MS. IFILL: Good news on the economy, more jobs, but standoffs over the federal budget and the prospect of stalemate in Libya. Tell me again they anyone wants to be president? We’ll ask that question too, tonight, on “Washington Week.”

A glimmer of good news for the economy.

PRESIDENT BARACK OBAMA: The unemployment rate has now fallen a full point in the last four months. The last time that happened was during the recovery in 1984 where we saw such a significant drop in the unemployment rate.

MS. IFILL: But no sign of budget movement on Capitol Hill.

REP. STENY HOYER (D-MD): April fools, America. This is a joke, America.

REP. STEVE WOMACK (R-AR) : Our constituents did not send us to Washington to shut down the government. They sent us here to make it more accountable.

REP. MIKE PENCE (R-IN): It’s time to pick a fight.

MS. IFILL: While on Libya, the president and members of Congress struggled to define the end game.

SECRETARY OF DEFENSE ROBERT GATES: In my view, the removal of Colonel Gadhafi will likely be achieved overtime through political and economic measures and by his own people.

SEN. JOHN MCCAIN (R-AZ): Then the United States must remain strongly engaged to force Gadhafi to leave power. Nothing less is desirable or sustainable.

MS. IFILL: No wonder the 2012 campaign is off to such an uncertain start. Who’s really running? Who’s not?

Covering those stories this week: Greg Ip of “The Economist;” Naftali Bendavid of “The Wall Street Journal;” Yochi Dreazen of “National Journal;” 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.

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

MS. IFILL: Good evening. Finally, good news for the economy and, by extension, for the Obama White House: a boost in hiring and a lower jobless rate. At 8.8 percent, still high but a full percentage point down from just last November. So is this the turnaround, Greg, that everybody’s been waiting on?

MR. IP: It’s a little soon to declare the turnaround, but it’s definitely closer than we’ve ever been in this recovery so far. It’s the first time actually in over five years that we’ve had back-to-back months of payroll growth of 200,000 plus. And we also had that nice news that the unemployment rate also dropped, which, of course, is very politically sensitive. We often have these months where the employment and the unemployment number going opposite directions. This wasn’t one of them.

You know, we’ve had good news on investment, on stock prices, the banks great profits. It’s never going to feel like a recovery for most Americans until they see it in jobs. And now it seems to be happening.

MS. IFILL: So the trend line, which is what we’re watching as much as the month-by-month numbers which seem pretty incremental, but the trend line is heading in the right direction?

MR. IP: It’s heading in the right direction. Now, mind you, by the standards of recovery it’s still extremely week. We should have had unemployment down several percentage points if we were growing at the kind of speed you would expect coming out of this recession. The fact of the matter is recoveries that follow financial crises are quite weak. And that’s one reason I think we need to be careful about reading too much good news into these numbers. Just a year ago we had a couple of really good jobs numbers in a row. The administration was crowing, saying this was evidence that the stimulus had worked. Then, in the next few months, it all petered out, people worrying about double dip.

MS. IFILL: So expectations is key.

MR. BENDAVID: Greg, one of the things that a lot of people I think have noticed is gas prices which are not going down. They seem to be going up.

MR. IP: Yes.

MR. BENDAVID: How much of a drag could this be on the economy?

MR. IP: It’s definitely going to be a drag and it’s encouraging that we haven’t seen it yet. But, I mean, just today oil prices hit a new high. Now, partly that’s a good news story because of the reasons commodity prices are rising is because the outlook in the United States looks stronger, but there’s no question that if this continues, it’s going to eat away at people’s disposable income. That will be a big negative. It’s definitely one of the things that put us into recession three years ago.

MS. TUMULTY: And what about one of the things that got us into this problem, which was the housing market? How are things looking there?

MR. IP: Pretty terrible. Unlike the jobs market – in fact, unlike almost everything else, housing seems still stuck in its recession, seems to be on the verge of going into another recession. New home sales hit an all-time low. The hard reality out there is that you still have this huge overhang of foreclosed homes that are pushing down prices. And unemployment, although it’s coming down, is not coming down fast enough for a lot of people to feel confident about going out and buying their first home.

MS. IFILL: I was in Florida not too long ago. They said that one in five of the homes there are vacant, so vacant homes also depressed the market as well as the fact that no new homes are being built.

MR. IP: Definitely. Given how fast households are growing in this country, given the underlying demographics, it will probably take at least three years to clear out the inventory of unsold homes.

MR. DREAZEN: Greg, you mentioned the flipside, it seems to me, about high energy prices is high food prices.

MR. IP: Yes.

