GWEN IFILL: Last-minute shopping gives way to last-minute policy on Capitol Hill and at the White House. We’ll tackle it all, tonight on “Washington Week.”

JULIE PACE [Reporter, Associated Press]: (From tape.) Has this been the worst year of your presidency?

PRESIDENT BARACK OBAMA: (From tape.) I’ve got to tell you, Julie, that’s not how I think about it.

MS. IFILL: At year’s end, the president puts the best face on what was really not a very good year.

PRESIDENT OBAMA: (From tape.) I think this room has probably recorded at least 15 near-death experiences.

 MS. IFILL: Whether the setback came on health care.

PRESIDENT OBAMA: (From tape.) The fact is it didn’t happen in the first month, first six weeks in a way that was at all acceptable. And since I’m in charge, obviously, we screwed it up.

MS. IFILL: Or domestic spying.

SENATOR PATRICK LEAHY (D-VT): (From tape.) The message to the NSA is now coming from every branch of government, from every corner of our nation: NSA, you’ve gone too far.

PRESIDENT OBAMA: (From tape.) Just because we can do something doesn’t mean we necessarily should.

MS. IFILL: Or the economy and the budget.

BEN BERNANKE [Chairman, Federal Reserve]: (From tape.) It’s been about a little over four years now since the recovery began, four and a half years. It’s been a slow recovery.

SENATOR MIKE ENZI (R-WY): (From tape.) This is not the right path forward. My constituents back home in Wyoming and Americans across this country deserve better.

SENATOR PATTY MURRAY (D-WA): (From tape.) We showed compromise is not a dirty word.

MS. IFILL: But there are still far more questions than answers. We assess the president’s yearend review and what it tells us about the state of the nation with Dan Balz of the Washington Post, Susan Davis of USA Today, Greg Ip of the Economist, and Pete Williams of NBC News.

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. As has become his custom, President Obama gave himself one final reason to look to a Hawaiian Christmas: he met the White House press corps for a yearend news conference. Among the topics he addressed today, the troubled Affordable Care Act, reining in the National Security Agency, and the state of the economy. But at the root of it all was a more fundamental question about Mr. Obama himself.

PRESIDENT OBAMA: (From tape.) If you’re measuring this by polls, my polls have gone up and down a lot through the course of my career. I mean, if I was interested in polling, I wouldn’t have run for president. I was polling at 70 percent when I was in the U.S. Senate. I took this job to deliver for the American people. And I knew and will continue to know that there are going to be ups and downs on it.

MS. IFILL: But ups and downs seem to be the least of his problems. It’s the downs which stay down, Dan. How is he doing?

DAN BALZ: Well, when the first question at the press conference is, was this the worst year of your presidency, you know basically where things stand. He tried to move away from that question as quickly as he could.

But there’s no question that he’s ending this year at low ebb. In our latest poll with ABC he’s at 43 percent in his approval. His disapproval is at 55 percent. That is the highest we have measured it. I think most importantly, if you look at where he was a year ago, coming off that reelection victory, his approval rating has dropped 11 points; his disapproval has risen 13.

More important I think in some ways is the perception of him versus the Republicans. We know the Republicans are not particularly popular at this point either. And yet a year ago he had a decided advantage. When people were asked, who do you think is better able to handle the biggest problems of the country, he had a big advantage on that. Today, he’s even with the Republicans.

MS. IFILL: Where has he lost ground? Is it on policy matters? Is it personal likeability? What is it?

MR. BALZ: I think – I mean, I think it’s a combination of things. He has lost ground on the question of competence because of what happened on the Affordable Care Act. He has lost ground on credibility, again because of the Affordable Care Act and some other things. And I think that overall, at the same time, while people still like him more than dislike him, he’s lost ground there too that people don’t think he – fewer people think he is honest; fewer people think he’s a strong leader.

So, I mean, there’s been a kind of a corrosive effect through – particularly through the fall and into this last month. Now, the good news is he’s no worse today than he was in November. I mean, he stabilized but at a low point.

PETE WILLIAMS: I don’t know what the opposite of a honeymoon is, but how does this compare to what most two-term presidents are a year in?

MR. BALZ: Well, he is lower than almost every other president at this point in their presidency post-World War II, except for Richard Nixon, of course, who was heading towards, you know, resigning because of Watergate. He’s actually a little bit lower at this point than George W. Bush was, and we know George W. Bush had a very bad 2005. So, you know – and Presidents Reagan and Clinton were well over 50 percent. So he’s – you know, he’s on the low end of that.

SUSAN DAVIS: So what is the White House plan to turn it around and do they even have a plan to turn it around?

MR. BALZ: Well, they have –

MS. IFILL: They’re keeping it a secret from us.

MR. BALZ: Right. It’s a secret plan.

