TOPICS > Politics

Brooks, Marcus on Coming Economic ‘Chaos,’ New Recession Fears, Bain Debate

May 25, 2012 at 12:00 AM EDT
New York Times columnist David Brooks and Washington Post columnist Ruth Marcus, sitting in for Mark Shields, discuss the week's top news including Europe's ongoing debt crisis, debate over Mitt Romney's role at Bain Capital and a Congressional Budget Office warning about political decisions that could trigger another recession.

JUDY WOODRUFF: And to the analysis of Brooks and Marcus. That’s New York Times columnist David Brooks and Washington Post columnist Ruth Marcus, filling in for Mark Shields.

It’s good to you have both with us.


JUDY WOODRUFF: And what is more exciting to talk about than the Congressional Budget Office?

So, this week , there was a sobering report from the Congressional Budget Office, David, in which they warned the country could land in another recession if Congress does a couple of things, lets these — doesn’t let these Bush era tax cuts expire, and if there are serious cuts made in government spending.

And there are members of Congress who want both of these things to happen. So what do people think is really going to happen there?

DAVID BROOKS: Chaos, decline, apocalypse.


DAVID BROOKS: You know, it’s all going to happen. . .

RUTH MARCUS: Have a nice weekend.



No, the weekend will be fine. It is only going to happen in December. It will be after the election. And all these things come due, tax cuts, spending. All these automatic things start happening. And we hand this incredibly knotty problem on to a Congress which is unable to do the easy problems.

So dealing with a tough problem is going to be tremendously difficult. And so, is there any reason to be other than despairing?

I think there is a couple. And, again, this is silver lining land. One is, I think the Republicans have decided that what happened last summer wasn’t good for them. They have taken the country to the brink. They are a little more chastened. They’re a little more flexible on the idea that tax revenue, not tax rates, but tax revenues, should be allowed to rise, so long as the money can be thrown into the debt.

And so that is some flexibility there. But if you had to bet long-term will we do what we need to do, all these different things to get sort of a fiscal balance over the next year, I certainly wouldn’t bet on that.

JUDY WOODRUFF: Congress going to come to its senses?


RUTH MARCUS: Well, I don’t think anybody should ever bet on that.

But David said that Republicans seem chastened. You certainly couldn’t tell it from the comments of Speaker Boehner, who seems more than willing to do a replay of the disastrous, from my point of view, economically, and also disastrous politically for Republicans, replay of the debt ceiling showdown last time around , a year ago.

And what’s going to happen is, all of this Taxmageddon, as we are calling it, is going — because of the timing of it, we will probably kick the can down the road from the lame-duck, for maybe six months into the next Congress. And guess what? That is going to coincide with, collide with hitting the debt ceiling yet again.

So the CBO — I just — quick thing on the CBO report. CBO used the R-word, which is very, very scary, recession. If all of these things come to pass, they said, the economy would be in recession in the beginning of 2013.

JUDY WOODRUFF: Which is what got everybody’s attention.

RUTH MARCUS: Which got everybody’s attention, but in some ways, that wasn’t really the message that CBO wanted to send, because, yes, that would be a very bad outcome.

But the second thing they said is that the alternative, if you filled that entire fiscal cliff and cushioned it, and you just dug the debt deeper, the debt hole that much deeper, that would also be a terrible outcome, just later.

And so they have been begging in their very quiet-sounding CBO language, please, members of Congress, you need to both avert the fiscal cliff now and come up with a plan that markets can understand that you really have to fill the debt hole later on.

Whether Congress can manage that. . .

JUDY WOODRUFF: So — but, David, Congress this year is watching the election. Not a lot is going on over the summer. So does a warning — does something like this that is said in the late spring, does it really have an effect?

DAVID BROOKS: Yes, I think they are taking it seriously. I know the Republicans are. They take the debt extremely seriously.

