MS. IFILL: Fixing Wall Street, why it’s not like fixing health care, plus auto bailouts and climate controversy, tonight on “Washington Week.”
Down to the wire or yet another big reform bill.
PRES. BARACK OBAMA: What’s not legitimate is to suggest that somehow the legislation being proposed is going to encourage future taxpayer bailouts, as some have claimed. That makes for a good sound bite, but it’s not factually accurate. It is not true.
SEN. MITCH MCCONNELL (R-KY): The administration has said it wants to end bailouts. I say to them, prove it.
MS. IFILL: But this time, both sides say there is hope for bipartisanship. As election year fire is focused instead at financial institutions once deemed too big to fail.
At the same time, General Motors, which also receives government rescue help, begins to bounce back.
MR. EDWARD WHITACRE: I am very pleased to announce that, as of today, General Motors has repaid in full and with interest – (applause). Worth clapping about.
MS. IFILL: But there is always another big debate just around the corner, next stop, energy reform.
Covering the week, John Harwood of CNBC and the “New York Times,” Janet Hook of the “Los Angeles Times,” David Shepardson of the “Detroit News,” and Jeanne Cummings of Politico.
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. Another reform bill, another round of closed door negotiations, another furious flurry of lobbying and another partisan drama. It stars President Barack Obama and Senate Minority Leader Mitch McConnell.
President Obama went to New York Thursday to claim the stage in the financial regulatory reform debate, but the day before he sat down with John Harwood.
MR. HARWOOD: Some of the institutions and their lobbyists don’t seem to think it would be so good for them.
PRES. OBAMA: The core of the Wall Street reforms that we’re proposing is to make sure, number one, that we don’t have to bail out firms if they’ve acted recklessly, that we can unwind them in an orderly fashion that protects the economy as a whole and taxpayers aren’t on the hook.
MS. IFILL: But the president doesn’t get the stage to himself.
SEN. MCCONNELL: I need to be able to look my constituents in the eye and prove to them that this bill does not allow any bailouts. I need to prove to them that this bill doesn’t treat some favored groups better than others. I need to prove to them that this strengthens the economy, that it doesn’t make it worse.
MS. IFILL: So let’s peek behind the partisan curtain. Are the White House and the Senate as far apart as the rhetoric would seem to suggest, John?
MR. HARWOOD: No, they’re not and they’re getting closer. There’s likely to be a deal in the end. It’s an interesting adjustment in the rhetoric for Mitch McConnell in the clip that you just played, Gwen, because what he said there was not that I think it’s going to create bailouts in perpetuity, but I have to persuade my constituents –
MS. IFILL: Some say.
MR. HARWOOD: – exactly, it’s different. And that was one of the problems for the Republicans earlier in the debate because you had a fairly technical argument when you really got down to the details about what you can do to prevent the government from having to step in the way they did with that $700 billion TARP program two years. And it’s very arcane stuff. And for the minority leader to come out and say that this bill would do the reverse of what the sponsors were trying to do and had been negotiating with other Republicans to do and in trying permanent bailouts, it wasn’t credible when you look at the actual disagreements.
MS. IFILL: But when you talked to the president, did it seem like he felt like he had the upper hand on this argument at this point?
MR. HARWOOD: Yes, and it was interesting because when he gave his weekly radio address last week, he went really hard at Mitch McConnell and he talked about the cynical and deceptive arguments being made and he went after the special interests and the financial institutions. By the end of the week, Republicans had signaled they were negotiating seriously with the White House. The battle lines had been pulled back a little bit. And the president knew that he was on track to win this. And that’s why I think he had a slightly more temperate tone.
MS. IFILL: How is that all being interpreted from Mitch McConnell’s office on the Hill? Do they see the president has an upper hand or are they still – for instance, we saw Harry Reid come out and say, we’re going to vote on this Monday. We don’t really trust Republicans not to draw this out. What are they doing?
