MS. IFILL: The first Friday of the month brings more bad jobs news, plus the week in politics, tonight on “Washington Week.”

PRES. BARACK OBAMA: If you got hit by a truck, you know, it’s going to take a while for you to mend, and that’s what’s happened to our economy. It’s taking a while to mend.

MS. IFILL: Hard news to spin: slower than expected job growth as unemployment creeps up.

REP. JOHN BOEHNER (R-OH): We’ve wasted $2 million and what have we gotten for it? We’ve lost 2.7 million jobs since he took office.

MS. IFILL: Is this issue going to decide the 2012 election?

MITT ROMNEY: I’m Mitt Romney. I believe in America and I’m running for president of United States.

MS. IFILL: Or do Republicans have to sort out their primary challengers first?

SARAH PALIN: The field isn’t set yet, not by a long shot.

MS. IFILL: Or might it all depend on whether Congress and the White House can agree to reduce debt.

REP. ERIC CANTOR (R-VA): The question is where is the president.

JAY CARNEY: We sort through what matters with the reporters covering the week: Deborah Solomon of the “Wall Street Journal,” Jeff Zeleny of the “New York Times,” and John Harwood of CNBC and 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.”

(Station announcements.)

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

MS. IFILL: Good evening. The unemployment rate ticked up again last months from 9 to 9.1 percent and although 54,000 jobs were added to the rolls, that was less than expected. Expectations being the name of the game, the president’s response today was to point to the part of the economic recovery that seems to be working: the auto industry rescue.

PRES. OBAMA: Today, all three automakers are turning a profit. That hasn’t happened since 2004. Today, all three American automakers are gaining market share. That hasn’t happened since 1995. And today, I’m proud to announce the government has been completely repaid for the investments we made under my watch by Chrysler because of the outstanding work that you guys did. (Applause.)

MS. IFILL: But Republicans aren’t buying that.

REP. BOEHNER: If you talk to job creators around the country like we have, they’ll tell you all the over-taxing, over-regulating, and over-spending that’s going on here in Washington is creating uncertainty and holding them back.

MS. IFILL: It was also bad news this week about home prices and manufacturing. So where is the recovery, Deborah?

MS. SOLOMON: Well, it’s in hiding at the moment. We’re in what most economists are calling a soft patch. And this week, we saw a slew of bad news. The economy is still growing. We’re still adding jobs, but not anywhere near the rate we need to keep up with the number of people who want to work. Housing prices fell to the 2002 levels, wiping out an entire decade of home equity. Manufacturing sector, which the president alluded to and had been driving the recovery, actually stagnated a little and we saw for the first time has started shedding jobs, the first time in six months.

You’re seeing nearly one in three unemployed people have been out of work for more than a year and 14 million Americans want to find a job and can’t. So we’re in this moment now that the recovery that had been sort of gaining momentum has stagnated and it’s sort of unclear whether this is something that’s temporary, caused by some hiccups, I mean the Japan earthquake. Commodity prices have been rising. You know, some of these things are temporary one-offs, but the long slog ahead of us seems pretty high.

MS. IFILL: It also seems kind of like the accumulative effect of all of these things, whether or not someone can make the argument actually that there’s a slow recovery underway, is that people begin to psychically begin to internalize this notion that we’re in bad shape. They can’t buy a house. They don’t want to buy a house. They don’t know if they’re ever going to be employed again. And that has its own dangerous side effects.

MS. SOLOMON: Oh, yes, I mean the psychological impact here is huge. You know, one of the problems during the financial crisis was that the confidence just wasn’t there, so even – things were very bad, but they were made even worse because people were worried about losing their jobs. Businesses were worried about demand, so they weren’t investing. And the administration is particularly worried about that now, sort of this knock on effect that even if things are – we’re in a quote, unquote, “recovery,” it doesn’t feel that way, so people are really worried. They’re scaling back. Consumers aren’t spending money as much as they would be. Businesses aren’t investing. And that’s a real risk to this recovery.

