January 21, 2011

MS. IFILL: A turning point week as the White House refocuses on the economy and Congress tackles healthcare, each side trying to set the pre-state of the union agenda, tonight on “Washington Week.”

At the White House pomp, circumstance, designed to accommodate an important ally –

PRESIDENT BARACK OBAMA: The currency issue is a part of the problem.

MS. IFILL: – all while trying to turn the jobs picture around at home.

PRES. OBAMA: The past two years were about pulling our economy back from the brink. The next two years, our job now is putting our economy into overdrive.

MS. IFILL: On Capitol Hill –

Rep. Louie Gohmert (R-TX) : I don’t want rationed care.

MS. IFILL: – a vigorous effort to roll back one of the administration’s signature accomplishments.

REP. JOHN BOEHNER (R-OH) [Speaker of the House]: Our goal is to stop the job destroying health care bill.

REP. PAUL RYAN (R-WI): What does this bill ultimately do when you really look at it all? This bill blows a hole through the deficit.

MS. IFILL: Washington’s political chess game turns three dimensional as senators retire.

SEN. JOE LIBERMAN (I-CT): I have decided that it’s time to turn the page to a new chapter.

MS. IFILL: Who’s likely to go next? Covering the week: David Wessel of the Wall Street Journal, Peter Baker of the New York Times, Doyle McManus of the Los Angeles Times, and Karen Tumulty of the Washington Post.

ANNOUNCER: 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.

(Station announcements.)

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

MS. IFILL: Good evening. Well, it couldn’t have gotten any fancier here in Washington this week. There were ruffles and flourishes and red carpets and famous faces and lots and lots of handshakes. The Obama administration pulled out all the stops for Chinese President Hu Jintao’s visit and went out of its way to stress the importance of the relationship.

PRES. OBAMA: At a time when some doubt the benefits of cooperation between the United States and China, this visit is also a chance to demonstrate a simple truth: We have an enormous stake in each other’s success.

MS. IFILL: So break down the numbers for us, David. Why is China considered to be so important?

MR. WESSEL: Well, it’s simply a matter of size. In 2000 the economy of China was smaller than the economy of California. Today – the Chinese just put out their numbers this week – China is three times the size of the California economy. This was very much about doing business. I thought – my favorite line that the president used was he said at the press conference with Hu Jintao, we want to sell you all kinds of stuff. We want to sell you planes. We want to see you cars. We want to sell you software. It’s hard to believe that in 1972 when Henry Kissinger and Henry Nixon that they could have imagined that today the issue would be, is the Chinese government stealing Microsoft Word instead of buying it? Or is the Chinese government at all levels being unfair because they prefer to buy from Chinese companies rather than American companies?

MS. IFILL: There’s always a lot of worry also that we seem to be in great debt to China. How serious is that really and how much of that is just like a sense of insecurity on our part?

MR. WESSEL: I think it’s very serious. I mean, basically, they hold $1 trillion worth of our debt. We were able to run huge budget deficits and to borrow lots of money during the financial crisis with very low interest rates here because they have so much savings and they want to give it to us. And that was one of the reasons why Fannie Mae and Freddie Mac were handled the way they were because they owned a lot of their debt. So it was very much in everybody’s mind that this is our lender coming to visit and we’d better be polite. And I think Hu Jintao was smart not to sort of needle us about it. He didn’t have to. In fact, I think at every opportunity he resisted the chance to kind of stick it to us a little. When asked about human rights, one can imagine another politicians saying, what about Guantanamo? When asked about the Chinese currency, he might have said, well, you know, you guys are making it worse with what you’re doing in monetary policy.

MS. IFILL: But that’s not what this visit was about.

MR. WESSEL: That was not what it’s about. It was about a guy who came to Washington representing a country that believes that we need them as much as they need us.

MS. TUMULTY: But not all the issues with China are economic ones. There were a lot of national security issues as well. Did we see any progress, for instance, this week on North Korea?

MR. WESSEL: I think actually that was one of the more encouraging things. It looks like what the U.S. official said to China is if you don’t want our aircraft carriers round your backyard, then you’ve got to take care of this thug in North Korea. And the Chinese kind of got the message and they seem to be very cooperative. Administration officials said they were pleased with what they heard from China about Iran, about the Sudan. So on that front, after some tension of when Secretary of Defense Gates went to China, the visit itself seemed to be, let’s all make nice.

