MS. IFILL: On the front burner, hand-to-hand combat over spending priorities. And the opening salvos in the 2012 campaign, tonight on “Washington Week.”
PRESIDENT BARACK OBAMA: Last week we were able to prevent a government shutdown. And the reason we were able to do it was because we agreed to spending cuts.
MS. IFILL: That was just the beginning.
PRES. OBAMA: We cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society.
REP. PAUL RYAN (R-WI): We don’t need a doubling down on a failed politics of the past. Rather than building bridges, he’s poisoning wells.
MS. IFILL: There will be fights over taxes.
REP. JOHN BOEHNER (R-OH) [Speaker of the House]: Washington has a spending problem, not a revenue problem.
TIMOTHY GEITHNER [U.S. Secretary of Treasury]: Unless you’re going to cut deeply into commitments we’ve made to seniors and to disabled and to the poor, we’ll ask the country to go borrow the money. You can’t solve this.
MS. IFILL: Fights over Medicare.
REP. ERIC CANTOR (R-VA): We’re trying to say you’ve got to have a safety net for those who need it, but not for those who don’t.
SEN. CHARLES SCHUMER (D-NY): The debate ahead of us is about more than spending levels. It is about the role of government itself.
MS. IFILL: And fights over raising the debt ceiling.
REP. JEB HENSARLING (R-TX): The deficit is the symptom. It is spending that is the disease.
JACOB LEW [Director, United States Office of Management and Budget]: Nobody should be playing chicken with the debt limit.
MS. IFILL: We look at the facts, the figures and the politics of the great budget debate with Susan Davis of National Journal; John Harwood of CNBC and the New York Times; Janet Hook of the Wall Street Journal; and Jeff Zeleny of the New York Times.
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.
ANNOUNCER: Once again, live from Washington, moderator Gwen Ifill.
MS. IFILL: Good evening. It’s not that often that the week’s debates boil down to such clear contrasts. But for President Obama’s Democrats and John Boehner’s Republicans, a vigorous political disagreement has shed new light on their drastically different visions of government. The president made his case before an invited audience at George Washington University Wednesday and again last night at a campaign fundraiser in Chicago.
PRES. OBAMA: We’ve got to reform defense spending. We’ve got to reform health care spending. But we’re not going to sacrifice our fundamental commitment that we made to one another through Medicare and Medicaid and Social Security, the safety net for our people.
MS. IFILL: And House Budget Committee Chairman Paul Ryan laid out his vision on the House floor today.
REP. RYAN: This is the most predictable economic crisis we’ve ever had in the history of this country. And yet we have a president who is unwilling to lead. Every politician in this town knows we have a debt crisis. They know that we are in danger. We cannot avoid this choice. To govern is to choose.
MS. IFILL: Ryan’s plan to slash the budget is not likely to survive a Senate vote, but his underlying argument set the stage for a pretty important battle heading into 2012. What did this week’s to and fro tell us about who the players are and what they’re setting to do, starting on Capitol Hill. Susan, what do we know?
MS. DAVIS: I think the most important thing to think about this week is that budgets, particularly when we have split government, are political documents by nature. Paul Ryan, the budget chairman, said recently this isn’t a budget; this is a cause. And I think you talk to Democrats this week and they say – what Obama said this week was the opening salvo in the 2012 presidential campaign. So I think we’ve seen sort of the broader arguments that we’re going to be hearing in 2012.
And it’s going to again be an argument about fiscal responsibility and health care because, as we saw this week, the overarching bid over Medicare and Medicaid and our social safety net is going to be probably the biggest clash between the two parties over the next year and half. And we’re going to have another argument over tax – it’s just starting to simmer now, but tax cuts. It’s going to be in the Bush tax cuts. And I think the president saying this week, I extended them once, I refuse to do it again, and having Republicans on Capitol Hill say, we’re not raising taxes, is setting a path towards a collision course on those two issues.
