MS. IFILL: History unfolding before our eyes as Egypt is transformed and the Middle East is shaken, tonight on “Washington Week.”

With Hosni Mubarak’s exit, all eyes are on Egypt and Iran and Israel, but most of all on the people. A revolution broadcast live transfixes the world.

PRESIDENT BARACK OBAMA: This is the power of human dignity and it could never be denied. Egyptians have inspired us.

MS. IFILL: Now with a ripple effect, including what it means for U.S. foreign policy. At home, lawmakers prepare for battles of their own over their budget, over government’s role and over the 2012 presidential nomination.

REP. MICHELE BACHMANN (R-MN): The all-important must-have for 2012 is this: making Barack Obama a one-term president.

MITT ROMNEY: President Obama has stood watch over the greatest job loss in modern American history and that, my friends, is one inconvenient truth that will haunt this president throughout history.

MS. IFILL: Covering this remarkable week: Yochi Dreazen, of “National Journal,” Tom Gjelten of NPR, John Harwood of CNBC and the “New York Times,” and Dan Balz 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, live from Washington, moderator Gwen Ifill.

MS. IFILL: Good evening. Eighteen days after it started, the people of Egypt pulled off a very modern sort of revolution today, making full use of satellite television, Facebook, Twitter and the full throated cries from Tahrir Square. President Mubarak was shown the exit. He had said he would leave in September or hand over some, but not all, of his power, until it became clear that none of that would hold. The voices of the Egyptian people must be heard, President Obama said in a statement last night, and with that, the U.S. abandoned its middle ground, giving Mubarak a final push out the door.

PRES. OBAMA: I am confident that the people of Egypt can find the answers and do so peacefully, constructively and in the spirit of unity that has defined these last few weeks. For Egyptians have made it clear that nothing less than genuine democracy will carry the day.

MS. IFILL: The president’s tone was very different today than it had been in the past. When did the U.S. finally realize, Tom, that its relationship with Mubarak, which had been sustained for these 30 years, was irretrievably broken?

MR. GJELTEN: It was undoubtedly when they decided that he was out of touch with the reality and no longer really able to preside over that government. But I think the larger question, the larger moment was when the United States realized that there was no longer a choice between promoting democracy and ensuring stability. As long as there seemed to be that choice, the U.S. interests in counterterrorism cooperation, in support for Israel, in keeping the Suez Canal open, all these strategic interests were clearly more important over the years than promoting democracy in Egypt.

And I think what happened is that the administration realized that those days were over, that that was no longer a choice. That if it really – even if it wanted to make this decision on the basis of vital U.S. strategic interests, it needed a strong democratic and modern ally, and at that point it was clear that Mubarak – Mubarak’s relationship with the United States was over.

MS. IFILL: That’s what happened with the relationship with the U.S. But Yochi, what happened actually in Egypt? What happened in the palace between the time that Mubarak came out yesterday and said “I may go soon, but not right now,” and this morning, when he said, “maybe right now.”

MR. DREAZEN: And all the steps in-between. There was the step of “I’m going to stay, but give power to Omar Suleiman.” Then of course there had been rumors all day yesterday that he was going to step down entirely. And then it was the rumor that he was going to keep some power, but give some to the military. What I think happened is that Suleiman and Mubarak had been very, very close. They were said to have been –

MS. IFILL: The Vice President Omar Suleiman, yes.

MR. DREAZEN: – sort of where the – as it turns out, the shortest tenure for Egypt as ruler perhaps of all times.

MS. IFILL: True.

MR. DREAZEN: But they were said to have been very close personally and very close professionally. Mubarak wanted Suleiman badly. That was the person he thought could kind of ride herd until September. What I think happened, from conversations and also just from the sort of sequence of events, as we’ve seen it, is that the military decided that wasn’t going to fly. That if Mubarak and Suleiman’s plan went forward, there would be blood in the streets of Cairo and the military, at some point between the time Mubarak’s speech was recorded, which as you know that was not a live speech, but sometime between the recording of it and the airing of it, the military realized there was no more choice. They had to either step in or there’d be literally blood flowing in the streets of Cairo.