MR. DREAZEN: And when the energy prices go up, politicians say, drill, baby, drill. They have all these catch phrases ready to go. How important are the rising energy – the rising food prices – sorry – and what can you do about it?

MR. IP: Well, rising food prices – they’re also reflecting some of the same forces that oil prices are responding to; namely, very strong growth in emerging markets like India and China and so forth. So that’s probably a good news story because it means the world is growing very strong. The other positive thing is that the United States, unlike with oil, is a net food exporter. This is great news for the farm belt.

The negative thing is that most people who drive and eat tend to see this in their pocketbooks and they feel pretty lousy about it. The other thing you might worry about is that this obviously raises the inflation rate and there might be pressure on the Federal Reserve, which right now has its foot to the monetary floor, to start tightening monetary policy. And one of the things that got people worried this week is that a bunch of people from the Fed were out there talking about it, saying exactly that. My own guess is that the leadership, you know, people like Ben Bernanke, the chairman, are not at all concerned about inflation. They want to see many more months of the kind of job growth we have just seen before they’re ready to start withdrawing some of this like easy money.

MS. IFILL: What kind of pressure – the instability we see everywhere – and whether it’s in the Middle East on oil prices or in Japan, which might affect people’s confidence in nuclear power – what kind of pressure do these kinds of unexpected events have on our ability to recover?

MR. IP: They have a very insidious and not very well observed impact. They tend to eat away at people’s confidence. Just, for example, about a year ago, what happened was Europe went into crisis where there are some countries on the verge of default. And even though American companies did not export a lot to Europe, it appears that that rattled people enough in this country that they stopped hiring. That may be why the United States sort of slipped into that soft spot a year ago. And that’s why. So you can’t be too complacent right now because those sorts of things – whether it is the spread of trouble in the Middle East, whether is it renewed trouble in Japan – those things can just eat away at confidence and weaken the recovery in ways you don’t always expect.

MS. IFILL: And how much, Greg, is this a cycle that we just have to get used to being on -- a hamster’s wheel?

MR. IP: Well, as I was saying a minute ago, you know, what we know from other countries that have been through financial crisis that these recoveries are long, slow, groundout affairs. I think we’re going to have four or five years of this sort of stop-start growth.

MS. IFILL: Oh, Mr. Cheerful, as always. Thank you so much, Greg.

The government appears no closer tonight to reaching a deal to keep itself open past next Friday. Conservative House freshmen have resisted all efforts at compromise, but the White House repeatedly suggests a deal is near. One thing hasn’t changed: each side says the other is at fault.

REP. JOHN BOEHER (R-OH) [Speaker of the House]: Now, the Senate says, we have a plan. Well, great. Pass the damn thing, all right, and send it over here and let’s have real negotiations instead of sitting over there rooting for a government shutdown.

PRES. OBAMA: We know that a compromise is within reach. It would be the height of irresponsibility to halt our economic momentum because of the same old Washington politics.

MS. IFILL: So I don’t know what to believe, Naftali. Is a deal in sight or is a deal not in sight?

MR. BENDAVID: Well, the truth is that both sides are now negotiating very hard on a deal with a figure of about $33 billion in cuts for this year, and, as we speak and through the weekend, negotiators from the House, Senate and the White House are working on this. Now, I think there are tactical reasons why the Democrats want to suggest that a deal is at hand. I think that way if it falls through, they hope people will blame the Republicans. John Boehner I think wants to suggest that a deal isn’t at hand because he doesn’t want to provoke a rebellion from his own right flank. And I think that’s one reason for some of the –

MS. IFILL: Who are not interested in dealing.

MR. BENDAVID: And, certainly, if there was a big juicy out there would attack it. So I think there are reasons why we’re hearing these different perspectives from different sides. But, you know, as to whether or not we’re close, there’s a couple of stages to this thing. The party leaders have to reach an agreement, and then that agreement has to be sold to the rank and file. So right now we’re waiting for phase one of that and then we’ll see what happens.

MS. IFILL: Today on the floor of the House there was lots of – people were getting quite exercised about this idea. They were having a spending debate, theoretically, but they were also having a debate about the Constitution and a debate about whether it’s $61 billion or $33 billion, and who gets to vote, and the Senate is a bad guy. What’s that about?

MR. BENDAVID: Well, the House, every once in a while they have one of these debates that’s completely theater, and this was one of those. House Republicans have been getting incredibly frustrated that the Senate hasn’t passed anything regarding spending cuts this year. And it always happens. Members of both parties in the House get frustrated at the Senate, which is a ponderous, slow moving body. So today House Republicans proposed a bill that essentially said, if the Senate doesn’t pass anything, then our cuts go into effect, just automatically, like that.

