JIM LEHRER: And to the analysis of Shields and Brooks, syndicated columnist Mark Shields, New York Times columnist David Brooks.
Fannie Mae and Freddie Mac, Mark, you’re an expert on that. How serious is this?
MARK SHIELDS, Syndicated Columnist: Big Mac is my expertise.
It’s serious, Jim. I mean, it sent tremors, quite frankly, through both Washington and Wall Street, the possibility that it could fail. And I think the discussion with Jeff and…
JIM LEHRER: They at least explained it. A lot of people don’t understand what it’s about.
MARK SHIELDS: Explained it very well. And I think they talked about it’s really too big to let fail, seems to be the emerging consensus.
But there was a picture in David’s paper, the New York Times, of the secretary of the Treasury, Hank Paulson, testifying before the Congress on this. And he had his head in his hands, which kind of sums up the whole thing.
I think it’s — the alternative, the options that were laid out in the discussion in reality are not very appetizing politically. If the government takes over the obligation, takes over Fannie Mae, that almost doubles the national debt, all right? I mean, it’s $5.2 trillion, I think, is what their outstanding debt is, Fannie Mae and Freddie. If that would be the case in a political — it would be political disaster in a presidential year.
JIM LEHRER: Do you agree with that, political disaster?
DAVID BROOKS, Columnist, New York Times: It would be tough. I mean, over the past 10, 20 years, there have been op-ed piece after op-ed piece, which I confess I have not always read, saying we should privatize Fannie Mae and Freddie Mac because why should we have these quasi-independent agencies where they get the money and the implicit assumption is the government gets to back them up if they lose the money? And so why do we have these things?
JIM LEHRER: They don’t make any money ever.
DAVID BROOKS: Right, but they get to take risk, and we’re sort of — we’re left holding the bags, we as taxpayers. But now we’re in the situation where we may be left with this.
I think the more — I don’t know. I don’t know — it’s a crisis, but I do think you don’t have to be a genius to see what’s going on here, and that this is the underlying picture crossing this, Bear Stearns, and really the whole political year is jitters.
Anxiety over mortgage giants
DAVID BROOKS: The psychology of the situation to me as a political analyst is almost more interesting than the finance. That's for other people to do.
But the psychology is that people are afraid of the structure of the financial markets. They're afraid of the world energy economy. They're afraid primarily about our institutions, whether we have the institutions to run a big economy.
And there's just nervousness, and there's just sort of free-floating nervousness, and it's attacking vulnerable spots in the political world and the economic world. And so everybody gets extremely nervous and anxious when something seems to be tottering.
JIM LEHRER: That's exactly what these analysts told Jeff Brown earlier, that if you just look at the situation, the real-world situation of Fannie Mae and Freddie Mac, it's not that bad. It's all up here.
MARK SHIELDS: Somebody said that this week, that it's all mental.
JIM LEHRER: Right, Phil Gramm, former...
MARK SHIELDS: But I would argue that it isn't.
JIM LEHRER: OK.
MARK SHIELDS: I would say that, that...
JIM LEHRER: I'm just talking about Fannie Mae and Freddie Mac.
MARK SHIELDS: Oh, Fannie Mae, OK. For 27 years in this country, really since the big recession of Ronald Reagan, where there was double-digit unemployment in the country, the country has gone through a period of basic economic tranquility and limited prosperity, I mean, economic growth, low inflation, low unemployment, with the exception briefly in first President Bush's term. And people come to expect it to the point, Jim, where...
JIM LEHRER: Everything always goes up.
MARK SHIELDS: That's right. You got a house? The value, the price is going to go up.
JIM LEHRER: That's right. You've got a stock? It goes up.
MARK SHIELDS: You buy a stock? That's going to go up.
JIM LEHRER: That's right.
MARK SHIELDS: And so your retirement and everything, you're feeling good about things, and you've got a whole generation of people who've never gone through sort of what many of us went through in 1958 or in 1991. And they aren't prepared for this.
And I think that contributes to the anxiety that David says and I'd say the other thing is the unequality in the last 15 years of the economic growth, and particularly in the last 10 years.
JIM LEHRER: In other words, the growth wasn't for everybody.
MARK SHIELDS: Economic growth, that's right.
JIM LEHRER: Do you buy that?
