MS. IFILL: Another week of distractions on the presidential campaign, on Capitol Hill, and on Wall Street. We explore it all, tonight, on “Washington Week.”

The candidates race to define each other.

FORMER MASSACHUSETTS GOVERNOR MITT ROMNEY (R): The centerpiece of his campaign is quite clearly character assassination and the centerpiece of my campaign is going to be my vision to get America working again.

MR. JOE SOPTIC: He’s running for president and if he’s going to run the country the way he ran our business, I wouldn’t want him there.

MS. IFILL: But much of it is overshadowed by a billionaire’s plan to throw a new spotlight on an old debate. House Speaker John Boehner renews another hard fought battle, this time over the debt ceiling.

SPEAKER JOHN BOEHNER (R-OH): Where’s the president’s plan to tackle our looming debt crisis, to stop the largest tax increase in American history from occurring on January the 1st?

MS. IFILL: And Congress asks the question what is government’s role when big banks stumble.

SENATOR BOB CORKER (R-TN): It’s important for us as a nation, a nation that’s just gone through the crisis we’ve gone through, to understand what is legitimate, what isn’t legitimate.

SENATOR HARRY REID (D-NV): Well, I would suggest that JPMorgan take their business to Las Vegas because it’s just a gamble.

MS. IFILL: Covering the week Karen Tumulty of the Washington Post, Jeff Zeleny of the New York Times, David Wessel of the Wall Street Journal, 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. One of the best things about assessing the news at week’s end is that we get to see what went according to plan and what didn’t. The president wanted to make the case that his reelection would sustain the momentum of a recovering economy.

PRESIDENT BARACK OBAMA: One of the ways that we can sustain momentum is for Congress to take some actions right now, even though it’s election season, even though there’s gridlock, even though there’s partisanship.

MS. IFILL: Mitt Romney wanted to say the exact opposite, but in this –

MR. ROMNEY: People are suffering because of the policies of this administration. He has tried to divide the American people and try and talk about this group and that group and the 99 percent and the 1 percent. We’re all Americans and we’re a united people. Our strength as a nation has come from the fact that we come together. We work together.

MS. IFILL: But – and this keeps happening – unplanned distraction intervened. This time, it came in the form of a billionaire brokerage firm founder, Joe Ricketts. Jeff Zeleny broke that story. What was he trying to do, Jeff?

MR. ZELENY: Well, Joe Ricketts is the latest example of a wealthy contributor playing by the new rules of presidential politics where unregulated money sort of reigns supreme, and he was trying to have an influence in this presidential race. He sought out some top Republican strategists who are more than eager to throw some business his way and he was trying to have a big bang effect on this campaign. He said he would spend $10 million and he asked people to come up with a plan that would sort of make an impact. Well, one of these plans that was reviewed in a secret meeting last week in Chicago was to reintroduce Reverend Jeremiah Wright back into this campaign. Of course, we remember him. He’s a familiar figure from 2008, but it was mainly from the primary campaign of 2008. Senator John McCain rejected the idea of using him in the general election four years ago. So this plan was designed to reintroduce him. It was not signed off by Mr. Ricketts and his family, but one of the problems here – as this was sort of being revealed and coming to a light, the blowback was furious and swift.

He is the founder of TD Ameritrade. He is – his family owns the Chicago Cubs. So a lot of consumer reaction, if you will, to this, at the idea of using this type of a divisive campaign.

MS. IFILL: How do we know this was a real plan and wasn’t just somebody freelancing and deciding to try to revive the Wright controversy without any knowledge of the candidate?

MR. ZELENY: It was a real plan at least underway, and he had yet to sign off on it. But the real plan, the fact that it was in the works was proven by the fact that he had seen this – the first advertisement of Jeremiah Wright that an advertising man by the name of Fred Davis wanted to use four years ago. And he said I think that should be used this time. So the plan that we obtained this week was a 54-document. It was bound. There were color pictures and it had all the storyboards of the campaign about how this would unfurl. And it was set to be launched at the Democratic National Convention in September. So it was a plan underway. He had not signed off on it, but some members of his family were supportive of it and he had given at least some sense of approval that he thought it was a good idea.

MS. IFILL: Karen, we – I just want to ask Karen. We have heard throughout this campaign of previously unheard of millionaires and billionaires who have tried to kind of shape the direction of this campaign. Foster Friess kept Rick Santorum’s campaign alive. Sheldon Adelson kept Newt Gingrich’s campaign alive, and now we have Joe Ricketts, who was doing something which obviously the Romney campaign has now repudiated. Has this been a Citizens United impact?