MR. WILLIAMS: And him too.

MS. IFILL: And him as well.

MR. BALZ: The secret plan is some of what Greg will talk about. Their hope is that the economy continues to improve. They have always believed that there is a direct connection between that and his standing, and they’re going to – they’re going to try to ride that.

At the same time, I think they’re looking for ways to make it appear as though he actually is in command and can do some things. He’s brought John Podesta in as a counselor at the White House, in part with a portfolio to look at executive actions, things he can do without the approval of Congress to get some progress on climate change or energy or even the jobs front.

GREG IP: You know, when you’re at a record low, the temptation among the optimists must be to say, well, I can only go up from here, but is that true? Could it actually get worse from here?

MR. BALZ: I suppose it could, although I think that the country is so polarized that he has a little bit higher floor than perhaps President Bush did in his presidency. The expectation among –

MS. IFILL: He’s not losing as many Democrats as he’s losing Republicans?

MR. BALZ: Well, one place where he’s fallen down in the last two months is with Democrats and with liberals so he’s lost some. Now, you know, the White House belief is that some of that will come back, that there was disillusionment over the Affordable Care Act or there was disaffection because of the National Security Agency problems, and that over time they will kind of regroup behind him and particularly in a mid-term election year.

MS. IFILL: Speaking of which, are the congressional Democrats getting a little unnerved by all this?

MR. BALZ: Well, there’s been a kind of a White House watch on the Senate. I mean, through that period when the website of the Affordable Care Act was not working, the Senators were in a very foul mood and were making it very clear to the White House. They think since the website has improved some that that fever has broken a little bit, but we’ll have to see.

MS. IFILL: We’ll talk some more about whether the fever is breaking on Capitol Hill. We’ll see in a moment.

But first, we’re going to turn to the NSA. The National Security Agency – first, a federal judge and then a separate review panel said the nation’s top spies go too far and the president conceded today it has hurt his government’s credibility at home and abroad.

PRESIDENT OBAMA: (From tape.) In fact, there have not been actual instances where it’s been alleged that the NSA in some ways acted inappropriately in the use of this data, but what is also clear is, from the public debate, people are concerned about the prospect, the possibility of abuse.

MS. IFILL: The president, Pete, seems to be talking about perception rather than reality. Is that all there is to this?

MR. WILLIAMS: Well, I think very much that is what he said. He said, you know, I wanted to see these recommendations not because I think the thing is out of control, but because the public thinks it’s out of control. And more to the point, so do the people overseas, our foreign leaders, our allies and foreign publics, and we need everybody to be onboard so let’s see what we can do to fix it.

It had two blows this week, not only a federal judge who said that the program is over-expansive and is unconstitutional, but also this panel, both of whom failed to buy the main argument that the government has been making about why we need this bulk collection of phone data, which is the ability to have it all in one place, ready to go, so that if we need to quickly check a phone number of a suspected terrorist to see if they’re talking to somebody in the U.S., we have instant access to it.

MS. IFILL: And the judge said he couldn’t – he couldn’t find one example of where that had happened.

MR. WILLIAMS: And so did the panel. So that’s got to be a main concern for the government. And that’s why you heard in the little clip you played of Patrick Leahy, you now have the judicial branch and the executive branch in the form of this report saying, we don’t buy the main argument for the program.

Now, what the recommendation says is you shouldn’t end the program, but the government shouldn’t gather this data. The phone companies, which already have it to send you your phone bill, should just keep it, or form a little consortium, some other thing that they form to hold it all. And then, when the government wants, they ring that doorbell but the report also says they should have to get a judge’s order before they go in looking for any needles in the haystack.

MR. IP: Can you talk a little bit about the federal judge’s decision? He said that parts of this program were unconstitutional. In what respect is it unconstitutional?

MR. WILLIAMS: Well, his main thrust of his argument is to say the Supreme Court was wrong in 1979 when it concluded that people have no expectation of privacy in the phone company keeping the records of their phone calls and then giving them to the cops when the cops come to get them.

What Judge Richard Leon, who wrote this opinion, said is times have changed. We live in what he called a cell phone-centric culture. We use our phones for a lot more. We expect more protection of what we do with those phones.

Now, that’s gotten a lot of criticism from other people who say, well, yeah, you use your phone for a lot more – to read books and to hold up at rock concerts and to share photos and music, none of which have anything to do with phone calls. As a matter of fact, some legal scholars even think we depend on our phones less for communication now. So it’s a controversial part of his ruling, but it was the essence of it.

MR. BALZ: And what are the prospects for appeal as a result of that?