DAVID BROOKS: I do. I mean, I think, first, you have a Depression generation, which understood the value of saving. And then I would say, through the 1970s, where you had people whose portfolio values really were flat or down over a long period of time, 15, 20 years in the '70s, they also knew the importance of saving.
I think now you've been an idiot to save over the last 25 years. Now, at this moment, maybe you're not such an idiot to save. Maybe you're not such an idiot to put something away. And I think you do go through these psychological phases.
A weakened economy or a recession?
DAVID BROOKS: I'm still not convinced we're in a total, flaming recession. I think we have a fundamentally, reasonably strong economy, with two gigantic problems. The financial world is rocked by the mortgage crisis; the rest of us are rocked by energy prices.
And it's these two fundamental problems which are on top of an economy which you see rising productivity, reasonable growth, or at least flat growth, but it's these two problems which are upsetting everybody.
JIM LEHRER: What about -- do you have a view on the Phil Gramm statement, former U.S. senator from Texas, economic man, an economic adviser to John McCain, said that we've got nation of whiners and it's all in the -- all up here?
DAVID BROOKS: It's all in their head?
JIM LEHRER: Yes.
DAVID BROOKS: Well, Phil Gramm is never going to be the poster boy of emotional intelligence. He's a smart guy, but he doesn't -- empathy is not -- he's not going to succeed Oprah on her show.
And so what he said was politically incredibly stupid. And you'll recall how badly his own presidential race went, where he spent lots of money and did terribly.
JIM LEHRER: I do remember that.
DAVID BROOKS: So as far as the common touch, feeling your pain, he's not exactly your kind of guy. But in terms of the substance, he's about a third right.
And like I said, the economy is not fundamentally unsound. We've got these gigantic problems which are causing a lot of anxiety, but to go out and say it in that way is the height of insensitivity.
JIM LEHRER: Mark, is it correct to say that this has not been a good election season for surrogates and spokespersons?
MARK SHIELDS: Well, surrogates and spokespersons, yes. I would have to concede that point.
In Phil Gramm's case, he did John McCain really serious damage, because John McCain, you'll recall, when this little bon mot of Phil's hit us from the Washington Times, he said, "He doesn't speak for me."
He's cutting Phil loose and ignoring the fact that Phil, at that very moment, Phil Gramm, is his surrogate before the Wall Street Journal editorial board. And, I mean, there's not a more important paper in the country for a Republican candidate running on an economic issue than the Wall Street Journal editorial board.
But John McCain was in Michigan trying to re-assure Michigan people, who are wracked by unemployment, that he cares, that he's involved...
JIM LEHRER: And that it's real.
MARK SHIELDS: That it's real. And along comes Phil Gramm to say this, that, "No, you're just a nation of whiners," then tries to -- at least Charlie Black, his aide, when he made a mistake like this, said, "Look, I'm sorry. I was wrong." Phil says, "No, I wasn't wrong. I'm talking the truth."
And I guess the thing I could compare it to was when Obama said people are bitter in small towns.
JIM LEHRER: Right. Right.
MARK SHIELDS: I mean, that came back to haunt...
JIM LEHRER: That's why they have guns and stuff like that.
MARK SHIELDS: That came back to haunt him. This will be seen over and over and over again this campaign season, "a nation of whiners," every time there's bad economic news.
Obama's acceptance speech risk
JIM LEHRER: Speaking of Obama, David, what do you think of Obama's decision to give his acceptance speech at a football stadium instead of the convention hall in Denver?
DAVID BROOKS: I guess my first reaction was, was Mount Sinai booked for the evening? I mean, I do think -- I'm disturbed by it. I think if you take the long...
JIM LEHRER: Disturbed?
DAVID BROOKS: Disturbed by it. If you take the long history of presidential nominations, you have sort of four phases. You have the George Washington phase, where he left the room when they would even talk about him as president, because it would disgrace him.
Then there was the front porch phase, where you weren't campaigning, because you didn't want to be a narcissist. Then you had the...
JIM LEHRER: You didn't actually ask people to vote for you.
DAVID BROOKS: Right. I mean, at least that was the pretense.
MARK SHIELDS: They came to you.
JIM LEHRER: They came to you, right.
DAVID BROOKS: And then you had the party convention phase, which has been our recent phase, where you have a convention. The party is actually more important than the candidate. The delegates gather, they talk about things, and then they give the nomination to a person.
