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Changes to Bailout Package, Obama Transition Top Week’s News

November 14, 2008 at 6:40 PM EST
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Syndicated columnist Mark Shields and New York Times columnist David Brooks assess the latest changes to the implementation of the $700 billion federal rescue plan, the Obama administration's ongoing transition process and other news of the week.
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JIM LEHRER: And finally tonight, the analysis of Shields and Brooks, syndicated columnist Mark Shields, New York Times columnist David Brooks.

Mark, what do you think of the Democrats’ desire to help the automobile industry?

MARK SHIELDS, Syndicated Columnist: I think it’s real. I think it’s needed.

I think the auto industry is an object lesson in badly managed industry. I think that it’s been the child and the ward of the Michigan delegation in Congress that has been uncritical and unswerving in its support for it.

But I think the prospect, Jim, of the United States automobile industry going into bankruptcy is not an alternative.

JIM LEHRER: Not an alternative.

MARK SHIELDS: It’s not an alternative. It’s not like the airlines. The airlines go in and out of bankruptcy…

JIM LEHRER: Yes, they go to Chapter 11 and…

MARK SHIELDS: But you buy a ticket on a plane, and you’re off. You’re not going to buy a car from a company that is in bankruptcy, that is closing dealerships, because when you buy a car, it’s a continuing relationship. You want to know that there’s going to be service there, that it’s going to be convenient, that there are going to be parts available.

And I really think that there is a concern in this country — and a legitimate concern — that if the auto industry does go, that it leads the nation to a depression.

JIM LEHRER: David, Gov. Sanford of South Carolina said on this program last night, “Let them go,” meaning the big three auto industry, auto companies, American can do without them. What do you think?

DAVID BROOKS, Columnist, New York Times: Well, I don’t think you can just let them go and do nothing. But I think the essential point is that Detroit as we know it is not viable. There’s not going to be a Detroit as we know it in 5 years, in 10 years.

These people are bleeding money. And it’s not because of this crisis. It’s because of a whole series of long-term problems: bad management, bad contracts, bad cars, bad corporate cultures.

The market has rendered a verdict on this Detroit, and the verdict is these cannot survive as capitalist enterprises. So the question is, how do you transition into the next model? And the worst thing you can do is give them another $50 billion with no strings attached.

Options for the auto industry

David Brooks
The New York Times
I think there are some experts, many experts who think there's a way to work through (fiscal crunches in the auto industry) to reassure people they will get service for their cars, but the bottom line is, Detroit is not going to be where it is today.

JIM LEHRER: Which is what the Democrats want to do, is it not?

DAVID BROOKS: There are some strings.

JIM LEHRER: Some strings.

DAVID BROOKS: But to me, they're minor strings. It's -- it's no executive pay that's too high and a few other things. It's nothing like the sort of radical reorganization I think most analysts think they need.

The second thing, the second idea -- and this is something Barack Obama has hinted at and a lot of other smart people have hinted at -- is that you appoint sort of a czar, an auto czar or maybe a board, that will somehow reorganize these companies and impose it upon them.

If that person exists, more power to them, but I think it would take a deity. You would have to be a divine force for one individual to be smart enough to know how to do this.

And then the idea that this person would be somehow free from political pressure I think is -- it's not going to happen. We're not China. We do not hand over our country to all-powerful technocrats.

So the third option is the bankruptcy option. And it seems to me there are a number of ways to do this, and that is really to get a court-appointed process going.

I think that would be less procedural, less political, and therefore better.

The objections Mark raises are real, that -- do we know this will be -- this will not lead to a cataclysm because the auto industry is unique?

I think there are some experts, many experts who think there's a way to work through this to reassure people they will get service for their cars, but the bottom line is, Detroit is not going to be where it is today.

JIM LEHRER: Do you agree with that?

MARK SHIELDS: I do.

JIM LEHRER: No matter what happens?

MARK SHIELDS: But I do want to make an emphatic point. Democrats I have talked to do not -- nobody favors a no-strings-attached bailout or help or anything like that.

JIM LEHRER: But they do want $50 billion.

MARK SHIELDS: They want -- they recognize -- they think that's necessary. I mean, but...

JIM LEHRER: But what would the money be...

MARK SHIELDS: There will be strings attached. I mean, what they're facing right now is a severe crisis, the automobile industry.

I agree with David. It won't continue in its present form, either with or without government help.