MS. IFILL: So both you and Janet have spent your week kind of prowling all the marble halls, as it were, the granite halls, I suppose, up on Capitol Hill. And we heard on the things that John Boehner, the speaker of the House, said is that he has succeeded in shifting the debate, since he’s been speaker, into a debate about spending cuts, not about spending. Is he right?
MS. HOOK: The frame of the debate really has shifted in that direction. Whether Boehner is singlehandedly responsible for it – I mean, there’s a question of whether he led the debate in that direction or he was carried that way by the political forces in his party. I mean, it is true. I mean, the first three months of this year really have been dominated by a spending debate. And it’s kind of been sort of a shakedown cruise for the parties and their leaders in this sort of new divided government, trying to figure out who’s who and what’s what.
But it’s true that at the beginning of the year, we started out with a debate between a president who wanted to freeze spending for the current year at last year’s level and Republicans who wanted to cut it by $61 billion. And the debate for the three months was all about, well, we’re cutting. How much as we going to cut? And if you come out from zero to 61 and you come out at 40, it looks like the Republicans got the better end of the deal.
MS. IFILL: But did they?
MS. HOOK: Well, there was a last minute flurry after the Republicans had been declaring victory in this compromise, a last minute firestorm broke out among Republicans when the Congressional Budget Office reported that, well, while it cuts $38 billion in spending, you know, the impact on the deficit right away is really quite small. And that was very upsetting to a lot of conservatives.
MR. HARWOOD: Susan, Gwen said in the intro that the Ryan budget has no chance of being passed in the Senate. We had this government shutdown near crisis last week, and Republicans said, oh, that’s because the Democrats didn’t pass a budget last year. Well, so if Ryan’s budget can’t pass the Senate – but that’s the House position – is there going to be a budget resolution that passes both chambers this year? And if not, are we headed for some sort of a shutdown debate in September?
MS. DAVIS: I think we are. It’s not inconceivable that they could reach a budget resolution. But the parties are so far apart on the issues of health care and taxes, which is very volatile political issues, that it’s hard to see where they get that compromise. Now, what I do think it’s going to happen is Republicans, as they did say pass their budget, and they set their limits of what they’re willing to spend. And they’re going to pass their spending bills at their levels and they’re going to have a confrontation with the Senate over these in September, in this current fiscal year. And I think once again in the fall we are going to be having a shutdown conversation again very likely.
MS. IFILL: Compromise seems like everybody’s unhappy. That’s the new definition of compromise.
MS. HOOK: Well, and that was actually something that Boehner said when he gave his speech about this big spending bill this week was, welcome to divided government. And they ended up passing that continuing resolution, the spending bill for the rest of this year with a very bipartisan coalition. Who knew? A lot of liberal Democrats voted against it and a lot of conservative Republicans opposed it.
MR. ZELENY: We’ve had a week to sort of assess how Speaker Boehner did in bringing this deal together. Some, I think 59 or 60 Republicans voted against this deal. He needed Democrats to support him. How do you think he has emerged in this? And where’s he sort of at going forward? I mean, he needed Democrats with him this week. Is that something that will continue? Is that a risky proposition for him, do you think?
MS. HOOK: I think that is something that he’s going to be navigating throughout the budget debates. I think in this particular instance, I think that it was a little bit overstated the significance of those 59 Republicans voting against him because I didn’t find very many of them who were voting against the bill saying, that John Boehner really screwed up here. They were mostly saying, well, it’s a tough situation. This is as good as he could get, but I don’t like it so I’ll vote against it.
MS. IFILL: Well, that’s an interesting point because what you have is a lot of fiscal conservatives who are, you know, they’re fairly ideological about this. It’s not personal necessarily. But they came to Washington to cut this budget. Are they – is that just setting the stage for the kind of fights we’re going to see on these larger issues which are coming, which is to say the unyielding nature of people who are not here to compromise at all?
MS. DAVIS: I think if you look at that vote, the 59 was sort of the high-water mark so far. I think within that you have about two dozen that are what would most likely be considered the tea party Republicans, this wave that was elected last November that are probably going to be a thorn in John Boehner’s side for the next year and a half. The Republican Party is never going to go as far to the right as they believe they came here to push the party.
