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Shields and Brooks Mull Economic Woes, Obama’s Plans

February 20, 2009 at 6:40 PM EDT
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Columnists Mark Shields and David Brooks discuss the week's news, including reaction to President Barack Obama's economic recovery efforts and what role the government should take in easing the financial crisis.
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JIM LEHRER: Finally tonight, the analysis of Shields and Brooks, syndicated columnist Mark Shields, New York Times columnist David Brooks.

David, there was much discussion in the first conversation that Jeff had with those four folks about the issue of trust — that is, the lack of is now driving a lot of the public thoughts about what’s happening, not only in the governmental level, but all through this entire economic situation. Do you agree with that?

DAVID BROOKS, columnist, New York Times: Yes, I do. We call it an economic crisis, but it’s a psychological crisis. People don’t have trust in the banks; the banks don’t have trust in each other. But primarily people don’t have trust in the future. And if you don’t have trust in the future, why should you invest? Why should you spend?

And the problem is there are very few people — maybe Dan Ariely was on the segment as one of those few people — who understands how to marry economics and psychology. So we’re pulling a lot of economic levers, but if you don’t have any psychological trust, people will not spend, they will not invest. You’re just pushing on a string.

And so how you deal with that is really the tough political question. And so one of the things we don’t know, for example, is, we’re spending trillions of dollars trying to get the economy out of this mess. But when the president is so downbeat, how much does that just scare people and counteract the spending? That we just don’t know.

JIM LEHRER: And Bill Clinton, former President Clinton, we had it in the news summary, said on ABC that President Obama — he essentially said President Obama needs to be more optimistic, he’s too downbeat, has been too — has told the truth, but it’s not working. What do you think?

MARK SHIELDS, syndicated columnist: Well, President Clinton did, as well, salute him for not happy talk and just saying, “Everything is OK,” by any means. And if the president did that, there would be people seriously questioning his sanity and rationality.

I mean, I think you have to acknowledge, because people confront it in their daily lives, just how serious and grave the situation is. And I…

JIM LEHRER: That’s a hard line to walk, though, is it not?

MARK SHIELDS: It is a hard line to walk. And I think — but I think President Clinton was on to something in this sense, Jim. If you think about Franklin Roosevelt, John Kennedy, even Ronald Reagan, there was about them a contagious optimism, even, in many cases, in the darkest of hours.

And confidence is the child of optimism. Americans are, by actual measurement, have been, the most optimistic people on the face of the planet.

This didn’t just happen. I mean, all throughout 2008, three out of four Americans believed that their children’s future lives would not be as bright as their own had been. That was a sea change in American attitudes. So the president is dealing with that.

But I do agree that there has to be a sense that, look, we are — Americans rebuilt a war-devastated Europe. Americans rebuilt a devastated Japan. We can do it.

I mean, it required all of us. It’s going to require every shoulder to the wheel, but we can do it. It’s a serious, tough mission we’re on, and I think he has to communicate that.

DAVID BROOKS: Yes, I’m sort of torn. I am completely seized with the idea that the economy is in terrible shape and the government has to take dramatic action, but does the government have the carrying capacity to actually know how to fix the economy?

I’m totally not convinced the government knows how to do that. But Larry Summers is very smart. Peter Orszag, the budget director, is very smart. Tim Geithner is very smart. But do 10 guys sitting around the White House — and, believe me, they’re barely staffed over there — do they know how to build, first, a banking plan, then a housing plan, then an auto bailout, soon a health care plan, next week an energy plan?

Do all those guys sitting around know how to create these plans? Can they rationally and technocratically plan those things and actually get us out of this mess? That’s the central tension, the need for some sort of salvation, but skepticism — and I would say proper skepticism — that you could plan that kind of salvation from the center.

Litany of issues face Obama

Mark Shields
Syndicated columnist
What he's facing every day is usually enough that would occupy a president in a whole first term ... he had the economy last week, the housing this week, the banking is still there, health care on top of everything else.

JIM LEHRER: But you all are saying -- are you saying, Mark, that the American public needs to believe that...

MARK SHIELDS: Needs...

JIM LEHRER: ... that it is possible for all these folks that David just outlined to get this thing done?

MARK SHIELDS: Not that they can do it. Not that they can do it.

JIM LEHRER: OK.

