Friday, January 25, 2008

MS. IFILL: The feds try to fix the economy and showdown time in two critical states, South Carolina and Florida, tonight on "Washington Week."

SPEAKER NANCY PELOSI (D-CA): The stimulus package will put money in the hands of hard working Americans.

SEC. HENRY PAULSON: I'm looking forward to working with the Senate and working with the House to get a package as soon as possible because, again, speed is of the essence.

MS. IFILL: There's nothing like a crashing stock market, a housing slump, and slipping consumer confidence to get Republicans and Democrats to the table. But will the new economic rescue plan do the trick? On the campaign trail, the Democrats squabble.

SEN. HILLARY CLINTON (D-NY): I did not mention his name.

SEN. BARACK OBAMA (D-IL): Your husband did.

SEN. CLINTON: Well, I'm here. He's not.

SEN. OBAMA: Okay, well, I can't tell who I'm running against sometimes.

MS. IFILL: While Republicans seek peace.

SEN. JOHN MCCAIN (R-AZ): All these are good people who are running here and I respect them.

MS. IFILL: Which side has the tougher challenge? The voters are speaking, candidates are falling by the wayside, and the answer is no more clear. Covering the week, Michael Viqueira of NBC News, Wayne Washington of "The State" newspaper, Michael Duffy of "Time" magazine, and Gloria Borger of CNN and "U.S. News."

ANNOUNCER: Celebrating 40 years of journalistic excellence, live from our nation's capital, this is "Washington Week" with Gwen Ifill, produced in association with "National Journal."

ANNOUNCER: Once again, live from Washington, moderator Gwen Ifill.

MS. IFILL: Good evening. Well, they said it couldn't be done, and perhaps it can't, but for now we are in one of those rare moments of agreement in Washington as the president and House Democrats invest in an economic rescue plan that both sides need. The $150 billion package would send tax rebates of up to $600 to individuals and up to $1,200 for couples, raise federally sponsored mortgage limits, and provide tax cuts for small businesses. President Bush issued a follow-up warning today.

PRES. GEORGE W. BUSH: I understand the desire to add provisions from both the right and the left. I strongly believe it would be a mistake to delay or derail this bill.

MS. IFILL: So how did they get this far and why, Mike?

MR. VIQUEIRA: Well, Congress came back from their holiday break, it was about six weeks long, and apparently they had two epiphanies while they were gone. Number one, something had to be done about the economy. They were going to get away from this debate over the war that lasted all year long and immigration that lasted through the course of the year last year. Something needed to be done about the war and perhaps taking a page from what they're seeing on the presidential trail, something also has to be done in concert with the other side - Democrats and Republicans, imagine it, getting along and doing something. So they ensconced themselves - did Nancy Pelosi, the Democratic Speaker of the House, John Boehner the Republican leader in the House, got together with Hank Paulson, we saw him in the open - the treasury secretary.

Behind closed doors they had meeting after meeting after meeting. Three meetings in one day at one point and they came up with this deal. They did not keep it in the public sphere, which was a calculated thing to do, leaving it out there and letting the details drip out little by little would have had it picked apart from both ends of the political spectrum and even now as it's now out in the public sphere we're starting to see that - people taking shots from the right and the left.

MS. IFILL: Is a promise here that this is going to stave off any recession that nobody will admit is coming?

MR. VIQUEIRA: No, no one's making that promise. The parameters as set forth by the president and agreed to was 1 percent of GDP. They arrived at this figure $150 billion, about 117 million checks are going to be mailed out. But everybody's talking about a soft landing. This can help mitigate the effects of a slowdown in the economy. No one is saying recession. Democrats have been very careful not to use the R word lest they be accused of jawboning the economy down into a recession, affecting consumer confidence - things of that nature. But both Ben Bernanke, who came to the Hill and testified not long ago, and the director of the CBO - economists down the line - said, hey, look, we don't know what's going to happen with the economy. We know there's going to be a slowdown. Until the housing market can come back, this can only help.

MS. BORGER: Why can't they get this - first of all, I think the question is applaud them when they actually get something done, and it's not there yet but I guess the second question is why does it take so long for the checks -check is in the mail. Why will it - it's going to take a while, right?

MR. VIQUEIRA: That was a big part of the negotiations, as I understand it because now, apparently back in 2001 when we had a similar rebate it took about two months from the enactment of that legislation. It's perhaps going to take another few weeks, a little bit longer this time, maybe even three months. People will start seeing checks in May and perhaps into June. Remember, the difference this time - it's tax season. It's the filing season, and the IRS is going to be swamped, but they say they did take steps to get these out a little quicker procedurally than otherwise might have been given the time of year.

