GWEN IFILL: Reality check, the week Washington actually mostly got stuff done, tonight on “Washington Week.”

A filibuster.

MS. : The senator from Kentucky.

SENATOR RAND PAUL (R-KY): (From tape.) I will speak until I can no longer speak.

SENATOR HARRY REID (D-NV): (From tape.) To succeed, you need strong conviction, but also a strong bladder. It’s obvious. Senator Paul has both.

MS. IFILL: A Wall Street record.

REPRESENTATIVE NANCY PELOSI (D-CA): (From tape.) This week, we saw something quite remarkable, the stock market soaring to new heights.

MS. IFILL: Bipartisan agreement.

REPRESENTATIVE JOHN BOEHNER (R-OH): (From tape.) Our goal here is to cut spending; it’s not to shut down the government.

JAY CARNEY: (From tape.) The president has not and would not use drone strikes against American citizens on American soil.

MS. IFILL: And a presidential charm offensive.

SENATOR JOHN HOEVEN (R-ND): (From tape.) Good, very candid discussion.

MS. IFILL: Good news on the economy, the CIA director confirmed, and real debate over everything from deficits to drones. What the heck is going on in Washington?

Covering the week Charles Babington of the Associated Press, Susan Davis of USA Today, and Greg Ip of the Economist.

ANNOUNCER: Award-winning reporting and analysis, covering history as it happens, live from our nation’s capital, this is “Washington Week” with Gwen Ifill.

(Station announcements.)

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

MS. IFILL: Good evening. We had an unexpectedly entertaining, not to mention consequential week here in Washington. The debates ranged from domestic to foreign policy, from cabinet nominees to the federal budget, all bracketed by good economic news, a record close for Wall Street, as well as more jobs for Main Street. But at this very time, last week, we were being told to brace for the sky to fall as across the board budget cuts took effect.

So why did it turn into such good economic news this week, Greg?

GREG IP: Well, the employment numbers that came out Friday were extremely positive, about 236,000 jobs created across the economy, a very small decline in government jobs, so the private sector even stronger. But more to the point, this is against the backdrop of a bunch of other good news, good news on the factory front, and of course, the stock market making its first new high since 2007. Kind of a rare week when it’s good for both Wall Street and Main Street.

Now, to keep things in context, I mean, neither these numbers just that the economy is racing ahead. In fact, it’s probably still growing at only around 2 and 2.5 percent, the same rate it was growing last year. The impressive thing is that it’s doing this in the face of so many headwinds. We may have forgotten, but taxes went up by quite a lot in January. Gasoline prices have gone up. Most economists would have anticipated some kind of a significant slowing in growth by this point. We just haven’t seen it.

MS. IFILL: Well, and you have to explain why it is that we mislead all our viewers last week to think that the sequester was going to be a big deal, and at least so far, it’s not.

MR. IP: Well, because nothing really has happened. I mean, we recall that most government agencies still haven’t furloughed any employees because they need to get 30 days notice. And as the White House itself pointed out this morning in terms of greeting the great economic news, let’s remember that the report out Friday morning was a snapshot of the economy in mid-February, several weeks before the sequester took place.

So obviously, the economy still has some hurdles ahead. It does have to deal with the sequester, although most economists think it’s very manageable, the size of the hit that’s going to be taking, it looks like we’ll probably not going to get a government shutdown, but who knows. Possibility of a debt ceiling crisis later on in the summertime, but assuming we work our way through those sorts of things, the story looks pretty positive for the economy.

MS. IFILL: Let’s talk about how this is going over on Capitol Hill. There are people who – their entire argument is predicated, on either side of the aisle, on the idea that this either was or was not going to be a big deal, this sequester, the word I hate to use. What was their reaction on the Capitol Hill this week?

SUSAN DAVIS: Well, I do think in some ways there’s a reality set that this is sort of here to stay until they find some longer term alternative. I think one thing they have tried to do this week is pass a spending bill for the rest of the year to hopefully head off a government shutdown later this month, but that would give the Pentagon, in particular, some more flexibility to implement these cuts, which in the – the subtext of that they’re here to stay.

