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Presidential Aide Rove to Exit; Federal Reserve Takes Action

August 17, 2007 at 6:40 PM EST
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JIM LEHRER: And finally tonight, the analysis of Brooks and Meyerson, New York Times columnist David Brooks and Washington Post columnist Harold Meyerson, also the executive editor of the American Prospect magazine. Mark Shields is off tonight.

David, what’s your reaction to what the Federal Reserve did today?

DAVID BROOKS, Columnist, New York Times: Well, the Brooks Foundation is in better shape than it was yesterday. It’s not quite up to the Gates Foundation, but…

JIM LEHRER: How about your mortgages?

DAVID BROOKS: My mortgages, I think they’re fine.

JIM LEHRER: Oh, good.

DAVID BROOKS: No, I think once the markets go haywire, to start punishing the healthy/unhealthy alike, it seems rational they would take — the Fed would take some interest in this and do what they did.

I would just say politically — and we’ve all been curious about whether it will have political ramifications — I spent the week in Iowa going to a bunch of Democratic rallies one after the other, and I probably heard 100 questions asked of candidates. Not a single one had to do with any of this. I didn’t hear any talk of any of this.

So maybe this will have spillover effects; it certainly will, if there’s a recession. But I would say, based on that sample, so far it hasn’t had spillover effects in the political world.

JIM LEHRER: Harold, what do you think of what happened today and David’s point about the economy generally?

HAROLD MEYERSON, The American Prospect: The Fed had to do what the Fed had to do today, because liquidity was just drying up and loans simply weren’t being made. That said, there’s a downside to this, which is you end up rewarding the bad behavior that gets you into this trouble in the first place.

And I think, as my American Prospect colleague Bob Kuttner often says, you need to establish some real regulations, something that’s beyond the Fed, something that’s the work of the Congress and the administration, on what all these lending institutions can do.

That said, if a recession doesn’t happen, I think this is not a major event, but we’re far from out of the woods. There are 2 million mortgages that are up for readjustment this fall. We could see people losing their homes in large numbers. We’re at the highest volume of unsold houses in about 15 years.

So, unfortunately, this may just be act one. And if we get in a real act two and act three, then you will be getting more questions out in Iowa, I think.

Role of the Federal Reserve

David Brooks
The New York Times
You've got to have fear in the market; you've got to have discipline; you've got to have personal responsibility for people who've made unwise decisions.

JIM LEHRER: In a general way, is this what the Federal Reserve is supposed to do? Is this a legitimate act of the Federal Reserve?

DAVID BROOKS: I think so, because no one is bothered by punishing people who've taken greedy risks. You've got to have fear in the market; you've got to have discipline; you've got to have personal responsibility for people who've made unwise decisions. But as we've seen in this case and in several other cases, the markets get to the point where they begin gyrating and they begin punishing people who have not taken risks.

JIM LEHRER: The innocent.

DAVID BROOKS: The innocent, as well, and the Fed is perfectly legitimate to regulate that.

JIM LEHRER: Will you agree with that?

HAROLD MEYERSON: Yes, markets don't react; they overreact. That's the nature of markets. And what you were getting was an incipient panic, and not just in this country, but in markets all across the world, since we are now fully globalized. So the Fed certainly had to act, but that's not enough.

I mean, I think the whole structure of our financial system has gotten so intricate and risky that there are some more fundamental reforms we do need.

DAVID BROOKS: I would doubt that members of Congress can, a, understand the markets, let alone regulate them at this point.

HAROLD MEYERSON: Well, it usually takes a crisis to force some understanding, and we're not at a crisis yet.

Karl Rove's polarizing tactics

Harold Meyerson
The American Prospect
Rove's whole theory was you play to your base, you demonize the other side, and you get maybe -- you know, you win by 50 percent and a small majority, which worked up until the last election.

JIM LEHRER: Farewell Karl Rove this week. What kind of farewell would you speak to Karl Rove?

HAROLD MEYERSON: Well, it would be less than fully friendly, I think, because I think Karl Rove helped inject a tone of bitterness and polarization into American politics which we all suffer from. I think there was a consistent demonization of the Democratic Party once they moved into beginning to prepare to fight the Iraqi war that made politics very polarized, very poisonous.

