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Shields, Gerson on Bachmann, Parties’ Willingness to Budge on Spending, Taxes

July 1, 2011 at 12:00 AM EDT
Syndicated columnist Mark Shields and Washington Post columnist Michael Gerson dissect the week's top political news, including President Obama's rebuke of Congress for the stalled debt-ceiling talks, what created the housing bubble and Rep. Michele Bachmann's formal foray into the 2012 presidential race.
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TRANSCRIPT

JIM LEHRER: And to the analysis of Shields and Gerson, syndicated columnist Mark Shields, Washington Post columnist Michael Gerson. David Brooks is away tonight.

Mark, what do you make of that Fannie Mae story?

MARK SHIELDS: Well, the drive for homeownership was something I can recall President Clinton speaking about it, President Bush speaking about it, how important it was. It was a measure of the achievement in the country.

But, as you go to the story of Fannie Mae, what it comes down to is, they privatized profit — in other words, whether it’s the investors — but they socialize losses. In other words, everybody else in the country picks up the tab when it doesn’t — when it goes under. That is really…

JIM LEHRER: While you’re making money yourself.

MARK SHIELDS: Yes. I’m making money, it’s mine. But now that…

JIM LEHRER: But if I lose it, it’s yours, government.

MARK SHIELDS: Yes.

JIM LEHRER: Yes.

MARK SHIELDS: It’s yours, taxpayers. And I just — I think that’s a really bad public policy.

JIM LEHRER: Michael?

MICHAEL GERSON: Well, it’s still also the political context in which everyone’s operating right now.

As far as I know, the president didn’t have anything to do with this. But the bursting bubble of the housing market has really undermined confidence in the whole economy. We have had a larger percentage fall in housing prices in this crisis than we did in the Great Depression. It’s hard for people to feel good about the economy when their principal asset has declined in that way.

JIM LEHRER: And Fannie Mae and Freddie Mac were huge dominoes in this collapse, were they not?

MICHAEL GERSON: No, it’s absolutely true.

And as it points out, this was a massive bipartisan failure. Both parties built this house of cards. Nobody really wants to take responsibility in the aftermath, because it might hurt the markets even further.

JIM LEHRER: Yes. Yes.

All right, on to other things, Mark. The hot new tone from President Obama, and returned somewhat by Republicans, on this debt ceiling debate, what’s going on?

MARK SHIELDS: Well, I mean, the knock on Barack Obama is, he is too cerebral, too cool, too detached. So, he gets a little combative in a press conference, and immediately says: My God, almighty, this guy is a — he’s Pier Six Brawler. What’s happened to him? Is he a rabid dog?

No, I think — I think it was — from my own reporting, I have concluded that there was an authentic reaction on his part of anger and frustration, spearheaded in large part when Eric Cantor, the Republican majority leader, withdrew from the talks from — with Vice President Biden, which had been going quite well.

And whether he agreed Wednesday — on a Wednesday that he would — that everybody would be back on Thursday. See you tomorrow, Eric. Fine. And then, that Wednesday night, the president met with John Boehner in an unscheduled meeting, whether that triggered it, but the next morning, he got up, and: I’m out there of.

And…

JIM LEHRER: Cantor said, yes.

MARK SHIELDS: Cantor did.

And the president, I think, feels that the Democrats have moved on spending cuts. They have been more than flexible. And on the other side, he sees an inflexibility. And I think he wanted to lay down the marker that this is — this is serious stuff we’re talking about, the default.

JIM LEHRER: What did you think about the president’s performance?

MICHAEL GERSON: Well, I think he spent a lot of time telling members of Congress that they need to show leadership.

But if you talk with members of Congress, both Republicans and Democrats, they are pretty critical the president hasn’t shown much leadership on this. He doesn’t really have a plan on the table. His own budget is irrelevant. The Senate voted against it. And so, you know, he’s impatient with the Congress but he’s vague in his own prescriptions in this case.

I think, also, that the press conference shows an even deeper problem, which is, the president wants to talk about jobs, which is how he began the press conference, and economic growth, but the only topic in Washington is about debt, deficits and cuts. He’s not controlling the context of the political debate right now. Republicans are controlling that debate. I think that it’s hurting him.

JIM LEHRER: Michael, what is — what is the problem for the Republicans to completely just not — they refuse to even discuss any kind of revenue in this package to try to reach the debt ceiling deal. In other words, that’s why Cantor walked off.

