Friday, October 30, 2009

MS. IFILL: The economy rebounds – somewhat, but progress on health care, Afghanistan and swine flu slows. Tonight on “Washington Week.”

VICE PRES. JOE BIDEN: We’re moving in the right direction, we’re starting to make real progress on the road to recovery.

MS. IFILL: Finally, good economic news.

PRES. BARACK OBAMA: The 3.5 percent growth in the third quarter is the largest three-month gain we have seen in two years.

MS. IFILL: With at least one big exception

REP. JOHN BOEHNER (R-OH): I’m pleased that the GDP numbers this morning were up. But the question is where are the jobs?

MS. IFILL: The numbers tell the story as Wall Street heads up then down. While on Capitol Hill, the health care two-step continues with new Democratic plans.

SEN. SHERROD BROWN (D-OH): I think people don’t want to be on the wrong side of history on this.

MS. IFILL: And new hesitations.

JOSEPH LIEBERMAN (I-CN): If at the end it’s not what I think is good for our country and most people living in our country, then I’ll vote against cloture, I’ll join a filibuster and I’ll try to stop the bill from passing.

MS. IFILL: Meanwhile, worries mount about the availability of the H1N1 flu vaccine.

SEC. JANET NAPOLITANO: This is not a situation that is cause for panic

MS. IFILL: But what to do? And along the Afghanistan-Pakistan border, fresh casualties complicate the U.S. effort as Secretary Clinton talks tough to old allies. Covering the week: Greg Ip of the “Economist,” John Dickerson of “Slate” Magazine and CBS News, Marilyn Werber Serafini of “National Journal,” and Nancy Youssef of McClatchy News Service.

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.”

(Station announcements.)

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

MS. IFILL: Good evening. We’ve given you so much bad news about the economy this year, it seems only right that we tell you when the news is good. Well, mostly, kind of good. We heard yesterday the U.S. economy actually grew in the third quarter, the first time that’s happened in more than a year. Wall Street soared. Then today, sobering news. Consumer spending dropped, incomes are flat, and Wall Street plunged. So, Greg, is this recession over or not?

MR. IP: Yes, if you just look at the numbers, the recession is almost certainly over. The economy contracted by an astonishing amount, but it grew by 3.5 percent in the third quarter, according to the number that most economists look at as the most comprehensive. But there is a great big asterisk next to that third-quarter growth number of 3.5 percent and that asterisk is because that a lot of that growth came from essentially the temporary stimulus of government spending and programs. For example, a lot of the gain in consumer spending that we saw was people rushing out to buy cars under the Cash for Clunkers program. And as soon as that program ended in August, car sales went right back down. That’s one of the reasons September was a weak month.

Similarly, we saw housing construction go up for the first time in over four years. But again, some of that was driven by people taking advantage of the new home buyer tax credit. The big concern is now that those things are expiring, unless Congress extends them, can the economy gain traction?

MS. IFILL: We saw Vice President Biden come out and other members of the administration today and say rah, rah, rah, rah “we created, we saved,” whatever the term is, 650,000 jobs because of the stimulus program. Is that so?

MR. IP: We can’t really say for sure because we can measure some of the jobs that were created by direct grants for infrastructure and spending and so forth. But tax cuts, for example, that’s essentially putting money into people’s pockets that they will go out and spend and create economic activity and save some jobs almost certainly. But you can’t count them. I can say that the vice president’s estimates are consistent with what most Wall Street economists think that the stimulus plan did. Unfortunately, all you’ve basically said is that instead of losing four million jobs, we only lost three million jobs since the plan was signed. And so as you can imagine, the Republicans are having a field day essentially saying that this is bunk.

MR. DICKERSON: Let me ask the question about what more the president can do? They’re championing what they did before, but isn’t there – aren’t there also a series of other measures that they’re trying to push forward to show they’re on the case and that they can still help people to get at this question of jobs?

MR. IP: Oh, yeah. In fact, ever since we had a bad jobs number a month ago, and I suspect we’ll have another very unpleasant jobs number in a week’s time, people in the administration and Congress have been scrambling to try and show that they can do something. And so you have what I would call a stealth stimulus taking shape on Capitol Hill right now. It involves things like extending unemployment benefits for people who’ve exhausted them, perhaps extending the -- extending the new home buyer tax credit up till April, and then offering it to people who actually already own their own home and a few other things like giving companies for their tax refunds. A lot of these things, though, I don’t actually think are a very good idea. The home buyer tax credit, all you’re doing is giving people large amounts of money for homes they probably would have bought anyway. And the president has even endorsed this idea of giving $250 to Social Security recipients because their cost of living increase is going to be zero. Well, that’s because inflation was negative. So their actual real benefits went up. There are much better uses for that money.