MS. HOOK: Well, it really has been a series of mood swings on the Capitol. One day it looks like they’re on the two-yard line of getting a deal and then the next day Harry Reid is setting up a test vote. It’s a really interesting dynamic because, as John was saying, there’s been this very partisan dynamic in the Senate for so long. They’ve been saying no to each other for so long, they hardly know how to say yes now. But they’re very close in the legislation, and in part because the goal of the legislation is one that is so clearly bipartisan. It all arises out of the financial collapse at the end of 2008. And nobody wants to go back there. So everybody agrees, okay, we need to do something so we don’t have another meltdown. And the differences over how to do it are small enough or technical enough. Nobody’s going to stand on the floor and say, I’m going to filibuster this to death because this is overseen by one federal agency rather than another. It’s just not –
MR. HARWOOD: When you talk staffers about it, they say, well, it says should but it should say must. Come one –
MS. HOOK: right, right. So they’re at this place where the Republicans are very reluctant to give Obama another big legislative victory. And make no mistake about it, this would be a really big bill.
MS. CUMMINGS: Janet, how many Republicans are now in the mix? Because for a long time we knew Senator Corker from Tennessee was doing some negotiating. But now how many of them are at the table?
MS. HOOK: Well, there’s actually quite a lot of negotiating going on. The central negotiations are being conducted by Chris Dodd, the chairman of the Banking Committee, and Richard Shelby, the ranking Republican. But there’s been a lot of members of the Banking Committee involved in all of this.
Now, the question is, do they get a bill together in time for this showdown vote they’re going to have on Monday, which is a procedural vote just to bring the bill to the floor? And I have the feeling that it’s going to be – they’ll either – all the Republicans will stick together or I – the vote might just not even happen. If they get a deal, they’ll say, okay, fine, let’s just bring the bill to the floor. I do think there’s a handful that are already feeling kind of edgy about voting against bringing the bill to the floor.
MR. SHEPARDSON: John, what needs to be changed in this bill to finally get the bill over the two-yard line? Is it the derivatives issue? Is it the $50 billion bailout fund?
MR. HARWOOD: There’s a lot of stuff and some of it is very, very esoteric and difficult to explain. But there are a couple of big ticket things. First of all, you have the consumer protection piece of this. Now, Republicans have already won a victory because Chris Dodd’s bill is not a free-standing new agency. The Democrats backed off of that. They did that in the House bill, but not in the Senate bill.
MS. IFILL: To regulate all of these.
MR. HARWOOD: Exactly. And it has the ability of another group of people, the people regulating what they call systemic risk, to veto some of their rules. Republicans think that the Consumer Protection Agency should come under the other regulators. That’s one issue.
Second issue is whether or not you actually have this fund that is designed to wind down firms that are failing. And do you raise the money before the failure happens or do you raise it after the failure happens? Some people think – Tim Geithner’s made this argument, Mitch McConnell and the Republicans made the argument – if you raise the money ahead of time, that makes people think there’s more of a cushion.
And the third thing is on derivatives. Blanche Lincoln, the senator from Arkansas, who’s got a primary fight, went further to the left on derivatives than the administration did. She would require the big Wall Street institutions to get rid of their derivatives trading debts, saying that’s too risky, and there’re some other changes that she would make. The president’s not necessarily committed to going as far as she wants.
MS. IFILL: So in that case, Janet, why did she do that? Why is – Blanche Lincoln seemed to be farther to the left than the president is on this and why is Harry Reid throwing down the gauntlet at a time that it seemed like there were some negotiations going on?
MS. HOOK: Well, it’s not clear that Blanche Lincoln’s position is going to stand as it goes to the floor because the Banking Committee bill it’s going to have to be melded with doesn’t go that far. And there’re a lot of Democrats who are a little bit edgy about it. For Blanche Lincoln, there wasn’t too much risk in what she did because there was sort of an exemption for farmers who use these derivatives a lot to kind of lock in the price of their crop in advance. And she’s got a lot of farmers in Arkansas. And, as John pointed out, she’s got a primary challenge from the left. She’s a very moderate Democrat and she’s kind of annoyed the liberal base quite a lot with some of her votes on health care. And so she now has a primary challenger who she wants to show that she can be even more liberal than Obama on some things.
MS. CUMMINGS: And powerful, too, because she is the first Arkansan to be chairman of that committee. What I wonder about is if they get a deal, and so we have a bipartisan victory here, to you, John, what does that mean for the president moving forward? And, Janet, does it mean we might see more bipartisanship on the Hill? Or what does it mean?