MICHAEL GERSON: Well, there is actually, I think, plenty of inflexibility to go around.

JIM LEHRER: Right.

MICHAEL GERSON: Democrats are saying, we’re not going to consider entitlement cuts or dealing with them in any way, unless we get tax increases. Republicans are saying we are not doing tax increases, which takes just about everything in the budget off the table.

You are left with defense spending and some discretionary spending, education spending, foreign relations spending. That’s not enough to get trillions of dollars in savings out of this system. But that could be what they are trying to move towards, which is, let’s just agree on this, not pursue any broad reforms on taxes or entitlements, and just get past this election without making any real choices.

JIM LEHRER: So you don’t think the Republicans will ever, ever agree to any revenue enhancement?

MICHAEL GERSON: Well, I think the big question here is can you get revenue enhancements without tax rate increases?

JIM LEHRER: Yes.

MICHAEL GERSON: There are things you can do, getting rid of ethanol subsidies or deductions for second homes, that would raise revenue, but wouldn’t necessarily increase tax rates, which I think Republicans have a good economic case you shouldn’t do in a recession.

So I think that’s the question. I would like to see more flexibility on that issue. I think you could come to some agreement.

JIM LEHRER: What do you think?

MARK SHIELDS: I think the Republicans are irrational. I really do.

And I think it’s a politically indefensible and civically indefensible position they have taken.

JIM LEHRER: On taxes.

MARK SHIELDS: On taxes.

JIM LEHRER: Or on revenue. OK.

MARK SHIELDS: On revenue.

The reality is this, that every single group, whether it’s Simpson-Bowles, whether it’s Alice Rivlin and Pete Domenici, whoever it is — semi-serious, we probably should have said — yes, there have to be budget cuts to deal with the deficit problem and the debt, but there have to be revenue increases.

It’s become a dogma with Republicans now that anybody who votes for a tax increase is no longer a member of the club or the party, and is driven out of the tent. Ronald Reagan raised taxes six times. The amount of money we’re talking about raising taxes, which would be $400 billion over 10 years, is less than one percent of the money to be collected in the next 10 years, less than one percent.

And if you look at it — and Sen. Inouye presented this yesterday, and I thought it was a brilliant document. If you look at it in terms, Jim, from 2001, the last time that the budget was balanced, the fiscal year, $128 billion surplus, and we look at what we’re spending on discretionary spending — that’s one that isn’t mandated — it is exactly the same, in inflationary dollars and in population growth, as it was then.

Defense spending and wars have gone up 80 percent. Tax revenues are down 18 percent. We are actually collecting $500 billion less in 2011 than we collected in 2001.

MICHAEL GERSON: I think — I think Democrats are being equally unreasonable on the issue of entitlements.

This is our long-term spending challenge. It’s not that we tax too little. It’s that we have expensive entitlement commitments, an aging population, and health care inflation that have made that portion of the budget completely unsustainable.

Democrats will not deal with that in this context. And I think that that is a failure as well in this system. People are going to have to give in this process. And, I — you know, right now, everyone knows that this debt limit has to increase, OK? Everyone knows it. But no one knows what the path is, given these deeply seated disagreements.

And Republicans make the point that we have a historically high level of the economy in spending right now, OK, which has gone up considerably. The normal level of taxes is more like 20 percent of the economy, I mean, which is well below what — you know, the Republicans just want to bring spending down to historical level of taxes as a percentage of our economy.

That’s their argument here, not to bring rates up to cover a larger portion of our economy.

JIM LEHRER: But, OK. We have got the differences here.

You say you don’t see a path that can make this thing work, a path to bring these two sides together?

MICHAEL GERSON: Well, I did say.

If — if both sides can, within the realm of reality, avoid doing either taxes or entitlements, and just do more cuts in these small, relatively small categories of spending, they might get past the election, I mean, do enough to increase the deficit — the debt ceiling and get past the election.

JIM LEHRER: Is there — what are the politics of there being — actually being a default on October — I mean August the 2nd, and the country does default? Who pays the political price, the Republicans or the Democrats, or both? Or what happens?

MARK SHIELDS: Probably — I mean, certainly, the country does, I mean, and I think, Jim…

JIM LEHRER: Well, I’m assuming that.