MS. WEBER SERAFINI: Greg, do consumers at this point really believe the recession is over?

MR. IP: They don’t really. In fact, consumer confidence went down in October. And a poll that was done for the “Economist” asked people is the economy getting better or worse. And by a significant margin they said it’s getting worse. So clearly they don’t believe it. And that’s because I think their primary benchmark is what’s happened to the job market and my job security. And employment is still going down. It will probably go down for a few more months.

MS. YOUSSEF: Given all this news, then, can we expect a hike in interest rates?

MR. IP: Absolutely not. The Federal Reserve is meeting in the coming week. There’s been a lot of speculation that maybe they’ll modify their language to suggest that an interest rate increase will be coming, perhaps in the next six months. Even if they do change the language, I think the odds of interest rates going up in the next six months are almost zero. Frankly, the economy is extremely weak with unemployment so high almost nobody can get a wage increase. That’s an environment for inflation to go down, not up. The fed really has to maintain these ultra easy conditions.

MS. IFILL: It was interesting to me today to see Vice President Biden come out and stand there with Governor Arnold Schwarzenegger from California on his right and Governor Martin O’Malley from Maryland on his left. And they said rah, rah – I’ve said rah, rah a lot tonight – I think the federal government has done a great job and we only want more. Are states as uniformly as supportive of all of this government intervention as they left that impression, one Republican, one Democrat?

MR. IP: I would say so because one thing we can see from the numbers is that states are spending a lot more money than their tax revenues should support. That difference is coming from the federal stimulus programs. And over the last six or seven months, a lot of the governors like Mark Sanford, who had basically said, I’m not going to take the stimulus money, they had to essentially –

MS. IFILL: So he got distracted by other things.

MR. IP: – he got a little bit distracted by other matters.

MS. IFILL: Okay, thanks a lot. The other big issue looming on the domestic agenda is, of course, health care. The players are familiar. Senate Majority Leader Harry Reid has his plan. House Speaker Nancy Pelosi has her plan. Republican leaders have no use for either of them. After weeks of a focus on a single Republican, Maine’s Olympia Snowe, attention now swings to the moderate Democrats and winning support from lawmakers like Nebraska’s Ben Nelson who won’t say where he stands.

SEN. BEN NELSON (D-NE): No secret handshake, no wink, no indication whatsoever other than I haven’t decided and I can’t decide until I see the actual physical bill, get a chance to review it. And then I can make the decision.

MS. IFILL: And then there is Joe Lieberman, the independent Democrat who made clear this week Reid will not get the 60 votes he needs to avoid a filibuster, if it comes to that. Is it coming to that, John?

MR. DICKERSON: It’s come to that. And let’s step back and look at what’s happening in the Senate. There’re sort of two hurdles that Harry Reid needs to get over. Because there’s unified Republican opposition, he needs to get all non-Republicans to create those 60 votes to keep a filibuster from happening. His first obstacle is Ben Nelson. Ben Nelson’s not – maybe not even going to let the conversation even begin, let the speeches begin, let the debate begin yet on health care. So he’s got to convince Ben Nelson. Why would Nelson want to stop things now? Because he’s got his maximum leverage to get things changed in the health care bill right now.

If he gets past Ben Nelson, well, there will be a lot of debate on the floor. And then at the end there will be a question of a filibuster and that’s where Joe Lieberman comes in. Lieberman’s got some things he wants to change in the bill too. So those will have to change or else Harry Reid won’t be able to get the 60 votes he needs to stop the filibuster and have that final vote. And these guys aren’t alone. There are a series of other moderate Republicans -- excuse me -- moderate Democrats who also have concerns about the bill that they want fixed.

MS. IFILL: So when Senator Reid says speaking for himself in the third person, “Joe Liebermann is the least of Harry Reid’s problems,” this is what he meant?

MR. DICKERSON: It is. Well, anytime a majority leader has to speak about themself in the third person, it is the time to steady yourself because –

MS. IFILL: Bob Dole -- shades of Bob Dole.

MR. DICKERSON: – it means things have gone wobbly. And Harry Reid has problems in dealing with these different kinds of Democrats. The Republicans are giving him no help and he’s got to try and shepherd a bill here through. And one of the ways he tried to do that is he included this government-run plan, this public option we’ve talked so much about. He’s got it in the bill. Well, that scared off a number of moderate Democrats. And he’s got to figure out how to get them back on board.

