MS. IFILL: Deficits and priorities, the beginning and the end of bipartisanship, gays in the military, and the politics of terror, tonight on “Washington Week.”

PETER ORZSAG: One of the lingering problems in our financial markets, however, is access to credit for small businesses. That’s why in this budget –

SEN. JUDD GREGG (R-NH): No, no, no, you can’t make that type of statement with any legitimacy.

MS. IFILL: Fireworks at a budget hearing? Fresh signs of broad disagreements in Washington, over spending and debt.

PRES. BARACK OBAMA: We simply cannot continue to spend as it if debts just don’t have consequences.

MS. IFILL: Over the balance of power and politics.

SEN. SCOTT BROWN (R-MA): I’m hopeful that there’ll be bipartisan negotiations. That’s part of the problem, the fact that there is – it was always 60-40, 60-40.

MS. IFILL: Over who gets to serve his or her country.

ADM. MIKE MULLEN: I cannot escape being troubled by the fact that we have in place a policy which forces young men and women to lie about who they are in order to defend their fellow citizens.

MS. IFILL: And over who gets prosecuted for terrorism and how.

SEN. LINDSEY GRAHAM (R-SC): I believe it is inappropriate to give the mastermind of 9/11 full constitutional rights of an American citizen.

MS. IFILL: Washington at war. We sort through it all with the reporters covering the week: Jackie Calmes of the “New York Times,” Michael Duffy of “Time” Magazine, Nancy Youssef of McClatchy Newspapers, and Pete Williams of NBC News.

Award-winning reporting and analysis, covering history as it happens, live from our nation’s capital, this is “Washington Week” with Gwen Ifill produced in association with “National Journal.”

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

MS. IFILL: Good evening. Budget season is like Christmas here in Washington. There are the true believers, deficits bad, spending good. There are those who embrace it as a way of promoting an agenda. One politician’s investment is another’s wastefulness. And in the end, the buildup often outshines the payoff. Witness the sermons delivered President Obama and House Republican Leader Boehner.

PRES. OBAMA: In order to meet this challenge, I welcome any idea from Democrats and Republicans. What I will not welcome, what I reject is the same old grandstanding when the cameras are on and the same irresponsible budget policies when the cameras are off. It’s time to hold Washington to the same standards families and businesses hold themselves.

REP. JOHN BOEHNER (R-OH): This economy went through a very difficult meltdown, and over the course of the last year the policies that are coming out of this administration have caused us to lose more jobs. And so we’ve got to change those job-killing policies if we expect the economy going again and put Americans back to work.

MS. IFILL: Depending on your point of view, either one could have been grandstanding. Jackie, you covered more than your share of budgets over the years. What are we to take at the end of the week from all this to-and-fro?

MS. CALMES: Well, we’re not to take a lot of hope for action this year to bring this down. The budget that the president has laid out for the coming fiscal year would be the third trillion dollar deficit budget in a row and before we even get there, though, the deficit for this fiscal year that we’re in has gone up to an estimated $1.6 trillion. Now, the reason behind all of this is chiefly the recession. The government is bringing in less in tax collections than it would normally get in good times from business and individuals and it’s spending out more chiefly in what we call the automatic stabilizers like unemployment compensation, food stamps.

But then there’s also the stimulus spending. But really, that’s a relatively small portion of this. What it really comes down to is that for long-term spending reductions, you got to go where the money is. And that’s Medicare and Medicaid. And it’s some change in the tax code because we, even in good times, got a gap between taxes coming in and benefits going out and that’s called the deficit.

MS. IFILL: Today we saw that new unemployment numbers came out, jobless numbers, 9.7 percent is the jobless rate now as opposed to 10 percent, which sounds like things are headed in the right direction but?

MS. CALMES: Well, it’s a continuance of this trend towards recovery and job creation. But we’re still shedding more jobs than we’re creating and it’s a slow process. And frankly, I think it’s too slow to give Democrats much hope of a bounce going into the November elections. One hopeful thing is there was an increase in manufacturing jobs, but there was a big decline in construction jobs again. State and local employment is going down, which is going to in turn put more pressure on the president and Congress to ask for more stimulus money for the states to avoid them firing more people. But then that just invites another fight with Republicans.

MR. WILLIAMS: Giving these built-in problems you said there are with the budget, will it ever get down below a trillion without huge changes? What is it about a trillion?