MARK SHIELDS: … if this weren’t — if this weren’t — the stakes weren’t as high and the consequences weren’t as grave, this would be a fascinating political drama and screenplay to look at, because you have got — you have got Mitch McConnell, who is looking over his right shoulder at Jim DeMint. And so he’s against taxes.

JIM LEHRER: Yes.

MARK SHIELDS: You have John Boehner, who is nervous about Cantor. You have got a tension between congressional Democrats and the president because he let them down in December on the — extending the Bush tax cuts.

You have got all of these sub-currents. But the reality is that…

JIM LEHRER: This is real, huh?

MARK SHIELDS: … this is real.

JIM LEHRER: Yes.

MARK SHIELDS: And the consequences are enormous.

I think, probably, the president — and I would say the president would prevail in — and I think the president in the press conference was laying down what the consequences are and what the stakes are. I think that was the point he was laying down, and trying to change that debate.

Michael is right in the sense that, in the two major fights of this administration, the stimulus package and health care, the president lost the narrative. I mean, the Democrats have not been able to carry the debate publicly. And they can’t let that happen on this fight.

JIM LEHRER: Do you think, Michael, that the Republicans understand and accept what President Obama and what Mark Shields and others say about what a catastrophic event it would be if we did, in fact, default on Aug.2?

MICHAEL GERSON: I think most Republicans do. I think they view this as a very undesirable outcome.

I think there are some members of the House that may have a slightly different perspective on that, but I think members of the Senate — and it does raise the prospect there could be another element of this strategy, by which the president just decides, at the end of this process, to put $800 billion in spending cuts on the table and say — dare Republicans to shut down the government if they don’t accept that.

I think the Republicans would be under a lot of pressure in that circumstance to agree to that.

JIM LEHRER: Finally — we have just got a couple minutes left — and I will start with you, Michael.

Michele Bachmann is now officially a candidate.

MICHAEL GERSON: Right.

JIM LEHRER: Is she a serious contender?

MICHAEL GERSON: I think that Michele Bachmann has benefited immensely from not being Sarah Palin. She has much of the similar appeal, but she is actually a better candidate in a lot of different ways.

I wouldn’t underestimate her strength in Iowa. She has both a Tea Party appeal…

JIM LEHRER: She was born there. Born there.

MICHAEL GERSON: Born there, Tea Party appeal, strong evangelical appeal, that is a strong combination. And I think that her rise is very bad for Tim Pawlenty, who — she has taken a lot of the attention and a lot of the oxygen right now. In a period where Pawlenty needs to raise his profile and raise some money, it’s become harder.

JIM LEHRER: From the — and both from the same state.

What do you — how do you see Michele Bachmann…

MARK SHIELDS: Well, she has had a — she has had a great introduction. She really has. I mean, I think she’s a natural candidate. I think she is a good platform performer.

She has got a natural identification with much of the Iowa Republican Party, which is, culturally and religiously, a conservative party, a party that — where Mike Huckabee did very well in 2008, won the caucuses over Mitt Romney.

And I think — I think, right now, she’s a natural fit. Contrast her introduction and first 10 days with that of other principal House candidate, not Ron Paul, but Newt Gingrich, and — you know, who still, I think, was visiting Tiffany windows at this point.

(LAUGHTER)

JIM LEHRER: Well, do you see a serious opponent within that wing of the party for Bachmann? Has she got does that — does she have the Tea Party wing, et cetera, that you just described all to herself?

MICHAEL GERSON: People are waiting to see what Sarah Palin will do. I don’t think she’s…

JIM LEHRER: Oh, Sarah Palin.

MICHAEL GERSON: Yes. I don’t think she’s making a serious run at early supporters and early states. So, I think Bachmann has that…

JIM LEHRER: So, it’s Bachmann against all the others, Pawlenty, Romney?

MICHAEL GERSON: No, no. I think it probably benefits Romney if his main opponent is…

JIM LEHRER: Is Bachmann.

MICHAEL GERSON: … is Bachmann, basically because most Republicans view him as more electable in this race.

MARK SHIELDS: Don’t forget Rick Perry, who would be…

JIM LEHRER: Oh, the Texas governor.

MARK SHIELDS: … would in fact have an equal appeal to those constituencies…

JIM LEHRER: If he runs.

MARK SHIELDS: … if he does enter the state.

JIM LEHRER: Sure. Absolutely.

MARK SHIELDS: That’s right.

JIM LEHRER: OK.

Thank you, Mark. Good to see you.

Thank you, Michael. Good to see you again.