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President Bush Pushes Credit Measures; Warner to Step Down

August 31, 2007 at 6:25 PM EST
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TRANSCRIPT

JIM LEHRER: And to the analysis of Shields and Brooks, syndicated columnist Mark Shields, New York Times columnist David Brooks.

David, should everyone feel better now because of what Fed Chairman Bernanke and President Bush said today about the economy and all the things that the folks were just talking about?

DAVID BROOKS, Columnist, New York Times: Sanguine. Go to Home Depot, start redecorating your house. They should feel a little better, in the sense that there’s activism in Washington, that people are paying attention, they’re doing what they can. The Fed is obviously going to be aggressive, as we just heard from two economists.

On the executive branch level, there are sort of two interesting issues here. One is, how big a moral hazard does the administration think they’re presenting? Are they rewarding people who took bad loans and took irresponsible decisions? And I think that’s what’s bracketing their behavior so far, though, as we just heard, they may go more.

The second issue, which makes this different from a lot of the banking crises in the past, is you’ve got a mortgage in Ohio, and it’s held by a bank in Germany. And how does…

JIM LEHRER: Paul Solman had a terrific piece on this last night.

DAVID BROOKS: What do the Germans know about you and what do you know about the Germans?

JIM LEHRER: Sure.

DAVID BROOKS: And so that makes this much more unpredictable than similar situations in the past.

JIM LEHRER: But you have a feeling, Mark, that the situation is under control by the folks in charge?

MARK SHIELDS, Syndicated Columnist: No, I don’t have that feeling. I think the president’s impulse — I think, first of all, the Federal Reserve and the Treasury Department underestimated the dimension and the velocity of the potential crisis here in homeownership foreclosures and mortgage failures. That’s the first thing.

The second thing is, the president’s whole inclination is to rely on the free market, and so now he’s acting. And there is the potential here for cooperation with the Congress. Both Barney Frank, the Democratic chairman of the House committee, appropriate committee, and Chris Dodd in the Senate. The problem is going to be this, Jim, in a realistic sense. The Congress is going to go further than where the president did, as we just heard in the earlier segment with Judy, and that will be the moment of truth. Will the president — because they’ll give the president what he’s requested, but they’ll also do more.

Turning to the Federal Reserve

JIM LEHRER: Well, Diane Swonk said that if Congress and president can't act fast enough anyhow, it ought to be left to the Fed, the Fed is the only one that can really move.

MARK SHIELDS: I know she said that, but I do think that there is an impulse in the Congress to do something and to do more than the administration. But this is obviously -- the administration is only saying it's 80,000 mortgage holders they're going to affect, and we're talking about a potential of 2.2 million foreclosures.

DAVID BROOKS: But this is a soft spot for Bush, because the ownership society is something near and dear to his heart, and he has been promoting policies for the past six years to expand home ownership. And a lot of the people probably who are in trouble are people who were induced by the policy of the past few years.

On the other hand, there really is that moral hazard issue. And I think the president referred to it this time, that if you take on -- I mean, the greed here is on the part of the lenders, some of them, who lured these people with loans that were -- you know, that we all got in our e-mails.

But then people, you know, we've all gone home shopping. You look at something, you think, "I'm going to take a risk. I really want that house." And you get a little greedy, and it's affected us all.

MARK SHIELDS: The other thing is -- and Paul touched on this last night -- the number of loans that are made, not by regulated savings institutions, I mean, they're made by unregulated institutions. That's going to be one of the...

JIM LEHRER: Through securities sold on loans.

MARK SHIELDS: That's right. And through not banks and S&Ls and the traditional way that we associate home mortgages being made.

JIM LEHRER: What do you make of Senator John Warner's decision not to go again?

MARK SHIELDS: Well, in a strange way, it elicited cheers, first of all, from Democrats in the House I talked to today, because they're thrilled at the prospect of Tom Davis, the Republican congressman from Virginia, running for the Senate, because they see Tom Davis as the most formidable and able Republican strategist in the House of Representatives. They're thrilled that he would be leaving the House.

JIM LEHRER: And hope he would lose, you mean?

MARK SHIELDS: Well, they don't care. They're not going to want him to win, but if he wins, that's fine, but he won't be in the House where he's just a very, very able guy.