MS. CALMES: Well, it will get below a trillion –

MS. IFILL: The deficit, not the budget.

MR. WILLIAMS: Excuse me. Yes, right.

MS. CALMES: It will get below a trillion by fiscal year 2012, the year after the coming year, which also happens to be the year where you’re going into a campaign. But it won’t be much under a trillion. And chiefly the reason it comes down and then continues to go down for most of the coming decade is because of economic growth. Once the economy recovers, you’re bringing in more taxes and you’re not paying so much in unemployment compensation and the like anymore. But just by the end of the decade, you pick up again. And what that represents is the – really the bulk of the baby boomers reaching retirement age and drawing benefits from Medicare and Social Security and Medicaid to the point where it’s unsustainable.

MR. DUFFY: Was there any sign this week that either the Democrats or the Republicans are serious about when they talk about deficit reduction? They’re always fairly serious about talking about it, but is there any sign that they actually intend to do very much about it, since that was something President Obama had talked about himself?

MS. CALMES: Well, you notice one of the things that came up with the budget was a new twist. It was this proposal to have a bipartisan commission. The Senate voted down creating such a commission by law to come up this year with a plan for reducing the long-term debt to sustainable levels. So the president said, all right, I’m going to have an executive order to the same thing. The difference is he can’t force Congress to act. The leaders of the House and Senate said we will hold a vote on it, but the Republicans still don’t believe it. There is no sign of two things. There is no sign really that the president has reached out to Republicans yet to be part of this bipartisan commission and there is no sign that if he did, the Republicans would say yes. So we’re going to get this standoff here and see whether we can even agree to talk about it, let alone do it.

MS. YOUSSEF: Jackie, you mentioned that there was an effort to help those in manufacturing jobs. Who else came out ahead in this budget? What were some areas where the president tried – other areas where the president tried to help groups out?

MS. CALMES: Well, the winners, as far as it went, were in education and in scientific research, civilian research, and in some of the innovation programs they call it, clean energy programs for both subsidies – tax subsidies and spending subsidies. But it really, in the scheme of things, isn’t a lot. In fact, if you took everything the president’s proposed and you just didn’t do any of it and let the budget sort of stand pat, you’d still have a deficit over $1 trillion.

MS. IFILL: Because hard choices have to be made and the president starts the ball rolling. It doesn’t end there. Well, the budget notwithstanding, this was supposed to be the week when we would be able to gauge what happens when the president talks turkey to both Republicans and Democrats. Last week we saw his in-your-face exchange with the opposing party. This week, the counsel he offered his own party went more like this: don’t cut and run.

PRES. OBAMA: So I would just suggest to this caucus, if anybody’s searching for a lesson from Massachusetts, I promise you the answer is not to do anything. The American people are out of patience with business as usual. They’re fed up with a Washington that has become so absorbed with who’s up and who’s down that we’ve lost sight of how they’re doing.

MS. IFILL: So is picking on the Republicans and nudging the Democrats the West Wing’s new definition of bipartisanship, Michael? (Laughter.)

MR. DUFFY: It used to just be called triangulation. He sounded a little bit like he was running for president there. This I think was the week when both parties realized that there was a limit of how much the public would take in terms of obstruction and delay and bickering and finger-pointing. But it was also the week where it was pretty clear that there wasn’t a lot of movement off into something more helpful, more constructive. There was really no sign, despite the widespread acknowledgement that something had to stop and enough was enough, that there was a new way forward in terms of cooperation between them at all.

In fact, there were signs that they might even be farther apart at the end of the week than the beginning. There was a lot of symbolism, a lot of theater. The president not only met with members of his party and sort of cattle-prodded them into action or tried to; he met with business leaders for lunch. He’s having some over on Sunday to watch the Super Bowl. He’s going to sit down next week with members of both parties to try to figure out a way forward legislatively.

And these steps are important signals to send. And the public, I’m sure, is desperate and so thrilled that it’s happening because they haven’t seen that kind of thing, but really just talking about meetings here. I was going to say one other thing – there’s no, however, sign that anyone has any less dug in than before. Republicans have said very clearly we just don’t see that it’s in our interests to give the president a win on anything, which is why the president in unusually explicit terms on Thursday night at a fundraiser after 10:00 at night said here’s what we’re going to do. We’re going to say we are handing you the olive branch of compromise and cooperation and if you don’t play ball with us, we’re going to swat you.

