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Shields, Brooks on Campaign Ads, JPMorgan Losses, Debt Ceiling Debate

May 18, 2012 at 12:00 AM EDT
Syndicated columnist Mark Shields and New York Times columnist David Brooks discuss the week's top political news including a recent Obama campaign video that tries to debunk Mitt Romney's job creation claims, JPMorgan Chase losses and the expected renewal of the debt ceiling debate.
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JEFFREY BROWN: And now to the analysis of Shields and Brooks, syndicated columnist Mark Shields and New York Times columnist David Brooks.

Welcome back.

A few things bubbling under the surface of the campaign this week. I want to start with one, which was the focus on Mitt Romney and his experience at Bain Capital. Ads come out, competing narratives of that experience.

Mark, why the focus on that?

MARK SHIELDS: Well, you’re Barack Obama, and the economy is the dominant issue, economy and jobs, and Mitt Romney has better scores on the economy than you do.

So you have to try and discredit or disqualify him on his economy credentials. And the irony is you have got two candidates in this race, both of whom are running away that from their signal legislative achievements of their career, health care.

(LAUGHTER)

MARK SHIELDS: So, what you have got is Romney wants to talk about he’s a turnaround specialist. And what — the Obama campaign is saying, well, wait a minute, this isn’t all about creating jobs. It’s about creating profit. Sometimes creating profit means losing jobs.

JEFFREY BROWN: So they focused on this Kansas City steel company.

MARK SHIELDS: They want to establish that this wasn’t just an economic — without some pain and without some price.

JEFFREY BROWN: What do you see in the focus on Bain Capital?

DAVID BROOKS: It was pretty similar to the ads Ted Kennedy ran against Romney where they got the unemployed people and said this guy’s a vampire, he destroyed our company.

I personally think the ads are 80 percent unfair. This was a company. . .

JEFFREY BROWN: The Obama ad.

DAVID BROOKS: The Obama ad against the Bain activity and this steel company are mostly unfair.

This was a company that was on the way down. They had no other buyer. Bain comes in, buys the money — buys the company, puts in $100 million. They hang to it for eight years, so it is not like they are just dumping it, and then the thing ends up folding anyway.

And so I think it was a legitimate business transition, an attempt to make a success. The 20 percent that’s accurate is that they did load it with a bunch of debt. And Bain — even though the company went down, Bain did okay. And so that part, they are right about. But it gets into a larger argument about creative destruction, that we have had this. . .

JEFFREY BROWN: And what capitalism is, right?

DAVID BROOKS: Really a ruthless pruning on the part — especially pats of the economy that are globally competitive, manufacturing, high-tech.

And it’s involved tremendous productivity gains, but also tremendous layoffs. And so it’s perfectly legitimate for to us have a debate about that, in part, I think because Mitt Romney and a lot of Republicans see that churning as the model for the whole economy. And so that’s a legitimate thing to talk about.

JEFFREY BROWN: That a big debate about what capitalism is, right, but how does it work politically?

MARK SHIELDS: But it is one that Mitt Romney has chosen not to make. Mitt Romney has sold us about Staples, a success. He helped this company. And Sports Authority and the jobs, 100,000 jobs.

If you are going to say I have created 100,000 jobs, I mean, the people who got hurt were the workers. I mean, the officers didn’t. The officers of the company didn’t. And Bain didn’t. So, I mean, this reflects a value. I mean, is it going to be decisive? No.

But if you are the president of the United States and the economy is the top issue, and you are running behind, you better make sure that the guy on the other side doesn’t appear as a just totally faultless tribune of this position.

JEFFREY BROWN: Now, speaking of the nature of capitalism, another thing we learned this week is JPMorgan Chase, the largest bank, loses at least $2 billion and now it’s probably more like $5 billion, right? Brings up all the focus on did the banks not learn a thing from the financial crisis and did regulation do anything and is more needed?

DAVID BROOKS: Well, I don’t think regulation is more needed. I think parts of regulation are more needed, but not to regulate failure.