MR. HARWOOD: Well, I think as Janet said, it would be a big victory for the president, very large bill. I doubt that it’s going to have a big ripple effect on other issues because this is a unique issue. Wall Street reform is very popular with the public. It’s something where the president’s not sailing into the wind –
MS. IFILL: For a change.
MR. HARWOOD: – yes. And this is why he’s enjoying this fight so much. The procedural vote we may have on Monday, Republicans are saying, that’s just Democrats wanting to try to extend the argument that Republicans are filibustering so they can whack that piñata a couple of more times before the party ends. It looks like this thing is going to go through and it’s going to be a victory for the president.
MS. HOOK: Well, and I think that for Democrats, actually there’s a little bit of an internal debate among Democrats about how quickly they want to reach that bipartisan deal, maybe have a couple of cloture votes to kind of make sure that we ended up with a bipartisan bill but you want to know who’s on your side from the outset.
MR. HARWOOD: Wasn’t that an extraordinary press conference that Schumer and the other Democratic leaders set, showing the clips of the Republican leader? I hadn’t seen that before.
MS. HOOK: Right, they kind of –
MS. IFILL: Tell us what you’re talking about.
MS. HOOK: – well, what it is, is actually was the day Obama was giving his speech on Wall Street or in New York, near Wall Street, and he actually set a rather conciliatory tone, didn’t bash big banks the way he sometimes does. And back on the Hill, just right after the speech, the Democratic leadership had a press conference where they just went after the Republicans hammer and tong and they were basically saying that these Republican leaders are lying about what’s in the bill. They showed TV clips of –
MS. IFILL: Sounds like a little good cop-bad cop going on here with Democrats.
MS. HOOK: Yes.
MS. IFILL: Well, let me ask you a question, though, this is not something which is brand new. We knew this has been coming ever since the meltdown last year. In the year that’s passed, has Wall Street tried to head it off at the pass by attempting to regulate itself in the way that sometimes some of these companies settle before they’re actually sued, like Goldman Sachs wanted to do for instance?
MR. HARWOOD: The president says no. And he said you can’t paint with a broad brush. We can’t say the same thing of every firm. And there have been some revisions to pay practices, partly at the behest of the administration and federal agencies from institutions that took federal money. But when he gave a speech on Wall Street a few months ago, he said to the assembled executives, you don’t need a law. You can change your behavior right now. And I asked him in that interview the other day, have they done it? He said, not as much as I would have liked.
MS. IFILL: I bet they would have a different answer.
MR. HARWOOD: Yes.
MS. IFILL: Okay, well thank you all. We’re going to move on to that because we’ll be talking about this for a while. And speaking of bailouts and, of course, we were here’s the flip side, General Motors, which got $50 billion in rescue money from the government just last year announced this week it would repay $6.7 billion ahead of schedule. The news doesn’t get U.S. taxpayers completely off the hook, but it’s the kind of good news the auto industry and the Obama administration has been waiting for. But how significant is it really, David?
MR. SHEPARDSON: It’s good news. It clearly shows the industry, General Motors is in a much better spot than anyone thought about a year ago and the White House is really trying to take credit for this because, as the president said, this is not only unpopular, it’s the most unpopular of all the bailouts and pointing out there would have been a loss of 1.1 million jobs if they had let those two companies collapse, and a big impact on the industrial Midwest. But as you point out, there’s still another $43 billion that the taxpayers won’t know if they’re going to get back until the government goes to sell off that 61 percent majority stake in GM. And, of course, the government also owns a 56 percent stake in GMAC. And we own part of Chrysler. So the government is going to be in the auto bailout business for a long time to come.
MS. IFILL: Assume for a minute that this – just accept that this is good news, how did GM come back?
MR. SHEPARDSON: I think – well, number one, the economy came back, started out with Cash for Clunkers last summer. They started selling more cars. They replaced much of the leadership of the company and they got rid of half of their brands like Hummer and Saab and –
MS. IFILL: Saturn.
MR. SHEPARDSON: – Saturn and Pontiac. And so they’re focused on four core brands. And they’re really focusing on bringing up this new electric vehicle, the Chevy Volt, which will come out at the end of the year, which is sort of a halo to try to get some of the Toyota magic with the Prius that GM’s been lacking.