MR. HARWOOD: Deborah, I talked yesterday to the economist Mark Zandi pointed to the one-offs that you mentioned: oil prices, Japan, some other factors. And so he expects that actually growth will accelerate in the second part of the year and that the labor market is recovering, even though this number was weak. Is that the consensus among economists that you talk to or is Mark an outlier in that optimistic view?

MS. SOLOMON: There’s a mix. I mean, there definitely is this school of thought that we are headed – that the recovery is going to accelerate later this summer or possibly in the fall. But people are worried. There’re a bunch of economists today who say, you can’t put lipstick on this pig. These numbers are really bad. June is expected to be bad as well. So there is sort of this school of thought that there’s a wait and see attitude, but there is a worry that things are not going to improve at the rate that people have thought at the beginning of the year.

MR. ZELENY: Is there anything that Washington is able to do in the short term or the long term, long being the next six months or so, to alleviate this or is it – is it what it is for a while?

MS. IFILL: And if I can piggyback on that. We saw the president out today saying, look what we did, look what Washington to save this from just being worse. Is there something more?

MS. SOLOMON: Right, well, I mean, there’s two things they can do. They can talk about they’ve saved – they’ve done good things to kind of overcome that psychological hurdle saying, hey, look, things are getting better. We’ve done X,Y, and Z, but –

MR. HARWOOD: So that’s therapy, not policy.

MS. SOLOMON: – that’s therapy, exactly, right. There’s lots they can do, but they won’t do. Right now, the name of the game is belt tightening. So there’s no appetite for spending any more money, and you have to wonder whether the things that they’ve actually done have had any kind of real impact and the Fed is about to end its grand experiment with printing money and pumping money into the economy. A lot of people think it didn’t actually do very much. Stimulus has ended. State and local governments are starting to scale back. So there’s a question about how effective the government programs have actually been. There’s a little bit that – Democrats talk about, well, if we can get the deficit agreement, we could do a little bit of payroll tax cuts here, maybe some infrastructure spending. But I think the reality is that there’s really not much the government can do at this moment.

MR. HARWOOD: Republicans leaders in that clip were talking about Washington overtaxing. The president has agreed to extend the Bush tax cuts and has also offered some business tax cuts. Are they proposing more, additional new tax cuts, given their concern about the deficit?

MS. SOLOMON: Well, I mean I think that they would like to do maybe additional payroll tax cuts, anything that’s going to – especially heading into campaign season, anything that’s going to help put money back in people’s pockets. I don’t think there’s particular proposals right now, but they want to come to some sort of agreement. They figure if they can get a deficit agreement underway, that they could also have a little bit of extra spending to go with that if they have some real firm commitment to fiscal responsibility.

MS. IFILL: How much has this leaked over into – and we’ll talk about this a little bit with Jeff, but how much has this leaked over into the presidential campaign. How much do you hear people talking about the economy as the central issue?

MS. SOLOMON: Oh, yes, it’s going to be the central issue and I think it’s a huge risk for the Democrats and a huge risk for Obama. And I think the only thing they really can do is talk about the progress that we have made. You don’t get credit for saying, things would have been worse, but things would have been worse. So what they have to do is sort of point to the areas where we are seeing some growth and – you know, manufacturing, you’re seeing obviously jobs being added. It’s not going to be easy for them, but they’re just going to have to try and turn the conversation.

MS. IFILL: Well, let’s move out on the campaign trail, where the Republican presidential contenders do agree that the election will turn on the economy, but first, they have to decide not to turn on each other.

Officially in this week, Mitt Romney. Unofficially in, former Utah Governor Jon Huntsman and officially stirring the pot, Sarah Palin.

Romney took aim at Obama.

MR. ROMNEY: When Barack Obama came to office, we wished him well and hoped for the best. Now in the third year of his fourth year term – or his four-year term, we have more than slogans and promises to judge him by. Barack Obama has failed America.

MS. IFILL: And Palin took aim at Romney.

MS. PALIN: Health care plan, in my opinion, any mandate coming from government is not – not a good thing. So obviously – and I’m not the only one to say so – but there will be more the explanation coming from former Governor Romney on his support for government mandates.

MS. IFILL: Now, as it happens, she was on her way to or in New Hampshire when she said this, on the same day that Romney was making his well publicized in advance formal announcement. So was there offence intended here?

