

  • 10:30:57

    CLIFTWell, Sarah Palin is right in the sense that impeachment is the normal procedure that one would use. But I think Republicans recognize that, A, there are no grounds for it, and, B, if you start impeachment proceedings, you might actually re-elect Obama to a third term. I'm being facetious, but you could change the politics going into the November elections.

  • 10:31:19

    CLIFTSo I think people think that Speaker Boehner has instituted this lawsuit in a way to sort of drain some of the anger away from his caucus that might otherwise be focused on impeachment. And I -- you know, they claim they're going to bring this lawsuit to the House floor by the end of July. Presumably, it would pass along party lines, but then it would go nowhere. If it goes into the courts, it will be judged on whether the speaker actually has the standing to bring this suit 'cause he has not been personally damaged.

  • 10:31:54

    CLIFTAnd it was an earlier Congress actually that passed it. And if he's bringing it, you know, on behalf of this Congress, you get into all the legal back and forth. I think most people think it gets thrown out, but he did have one -- Jonathan Turley, who is a constitutional law professor at GW, who took some, I thought -- he's labeled as a liberal, but he took some sort of contrary positions back during the Clinton impeachment proceedings as I recall.

  • 10:32:20

    REHMYes, yes.

  • 10:32:21

    CLIFTAnd he basically said that this president is sort of -- he's conducting an uber-presidency because he's overreaching. So his testimony was listened to, and then you had, you know, Walter Dellinger and Simon -- Si Lazarus who served in Democratic administrations, you know, basically taking the other side. It's a wonderful discussion for law professors to have, but I don't know that the general public is going to get engaged in this.

  • 10:32:49

    REHMAnd you're listening to "The Diane Rehm Show." Jeff Mason, is this going to take the place of any real action on the part of the House?

  • 10:33:04

    MASONWell, the...

  • 10:33:04

    REHMI mean, you just -- it's a time waster.

  • 10:33:08

    MASONYeah, and that's certainly the way the White House sees it. The president has lost no opportunity to say, look, this is what the Republican Congress and their Republican House is doing, suing me for doing my job while not doing theirs. And he likes to make a point of saying, this is a taxpayer-funded lawsuit, which is true and which is something that could also resonate with voters when they come around in November.

  • 10:33:31

    MASONBut it's -- there's a lot of anger in the White House about this. They see it as a complete waste of time obviously. And, you know, even on a week where there was some bipartisan agreement on the transportation fund and -- which raised the possibility of maybe some agreement on other issues, this counters that completely.

  • 10:33:55

    REHMAll right. And you're listening to "The Diane Rehm Show." All right. We've got lots of callers waiting. But first let's go on and talk about the economy and the testimony of Janet Yellen this week.

  • 10:34:23

    PALETTAYeah, Janet Yellen's the Chairman of the Federal Reserve. And she -- you know, the Fed has been doing everything it can to controversially pump money into the economy. And it's now at a time where it's going to start winding that process down. And the question is, how quickly are they going to wind that down? And she signaled that the robust job growth we've seen the past few months puts the prospect on the table that they're going to start hitting the brakes a little faster than people expected and withdraw the monetary support that they've been providing.

  • 10:34:53

    PALETTAAnd the question is, you know, what's the impact? Is the economy ready for that? The stock market's very high right now. The job market seems to be really improving. But once the Fed sort of takes away the punch bowl, are we going to be in a position where the economy -- the economy's going to be in a glide path? Or are we so fragile that we might kind of slip back into some weak job growth?

  • 10:35:11

    REHMJeff.

  • 10:35:12

    MASONYeah, and I think that surprised some people. But she also made a real point of defending the Fed's policy so far saying that it was right to keep interest rates at the level that they are -- this historically low level -- because there still hasn't been a rebound in wages and that, despite some positive signs in the labor market, which could require the Fed to increase that policy a little bit sooner than some had expected, she's still comfortable with where it is at this time.

  • 10:35:39

    REHMEleanor.

