MS. IFILL: Careening toward a cliff. House Republicans rebel. Senate Democrats dig in. And the U.S. economy titters on the edge. What will it take to avoid calamity, tonight on “Washington Week.”
REP. JOHN BOEHNER (R-OH): It’s time for somebody in this town to say yes.
SEN. HARRY REID (D-NV): The only compromise that there is (is mine ?).
PRESIDENT BARACK OBAMA: There are plenty of ways out of this mess, but we are almost out of time.
MS. IFILL: A stubborn standoff throws Washington into chaos.
SEC. RAY LAHOOD: This is a time that I think most of us that have watched politics have never seen before.
SEN. JOHN MCCAIN (R-AZ): It’s unfair. It’s bizarro.
MS. IFILL: But compromise remains out of reach.
SEN. JIM DEMINT (R-SC): Folks, we’ve got to hold the line. We’ve got to stand strong.
MS. IFILL: Will the nation be able to pay its bills by this time next week, and what are the consequences if it can’t? Covering the week Jeanne Cummings of Bloomberg News, Major Garrett of “National Journal,” Karen Tumulty of the “Washington Post,” and David Wessel of the “Wall Street Journal.”
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. Well, take your pick of adjectives. The debt ceiling deadline is looming or it’s threatening or imminent, or verbs, collegiality has collapsed. Patience with Washington has plummeted. Or merely descriptive: Republicans are stubborn. The Democrats are job killers. None of this point and counterpoint allows us to escape a troubling truth. Unless someone somewhere comes up with a solution that can win votes from Democrats and Republicans in the House and the Senate, the nation will default on its obligations beginning next week. After spurning Speaker John Boehner’s plan yesterday, the House, today, approved the revised approach, which finally passed, but it’s certain to die in the Senate.
REP. BOEHNER: I stuck my neck out a mile. I put revenues on the table, in order to try to come to an agreement to avert us being where we are.
This House has acted and it is time for the administration and time for our colleagues across the aisle, put something on the table. Tell us where you are.
MS. IFILL: So is all this stubborn politics or a real divergence of philosophy or both?
SEN. MITCH MCCONELL (R-KY): Republicans have been doing the hard work of governing this week. It’s about time our Democratic friends joined us.
SEN. CHARLES SCHUMER (D-NY): The House continues to waste time. The Senate cannot afford to wait on the House any longer. Speaker Boehner should just give it up.
PRES. OBAMA: There’re a lot of crises in the world that we can’t always predict or voice: hurricanes, earthquakes, tornadoes, terrorist attacks. This isn’t one of those crises. The power to solve this is in our hands.
MS. IFILL: Majorities on both sides say the debt ceiling has to be raised to avoid a fiscal catastrophe. But let’s start with these questions. What happens if it isn’t raised, David?
MR. WESSEL: Oh, you’re such a pessimist.
MS. IFILL: Just asking.
MR. WESSEL: Right. The United States government now has less money in its checking account than Apple Computer has. The United States government spends more money every day than it takes in. As of next week, it will not have enough money to meet all its obligations. And although the Treasury is being very quiet and mysterious and refusing to answer questions, we know that they are sitting there doing contingency plans and saying which bills are we going to pay and which ones aren’t we going to pay. It’s very likely they will continue to pay the interest on the debt. Actually, the first interest payment isn’t due till August 15th. But they will have to begin deciding which bills not to pay so they have enough cash to meet the obligations they decide to pay.
MS. IFILL: Let’s just take one thing. If you are relying on a Social Security check to pay your bills this month, is that one of the things that won’t get paid next week?
MR. WESSEL: We don’t really know. There is a Social Security payment due next week. My expectation is they’ll pay that. They haven’t said one way or the other. I think they’re aware of what would happen if that money doesn’t come into people’s bank accounts.
MS. IFILL: So Major, tonight, as we look at what the Senate is acting on, based on what the House did this afternoon, what’s on the table?
MR. GARRETT: Before I get to that, let me pick up on David’s point for a second. It’s not just Social Security. I was talking to an agricultural lobbyist this week who said part of his industry went in to talk to the USDA and say will there be meat inspectors on Wednesday?
MS. IFILL: Yes, yes.