MS. WEBER SERAFINI: John, we’re entering a really critical time for health care with a lot of negotiations going on in both the Senate and the House. And President Obama has a very busy schedule for November and it’s not on Capitol Hill talking about health care. It’s mostly in Asia. What do you expect President Obama’s role will be during this critical time?

MR. DICKERSON: That’s right. The president will be out of town and then he’s also got this big Afghanistan decision he’s got to talk about, roll out, talk to the country about. There’s always been this question of when is the president going to engage? He has engaged in slow steps. He gave this address to Congress that tried to regain control of the debate. Basically, though, he is trying to give pressure and movement where he can. He brought in some progressives into the White House for a meeting to talk about a House bill that we’ll get to in a minute. And he said basically to these liberals and progressives “Take half a loaf, take three quarters of a loaf and declare a victory. Let’s focus on the good things here, which is insuring a whole bunch of new people, putting regulations on the insurance companies to make them give more benefits to people.”

MS. IFILL: And they said to him?

MR. DICKERSON: And they said to him actually, “We’re going to listen to you, Mr. President.” At least that’s what it looks like for the moment. Nancy Pelosi in the House is trying to put together a bill. She announced it this week, 2,000 pages. It’s a big bill but it includes all of these goodies that people have talked about. She needs to get 218 votes or maybe a little bit more, and she is working hard. She is buying them. She is trying to get those people onboard to have a win in the House. And the progressives have said “Okay, we’ll go along” – again, we’re talking about the public option which is a sticking point. They wanted a more robust public option to use a cliché that’s been much in the news. And they got a little bit less than what they wanted. They listened to the president and they said “Okay, we’ll go along with this less powerful public option and we’ll support this final bill.”

MR. IP: John, you mentioned the House bill. Walk us through where the primary differences are between that bill and the Senate bill because obviously the House has all along taken a much more aggressive, robust stance on issues like the public option and how they’re going to pay for it.

MR. DICKERSON: That’s right. There are some tricky things to get the House bill passed, but let’s assume it does. What would the differences be with the Senate bill? Well, on this question of the public option, even though Harry Reid has included a public option in the Senate bill; it’s not as robust as the liberals in the House would like. Those two will have to be reconciled when these two paths join and the bills are put together. That’s one problem.

The other problem is the question how do you pay for this monster? And in the House, what they do is they increase taxes on the wealthy. Now, in the Senate, they don’t like to raise taxes on the wealthy because the wealthy tend to write checks for Senate campaigns, which tend to be a heck of a lot more expensive than House campaigns. In the Senate, their version of paying for it is to tax these high cost insurance plans, the so called “Cadillac plans.” They don’t like that in the House because union – folks in unions who don’t get paid a lot in actual wages have negotiated over the years high cost insurance plans. So the unions don’t like that so they’re putting pressure on the House. How they square those two is a big problem.

There’s also issues about a drug benefit. Medicare prices for drugs can be negotiated in the House plan. In the Senate, they made a deal with the drug companies along with the White House to not have that be the case. That will also have to be reconciled. And then there’re about a couple dozen other troublesome things as well.

MS. YOUSSEF: So what areas do they agree on?

MR. DICKERSON: Well, they agree on the big stuff. And they’d like us all to pay a lot of attention to what they agree on which is insuring 36 million maybe people in the House bill, telling insurance companies, “Look, you can’t deny people because of preexisting conditions. You can’t stop care once you’ve treated them.” And then all kinds of other provisions to get people to focus on wellness and improve their health care and reform the system in that way. So there’s a lot they do agree on, too.

MS. IFILL: Well, thanks John. We got a lot here. That was good. There is health care debate as theory, and there is health care debate in the tangible present tense, especially if you’re looking for a swine flu shot. And especially when you hear the White House use words like “emergency” to describe the vaccine shortage. So, first let’s explain what the president meant when he declared a national emergency this week, Marilyn?

MS. WEBER SERAFINI: Right, well the president did declare a national emergency when it comes to swine flu. But really it’s not as big a deal as one might think. It’s more a technical matter. There are some rules and some regulations, for example. We’re facing some capacity issues in hospitals when it comes to ICU space, especially pediatric ICU space because this is affecting kids a lot more than the regular seasonal flu would. So if we have capacity issues and hospitals find that they need to set up emergency sites off campus, say, even if it’s just in the parking lot, there are specific rules and regulations about how close that site has to be to the actual facility for the hospital to continue to receive payments from the government and programs like Medicare. So, really, it’s more of a technical matter when he declares emergency.