  • 10:35:39

    CLIFTI think she's right to be wary. She used the phrase false dawns. We've seen too many false dawns. And while the economy right now looks like it's gaining some traction, you've had some pretty good job growth throughout this year, and the unemployment figure has dropped from, what, 7.5 percent a year ago, and it's likely to go below six by the November elections. But we've seen too many summers where things look good and then they're stalled.

  • 10:36:10

    CLIFTAnd I think the risks she runs is if she waits too long to withdraw the monetary support is that you trigger inflation. But they know how to fix inflation. They know how to go after it. If they take away the supports and we go and fall -- the economy falls back, they don't know what to do. They wouldn't have any tools. So I think she's handling this well. And The New Yorker had an excellent profile on her, by the way.

  • 10:36:35

    REHMExactly. Why do you think she submitted to that so early in her tenure?

  • 10:36:40

    CLIFTI think she's fearless, and she knows what she's about. And she's really focused on the jobs and wage situation. And I really admire her. I mean, she doesn't feel like she's spinning anything. She is who she is.

  • 10:36:56

    REHMWhat about that, Damian?

  • 10:36:57

    PALETTAWell, remember a lot of people thought this was Larry Summers' job to lose. And possibly he lost it, right. And so she's beholden to no one. She doesn't owe anyone anything. She's her own person. She's -- you know, she's the first woman chairman of the Federal Reserve. She's got all these incredible economic bona fides. She can be her own person and do whatever she wants.

  • 10:37:15

    REHMDamian Paletta of The Wall Street Journal. Short break here, and when we come back, we'll open the phones and take your calls.

  • 10:39:59

    REHMAnd welcome back. I have to inform you we're having some trouble with the phones, so we're not going to be able to take calls just yet. I hope that problem can be fixed before the end of the program. Here's an email from Chris in North Carolina who says, "Why are citizens not allowed to or asked to vote on increasing the gas tax for the highway fund? I would vote yes because I use roads, and so do the industries that support our communities." Damian?

  • 10:40:43

    PALETTAGreat question. There have been votes in states to raise state gas taxes. I think state gas taxes range from maybe 12 cents in Alaska to 70 cents in California. So states do raise -- states raise, quite frankly, as much money as the federal government through their own gas taxes. But they tend to spend the money very quickly. Like I mentioned, states have borrowed a tremendous amount of money to do road projects.

  • 10:41:06

    PALETTAAnd now some states are paying more on interest on these loans than they actually are doing on road construction. Some states have almost no money for road construction. So I think the issue is, you know -- I mean, obviously only Congress can vote on taxes at the federal level. And so that's what would have to happen if you want to raise the federal tax.

  • 10:41:23

    REHMJeff?

  • 10:41:23

    MASONI think it's also interesting -- the writer may have voted yes, but most people would not vote yes. And the idea of increasing the gasoline tax is so politically volatile that in election years, for the last couple of presidential elections, it's come up. And when gasoline prices started going up, even in 2012, there was discussion about tapping strategic petroleum reserves, doing virtually anything possible to bring those prices down. People really feel it when gas prices are high. They might see the political dysfunction right now and say, yeah, we'd support an increase in taxes. But once oil prices really go up, that would become a lot less popular very quickly.

  • 10:42:03

    REHMAll right. And here's a question on GM from Keith who says, "Is there a point where Congress can identify enough criminal activity that they can decide to shut down GM and end the madness?"

  • 10:42:23

    PALETTAWell, I think that wouldn't be up to Congress as much as probably the Justice Department. I mean, if we're really getting into criminal conspiracy talk, that would -- probably not within Congress' purview to tackle that sort of investigation. So that would be up to the Justice Department.

  • 10:42:35

    REHMAnd we were just talking about Mary Barra. Given the public's opinion of Congress right now, they might like Mary Barra more because of her defiant posture, Eleanor.

  • 10:42:52

    CLIFTWell, I mean, I do think she is conducting herself like a leader. And I think that is admirable. But I don't think you can rally around her in her role as the head of a company that has mistreated so many people who have been victims of the company's willful ignoring of a problem that they knew existed.