Now, with Obama leaving the convention, it's like he's bigger than the party. He doesn't need the delegates. He's going off to have a mass rally, and it's going to be all about Barack.
And he's not the first to lead us in the direction of narcissism, but he is just crushing the party institution, and, "It's all about me."
JIM LEHRER: All about him?
MARK SHIELDS: Could not disagree more. I think it's a chancy thing to do, I mean, trying to -- first rule of politics. You do those things which your opponent cannot do. And there's no way John McCain, great American, could fill up 80,000 people. I mean, you're not going to get 80,000 people if you're giving away free plasma TVs with John.
So, I mean, that's risky, risky Denver weather. Last person to do it -- David's too young to remember this -- you remember it, 1960...
JIM LEHRER: I remember everything.
MARK SHIELDS: ... Los Angeles Coliseum, John Fitzgerald Kennedy...
JIM LEHRER: Right, that's right.
MARK SHIELDS: ... youngest president ever elected, came out, and gave the speech before 80,000 people in Los Angeles. To me, where it makes sense for Obama to do, is that this is a different kind of candidacy.
Just imagine this iconic moment, if you would. This week, we saw Ted Kennedy, ailing from his brain tumor and the treatments he's had, come back to the Senate to cast a key vote on Medicare.
Imagine, if you would, at the stadium in Denver, that the film of the idealized memories of Robert and John Kennedy fills the screen, and then comes Ted Kennedy slowly walking to the microphone, and says, "The torch has been passed to a new generation of Americans. I give you the senator from Illinois."
I mean, I'll tell you...
DAVID BROOKS: It'll be a great moment. I've been to U2 concerts. And when Bono comes on the stage, that's a good moment, too. I'm sure there are good moments when they have mass rallies in China and around the world.
I just resist the notion that the candidate is bigger than the party, that it's all about one person. The institutions do matter, and the conventions had a certain structure which has reinforced the primacy of the party and the institution, and that's gone.
I admit it. Conventions are now shams, and they're shows about one person, and we get to learn about the person's past, and when they felt bad about themselves, and when they had a good relationship with their family. And the parties are gone. But this is a step, and it's not the best step.
MARK SHIELDS: I missed the psychological impact, but David sees these things sometimes, and I -- I mean, he really...
JIM LEHRER: That's what he's here to do.
MARK SHIELDS: That's right. And I am grateful to him. I just think he's wrong.
Large interest in 2008 election
JIM LEHRER: How does the new Pew poll results -- we had Andy Kohut on the program the other night -- and there's more interest in this election, this early, than there's ever been, according to the polls. Something like 76 percent of the people of various kinds are -- how do you explain that? Is this part of the negative that David is talking about? That's not a set-up, David.
MARK SHIELDS: I think it's part of this is a campaign about big issues. I mean, we're talking about...
JIM LEHRER: Just like what we've been talking about tonight.
MARK SHIELDS: Exactly. I mean, we're talking war and peace. We're talking about prosperity. We're talking about survival. We're talking about economic anxiety.
JIM LEHRER: We're talking about where people live and homes...
MARK SHIELDS: Every day. I mean, this is not about the Pledge of Allegiance, Jim. It's not about, you know, Willie Horton. I mean, this is a big-time election. I think that's part of it.
And I think Democrats are energized for the first time. Remember this about the Democrats: They're a minority party. Other than Franklin Roosevelt, exactly two Democrats in the history of the United States have won a majority of the popular vote, Lyndon Johnson and Jimmy Carter in 1976, who got 50.1 percent.
So, I mean, to see Democrats this energized and excited is probably a very good sign for Barack Obama.
DAVID BROOKS: Yes, I'm not sure they're going to be the minority party much longer. But I think it is the Democrats. Look, they've had a tremendous race between Hillary Clinton and Barack Obama.
And then there's Barack Obama, I mean, the first black potentially president. That's sort of a big deal.
I was in two places this week. I was in Aspen, Colorado, with the private jet set, and I was in rural Georgia. And in rural Georgia, at a gas station, I saw portraits of Barack Obama on the wall next to where they repair the cars. And the Aspen thing was an Obama-fest.
It's him. I mean, for all I complain about the way he's going to run his convention, he's a big deal. And he's had a big emotional impact on the country. And it's crossed a lot of lines.
JIM LEHRER: You two are big deals to me. And thank you very much for being here tonight.