So at the end of the day or the end of this week, it’s not clear that they have moved much past sort of the stalemate they were in 10-12 days ago.

MS. CALMES: And didn’t he have Republicans in to the Super Bowl watch party last year, too?

MS. IFILL: Yes. It really helped a lot. But you know what? We saw financial regulation reform stalled again. We saw Senator Shelby say he’s going to put a hold, a blanket hold on all president’s nominees until he gets – seems like everything old is new again.

MR. DUFFY: Right and there is even some talk at the White House that maybe they need to take a hard look at the filibuster process. And maybe they actually – every time that there’s a vote in the Senate to sort of slow things down or delay things, maybe they actually need to make the filibustering senators come to the floor and actually filibuster, but they recognize that that may not be good for them in the future either. So that might be right. They want to hold back.

It was just a sort of collection of actions that seemed to add up to, again, more talk, not much progress, a lot of politics, which both sides seem to be trying to figure out is there any percentage for us to actually work together. A couple things -- perhaps on a jobs bill, there’ll be a little bit of cooperation, but very much at the margins. You’re right about financial regulation. That seemed to hit the skids again this week and it wasn’t going well for starters. So again, not a lot of hopeful sense.

MR. WILLIAMS: How about health care?

MR. DUFFY: This is – one of the things that happened in that meeting with the Democrats this week is that you could – they got up one after one and essentially pleaded with the president to say, show us the way we need to go now. It’s stalled. We’re not quite sure how to proceed. And he said at one point, okay, basically all of us need to get in a room and decide what we think. Because after all, it’s the Democrats who can’t agree yet on the measure.

MS. IFILL: And they’re still in the majority.

MR. DUFFY: That’s right. So he said this week we’re going to get and we’re going to come up with something. He didn’t say how long or when or how long it would take them. And then, once we have an agreement between us, we’ll go to the Republicans and say got any ideas? And if we don’t like them, we’re just going to have a vote. It sounded like he was saying, once we get our act together, we’re going to muscle this through. (Laughter.) Which again isn’t exactly the soul of compromise and bipartisan as you talked about.

MS. YOUSSEF: So given all this politicking then, what legislation is he more apt to put forward now than he was before? Are there some pieces that are more appealing in this environment or less appealing given all this effort to reach out and talk and create a climate of bipartisanship?

MR. DUFFY: Compared to the last year, it’s clear that the list is shrinking. And in 2010 it’s always harder because it’s an election year and Republicans are mindful that’s only nine months away. The other signal that we were able to get this week is that they would really like to put a jobs bill through. They have some money, depending on how you count it, left over from some of the money they got back in TARP. It’s borrowed, too, but it’s coming back in. They want to spend some of that on construction, on unemployment. There are some Republicans who are trying to work out with Democrats perhaps a payroll tax freeze for new workers. That isn’t done yet. A couple of weeks perhaps. They are very mindful that jobs are their number one problem.

MS. IFILL: Is it me or is it that it’s a circular firing squad. The Democrats are yelling at the president saying tell us what to do. And the president’s saying you Democrats ought to be taking the lead, and everyone’s frozen in place.

MR. DUFFY: Yes and a lot of those people are actually that are up for reelection this year and probably don’t see a lot of percentage in signing on to some of the things that the president would want to do, particularly in states where the races are close and the voters are more restive.

MS. IFILL: Okay, well let’s move on to another big moment on the Hill this week. A few of us around the table here remember the early days of the Clinton presidency in 1993, when he made what is now regarded as his earliest stumbles trying to keep a campaign promise to allow gays and lesbians to serve openly in the military. The Joint Chiefs fought back and everyone settled on a compromise. If you don’t advertise your orientation, no one will kick you out. This week military leaders said “don’t ask, don’t tell” never worked. Joint Chiefs Chairman Admiral Mike Mullen led the charge.

ADM. MULLEN: Putting individuals in a position that every single day they wonder whether today is going to be the day and devaluing them in that regard just is inconsistent with us as an institution. I have served with homosexuals since 1968. Everybody in the military has.

MS. IFILL: Some members of Congress, including celebrated veteran John McCain, disagreed.

SEN. JOHN MCCAIN (R-AZ): This would be a substantial and controversial change to a policy that has been successful for two decades. It would also present yet another challenge to our military at a time of already tremendous stress and strain.

MS. IFILL: So, Nancy, what if anything has changed?