MR. DUFFY: What's the piece of this that's most likely to be problematic to both sides? And what was that thing that was mentioned about federally sponsored mortgage limits, what's that?

MR. VIQUEIRA: Okay. First, well let me start with that. And it's a big deal and perhaps underplayed. Everybody's talking about, am I going to get $600? Am I going to get $300? Am I going to get $1,200? How many kids do I have? Ka-ching, ka-ching, ka-ching. But perhaps just as important, efforts to mitigate the housing crisis, the quasi-governmental agencies Fannie Mae, Freddie Mac - we know about them - have a limit in how much they can handle in terms of a mortgage - how much you can funnel through them and typically get a lower interest rate and the limit is $417,000. That's going to go up to as much as $730,000, depending on where you live and what you're eligible for.

MS. IFILL: Now, what we know for sure the way things work in Washington, is this was a deal between the House Democrats and the administration.

MR. VIQUEIRA: Yes.

MS. IFILL: The Senate Democrats aren't part of this deal yet.

MR. VIQUEIRA: No and they are already asserting themselves. Yes, there're some very powerful chairmen there, Max Baucus, the Finance Committee chairman, Pat Leahy, the Judiciary Committee chairman. They want expanded unemployment benefits. They want expanded food stamp benefits and these are things that economists do say would have a very quick effect on the economy. And that is, after all, what they're trying to do with mailing out these checks is provide a quick stimulus - get money into the hands of people, lower and middle income people who need that money, will turn around and spend it and provide the necessary stimulus.

MS. BORGER: But politically isn't there a delicate balance here because they can't really stand in the way of this stimulus package, particularly when the president gave up making his tax cuts permanent.

MR. VIQUEIRA: And you know what the ironic thing is is now I think Democratic leaders and Republican leaders in the House are counting on that 60-vote Senate threshold to bail them out this time because it's going to be hard for them, if they want to add the food stamps, which the Republicans in the House are very much against, or the expanded unemployment benefits, at least in this package it's going to be very hard to reach the threshold, particularly if the president weighs in and tries to keep Republicans from voting in favor of that -

MS. IFILL: And of course we've seen all the presidential candidates beginning to weigh in on this as well.

MR. VIQUEIRA: That's right and most of them are against it.

MS. IFILL: They're against it or they just don't think it goes far enough?

MR. VIQUEIRA: Well, keep in mind they're running in primaries, trying to attract the votes of core voters in the Democratic and Republican Parties respectively. Most of the primaries now, as we know, closed. Talking about some of the points that would appeal to Democratic base voters - the unemployment benefits, the food stamps - Republican base voters - extending the Bush tax cuts, 2001, something the president himself took off the table.

MS. IFILL: Which brings us to campaign '08. South Carolina Democrats vote Saturday and Florida Republicans vote Tuesday. Along the way to these next critical primaries, voices have been raised, touchy issues have been debated, and political miscalculation and recalculation have ruled the day.

SEN. MCCAIN: We need to return to the Reagan years. We need to have fiscal conservatism. We need less government. We need less regulation. We need to end of spending spree which has eroded our base of Republican support.

GOV. MITT ROMNEY (R-MA): I've been there and I think it's time to have a president who thoroughly understands the economy, understands jobs, knows why jobs come and goes, knows how - how we could be competitive around the world. It's something I know intimately.

MR. RUDY GIULIANI (R-NY): I probably never did anything "The New York Times" suggested I do in eight years as mayor of New York City. And if I did, I wouldn't be considered a conservative Republican.

SEN. OBAMA: Everybody says I'm for change, but let me tell you, you can't be a master of a broken politics in Washington and then say you're the best person to change it.

SEN. CLINTON: I think we've got to start solving the problems of America again. I'm willing to take on the hard problems because I think America's ready for a leader who will lead us to solve these problems now.

SEN. JOHN EDWARDS (D-NC): I stood on that stage and I listened to all the personal squabbling between Senator Clinton and Senator Obama and I was proud to be there representing the grown-up wing of the Democratic Party.

MS. IFILL: Well, and that's just the beginning of it because the din has been deafening, especially for you poor or lucky folks in Florida and South Carolina. We'll start in South Carolina tonight with the "Washington Week" alum, Wayne Washington, now working for "The State" newspaper in Columbia. So how does this all look from the ground up, Wayne?