MS. IFILL: Marilyn, you spend your days up to your eyebrows in these stories yet – you don’t mind my saying that you were in the middle of the story yourself this week as it were?

MS. WEBER SERAFINI: Yes, I definitely was. I have two daughters. One of them already had swine flu earlier in the summer and I took my other daughter to one of these mass clinics at a high school in Montgomery County to get the --

MS IFILL: Maryland.

MS. WEBER SERAFINI: -- in Maryland, to get the swine flu, the mist, which is made by MedImmune. It’s not the shot because the shot is pretty much – you can’t find it anywhere. So I did take her to get the mist and we were in line with about 999 of our closest friends and, fortunately, after about two and a half hours, we walked out and she was vaccinated. But it was quite a scene with lots of police and lots of cones and lots of flashing lights and it was very orderly.

But it really just shows you the significance and the importance of getting the vaccine. It also shows you the emphasis, because these were children. I would say that just about everybody there getting the vaccine was a child. This is the – as I mentioned before, 90 percent of the deaths are usually in seasonal flu, what we get – the flu we get every year – are in people who are 64 or older. In this case with swine flu, 90 percent of the deaths are in 64 or younger.

MR. DICKERSON: But the president and the White House said that they paid a lot of attention to this. There was a lot of planning. And they promised there would be lots of doses. There didn’t turn out to be as many as they had promised. Why?

MS. WEBER SERAFINI: Well, there are several reasons. But one of the big reasons is that we still make vaccines with chicken eggs. And it’s unpredictable. Somewhere along the line, the seed, the actual antigen that the manufacturers got from the CDC, the Centers for Disease Control, didn’t work so well. The virus grew very slowly in the eggs and, therefore, it produced far fewer doses than one would expect. So in the end, we had a lot of the vaccine that was supposed to be coming, just not coming. We were supposed to see a lot of this in September and here we are at the very end of October and people are going crazy to try to get it. It’s just not there.

MS. YOUSSEF: Marilyn, you mentioned that your daughter had it in June and that was some months ago. Is it fair to say that we’re near the end of the pandemic? Where are we in the sort of spectrum?

MS. WEBER SERAFINI: Well, the CDC was just saying today – they are having regular updates with the press – and they were just saying today that we are not done with this, although they have started to see a decline in certain states, but nationally we are still going up. We’re still seeing many more cases. And they really don’t expect this to be done right now. Even if we pass this wave, there is very likely to be – and we know this from past pandemics – a second wave that could hit more in the middle of the winter, maybe January, after the turn of the year. So we have a ways to go here.

MR. IP: Marilyn, how much do we know about this disease? I think that one of the reasons parents get so worried is that it’s got this air of mystery about it. Once the child actually has it, just how dangerous is it compared to, say, having the seasonal flu?

MS. WEBER SERAFINI: Well, for a child it’s much more dangerous because kids don’t usually – don’t get a lot of the seasonal flu. And when they do, it’s not so bad. Right now, unfortunately, as I mentioned, there have been over 100 deaths already for children in the United States for this flu. And what is really surprising is that while two thirds of these kids who have died are – have chronic conditions or are somewhat ill, a third of them are perfectly well kids.

MS. IFILL: Thank you Marilyn. And I hope everybody in the house is fine now.

MS. WEBER SERAFINI: So far so good.

MS. IFILL: So far so good. Well, on to foreign policy. The president today completed his seventh meeting with top military and political advisors on the choice ahead in Afghanistan. At the same time, his secretary of state was traveling in Pakistan, absorbing complaint and doling out some of her own to a key ally, telling newspaper editors she finds it hard to believe that somebody in Pakistan didn’t know of the al Qaeda leaders in their midst. My “NewsHour” colleague Margaret Warner asked her about that today in Islamabad.

MS. MARGARET WARNER: Are you saying there that you think there are people in significant positions in the government who are complicit in protecting them?

SEC. HILLARY CLINTON: No, but what I am saying – and I think the context is as you portrayed it – I respect their perceptions, whether or not they comport with what I believe to be the reality of their not trusting us on a range of issues. But in order to have the kind of partnership that we are seeking between our two countries, the trust deficit goes both ways. We have some questions of our own.

MS. IFILL: Nancy, as we listened to Hillary Clinton there, it seems like she’s laying the sort of broader framework for an argument in that entire region. Is that right?