MS. YOUSSEF: Well, legally, nothing has changed because it takes an act of Congress to end the ban on gays and lesbians openly serving in the military. But Admiral Mullen’s statements were really surprising to everybody in the Pentagon. When they appeared on the Hill, everybody expected Gates -- Secretary of Defense Robert Gates to say what we did, that we would commission a review, that we would look at ways to implement this, that we would honor what the president called for in his State of the Union address. But Admiral Mullen made a personal, impassioned plea for lifting the ban. And I think it really resonated in the building. So even if the law hasn’t changed, the tenor in the building has changed because the chairman has spoken.

MS. IFILL: So you said you were over at the building. You were at the Pentagon the day after this announcement and did you get any sense in the hallways of what the reaction were? Were people surprised? Were people accepting?

MS. YOUSSEF: People were surprised. It caught everyone off guard because again I think this has been a pretty demure chairman and here he came out and said it with such conviction. At one point on the Hill, a congresswoman said to the chairman, I appreciated you sharing your feelings. And he corrected her and said these are my beliefs. At another point Senator Sessions said – questioned him and said this is our job to change, not yours. And he admonished him and the chairman very strongly said this is about leadership in terms of why he said what he said. And so it really caught the building off guard. And you heard a lot of talking in cubicles and in lines about personal experiences of serving with gays and lesbians in the military, what it means to unit cohesion, what it means to troop morale. So it really spurred a discussion throughout the building and it was an interesting one and one, again, where people were starting to say, it’s now not a matter of if, but when.

MR. DUFFY: I don’t think there’s any question that in the society as a whole attitudes about homosexuality have changed hugely since 1992, particularly among the group of people who is most likely to go into the military, teenagers, much different than it was then. I guess the question I have is inside the rank and file uniformed military, has it changed, or is that culture – I recognize that the Pentagon is one place – but inside, when get outside of Washington, is it the same or do you think that’s changed more broadly inside the military culture?

MS. YOUSSEF: I think it sent a shock wave, if you will, through the building. The top leadership are still hesitant on General James Conway, the Marine Corps commandant, has said he is opposed to it. General George Casey, the Army chief of staff has said not while we’re engaged in two wars. But if you’re a soldier now and you’re serving in Iraq and Afghanistan, you know that it won’t be tolerated. At the minimum, there is no more joking and harassing. The highest ranking military officer has spoken and said that this is not acceptable. And I want an Army or a military – excuse me – where people don’t have to lie about who they are to defend their country.

MS. CALMES: Do you see the same generational divide that you sort of see in society as a whole within the military?

MS. YOUSSEF: You do generally. Generally younger soldiers have no problem with it because they grown up their whole lives, many of them, their adult lives under a don’t ask, don’t tell, so this is not a new issue for them. For some the older rank and file, they’ll say this fundamentally changes the culture of the military. This is a family-oriented unit. This is something that will change how we serve. They’ll bring up things like we’ll have to get separate facilities. What would it be like if gays and lesbians were allowed to show public displays of affection on base? It will change the culture.

MR. WILLIAMS: So as a practical matter, what happens now in the next – until Congress, if they do repeal the law, will there be fewer separations?

MS. YOUSSEF: Well, Secretary Gates spoke to this. He said we’re no longer going to have third parties come forward and be allowed to out gays and lesbians in the military. Since 1994, 13,000 -- roughly -- servicemen and women have been forced to leave the military under “don’t ask, don’t tell.” Eighty percent of those were people who came forward on their own. And the secretary is trying to address the remaining 20 percent. And I think part of that is to try to get at the true intent of “don’t ask, don’t tell,” which is really if you’re a gay or a lesbian military person and you don’t want to serve, you don’t have to, but we don’t want a climate where people are persecuted, where there are witch hunts going on to search for people who are gays and lesbians and force them out of the military

MS. IFILL: And also practically they’ve just stopped enforcing this for quite some time.

MS. YOUSSEF: That’s right. At the peak in 2001, it was 1,273. Eight years later and two wars later, we’re down to 428 in 2009.


MS. IFILL: A year.

MS. CALMES: Why does it take a law now, if it was originally a presidential policy?

MS. YOUSSEF: Because “don’t ask, don’t tell” is essentially an instruction sheet on how to implement the law on the books that says gays and lesbians can’t serve. So you have to get rid of the law, which would essentially nullify the order.

MS. CALMES: I see.