  • 10:43:14

    REHMAll right. And, Jeff Mason, I know you wanted to add something to the conversation about Janet Yellen.

  • 10:43:23

    MASONYeah, we were talking about one of the reasons she said this week that it wasn't -- that it was good to keep interest rates at the level that they are is because wages have remained stagnant. And I made the point in the break that her talking about a disparity between wages for middle class people and lower income people compared to the very wealthy plays right into what the president is saying as well. And the irony there is that she was not necessarily Obama's first choice, as Damian referred to earlier. But the policy that she's talking about fits very much with the White House playbook.

  • 10:43:58

    REHMAll right. And I'm going to try to read from some of the caller's comments and what they'd like to know. Caller three, Paul from Woodsboro, Md. says, "The gimmicks being used to fund the Highway Trust Fund, has money previously been taken? And if so, where was it taken from, and was it returned?"

  • 10:44:29

    PALETTAWell, the Highway Trust Fund, I think a few years ago, they started these more short-term patches. And I'd have to go back and look and see how exactly they did it. I mean, I don't think anyone is really defending the, like Eleanor said, the sort of gimmicks they're using this time. It's just one of those congressional eye rollers just to get them through May without having some sort of, you know, highway crisis before the November elections.

  • 10:44:54

    PALETTAI think there are -- there has been some screaming from Democrats and Republicans who say this is a bunch of baloney, but the leaders seem to be ready, and even President Obama, to sort of let this pass through because they don't want some sort of mess in the summer construction months.

  • 10:45:05

    REHMAll right. And to Eleanor, let's talk about Citigroup and its settlement with the Justice Department. Does this mean that they won't be held liable in the financial meltdown because of the mortgage crisis?

  • 10:45:26

    CLIFTYeah. I mean, well, they avoid a civil suit from the Justice Department, I believe. And what I think -- I mean, I think it's a nice -- it's a hefty fine, and it's appropriate.

  • 10:45:38

    REHMSeven billion.

  • 10:45:38

    CLIFTYes. But I think what some people, especially people who follow Elizabeth Warren and her sort of conversations about how the banks get away with everything, there is a feeling that, you know, people made these decisions to package these bad mortgages. And the people who made those decisions are walking away. They're not -- there's no prosecutorial jail time. And I think that's frustrating.

  • 10:46:06

    CLIFTAnd I noted with interest that Elizabeth Warren, John McCain, Maria Cantwell, the Washington state senator, and Angus King, the independent from Maine, introduced a bill in the Senate to rein the big banks. It's not going to pass, but I think there's an assortment of political views there from John McCain and the Republican Party, independent, Democrats that's really trying to tap into the anger that people feel that the big banks are just humming along as usual, really haven't paid much of a penalty.

  • 10:46:42

    REHMAnd, boy, is Elizabeth Warren stirring them up.

  • 10:46:46

    MASONYeah. She's very hot right now, as everyone here knows, in political circles. And though she said she's not going to run for president in 2016, that question keeps getting raised as well. I'd like to make two other points that I thought were interesting about the Citi settlement. One, Atty. Gen. Eric Holder made a point of saying this does not preclude Citi from facing further criminal charges, which is one thing that the Elizabeth Warrens and people who support that are questioning about that are really upset about that banks like Citi have not faced criminal charges.

  • 10:47:21

    MASONSo Holder made a point of saying that doesn't go away. And the other thing that was interesting to me from this particular settlement is that Citi also agreed to provide $180 million in financing for affordable rental housing. So it sort of raises the issue of, you know, mortgage-backed securities and mortgages, you know, really helped tank the U.S. economy in 2008. But the broader questions of housing are also relevant and needed in banking circles.

  • 10:47:51

    REHMDamian?

  • 10:47:52

    PALETTASo Citigroup now has a new CEO. Most of these banks now, except for JP Morgan, I think, and Goldman Sachs have new chief executives. So the big question is -- I mean, we're going to see -- Bank of America is expected to have one of these settlements soon. These sort of things are going to wash through the banking system.

