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Shields and Brooks on White House’s Economic Predictions, Beck Rally

August 27, 2010 at 12:00 AM EST
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Columnists Mark Shields and David Brooks analyze the week's top news including economic slowdown concerns, the Federal Reserve's role in propping up the U.S. economy, how John McCain staved off primary opposition and what to expect from weekend rallies in Washington hosted by Glenn Beck of Fox News and the Rev. Al Sharpton.
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TRANSCRIPT

JUDY WOODRUFF: And finally tonight to the analysis of Shields and Brooks. That’s syndicated columnist Mark Shields and New York Times columnist David Brooks.

Gentlemen, it’s good to have you back after a few weeks away. You look well-rested.

MARK SHIELDS: Good to be back. Thank you.

(LAUGHTER)

JUDY WOODRUFF: Mark, let’s start — just a word on the economy, some news today, the growth earlier this year not as good as it had been thought. Ben Bernanke of the Federal Reserve said today they stand ready to move if needed.

We talked about this at the top of the show, but what other thought do you have about it?

MARK SHIELDS: Well, I mean, it just seemed that Chairman Bernanke’s words that the economy — the recovery train is late. It’s not on schedule. But it will come. It’s still on its way. It hasn’t been derailed, and it was — attempted to reassure without any positive action statement to it.

And the question is, what are the actions that the Fed could really take at this point?

JUDY WOODRUFF: Should we feel reassured?

DAVID BROOKS: A little. I mean, he’s showing he is aggressive. But it’s all on the Fed now. There was a lot of hope, I think, earlier in the year that the stimulus package and the fiscal policy would be able to boost some demand. When the thing was passed, the Obama administration projected that unemployment would be coming down quite substantially by now. That didn’t turn out to be true.

Then they had another set of projections where they called this the summer of recovery and Joe Biden said we’re going to be creating up to 500,000 jobs a month. That’s clearly not happening. And, so, it has been disappointing, what has happened to the stimulus package. So, now the fiscal policy, as my colleague Paul Krugman said earlier in the show, there is no political will. I think there is no reason to do it. It’s just not effective. And so now it is all on monetary policy.

And I think what we have to expect is what financial crises are like, long, slow recoveries. And just one final thing — the number that to me crystallizes this is the amount of personal debt that is floating out on individual households. For decades, it was like 45 percent of GDP.

And then, as we went through the consumption boom, it went up to like 133 percent of GDP, huge amounts of household debt. And we had to wind that down. We’re only down to about 122. So, that’s just going to take a long time to get down. And that’s why I think this is going to be a long, slow, grinding recovery.

JUDY WOODRUFF: A lot of family debt.

MARK SHIELDS: A lot of family debt and a lot of pain and a lot of hurt out there, Judy. It — politically, it — the recovery summer was an unfortunate prediction. And it comes back to…

JUDY WOODRUFF: On the part of the Obama…

MARK SHIELDS: On the Obama folks. And it was a self-inflicted wound. They are the ones who dubbed it. No one had ever heard of recovery summer before. And it reminded me of the rosy scenario and Ronald Reagan 30 years ago when cascading tax revenues were going to come in, and the economy was going to jump, and there would be no inflation, and the budget would be balanced, and rosy scenario emerged, not an interpretive dancer at a gentlemen’s club, but an overly optimistic projection of the future.

The problem with making something like the recovery summer statement or rosy scenario is, it’s one thing to say what is going to happen in the long-term or in the next generation. Don’t ever say it’s going to happen this summer, you know, or in the next six months, I mean, because that’s when you really get caught on predictions.

JUDY WOODRUFF: But they really thought something was going to happen.

MARK SHIELDS: Well, they obviously did, but better to have it happen and then take credit for it, than to predict it and not have it happen.

DAVID BROOKS: It was the intellectual foundation for the whole policy. They had these models. And the models were based on what they call the multiplier effect. You put a dollar in and you get $1.4 of stimulus or $1.2, whatever the model is.

And that was the model on which the whole policy is based. And it seems — and there is a big debate about this, but it seems that, to me, that the multiplier is not that high, that the effect is not that big. And that’s why it is not just a policy — or a political mistake, though it is — it is a policy mistake.

MARK SHIELDS: The OMB this week, though, did — did argue that the stimulus had had an impact, almost up to 4 percent on GDP growth, which would not have happened without it, and that the unemployment would have been greater.

JUDY WOODRUFF: This is the Budget Office.

MARK SHIELDS: That’s right, the Office of Management and Budget. And — I’m sorry — the Congressional Budget Office…

JUDY WOODRUFF: The Congressional Budget Office.

DAVID BROOKS: Congressional Budget Office.

MARK SHIELDS: Pardon me — which is nonpartisan, not part of the administration — and that it had created up to 3.3 million jobs. I guess what wasn’t accounted for was just how bad it was.