Now, I do think you raise and interesting point about leverage the Democrats had. I think in this debate over the CR, I feel like Democrats felt they had no leverage, that all the cards were in their hand. And then, when it comes to having these on the floor, the CR, they did sort of need Democrats. I’m sorry. I’m sorry.
MS. IFILL: When we say CR, we’re talking about the six-month budget.
MS. DAVIS: The bill that averted the shutdown. When it came to that vote, they did need some Democrats.
MR. HARWOOD: But think about it. How many times did Nancy Pelosi pass a bill with 80 Republicans? I don’t think very often, if ever.
MR. ZELENY: No.
MS. DAVIS: And she hinted at that this week. She said, you know, we did it with our guys. And Kevin McCarthy, who’s a California Republican, who’s the whip, whose sort of job it is to know where the vote is, his office reached out to Steny Hoyer, his Democratic counterpart this week to say, hey, you know, we’re gauging where the Democratic votes are. That is pretty remarkable in the House, which by nature likes to move bills on majority rule – the majority party. So I do think there is – I don’t think that the lock on the House they have is as strong as he would like it to be because of this –
MR. HARWOOD: Should all the people who want to see the two parties work together think of that as the good news part of the story?
MS. DAVIS: I do think the Democrats at least walked away thinking maybe we’d have more – maybe we can force them to the center more than we thought we could because they might need us.
MS. IFILL: Except two big fights looming, that word we love to use in Washington – “looming” – and that is the debt ceiling vote and the 2012, the big, big budget. And we saw Paul Ryan at the center of this, the congressman from Wisconsin, the chairman of the House Budget Committee, rising power I guess in the House – does he have a chance of getting any part of what is a pretty expansive remaking of government, his proposal this week, getting that through.
MS. HOOK: That’s where I think the difference between the small-bore spending fight they just had and the big budget issue that we’re heading into, there’s a big difference there because when you’re just talking about money it’s cutting more, cutting less. But Paul Ryan’s budget and the message from the president’s speech showed very, very different visions of what government’s about and what needs to be done to address the fiscal problems. It’s just really – it’s much harder to compromise on those larger scale things.
And that’s why there’s this – the other thing is that I think a lot of the compromising and the bipartisanship came out of – there was one thing that both parties agreed to: they didn’t want the government to shut down. And there was a deadline. It was an action forcing deadline. They had to decide something or the government would shut down. And there’s no comparable like backstop on the debt ceiling. People aren’t exactly sure when we’re going to hit the debt ceiling. And also the solutions – everybody can say, okay, we all – there’s a consensus. We want to do something about the fiscal crisis, but people don’t really know – it’s not as clear as, well, cutting spending this much or that much.
MS. IFILL: Isn’t the dilemma about this debt ceiling that whether they act or not, whether there’s a deadline or not, it sends tremors to the markets, the idea that Congress would not be willing to raise the debt ceiling?
MS. DAVIS: Yes. I think that’s exactly right. I think – the debt limit has been cast as it’s going to be a tougher debate but, at the end of the day, I think it’s almost an easier vote to get because Democrats aren’t going to oppose it so they’re going to side with the president on there. And I do think fundamentally members understand that if you mess with these kind of things – this debt limit has far greater consequences for recovery –
MS. IFILL: Even though it should be said that both Harry Reid and Barack Obama voted not to raise the debt limit.
MS. DAVIS: Voted against it, as did Steny Hoyer, a leading Democrat in the House.
MS. IFILL: That’s right. They all say it was a mistake.
MS. DAVIS: The debt limit has always been sort of this political – you know, the party out of power votes against it, and says, oh, I’ll never vote to raise the debt limit. The dynamics are different this year. And, John, you can probably speak to this.