Companies are allowed to fail. People are allowed to be stupid. And they lost $2 billion or $5 billion. That’s being stupid. They pay the price, the head of the investment strategy out. And that’s the way capitalism is supposed to work. That’s how you chase in companies.

Where we have a public interest — the idea of getting regulators involved and telling them, no, you can’t make that hedge, you can’t make that bet, you can’t make that investment, that seems to me a recipe for disaster. Where we do have a public interest is making sure when people are stupid, they don’t bring down the whole system.

And so making sure the capital requirements are high enough, that seems to me perfectly legitimate. But regulating within companies, and what bets they can do and hedges and upping the regulation in that sense seems to me completely wrong.

JEFFREY BROWN: What do you see, Mark?

MARK SHIELDS: I disagree.

I mean once you’ve got these banks that are insured by the public, as they are, and the Volcker rule, which is very straightforward, endorsed by five secretaries of the treasury, which says with these deposits, you can’t get into speculative enterprises, and expect that you are going to be bailed out.

And I think there’s an overwhelming public interest here. You know, I think Barney Frank had some legitimacy today by saying they’re complaining about the cost of applying and complying with the Dodd-Frank law, the banks are, saying it’s $400 million or $600 million, and they’re talking about losing 10 times as much.

And so I think there is a public interest. I stand in awe of the fact that none of these guys has walked into the bar of justice and what happened to this country, what they did to this country?

JEFFREY BROWN: Well, you say there is a public interest. Is there public interest in this? Does it play as a political matter when something like this happens?

DAVID BROOKS: Well, I think it’s part of the big debate we’re in the middle of.

And Joe Biden, the vice president, gave a speech where he talked about finance capitalism. He emphasized we have got to get back to making things. And so it was the good capitalism where the guy is out with a hammer, and the bad capitalism, these cowboys running around with credit default swaps.

JEFFREY BROWN: I was with Secretary Geithner yesterday in a Baltimore factory, and that was the emphasis, making things.

MARK SHIELDS: Manufacturing.

JEFFREY BROWN: Yes.

DAVID BROOKS: And so I guess we’re going to have this debate.

I think it is a completely bogus distinction.

JEFFREY BROWN: Why?

DAVID BROOKS: How do factories get capital? They get them through the capital markets.

Now, I’m not crazy with al the derivatives and credit default swaps. I’m certainly not crazy about the way people are compensated on Wall Street. But having the best capital market in the world is why we have a successful manufacturing sector. And the idea of separating the two seems to me economically illiterate. I understand politically why you want to do it, the wholesome guy with the hammer vs. those rich Wall Street guys.

But it seems to me economically illiterate. Nonetheless, it’s part of the big debate we’re having about modern capitalism, which is a service sector. We have a service economy. This is the other problem with the Obama strategy. They talk about manufacturing. We have a strong manufacturing sector. It happens to be 10 percent of employment. We are a service economy, and we have to have a strategy for a service economy.

MARK SHIELDS: I come back to the belief that we have to make something in this country. And are finally starting to make something. And I think that is important.

In answer to your question, Jeffrey, about is it — does it have political saliency, there is no question that President Obama’s message about fairness, about playing by the same rules, about everybody having a fair shot plays far better as a message in these times and situations like this than does Mitt Romney’s, which is sort of a back to the future, we need less regulation, less government, smaller involvement. And I think, in that sense, the advantage goes to Obama and the Democrats.

JEFFREY BROWN: Okay, another event this week is the beginning bubbling up, dare I say it, of the debt ceiling debate again, the debate that got kicked down the road, right, last year.

Was this, David, posturing or is there a real possibility of debating it during the campaign?

DAVID BROOKS: Well, it was posturing. This is Boehner saying he was drawing a line in the sand, saying, no new tax, we’re going to demand real spending cuts.

But I think was really more mobilizing the base. What happens, as everybody probably knows, is after the election in December, they have what we call Taxmageddon, where all these tax cuts, that all ends, a lot of spending sequestration starts. We really have a bunch of things all happening at once. And it is a potential for a complete catastrophe because the whole system goes kablooey.