MR. WILLIAMS: Well, the government will certainly appeal. It goes to the D.C. Court of Appeals here in Washington. And they may or may not agree with him. I mean, this is – this could be a more conservative court. Who knows whether that will survive appeal, and then, of course, what happens if it goes to the U.S. Supreme Court, which it seems likely that it will ultimately have to be worked out. But in the meantime, Judge Leon at least said, while I feel strongly about this, I’m putting my own ruling on ice so this program can continue.

MS. DAVIS: Pete, how is the intelligence community responding to these rulings? And do they support them or are they actively trying to make the case against them?

MR. WILLIAMS: Well, they certainly think Judge Leon is wrong. They seem pretty united on that. As for the report, I think what any of them will say is, yeah, we recognize we’re going to take some hits. What would be devastating to them, they say, is if the president accepts all the recommendations because that’s simply taking away too many tools, they believe.

But I think they also – there may be a strong feeling, not a unanimous one, that they should concede the phone program; let the phone companies keep that in the name of or in hopes of preserving other parts of the intelligence community’s efforts, especially the ability to look at overseas Internet communications, which they frankly think are more important.

MS. IFILL: I found a couple of things curious: one, that the tech CEOs came from Silicon Valley and had this big meeting in the White House, which they all kept to themselves, but the very next day, the president comes out and says, I’m going to release the – so the White House came out and said they were going to release this panel review, which we weren’t supposed to see until next month.

The other thing I found interesting, while everybody was looking at the president shaking hands with Raul Castro last week in South Africa, right next to him was Dilma Rousseff, the president of Brazil, who canceled a state visit because she didn’t like being spied on by the NSA.

So I wonder how much of what the president is doing now, at this moment, why now I guess is the question, is being pushed by these outside forces?

MR. WILLIAMS: Oh, without question, a great deal of it. And it’s interesting what he said today about Edward Snowden, because he still won’t buy into the idea that Edward Snowden did us a favor, but what he’s saying is now that it is out there, we do have an obligation to make things more public, which is one of the things the report says: let the Internet and phone companies disclose what kind of things the government is asking for.

But on the foreign collection, yes, one of the things the report says is, let’s not have the intelligence community decide which foreign leaders we’re going to spy on. Let the president decide that when he thinks it’s the right time.

MS. IFILL: And to be clear, he resisted an opportunity today to say he would grant amnesty or any kind of absolution to Edward Snowden.


MS. IFILL: Yeah. OK. Thank you. The president gave mild kudos today to the House and the Senate, which managed in its final days to pass – before vacation, not its final days. (Laughter.)

MR. WILLIAMS: If only.

MS. IFILL: Not quite. To pass a budget, approve a defense spending bill and confirm a number of his executive and judicial branch nominees. So what did Congress get done and what did they leave undone, Sue, not in their final days?

MS. DAVIS: Twenty thirteen is an interesting year for Congress in that it is – has been the least productive legislative year on record.

MS. IFILL: That’s shocking.

MS. DAVIS: Even more unproductive than last year, but unproductive and insignificant are maybe two different things. This budget deal that passed in this final week is perhaps one of the most significant things that Congress has done maybe not on the substance, but also on the politics of it.

We have our first bipartisan budget deal. It defuses – I don’t like to say eliminates, but defuses the threat of a government shutdown for at least two years. It gives some certainty to the budget process. And it was, as Patty Murray said, something that would heal the wounds of the Congress. There was this idea that a divided Washington cannot get anything done and to end the year on a note which they get something done maybe perhaps set a positive tone for what may come in 2014.

There’s a lot to do. Congress is only gone for two weeks. They come back. First order of business is they need to confirm Janet Yellen as the next Federal Reserve chairwoman. They used to have an ongoing fight in the Senate over the filibuster rules changes that has really soured the mood in there. And on December 28th, three days after Christmas, they left town without extending unemployment benefits so 1.3 million Americans are going to see unemployment benefits for the long-term unemployed run out and that is potentially going to become a more uncomfortable debate the longer they stay expired.

MS. IFILL: So, at best, this is a temporary truce, kind of a Band-Aid.

MS. DAVIS: There’s still a lot to do. And there’s still a lot of hard feelings. So I’m not sure it’s a new era of compromise, but hope springs eternal.

MR. IP: Susan, I’ve got to ask, you know, Patty Murray and others and Paul Ryan are sort of like holding up this great sign that Congress can get things done. But isn’t there a kind of a contrast between the style, which looked good, and the substance? I mean, when you actually look at the details as what does this tell us about how much of meaningfully can get done on the budget especially?

MS. DAVIS: For the past three years, we’ve heard so much about grand bargains. And I think the thing that – the way that this was characterized that made me laugh was it’s been called the bland bargain. (Laughter.) It’s really not – I mean, it’s a substantively small deal. It does not radically change any of our budget policy, nor does it really answer the tough questions about the deficit and spending and taxes. But it does provide – it does at least clear the air a little bit and give time to maybe try and put together more substantive long-term resolutions to these questions without the constant threat and brinksmanship politics, but it is far more significant politically for what it was than what it was substantively for what it’s going to do for the fiscal portrait of this country.