MR. HARWOOD: And if you mess with the debt limit, you’re also messing with all the big money people on Wall Street who are warning – Jamie Dimon came out a weeks ago and spoke at the Chamber of Commerce and said, you are crazy if you press that button, that it will have catastrophic and unpredictable results for the financial markets, for interest rates and all of that if you even raise a question about U.S. default. I think that’s one thing that gets attention of leaders in both parties for sure. You combine that with the tremors going through elderly voters as you have a debate about Medicare – it’s a very volatile moment.
MS. IFILL: You know, and the part of the volatility for the Democrats seems to be the unhappiness on the left. And the volatility for Republicans is the unhappiness on the right. Does the twain meet anywhere in there or are we overstating this unhappiness on the edges of both parties?
MS. HOOK: Well, it was interesting – the tea party actually has been – for the last three months has been complaining about the House Republican leadership just when, you know, Obama is saying that they’re – you know, it’s a budget Armageddon going on among Republicans. The tea party thought that they weren’t doing enough. They held a protest vote just before they voted on the CR. And truth to tell, not many people showed up.
MS. IFILL: Well, the stakes couldn’t be higher for any of these folks, and especially for President Obama and Democrats who are positioning themselves for reelection. Up until now, they’ve been playing on Republican turf – spending, deficits, taxes. This week, the president tried to shift that momentum and Paul Ryan, as we mentioned, became the punching bag. Was that the plan all along, John?
MR. HARWOOD: I think so. The president came out of the 2010 election always intending to both run for reelection and try to deal with the long-term deficit problem. He knew that the solution that he favors, that his presidential commission favors, involves some tax increases as well as cuts in these big spending programs we’re talking about. The Republicans were not going to play in the tax debate. So the president took an approach of sitting back, smoking out the Republicans, having the fight over the 2011 spending. That’s over these discretionary programs that tend to be small. People aren’t really familiar with them.
Then the Republicans laid down their budget and they went after the big program that everybody knows about – that’s Medicare. Remember, Medicare is where Bill Clinton bested Newt Gingrich and the government shutdown in 1995. It wasn’t over discretionary spending. It was over Medicare. So the president looked at that. Bill Clinton got healthy for his ’96 reelection campaign there and he chose this moment, right after getting the 2011 budget passed, to hit hard against the Paul Ryan approach and say he would give tax cuts to – extend tax cuts for millionaires and billionaires and take the money from senior citizens. That was a powerful message. It got Republicans very upset with him. It unified Democrats. You were talking about before the unhappiness among liberals. Liberals loved that speech. Many Republicans said, oh, there’s the kickoff of the 2012 campaign and –
MS. IFILL: But wasn’t it, Jeff? Wasn’t it? It seems that at some point he has to focus on 2012 and this seemed as good an argument to make as any.
MR. ZELENY: In the official beginning, you know, in the schedule at the White House issued on Monday so the campaign begins on Thursday, technically, I thought it began on Wednesday when he was giving his speech at George Washington University. He completely brought any skeptical Democrats around his side when he mentioned Medicare. He said he was going to protect it. He mentioned things we really haven’t heard him talk about that much, perhaps even since 2008.
MS. IFILL: Like the poor.
MR. ZELENY: Like the poor. And he was absolutely – you know, this is all following this script that almost seems too perfect. It’s repeating 1995 and 1996. So I’m not suggesting it’s going to end like that. We don’t know. But, without a doubt, this White House has everyone I think where they want right now. The liberals are sort of quieted down, back on their side. The Republicans are on their heels. And in 2012, Republican presidential candidates are worried about this now. How do they go out and campaign for votes in Florida, for example. Mitt Romney was in Florida today. How does he campaign for votes? You know, at some point he’s going to have to say up or down on the Ryan plan. And all of them, to a person, came out and said, oh, we praise them for their boldness.
MS. IFILL: Boldness is the code.
MR. ZELENY: We think like this is good work, but no one is signing on to this exactly because it’s trouble for them and they know it.
MR. HARWOOD: But now it’s important to point out that while hitting hard at Paul Ryan, he did invite Republicans to negotiate with him because he does need to get the debt limit done. Republicans have accepted the need for that too.