  • 10:48:07

    PALETTAIs there going to be some sort of cultural shift on Wall Street? Or is it going to be kind of back to business? I mean, that's the kind of thing -- unfortunately, it might take the next financial crisis for us to see whether that's happened. But, you know, there has been change at the top of these companies. Is there going to be kind of a change in culture and behavior?

  • 10:48:23

    REHMAll right, caller four, Ruby in Goshen, Ind. says, on undocumented immigration, she believes somebody is paying for these kids to come up, and there is an impression that there is a deadline which is why everybody is rushing up here now.

  • 10:48:47

    PALETTAYeah. I mean, sure. I mean, one of the big questions is, where are all these kids coming from, right? And why has there been such a surge since May? And I don't think I've gotten a real good answer as to what the big -- what's caused the big spike. And I think any time you have all these children and kids, I mean, it raises a lot of anxiety among any American.

  • 10:49:02

    PALETTAYou know, what's happening? You know, what can we do -- both what can we do to handle, you know, the situation in the border? But then what kind of signals can we send to try to find out what's behind all this as well? And I don't think we've really gotten to the bottom of it.

  • 10:49:14

    REHMAnd Michael on line two says he believes that, on immigration, the left and right are both being extreme. It's a perfect example of the broader problems facing our government. There are solutions, but both sides are preventing these solutions from happening. Eleanor?

  • 10:49:40

    CLIFTWell, I mean, I think the president has indicated that he's willing to compromise with the Congress. I think he would send National Guard troops to the border -- we've done it before, I think George W. Bush did it as well -- if he got some of what he wants out of the Republican side. So, I mean, I think people are ready to compromise.

  • 10:50:02

    CLIFTAnd while, I think, the Democrats are going to oppose any change in that '08 law, there's a loophole there too where the Homeland Security is asking for just more prosecutorial discretion so that they can deal with these kids, you know, more individually and not be totally bound by the '08 law. I think there's room there for a compromise as well. And I think they've got to do something before they go home in August. I think they've got to pass something.

  • 10:50:31

    REHMYou think they will?

  • 10:50:33

    PALETTAWhat's also interesting is we saw -- we talked about Gov. O'Malley and the president. So the White House is saying, you know, if you want us to keep all these kids, we're trying to put some in Maryland in, like, a holding house.

  • 10:50:44

    REHMYeah, right?

  • 10:50:44

    PALETTAAnd you don't want them there.

  • 10:50:45

    REHMRight.

  • 10:50:46

    PALETTASo what do you do? What do you logistically do with all these children? And, I mean, there has to be some sort of logistical way to address this in the near term, too. I mean, it's a kind of a almost a humanitarian crisis in the United States. Like, we tend to go help other countries with their humanitarian crisis. We've got one in our own hands. So they have to do something quickly.

  • 10:51:03

    MASONWell, and then one of the primary reasons for asking for that money is just to provide beds for these kids. They're running out of beds. The Health and Human Services secretary testified about that last week. They need the money not just for, you know, just the broader immigration issue but for the very logistics that you're referring to.

  • 10:51:21

    CLIFTWell, two points. I think O'Malley is playing presidential politics. He wants to position himself to the left of anybody, so he has a place in the primary process and as it goes forward, assuming Hillary Clinton runs. And then, secondly, a lot of these kids who are coming have relatives in this country. They have parents in some cases that came and were sending money back home.

  • 10:51:43

    CLIFTAnd they see this as an opportunity for family reunification. So I think a number of these kids can be placed. They are illegal. And then presumably they would have to go through court proceedings. But it's not like they're all going to have to be housed in detention centers without having any relatives here willing to take responsibility for them.

  • 10:52:02

    MASONThe caller also asked about money flow. And I think it's important to note that, yes, money is flowing, and it's flowing to smugglers who are bringing these children from their parents in Central America into United States.

  • 10:52:12

    REHMBut are the parents getting the money to send back home so that then the smugglers can be paid and then the kids come up?

  • 10:52:25

    MASONYeah, that's a great question. And I think Eleanor's point earlier about the relationship between drug cartels and the drug trade is also a very important aspect in that money flow.