MR. GARRETT: We need our product inspected. If it’s not inspected, it has to sit on the shelves and will rot. USDA was unable to say whether or not there will be meat inspectors. They said, we don’t know what’s going to be paid, what’s going to be financed, what obligations of the government are going to carry on. It’s that granularity of government services that is a part of stake, not just Social Security checks.
Where are we? House passed its bill. It added a balanced budget amendment, essentially ordering the Senate to pass a balanced budget amendment and send it to the states and that would be contingent or part of the trigger mechanism to give the president debt obligation authority carrying through to 2013.
No legislative body can order the other legislative body what to do. So that’s clearly something for House votes, but not for the Senate to deal with. It will be killed in some procedural vote tonight.
Then the hard work of negotiating something will go on this weekend. Importantly, in the Senate, the killing of the Boehner bill, the House bill will not be final. That will still remain as a legislative option that can be revived very quickly and not be subject to all the filibuster hassles a typical piece of legislation might have to overcome. That suggests that the Senate and the House are looking at each other and saying, we’re keeping this option live, because we imagine the compromise and we can see a way forward. There is a will. We just haven’t yet found the way.
MR. WESSEL: So you mean the Boehner bill would become shelled and would be filled with the compromises.
MR. GARRETT: Precisely. That is the legislative mechanism that is being created as we speak.
MS. IFILL: Somebody has to blink in all of this, but how do we get to this, Jeanne, how do – it feels like we’ve been talking about this for several weeks around this table now and yet it still escapes me how it got to this point.
MS. CUMMINGS: Well, it’s actually been – the pieces of this have been coming together for a very long time. And part of it is redistricting, where back in the 1990s, early 1990s, the number of swing districts in the House as almost 200 out of 435, and then after two redistricting sessions, by 2001, there were 91 of them. And so most members only get elected by their own base. And then, more recently, the pattern of having primary challenges emerged. And we saw a little bit of that two cycles ago, a lot of it last cycle. And that’s created a whole new disincentive for members and a very, very strong disincentive for members to reach across party lines and reach bipartisan deals because they have been threatened on both sides that they’re going to have a primary challenge if they do so. So the way our political system now is composed, it actually has these built in very significant disincentives towards making big deals, towards working together, and that is – and we are now seeing the fruits of that evolution in the House, in particular.
MS. IFILL: Karen, let’s talk about the House in particular because John Boehner has been a very interesting figure in all of this. At one point, he was walking in the backdoor of the White House and trying to cut a deal with the president. Obviously shamed out of that and so now he came up with his own deal and he spent a lot of time last night bringing people in through his front door – recalcitrant Republicans to get them on board. Is he wounded by what happened this week? Is he strengthened because he gets something out in the end?
MS. TUMULTY: I think that what has happened this week is that we have seen how little leverage and how weak John Boehner really is. I – you know, he has a leadership style that he has said – after the top down leadership stall we saw with Nancy Pelosi that he really wanted to be a consensus kind of leader, that things would come from the bottom up. And he won his majority in the House because a lot of these freshmen ran very specifically against the establishment and against deals and against the kinds of things that have been sort of the lubricant of Washington. So he started out with a very weak hand and I think what we saw this week was just how weak it is.
MS. IFILL: Well, and what we saw today was the reason why Nancy Pelosi did what she did in that not one single Democrat crossed the aisle to support what John Boehner had said was a bipartisan approach.
MR. GARRETT: You know, on Capitol Hill, this week, some people were saying where is Tom DeLay when you need him? Tom DeLay with the hammer who could really force Republicans off their position and get them to vote for something.
MS. IFILL: He didn’t have this caucus.
MR. GARRETT: Number one, he didn’t have this caucus, but he had something that John Boehner does not possess and doesn’t want to possess: earmarks. Tom DeLay used to lubricate these votes with benefits specific to congressional districts. House Republicans have ruled that out as an option. There’s an old joke about someone coming out of meeting Tom DeLay and saying, hey, I got two bridges. Someone says, oh, you’re yes then. No, I’m still a no. I got no rivers. (Laughter.)
MR. WESSEL: Karen, the Congress is clearly very polarized. The Republican Party is polarized. Do you think the public is as polarized as the Washington politicians are right now?