I do think that one thing to look for and one thing that was cautioned when the sequester was going into place is that a lot of people said it’s not going to be immediate. So there was sort of a buildup both by the Obama administration in and the media to say this deadline March 1, but as Greg said, these furloughs for most government employees have to be given at least 30 days notice. A lot of Pentagon employees require at least 60 days notice. So I think if we’re going to really start to see a crunch, it’s going to mid-April and beyond, and that’s when, if we do start to see job losses, unemployment going back up, long lines at airports, that that is when you’re going to start to see some renewed pressure on members of Congress to take a more serious look at what these cuts are doing.

MS. IFILL: Is there any incentive at all, Chuck, for members of Congress or for the president to get this all figured out? We’re talking about, what, a $600 billion cut in the end, where they were hoping for a million in the beginning of these discussions?

CHARLES BABINGTON: Yeah. We’ve kind of taken a deep breath – probably just have exhaustion – political exhaustion from, the fiscal cliff, you know, this crisis, that crisis. And the sense that I get from talking to members of Congress in both parties is that they’d like to take a step back from that. And you’ve seen some pretty ugly things happen, you know, the fiscal cliff ended up with this awkward tax increase, and now the sequester ended up with these sort of awkward spending cuts that were supposed to be so terrible.

Remember, when they were set up, they’d be the incentive not to do them. But now that we’ve gone through that, there’s – I do hear, especially from Republicans, we don’t want a government closure. They still remember what happened in the mid-’90s that that did not work out well for them. And I don’t sense that they want to have a debt ceiling crisis.

So there is a pullback, a sort of let’s see where we are now, but I think there’re still a lot of hurdles to get through to make any significant changes beyond this.

MS. IFILL: What – I’m curious, though, about this revenue issue because in some ways, one of the things that John Boehner, the House Speaker, came out and said was that there would be – it’s off the table that there would be any more revenue. And it seems like in the short run, he’s right.

MR. IP: It certainly looks that way, but what is kind of intriguing is that the administration’s response to that seems to be, well, let’s not try and work through the immovable object of Speaker Boehner or the Senate Minority Leader Mitch McConnell, who are dead set against that. That’s why you see this outreach to individual Republican senators, and even some key House members like Paul Ryan, the chairman of the Budget Committee, perhaps in hopes that were faint, of maybe doing an end run around the leadership.

MS. IFILL: Does what happened in Washington matters when it comes to Wall Street or when it comes to these job numbers? Is Washington action or inaction driving the markets at all or depressing them?

MR. IP: Oh, absolutely, in fact, I would say that the main reason that the stock market has had such a good strong start of the year is because Washington didn’t tank the economy by doing a variety of silly things like all these taxes to go up or defaulting on the national debt. The absence of a negative is a positive.

MS. IFILL: You know, it goes without saying that there is a lot of distrust in Washington. Each side assumes the other is acting in bad faith, especially when it comes to these budget fights we’ve been talking about.

REPRESENTATIVE XAVIER BECERRA (D-CA): (From tape.) The Republicans are using the CR, the continuing resolution, to fund the government to put in their sequester cuts. And so they’re playing games again.

REPRESENTATIVE ERIC CANTOR (R-VA): (From tape.) Clearly people are tired of the political games in this town and they want to see some resolution of some problems.

MS. IFILL: Everybody accused everybody else of playing political games. This sort of talk is viewed with disdain outside of Washington by people like Scott Walker, Wisconsin’s Republican governor.

GOVERNOR SCOTT WALKER (R-WI): (From tape.) You had the sequester, but before that, you had the fiscal cliff. You have all these, in some ways, manufactured or self-manufactured crises out there that Congress punts things down the road a little bit. They kick the can, to use several metaphors there, but they don’t really solve things.

MS. IFILL: We love our metaphors. I’ve got another one for you. Both sides hit the pause button for at least a while this week. That was bad, wasn’t it? Beginning with House passage of that budget bill that may help to avoid a government shutdown at month’s end, everybody agreed that that at least was bad news. Great, the first sign of bipartisanship, right Sue?

MS. DAVIS: It is, but I would also say, even though we’re talking about all these good news, there’s still a prospect for a government shutdown here.

MS. IFILL: What?

MS. DAVIS: And John Boehner warned of it this week. Now, the House passed their bill and he’s – the Senate is looking at ways to maybe expand this flexibility in how we implement these cuts. And John Boehner said on Thursday this week, he warned, he said if the Senate gets greedy, as he said, they shouldn’t get greedy and mess with it, and if they get greedy and mess with it, we could be back at having an argument over – and if we do, it’ll be the Senate Democrats’ fault, if we get to a shutdown. So we’re close, but we’re not there yet.