MS. CUMMINGS: Well, speaking of Toyota, how much of their problems are now rebounding and helping?
MS. IFILL: That’s good point. If Toyota’s in trouble, then somebody’s got to benefit.
MR. SHEPARDSON: First, there was an amazing AP poll this week that said Americans actually thought that American cars were of higher quality than Asian cars, which obviously Americans haven’t thought for decades.
MR. HARWOOD: That’s a revolution.
MR. SHEPARDSON: Right. And if you think about Toyota and all of the problems they’ve had from the sudden acceleration, the recall of nine million vehicles worldwide, two more recalls just in the last week, and the decision to pay the largest ever fine in auto safety history of $60 million for delaying a recall by more than four months, it does give the domestic companies an opportunity to maybe convince some of those Toyota owners to come into the showroom.
MS. CUMMINGS: Is it short lived, though? I mean if Toyota gets its act together, could that then mean that the game’s either slow or they – could they erode?
MR. SHEPARDSON: Well, here’s the interesting thing. Toyota has really upped the incentives. They’re now giving more money in the hood than ever before. And they almost outsold GM last month despite all of the bad publicity. So Americans are very price savvy. They’ll cross the street to save 10 cents on a hamburger. If the car’s cheap enough, they’ll buy anything.
MS. HOOK: That whole bailout wasn’t too popular on the Hill among Republicans. So what kind of congressional reactions have been to that news? Are people saying, hallelujah?
MR. SHEPARDSON: Well, clearly this deal, as you remember in 2008, the Republicans blocked the bailout from happening to save GM and Chrysler. President Bush stepped in and did it on his own using TARP. And I think there’s a little bit of a “wait a minute, yes, it’s great news they’re paying it back but they’re using unused bailout funds to repay the taxpayers.” This isn’t money they earned by selling cars.
MR. HARWOOD: Is there any larger lesson we can take from the fact that they were able to repay this money about the health of the broader economy in the Midwest of the United States?
MR. SHEPARDSON: Yes, I think it certainly shows that people are buying cars again. The sales rate is up more than two million vehicles a year versus last year. And I do think it shows that American companies can start to get their mojo back a little bit.
MS. IFILL: But if they get their mojo back and everything goes as well, the best possible outcome, will we ever see an auto industry that looks like we remember it? The big three putting out big cars, satisfying middle America?
MR. SHEPARDSON: No, that’s not going to happen. And the new workers don’t forget – at GM and Chrysler and Ford only are going to get $14 an hour who work on the line. And those are not the jobs –
MS. IFILL: Down from?
MR. SHEPARDSON: – down from at least double that and with benefits a little higher. And then you remember in the good old days, they were getting a lot of overtime. So an auto worker could basically leave high school and make enough money to buy a house and two cars and maybe a place up north. But the auto industry is changing in that there’s a lot more start-ups like Tesla and Fisker Automotive, and they’re getting government loans to actually build assembly plants. In fact, Fisker just closed today on a $500 million Energy Department loan. They bought an old GM factory in Delaware and they’re going to assemble electric cars in a couple of years. So the industry is changing. It’s going to look a lot like maybe it did in Detroit in 1900.
MR. HARWOOD: Gwen, you’re not going to be able to drive the giant Hummer forever.
MS. IFILL: Giant – don’t even start with me. Somewhere Joe Biden is smiling about that electric car in Delaware. Okay, well, there’s no rest for the weary in Washington. Next in the policy on deck circle an energy reform, legislation that will require agreement among environmentalists, the nuclear and coal industries, and the unions. Strange bedfellows united in the common goal, they say, of improving the environment and creating jobs, which sounds tough. Jeanne’s been talking to those bedfellows. Who are they and why are they in bed together, Jeanne?
MS. CUMMINGS: Well, I’m not going to go there, okay? (Laughter.) It’s a family show. The bedfellows are Senator Kerry and Senator Lieberman and Senator Lindsey Graham of South Carolina, giving the only bill with tripartisan sponsors. And they are united for very different reasons, which is kind of interesting when you see the way that they have managed to cover an enormous amount of ground. They have – and they’ve cobbled together an agreement that’s expected to be released early next week, in which both sides make serious compromises to accommodate the other.