MR. ZELENY: She was going to a clam bake and I think she had some salt along, too, to pour in the wounds, but of course there was offense intended, but she was arriving in New Hampshire one day earlier than she planned to. She initially said Friday. She came Thursday. But I think at the end of the day Governor Romney got a lot of attention for the message that he was giving. He finally announced he’s running for president. He’s been doing it for a long time. Of course, this is his second bid for the Republican nomination. And he’s been kind of in a shell for at least the last six months or so, really only holding one campaign event every month.

He’s taking a completely different approach or sort of a different approach in this second time around. Four years ago, he was everywhere at this point. He was all over Iowa. He had been on TV advertising on television commercials for some four months at this point. He started February of 2007, which I’d forgotten about actually that I went and looked it up this week. So I think he is trying to introduce himself and trying to capitalize on the fact that the economy, obviously, as Deborah just said, is the central issue. And he thinks that this is his moment because he’s a businessman. He’s a former governor. So he is not talking about health care, but that’s what everyone else wants to talk about. That’s what Sarah Palin was doing there, talking about it. He didn’t give any specifics. He’s going to have to, but he finally has agreed to join the field and be in the first debate in two weeks in New Hampshire.

MS. IFILL: If he has run before, which he has, and he’s been especially in New Hampshire when he was governor across the line, how’s he doing in terms of the still forming field? It seems that there’re a lot of people nipping at his heels fairly closely for someone who ought to be this well-known by now.

MR. ZELENY: A lot of people are nipping at his heels and he has more people in the Republican Party who don’t like him than do in terms of like different groups and different sects of the party. So it’s a little bit hard to see how he’s going to thread the signal, but his strategy is, I’m going to be the last man standing. I’m going to raise more money than anyone else. I am going to sort of push through the primaries. I am going to still be alive after Iowa, New Hampshire, South Carolina, into Florida. We’ll see how that goes from when he needs to pick up some wings along the way. But one strategy that they haven’t quite figured out is Iowa. He spent more than $10 million there four years ago, and this year he’s kind of flirting with the idea of being there or not.

He was there last Friday. I was with him. A fire alarm of all things goes off in the middle of his presentation. It cuts it short. He’s not quite sure how to handle Iowa, but I think he knows that he has to play everywhere if he’s really going to be the frontrunner. If he’s really going to be the man who can beat Barack Obama, he can’t pick and choose different places. And the White House has their eye on Mitt Romney, for all the criticism from Republicans. So they’re watching him. He could be the nominee as well as anyone.

MR. HARWOOD: Jeff, I’m tempted to ask you what kind of hair gel Romney was wearing because I was at that announcement yesterday. Mine was going all over the place –

MS. IFILL: You left your hair gel at home?

MR. HARWOOD: – he was in control there. But I want to talk about the field itself. A lot of talk this week about the weakness of the Republican field, Romney as a weak frontrunner in that field. You and I have covered enough campaigns to know that this is often said about a party’s field of candidates before somebody emerges. They said it in 1992, and then, oops, guess what? Bill Clinton was in that field. He’s pretty good politician. What is your assessment of how much trouble the Republicans are in in terms of not having their best players on the field?

MR. ZELENY: I’m not convinced this is necessarily a weak field. There are three former governors in the race, which is always an impressive credential to run for president. There is Mitt Romney, of course, Jon Huntsman from Utah, and Tim Pawlenty from Minnesota. Those three are in. All of them are very strong in their own degrees among Republicans. And then you have several others who are interesting: Michele Bachmann from Minnesota certainly has appeal. You have some of the other –

MR. HARWOOD: Gingrich had a little following once upon a time.

MR. ZELENY: – Newt Gingrich, I – well, he’s on a two-week vacation from his presidential campaign oddly enough. So we’ll see what happens when he returns, but I don’t think it’s any weaker of a field than – I was thinking back to the first campaign I covered, which was in 1999, and that was June 13th of ’99, when George W. Bush made his first campaign visit. He was the governor in the field, but there were several other people, and that wasn’t particularly a strong field, except his last name was Bush. So I think this field is just fine. There’s been hankering for Governor Mitch Daniels to get in, Haley Barbour to get in. There’s still talk of Rick Perry, is he going to get in or not. But I don’t think it’s as weak as some people may think.