DAVID BROOKS: Well, that is because they use the same models. They are not counting jobs. They’re running the models with their assumptions and they get those numbers. It clearly helped. There is no question about that. But whether — it clearly has not helped as much as a lot of us thought it would.

JUDY WOODRUFF: Now, you did have, David, the House majority — minority — minority leader, John Boehner, weigh in with a — what he called a major speech this week on the economy.

Did we get a sense from that of what — if the Republicans take over the House in November, what they’re going to do about the economy?

DAVID BROOKS: In a word, no.

(LAUGHTER)

DAVID BROOKS: And that I guess is the theme of the speech: No. Obama is doing this. We’re not going to do that. Obama is creating all these programs. We’re not going to do that. But how the Republicans are going to address the long-term problems, there — there are two issues here. There is the fiscal crisis. But then there — we have had problems in labor markets for a long time. We have had wage stagnation for a long time. I don’t think the Republicans are there yet.

Doug Holtz-Eakin, on the show earlier, said we have slow growth. How are we going to improve the growth? John Boehner said nothing about that. So, basically, what he said was a political message: You don’t like what the Obama folks are doing. We won’t do that stuff.

That was a political speech. I expected a little economic thought going into the speech, whether it is supply-side thought or fiscal conservatism, something. But I would say, substantively, the speech was pretty thin.

JUDY WOODRUFF: How did you read it?

MARK SHIELDS: It was an elevation of vagueness and generality to high economic policy. I mean, it was really nothing short — any time a politician — and I say this as somebody that likes John Boehner — says things like, we’re going to have to make tough choices, and never tells you what the tough choices are, might be, ought to be, and that’s — that is the kind of speech it was. It was — he came out strongly for tax cuts and against regulation of business. But there was no real hook upon which to hang any kind of…

DAVID BROOKS: You know, the Republicans are doing so great right now, they figure, why mess with the script? And that’s — that was the speech.

JUDY WOODRUFF: Now, we do have some primaries to talk about. Five states voted this week. It’s interesting, David. In two states, you have the conservative, more conservative Republican candidate, do better, in fact, in Florida, in the governor’s race, beat the establishment Republican. And, then, Mark, in Alaska, the — the — it looks as if the incumbent Republican senator, Lisa Murkowski, is in trouble.

MARK SHIELDS: That’s right. It was a very big day for Sarah Palin. Make no mistake about it. And it’s been — Sarah Palin…

JUDY WOODRUFF: Because she had endorsed…

MARK SHIELDS: She had endorsed Joe Miller against Lisa Murkowski. It’s an old blood feud. She beat Frank Murkowski, her father, in 2006. Just — it’s that recent, 2006 Republican primary in — for governor of Alaska. And she won, obviously, the governorship, and then resigned the governorship, at which time Lisa Murkowski gratuitously offered the comment she was abandoning the people of Alaska, she Sarah Palin. Sarah Palin settled the score by embracing Joe Miller, a veteran, graduate of Yale Law School, but a total unknown, and a real Tea Partier, I mean, somebody who doubts the constitutionality of unemployment benefits for out-of-work workers.

And it’s — she did that. At the same time, she insulated, inoculated John McCain against the charge on the right early on down in…

JUDY WOODRUFF: Arizona.

MARK SHIELDS: … down in Arizona. So, I think it was a big — I mean, it’s been a big spring for Sarah Palin. And I think that she has to be given some credit for taking real chances in a lot of primaries, whether it is Nikki Haley in South Carolina, Susana Martinez in New Mexico.

DAVID BROOKS: I think she had a validating effect. I’m not sure I think she had that much effect. The reason Joe Miller won — he was helped by Sarah Palin, no question about that, but there were a lot of issues in the race. There was an abortion factor there. Murkowski is not staunchly…

JUDY WOODRUFF: You’re talking about Alaska still.

DAVID BROOKS: … pro-life, to say the least, yes, in Alaska. And then to me the most interesting thing is, Murkowski is on the Appropriations Committee. She stands for the old Ted Stevens style of politics it: I’m going to bring some money out — up here to Alaska.

And voters aren’t liking that this year. The Appropriations Committee is being decimated. Robert Bennett, many others are losing from that committee. So, people want a more — we don’t want the pork anymore. We just want no spending, and at least in the Republican primaries.

JUDY WOODRUFF: And…

MARK SHIELDS: This will be a real test, Judy, because Alaska gets $6 from the federal treasury for every $1 it sends to Washington. And that’s how politicians have lived up there, Don Young and Ted Stevens, over the years. And it will be fascinating, I mean, whether in fact that Joe Miller, who is on that side, as David says, against federal spending, whether in fact he is going to be outspoken on saying, we don’t want Washington’s money anymore.