But I think John Warner really is a moment in the Senate that we see too infrequently. John Warner and Carl Levin, the past chairman, Warner, and present chairman of the Armed Services Committee are a model in civility and comity. They work together.

JIM LEHRER: To each other and to others?

MARK SHIELDS: That's right, exactly. And, you know, there's precious little of that. And John Warner is one of the people who came to this Senate in 1978 as somewhat of a bizarre figure, married to Elizabeth Taylor, star power, sort of unheard, really heard folk tales, and yet in the Senate has grown to the point which I think he's enormously respected. In the state, he's enormously respected. He's been a bipartisan figure. Democrats really think they have a chance to win that seat.

JIM LEHRER: What do you think about John Warner?

DAVID BROOKS: Well, I think it's a shame. He is a senator's senator. I mean, the Senate is different from the House. The Senate is supposed to be more deliberative, more statesmanlike, more civil, more thoughtful, and Warner epitomized all those virtues.

And I think some of the things you heard from him over the past few years was that he had a lot of people coming over from the House, being elected to the Senate, and bringing the morals -- or the mores, I should say -- of the House to the Senate, a more slashing style, a less collegial style. And he resisted that.

And if you remember, he was very active in the Gang of 14 on the tradition of filibusters. And so I think he preserved the best of what the Senate should be. And so I personally think it's a shame for the institution. And, heck, he'll only be 88. He could be the ninth-youngest senator at this point. It's a pretty old body.

JIM LEHRER: Go ahead. I'm sorry.

DAVID BROOKS: No, that...

JIM LEHRER: I was just going to say, I was just thinking of all the times -- thinking today, of all the times he's said on this program, and everybody else's program, and on many different places, on many different issues, "We can work this out." This would be, you know, of course, Iraq is just the most grievous one of the present, but he's always said this. It's the words that first come out of his mouth.

MARK SHIELDS: No, that's exactly right. And, obviously, on Iraq most recently, I mean, he's been trying to build a bridge on that between the two parties.

Investigating Gonzales

JIM LEHRER: What are your expectations about the Justice Department investigation of Alberto Gonzales?

DAVID BROOKS: Well, people have looked into what Gonzales said. And clearly, what he said was unsatisfying, and some would say pathetic. But the people who looked into it have said that it's not perjurous or it's not -- he didn't violate laws, so I suspect that it will peter out. That's just based on what people have said.

JIM LEHRER: What do you think? Something serious going on here?

MARK SHIELDS: I think there's legs to the Congress to continue the investigation.

JIM LEHRER: Even though he's resigned?

MARK SHIELDS: Even though he's resigned, because there is this investigation by the inspector general of the Justice Department and the Office of Professional Conduct. And I think, Jim, that the smoking gun which has not --- David's right -- has not emerged is if there's any evidence, e-mail, any other form of any U.S. attorney who was fired because he or she was prosecuting a Republican politician or because he or she refused or was dragging the feet on prosecuting a Democratic politician, if there's any evidence of that -- and several Democrats I've talked to think there is, that it's uncoverable -- then it becomes a really serious offense.

JIM LEHRER: But am I correct, David, in believing that or understanding that this investigation was not self-launched by the Justice Department? It was requested by the Democratic majority on the Senate judiciary.

DAVID BROOKS: Right, and I think this is the right way to do it rather than a special counsel. But they've looked at this. And the threshold is not whether there's politics. There's a lot of politics. It's exactly as Mark said, whether it's frustrating the course of justice. And we'll see if they get there, but so far, with all the investigations that's been, so far it hasn't reached that level.

JIM LEHRER: Now, speaking of resignations, just a short while ago, the wires moved a story about Senator Larry Craig. We knew he was going to make an announcement tomorrow. The Associated Press just reported that, from sources, that he's definitely going to resign. And the Republicans have been asking for it from day one since the story first broke. Were they correct to do so, to push him out this way?

MARK SHIELDS: I think he was a victim, not to his behavior, but he was a victim of what had happened with Mark Foley in 2006. Mark Foley was a Republican congressman from Florida. There had been reports to the leadership of his own party about improper overtures he had made to House male pages. And they just kicked it further and further downfield. They never came to grips with it.