Jim, nobody has asked the American public on this. The American public is kind of fascinated, fascinating in their approach. They don't care how we got here. They really don't.

JIM LEHRER: They want the cars.

MARK SHIELDS: They want -- no, they want these jobs and this industry saved. And there is a psychological as well as economic importance.

We are going into a world where we cannot not compete in the making of automobiles. I mean, we've got now 14 percent of the people in the world own cars. I don't know how big that's going -- if it's going to double in the next generation. It's going to get bigger, and we have to be competing in that.

And there really is a sense that not simply Michigan and Ohio, the two premier states in the auto industry, but given the ripple effect of dealerships across the country, parts suppliers, that this would send the country into an economic spiral.

Avoiding a 'slippery slope'

Mark Shields
Syndicated Columnist
... when the American automobile industry was under siege from Japan in the late '80s, and it became a great political issue in this countries as to whether, in fact, we could compete and keep them out, there was a rally.

DAVID BROOKS: Well, people will be buying and making cars in this country. We have a lot of car plants that are not Detroit-based that seem to be working a lot better.

JIM LEHRER: Well, here, again, Gov. Sanford made that point. They're making BMWs in South Carolina. They're making Hondas and Toyotas in other places in the South. So what's the problem?

DAVID BROOKS: And they're free from the corporate cultures, and they're doing OK, which is not to say that losing Detroit as it exists will not be a cataclysm.

But my basic philosophy -- and I think it's the philosophy that's been the tradition of American politics of both left and right -- is that we have this creative destructive system. Companies rise, companies fall.

We protect workers. We give them a safety net. We give them unemployment insurance, in theory, and I hope we give them health care security in the near future. But we don't mess up with that creative destructive process.

We don't get the government in the way of that process, preserving failing companies, because if you do that, you will get -- every CEO in America will be saying, "Hey, you helped out those guys. Circuit City, I matter. I'm a newspaper. I matter. Help me out, too."

And we've already got -- this has been a boom time for lobbyists already in Washington now, and they're all lining up to get all this money.

JIM LEHRER: What about that, Mark? This really is a slippery slope. If you take care of the auto industry, you've got to take care of that industry or this industry or whatever.

MARK SHIELDS: I think -- I think the auto industry -- and I have no particular reform. I think they are unique in not only the American economy, but the American culture.

You recall, Jim, when the American automobile industry was under siege from Japan in the late '80s, and it became a great political issue in this countries as to whether, in fact, we could compete and keep them out, there was a rally.

And they did rehabilitate themselves. And they did become competitive. And you could almost feel a psychological ripple in the people of the country feeling better about the United States as a consequence.

I am not arguing that the elimination of golden parachutes or anything of the sort is going to do it. Lee Iacocca came for Chrysler to get federal aid. He did one thing: He put himself on a dollar a year. That was the first thing he did.

Second thing -- and we've seen in AIG and other instances that a corporate culture in this country that is noxious, that is so narcissistic that it is indifferent to the public wheel and the public money being involved.

The second thing is, they're going to have to restructure the labor contracts. I mean, there's no doubt about it. David touched on the...

JIM LEHRER: The bankruptcy, you would have to do that.

MARK SHIELDS: Yes, but an enormous -- that's right. But, I mean, even without bankruptcy, they're going to have to -- in my judgment, in order to get aid -- and Republicans, let's be honest about it. Absent further cataclysmic news in the next couple of weeks are not going to do anything, because Republicans, I think, have taken the wrong approach from this election, and that is they believe the bailout of the financial institutions...

JIM LEHRER: It's called a rescue.

MARK SHIELDS: ...rescue -- caused them defeats.

Weighing in on the stimulus package

David Brooks
New York Times
The stimulus package doesn't seem to have worked. The economy turns out a pretty complicated -- turns out to be a complicated place. We don't seem to have an idea how to get it jump-started.

JIM LEHRER: The election, yes.

Well, what -- add to this, the stimulus package that Obama wants passed in the lame-duck session. He says, if it isn't passed, then I'll do it first thing when I become president.

Is that going to happen? Or should it happen?

DAVID BROOKS: Well, something should happen. Every economist I know, even economists who are in principle against stimulus packages, are so scared of the current situation that I've noticed they've weakened. They've said, OK, I'm against stimulus packages...

JIM LEHRER: Martin Feldstein, conservative, was on this program...

DAVID BROOKS: Yes, he's for $300 billion and others I've spoken to in private who are pretty free-market economists, they say, you know, the circumstances are pretty bad.