MARK SHIELDS: But that they can create and help to repair the institutions that are -- that we can unleash that American capacity again. And not sounding too chauvinistic or jingoistic, but, I mean, the American -- the American imagination, the American risk-taking, all of which have been hampered by the conditions that the president has inherited. I mean, David just did the litany. I mean...

JIM LEHRER: Look at all those things that have happened.

MARK SHIELDS: ... what he's facing every day is usually enough that would occupy a president in a whole first term. I mean, just the auto, which is now based on page nine of most newspapers. He had the economy last week, the housing this week, the banking is still there, health care on top of everything else. Iran is messing around; North Korea is threatening the war; Israel is about to elect a right-wing government. I mean, you know, really, every one of those is a headache of migraine proportions.

DAVID BROOKS: I don't think a right-wing government is automatically equivalent to a war and a headache. There could be good right-wing governments.

JIM LEHRER: In general terms.

DAVID BROOKS: It's within the realm of imagination. I mean, the other thing I'd say is that...

MARK SHIELDS: I tried to sneak it by you.

DAVID BROOKS: You have to understand -- who's going to make the decisions? And how are the decisions made? When America has done all these great things, but a lot of that has been through the process of the market, this feeling around and feeling our way toward innovations -- some things work, a lot of things fail -- the question we're faced with now is, government is the only show in town. The government is sort of at the center of the economy. And to plan...

JIM LEHRER: No question about that now, is there?

DAVID BROOKS: No, I don't think there's any question about that, at least for the next year or so. And can, you know, the government planners, of whom there are very few, do they understand or can anyone understand how to solve this problem?

As I look at the economic debates, I'm struck by the fact that we really don't know how the Great Depression happened. We have no consensus on how much the New Deal actually helped or to what extent it helped. We really don't have a consensus on what caused the Japanese lost decade or why their stimulus plans didn't work.

If you're a policymaker and you're looking at the economic landscape, you see this tremendous descensus. How do you then plan that?

And when I look at what Obama calls his propeller heads, the experts around him, when I look at them, I think they're behaving basically cautiously and rationally. They're trying to make bold plans, but not the big bold plans, like bank nationalization.

But what they come out with as a general rule is a series of very complicated plans, which change incentives in a thousand ways, which doesn't offer immediately psychological comfort, because there's not one big thing.

Auto industry's fate in limbo

Mark Shields
Syndicated columnist
I do think that there is a sense in the country of wanting. I mean, the president is the commander-in-chief. He's the teacher-in-chief. He's the preacher-in-chief. But to some degree, he also has to be the psychologist-in-chief, as well.

JIM LEHRER: Well, for instance, we talked about it before, but it's there again, and it will always be there, is the auto industry problem. Both General Motors and Chrysler came up with plans this week. And Geithner and Summers are now going to look at it with their folks and decide whether this is going to work or not.

I mean, that's a huge thing to have somebody on -- to have on their table, is it not?

MARK SHIELDS: It is. I mean, and it would take the better part of three months of the most able people you know to deal with it and come up with that decision, and they've got to do it in a hurry, I mean, by next month. We're talking about 5 million jobs.

JIM LEHRER: And neither -- neither of those two people or most of the people involved -- which is, of course, your point -- have ever run an automobile company before.

DAVID BROOKS: I'd even say -- it's not only three months. You give them 30 years, they could still fail. The auto executives have had 30 years; they've still failed. And they're plenty smart.

JIM LEHRER: I think we're going to depress ourselves a lot more if we keep talking this way.

MARK SHIELDS: No, I do think that there is a sense in the country of wanting. I mean, the president is the commander-in-chief. He's the teacher-in-chief. He's the preacher-in-chief. But to some degree, he also has to be the psychologist-in-chief, as well.

And if we are depressed as a people, collectively so, we won't take chances. We won't go back to risk-taking in the private sector, personal initiative, whatever. We'll play it cautious; we'll hunker down. And that is -- I don't think any economist says that's the answer.

Obama's effect on the economy

David Brooks
New York Times columnist
I do think next week will be one of the crucial weeks of his presidency, with the speech on Tuesday, with the release on the budget ... he's going to add another six huge plans onto the agenda, including health care and energy.

JIM LEHRER: What is President Obama not saying, David, that he should be saying now, that could seem sane, that could make a difference?

DAVID BROOKS: Well, I have long-time believed, and I still basically believe, that presidents have only a limited effect on the economy. And I still, even with all the spending that's going on...