MS. TUMULTY: It’s interesting because in our most recent poll at the “Washington Post,” eight out of 10 Americans are saying that they think this is a serious crisis. And they are also faulting the Congress for not compromising, but I do think that this is something that is much bigger than partisanship going on here. And I’ve seen – if you talk to political scientists, they will tell you that the country has not been this polarized, that the Congress has not been this polarized since the 1890s. So a divided government is really not the problem. We have seen some of the biggest legislative accomplishments happen during eras of divided government, but it was at a time in the ’60s and even in the ’90s when people may have different party levels, but they – philosophically, there were some areas of unison. Those all have ceased to exist in the Congress.
MS. IFILL: I also wonder and I want to follow up with you on this, David, the degree to which the underlying weakness in the economy, which we saw more evidence of today with the gross domestic product numbers, which weren’t but anyone had hoped, whether that’s also driving a lot of the discontent.
MR. WESSEL: I think it’s driving a lot of the discontent in the people at large. I mean, you cannot overdo how bad these numbers were. The economy grew only four tens of a percent in the first quarter, 1.3 percent in the second quarter. At that rate, unemployment will rise not fall. And we already have very high unemployment. My sense is that there’s a lot of angst out there among the public about their jobs, their wages, their kids’ jobs, the value of their house. And that’s translating into a kind of anger at everybody that some of the members of Congress are reflecting. But I’ve been stunned really by how immune the members of Congress seem to be to the possibility that they are actually actively making a bad economy worse with these charades on Capitol Hill.
MS. CUMMINGS: One of the things I think in terms of the debt and the economy and how they fit into this is, with the debt rising is such an important issue, and so money’s drying up. That in a period of austerity, as we are in right now, then the choices are so much harder and the priorities of the parties really come in to clear relief, and they clash directly with one another. Whereas we saw in early part of this century, when we were – thought we were flush, we really weren’t, but we thought so – then they did everything. They cut taxes and they spent money. And you know, when you’re in that kind of environment, then the differences between the two parties don’t clash quite as sharply as they do now.
MS. IFILL: Let’s not stray too far. One of the interesting things that the president kept saying and the people of the White House kept saying is we’re not really that far apart. I mean what is on the table does not have any tax increases in it. And it’s all cuts. And it’s not even as many cuts as everybody said –
MR. WESSEL: It doesn’t have very many Medicare or Social Security and Medicaid cuts either.
MS. IFILL: And it doesn’t have entitlement cuts.
MR. WESSEL: So all the big issues have been pushed to the side, and now they’re arguing about a bunch of domestic spending and defense spending cuts where they’re very close and a whole bunch of procedural mumbo jumbo that even they don’t understand.
MS. CUMMINGS: And the dates –
MS. IFILL: And a philosophical question – the balanced budget amendment, which is –
MR. GARRETT: Right. But that’s a bargaining chip. The Senate may agree to have a debate and a vote, but that’s all that the Senate can give. The Senate can’t give the House a guarantee it’s going to find 67 votes for a balanced budget amendment or to rename a post office. Legislative bodies don’t speak to each other.
MS. IFILL: All they want is the vote, though.
MR. GARRETT: That way. Right, but that’s what they can offer them as a bargain chip. We’ll vote on it. We’ll have a big debate and we’ll see where it goes. One thing I’m struck by is, talking about this issue and the history of – in 1985, we had a similar crisis, low level crisis, never a default situation, for raising the debt ceiling. And out of that grew the Gramm-Rudman-Hollings budget balancing attempt. It set hard spending caps for several years that lasted all the way to President Bush. In 1990, he raised taxes because of caps bit too hard. But that lasted for five years. Look at the figures involved. Ernest Hollings, South Dakota Democrat, powerful –
MR. WESSEL: Carolina.
MR. GARRETT: – South Carolina. Phil Gramm, Texas, and then Warren Rudman from New Hampshire, a nominal independent, probably the closest the Senate had, but all three smart, capable, politically adapt, and they pulled this together in cooperation with the Republican president. I would submit to this table. I don’t see those figures in the Congress in this current situation, people of stature, political ability, policy expertise who can put something together.
MS. CUMMINGS: I do think that’s one element that is missing in this current clash. In the 1990s, you had Bob Dole step up during the government shutdowns and say, it’s time for the grownups to take over.
MS. IFILL: But once again, you had a different membership. You had –
MS. CUMMINGS: Yes, that’s the point.
MS. IFILL: – yes, there was no tea party movement.