Everybody kind of knows that’s not constitutional and would never work, but the Republicans wanted to make a point that they’re fighting to the last breath for these cuts. So Democrats had a field day ridiculing it and holding up these little childish comics that said, how a bill becomes a law, you know, you need the Senate too, that sort of thing. But every once in a while you have one of these in the House. People let off steam. I think that’s what was happening.

MS. TUMULTY: But coming to an agreement on the numbers is one thing. That’s arithmetic, but there’s a lot in this bill, in this House passed bill that’s not about the numbers. It’s things like Planned Parenthood and environmental regulations and repealing healthcare. Are these kinds of things going to end being stumbling blocks or are they going to go by the wayside?

MR. BENDAVID: Well, they’re definitely stumbling blocks. I mean, right now, as you say, there’s some talk about what the spending level should be. Republicans want it to be about $60 billion in cuts. Right now they’re talking about $30 billion in cuts, but there are all these other issues. And some of them are very ideological, they’re emotional, they mean a lot to the people involved.

So Republicans have proposed, for example, not letting the EPA pass or enact greenhouse regulations. There’s a measure in there that attempts to block President Obama’s healthcare law. There’s one that blocks funding to Planned Parenthood. So there are all these things that are very emotional and these have to be resolved as well. And they’re adding a whole other twist to this. If they can figure out the number of dollars that they want to cut, they’ve also got to figure out how to thread the needle when it comes to these ideological and policy issues.

MR. DREAZEN: Do you think that Boehner, if given a choice, and maybe he is being given a choice, would rather see a shutdown where he has all of his party with him, or a deal where he has to rely on Democrats and loses some of his tea party backers?

MR. BENDAVID: Well, that’s a good question. I mean, he certainly says that the last thing he wants is a government shutdown. And both parties say that. And my guess is neither of them really does want a shut down.

MS. IFILL: It sounds like it might be true.

MR. BENDAVID: I think it probably is true, but on the other hand they each have these lines in the sand that they’re not willing to cross. So you could picture a situation where nobody wants a shutdown, but it happens anyway. And, as you suggest, I mean, this is a big I think test for John Boehner, arguably his biggest one yet because on the one hand there’s pressure from conservatives and tea party folks and freshmen who want a certain amount of money to be cut out of the government. On the other hand, he’s under a lot of pressure to get stuff done. And if he can’t come through with this with a deal, that too I think would damage him. So if he can thread this needle, he’ll build his credibility to a tremendous degree. And if he can’t, it’s going to be a challenge.

MR. IP: What kind of role has the president himself been taking in these negotiations? Obviously he was addressing the situation today, but he seems to have outsourced a lot of it, sort of, you know, hand to hand to his other people in the administration.

MR. BENDAVID: Yes. No question about it. People from both parties have noticed that he’s taken a fairly low profile role. Now, I mean, I should add that negotiators from the White House are involved. They’re talking to people on Capitol Hill. But the president himself has chosen to step back a little bit. And if you think about it, that’s his style, whether it’s healthcare, whether it’s the stimulus. He likes to let Congress work out the nitty-gritty and sort of fight amongst themselves and then he steps in at what he deems to be a key important moment and then he helps bring the plan home. And my sense is that that’s what he’s doing right now. But Republicans and some Democrats are frustrated, too, that in this big spending debate he’s not playing a big role.

MS. IFILL: Next Friday may be the big key moment. We’ll be watching to see what happens, whether it’s actually another shutdown. Thank you, Naftali.

On to the fighting in Libya, which appears to grow closer to stalemate every day. Moammar Gadhafi remains in power and the no-fly zone remains in place while here at home lawmakers are asking, what are we really trying to accomplish? The administration’s chief defender is Pentagon Secretary Robert Gates, who warned against going in in the first place.

SEC. GATES: I think we have considered the possibility of this being a stalemate. It’s hard for me to imagine circumstances in which we would be content to deal or tolerate a government that still had Gadhafi at its head.

MS. IFILL: Not being able to tolerate a government with Gadhafi as its head is a nice goal, but what is the U.S. or anybody else willing to do about that, Yochi?

MR. DREAZEN: This is sort of the war that dare not speak its name. I mean, we know, almost all observers know that what the U.S. wants, what France wants, what Britain wants is Gadhafi out of power, but nobody’s willing to say that. The French aren’t willing to say. The British aren’t willing to say it. And we, as a country, are not willing to say it either. We’re funneling money. We have CIA operatives who have been on the ground for not just a few days, but actually for several weeks. So while this debate was playing out in Washington, there were already CIA personnel on the ground in Libya.