And we are going to have to fix these things, deal with all these incredibly complicated issues at once. And the Republicans are saying, we are going to do fundamental tax reform. I happen to think they are right. Last time, it took two or three years. How are we going to do it in a couple of weeks?

JEFFREY BROWN: Right.

DAVID BROOKS: And so I think what they are going to end up doing is kicking the can down the road.

JEFFREY BROWN: Again.

DAVID BROOKS: Again. And then we will see how the election turns out. But right now, everybody is posturing to say this is what we stand for. We stand are for spending cuts, or, in the Democrats’ case, we stand for keeping the middle-class tax cuts, but not the rich.

JEFFREY BROWN: What do you think this was all about this week, raising it. . .

MARK SHIELDS: I think it was all about Republican politics and I think it was incredibly stupid.

John Boehner is a savvy politician, an able politician. I think Republicans are looking at election results. They see a Lugar go down in Indiana to Mourdock. They see Orrin Hatch, who has recreated himself as a new conservative in the contemporary mold, barely holding on.

Deb Fischer upsets the Republicans and the conservative establishment in the Nebraska primary with Sarah Palin’s endorsement. So they’re looking over their shoulder. This is what got the Republicans in the problem they’re in. Last August, and that deal, they’ve never recovered from it, as a negative.

Interesting. David had a piece which you pointed out that in the contraception argument with health care, that the Democrats’ support for President Obama had fallen by eight points. The bishops, Catholic bishops have become the Republicans’ new best friend.

So by raising this issue, the Paul Ryan budget, which cuts aid to the disabled, which cuts aid to immigrants’ children, which cuts aid to the elderly, and to the — those victims of abuse, the Catholic bishops came out and said, this violates the moral code. This is a violation of our belief in common ground and common good.

And so they are alienating the Catholic bishops. I mean, it makes no sense, other than politically within the Republican Party.

DAVID BROOKS: I do agree with that.

The message plays within the Republican Party, 28 percent of the country. It doesn’t play outside. And in places like California, where — I mean Pennsylvania, where you have a lot of Catholics, they are really enjeoparding whatever little chance they had.

JEFFREY BROWN: All right, just a couple minutes here, and I want to get to the last story. It’s sort of a non-story story, right? This is the group of Republican political operatives. And they propose an ad, an ad campaign, right, that would tie President Obama to Rev. Jeremiah Wright, as almost happened four years ago.

And then it quickly gets disavowed, right, by Mitt Romney and others. What was that about? Does it tell us anything about the campaign?

MARK SHIELDS: It tells us first of all about greed. I mean, this was a greedy proposal. It has no political saliency to it. The issue of Rev. Wright was litigated in 2008.

President Obama gave the most popular and perhaps the most persuasive speech of his career in rebuttal to it. And in the past four years, people have seen him go to St. John’s Church and other places and so forth. So in that sense, it is playing only to the conspiracy nuts and those who are convinced that he is either from Mars or Venus or Kenya.

So it really made no sense. It particularly made no sense when Mr. Ricketts, the owner of the Chicago Cubs, who was going to spend $10 million against President Obama while he is asking the people of Chicago to refinance the refurbishing the Wrigley Field, the home of the Cubs. This is a guy who just slit his own throat by doing this.

DAVID BROOKS: And the campaigns are losing control of their message with all these different facts.

MARK SHIELDS: Absolutely.

DAVID BROOKS: And Romney, you can see how strongly he reacted. And Mark hinted at what is driving this.

The consultants get paid by the amount of ads that are taken out by these rich guys. And so they have an incentive to try to pump it up in ridiculous ways, and this was an example of that.

JEFFREY BROWN: Do you think we are going to see a lot more of that?

DAVID BROOKS: I think it’s going to be one of the stories of the campaign.

JEFFREY BROWN: All right.

Mark Shields, David Brooks, thanks, as always.

MARK SHIELDS: Thank you.