MR. WASHINGTON: It's competitive and it's frenetic. John Edwards spent a good chunk of his day today campaigning in the northern part of the state where he's from. He was born in South Carolina. Appealing, he hopes, to those low and moderate-income voters that he believes form the backbone of the country and perhaps form the backbone of his support.

Barack Obama spent his time in the Midlands, in the Columbia area appealing to women voters. He trails Hillary significantly among women and he really wants to make up ground there. And Senator Clinton spent her day here also appealing to African-American voters, and so they're all over the state working hard. The weather tomorrow is supposed to be very good, so Democrats are expecting a big turnout and this election has been a wild ride.

MS. IFILL: Well, it sounds from this end that it's been wild. And I wonder when you talk to voters, when you talk to these women voters or these targeted voters, we see John Edwards seems to be getting 40 percent of the white vote, for instance, and we see Barack Obama leading with the black vote and Hillary Clinton, as you said, with the women's vote. Are they as engaged as these candidates appear to be in South Carolina?

MR. WASHINGTON: They are very engaged - very, very engaged. And they - and they frankly are offended by these easy categorizations that we sometimes make. I've spoken to many female voters, for instance, who feel that Barack Obama or John Edwards is the best candidate for them. I've spoken to African-American voters who say that they appreciate Hillary Clinton's experience. She's lived in the White House before. I spoke to some voters during the King Day rally at the Statehouse here in Columbia and those voters - they just have a variety of views and they are not - just because you see a woman doesn't mean you see a Hillary supporter and just because you see an African-American doesn't mean you see a Barack Obama supporter.

MS. IFILL: We'll be on the edge of our seats. Hold that thought for a minute, Wayne, because I want to ask Michael Duffy here about the Republicans in Florida.

Now, they're also completely, as last we checked, up in the air. Rudy Giuliani's last stand, how's it going?

MR. DUFFY: Well, he's moved there. He parked himself in Florida for the last couple of weeks after having tried to compete other places. So this really is the place where he has to - he will live or die. And at the moment he's not doing great in the polls. We'll see what happens. It's a complicated state. It's - one fifth of Floridians are foreign born. Another fifth or some of them are Hispanic. There's a huge - the highest percentage of seniors are in the state. But it's a swing state. Whole parts of the state are sort of Southern culturally, and so it's a - it is a state that is as closely contested in the fall as it is - and the Republicans are in a very, very tight race - Mitt Romney, John McCain. The expression I keep hearing today was photo finish, photo finish. Just wait, it's going to be a photo finish. We won't know for a while until after it's done. After all, this is Florida we're talking about. So -

MS. IFILL: Does it mean - does it count on that Mitt Romney seems to have a little bit more cash on hand than John McCain these days?

MR. DUFFY: It certainly helps that he has a much bigger wallet. McCain is trying to raise money like mad. They said today - McCain's folks - that they were trying to - they were spending every dollar they could going into this weekend, maybe a million dollars on television and radio. It's hard to believe they could outspend Romney given what he has to spend. There was a huge fight for endorsements of Republican politicians. Today Mel Martinez, the junior senator from Florida endorsed McCain but no one got the endorsement of the governor. That was closely contested. And so all through this we have seen in the Republican race a see-sawing and a roller coaster of who's ahead, and once again we don't know.

MS. IFILL: Let me ask you about that see-saw and roller coaster, Gloria, because if you had to - it's shocking that Iowa was, what, three weeks ago. It feels like it was -

MS. BORGER: Is that all?

MS. IFILL: Yes. I know. Feels like three years ago. It was this month. But think about it, go all the way back. If you had to go back to before the first voting began, what's the biggest shock and surprise?

MS. BORGER: No frontrunner. No, no frontrunner anywhere. No bounces. It used to be, in the old days, when you won a primary you would get a huge bounce out of it, then you'd have momentum and you would go on to win and win again. Now you just kind of get a little burst of support, but not a huge bounce of support. And so you have these candidates in the Republican side - clearly the Republican voters haven't made up their minds. The Democratic voters haven't made up their minds.

The other thing that's been interesting to me, particularly on the Democratic side - and Wayne, you can probably speak to this in South Carolina - is how contentious and nasty this race has gotten between Hillary Clinton and Barack Obama with all kinds of issues being injected into it from whether Barack Obama really likes Ronald Reagan or not to the issue of race. And Bill Clinton getting involved in this race has changed the whole character of it, I think.

MS. IFILL: Wayne, before we ask you to talk about that, I want to talk a little bit about Bill Clinton because he's been one of the biggest players in the political field this week and he's not even a candidate, or at least we don't think he is.