But then you look at actually what's happened. We've had $300 billion in extra spending this year already. We had a large chunk of the TARP, of this rescue package that has gone out. Has any of it made any difference?

I mean, you touched on it with your interview with Paulson. There's signs that some of the banks are lending to each other. There's no sign they're lending to the actual economy. And so that doesn't seem to have worked.

The stimulus package doesn't seem to have worked. The economy turns out a pretty complicated -- turns out to be a complicated place. We don't seem to have an idea how to get it jump-started.

I doubt we'll have an idea how the government will have an idea how to reorganize the auto industry.

JIM LEHRER: Stimulus package?

MARK SHIELDS: I think the worry that Republicans have to have at this point is that, if autos go down, if the auto industry goes down and the recession/depression that follows, that George W. Bush will be remembered as the Herbert Hoover of the 21st century. And if that's the case, it seals the party's fate for the foreseeable future.

I think the stimulus package, at least -- I think we'll probably get unemployment insurance extensions. And the form of the other, I think may very well wait until the new administration.

Obama builds his cabinet

Mark Shields
Syndicated Columnist
... the economy is going to be the preoccupation of the president in this administration ... So the idea of having somebody of (Sen. Clinton's) horsepower and firepower, intellectually, politically, there it does make sense.

JIM LEHRER: Until afterwards. Until then.

All right, speaking of the new administration, Mark, the word is today, or it's the -- the rumor is today -- the word "rumor" is today that Hillary Clinton is going to be asked to be secretary of state by Barack Obama. What do you think of that?

DAVID BROOKS: I actually think that's a good move. I'd hate to see any single member of the Clinton administration not in the Obama administration. Somebody might feel left out. I think he's taking the whole group.

And I actually think Hillary Clinton would be a good secretary of state. I think, when you saw her in the Senate, she is a hard-worker, a smart person, very effective at that sort of job.

And her positions on foreign affairs, she worked very hard on it. She earned the respect of Republicans and Democrats on foreign affairs. It was not her natural milieu.

So I actually think it would be quite a good pick, just for the substance of her being secretary of state.

In addition, then you've got her global celebrity, which would help wherever she went. And then you've got her and Bill inside the tent, which is probably safer than being outside the tent.

JIM LEHRER: Mark?

MARK SHIELDS: I do think that Sen. Clinton brings certain strengths. I mean, there's no question, given what we were talking about, the economy is going to be the preoccupation of the president in this administration.

So the idea of having somebody of her horsepower and firepower, intellectually, politically, there it does make sense.

It is rather intriguing. Barack Obama ran on the express point against a third term.

JIM LEHRER: For Clinton, as well?

MARK SHIELDS: He was talking about George W. Bush. Now it turns out it's with Rahm Emanuel, with Ron Klain, with John Podesta, Larry Summers, Hillary Clinton. Is this change?

JIM LEHRER: Yes. Well, but do you think this is -- do you think it's going to happen? Have you all picked up anything that makes you think otherwise?

MARK SHIELDS: I don't...

JIM LEHRER: You don't?

MARK SHIELDS: I don't know if it's going to happen. I honestly don't.

JIM LEHRER: Quickly, what about the idea of keeping Bob Gates on as secretary of defense? Is that a good idea?

MARK SHIELDS: I think it's a good idea.

JIM LEHRER: What about you?

DAVID BROOKS: That's an excellent idea, if he'll do it.

JIM LEHRER: Yes, what about Volcker? There's now talk that they -- he might ask Paul Volcker to become secretary of the treasury, at least temporarily. He's in his 80s, may not want a full term. Would the signal of...

MARK SHIELDS: With Tim Geithner as his deputy, there would be...

JIM LEHRER: Right, when he takes over...

MARK SHIELDS: ... there would be the country's 1 and 1-A, but I think Paul Volcker would be an enormously reassuring nomination.

JIM LEHRER: Yes. What do you think?

DAVID BROOKS: I think it would be excellent. The other candidate people talk about is Larry Summers, who's already held the job, who is brilliant. I think he's been writing outstanding columns for the Financial Times, really ahead of the curve on this.

A lot of people think he's too abrasive and not sure they want to work with him. But, you know, having an understanding, as he has demonstrated in those columns, that he has basically a sense of what's going on, I wouldn't downplay his talents.

JIM LEHRER: OK. Well, we'll leave it there. Thank you all very much.