We have a no-fly zone, as you mentioned, which has grown to be a zone that also attacks ground vehicles, also attacks clusters of troops. So we’re heavily involved in the fighting, heavily involved in meeting with the rebels. But we can’t yet say publicly what it is we’re trying to do, even though it’s clear to everyone what that is.

MS. IFILL: I don’t want to climb in side this, the Pentagon secretary’s head, but watching him in these hearings, he doesn’t seem real enthusiastic about his role. And I wonder whether he is. You traveled with him on his recent trip abroad. What sense did you get?

MR. DREAZEN: You know, he’s always been a loyal soldier, so you saw him on the Hill sitting there for eight hours just sponging abuse from left and from right. But he’s not enthusiastic about it. And my sense he’s into his swan song. He’s leaving within the next few months, certainly by the end of the summer, by the early fall. When he came into office, he wanted to do two things: wind down Iraq, get Afghanistan stable. He feels like he’s done the first, like he’s made progress on the second. He doesn’t want a third war. And he knows very well that once you’re on this kind of slope of providing CIA assistance, special operations assistance, it’s a slippery slope. We saw that in Afghanistan and potentially we’re seeing it now in Libya.

MR. BENDAVID: Yochi, one of the things that I noticed, people talk all the time about we’re not going to have ground troops, we’re not going to have boots on the ground, we’re not going to be there. But there certainly have been a lot of reports that the CIA is there and has been for some time. So how do those two things match up?

MR. DREAZEN: You know, it’s like one of those Clintonian definitions of what kind of boot? If it’s a camouflage boot, then literally that’s true – we do not have military boots on the ground. We have a lot of other boots. We have our own CIA personnel, MI-6, the British version obviously of the CIA, has a much, much bigger presence. The British have a huge quantity of their most elite troops from their Special Air Service. So we have our personnel. We have British personnel. I would also be stunned if by the end of this we do not have elite American special operations personnel there too. There tends to be once you do covert action, this kind of slippery slope where it starts moving down, the snowball starts picking up snow –

MS. IFILL: Well, that’s the mission creep that Robert Gates was saying.

MR. DREAZEN: And by the end of it you’ve got American troops on the ground.


MS. TUMULTY: Yochi, the president gave a very big speech on Monday night. He described this goal of this mission as preventing Gadhafi from slaughtering his own people. But what if at the end of all of this there is a ceasefire, but Gadhafi is still in power? Will this have succeeded?

MR. DREAZEN: No. I think that that’s in many ways – it’s a very high probability, but in some ways the worst of all worlds because you’re already seeing tensions between Washington and its allies, between the Arab League, which approved this to begin with, which was kind of remarkable – has since backed away. Tensions between Washington and Paris – France has been the lead on this. The no-fly zone that we had over Iraq was in place for a decade. It was enormously costly and there was no fighting going on. So if you image a no-fly zone over a war zone, we have a civil war going on and planes flying overhead for years, this would be financially costly and diplomatically costly.

MR. IP: And, you know, this might sound like a strange question, but for all the blood and treasure that’s being spilled now, does Libya really matter? Are there actually other things going on in that region that matter more?

MR. DREAZEN: It’s a great question. And I think one reason why – to go back to Gwen’s point – why Robert Gates was kind of pulled into this kicking and screaming is that it doesn’t. I mean, at the risk of sounding very cold, our strategic interest right now depends on Egypt being stable. We’ve taken our eye off of it, but Egypt is not yet finished. It depends on Saudi Arabia and Iran, which have been fighting behind the scenes. We want the Saudis to win. Those countries matter a whole lot more than Libya does.

MS. IFILL: Well, we’re going to be waiting to see whether that – whether there’s some movement on that. I guess the best of all worlds would be that Libyans rise up and get him out of there and including like his foreign minister left town this week and get Gadhafi out of there on their own.

Well, watching all of this from the sidelines is a clutch of men and women, all Republicans, who would dearly like these problems to become theirs. These are the current and former lawmakers and at least one big business mogul who are engaged in varying degrees of contemplation about whether to run for president. And as surprising as it may sound, they are already quite late out of the gate. Why is that, Karen?

MS. TUMULTY: I’m sure that probably does sound rather like a bizarre thing to most people out there who don’t live and breathe this. They’re saying, wait a minute, the Iowa caucuses are almost a year away. But the fact is by this time four years ago we had almost 20 declared presidential candidates. And when they held the first Republican debate in May of 2007 on the stage of the Reagan library, there were 10 Republicans standing on that stage. This week, the Reagan –

MS. IFILL: That one with the big plane?