And the Republican defeat in 2006 was part of the problem, the whirlwind that was reaped. And Larry Craig, as soon as this happened, as I recall, the only senator who came immediately to his defense and said, "Let's stop this, let's just wait a minute and find out what happened," was Chris Dodd, the Democrat from Connecticut. Every other one, Republicans, seemed to be lined up with, "I've got the rope. You find the tree. Let's hang this guy."

Media attention for Larry Craig

JIM LEHRER: Now, David, your newspaper, the New York Times, an editorial page, which does not support Republicans as a general rule, said, "Wait a minute on Larry Craig," that there's a double standard here, that if the incident had been involving a heterosexual incident rather than a homosexual incident, this would never have happened. There would not be the press to get him out.

DAVID BROOKS: There's some double standard. And we all know senators who -- I mean, what Larry Craig is alleged to have done is made a pass at someone he thought was willing to have sex with him. That's what the allegation is. And we all know senators -- and it's been widely reported -- who have made passes at people, whether they thought they were willing or not. And those people were not chased out of the Senate. But here, the politics is different, partly probably because it's an alleged homosexual affair, and that probably gets people a...

JIM LEHRER: But that's the point.

DAVID BROOKS: But I think the larger issue -- and I've heard anecdotally several times today -- is that a lot of people, and especially mothers, are uncomfortable sending their 10- or 11-year-old boys into a public restroom in an airport, and they want to have some confidence -- or at a football stadium or whatever -- that when they do that, they can do so with safety.

And this strikes right at that insecurity. And I think that sort of insecurity about the public climate is feeding into this in a way it wouldn't if it were done at a restaurant or somewhere else, that it's the pollution, if you want to put it that way, of a public space where people should feel safe sending their kids.

MARK SHIELDS: People have a right to expect to walk into a public restroom and not to have sexual activity taking place. I don't think there's any question about that.

But when you talk about the public trust being violated, I mean, here's Duke Cunningham, Republican congressman from California, who was selling his vote. There was no call for an ethics investigation. Here is Jack Abramoff buying up large chunks of the Republican caucus, it seemed -- at least Bob Ney and others -- and there was no call for an Ethics Committee.

I mean, in this case, the rush to judgment -- you know, they started up the bus, they threw him under the bus, they ran him back and forward over. You know, what he did was a violation of -- he did break the public peace, and he violated his own marital vows, but it wasn't the same thing as selling his vote.

JIM LEHRER: Quickly, before we go, the Census Bureau figures, Mark, this week on poverty and the uninsured, is it -- it's growing, the uninsured, up 2 million to 47 million, et cetera -- does it have the possibility of breaking out as a major issue in the 2008 campaign?

MARK SHIELDS: I think already is, Jim, I really do.

JIM LEHRER: Already?

MARK SHIELDS: I think there's an acceptance for the discussion, full discussion, full debate of a national solution, national health plan to remedy this failure. I'll tell you, the first sign is going to be -- there was an increase of 600,000 in the number of uninsured children.

When Congress comes back, the Senate passed a less ambitious version of this plan's extension, the state children's health plan, and the House passed a more generous one, more comprehensive one. The House, if they're smart, if they're not brain dead, Democrats in the House will embrace the Senate plan and pass it as is. And I can't believe that President Bush, even though he's threatened, would dare to veto it politically.

JIM LEHRER: How do you see it?

DAVID BROOKS: I think it is huge politically. When you go to Republican and Democratic events in the presidential campaign, it's like going to two different universes. They're talking about different issues with two exceptions. There's two issues that come up in both equally, and they come up a lot. The first is immigration, and the second is health insurance.

I was with Mitt Romney in New Hampshire several weeks ago now. Every other question was about health insurance. And this was not Hillary Clinton or John Edwards. This was Republicans wanting to talk about it.

JIM LEHRER: And they want something done about it?

DAVID BROOKS: They absolutely want something done about it. So they want to be able to leave their job and go to a new job. And, you know, when you look at what came out of the census, slight rise in income, slight drop in poverty, but unquestionably and significant rise in the uninsured. And what was striking to me was the uninsured white Americans was the same, uninsured Asian-Americans was down, but African-Americans and Hispanics were bearing the brunt of this. So it has that element, too.

JIM LEHRER: Housing and health insurance, two things that touch everybody. And...

MARK SHIELDS: Absolutely.

JIM LEHRER: ... yes, indeed, thank you, gentlemen, both very much.