MR. BAKER: What about – you mentioned human rights and needling. Usually there’s this question about whether we were going to needle them about human rights. How did President Obama handle that and what did President Hu say about that?

MS. IFILL: Especially with the Nobel Peace Prize winner this year being a Chinese dissident.

MR. BAKER: Right, locked up.

MR. WESSEL: Right. Well – who wasn’t allowed to go the ceremony, of course.

MS. IFILL: Who wasn’t allowed to attend.

MR. WESSEL: I think the president did as little as possible at the press conference. There was this great moment when a reporter asked Hu Jintao about this and Hu Jintao kind of ignored the question, blamed it on the translation. And the reporter then asked the question – another reporter pressed the case. I would love to know what Hu Jintao was thinking at that moment. And I thought it was interesting what he said – he gave a kind of starring defense but then at one point he said flatly that China has – a lot still needs to be done in China in terms of human rights. That seemed to be sort of a concession of some sort.

Unfortunately, the Chinese people didn’t get to hear that part. That part of the press conference was not broadcast in China. So I would say it was downplayed, although it came up and certainly House Democratic Leader Nancy Pelosi made a point of it when they met with Hu Jintao talking about Tibet and the Nobel laureate.

MR. MCMANUS: David, as you mentioned, the economic agenda here hasn’t just been about the United States selling stuff to China. We’ve got a problem with their currency. We’ve had problems with their policy on intellectual property and on those preferential laws on government contracts. Was there any positive movement on all those fronts?

MR. WESSEL: I think there was little positive movement, but in the right direction on things like intellectual property. If you do business in China, will they steal your stuff? And that’s why the CEOs were there. On the currency, I think there was not much progress. The currency has been rising too slowly for the U.S. taste. But U.S. Treasury officials just today were saying that they saw a little bit of movement in the actual language that the Chinese move. The Chinese are not going to move the currency because we want them to. The Chinese are going to let their currency rise if they think it’s a good thing for them to fight their inflation problem, which they have. So I think administration officials were encouraged at a slight movement but there was really no visible sign of progress.

MS. IFILL: I wonder whether Hu is actually kind of a lame duck leader in his own country and whether this helped or hurt this trip?

MR. WESSEL: I think as best we can tell he’s not a very strong leader compared to some of his predecessors. You’re right. His term – he’s going to be replaced in I think it’s about 18 months. And so he came to the United States – he was clearly pleased with this reception. They seemed to care a lot about the respect that they were accorded and it was a very smooth visit, as you said, all the bells and whistles and there was no interruption by Falun Gong, and then, as a reward, they’re letting the panda stay in Washington for another five years. (Laughter.) And they cut the rent. And they cut the rent.

MS. IFILL: They cut the rent on the pandas. Politics lives around the world. thank you, David.

Now to the domestic side of the story, the economy story. As the president prepares to head to Capitol Hill next Tuesday night, there is little doubt that he will use his state of the union speech to re-seize his domestic agenda. Listen for words like competitiveness and incentives and jobs. In this Sunday’s New York Times magazine, Peter writes about how the president’s economic team has wrestled with what Treasury Secretary Geithner called a brutal two years. Now they tell us.

MR. BAKER: Exactly. Well, if it was brutal for them –

MS. IFILL: Now they tell you.

MR. BAKER: Well, if it was brutal for them, imagine how it’s been for the American people.


MR. BAKER: This has been a really, really rough period and the president’s going to get up there and he has to try to explain to people why in fact things are beginning to get better without looking overly optimistic. He has a case to make: the banks obviously are healthy; they’ve returned most of the TARP money with interest; the automakers are back, they’re selling cars, they’re selling shares; the government is getting out of GM to some extent; profits are up in board rooms; the market’s up, and yet, and yet, and yet – 9 percent-plus unemployment 20 months straight. And if you count people who want jobs but don’t look for them anymore or who are working part-time but want fulltime jobs, we’re talking about 17 percent. One in every six Americans would like a fulltime job they’re not getting. So this is his conundrum. He can’t make the case that things are going too well because for a lot of people they’re not.

MS. IFILL: So when the president says, like we saw him say in Schenectady, you know, now the next two years are going to be about getting the economy into overdrive. What does that mean?