MS. TUMULTY: It is and we have seen this week, I think, most dramatically that this is a real, to use the cliché, double-edged sword for the candidates because on the one hand these are untold amounts of resources that can be thrown into the campaign, but the candidates don’t get to control the message. So even as Mitt Romney keeps trying to talk about the economy, which by the way is the issue that remains on the top of all the voters concerns, that day he was planning to give a big speech on the debt in Florida and what does he end up having to talk about? He has to talk about an attack that never happened that was being planned by people who were not even associated with his campaign.

So, you know, these outside forces are really sort of taking away from the candidates the ability to control their own destinies in many ways.

MR. HARWOOD: What’s the difference, though, about the role of those outside forces in this campaign and what we saw, say, eight years ago, when Swift Boat Veterans for Truth went after John Kerry also independent of the Bush campaign?

MS. TUMULTY: Well, the Swift Boat Veterans for Truth, people forget, did not actually spend a lot of money. They had a small – and it was quite frankly those of us in the normal, regular, traditional media who kind of picked that up and gave them the attention they needed. But what you have here are people who are going to be able to pour tens of millions of dollars onto the airwaves themselves. In fact –

MR. HARWOOD: Couldn’t they do that before? Didn’t Citizens United just open the door for corporations to do that where individuals could do that already?

MS. TUMULTY: Well, what had happened, though, is – you never heard of the phrase Super PAC before this year. And it was after Citizens United that these kinds of structures were set up as a sort of a vehicle for that money so that, you know, these people can say, give it to Crossroads, which is a group being run by Karl Rove, and he can take all that money and cool it and sort of drive the message.

MR. WESSEL: So let’s step back from this particular spat. It seems like it’s a very close race at the moment. Is that the right reading of it?

MR. ZELENY: I think it is a close race at this point. I mean – and largely because the economy, as Karen said – I mean, for all we want to talk about this, really the underlying issue that both sides are fighting is the economy. And if you look state by state by state, Mitt Romney is actually doing fairly well in a lot of these early battlegrounds states. He is holding his own in Florida. He’s holding his own in Ohio. He’s down a little bit in a couple. He’s up a little bit in a couple. But this is a very close race and the White House realizes it. It’s one of the reasons – it’s the central reason that they are working overtime to try and define Mitt Romney over the next two-month period.

MS. IFILL: That’s also –

MR. ZELENY: They believe between now and the conventions or now and August is a critical time to define Mitt Romney –

MS. TUMULTY: And Mitt Romney –

MR. ZELENY: – for the fall.

MS. TUMULTY: Mitt Romney’s approval rating has risen by 9 percentage points according to Gallup since the end of the primaries.

MS. IFILL: And isn’t it also one of those reasons why these issues, which only seem to last so often for like a week, maybe sometimes even 48 hours – last week, we were talking at this table about gay marriage. This week, we’re talking about Jeremiah Wright. And they seem to bubble up and then they fade, but neither campaign can afford to ignore it because you never know what’s going to be the tipping point.

MR. ZELENY: I think that’s true. I mean, you can’t ignore this. The Romney campaign was very eager to sort of disassociate and disavow and really denunciate this effort. And they wanted to send a message to all Republican wealthy contributors and Super PACs and strategists that we want this message to be on the economy. Now, at the same time, I mean, there are some people in the Republican world who are fine with the fact that this Jeremiah Wright storyline is out there because it reminds some people of, wait, didn’t I have some questions about the character of this president? So in some effect, this is already –

MS. IFILL: And any of those people who’re affected by it, had they voted for Barack Obama anyway?

MR. ZELENY: Probably not. Probably not. But one thing – I mean, this has been playing out in conservative media really nonstop over the past four days.

MR. HARWOOD: But on Gwen’s point about how fleeting these issues are, does that mean all the talk that we heard at the end of the primary campaign about how Romney had been dragged to the right and damaged, was all of that sort of a momentary phenomenon and now it’s gone and we’re in a neck and neck race?

MS. TUMULTY: We’re in – I think what we are into is this race has gone back to what it was always going to be. I think that during the primaries – Mitt Romney has a less favorable public image at this point, I think, than any other recent Republican nominee in recent history. But at the same time, we have seen that recovering quite a bit since the end of the primaries and we aren’t having to watch him getting pounded on by the Right and getting pounded on by his opponents.