MR. GJELTEN: You know what was so remarkable today watching those scenes in Tahrir Square, is you had, what, 100,000 people absolutely jubilant, and this pro-democracy passion. And what was it that really sparked them? It was the report that the military was taking control of the government.

MS. IFILL: They’re happy about that.

MR. GJELTEN: How ironic was that? That that was to them a triumph. Basically it’s just one step short of a military coup, right?

MR. BALZ: But what does it mean that the military takes over now? What role will they actually exercise and how long can they do that with the will of the people?

MS. IFILL: Yes, I’ve heard that the U.S. has quite a tight relation – U.S. military has quite tight relationship with the Egyptian military, it’s a lot of its training of its officers.

MR. DREAZEN: Although – that’s true kind of at the lower ranks. We have an Egyptian military which is fascinating as a generational split. You have the elder ranks, Mubarak, Suleiman, who was a general, Tantawi, who’s the defense minister, Mohammed Tantawi who now effectively – to answer Dan’s question – is running Egypt. These are all people who were trained under the Soviet Union. They did military training in what had been the Soviet Union. Since the peace treaty between Israel and Egypt, younger officers come to the U.S. So you have a split now, where the kind of old guard, including the guys who are still in power, have this kind of Soviet training, and the young guard have training with us. But it’s going to be fascinating because yes, I think this was a coup. It was a bloodless coup. It was a peaceful coup.

MS. IFILL: Well, it wasn’t entirely bloodless.

MR. DREAZEN: Well, true.

MS. IFILL: As they say there were martyrs in this.

MR. DREAZEN: True. But I meant more – it’s a fair point – more the switch from Suleiman to this kind of military council.

MR. HARWOOD: Let me step back and ask a question about the United States and its role. A lot of attention to shifting postures and statements by the United States over the course of this drama. But to what degree were President Obama and his advisors commenting on events that they were not controlling? And to what extent were they actually shaping those events?

MS. IFILL: Yesterday, it seemed – especially when we heard from the CIA chief and other people, who seemed to be either ahead of or behind the story at different times.

MR. GJELTEN: Well, the CIA director saying that there was a strong likelihood that Mubarak was going to step down, and then the president himself coming out and saying, “we are witnessing history unfold.” I think that there is a really delicate balance here. On the one hand, they don’t want to make it appear that they’re behind the curve or out of touch or out of the loop. On the other hand, they don’t want to make it appear that they are dictating events either. So I think, in a sense that maybe helped them in a way because it did show that they were on the sidelines. They were not behind the scenes being a puppet master.

MR. DREAZEN: There was a joke sweeping Egypt that is I think very revealing, both about the mindset there and frankly about the mindset here. The joke is that Obama calls Mubarak, obviously before he stepped down, and said “It’s time, Hosni, it’s time for you to go, it’s time to say good-bye to the Egyptian people.” And Mubarak paused and then says, “Where are they going?” (Laughter.) I was thinking about that joke yesterday, watching that bizarre speech. It was really strange.

MS. IFILL: It was very bizarre. It had no clue.

MR. HARWOOD: But it’s the punchline to the question that we’re talking about that we, in fact, were controlling events behind the scenes or it just looked like we weren’t, given the fact that some statements that we made didn’t come to pass immediately.

MS. IFILL: Or came to pass eventually.

MR. DREAZEN: I think that we have a tendency for not unreasonable reasons that we often think that we, as the U.S., have more control than we do. Much like with Oslo, where if you remember the Israeli and Palestinians did the deal on their own. We found out about it afterwards, then Clinton kind of did the handshake. But that was largely the only role the U.S. played. This was not something the U.S. controlled at all.

MS. IFILL: Let’s talk about the regional implications because there’s another concern, which is how these events are going to affect America’s allies like, say, Israel, which is said to be quite nervous about this, as well as its enemies, like Iran.

VICE PRESIDENT JOE BIDEN: I say to our Iranian friends, let your people march. Let your people speak. Release your people from jail. Let them have a voice. (Applause.) It’s a bankrupt system.

MS. IFILL: Something very interesting about what Vice President Biden was doing there because later in the day we saw the president’s press secretary, Robert Gibbs, at his final press briefing, not once but twice, kind of unsolicited bring up this question about Iran. Are we trying to stir the pot in another way as a result of what we saw happen in Egypt?