MS. IFILL: It’s probably helpful for us to do a little civics lesson or remind people the way this works. What we saw in this continuing resolution to keep government running, we saw the House agreed to something, which is not something the Democrats in the Senate, which is controlled by Democrats, would necessarily agree to. And that’s the next hump, right?

MR. BABINGTON: That’s right, Gwen. We’ve gotten so far away from the way budget making is supposed to be, what we learned in civic classes. So that we haven’t had this regular order – I mean, the Senate hasn’t passed a budget bill in what, four years or something like that, which the Republicans love to remind them about. So we’ve really kind of been lurching along from year to year and you have these continuing resolutions, they call the CR, which basically just funds the government another year at the old level that it was.

But you really hit something important a few minutes ago, when you talked about Speaker Boehner saying, you know, we absolutely cannot have more revenue increases. That is the thing that Republicans, and especially House Republicans, have just stuck to, welded themselves to more than anything else.

It’s really remarkable. And one reason you had the sequester go through is because the drive among Republicans not to let taxes go up was greater than the incentive not to let the Pentagon take these hits, which there was a time when Democrats thought, oh, the Republicans won’t let the Pentagon take these spending cuts. Yes, they did, because keeping income taxes from going up was more important.

MS. IFILL: And they – we’ll get back to the question of whether that’s what forced all the bipartisanship in a moment. But one other thing it did force was some – a discussion about one of the things that Republicans like to bring up the most, which is that the part of the problem with what’s been going on in Washington, what hasn’t been going on is the lack of certainty. And so now there’s this – is it to be assumed from the behavior and the reaction of Wall Street and the reaction of the markets and the reaction of the jobless – of the housing construction agency – industry that they now think, hey, well, things are looking more certain, or are they thinking it’s not going to matter what we do?

MR. IP: Well, uncertainty is always there. All businesses deal with uncertainty, and they’ve always accepted the fact that Washington’s going to play games and make life difficult for them. I think what was hard on the economy, the investors for the last few years, was when the inordinate amount of uncertainty and the possibility not just of, you know, tax increases or spending cuts, but of catastrophe, of default of the government shutting down. And I think the fact that both sides seem to be showing signs of exhaustion on that front and don’t – and have lost their appetite for that kind of high stakes brinkmanship has been an important source of confidence building in a market, although, I wonder whether that confidence is appropriate. I mean, for example, Speaker Boehner also reiterated his condition that before he raised the debt ceiling, he has to have equal spending cuts. Does he mean that?

MS. DAVIS: I think he does. I think, though, that one of the things the Republicans give themselves wiggle room now is they say cuts are reforms. It’s not just dollar for dollar. So when you talk about reforms, I think one of the things – that example that Republicans have pointed to is things like raising the Medicare age. They would consider that a reform that would save money, that isn’t necessarily a spending cut.

MS. IFILL: Well, let me ask you, though, about this flexibility issue, because one of the reasons why they were able to get this bill through the House, this budget bill, is they carved out a little room for the Pentagon, a little room for the Department of Veterans Affairs, so that they could not take as deep a cut as had been proposed in this across the board sequester, which they want to make permanent. Is that something the Senate is going to – the Senate seems to be indicating they’re going to keep doing that? They’re going to strike – carve out other holes for every – other discretionary spending. And that could derail the whole things. That’s what you’re talking about, isn’t it?

MS. DAVIS: Well, I think the Democrats in the Senate – and there are some Republicans in the Senate that feel the same way, there’s a little bit more bipartisanship in the Senate, it tends to be more of a creature of the Senate, if you’re willing to have some flexibility on spending – is that so much of the flexibility right now has been put towards the Pentagon and military programs. And Democrats are saying, look, if we’re going to give the Pentagon this kind of flexibility, we should give other agencies some flexibility as well. Specifically, they’ve pointed to things like the FBI, the Homeland Security Department. Through the regular spending bills, which is arguably the way Congress should be doing business to begin with, is doing regular spending bills instead of CRs, which is the way we do it, which is I kind of say is like autopilot. They’re not really governing. They’ve just been letting things go on autopilot.