MS. IFILL: Go ahead.

MR. WESSEL: So are you saying that if I want to know what’s going to happen, just watch the unemployment rate? I mean, the unemployment rate is falling, particularly in a lot of the swing states: Ohio, Virginia has a low unemployment rate. Florida’s down a lot.

MR. ZELENY: I think that’s part of it, but also we have to watch how people feel about their personal circumstances, their personal conditions. A large share of people still feel the country is on the wrong track. So Iowa, for example, and New Hampshire, for example, key battleground states, they have lower unemployment rates than almost any other place in the country. But people there don’t necessarily believe that their circumstances are any much better than Ohio. So the unemployment rate is important, but it’s not the only indicator here that’s going to drive this presidential race.

MS. IFILL: The other interesting thing about this is seems to me that everyone’s talking to their bases. So everyone’s trying to get their bases energized. The other one is energizing the other one’s base. But it seems almost like it’s a wash. Is there any possibility that by bringing up the Reverend Wright thing – we saw that the Obama campaign immediately came out with a web ad at least, trying to exploit the fact that the Republicans were –

MS. TUMULTY: And they were raising money on it. They were sending out fundraisers –

MS. IFILL: So they obviously think there’s something good in someone bringing up this negative stuff and the same thing with the Republicans. They’re happy to, if not the candidate themselves, the Republicans are happy to remind people that Barack Obama is more left than he presents himself as.

MR. ZELENY: And in the middle of this all are the voters who really matter in this race are the independent voters who are probably growing frustrated, either, A, not paying attention yet, or B, growing frustrated by all of this here. So I think that’s what’s really going on among the campaigns. I mean, that’s what the fight is for and that’s what the Romney campaign is worried about here, something like this association with the Reverend Wright, even though they had nothing to do with it, could really turn off some independent voters.

MS. IFILL: And is it possible for the Republicans to be – for both sides to be so – to be so – the bases of both sides to be so energized that that ends up making the difference?

MS. TUMULTY: Well, there is a question of, you know, how big is the center anymore because we are –

MR. HARWOOD: Not too big.

MS. TUMULTY: Right. And – but it’s – but there – and all the evidence does suggest that at this point and this far into the race, the Republicans’ base is much more energized than the Democrats’ is.

MS. IFILL: Okay. Well, thank you both. Well, I’ll bet you’ve all been sitting at home wondering whatever happened to that scintillating debt ceiling debate. I know you’ve been asking each other this. And can’t we please talk about it again? Well, we’re here for you. House Speaker John Boehner’s got your back.

REP. BOEHNER: It is a line in the sand because Washington has kicked the can down the road, kicked the can down the road, kicked the can down the road, and the American people think we’re crazy. They’re ready for Washington to take action. I’m here. I’m ready to do it.

MS. IFILL: Taking action, but why now, David?

MR. WESSEL: Kicking the can down the road across the line in the sand. It doesn’t get much better than that. (Laughter.)

MS. IFILL: All clichés in one place.

MR. WESSEL: I think the reason why now is that the Republicans have decided that the president is vulnerable on the debt, for good reason. We’ve ran up a huge debt on his watch. He said we needed to do it in order to fight the recession. But the fact is we’ve run up a big debt and the polls show people are worried about that.

I think that nobody expects anything to happen before the election, on the debt ceiling and on the so-called fiscal cliff, the tax increases and spending cuts that are going to be triggered on December 31st, unless Congress and the president find some alternative way to reduce the deficit. So people are staking out their positions. On Tuesday, this week, there was a conference on the deficit called by Pete Peterson, the billionaire deficit fighter and Tim Geithner was in – I interviewed Tim Geithner and he said, I don’t need to do the debt ceiling until early 2013. The administration would like to separate the debt ceiling from tax increases and spending cuts.

And – but John Boehner came right back and he does not want to do that. He knows that that’s a lever, one of the few levers that they have against the president, and he says, we’re not doing the debt ceiling unless we get spending cuts and reforms as least as big as the increase in the debt ceiling.

MS. IFILL: Now, the president apparently met with some of the House leaders – congressional leaders at the White House over hoagies this week. And both sides came out with completely different interpretations of how this conversation happened.

MR. HARWOOD: Surprise, surprise.

MS. IFILL: Surprise, surprise.