MR. GJELTEN: Well, the Iranian government has been really on the spot with these protests because the opposition movement there, the green movement there has really wanted to highlight its solidarity with the Egyptian protesters.

MS. IFILL: It wasn’t that long ago.

MR. GJELTEN: And the Iranian government, on the one hand, wants to sort of embrace what is happening in Egypt. On the other hand, they want to try and own it. They want to try and make sure that is not co-opted by the opposition movement. I think the Iranian government has actually been very clever about this and really trying to orchestrate this, to orchestrate the demonstrations, to manipulate them, and I think they have done a fairly effective job.

MR. HARWOOD: And to what degree are Israeli concerns justified that this change of government in Egypt might overturn or interfere with the peace treaty?

MR. DREAZEN: I think that the sort of scenario as we understand it and again, it’s changed so much so quickly that who knows what it will be by tomorrow, but I think the scenario of a military council headed by generals that the Israelis have worked with for 30 years is from the Israeli point of view, given the range of outcomes, probably actually the best case scenario.

MR. HARWOOD: The Egyptian military likes this treaty.

MR. DREAZEN: The Egyptian military does like this treaty because that’s what opened the door for them to be the second best funded, second best equipped military in the entire Middle East.

MR. GJELTEN: And if you look at specific issue, which is very important to the Israelis, and that is the border between Egypt and Gaza Strip, where Hamas is in power. The Egyptian military has been to a greater lesser extent enforcing the smuggling ban there. Now, that is not an issue that is necessarily going to have great resonance politically within Egypt. That is probably something that regardless of how the political reforms take course in Egypt, that is probably a function the Egyptian military will still be able to play and to play to the satisfaction of the Israelis.

MR. BALZ: And the other question that I have is does this movement that we’ve now seen in Tunisia and now Egypt, continue to spread and if so where might it go?

MR. DREAZEN: It’s interesting. Earlier today, there were reports that in Yemen mass crowds had gathered in the capital, moved into the Egyptian embassy, sort of waving the Egyptian flag kind of in celebration and then moved to the palace of President Saleh of Yemen. President Saleh of Yemen will not go quietly into the good night.

And I was talking to a friend, actually a journalist friend who was there. He was saying that there were crowds of police and army coming out of trucks from all sides, coming towards the protesters and then the cell phone went dead. Cell phone service to Yemen has been out since. There’s no email traffic coming in or out of Yemen. So it may spread, but it could also, in other countries, lead to a putdown that I think would have happened in Egypt had the military not stepped in when it did.

MS. IFILL: Are other allies also nervous, more traditional allies like Saudi Arabia, watching? They were apparently working behind the scenes to try to keep Mubarak in power. Do they find themselves out of the loop in this whole episode?

MR. GJELTEN: Well, sure. And I think that one of the things that – as Yochi mentioned, one of the things that we can watch here as an indicator of how governments are reacting to this is how they deal with BlackBerries, for example. This technology has been a very sensitive issue for a lot of these authoritarian governments. And we can see how quickly they move to start restricting wireless communication will be a good sign of how nervous they are.

MS. IFILL: So where do we go? Who’s in charge? How does this thing shake out? Do these people in the square ever go home?

MR. DREAZEN: I think that’s the exact – that question, more than any other, is the question going forward. They have the scalp they wanted, right. They wanted the Mubarak scalp. They got it. They wanted Suleiman out. They got that. It was very clear. Watching the press conference today, the very short one where Suleiman made the announcement, what was really striking to me was right over his shoulder, the person that I happen to know who was, was the main Egyptian military spokesman, standing directly behind. Suleiman gave this kind of hostage-style, “we are now transferring it to the military,” and then was shuffled off to the side.

MS. IFILL: And then that same man came and made the statement later saying, “we are the military, but we won’t be in charge for long.”

MR. DREAZEN: Exactly.

MR. GJELTEN: But the critical thing is that the political reforms that we’re talking about now are going to take two or three months, and you cannot keep the popular pressure on a government for two or three months. It’s going to really require the support of the United States, for example, to make sure that this movement continues in that direction.