MS. IFILL: Okay, thanks a lot, Nancy. And finally tonight the debate that never goes away, how best to fight terror. This exchange at a Senate hearing left a distinct impression that the U.S. could be under imminent threat.

SEN. DIANNE FEINSTEIN (D-CA): What is the likelihood of another terrorist-attempted attack on the U.S. homeland in the next three to six months, high or low, Director Blair?

DENNIS BLAIR: An attempted attack, the priority is certain, I would say.

SEN. FEINSTEIN: Mr. Panetta?

LEON PANETTA: I would agree with that.

MS. IFILL: Even Washington’s newest senator misread it.

SEN. BROWN: The CIA director said that there will be another al Qaeda attack here in the United States in the next three to five months. And obviously this is frightening news.

MS. IFILL: I didn’t hear that. The president’s budget also makes clear that another anti-terrorism goal -- closing Guantanamo -- is even farther out of reach. But the administration’s key priority this week was to defend using civilian justice to prosecute alleged terrorists, an approach that has come under sharp attack in the case of Umar Abdul Mutallab, the alleged Christmas Day bomber. Pete broke the story that he’s talking again. Why are we hearing that now, Pete?

MR. WILLIAMS: We’re hearing it because he is talking again because the word was starting around about it and because the administration is eager for people to know this. Ever since he was arrested, he was initially questioned. He talked for about an hour. Then he went into surgery for the burns on his legs. And when he came out, they tried to question him again and he said enough. So they finally gave him the Miranda warning and he clammed up. And the administration has been hammered by Republicans who say you’ve completely mishandled this case. He should never have been declared somebody in the civilian court system. He should have been an enemy combatant in the military justice system and we could have exploited him for more intelligence.

So the Obama administration is eager for the public to know that no, in fact, putting him in the civilian court system hasn’t stopped him from talking. He is talking now. He is giving all the names, dates, places, who he met with, where he went, how the plot was organized, who put him up to it. And so they say, look, the Miranda warning was not the end of the day.

MR. DUFFY: Isn’t some of the back and forth about this part of the leftover fight from the Bush administration about whether the entire war on terror and the change in the way they defined constitutional rights was the right step then, and how much of this is really important to prosecuting this case and finding out who sent him and whether we can get that guy?

MR. WILLIAMS: Well, I suppose you could – well I think there’s probably equal amounts of it, but I think there is some very legitimate concern about whether this was a missed opportunity. The government says no, it wasn’t. Look, he is talking. And they say, by the way, that what got him talking again was the decision to go find members of his family in Nigeria, where he’s from, who would come over and persuade him to talk. The administration insists that if he had been an enemy combatant in the military justice system, his family members would never have come here. And look, they say there’s no guarantee that putting somebody in the military justice system will somehow make them more likely to talk to us. In fact, they say historically is experience with people in the criminal justice system talking, even after they’re arrested, even after they’re given the Miranda warning and there isn’t that history with defendants at least in the military justice system in the U.S.

MS. CALMES: Is she talking, do they think, because there’s sort of deal that he feels he is going to get?

MR. WILLIAMS: They insist that while there are plea negotiations or the possibility of a plea is going on – I shouldn’t have said negotiations – that they’re not – he is not talking in return for some offer. If you talk to us, we’ll give you this. We’ll try to cut you sentence. They say that sort of deal-cutting is not going on, but it does seem very likely that this case will end with a guilty plea and not a trial.

MS. YOUSSEF: Given that, Pete, going forward, what does it say about how you go about deciding whether to prosecute someone under a civilian court or under a military commission?

MS. IFILL: It seems to me that’s the question about Guantanamo. That’s the question about what’s happening at so many different levels.

MR. WILLIAMS: Yes, that is the big question. Well, I’m not sure it provides an answer. What they say that in this case, look, we can use the civilian justice system. We can still get him to talk. Now, what the Republicans are saying is yes, but he was silent for a month. The fact is the Obama administration is willing to put some people on trial before military commissions, for example, the defendants who were accused of attacking the USS Cole in Yemen. They will go for a military commission. Some will go for – will be in civilian trials.

MS. IFILL: As in New York.

MR. WILLIAMS: Right. No easy answer to this.

MS. IFILL: Yes, okay. Well, we’ll be watching all of it. Thank you all very much. We thank you as well. We have to go now and dig ourselves out of a Washington snowstorm, but you keep up with daily developments every night at the PBS “NewsHour.” And we’ll see you again next week on “Washington Week.” Good night.