JUDY WOODRUFF: But, again, in Arizona, David, no surprise that John McCain held off J.D. Hayworth…

DAVID BROOKS: Yes, although, if you had asked me six months ago, was I sure? No. And I think smart people were not sure. And I think there were a couple factors that went into that. McCain was really aggressive. He didn’t take anything for granted. He ran against J.D. Hayworth before Hayworth even started. Hayworth, as we knew, was a flawed candidate, hurt very badly by an infomercial he did saying, “I can get you some free money from Washington,” which is not what the Tea Party people want to hear.

And — but McCain was a sign that, if you are an establishment candidate, and if you run hard, and in some ways not necessarily true to your best self, that you can win this thing. And he just campaigned hard and won.

MARK SHIELDS: He didn’t run on his record. He ran…

JUDY WOODRUFF: McCain.

MARK SHIELDS: John McCain — which is an interesting record over the years. He instead chose to run on J.D. Hayworth’s flaws, fables — foibles and shortcomings. And it was a target-rich environment.

JUDY WOODRUFF: Well, speaking of the Tea Party and Sarah Palin, Glenn Beck, David, is holding a rally in Washington this weekend. It happens to be the anniversary of Martin Luther King’s “I Have a Dream” speech. They are having it at the Lincoln Memorial.

This is all about restoring honor. Sarah Palin is going to speak. What do you expect?

DAVID BROOKS: Well, the question will be whether Al Sharpton is going to be there with a group, and how many people find it extremely distasteful that he is doing it on this day, on that site. You know, one of the things to me, though, that I’m beginning to think more and more about is sort of the demographic chasm between people in the Tea Party movement and who they perceive as the elites, and they feel that both parties, the media, all of Washington and New York, is controlled by people with a tiny sliver from America, of highly educated, more affluent, and that those people feel completely unrepresented by the entire system.

And so there is a political element, which we have talked about a lot, an economic element, an anti-government element. But there is also a class element in this. And that has the potential, I think, to get much more nasty and long-lasting, if that class element is really there. And, frankly, I think there is some basis to it. I do think a lot of people in the country look at a lot of people in Washington and say, those people are not me. And that’s one of the newer themes I will be looking for. I’m going to try to go tomorrow and see what it is all about.

JUDY WOODRUFF: You are going to go? Is that what you’re saying?

DAVID BROOKS: Yes, I’m bringing Mark with me. I’m going to…

MARK SHIELDS: No, I plan to go. I disagree with David in this sense, that I think that the Tea Party is really a nation apart. I mean, nationally, Americans were asked, how do you feel about Barack Obama personally? And this is David’s own paper’s poll of Tea Party members and the general public.

And they were 3-2 favorable on Obama, his personal qualities, and 88-7 unfavorable among Tea Party members. And they — Glenn Beck is 10-1 their hero. I mean, he’s a figure who gets very middling and divided feelings in the country.

And I just — I think that, tomorrow, the test will be — there’s only two speakers of really national prominence, Glenn Beck and Sarah Palin — will be the optics and the atmospherics of this, as much as anything else, not that either one of them is going to say anything that schoolchildren will be learning and reciting a generation from now, like Martin Luther King did.

But I think it will be whether, in fact, there will be the signs, whether there will be the buttons, whether there will be the disparaging and sometimes racially charged placards that have showed up at other Tea Party events. I hope it is not the case. They are trying to prevent it. They have said there will be no guns there, which is reassuring. That’s — that — so — and would be in violation of Washington, D.C., law anyway. But — so I think it is — I think it is important. But I think this is a group apart. And to the degree that it becomes the face of the Republican Party in 2010…

JUDY WOODRUFF: And they say they want to take over the Republican Party.

MARK SHIELDS: I think poses problems. I mean, I think it has posed a problem already. It’s provided great energy, but it’s nominated some candidates who frankly, in races they should win, their electability is open to question.

DAVID BROOKS: I was at the rally last year, and it was a family atmosphere. It was a nice atmosphere, actually. But the question, will they hurt the GOP by moving so far to the right, I think there is a case in Nevada, the Harry Reid-Sharron Angle Senate race. I think there is some evidence that they have done that there.

Is there broader evidence around the country? Haven’t seen it yet. The Republicans are still looking pretty good for the fall. So, it hasn’t happened yet, I don’t think.

MARK SHIELDS: Colorado, I think, may be an example…

DAVID BROOKS: Maybe.

MARK SHIELDS: … where there might have been a great Republican shot that doesn’t turn out to be that, in the governorship in particular.

JUDY WOODRUFF: Well, the two of you are looking pretty good, to pick up on what David said.

(LAUGHTER)

JUDY WOODRUFF: Thank you for being back, for being here, and coming back. And we will see you next week.

DAVID BROOKS: OK.

JUDY WOODRUFF: Thank you.

MARK SHIELDS: Thank you.