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Shields and Brooks on Economy’s Moves, Obama’s Trip

April 3, 2009 at 6:40 PM EST
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Columnists Mark Shields and David Brooks weigh the news of the week, including what new unemployment numbers say about the economy, tough talk on the auto industry and President Obama's trip to Europe.
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JUDY WOODRUFF: And to the analysis of Shields and Brooks, syndicated columnist Mark Shields and New York Times columnist David Brooks.

Really interesting report just now by Paul Solman. Let’s talk about the economy. Mark, there are some economists who are going around now saying maybe we’re seeing the bottom of this recession, maybe there are a few glimmers of hope. And then you get these terrible unemployment numbers today.

What are people to believe?

MARK SHIELDS, syndicated columnist: Well, I think the real test always is unemployment. That’s been the standard in the United States. In Germany, it’s been inflation, was their seminal experience as a nation economically. It’s unemployment in this country.

And what we’re seeing, Judy, is the unemployment continuing unabated. I mean, just take, for example, manufacturing jobs. Since Ronald Reagan was president, the United States has lost 6.9 million manufacturing jobs.

Now, manufacturing jobs are not only highly paid, they provide benefits, they provide health insurance. That’s over a third of the total manufacturing jobs we had. And those are concentrated in the Midwest of the country, in states like Michigan and Ohio and Indiana.

And the fear is that we will not return to normal unemployment, what’s considered normal, 5 percent, for four years. And, you know, there are isolated encouraging signs, like factory orders being up or house sales improving. But the unemployment numbers just continue, continue.

JUDY WOODRUFF: How do you see it?

DAVID BROOKS, columnist, New York Times: Well, it’s the most concrete measure of how people are reacting to the recession, how they’re being treated. But it’s not the best predictor, as we’ve heard.

And I’ve spoken to economists within the administration who think that, for a few months, we really had a sense of freefall, and now we’ve sort of hit the curve. And so the question is, does the curve come up V or does it stretch out? Nobody expects a V, but is it a U or a really elongated U? And nobody really knows the answer to that.

But there is a sense that — I think there’s a little growing optimism on Wall Street. And I would say, if you measure the economics community, there’s certainly an increasing optimism there. There’s increasing optimism in the White House, but that will not affect the unemployment rate.

I happened to have a meeting with the head of state from another country whose economists study the U.S. economy very closely. And we said, “What do you honestly think the unemployment rate will top out at here?” And he said, “Oh, well over 10 percent.”

So that’s a long stretch. And I’ve heard much longer than four years before we get back to sort of the natural unemployment rate.

MARK SHIELDS: Well, and the other thing — we saw it in Paul’s piece — is that we’re seeing not simply companies laying off workers, freezing payments, stopping 401(k) contributions, cutting back on hours, forced furloughs, reduction in salaries.

So, I mean, the unemployment is the most dramatic and certainly the most human number. And what’s interesting is, it’s really hitting men. Men are being laid off in greater numbers than women. I mean, women don’t…

JUDY WOODRUFF: Which is a new thing.

MARK SHIELDS: A new thing, and women don’t earn as much, obviously, as men have. But there’s a potential for sort of an explosiveness here in the social order with men.

DAVID BROOKS: I think that is the crucial question, because first it’s hitting men. It’s hitting people with high school degrees. And I think we heard about that earlier in the program. I think I read today the college grad unemployment rate is about 4.5 percent. So it’s really hitting people without that.

And then the final thing to be said is, it’s not elastic. We don’t come back to the economy we had before the recession. The jobs that are being lost, a lot of them are gone forever and their sectors are gone forever.

And so the economy that emerges after a recession is totally different. And so the question will be, what political effect?

And in Europe, they have mass marches already. We don’t have that here yet. But they have mass marches sort of without a political agenda. But if we have a couple years like that, an agenda will emerge.

Obama's strategy on bailouts

David Brooks
The New York Times
Yes, this is my problem with the auto -- the Obama auto approach. I think they did a very rigorous and honest analysis of where the industry is, but they've hyper-politicized it.

JUDY WOODRUFF: Well, speaking of this fairness thing, and referring back to the Paul Solman piece, Mark, the Obama administration moved aggressively this week against the automakers. They set down some requirements. They forced out the CEO of General Motors.