MS. YOUSSEF: Well, she landed and there was a violent week in Pakistan and she not only found that violence there, but a verbal assault from the Pakistanis. The United States sees itself as an ally to the Pakistanis. The Senate just passed a $7.5 billion aid package. But the Pakistanis see the Americans as antagonizing the violence, contributing to the violence, the reason that they’re seeing more attacks in their country. And she went to try to calm those fears. And so –

MS. IFILL: They’re suspicious of that aid package.

MS. YOUSSEF: – that’s right. That’s right. And she met a verbal assault and she responded by saying criticism is a two-way street, and that’s where that comment came from. So it was her effort to open the dialogue and also to have a candid discussion about what that criticism is. It’s not, from the United States’ perspective, just the U.S. antagonizing forces there, it’s the Pakistanis not doing enough in their own country to thwart some of these forces that they themselves created.

MS. IFILL: One-two punch, she is doing that while the president very publicly wrestles with what to do in Afghanistan?

MS. YOUSSEF: That’s right. We heard more leaks this week about where it’s going. We’re hearing that as many as 40,000 troops. The president reportedly asked for a province-to-province report. Assault came as a very violent week in Afghanistan. Twenty-two Americans were killed in a two-day period, including eight in southern Afghanistan. And we’re starting to see that they’re getting close to a decision on this plan. We don’t know what it is yet. It’s all being done behind closed doors. But it comes at a time where he is really deciding how many troops he wants to commit in what is increasingly a fragile and unpredictable situation. It’s not just about Afghanistan but it’s about Pakistan as well.

MR. DICKERSON: What about the violence? Is that related at all to his decision, U.S. troops, and what is it about the violence in Afghanistan that’s new and different from what we’ve expected and learned about in, say, Iraq over the years?

MS. YOUSSEF: Yes, it’s remarkably different. In Iraq, a firefight that lasted 30 minutes was a long time. In Afghanistan, an eight-hour fire fight is normal. The attack on the Stryker Brigade, the 5/2 brigade out of Fort Lewis this week, it was a multipronged attack. They’re not just sort of planting an IED and running. They’re using RPGs and then launching IEDs.

MS. IFILL: Rocket-propelled grenade.

MS. YOUSSEF: Yes, forgive me. And then launching cruder, bigger IEDs -- explosives -- under these vehicles and that’s leading to more multiple casualties. And that’s much different than Iraq. We saw that, but generally the Iraqi attack was a lot less simpler in terms of approach. It was a one-two punch pretty quickly. This is multifaceted.

MS. WEBER SERAFINI: Nancy, why have we not had a decision yet on the troops? When do we expect that?

MS. YOUSSEF: Yes. It’s the $64,000 question in Washington. The Afghan election is slated for November 7th. CNN is reporting tonight that an effort between Abdullah Abdullah, who is Hamid Karzai’s running mate, to reach a power-sharing deal collapsed and it suggests that perhaps he will back out of the election altogether and putting everything sort of up in the air. That’s a factor in all of this. I think the president is waiting to see where that comes. He’s signaled that he’s waiting to see where that comes down. But in addition as we talked about, he has an Asia trip coming up in the next week. So the expectation now is that it will be somewhere between the 7th and 11th. But if this power sharing deal has indeed collapsed, that could complicate things even further.

MR. IP: Nancy, the president actually went out to see the bodies of some of the slain soldiers coming back, very significant from a symbolic point of view. What do you think the impact is of that decision? How do you think it plays in at all with the decision he ultimately makes?

MS. YOUSSEF: Yeah, he went out to Dover Air Force Base, which is where the fallen soldiers returned. He actually lifted the ban on the photographing of those ceremonies. It was an 18-year ban that prohibited media from seeing those images. This week he went out and met Sergeant Griffin, who was one of the eight killed in that Stryker attack.

MS. IFILL: His mother or his wife?

MS. YOUSSEF: Sergeant Griffin was one – he was a 29-year-old from Indiana.

MS. IFILL: Right, but he didn’t meet him. He met his –

MS. YOUSSEF: He met his remains and saluted his remains. And it was – the message he said he was trying to convey is that he understands the gravity of this decision. Every president should see a casket and having seen it in theater as they’re being loaded on to the C-17 for the trip home, it is something that stays with you. It makes the war very personal. And the message was clear that at the end of the day he’s sacrificing lives maybe.

MS. IFILL: All right. Thank you. Thanks everyone. We have to go, but the conversation continues online. Find our “Washington Week” Webcast at pbs.org. Beginning this week, you can become a fan of “Washington Week” on Facebook. Keep up with daily developments every night on the “NewsHour,” and we’ll see you right here, next week, on “Washington Week.” Good night.

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