  • 10:52:34

    REHMAnd we had an email from Jim on our website. He says, "We cannot accept any and every child who fears they'll be recruited by drug networks. They are all candidates." And you're listening to "The Diane Rehm Show." Let's see, Rob has a question: "If the Federal Reserve is planning to pop a bubble or do a controlled collapse, doesn't that mean we're not technically in a free market?" Damian?

  • 10:53:12

    PALETTAWell, the Fed's got a very tricky responsibility here. I mean, they want to make sure the economy is moving and, like we mentioned, not just, you know, economic growth, but, ideally, we're going to see wages increase as well because it's -- you know, if wages aren't increasing, then it's hard to make much progress. But the Feds got that, you know, very tricky balance of having to keep the economy juiced but at the same time keep it from getting overheated. And so now we're at one of those inflection points, and Janet Yellen is going to be the one kind of with her hand on the wheel.

  • 10:53:41

    REHMAnd Joyce comments, "President Obama has been trying to move on an immigration solution ever since he came into office. The problem is ballooning because there is no movement in Congress." Jeff?

  • 10:54:02

    MASONWell, and she's right. I mean, the president, particularly in 2012 but also in the 2008 campaign, made immigration reform one of his primary response -- his primary promises and said it would be his first goal coming out of the gate after inauguration. And he has tried. And the Senate passed a bill, as we know, and then it got stalled in the House.

  • 10:54:22

    MASONAnd just a couple weeks ago, Speaker Boehner said they would not vote on it this year. So immigration reform is effectively dead for this year, at least before the November elections. But it's still on the agenda of the White House. It's still something they want to do. But as we said at the beginning of the program, the political calculus there is also shifting because of this border crisis.

  • 10:54:44

    REHMAll right. And one caller who could not stay on the line says he's a Republican, and he thinks impeachment is a silly conversation that makes the GOP look "Sarah Palin crazy." But in fact it's not a big issue among mainstream Republicans.

  • 10:55:08

    PALETTAWell, I mean, I think the question -- Eleanor could probably help with this -- is would this be 1998 all over again, right? I mean, did they -- they sort of set their own trap and walked into it with Bill Clinton and somehow got the public against them, you know, on the way they handled that impeachment. Would they be doing the same sort of thing here? And I don't know, I mean…

  • 10:55:28

    CLIFTYeah. I mean, I think the emailer or the caller is exactly right, that mainstream Republicans do not want to go down this route. And I think it's Speaker Boehner basically trying to codify or coddle -- I should say coddle -- the Tea Party caucus within his ranks who have given him so much trouble, giving them -- it's like throwing a bone to them. I don't think it's going to go anywhere.

  • 10:55:51

    CLIFTBut I would also point out that Speaker Boehner, if he brought that immigration -- if he brought the Senate bill to the House floor, it would pass. Virtually every Democrat would support it, and all they would need would be, like, 18 Republicans. So, you know, if this border crisis balloons through the summer, maybe Boehner will see the light, probably not, but...

  • 10:56:16

    REHMInteresting. Last word, Jeff.

  • 10:56:18

    MASONI think that's unlikely. And I think that the fact that Boehner has also said he disagrees with Sarah Palin on impeachment means that will be an issue that talked about on the outside fringes of the Republican Party, but not in the center.

  • 10:56:32

    REHMJeff Mason of Reuters, Eleanor Clift of The Daily Beast, and Damian Paletta of The Wall Street Journal, thank you all so much. And thanks to our listeners. You were so patient. Sorry about these phones. Thanks for listening. I'm Diane Rehm.

  • 10:56:53

    ANNOUNCER"The Diane Rehm Show" is produced by Sandra Pinkard, Denise Couture, Susan Casey Nabors, Rebecca Kaufman, Lisa Dunn, Danielle Knight and Allison Brody. The engineer is Toby Schreiner. Natalie Yuravlivker answers the phones. Visit drshow.org for audio archives, transcripts and podcasts. 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, D.C. This is NPR.

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