MS. TUMULTY: There’s those skills – the question is whether those skills are even relevant –
MS. IFILL: Yes.
MS. TUMULTY: You still do have people – Mitch McConnell knows how to cut a deal.
MS. IFILL: John Boehner used to know how to cut a deal.
MS. TUMULTY: But in the tea party culture – first of all, the tea party effect – they have completely changed the conversation in Washington, where it’s top to bottom focused on spending cuts.
MR. WESSEL: Huge success for them.
MR. GARRETT: Yes.
MS. TUMULTY: And second of all, they have created a culture which for many people the only safe vote on just about anything is no.
MS. IFILL: Well and speaking of no being the safe vote, we’re just hearing tonight that the Senate has taken its first vote on the Boehner and predictably it’s gone down, which sets the stage for the next quarter of this drama.
MS. CUMMINGS: You mentioned earlier, has the speaker been hurt by what went over – what happened over the last 48 hours. It seems to me, from what we were hearing from Republican members last night, they are not that angry with him. In fact, many of them feel like because they’re not trading bridges and that sort of thing that they’re being treated as adults and are having more grownup conversations and they’re being treated respectfully. This vote was not – it wasn’t pretty, but it got through it. But I think the much more treacherous vote is the next one. And that is when he’s going to have to take whatever compromise they reach, assuming that they do, and he’s then got to go over and talk to the Democrats and try to get the Democrats on board –
MS. IFILL: And at the same time, get people who weren’t even – 22 Republicans who weren’t even willing to compromise today on the revised –
MR. GARRETT: They’re gone.
MS. CUMMINGS: They’re gone. But they think they might only able to hold 74 Republicans, which means the only way the House passes the final deal that will eliminate the threat of default is if the Democrats come over and bail him out.
MS. IFILL: Okay, so here’s a –
MS. IFILL: – well, here’s a question about this, which is some point stepping back. We are expecting leadership. Part of the frustration we get from Americans who are watching this with astonishment is it feels like there’s nobody leading this parade. The president seemed to be leading it, but he stepped to the side and kind of has been shaking his finger. The speaker can’t quarrel his folks. We don’t know what’s happening in the Senate. And we even have people running for president, who want to be president in 2012, who we’ve heard very little from, except around the edges.
MS. TUMULTY: Well, what we’ve heard from them is that Barack Obama – he’s not leading on this. I mean the safe position for the Republican presidential contenders has been to just criticize President Obama’s leadership, but there have been – last week, for instance, with this cut, cap, and balance in the House, only nine Republicans voted against it. Two of them were presidential candidates – Ron Paul and Michele Bachmann. She said it didn’t go far enough. Ron Paul said it was an empty promise. The presidential contenders are just out there urging a hard line, without offering any specifics or even –
MS. IFILL: Cause they don’t have to.
MS. TUMULTY: They don’t have to and if they do, they run the danger of either getting crossways with the establishment Republicans who are terrified of a default and the tea party. So they’re essentially merely arguing pretty much of a hard line.
MR. WESSEL: What about the president himself, do you think his political fortunes have improved in the last two weeks?
MS. IFILL: Well, we saw a Gallup – was it a Gallup poll today – that has him at 40 percent approval, the lowest of his presidency.
MR. GARRETT: He was at the lowest of his presidency last week, at 43 percent weekly average, 40 now, down three ticks.
MS. IFILL: Is this about disapproval of the president’s handling of this or is it that – it’s pox on everyone’s houses and they’re dirtying each other up?
MS. CUMMINGS: The Gallup poll numbers for the Republicans are even worse. So it looks like pox on both your houses, that Washington is just failing to govern.
MR. GARRETT: It’s hard to look at the spectacle and feel inspired.
MS. IFILL: This is true.
MR. WESSEL: True, right.
MS. IFILL: This is true.
MR. WESSEL: And he’s had an extraordinary run here, where he’s managed to alienate his base, completely antagonize his foes, and not appear to accomplish any of his goals. And you can see the frustration in his conversations.
MS. IFILL: Whose base is the most unhappy tonight?
MR. GARRETT: Well, this is a central question for Republicans. I mean, at some point, you have to understand the physics of pushing against an open door. When this debate started, the president said, I want a debt ceiling increase with no strings attached. That’s gone. That’s beyond the boards. He introduced the budget that went before the Senate, lost 97 to nothing. He abandoned it with a speech in April.