MS. TUMULTY: That’s right.


MS. TUMULTY: But this week they announced they’re going to have to put that debate off until September because they did not have anybody – you know, they don’t have any declared candidates out there. And there are a number of things that are going on. One, the whole dynamic of a presidential contest when you are running against an incumbent is very, very different. And that is why – you know, in 1991 there were – Bill Clinton didn’t even announce until like October. Mario Cuomo didn’t announce he wasn’t running until December. It’s a different kind of calculation that you have to make.

And I think one of the lessons from 2008 was it started too early and it went on too long. There’s only a certain amount of money out there to be raised. And once you start running, you start spending, which is why we saw John McCain, the frontrunner, the ultimate nominee, essentially run out of gas in the summer.

MS. IFILL: Let’s talk about a couple of people who suggested they want to run. Tim Pawlenty is out there, the former governor of Minnesota. We’ve seen Mitt Romney, who ran last time, who certainly is raising money. Are they on the ground talking to people, hiring staff?

MS. TUMULTY: Well, for all intents and purposes, they are running. These people are constantly in places like Iowa, New Hampshire, South Carolina, Florida. They are hiring their key operatives. They are raising money, by and large, through their political action committees. They are working on their messages. And they are lining up supporters. So really a lot of the work of a presidential campaign is well underway, even though a lot of these people not only haven’t declared but are still sort of scratching their chins and trying to act as though they really haven’t made up their minds yet.

MR. IP: How late is too late? I mean, literally, how much more time do these candidates have to hold it off until they have to finally throw the hat in the ring?

MS. TUMULTY: One key moment is going to be a decision on whether or not they are going to really run in Iowa. And one of the early tests in Iowa is this August straw poll. And if you are a candidate who wants to be taken seriously in that and really compete in that, that means you really do have to be organizing and getting ready starting maybe in June. And that does suggest – I interviewed Mike Huckabee a few weeks ago. He said he thinks he doesn’t even necessarily have to make this decision until the fall. But if you’re not on the ground and working in Iowa by early summer, you’d have to be making up a lot of ground after the straw poll.

MR. BENDAVID: Karen, there is a Democrat, the president.

MS. TUMULTY: Oh, him. (Laughter.)

MR. BENDAVID: How geared up is he? I mean, I guess for presidents there’s always this balance between being presidential and being a candidate. Where is he in that transition?

MS. TUMULTY: Well, he is – he will be declaring relatively soon that he is running for reelection. His campaign manager is already hired. It’s a guy, Jim Messina, who was in the White House as a deputy chief of staff. He’s already moving people to Chicago. And perhaps, most importantly, they’ve begun giving their big fundraisers some big targets because, you know, the assumption is that Barack Obama is going to have probably $1 billion at his disposal this time.

MR. DREAZEN: Earlier Gwen mentioned two of the big names – Tim Pawlenty and Mitt Romney. Sarah Palin’s name has always been out there. Suddenly now you see Michele Bachmann. Has she eclipsed Sarah Palin? Is she likelier to be that constituency’s candidate?

MS. TUMULTY: Well, right now – you know, two months ago everybody thought that – is Sarah going to run or not was the big question. But Sarah Palin has not really done anything that you would expect a candidate to be doing.

MS. IFILL: She’s slightly MIA when it comes to presidential politics right now.

MS. TUMULTY: When I was in Iowa a few weeks ago, the Republican activists there were saying, you know, you would expect her to be making phone calls or getting in touch with people. Nobody is hearing anything. So the assumption increasingly is that she is not going to run. And a lot of that energy that she excites I think Michele Bachmann would be – Congresswoman Michele Bachmann from Minnesota – would be probably the likely person who may be best positioned to tap into that. And she has –

MS. IFILL: At the very least, she had some big numbers today.

MS. TUMULTY: She did. She had some pretty impressive fundraising numbers, over $2 million for the last quarter. That’s better than Mitt Romney raised. Of course, she does have a congressional campaign raising money in addition to her PAC.

MS. IFILL: At least if I were Mitt Romney, I’d be looking over my shoulder.

Thank you all very much. Before we leave you tonight, we want to add our condolences to the flood already sent to the family of Geraldine Ferraro, a glass ceiling-breaker, historic breakthrough and tart-tongued woman from Queens who left the kind of imprint on public life that most can only dream of. In tribute to the mark she made on politics, the 1984 vice presidential nominee was saluted this week by both Sarah Palin and Hillary Clinton, and for the same reason: she made their careers possible. She would have enjoyed that.

Keep up with daily developments on the PBS “NewsHour.” And we will see you again here, next week, on “Washington Week.” Good night.