MS. IFILL: I have to say. One of the most remarkable things that happened this week was conversation. One night, there was a dinner, at a posh Washington hotel, a few blocks from the White House. About a dozen Republicans invited by John McCain and Lindsey Graham through the president’s nemeses, I guess you could call them, and they all came out saying this was great. Thumbs up. And then, the next day, the president had lunch with Paul Ryan. What is happening? What is going on in Washington that’s shifting this from what we’ve seen before, which is basically people yelling at each other from opposite sides of Pennsylvania Avenue?

MR. BABINGTON: Well, one thing, Gwen, even though President Obama obviously won the election, the Republicans have dug in so hard, especially on this income tax issue that we were talking about earlier, and I think to some degree, the Democrats, including the White House were somewhat taken by surprise. And so for example, when you had that fiscal cliff fight that was right at the end of the year, in fact it went into the January 1, President Obama was in a position to take a larger revenue increase, if he’d really wanted to, and he chose not to. He doubted back a little bit, thinking there’d be more down the line. It’s like, you know, he’s not at all certain that he’s going to get more down the line. So I think he’s taken a somewhat different approach. Well, let’s try to reach out more, to have more conversation with members. He has tried this before. I mean, it’s not the first time this has happened.

MS. IFILL: Which is why people thought he wasn’t going to try it again.

MR. BABINGTON: Exactly. But you know, I think it’s a good thing to do. You know, you want your leaders to be talking with each other, but I think some people are getting a little carried away in thinking, oh, this is going to be some big breakthrough to a grand bargain. Well, I think that’s pretty questionable because just because you have dinner with someone, you might feel a little better about him, but you’re probably not going to change your bedrock principles. And they really are clashing on this.

MS. IFILL: Well, especially since the big sticky wicked out there is entitlement reform, Social Security and Medicare reform. And nobody’s actually made any movement on that.

MR. IP: No, I mean, the president keeps saying, hey, I have a bunch of these things on the table that I offered to Speaker Boehner during our failed negotiations in December. Those are very much on the table. They contain things like cuts to fees paid to Medicare providers, changing the inflation formula for Social Security. Importantly, one thing that’s not out there, at least not yet, is changing the retirement age for Medicare, which has tended to be kind of the minimum the Republicans would accept to talk of entitlement reform they want. But it looks to me like the great one will be, once again, as it always is, taxes.

And one of the reasons you saw, I think, the president reaching out to some Republicans is that a few of those Republicans, like Lindsey Graham, have actually said, yeah, we are willing to raise more taxes, beyond what we did in January, provided we get the entitlement reform. If there is to be a grand bargain, and I don’t know many people who are terribly optimistic, but if there is, will probably begin there.

MS. IFILL: And there’s still no discussion – and I just want stay with you for a minute on this, Greg, the one, you know, problem in these unemployment numbers we saw is the long-term unemployed are still a problem. They are the ones who took the hit with these across the board budget cuts and no one’s figured out how to address that.

MR. IP: Absolutely right. I mean, the long-term unemployment isn’t just a problem. It’s getting worse. I mean, oddly enough, you can see evidence that if you’ve been unemployed for less than six months, your odds of getting another job are actually not that bad right. The longer you stayed unemployed, the harder it is to get a job. Your skills atrophy. People start to look at you like you’re not actually somebody they want to hire any longer.

And partly that’s a consequence because we’re doing deficit reduction just the wrong way. Every economist basically says you want basically easy does it on the austerity now, when the economy’s weak. You want to be talking up 10 years from now. And we’re kind of doing the opposite.

MS. IFILL: Well, and then there was this other piece of drama in Washington this week, the Rand Paul filibuster, a nearly 13-hour tour de force objection to the administration’s policy of targeted killings that brought the Senate to a standstill and forced the White House to respond.

SEN. PAUL: I’m not asking any questions about the President’s motives. I don’t question his motives. I frankly don’t think he will be killing people in restaurants tonight or in their house tonight. But this is about the rule of law. It isn’t so much about him. It isn’t so much about John Brennan. It’s about having rules.

MS. IFILL: That administration response I mentioned came in the form of a one paragraph letter from the attorney general. “Dear Senator Paul,” it said, “it has come to my attention that you have now asked an additional question: does the President have the authority to use a weaponized drone to kill an American not engaged in combat on American soil? The answer to that question is no. Sincerely, Eric H. Holder, Jr.”