Then House Republicans said, we want spending cuts attached and a long-term deficit reduction. President said, okay. Then they said, we don’t want any tax revenue. That went back and forth, back and forth, ultimately decided no revenue, at least for the time being. Up to $2.7 trillion. I submit these are significant gains in a political conversation initiated by Republicans to force a big conversation about a big issue.
MS. IFILL: But they forced a big conversation.
MR. GARRETT: At some point, you have to say to yourself, what will our – I’m saying abstractly, any party – what are our goals. What have we achieved, and how do we consolidate them? They haven’t answered that.
MS. CUMMINGS: The Republicans, I think, definitely should feel really good right now because the bill that Boehner put through was improved in a way to collect even more conservative Republican votes. And so it’s much more –
MS. IFILL: So you’re saying the Democratic base should be more unhappy if they were paying attention to what’s actually on the table now.
MS. CUMMINGS: Exactly. And I think the Democratic base is not going to be happy no matter how this turns out, but I think it’s entirely possible that over the next 48 or 72 hours that the Republican base will become really frustrated and angry because what – there was one long-time Tom Cole, Congressman Tom Cole, been around Washington for a long time. He said this week, there’s a lot of learning going on in our caucus. And what they’re learning is that they don’t own the Senate. And they just can’t push through pure snow what their proposal is. And it was his estimation that they – that that has not completely sunken yet.
MS. IFILL: How much are the – the outside pressure – it’s hard to measure – switchboards lighting up, Twitter feeds blowing up, all of the pressure, which is being brought by the public saying, get a deal dog on it – we have any sense of that kind of sipping through? You don’t think so, Karen.
MS. TUMULTY: I’m also surprised that we haven’t seen a lot of members, at least that I’ve heard hearing from their local banker at home, hearing from the local real estate agents at home. These – also these people who feel like they have a lot on the line. If – you know – what we are hearing from some national Republicans, people like Rick Perry, who may be running for president, say, oh, a default wouldn’t be so bad. There’s money sloshing around. So – Rick Perry, the governor of Texas – and you know, so it’s – people have been downplaying.
MS. IFILL: Well and it’s interesting because – look at Wall Street, which has been kind of quietly writing letters and saying, hello, hello –
MR. WESSEL: I think they – Wall Street is definitely stepping up the pressure. And the stock market –
MS. IFILL: But slowly.
MR. WESSEL: Right. The stock market had the worst week in a year. It lost 4.2 percent. I think that the business community outside of Washington thought this is some kind of game and that Mitch McConnell and Harry Reid have some plan that they’ll pull out at the 11th hour. And it’s really only in the last few days that it began to occur to these guys that the unthinkable might become thinkable.
MR. GARRETT: Also because of the instability in Europe, Treasury bonds still remained a very good bet because Europe is in such –
MR. WESSEL: And because the economy’s tanking so the yields on Treasuries are actually going down –
MR. GARRETT: I think this has created a false sense of security, but I agree completely with David. People thought it is impossible this could happen and now they’re like, wow.
MS. CUMMINGS: But it’s not – but it hasn’t been totally quiet. There are people who know they’ve got big stakes in this fight. There’re a lot of people who don’t know what’s in the bill, including all of us. We haven’t seen it, but they – like big oil nose is in – it’s in play here in some fashion, if not immediately, maybe later in tax reform. They brought in busloads of people. The realtors have been bringing in busloads of people.
MS. IFILL: So there is you think an exit –
MS. CUMMINGS: There is an attempt.
MS. IFILL: – there is an exit strategy that’s clear to everybody tonight or is that still going to emerge in the next 48 to 72 hours? Quickly.
MR. WESSEL: I think there is a sense – I mean, Bob Corker, the senator from Tennessee, said that by the time Tuesday rolls around, I think something pretty good will have happened. It’s going to happen. Unfortunately, there’s going to be some theater before it does.
MS. IFILL: Really, theater? We haven’t had any of that. So we’re just going to wait and suffer through so much – so much more. Thank you all very much. And thank you all as well. We’re done here for now, but the conversation continues online, where we’ll continue to sort things out. You can find us at pbs.org. Keep up with daily developments with me every night on the PBS “NewsHour.” And we’ll explain how everything turned out, if it does, right here next week, on “Washington Week.” Good night.