Rove's whole theory was you play to your base, you demonize the other side, and you get maybe -- you know, you win by 50 percent and a small majority, which worked up until the last election, when he lost by -- and the Republicans lost by a good deal less than 50 percent.

JIM LEHRER: David?

DAVID BROOKS: I wouldn't disagree with that. I think he was a self-consciously polarizing strategist. And I would only point out that his grander project was defeated largely because of that, because he walled himself off from Democrats, because he walled himself off -- or the administration walled itself off from congressional Republicans.

And so that was one of the biggest problems that Rove -- the administration has faced and faced again. And it's a lesson for Democrats, frankly, not to wall themselves off.

But I do have other factors in the Rove accomplishment book. I mean, he was polarizing, but as a political tactician, he was superb. And one of the things he did was he reintroduced the idea that, if you want to persuade people, you get their neighbors to persuade them. You don't get people from the outside.

And so he saw politics as go to people you trust. And he won and George Bush won in 2004 because Rove had a smarter strategy, especially with dealing with some of these newer suburbs.

And then, finally, I think on policy substance -- and he was, to a large degree, he was the domestic policy process in the White House -- he had many of the right ideas, I think, which were conservative reform ideas of immigration reform, where he was with Ted Kennedy, on Social Security reform, on health care reform, on compassionate conservativism.

Not all these ideas paned out; many went down in flames. But I think he did understand the Republican Party had to change. And if it had changed in the way he originally conceptualized it, I think the party would be healthier than it is.

JIM LEHRER: Do you agree, the party would be better off if they had done what Rove wanted?

HAROLD MEYERSON: The party would be certainly better off than it is losing every Hispanic vote in the next election, which I think it's about to do. But I think Rove had a mistaken notion of where political realignments come from. Rove thought that, you know, if you privatize Social Security, you break the bond between the American people and their government. Rove thought that, quite rightly, that the American public was becoming less and less white and Republicans needed a higher percentage of African-American and Hispanic support.

But that said, the two signature initiatives of Bush's second term, on domestic policy, the Social Security and the immigration reform, took place at a time of real economic and cultural insecurity, not a very good time to press forward with either. At a time when your employer is dropping his pension plan to hear that the government wants to start monkeying around with Social Security, that doesn't exactly create a warm and fuzzy feeling.

And, you know, at a time when many Americans are concerned economically and culturally about the United States, he just drove a wedge into his own base, the Republican base, with the immigration reform.

DAVID BROOKS: He did. He was trying to change the party. I mean, it wasn't only him; it was President Bush and many others. He was trying to transform the party, and I think essentially the party rejected the implant. And so there were certain things that he couldn't get through with his own people in the House, including Social Security reform.

Nonetheless, the impulse to move beyond the idea that government is always the problem to some more positive conservative vision for government was something he championed and something George Bush championed in 2000. And I think it was a noble impulse that became stillborn.

JIM LEHRER: How responsible should Rove be held for what Bush did as president of the United States?

DAVID BROOKS: I think on domestic policy, in particular, he was the key player in the process.

JIM LEHRER: So George W. Bush listened to what Karl Rove said and he did it?

DAVID BROOKS: Listen, in the White House -- one of the things, if you interview Rove, which I've done many times, he is always cheerful. He's a pleasure to be around. He's incredibly smart, and he can talk to you about anything knowledgably and interestingly. And so he intellectually dominated the White House, I would say. And he had the trust of Bush, because he'd been there with Bush since before the beginning.

Outsized domestic policy role

David Brooks
The New York Times
Rove had conceptualized how the party should change before Bush had even begun to think about it. And they did work on it together, but Bush dominates that White House.

JIM LEHRER: Yes. Do you agree, that he wasn't just, quote, "an adviser"? He was much more than that.

HAROLD MEYERSON: No, not at all. Not at all. But maybe the distinguishing mark of the Bush presidency is you have Rove playing this outsized role on domestic policy and the vice president, Dick Cheney, playing the same on foreign and military policy, and both of these at somewhat unprecedented levels.