JIM LEHRER: Even now they have the whole thing?

DAVID BROOKS: Yes, well, I still think you could spend -- we're going to spend the stimulus. We'll end up being, say, $3 trillion. There's a big global economy, and the money bleeds out all over the economy. I'm still not sure he can permanently turn it around.

But I do think next week will be one of the crucial weeks of his presidency, with the speech on Tuesday, with the release on the budget, because what he will have to do -- first of all, he's going to add another six huge plans onto the agenda, including health care and energy.

But, second, he's going to have to show that he's absolutely serious about getting us on a long-term glide path to fiscal health. It's easy to hand out money, which is what we've been doing, handing out free money.

He's got to convince people that, over the long term, we're not going to go bankrupt as a country, we're not going to default on their debts, we're not going to run up inflation, we do have a long-term plan for fiscal health, and that's the much more painful. And next week is going to be all about that?

Critical weeks ahead

David Brooks
New York Times columnist
I still think the policies have to do the talking. The public reaction has been mostly favorable for the stimulus package, mostly negative for the TARP. It's hard to tell so far with the housing package, and ... next month it will be health care.

JIM LEHRER: Do you agree? Is that -- next week is D-Day again?

MARK SHIELDS: Well, you could say that. David said next week is going to be a critical week. This week was a critical week. Last week was a critical week. The week after next is going to be -- yes, next week is going to be a very serious week, Jim.

You know, Mario Cuomo once said, "You campaign in poetry; you govern in prose." I would hope that President Obama, given -- because he's approached things, I think, incredibly disciplined. He's shown great decisiveness. I mean, this is a -- talk about a baptism by fire. I mean, politically and intellectually, he's been incredibly decisive. I would urge him...

JIM LEHRER: You mean in going through all of these...

MARK SHIELDS: All of this so far...

JIM LEHRER: ... specific plans and...

MARK SHIELDS: I just think -- I think it's really been remarkable that -- I mean, we haven't heard stories about him blowing up and chewing out aides or whatever else. I mean, the pressure has to be enormous.

But I would just say that, in the poetry to the prose, I'd return a little bit to the poetry of the campaign. I mean, he did evoke great response with, "Yes, we can." And I think it is time to remind Americans what we have done, that we are the children of heroic people. We have an enormous, enormous legacy. And that, if we do pull together, we can do it.

And I think -- I really think -- David says that not sure what we're doing with the economy, I think Franklin Roosevelt psychologically convinced the American people that things were going to get better and they could be better. And whatever one says, the unemployment rate went from 25 percent to 9 percent. And that was a change; that was a remarkable change.

JIM LEHRER: David?

DAVID BROOKS: Yes, I still think the policies have to do the talking. He's released a series of policies. The public reaction has been mostly favorable for the stimulus package, mostly negative for the TARP. It's hard to tell so far with the housing package, and next year -- next month it will be health care.

You've got to walk people through the policies. I really don't think the time for campaigning is -- I think that's gone.

MARK SHIELDS: I don't mean campaigning. But I just mean the thematic. I mean, I'm not -- I'm not suggesting campaigning, you know, balloons and bunting.

DAVID BROOKS: But the style they've developed is a very technocratic, complicated style. For those of us who have all day to read about the banking plan, it's hard to understand. And somehow he's got to explain it, that in layman's terms.

JIM LEHRER: But he's been explaining it. And, as we just heard, the markets are down to an almost record low. And if that is a public response, should that be read as a public response?

DAVID BROOKS: Well, that's short term, you know. I think they're right to doubt the short-term responses even to the TARP plan, which was very sharply negative.

You know, as I say, I think the plans are basically moderate and responsible and would inspire confidence because they're not trying to totally remake the economy, but it just takes a long time for it actually to have an effect.

JIM LEHRER: OK. But that is not the emotional thing you're talking -- and the market is a real reaction to these plans, right?

DAVID BROOKS: Well, the market is reacting to a lot of overseas events.

MARK SHIELDS: Let me -- let me...

JIM LEHRER: A couple seconds.

MARK SHIELDS: ... let me just agree with David, in the sense that the market, over an extended period of time, is a great allocator of resources. It's a neurotic, hysterical daily barometer. I mean, sometimes over-reacting, under-reacting, I mean, so I don't -- let's not just genuflect.

JIM LEHRER: All right. Let's not. Goodbye.