MS. IFILL: We actually have to move on or you won’t get to talk about what you can talk about. The drama of domestic politics, which is that. It can’t help but pale in comparison to the events in Egypt, but it became clear this week that lawmakers here are girding for battles of their own. Key to that is a fundamental disagreement about budget, spending, government priorities, and presidential ambitions. The face of the budget argument is Republican House Speaker John Boehner.

REP. JOHN BOEHNER (R-OH): Listen, everything’s on the table. We’re broke. Let’s be honest with ourselves. It’s time for Washington to get serious and that’s exactly what the American people expect of us.

MS. IFILL: Also on the front lines, Republicans testing the waters for 2012.

TIM PAWLENTY: We simply need to remind each other what made this country great and restore America’s greatness by restoring American common sense. (Applause.) We need more common sense and less Obama nonsense.

MS. IFILL: We get a Valentine’s present next week, which is the president and the White House prepare to release its budget. So how does all this begin to sort itself out, John?

MR. HARWOOD: Well, I think it’s really going to begin to sort itself out next week, when the president lays out his budget. We’ve already had Republicans, after some internal fighting, coming up with a proposal to fund the government for the rest of the year, and proposing $100 billion in cuts, at least they’re describing it that way. Democrats say if you actually look at reductions from current spending, it’s less than that. But I think you’re going a segmented battlefield in Washington politically. There are going be some things that the Republicans and the White House and Democrats in the Congress are going to engage on, try to reach a resolution, and there are some things that are likely to be punted to the future.

MS. IFILL: Are Republicans fighting among themselves or are they fighting Democrats? It seems to me sometimes the fight is as much internal as external.

MR. HARWOOD: Absolutely. They’ve got two fronts to battle here because you’ve got a divide within the Republican Party between the energy and the fervor of many of those new members, call them the Tea Party members, and the leadership, which is more pragmatic and trying to figure out how they can get some things done, get some things accomplished. So you already saw the Tea Party members successfully resisting the leadership’s proposed solution on the initial round of budget cuts. Said, no, not enough. And now they’ve gone back and laid out today another round of cuts.

Now, that’s the budget field where the Democrats are going to engage. That is the domestic discretionary cuts. And the president has taken a strategy like Bill Clinton did with Republicans, when Newt Gingrich was the speaker. You might remember. Bill Clinton came out and said, the question is not whether we’re going to balance the budget, it’s how fast we’re going to balance the budget.

President Obama has said, the question isn’t cuts, it’s whether there’re going to be smart cuts or meat cleaver cuts that damage the ability to win the future. He wants to engage on that, the issues of Social Security, Medicare, and the question of tax increases, likely to be punted beyond this next two years.

MS. IFILL: Does that same argument play out in the presidential field? We’re relatively late in the process, as these things go, for people to begin deciding whether they’re going to run especially against an incumbent president. So when you go to a conservative political action committee, like you did today, Dan, do you see these same arguments or is it different?

MR. BALZ: You see most of the same arguments, but I think that the dynamic that now exists in the presidential nominating battle is one that pushes the candidates more to appease the Tea Party side of the party as opposed to the pragmatic leadership here in Washington. I was in Iowa this week, talking to a lot of different people. And one person, who’s a local activist in the Des Moines area, volunteered the idea. We do not want our people back in Washington cooperating with President Obama. That’s not what this election was about. If they find common ground with Obama, I will feel that they have failed in what we sent them there to do. So that’s the tension that these candidates are going to face.

MR. HARWOOD: And the problem for Republicans in that attitude, which is widespread among many of those people, is that ultimately if your goal is to make the independent voters in our equivalent of Tahrir Square jubilant and exhilarated, you’ve got to do something. You’ve got to get something done. And that’s the calculation the president’s made, beginning in the lame duck session. We’ve got to show that we’re going to work across party lines, get something done. So he made a tax cut deal that included some stimulus to a payroll tax cut. And he’s worked on trade deals.

MS. IFILL: Chamber of Commerce this week.

MR. HARWOOD: He went to the Chamber of Commerce and said, I’m going to work with the Chamber to try to expand exports and reform the tax system and get some of that corporate cash off the sidelines. That is the posture the president’s striking. And it’s interesting because unlike the first two years of his presidency, when he needed major legislation and he had to wheedle and bargain and lobby to get those bills, he doesn’t have to do nearly as much of that now. He can strike rhetorical poses.