And I could be that when George W. Bush says, "I'm the decider," he means literally that. You guys go figure out the policies and, at the end of the day, I'll say yes or no or maybe. But I think there's almost been, to a certain degree, an outsourcing of the duties of the presidency, as most Americans had historically understood it, to people sitting next to Bush.

DAVID BROOKS: There I would disagree. I think Bush runs the administration, and he delegated to Rove. How much he delegated to Cheney, I frankly don't know. And I think people within the administration have no clue of how important Cheney was, because no one understands the relationship because it's completely secret.

But he clearly delegated domestic policy to Rove and political strategy, because Rove had conceptualized how the party should change before Bush had even begun to think about it. And they did work on it together, but Bush dominates that White House. If you're going to blame anybody for all the stuff that's happened, you do start at the top.

HAROLD MEYERSON: Well, I'll blame Bush, too.

DAVID BROOKS: Thank you. Gracious.

JIM LEHRER: In all of the talk and the words that have been spoken and written about Rove since his resignation, among them are, quote, "everything would have been so much better for Karl Rove if we hadn't had Iraq, that Iraq is what caused Karl Rove the problem," not blaming him for Iraq, but that he couldn't do anything about that. Is that a legitimate comment?

HAROLD MEYERSON: You could substitute the word "Bush" for "Rove" in that sentence and that would be true, too.

JIM LEHRER: Sure, but we're talking about Rove.

HAROLD MEYERSON: Well, I think there would have been a problem anyway because the politics of polarization he played precluded the possibility, for instance, of winning Democratic support for Social Security.

JIM LEHRER: But also for Iraq, also? In other words, would his way, his method have also caused him problems in foreign policy, just as a general premise.

HAROLD MEYERSON: Oh, sure. Well, I mean, the administration has not pursued, to put it mildly, a bipartisan foreign policy. Foreign policy was yet another wedge, and that's come back to haunt him, too.

JIM LEHRER: Do you agree with that?

DAVID BROOKS: He didn't create the polarized country; he inherited a polarized country. And Bush's success is because Rove recognized it. And he was giving lectures before the 2000 election, and the lectures were, how many decidable voters are there in this country, people who could move back and forth?

Now, he would say it used to be 20 percent, but now it's only 8 percent, and that 8 percent is not in the middle. They're spread all over. So don't even pay attention to those people. You've got to work on your base.

And that's not something he created. He inherited it and then took advantage of it in ways that further polarized the country.

HAROLD MEYERSON: The irony is that, in the 2006 election, independents suddenly rose up and became a mobile force, shifting, some of them, from the Republican column to the Democratic column. So, in a sense, he helped create a situation which was somewhat counter to his original thesis.

DAVID BROOKS: But it was Iraqi that created all those independents away from the...

HAROLD MEYERSON: And it was Bush who created Iraq.

Democrats sharpen rhetoric

Harold Meyerson
The American Prospect
I think the major fact here is that the polling has been static for months. Hillary maintains a fairly wide lead over Obama, who maintains a fairly wide lead over Edwards.

JIM LEHRER: Quick thing about 2008, the sharpening of the rhetoric among Clinton, Obama and Edwards. Does it look like there's going to be a serious campaign among these folks for the Democratic nomination?

HAROLD MEYERSON: I think the major fact here is that the polling has been static for months. Hillary maintains a fairly wide lead over Obama, who maintains a fairly wide lead over Edwards. And so, if you're Obama or you're Edwards, you say, "Well, something's got to shake this up. I have to do more."

And, of course, the Clinton people then look at Obama and say, "Well, he's accusing us of this, that and the other thing, so he's just a normal politician, and that's undermines the raison d'etre for his campaign, which, you know, is what the Clinton people might say. I don't think it's a very valid thing, but Obama and Edwards have to move. They have to do something new.

DAVID BROOKS: It's also true I think the other candidates don't like Obama. They think he hasn't earned his way to this kind of stardom; he's just sort of waltzed into it. So he gets under their skin.

And then the big argument is over passion and electability, and so they're needling over who's going to be the most electable, which is to show who can be the toughest campaigner. And if you can take on your opponents here, you can take them on in the fall.

JIM LEHRER: OK, thank you both very much. Good to see you again, Harold.

HAROLD MEYERSON: Thank you.