And how much they want to move is a matter of internal debate. So, publicly, Ruth is absolutely right, John Boehner is lining down these stark markers. Underneath, I really don’t think those stark markers exist. I think there is some room for flexibility. There is some feeling, we need more revenue.

Now, the question is, you have got to disguise the revenue increases in a comprehensive tax reform. And the Republicans really want to do a comprehensive tax reform. They think it would allow them to secretly raise a lot of revenue, but also it would be good for the economy, it would create growth, more jobs, more tax revenues.

Democrats are — and especially the Obama administration — a lot less persuaded that tax reform would be a great thing. They don’t think it would produce a lot of growth. They think, politically, it would be extremely tough to get rid of some of these big deductions.

And so it’s very interesting to me to talk to people in the Obama administration and hear them being very tepid on the whole idea of comprehensive tax reform.

JUDY WOODRUFF: And, meanwhile, Ruth, you have got in Europe this week, became clearer that there really are serious disagreements on what they going to do to get out of their own debt crisis.

What — is there a consensus on what effect that could have here?

RUTH MARCUS: Yes. The consensus is bad.


RUTH MARCUS: And the only question is how bad.

And that really, in a sense, though CBO didn’t talk about it in their report, that just adds to the scariness and the height of the cliff, because what happens in Europe doesn’t stay in Europe. We know that Europe seems — the European problem just seems to be like a chronic disease now that we have been living with, and Europe doesn’t seem to be getting well.

And as it’s not getting well, and you see questions about economic growth in China, all of that has an impact on growth here, or lack of growth.

JUDY WOODRUFF: Is there a clear effect of all this, David, on the presidential campaign, or is it just wait and see?

DAVID BROOKS: Yes, potentially catastrophic.

What’s happened in the last couple of weeks in Europe is that a lot of Europeans have secretly decided, OK, Greece is gone. They are going to leave the eurozone. And the question is, do they have a soft landing, where Greece goes and Greece has to deal with some problems and the rest of Europe will suffer, but not cataclysmically, or does the Greek exit precipitate a whole series of other problems, which lead to a complete collapse of the euro, which would, according to one study, produce a 9 percent drop in European GDP, which would be cataclysmic, not only for them, but for us.

It would send us back into a pretty deep recession. And so I don’t know if that is going to happen. Nobody knows how they are going to handle that prospect, but it could have a really negative, really, really negative. . .

RUTH MARCUS: And not that anybody is thinking about this in political terms, but it would have a very negative effect, obviously, on President Obama’s reelection chances. And that’s — they are watching it very, very closely.

DAVID BROOKS: Their interest is in having Europe continue to kick the can down the road, so Greece, they will leave, but it will be maybe in 2013. The problem with that is you really — you have popular unrest. You have got to reverse all sorts of agreements.

It’s more likely that Greece will go. And then that’s really a problem for Obama politically.

JUDY WOODRUFF: And, meantime, the debate continued. It’s separate, but it’s connected in a way, this debate over whether Romney’s experience running his private equity firm, Bain Capital, which sometimes did big leveraged buyouts of companies that cost jobs.

The debate continued this week, David, over whether that is a good qualification for Mitt Romney to be president or whether it says something kind of ugly about what goes on in capitalism.


Yes, I sort of think this debate hurts both candidates. I think Bain is not popular. It is not well-known. Most Americans don’t know what Bain is, but it is not popular, the idea that he was in some sort of weird consulting group. It’s not popular.

And so I do think they are exploiting it for a reason. Nonetheless, I do think hurts Obama, because it makes him look like a very conventional politician. I don’t think, if you are a liberal Democrat, you want to be seen attacking business. People may not love business. They like it a lot better than government. And they don’t want to see an anti-business Democrat.

And, finally, I just think the Obama administration — or the campaign has demeaned itself with a series of falsehoods. They released this ad which had a whole series of falsehoods. The one was that this steel company, GST, was a healthy company until Bain took it over, which the ad suggests. Completely untrue.