MR. BAKER: Well, the problem is that we’re seeing modest growth right now, but it takes a certain amount of growth – a lot of economists say about 2.5 percent – just to keep up with newcomers to the labor force. To really knock that unemployment down, you need to have overdrive. You need to actually begin having much more robust growth. And the American worker is a very productive worker and they’re not seeing the growth translate into new jobs. Right now we had 100,000 new jobs last month – that’s really not enough just to keep up with the newcomers.

MS. TUMULTY: Peter, one of the parts of your story that I really enjoyed a lot was your descriptions of how dysfunctional and how much tension there had been within the president economic team for the past two years as they’ve been trying to deal with these problems.

MS. IFILL: The messy divorce, the way he described it.

MS. TUMULTY: Right. There’s a whole bunch of new players coming in. What can we expect from them?

MR. BAKER: Yes. The president assembled a new team that’s intended to joust with Republicans, not with each other. And I think you’ll see perhaps a team that’s less engaged in some of the personality conflicts that the last one was mired in at times. Some of these guys have worked together before – Gene Sperling of course and Jack Lew were both senior officials in the Clinton administration, know each other really well. Gene Sperling just finished two years working with Tim Geithner. I think they got along really well. So there’s some promise that this team might have a little more of the no-drama-Obama ethos to it.

And the type of team is different. The team that the president had first was full of big egos because he had a big crisis. He had a moment where you had to take the most brilliant minds of this generation, as he saw them anyway, and bring them in at whatever risk of personality conflict because you just didn’t have a choice. Now we are in a different stage. The recovery is beginning and he’s looking for a kind of person exemplified by Gene Sperling, who can marry policy and politics and media.

MS. IFILL: And who had the same job before.

MR. BAKER: And who had the exact same job before. And it’s less about macroeconomics than about trying to maneuver in this new political environment.

MR. MCMANUS: But, Peter, what tools does this president have available to him, because the stimulus is running out, states and municipalities are going bust. He wants to start talking at some point about deficit reduction but you can’t increase stimulus and reduce the deficit at the same time.

MR. BAKER: Right. Exactly. And he’s very frustrated by this. You know, at a meeting three days before Christmas he’s with his economic team and they’re talking about the future state of the union we’re about to see next week, what ideas you have, they present some ideas. And he’s frustrated. He said, I keep telling you guys bring me ideas that excite me. None of this excites me. He has used a lot of the tools and it’s a different moment. Ken Rogoff, other economists say, look, maybe he’s put everything in place that he can and it’s simply a matter of watching to see it take effect and it’s painfully slow for people who don’t have work to watch this play out through economy.

MR. MCMANUS: Can they do business with the Republicans on any of this economic agenda?

MR. BAKER: Well, I think what Gwen said at the beginning is right. If you can have a parlor game on Tuesday night, count the number of times you hear the word jobs and competitiveness, right? Competitiveness is a convenient political rubric as well as an economic idea that might bring Republicans together. We all are for America doing better against our economic competitors, China most notably. So within that rubric he puts a lot of his own priorities, education reform, infrastructure – like high-speed trains – trade, research and innovation, and he can define all those things within this context. Whether the Republicans go along with it or not, it’s an interesting question.

MS. IFILL: But – (inaudible) – to being brought into this newly restructured job is supposed to be a signal of some kind and all of this attention that’s been paying, you know, to CEOs, that seems to be part of that too. We’ll see whether they all sit together on Tuesday night and agree with that. Okay. Thank you.

Meanwhile, on the House side they voted to repeal healthcare this week, which doesn’t mean healthcare will be repealed. And Republicans said the law will kill jobs, but Democrats said it won’t. In other words, it was a debate that took us through the political looking glass again. First, to the jobs claim. Did we ever figure out who was right and who was wrong about whether this indeed is a job killing healthcare law, Doyle?

MR. MCMANUS: Well, first of all, Gwen, this is the new civil Washington. It’s not a job killing law. It’s a job crushing law.

MS. IFILL: That’s right. Job crushing. So much kinder. Destroying. Yes.

MR. MCMANUS: Destroying our jobs, squishing law. But to answer this substantive question, no, not really. The most frustrating thing about this debate was each side using those old talking points that we heard all last year. And if anything, they’ve gotten further apart on what the facts are.

Now, on is this a job killing law or not, the problem is there are too many moving parts in the American economy to come up with an easy, simple answer on that. Three quick parts of it: okay. It imposes new costs on businesses, so yes. At the margins some employers will go slower or not hire some people. You can think of it as a little bit like a raise in the minimum wage. The same effect, but does it kill the economy? No.