PRES. BILL CLINTON: Long before South Carolina was in play, when we were in Iowa a month ago, I never uttered a word of public complaint when Mr. Obama said Hillary was not truthful, no character, was poll driven when he had more pollsters than she did, when he put out a hit job on me.

MS. IFILL: Hit job on me. Bill Clinton is no shrinking violet. He was out there for a reason, Wayne. What was that exactly?

MR. WASHINGTON: Well, it can be argued, and certainly some of Obama's supporters do argue, that this was a deliberate attempt to muddy Obama, to basically drive white voters away from Obama, to make Obama less than the above-the-fray, nonpartisan candidate. And the polls certainly indicate that something's happened. Obama has very little support among white women in particular. This has been a fairly effective strategy, if it is - in fact has been a strategy. It certainly has narrowed the gap between Obama and Clinton. And it's been very effective and Obama's supporters are very unhappy about it. And while Senator Clinton's supporters seem eager to kind of say hey, this is part of the rough and tumble part of politics, Obama's supporters are remembering this. I've spoken to legislators and voters and their thinking is that they can't believe this is coming from a couple that they've admired so much.

MR. DUFFY: You put your finger on what I think is the strategic goal of the Clinton administration - it's an acid flashback - (laughter). And that is to knock Obama off his pedestal and get him out of the above partisan place he was when he was kind of impervious to attack. They've been trying to do this for weeks. And in fact, on the question of whether it was premeditated or not, I think Bill Clinton was quoted in "The Washington Post" this week saying, "I think it was the right thing to do," which indicated quite clearly they had been trying to do this for months.

MR. VIQUEIRA: So judging from everything we've heard from Wayne and the presence and the forward position, the out front position of Bill Clinton has been a net benefit now or is Clinton fatigue a factor that's got to be dealt with?

MS. BORGER: Well, I think that's a long-term - that's a long-term question. I think in the short term you can make the case, and a lot of people in the Clinton campaign make the case, that Bill Clinton as precinct captain in Nevada saying, "oh, my god there was voter suppression over there and voter suppression over there" may well have helped them and that he may in fact, as Wayne suggests, be helping her in South Carolina lower the altitude of Barack Obama. But in the long term, I think there is a long-term question here, if she wins the nomination, you're reminding people of the couple - the Clintons - and the whole psychodrama of the '90s -

MS. IFILL: But the question is, are we the only ones who care about the psychodrama or do voters respond positively?

MR. DUFFY: I think you could see in the debate, the MSNBC debate in Florida last night, if there was a memorable line it was issued by Mitt Romney, who again had a good night talking about economics. And he said - I'm going to read - I brought the quote with me because I think it's worth repeating: "The idea of Bill Clinton back in the White House with nothing to do is something I just can't imagine."

MS. IFILL: And what was striking about that is when Tim Russert said to him, "What do you mean?" he kind of backpedaled from that.

MR. DUFFY: Just exactly what he wanted to say that and nothing more.

MS. IFILL: And no more.

MR. DUFFY: The Republicans see this as - I think as Gloria suggested - see this a potentially huge line of attack.

MS. BORGER: To energize their voters quite -

MS. IFILL: But the offstage candidate with Republicans, Michael, seems to be Ronald Reagan. He's almost playing some sort of ghost role in this campaign.

MR. DUFFY: He has hovered over this race because he was the last sort of Republican president they all agree was a good thing. They don't feel that way about George W. Bush. They certainly can't say that - say that they felt that way about Bush's father since he was defeated for re-election. And so they have to go back to Reagan. It's complicated when a huge number of voters weren't, in some cases, fourth to fifth weren't alive for Reagan, but it's something they referred to a lot.

MS. IFILL: Wayne, you want to jump in?

MR. WASHINGTON: Yes, I wanted to ask a question about Reaganism and about the economy now. I wondered if as the economy becomes more and more of an issue if it's something voters in Florida are really obsessed with as they are here in South Carolina. That's suddenly become the hot issue. And I wonder if that plays to Romney's strengths and if voters there are responding to that.

MR. DUFFY: Yes, Florida is a state with a huge percentage of small businesses, one of the highest percentages in the nation. It's no accident that Romney talked about the economy. He'd done really well with the economy in Michigan, where he won a week ago. He's been on that sort of attack for a while. And he's always been more comfortable talking about the economy and business related matters than he ever was about foreign policy, which he doesn't know much about, or social issues, which he (back-and-forthed ?) on ever since he got in the race. So it's his safe ground.