Second, that Romney was part of throwing people out on the street when they finally did have to close this failing company. He was long gone from Bain. And then, finally, that these private equity companies load debt onto businesses. There is a study, though, reported in my newspaper. There is no more debt, no more default in these companies than in other comparable companies.

So it’s this whole series of things which were untrue, which make Obama seem much more like a conventional politician.

JUDY WOODRUFF: So Romney is not hurt by this line of attack?

RUTH MARCUS: Well, in a sense, David is right. They are both hurt.

I think one of the reasons we’re talking about Bain for a second week in a row is that we had the experience on Sunday of the Obama surrogate New York Mayor Cory Booker, who said he found it nauseating that these attacks were coming up.

If I were the candidates, I would get together very quietly — and this is my modest proposal to them — just have a pact that whatever — that your surrogate is going to say something really dumb and damaging to you. My surrogate is going to say really dumb and damaging to me. Let’s pretend they don’t exist.

JUDY WOODRUFF: Because it’s happened on both sides.

RUTH MARCUS: Because it’s happened on both sides. And here comes Donald Trump about to — with his birtherism, about to have a big fund-raiser with Mitt Romney.

But the reality is that there’s two Obamas when it comes to Bain. There is the Obama who gave a very nuanced, a very elegant answer when he was asked about it in a press conference this week.

JUDY WOODRUFF: In a statement. He was up there at the NATO meeting, right.

RUTH MARCUS: And then — so there is nuanced Obama, and then there is jugular Obama, who talked about — even if the ad were 100 percent true, who talked about Bain as a vampire.

JUDY WOODRUFF: But isn’t the way campaigns always operate, where the candidate can be sort of above the fray and the ads can be much rougher?


But, to me, one of the major questions of the Obama campaign is — he campaigned in 2008 as an untraditional candidate. Now, he did plenty of negative ads and all that. Nonetheless, he was something very different. People were disgusted by politics could really be inspired by Obama, because it was a very different campaign.

And, privately, they would say, we’re not going run a Clinton-type campaign. We’re not going to be conventional politicians.

And so they really got a lot of independents excited. Now they are running a completely traditional campaign, literally regurgitating the exact same ad that Ted Kennedy ran against Mitt Romney. And so have they decided , we have just got to win this way? Or are they losing something?

I think they’re losing something by being so conventional.

RUTH MARCUS: I — we saw this coming a ways out. And here is why they are doing it and here’s why it is a problem for Mitt Romney as well, is, if you look at, for example, the Washington Post-ABC poll that came out this week, it had Governor Romney leading the president 58-40 among whites without college degrees in terms of who would do the most — which candidate would do better to advance their family’s economic interest.

This is a group that President Obama is never going to win, but he has to be able to narrow that gap. He’s never done well with that demographic. And this goes right at the core of the message. This man doesn’t understand your needs, is the Obama campaign message about Romney. And that is a message that could stick.

JUDY WOODRUFF: Very, very quickly, Romney did give a speech this week on education.

David, did we learn something new from that?

DAVID BROOKS: It was — I thought it was disappointing. In some ways, it was pretty normal Republican education positions, which was increase voucher, increase choice, increase charter schools.

And I think they are all fine. I think it was a step back from President Bush, who wanted to use the federal government to really leverage and create a lot more reform. And, secondly, it was just rearranging the bureaucratic boxes. We have learned a lot about education even in the last four years, about the importance of quality teachers.

What did Obama — what Romney have to say about that? Precious little. So I thought it was stale, a little.


RUTH MARCUS: Worse than. . .

JUDY WOODRUFF: In two words.


RUTH MARCUS: Worse than stale, guts No Child Left Behind, ends accountability for schools as a condition of federal aid. You should be much more disappointed.


JUDY WOODRUFF: Ruth Marcus, David Brooks, have a good Memorial Day weekend.

RUTH MARCUS: You too, Judy. Thanks.