MR. GJELTEN: Dan, you used the word “pragmatic” to describe the Republicans leadership. How does that play out politically? You’re talking about the legislative context. But with the conservative political action meeting, for example, are they – is there a pragmatic view of the 2012 elections? And what kind of candidacy actually makes most sense?

MR. BALZ: Well, yes and no. One of the things that people who are going to be picking the nominee, the average voter in the Republican Party, primary caucus attendee wants is somebody who they think can win. And I think a lot of them realize that to find somebody who can mean means somebody who not only does energize the base, but can reach out to the middle. At the same time, the candidates themselves are working as hard as they can to dispel the idea that President Obama has actually begun to move, that he’s actually shifted, m¬oved toward the center. They are making the argument that this is all phony. So in a sense, they are undercutting some of the deal-making that may go on, at least rhetorically.

MR. HARWOOD: And the pragmatism that Dan was talking about, we saw some of that in 2008. John McCain was not the most conservative candidate in the Republican field, even though he ran to the right. But –

MS. IFILL: And he didn’t win the straw poll at the CPAC meeting either. That was Ron Paul, who could win it again this time.

MR. HARWOOD: Exactly. So we may in the end see some of that same dynamic play out. But at this stage in the process, they’re courting the right and it’s a challenge. It’s one of the reasons why Mitt Romney, who in other circumstances might be seen as a frontrunner, has got a difficult time. You played some of the snappy lines he had at CPAC. Those were better than saying, hey, Barack Obama stole my health plan. Because –

MS. IFILL: That didn’t come up, somehow.

MR. HARWOOD: – yes, exactly. And he’s got to distance himself and everybody who is running for president on the campaign trail is running as far away from Barack Obama as they can.

MR. DREAZEN: But there’s always been that cliché that Republicans sort of not – they go in lock step and it’s a very orderly process. Somebody’s turn to run John McCain, let’s say. So he gets the nomination. What happened that this year you’ve got Rick Santorum, who lost by 20 points and is out of office, planning to potentially run, Donald Trump talking about running. Even if some of these people are obviously going to shake out, but why is there no orderly process?

MS. IFILL: And I’d like to piggyback on that. We’ve all covered a lot of these conventions, of these CPAC conventions. They come relatively early. They seldom end up with the actual nominee. It’s mostly for people to kind of set their outer limits.

MR. BALZ: CPAC is a rite of passage for the presidential candidates. They have come. They have to sort of do their best. For some it’s a matter of getting out of there with their integrity intact. For others it’s to genuinely play to the crowd.

MS. IFILL: It should be said Sarah Palin wasn’t there and neither was Mike Huckabee.

MR. BALZ: Sarah Palin, nor was Mike Huckabee, but Donald Trump was. That tells you a little something about that nature of that. But Romney is in some ways the closest equivalent to what you’re talking about – a person who had run before, comes out of the establishment wing. But because of the health care issue, because of questions about the way he ran in 2008 and what he really stands for and is he authentic, he’s in no way the kind of frontrunner we’ve seen in the past or the sort of heir apparent or senior vice president as some Republicans have described their process.

MR. HARWOOD: Some of that is because you had a Bush administration that was discredited with an older vice president who was not in position to run in a subsequent election. If you had a much younger and a more politically healthy vice president from the Bush administration, you might have a different alignment of this field. But it also has to do with the reason why Barack Obama was able to come out from nowhere in 2008 and run past Hillary Clinton. There’s been a democratizing element to the primary process and the use of the internet to raise money and sort of brushfire politics has changed the game.

MS. IFILL: And we’re going to be in this position next week. We will all be digging through budget books, which is the reality part of politics and having really scintillating fights about the debt ceiling. That we’ll be looking forward to.

MR. HARWOOD: Oh, we didn’t get to that.

MS. IFILL: I know we didn’t get to the debt ceiling, darn. Thanks, everybody. Thank you all very much. It’s always good to begin the weekend with you and especially with such amazing stories. We have to leave it there for now, but the conversation will continue online. We’ll pick up where we left off on our “Washington Week Webcast Extra.” You can find it at And keep track of daily developments all week on the PBS “NewsHour” with Margaret Warner still in Egypt. See you again right here, next week on “Washington Week.” Good night.