MR. WESSEL: So if what we saw in public was political theater, then what we saw in private was the same political theater just done before a smaller audience. It’s clear that the president made the case to Mr. Boehner that we don’t want to have a repeat of last summer. We should just do the debt ceiling and separate it from everything else. And Speaker Boehner said that that, quote, “took his breath away.” And so it was, I think, just more of the posturing and most of them said they liked the sandwiches.

MS. IFILL: But were the hoagies any good is the question?

MR. WESSEL: They were gourmet.

MS. TUMULTY: But this kind of brinksmanship – and the last time around when they did, you know, they were pushing the government to the edge of default. The markets weren’t really wild about this. I mean how – how does Wall Street – are they finally deciding that these guys are all just bluffing or is this going to cause some real problems there?

MR. WESSEL: Well, that’s a great question. I mean, what we know so far is Wall Street is completely preoccupied. Either they were watching Facebook, which sold shares today and went up to 445 and then down to $38.23, which is a little bit above the $38 initial price, or they were looking at Europe, which has far bigger problems than John Boehner and Barack Obama. So the stock market was down here. The stock market was down overseas. But the rate at which the Treasury borrows money fell to the lowest rate ever this week – the government borrowed at 1.71 percent for 10 years. So I think that people know that the markets are going to be worried about that, but for the moment, they’re not.

MR. HARWOOD: David, I noted the language from Jay Carney in talking about this, and I agree with you. This is all posturing and nothing’s going to happen or likely to happen until after the election. Jay Carney made a point at one briefing that the president will not allow the same thing to happen on the debt ceiling that happened in 2011. I wonder if that is at all an indication that there’s consideration of him using his executive authority, which some lawyers have asserted that the president could do it. Any reason to think that might happen?

MR. WESSEL: I don’t have any reason to think that. I think that for one thing, as Tim Geithner made clear, because tax revenues have been a little better than expected, they now have a little more wiggle room and they can push this into January or maybe February 2013. And the tax cuts and spending cuts will have to be dealt with before that. You know, if the Republicans want to do the same thing that they did in August of last year, I don’t see how the president stops them.

MR. ZELENY: In spite of all this gridlock or as this was all happening, I noticed one thing actually did happen in the Senate this week. They confirmed a couple of members of the Federal Reserve Board of Governors. What happened with that and why did that go through? It seemed like the only bright of sunshine, if you will, for good –

MR. WESSEL: You’re right. I mean – so the president nominated a Republican, Jay Powell and a Democrat, Jeremy Stein for two open seats on the Federal Reserve Board. And Senator Vitter, a Republican, used his ability to block the things. And there apparently was enough sense that the Fed needed two more people on both sides of the aisle that they got to 60 votes needed to push these two candidates through the confirmation process. It means that it’s the first time since 2006 that the Fed has had seven governors. Will it make any difference on policy? I don’t think so. I think it means that Ben Bernanke, the chairman, has two reliable votes, and that’ll strengthen his hand a little bit, but it doesn’t look like he wants to do anything right now anyways.

MR. HARWOOD: It’s remarkable, though, as the exception to the rule, the idea that this is a big deal, something that the Senate would have done routinely, year after year after year –

MR. WESSEL: And they were totally uncontroversial –

MS. IFILL: Which never happens anymore. Okay, well, Wall Street was shaken this week by the vigor of that Facebook IPO and by the shock of a two to three, but now they’re saying $5 billion blunder at banking giant JPMorgan Chase. And Washington asked is there anything Congress or the White House could have done to stop it? Democrats said there should be tougher regulation. As is to be expected, Republicans said, no so fast. Which was the prevailing view by the end of the week, John?

MR. HARWOOD: Well, I don’t think there’s a lot that Congress can do. We’ll see. There’re going to be some hearings and Jamie Dimon is going to come down and testify –

MS. IFILL: Hearings, oh, good. (Laughter.)

MR. HARWOOD: Yes, there’s going to be a series of them.

MR. WESSEL: Beats the debt ceiling.

MS. IFILL: Yes, that’s true.

MR. HARWOOD: But certainly members of Congress whose approval ratings are so far down in the toilet, they welcome the news making by an institution that is right down with them, and that’s Wall Street, JPMorgan. (Laughter.) In one of the most unfortunate bits of timing I’ve ever seen for a lobbying campaign because Jamie Dimon has been leading the charge to weaken the so-called Volcker Rule, which is a key part of the financial regulation bill, in saying that we know what we’re doing. The regulators can’t restrict our activities.