MS. BORGER: I think it's not really good for Giuliani. It's not his safe terrain. It's not good for John McCain. It's not his safe terrain. They're all about 9/11, fighting terrorism, strong on the war, and suddenly you're talking about the economy. But McCain has now started saying, "Romney is a manager. I'm not a manager. I'm a leader."

MR. VIQUEIRA: And this fight for the Republican heart and soul for the mantle of Ronald Reagan that we see, we're entering a new phase of the campaigns on the Republican side in particular, the closed primary phase. And John McCain has benefited from registered independents heretofore. What -

MS. IFILL: That's going to be the test in Florida - to see if that still happens.

MR. DUFFY: He hasn't done very well on old-fashioned, main-street Republicans in the contest to date. Another factor that's funny about Florida is that it's one of the states where they allow a long time for early voting, absentee voting. And Giuliani, who again has been there a long time, has been having rallies outside absentee and early voting stations. So he has the rallies and he says, "thanks for - (unintelligible). Now, let's go vote." And a lot of people do. So there's a factor here we can't even measure in the sort of strangeness of the Florida Department which is a big department.

MS. IFILL: I want to talk a little bit about a candidate we haven't mentioned very much but who may have - be a big factor in South Carolina, first you Gloria, then you Wayne, John Edwards.

MS. BORGER: John Edwards - yes, he seems to be -

MS. IFILL: He's not done yet.

MS. BORGER: No, he is not. He's got an economic message that really resonates with voters who are hurting. And I think South Carolina is a real test of that. And then we'll see how he does in South Carolina. Then we're going to look down the road to see how long John Edwards can stay in this race. He's got federal matching money, so he's not going to be broke. And whether he can take with him 200 or 300 delegates and actually make a difference in who becomes the nominee.

MS. IFILL: Wayne, he's famously born in South Carolina, was a senator from a neighboring state, North Carolina, and is out there saying, "I'm still there."

MR. WASHINGTON: Yes, he, as you mentioned, he was born here in Seneca and lived here for much of his boyhood. I spoke to Senator Edwards on a conference call with some other reporters a couple of days ago and I made the mistake of asking him, when are you going to win a race? We've had a few and you haven't won anything.

MS. IFILL: I bet he liked that question a lot.

MR. WASHINGTON: Oh, he really did not like that question and so I got the sense from that that he - he clearly is planning to stick around for a while. And I spoke to Congressman Clyburn today, who's kind of a kingmaker here in South Carolina who's been lording over this whole process, and he said he hopes Edwards stays in and that this is healthy for the party. Edwards - with the back and forth between Obama and Clinton, Edwards really was the beneficiary of that. Voters seemed to like the way he handled himself. And his events have been fairly well attended. And so Edwards seems to be on the rise. We'll find out tomorrow if he's rising enough to catch the top two.

MS. IFILL: We have to be - we're almost shockingly out of time and I want to make sure we mention the passing of one Republican candidate and one Democratic candidate, Fred Thompson and Dennis Kucinich. Both of them leave not many handprints on this race. What do you think?

MR. DUFFY: Fred should have gotten out hereafter, as they say. He fizzled before he got in and then he went downhill from there.

MS. IFILL: And Dennis Kucinich has a tough -

MR. VIQUEIRA: He does. He's got a very credible primary competition in the Democratic primary. He's got events coming up on the calendar in Ohio. He decided now was the time to get out.

MS. IFILL: So, Glo, what happens next?

MS. BORGER: I don't know. I think - I've covered politics a long time and I've never seen a race that's this interesting. And I think it's because the country is really - understands what an important election this is and they want to be careful about what they do, and they're not quite sure where they want to go. And all of us pundits were wrong, wrong, wrong, this is going down to the wire and it's -

MR. DUFFY: It's just a benefit for them.

MR. VIQUEIRA: Could we have a - gasp - brokered convention?

MS. IFILL: Oh, don't say it. Don't say it. Don't even say it. We're not talking about that yet. Well, thank you everyone. Thank you, Wayne, down in South Carolina thanks for joining us.

MR. WASHINGTON: Thank you.

MS. IFILL: Another raucous week. We'll be on pins and needles waiting for this week's voting and preparing for the big Super Tuesday primaries February 5th. In advance of that, we'll be on the road next week, this time in Southern California where we will be broadcasting Friday from the Alex Theater in Glendale. In between now and then, two primaries, two more debates, and the president's final State of the Union speech. Oh, yeah, that. Keep up on daily developments on "The NewsHour with Jim Lehrer." And then we'll sort it all out again next week on "Washington Week." Good night.