MS. SOLOMON: Let me ask you, on the economy, did the Republicans have to have ideas, plans, or is it enough just to beat up on Obama for the weak economic numbers?

MR. ZELENY: I think for now it’s enough to beat up on Obama. After all, it worked for Obama when he was running for president. And when you’re a candidate running for president, you could say things and you can be opposed to the war in Iraq, which he definitely was during the primary and that helped him. So at this point, I think Republicans can not offer too many specifics, but down the line as they start to differentiate from one another. And this first debate in New Hampshire, which is June 13th, I think, look for people to ask specifics about their economic plans, but at this point – I mean, we talked, really there’s not that much specifically Washington can do, so there’s certainly not that much a presidential candidate can propose because they don’t have access to all the information and things. It’s more like what they’ve done in the past and what they’ll do in the future.

MS. IFILL: Let me ask you about another thing that happened today because, you know, you talk about how early it is in the race and how things change. John Edwards, not in one, but in two cycles was a real formidable candidate. And today, we saw a pretty spectacular fall as he was indicted.

MR. ZELENY: It was pretty unbelievable. Four years ago right now, he was in Iowa. He was in New Hampshire. And it just goes to show that we never exactly know what is going on in a campaign. So a lot of voters had their eyes on Senator Edwards and thought that he was the strongest nominee possible. I remember back to 2003, at this period, the people inside the Bush White House thought that he was the guy who could beat George W. Bush. Of course, it’s not ended very well for him and it’s a tragedy all the way around. We can argue the merits of if this is a rightful prosecution or not, the – a jury will decide that in North Carolina, but it just goes to show that flash and appearance is not perhaps the most important thing in a candidate. He had a lot of that. And he had substance as well, but –

MS. IFILL: And even if the government can’t prove its case here, he’s still – the things he’s admitted to are still things people find pretty objectionable.

MR. ZELENY: Right.

MS. IFILL: Yes. Well, we’ll talk some more about him during the webcast. Meanwhile, far from the madding crowd, behind closed doors, there seemed to be some actual deal making going on involving the federal budget. In public, both sides accuse the other of lacking the seriousness needed to cut spending and raise the debt ceiling, but in private, what’s really going on, John?

MR. HARWOOD: Well, they are making some progress.


MR. HARWOOD: And a lot of the public posturing that you’re seeing is oddly enough part of that progress. That is to say the issue is not identifying cuts that can be made or taxes that can be raised, tax loopholes that can be closed in order to raise the amount of money or close the deficit the amount they want. It’s really a task of political management. How do you bring – how does John Boehner bring along his caucus in a way that he can get people to support an increase in the debt limit, come to closure on a deal, and get enough Democrats, on the other side, to make a majority. It’s –

MS. IFILL: Sounds complicated.

MR. HARWOOD: Well, it is complicated and it’s the reason that the government shutdown talks went right out to the brink. You know, we had a vote in the House this week, where the House brought up the so-called “clean debt limit,” which is what the administration has said that they wanted. And John Boehner said, okay, we’re giving the administration what they want, a vote on their clean debt limit increase. And it went down with support of an awful lot of Democrats, about half the Democratic caucus. Well, that itself could have been a step of progress toward an ultimate deal for this reason. John Boehner has a bunch of members who were elected, who don’t want even less than other members for decades have wanted to vote for debt limit increases. It’s a horrible vote in Congress. Now, they can say –

MS. IFILL: The proof of that is the president himself voted against it when he was in the Senate.

MR. HARWOOD: Absolutely. It’s totally partisan. If the president’s a Republican and asks for debt limit increases, Democrats flee and vote no. The opposite if a Democrat’s in the White House. But now those Republican members can say, I opposed a debt limit increase, and then when we get to the end of the summer and there’s a deal on spending reductions, they can say, I insisted on those spending reductions and now I’m going to vote for the debt limit increase. I think that’s the end game. And the question is what is the mix of broad targets, triggers, when you can’t agree on specifics? And some specifics, both in the so-called entitlement programs and domestic discretionary programs, in order to achieve the coalition that will get that debt limit increase.