Now, not every Republican loved Paul’s tactics.

SENATOR LINDSEY GRAHAM (R-SC): To my Republican colleagues, I don’t remember any of you coming down here, suggesting that President Bush was going to kill anybody with a drone. You know, I don’t even remember the harshest critics of our President Bush on the Democratic side. They had a drone program back then. So what is it all of a sudden that this drone program has gotten every Republican so spun up? What are we up to here?

MS. IFILL: Spun up, Chuck. What was Rand Paul up to here?

MR. BABINGTON: Rand Paul was talking about something that hasn’t gotten a tremendous amount of attention, and that is this policy of using drones with weapons to kill terrorists or suspected terrorists in foreign countries. And it included an American citizen, who was killed by a drone in Yemen. He had become a jihadist. He did advocate killing Americans.

MS. IFILL: But the question he brought up was whether it should be extended to American soil.

MR. BABINGTON: Exactly. So he was like saying how much might you extrapolate that policy. And he was saying, you know, if an American is sitting in a café, you know, would you – he was trying to draw a bright line. I think he was also trying to make a point about – and you know, Rand Paul, like his father, is as much a libertarian as is a Republican. And look, at least one Democrat, Ron Wyden of Oregon, joined him in this effort. So it’s an important question to be raised.

MS. IFILL: But only one Democrat, and that’s one of the things I find interesting, too, is that this is something you would hear Democrats complain about. As Lindsey Graham pointed out, the Republicans wouldn’t complain about it in the Bush administration, but the Democrats would have. They weren’t there, not even the most liberal ones.

MS. DAVIS: Aside from just sort of the fascinating nature of the filibuster and the way he did it, the politics behind it were fascinating. Like you said, you would – you know, we’re at a time now, where there was a very notable lack of liberal voice on the Senate floor for a position that I think was more closely aligned with the Democratic Party through the Bush administration. And not only Rand Paul’s filibuster, but the senators that came to the floor to show their support for him or voice support from him, not limited to – including but not limited to Mitch McConnell, the minority leader –

MS. IFILL: Late at night.

MS. DAVIS: Late night. John Cornyn, the number two, two senators who are facing primaries, potentially primaries and reelection in 2014, Marco Rubio, another presumptive 2016 candidate, Rand Paul obviously might be running for president. And Lindsey Graham made a very interesting point about can you imagine the leading Republicans in the Senate during the Bush administration raising the questions that they were raising? It’s just completely upended the political paradigm that we’ve been looking at these issues. It was a fascinating display.

MS. IFILL: Big difference this time, the president of the tea party and tea party pressure in a lot of these races.

MR. BABINGTON: We focus so much on the tea party and fiscal issues, low taxes, low spending, but this is a case where sort of the other elements of the tea party, the libertarian, you know, get government – you know – no big brother, has played out. And this is where it causes some of the Republican establishment some real problems. So you saw John McCain, the 2008 presidential nominee, as well as Lindsey Graham, hitting Rand Paul pretty hard on this issue. So the Republican Party has a lot of things to deal with after losing the last election, but sort of deciding how to deal with the tea party, not only on fiscal issues, but also on libertarian social type of issues and policy issues is another question.

MS. IFILL: So was this one of these cases where the Democrats just decided I’ve got – this isn’t my fight. I’m going to let them fight this out among themselves?

MS. DAVIS: I think part of it is just party loyalty. Sitting senators of a sitting president don’t tend to go to the floor and really go after them. I think Ron Wyden, who has been very consistent on this issue, which is ideologically consistent, but I was not surprised to not see a big – a liberal rally against Barack Obama on the floor.

MS. IFILL: The worst advice given that night, Marco Rubio said that probably he should try to drink a little water during this. That was a bad idea for someone on his feet for 13 hours.

Thank you, everybody. We’re going to leave you just a few minutes early this week to give you the chance to support your local PBS station, which in turn supports us. But the conversation’s going to continue online on the “Washington Week” Webcast Extra, where we’ll tackle everything else that we missed this week.

Keep up with daily developments with me on the PBS “NewsHour” and we’ll see you right here again next week on “Washington Week.” Good night.