And then they go, as Barney Frank said the other day, that argument’s at least $2 billion harder to make now, of course now it may be $5 billion harder to make.

MS. TUMULTY: Would the Volcker Rule, which is not yet in effect – would that have prevented this from happening?

MR. HARWOOD: We don’t know. The administration says that they’ve not been able to determine that yet and the Fed has said they don’t have enough information yet to determine that. Carl Levin, who was one of the co-authors of the Volcker Rule, asserted that it would have because this was, at least as the legislation was intended – of course, there’s no regulation.

MS. IFILL: Explain what the Volcker Rule is.

MR. HARWOOD: The Volcker Rule was designed to prevent banks which benefit from taxpayer guarantees from gambling their own money in effect. Now, there were some permissible bets they could make, so-called hedges against specific investments that the banks had made. But the intent, according to Carl Levin, of this rule was that they couldn’t hedge against their entire portfolio of assets because that was too big of a gamble to make. Carl Levin asserts that that’s in fact what was done here. It is yet to be seen – you know, the Volcker Rule is not going to be done by a team of regulators until July, so it doesn’t even exist. So it’s hard to say.

MR. WESSEL: But as you point out, the game is now with the regulators. Does this change regulations? Does this mean that the regulation’s going to be tougher than they were –

MR. HARWOOD: I don’t see how it can’t affect that process. Everyone is conscious of what happened – even Republicans like Bob Corker, who we saw in that tape earlier, are saying we need to find out what happened and make sure it doesn’t happen because even though JPMorgan is an extremely large and profitable institution, they can take a $5 billion hit, but what does that tell you about how other banks are handling their money, banks that are less financially resilient than JPMorgan? Are they going to leave taxpayers on the hook? That’s, after all, the principal goal or a principal goal of financial regulation.

MR. ZELENY: What’s the effect do you think, if any, of this discussion on the presidential campaign, where you have President Obama, who’s often citing the bad behavior of Wall Street, and you have Mitt Romney on the other side who is a businessman. What is the effect of this? I mean, is it helping the argument of the Democrats here or is it a mix?

MR. HARWOOD: I think it’s definitely going to help the argument of the Democrats because the president has been making the case that Dodd-Frank is necessary to prevent taxpayers from being put in a position of bailing out banks again. Headlines that say a major financial institution on Wall Street just lost billions in a bad bet can’t help but reinforce that argument. And you saw Mitt Romney a bit on the defensive on that because he’s been campaigning for some time saying I’m going to repeal Dodd-Frank. The statement that he put out said this shows that my call for common sense regulation is legitimate. Now, of course, he considers common sense regulation something different than Dodd-Frank, but he’s still calling for regulation.

MS. IFILL: But here’s a point. Can risk really be supervised in this way? I mean is bluffing illegal?

MR. HARWOOD: No. You can’t take the risk out of business investments, but if you’ve got taxpayers who are on the hook for –

MS. IFILL: Which is not the case here.

MR. HARWOOD: – salvaging – well, no, they’re not, but that’s – the point is, is this an indication of a deeper problem in the system with banks that are less sound that JPMorgan?

MR. WESSEL: But doesn’t this strengthen the case that the administration’s been making and Jamie Dimon’s been fighting that the most important thing that can be done is force the banks to have so much capital that then when they make mistakes, they can –

MR. HARWOOD: Absolutely, yes. And you know, there’re some bankers who have said, yes, we need to have more capital. But certainly that argument is easier to make right now.

MS. IFILL: Jamie Dimon, who was – has spent a lot of time in Washington and a lot lobbying here, did not have a good week. We can all agree on that.

MR. HARWOOD: He did not and I don’t think – there was a time when people called him Barack Obama’s favorite banker –

MS. IFILL: Not so much.

MR. HARWOOD: I’m not sure he’s –

MS. IFILL: Hasn’t been for a while. I don’t think.

Thank you, everybody. That’s all the time we have for tonight, but the conversation continues online on the “Washington Week Webcast Extra.” And be sure to log on next Thursday at 1:00 p.m. Eastern, when Time Magazine’s Michael Duffy will join me for my monthly chat. We’ll talk about presidents past and present and anything else you want. Go to to post your questions in advance, right now if you want. In the meantime, keep up with daily developments with me on the PBS “NewsHour.” And we’ll see you again next week, on “Washington Week.” Goodnight.