It’s going to be ugly along the way, probably not going to get done too quickly. Some people talked about having it get done in July rather than – or early part of July rather than late part of July. But I think it’s likely to go up to the brink.

MR. ZELENY: How serious is this if the debt limit is not raised? Is it as – there’s sort of uniform agreement that this would be catastrophic for the markets and things. I’ve heard some presidential candidates saying that, you know, we’re not sure about that. I mean, of course, they don’t have to vote for it. So if you have to take a vote and have to own this, how serious is it for voting against raising it?

MR. HARWOOD: Well, ultimately, you’re not going to know the gravity of the vote they’re owning until we see the consequences if it goes down. If you have a repeat of what happened when the first TARP vote went down and the market goes down within 24 hours 777 points, that all of a sudden is going to be on the shoulders of those members. Right now – and it’s also part of the rhetorical positioning, people say, oh, it’s not that big a deal and we could have a technical default and we’re ultimately going to pay our bills.

MS. IFILL: Didn’t Moody’s come out with this report this week saying –


MS. IFILL: – this would be a very bad thing globally?

MR. HARWOOD: Yes. So if you look at the testimony that we have from analysts like Moody’s –

MS. IFILL: Right.

MR. HARWOOD: – from history, where Republican and Democratic presidents and treasury secretaries have said it’s unthinkable for us not to raise the debt limit, I think you’ve got to say the balance of the evidence is on the people who are trying to avoid the potential hiccup in the markets. And everyone has agreed, Republican and Democrat for quite a long, that it would be a severe adverse effect for the markets.

MS. SOLOMON: You know, you mentioned the TARP vote and this vote this week on the debt limit seemed to me to be almost like, you know, a charade that basically they had to have it fail once before they could vote for it. But as you mentioned, the spending cuts are really going to be the thing here. How are they going to get to agreement on spending cuts, given that we are heading into a campaign season? Nobody wants to be seen as giving the Democrats a debt limit without real severe cuts, and yet the Democrats are very worried about as big a number as the Republicans are positing. What’s – where are we going to see these cuts and do you think we’ll really be able to get a deal and a vote, clean vote by the end of the summer?

MR. HARWOOD: I think we will get a deal. Remember that President Obama, like Paul Ryan and the Republicans in the House, have been talking about net deficit reduction of $4 trillion over 10 years. They’re in the same ballpark. If you freeze domestic discretionary spending, as they’re talking about, do a hard freeze, that’ll get you $2 trillion. And remember, John Boehner said the other day that we have to have at least as much specified spending cuts as we increase the debt limit. They’re talking about a $2 trillion increase. So they’re in the zone there. Democrats are insisting on some tax increases. Republicans are resisting. Call them loopholes. Maybe you can get a deal on that. On Medicare, they’ve set aside the Ryan reductions because those got hammered in that special election in the House –

MS. SOLOMON: Those didn’t even factor in for the next 10 years or so.

MR. HARWOOD: Exactly, but they are talking about some relatively modest waste, fraud, and abuse and better collection of bills, and that sort of thing. They’ll get some out of that. They’re talking about some agriculture entitlements savings, some defense. And I think if you cobble together the mandatory spending, a little bit of defense, a little bit of tax loopholes, domestic discretionary freeze, you will have the guts of what could be a deal along with broad targets and triggers and people will call it a day and say, now, let’s go fight about 2012.

MS. IFILL: I’m saving that piece of tape. I’m going to roll it back at the end of, what, July, August?

MR. HARWOOD: You can hit me with that.

MS. IFILL: I’ll hit you with that. Okay. Thank you, everybody. We have to leave you a few minutes early tonight so you can take the opportunity to support your local PBS station, which, in turn, supports us. But the conversation continues online on the “Washington Week” Webcast Extra, plus you’ll find additional stories and analyses from me and from our panelists. Keep up with daily developments on the PBS “NewsHour” and we’ll see you again around the table next week, on “Washington Week.” Good night.