MS. IFILL: But they were sitting in the front row, Paul Ryan and Jeb Hensarling being slapped around. They didn’t look like they were happy to negotiate.
MR. HARWOOD: Oh, yes. Yes.
MR. ZELENY: But it’s the last speech they go to.
MS. IFILL: I don’t think they’re going to take any more invitations.
MR. HARWOOD: Right. And there’s going to be disagreement over what sort of negotiation, but they are going to have talks at the leadership level over some kind of gesture toward long-term deficit reduction that will allow people to vote for that debt limit. And it was very interesting – Paul Ryan, after the president really whacked him on that speech, was on television, was asked, how could you possibly work with the president on the debt limit after you received an attack like that? And he said, well, he was the campaigner-in-chief. It was all politics. I didn’t expect that from the president. However, I’m going to set that aside. The debt limit is something different. We need to work with Democrats on that. I thought that was a sign that in the end there will be a resolution of that issue.
MS. IFILL: That was an opening.
MS. HOOK: Right. And, truth to tell, the Republicans have taken some pretty heavy hits on the president’s leadership so it’s not like partisanship is foreign to them. However, I do think they felt a little blindsided because they’d been – they didn’t realize they were being invited to the opening of the president’s reelection campaign speech.
MR. HARWOOD: It was kind of interesting that one of the things the president said was, this is not – of the Republican plan – this is not the America that I’m familiar with. And some people, Republican certainly, thought he was skirting right up to the edge of calling them un-American in what they were proposing. Of course, there is a significant chunk of the Republican Party that thinks the president himself is not an American. So I guess both can play that game.
MS. DAVIS: I don’t think you can underscore the dangerous politics of this. When you talk about Medicare and seniors, right? Obviously, you don’t need to say how obvious there is to the voting bloc. But of the 150 congressional districts that have the most seniors, 99 are held by Republicans. If you look at the Senate map, keyed states, like Pennsylvania and Florida, which have significant senior populations in it. So, for – Janet had referenced earlier, when Nancy Pelosi was on the floor talking about the budget and she looks over at the Republicans on the other side of the aisle and says, do you all realize what your leadership is making you do, this vote you’re taking today?
MS. IFILL: They’re changing Medicare as we know it.
MS. DAVIS: Yes.
MS. IFILL: As we know it, whatever that means, but yes.
MS. DAVIS: And Steve Israel, who runs the Democratic campaign operation, said today, if we win the House back, this vote will be the start of the campaign.
MR. ZELENY: And something – I mean, I think that’s even extraordinary that that is even a possibility. I mean, it’s not been – we’re not even six months beyond the midterms and – I don’t know how great of a possibility it is but Republicans are far more concerned about holding the House than they were a couple of weeks ago.
MR. HARWOOD: But only four of them voted against this budget.
MR. ZELENY: That’s true because that’s one thing that – I think the thing we don’t know in all this – when I talk to voters out there, you sort of do get a sense that people understand I think more than before that this is a serious thing. So I’m not exactly sure that all the old rules apply there. Oh, seniors will definitely vote out someone because of this. I think it is a different time and it is more serious. And the deficit has been drilled down into people’s mind so much, there may be more flexibility out there than we think.
MS. IFILL: And is that why when we see the president come out this week and make speeches like this, it felt like he was snatching the mantle of deficit slasher from Paul Ryan’s hands and saying, no, no. Me.
MR. ZELENY: Right. He was doing that on the one hand, but then – and we’ll see how much he actually does and goes through with it. But he is trying to sort of do all of it. But I think one thing we also saw this week that running against an incumbent president, boy, it’s not all that easy. He has used the power of the bully pulpit or at least the visibility of the presidency I think pretty well over the last couple of weeks, you know, certainly throughout the budget deal. And then he zips to Chicago, zips back. He is going to be running at a loftier level. And meanwhile, all the Republican candidates who want to take him on are driving around in minivans in New Hampshire and Florida. So this is a – he has a bunch of advantages going into this reelection.
MR. HARWOOD: And he should be able to put away a lot of money pretty quickly too.