The second thing it does is it will give more people the freedom to decide to retire earlier, to reduce their hours, to not hang on the jobs that they’re only keeping because they need the health insurance. There was a debate over does that mean a loss of jobs? Well, no. It actually means people leaving the labor force that could mean more jobs for other people. It’s hard to get through that in the net.

Finally, if you talk to economists, and especially optimistic Democratic economists, they’ll tell you that eventually a good healthcare system will produce a more efficient, productive economy because, A, people will be healthier; B, it will be more efficient. People won’t be hanging on to jobs they don’t like or that they’re no good at. They’ll be able to move. Entrepreneurs will be able to go out on their own. That should produce – over the long run – a more efficient economy and more growth.

MR. WESSEL: Look, the Republicans are pushing this because they believe that the healthcare bill is truly unpopular with the people. And there’s some evidence for that in the polls. Is that – are they taking a wise bet, do you think?

MR. MCMANUS: We don’t know because that really is going to depend on how this plays out. But it’s worth taking a close look inside those numbers on what they call the wildly unpopular bill. The Republicans are right. If you ask people straight up, do you want to repeal the bill or keep the bill, you get about an even split. It’s roughly 50-50. Sometimes it’s up this way, sometimes it’s up that way. But if you take that half of the country that says, yes, let’s scrap this bill and ask them what’s your beef with it, almost a third of those people don’t like the bill because it didn’t go far enough. They’re liberals criticizing it from the left so they’re not actually in the same camp. So that’s kind of a deceptive number. In the end it may or may not be as unpopular as that.

MR. BAKER: What about the deficit? You know, we heard on the floor of the House they say this is going to blow a hole in the budget. Does it? I mean, the Democrats say it’s the other way around.

MR. MCMANUS: That’s right. The Democrats actually say it ends up –

MR. BAKER: Ends up saving –

MR. MCMANUS: Reducing the deficit, saving money.

MR. BAKER: Right.

MR. MCMANUS: And that one, Peter, really depends on whether you are an optimist or a pessimist because the biggest piece of cost savings over the next 10 years and the 10 years after that is if this new plan helps bring Medicare costs under control, helps make Medicare more efficient and if you think Congress will actually bite the bullet and do that, which will mean in some cases telling people they can’t get all the Medicare they want, there could be huge savings. But if you think Congress will wimp out, there won’t be.

MS. TUMULTY: So what next? Was this just hollow symbolism? As soon as the vote was over with –

MS. IFILL: What? Hollow symbolism in Congress? (Laughter.)

MS. TUMULTY: Well, demagoguery. So as soon as the vote was over with though, Mitch McConnell says, and now we’re going to have the same vote in the Senate and Harry Reid’s office says, not likely. Does this go anywhere from here?

MR. MCMANUS: It does, Karen. It was symbolic, but I don’t think it was hollow symbolism. I think it was meaningful symbolism –

MS. IFILL: Okay.

MR. MCMANUS: – in the sense that this was –

MS. IFILL: Now tell us what that means.

MR. MCMANUS: Well, this was the first salvo in what’s going to be a year long, probably two-year long Republican guerrilla war against the healthcare plan. And they’re going to fight it two ways. They’re going to take pieces of it and try and defund them or prohibit them. There’s even a proposal to prohibit the government from defending its case in the courts when the constitutionality comes up. That’s probably not legal, but they’re going try and take funding away from every piece of it they can and throw sand in the gears. And then, the other things that Republicans – the House leadership instructed its new chairmen to do was to sit down and produce finally a real Republican healthcare bill that does all kinds of good things, that lets kids stay on your plan until they’re 26, that – you know –

MS. IFILL: All the popular stuff.

MR. MCMANUS: All the popular stuff, but lowers costs, has no individual mandate. Now, if they can pull that off, that will be a miracle because nobody’s been able to figure out how to do it. But if they can do it, they’ll deserve every reward they get.

MS. IFILL: And that’s just what they’re doing on Capitol Hill. The governors are taking their own stabs at it so we’ll be watching it a lot. Thanks.

Since it’s never too early to look ahead to the next election we are here tonight to consider the careers of Senators Kent Conrad and Joe Lieberman, who both announced this week they will retire in 2012.

SEN. KENT CONRAD (D-ND): I don’t believe that the balance of power is likely to be changed by my decision. I will be here the next two years and then there will be an election in North Dakota. And hopefully they will choose somebody good to take my shoes. The people of North Dakota have good judgment.