But some people are asking, should they be doing the same thing with the CEOs of the banks, which have gotten even more money?

MARK SHIELDS: More money and have not been held to the same standard. I think that Rick Wagoner, the head of G.M., and certainly G.M. had made enormous mistakes and errors in judgment under his leadership, had gone -- stock had gone from over $70 a share to under $3. They stuck with the big SUVs and the big trucks for too long as gas prices came up. And their product was not regarded highly in the market until the Malibu of 2007.

But that said, Judy, I think the reality is that he became the Tom Daschle of the Obama administration.

JUDY WOODRUFF: Wagoner, G.M.?

MARK SHIELDS: Wagoner did. I mean, recall when Tim Geithner was nominated for secretary of treasury and he had tax problems. And he got a pass. I mean, OK, settle the bill.

But Tom Daschle was next. And when Tom Daschle came up, there was no pass to be given him, and he fell as secretary of health and human services.

In this case, Judy what happened was the administration botched AIG and the bonuses. They let the bonuses go forward. It ignited a populist prairie fire in the country. And I think that there was a need to show toughness and sternness in dealing with corporate. I think G.M. became, you know, the logical place to show that.

DAVID BROOKS: Yes, this is my problem with the auto -- the Obama auto approach. I think they did a very rigorous and honest analysis of where the industry is, but they've hyper-politicized it.

When you get a politician, the president, and a political party, the Democratic Party, not only firing a CEO, but picking winners and losers. G.M., we're going save you. Chrysler, sorry.

But also rendering opinion on individual cars -- the Chevy Volt is too expensive -- and then inserting themselves into the service warranty, that's a politicization of the auto industry without nationalization. So you've got them without really control of the industry, heavily politicizing it.

And to me the fear is you will have a process over the next several months which is going to be just a terrible process, with lots of plants closing, politicized.

So people will go to their senator, to their president, to Democratic Party donors, and say, "Don't close the plants here." And if those decisions are made on a political basis, that will just prolong the pain. So I thought they made a mistake in making it so political.

Assessing the G20 meeting

Mark Shields
Syndicated columnist
And let's be very blunt: [President Obama] does benefit from still being contrasted to his predecessor, and this is a stark contrast.

JUDY WOODRUFF: Meanwhile, the president -- let's talk about this week. The president is overseas, Mark. The G-20 meeting, economic summit. Didn't get everything he wanted, but he seems to be wowing the crowds. How would you sum up?

MARK SHIELDS: Well, I mean, the president went in with certain disadvantages. I mean, there were questions about his foreign policy credentials, which were pretty scarce. There were questions -- brand-new president, question of the United States being responsible for the financial turmoil and chaos in the world, that he was going to bear that burden, that he has a Afghanistan policy that an awful lot of people are paying lip service to, but very few want to pick up rifles and support.

You know, so I think that -- and probably the greater disagreement among the participants at this meeting in 50 years of the -- and the need to get something done.

And I think that, on all counts, he more than surpassed. He has a great advantage, which...

JUDY WOODRUFF: More than surpassed expectations?

MARK SHIELDS: More than surpassed expectations. I mean, he's a great listener. And, I mean, everybody, even those who disagree with him, say he's a great listener. He listens. He comes back and asks you questions. I think it worked very well.

And let's be very blunt: He does benefit from still being contrasted to his predecessor, and this is a stark contrast.

JUDY WOODRUFF: He had some pretty remarkable things -- among other things, David, you know, he said, "The era of the U.S. trying to dominate world affairs is over."

DAVID BROOKS: We'll see. That's easy to say. But the fact is, the U.S. is going to throw its weight around as the U.S. always does.

And the fact is that, on substance, as Mark said, this was not a substantively successful process. On Afghanistan, really no working together. We wanted a big stimulus package, which I think the Europeans absolutely need to do. I think their economies are in worse shape than ours. And yet they don't want to do it; they don't think this stimulus will work.

On financial regulations, the Europeans want one global architecture. We're for some increased regulations, but not with a global architecture, so there was a dissensus there. On those three big subjects, dissensus.