But Senator Kerry, longtime advocate of cleaning up the environment; Lindsey Graham, national security, energy independence; Senator Lieberman similarly sees it as a security issue as much as it’s a climate issue -- they share these – these priorities. Each one is motivated a little bit differently by one or the other. But what it did was it got them all together.
And what we are likely to see is legislation, somewhat like health care, in that it is a true compromise, so you can’t peel it apart. You can’t just say, well, we’ll do the easy stuff and the popular stuff and not do the other. And what it involves is the Democrats – at its heart the Democrats get their tax on carbon, which will make alternative fuels instantly more valuable, if there is a tax or fee on carbon. They finally get that. And then the conservatives, the Republicans, the coal state folks, they get billions and billions of dollars to try to develop new technology to make coal viable in the future, to make it cleaner. And the nuclear sector has a rebirth.
MS. IFILL: But you said this is like the health care bill in some respects except that that was a completely partisan effort in the end. There was no bipartisan – or tripartisanship involved in getting that passed.
MS. CUMMINGS: I think in crafting it it’s similar to health care in several ways. First of all, the fact that it is a grand compromise. Secondly, all of these industries have been having backroom conversations with senators for months.
MS. IFILL: Yes.
MS. CUMMINGS: They’ve been very involved in the conversation. So have the environmental advocates. So have the labor unions. And so nobody’s going to get blindsided here. They’ve all been in the room when the deals have been discussed. And then also Senator Reid is taking this bill into his office just like he did health care, and it will be run out of his office onto the floor.
MR. HARWOOD: Jeanne, I hear a lot of skepticism they can get the 60 votes they need to move this bill. What is your assessment of how likely that is?
MS. CUMMINGS: We don’t – it’s hard to say right now. I’ve talked to the people who’ve been working on it. They won’t put odds on it, but when you talk to them you only hear pretty good stuff. So when we see legislation, we’ll know a heck of a lot more. I think where we see a really important early indicator is how the industries react. Today they already lost Greenpeace, one environmental group. They’re likely, I was told when I talked to Friends of the Earth, they’re going to lose them too.
MR. HARWOOD: That may help them.
MS. CUMMINGS: That’s right. They’re going to lose some of those environmental groups. But if coal and nuclear and big oil come in and say, forget it, we’re not going to go along with this, that will be probably too high a bar for them to get over simply because they have the pockets to really attack and because they can probably hold those Republican votes and coal-state Democrats. It’s not just a partisan issue.
MS. HOOK: Forget about the 60 votes, what about the 60 days you’re going to need to get this bill through the Senate? It’s a big bill. It’s controversial. It’s going to require tough votes for everybody and right now they’re doing this big financial – they’re headed into the debate on the financial –
MS. IFILL: And it’s about an immigration bill that may knock it off.
MS. HOOK: – and then they have a Supreme Court nomination taking up a lot of time.
MR. HARWOOD: Oh, and they have a bill, too.
MR. SHEPARDSON: And they want to go home to campaign, don’t forget.
MS. IFILL: So yes, Jeanne, what about all that?
MS. CUMMINGS: All right, all right, all right. What I hear is it’s going to take four to six weeks for the CBO and the various departments and agencies at the White House to actually analyze with this bill when it is unveiled. So that’s plenty of time if they cut the deal on financial rags for them to go ahead and move that piece of legislation. The notion is perhaps they could squeeze in immigration in between. But nobody sees the Supreme Court until the very end of July. So that does give us almost a three-month window in which these – these pieces of legislation supposedly are going to come before the full Senate.
MS. IFILL: We’re going to have to go and leave it on that. But there’s so much more we can talk about. We’re talking about all of this on the air, but there’s so much more we can talk about online, including the discussion about immigration. Just watch our “Washington Week webcast.” That’s at pbs.org/washingtonweek. We’ll talk about everything we didn’t get to here. Plus we’ll take your questions. While you’re there, also check us out on Facebook and Twitter. Why not? Next week promises to be a big news week, so keep up with daily developments on the PBS “NewsHour,” and we’ll see you here again around the table next week on “Washington Week.” Good night.