SEN. LIEBERMAN: That was not an easy decision for me to make because I’ve loved serving in the Senate and I feel good about what I’ve accomplished. But I know that it is the right decision and I must say, having made it, I’m excited about beginning a new chapter of life with new opportunities.

MS. IFILL: There’s a potential for a big ripple effect, especially affecting – negatively affecting Democrats, isn’t there, Karen?

MS. TUMULTY: Well, that’s right. We now have three of these announcements, first, Kay Bailey Hutchinson in Texas and then these two. The net effect is likely to be Texas seat stays in Republican hands; Joe Lieberman is technically an independent but he does caucus with the Democrats on most things, votes with the Democrats.

MS. IFILL: As quietly as it’s kept.

MS. TUMULTY: Right. So, you know, if you were to look at the politics today, probably a Democrat wins. So that sort of stays the same. And then, Kent Conrad, though, that seat is very likely to switch into Republican hands. So what I think it begins to underscore is the degree to which the Democrats in the Senate particularly are going to be playing defense over the next two years. But the number to look at here, the map is there will be 33 seats on the ballot in two years. Twenty-three of those are currently held by Democrats and a lot of those are very conservative states. So you’re going to see a lot of senators right now, because this is the time when you have to start thinking about this decision. You have to kind of give your party back in your home state time to figure out somebody else to run, to raise the money. A lot of these men and women are looking at very difficult races two years from now. So it becomes a question of –

MS. IFILL: A big decision is whether you can win.

MS. TUMULTY: But, on the other hand, it was the Republicans who were in almost this exact situation two years ago. Back then – I looked it up today – they were defending 19 seats to 15 for the Democrats. And everybody thought it would be the Republicans who were on the defense. But the political climate changed so much in those two years that they actually picked up seats. And I think that a lot of Democrats are particularly – they’re taking a look at Barack Obama’s popularity beginning to come back. They’re looking at the economy possibly coming back. And so this may not be quite the disaster that it looks like if you, again, just look at the map.

MR. BAKER: You didn’t see just senators talking about whether to seek reelection or not. You saw the president this week beginning to take some moves in that direction too, didn’t you?

MS. TUMULTY: Yes. It was an interesting move. The president – we’ve seen incumbent presidents move their headquarters out of Washington before, all the way across the Potomac River into Virginia recently – (laughter) – but this was a real effort that the Obama campaign wants to go back to Chicago where it was started to try to both get some distance from this whole Washington game that they’ve been immersed in and also to try and rekindle a little bit of that energy.

They did something else that was sort of interesting, too. They decided to move the political operation out of the White House. It’s going to go to the Democratic National Committee. It’s going to go to the Chicago campaign headquarters. That doesn’t mean that politics will cease to be practiced in the White House, of course. David Plouffe, who was the president’s campaign manager, is actually moving into the White House. So I think, again, that is probably more symbolic, but it is – they are trying to make a statement here.

MR. WESSEL: You mentioned that the president’s popularity is up. Now, it was less than three months ago when the president had taken, in his words, a shellacking and that we were starting to read the political obits on Barack Obama. Did something change suddenly in the last three months and now he’s popular again?

MS. TUMULTY: Well, his numbers have moved up. In our Washington Post poll he was up to 54 percent job approval, which is pretty solid given what’s going on in the economy.

MR. WESSEL: And higher than it’s been in quite a while, right?

MS. TUMULTY: It was higher than it had been since last spring. And I think a lot of other polls are showing this exact same trend. A couple of things have happened: one, a productive lame duck session; the Tucson tragedy – I think the president’s speech was well received. We’ll see what the State of the Union brings us.

MS. IFILL: Okay. Well, thank you all very much. This was a fruitful week and next week will be as well. Before we go tonight, we send out condolences to the family of Sargent Shriver, the first director of the Peace Corps, the Democrats’ 1972 vice presidential nominee, and a lifelong champion of the poor and the underprivileged. He passed away this week at the age of 95.

Thank you everyone. We are done here for now, but the conversation continues online in our “Washington Week Webcast Extra.” I’m going to pick up where we left off. I’m going to make them tell me what the president’s going to say in the State of the Union speech. Maybe they won’t. Watch the PBS “NewsHour” for coverage of the president’s State of the Union speech. And we’ll see you again around the table next week on “Washington Week.” Good night.