MR. ZELENY: I mean, in Chicago, on that Thursday night, it was a little more than $2 million. I think they’re going to have a very strong first quarter – or second quarter, actually.
MS. IFILL: So let’s tick off some of these presidential wannabe candidates that are not formally announced. I can’t even keep track of who’s actually in the race and who’s not. But we’ve seen them all. And this week, of course, Mitt Romney, to the extent there’s anyone who’s at least a well-known name, has been out there. Has he been weighing on this or has he stayed as far back from the general issue, the bigger fights as he seems to be staying away from the Ryan plan?
MR. ZELENY: He’s about halfway through I think. He criticizes the president every chance he gets. But he did not come out against the budget deal. I think he is halfway to a pragmatic here. He’s not criticizing John Boehner, which some candidates did. You saw Governor Haley Barbour from Mississippi. He’s a potential candidate. He supported the speaker. He thought it was a good budget deal. Former Minnesota Governor Tim Pawlenty said that he thought it was a bad deal, Republicans shouldn’t vote for it. So you’re going to see the Republican presidential candidates sort of insert themselves in these congressional debates. It’s easy for them though because they don’t have to take a vote on this. But the one candidate the White House is keeping their eye on and a potential candidate is John Huntsman. He comes back from China in a couple of weeks, at the end of the month. There’s a lot of –
MS. IFILL: We should say he’s the president’s ambassador to China right now, a Republican, former governor of Utah.
MR. ZELENY: Exactly. And he – you know –
MR. HARWOOD: They’re going to smother him with love, right?
MR. ZELENY: Well, they’ll smother him with love. We’ll see how that works. But they are agitated by him and the White House is, I would say, slightly preoccupied by him, at least he might – (inaudible).
MS. IFILL: Well, we just happened to read today – somebody just happened to leak today to a conservative online publication that he’d written all these nice letters about the president saying he was a –
MR. HARWOOD: A remarkable leader.
MR. ZELENY: A remarkable leader.
MS. IFILL: Interesting – remarkable leader were the words which I guess is what you say about your boss, but, still, not if you’re about to run against him.
MR. HARWOOD: The president could smother Mitt Romney with a little bit of love on health care too because Mitt Romney, of course, was the author of the Massachusetts, or signed the Massachusetts health care bill that has some resemblances to the president’s. It’s not going to be easy for Mitt Romney to live down in the Republican primary.
MS. IFILL: From the Democrats’ point of view, not only in the White House but also the Democrats who necessarily are yoked to this president, is the idea of compromise essential to their success or is it dangerous for them?
MR. ZELENY: I think it’s dangerous in the sense of sort of a dispiriting the base. I mean, when you saw all the compromise going on last week, you didn’t see Nancy Pelosi really anywhere.
MS. IFILL: Anywhere.
MR. ZELENY: And she expressed some private frustration about not being involved in the talks, I believe. But I think the compromise is an agitating factor for Democrats. It does not inspire you to give money. It does not inspire you to perhaps go knock out on doors for the president or Democratic candidates. So they’ll have to give the liberals something.
MS. IFILL: Last word.
MR. HARWOOD: Well, most of the big things the president wanted from the Congress he got in the first two years. Except for keeping the government running and maybe getting some of these trade deals in, there isn’t a lot he needs from the Congress. So I think Jeff’s point is right: the most important thing that happened this week for 2012 is the fight that was framed on Medicare.
MS. IFILL: Okay. Well, we’re going to be watching lots of other fights being framed because I get the feeling we’re just at the very tip of the iceberg in all of this.
Thank you all very much, especially those of you who are running around on the Hill. That’s hard. As political as all of this seems, these debates are actually turning out to be about substance. So keep up with all of them every night on the PBS “NewsHour” and on our website where you can follow our panelists, see what they’re up to, see what they’re reading. And you can read my blog too. You’ll find us all at pbs.org. Congress is out of town for a couple of weeks, but we’ll be here, as always, around the table next week on “Washington Week.” Good night.