Now, that could have led to catastrophe. It was saved by Obama personally, by being a tremendous presence there, by being tremendously popular, and by being tremendously thoughtful and intelligent in the way he dealt with people.

So, in that sense, it was a diplomatic success, but it was still based on fundamental disagreements which were covered over, but were not solved. And I think the big one is the stimulus package.

If this economy keeps going downhill, and a lot of European economies are in worse shape than ours, then somehow we've got to try to get them to buy into the stimulus idea, assuming it does begin to work here.

JUDY WOODRUFF: But you don't think the substantive outcome that you were talking about was pretty much foreordained, given where everybody is coming from?

DAVID BROOKS: Well, but I'm pointing to the underlying friction in the relationship, that we still do have fundamental disagreements. Now, they did surpass expectations on working with the IMF, on helping emerging markets, and that was a genuine success.

Legislative agenda

David Brooks
The New York Times
To me, the interesting thing is what the moderate Democrats did, which was, I think, essentially gut cap-and-trade. We will probably not have cap-and-trade, the central anti-global warming initiative, any time soon.

JUDY WOODRUFF: Two quick things. The budget, the House and the Senate last night passed the Obama budget blueprint, not a single Republican vote. What does this say, if anything, about what the president faces?

MARK SHIELDS: I think it's a natural vote for the Republicans to vote against the budget. I think it's not only historic, it was going to be a Democratic -- it generally is a party-in-power responsibility.

I don't think bipartisanship is dead. I think you'll see it on health care. I think the possibility of an overwhelming majority in the Senate passing and backing health care. I think you'll see it elsewhere, as well.

But I think, on this issue, the Republican Party, quite honestly, is going through an identity crisis. They lost their brand as a small government party. They lost their brand as fiscal responsibility. And they're trying to get it back.

And I think one way of doing it was to draw a line between themselves and the president's budget.

JUDY WOODRUFF: Bipartisanship not dead?

DAVID BROOKS: Yes, I agree with that. I think bipartisanship is in bigger trouble than Mark does, maybe, but Republicans want to establish they're fiscally conservative.

And Obama created a budget which will create $6.5 trillion in deficits over the next -- or increase deficits in the next 10 years or so. So that, to me, is a dangerous budget.

To me, the interesting thing is what the moderate Democrats did, which was, I think, essentially gut cap-and-trade. We will probably not have cap-and-trade, the central anti-global warming initiative, any time soon. They took a lot of the revenue.

JUDY WOODRUFF: This is putting a tax, in essence, on the use of carbon?

DAVID BROOKS: On carbon emissions, creating a market in carbon emotions.

MARK SHIELDS: I think you're right.

DAVID BROOKS: And we will probably not have taxes on charitable deductions, which Obama wanted to raise. So a lot of the revenue streams have been taken out. On the minus side, or on the revenue side, I mean, on the outlay side, they took away the entitlement for Pell Grants, and so they shrunk things back.

Stevens' case thrown out

Mark Shields
Syndicated columnist
I think [Eric Holder has] done the right thing. Ted Stevens will not return to the Senate. Mark Begich will be the senator from Alaska.

JUDY WOODRUFF: Finally, less than a minute, Ted Stevens, the entire case against him thrown out by Attorney General Holder. What's going on? What does this say?

DAVID BROOKS: Well, prosecutors I guess are human and behave badly. And, you know, they did not release the forms they should have released.

There is a move in Alaska to get Ted Stevens reinstated. And the tragedy of this is suddenly it gives you the impression that Ted Stevens was innocent of all this stuff, which I personally do not believe. And so that's one of the tragedies of this prosecutorial misconduct.

MARK SHIELDS: Eric Holder has laid down a marker that, "We won't do this, that we will not" -- I mean, it's sort of a disappointment that Michael Mukasey, his predecessor, the judge and attorney general, did not step in himself and make that decision.

But I think he's done the right thing. Ted Stevens will not return to the Senate. Mark Begich will be the senator from Alaska.

JUDY WOODRUFF: But both of you will return, Mark Shields...

MARK SHIELDS: If you invite us, Judy.

JUDY WOODRUFF: ... and David Brooks, thank you very much.