MR. BALZ: The president talked several times at the press conference today about immigration, which is still one of the big undone issues sitting on the table. Does this bipartisan agreement tell us anything about the prospects for getting immigration done and what are the prospects?

MS. DAVIS: I think it does. I think when you ask lawmakers, particularly ones that would like to see an immigration bill, the fact that it has eliminated the threat of this brinksmanship almost frees up some bandwidth in this Congress to work on other issues. And immigration is the one prevailing domestic issue hanging over the 113th Congress.

There are some encouraging signs. House Speaker John Boehner recently hired a new staffer to come on who is known for their work on immigration reform, which was seen as sort of a signal that he’s not kidding when he says he wants to do this. I think both parties have a political benefit in maybe getting something done before the midterm elections. But it’s going to be very difficult. And I don’t think you can underestimate the opposition, particularly among House Republicans, to doing any kind of comprehensive immigration bill next year.

MR. WILLIAMS: Are we still at the fiscal cliff? Can we still see over the edge? And is a shutdown completely off the table now?

MS. DAVIS: It’s not completely off the table, but for practical purposes it still is. They still have to write these spending bills that they have to – they still have to pass. They just agreed to how much they should spend.

And we also have another debt ceiling coming up. And the debt ceiling is suspended through February. It could go as late as late March perhaps, the Treasury secretary said this week. And House Republicans, including Paul Ryan, who crafted this bargain, and Mitch McConnell have said, we’re going to want something in exchange for this vote. We just don’t know what it is yet.

MS. IFILL: Some of the Republicans who crossed the aisle to support the Democrats just happen to be, you know, retiring so there was a little room for them to do that. How much is the health care debate poisoning everything else that happens or might happen or might not happen, opportunities that especially tea party Republicans see to stick to the president on?

MS. DAVIS: I think it’s playing out much more in political races than it is on Capitol Hill. There’s not much legislatively that Congress is doing right now about health care. Now it’s about implementation. It’s about selling it. It’s about messaging. And members of Congress certainly play a significant role in doing that in the grassroots level and in their districts.

I think the Democrats have been hugely disappointed about the rollout. And, as Dan said, I do think it has sent some fear through the ranks. And I think that it has spawned some anger towards the White House. But I think that they’re hopeful that if the website can turn around and implementation numbers hit their marks come spring, they’ll be singing a different tune.

MS. IFILL: And they’ll at least be able to change the subject.

MS. DAVIS: Exactly. Which is what they desperately would like to do.

MS. IFILL: Exactly. Thanks, Sue. It’s not an accident that the president started today’s news conference by boasting of the recovering economy: two million jobs created this year, the lowest unemployment rate in five years and, just this month, a half million people enrolled in that troubled health care exchange program that got off to such a horrible start.

So is he right that things are getting better or is there something else that might be going on, Greg?

MR. IP: Well, he’s right that things are getting better. In fact, there’s no mistake he started the press conference that way, because, as he spoke, the Dow Jones industrial average was tramping its way to yet another record close. In fact, it will be the best year since 1998 for the stock market.

MS. IFILL: Did it stay up as he spoke?

MR. IP: We didn’t watch it minute by minute, but it still managed to hang on enough to close at another record. And so, yeah. The numbers don’t like. There’s enough evidence to suggest that the economy is ending the year on a bit of an upswing, as you mentioned, a lot of jobs being created, the unemployment rate coming down. This morning, we learned that the GDP grew at 4.1 percent annual rate in the third quarter, the fastest in two years; a lot of other things starting to look good.

It goes without saying that we have been all hoping for a strong recovery and keep not getting it, but I think the numbers are lining up in such a way that, yes, next year could be, as the president says, the breakthrough year.

MS. IFILL: Bernanke put it differently this week at his final press conference. He said he could see the whites of the eyes of the economy. I’m not certain what kind of revolutionary term metaphor that was.

MR. WILLIAMS: We’re clearly fighting the economy.

MS. IFILL: But we’re clearly fighting the economy.

MR. IP: He’s a monetary historian, not a military –

MS. IFILL: Exactly. But he was making the point that things have gotten better enough that it was OK for the Fed to ease off the pedal.

MR. IP: Right. In fact, ordinarily, when the Federal Reserve starts to withdraw some of the punch in the punch bowl, you start to get a little bit worried. But, in this case, the stock market actually reacted euphorically.

And I think that in some sense vindicates Bernanke’s policy of pumping so much stimulus in the economy to the point that the economy no longer needs it. It’s growing on its own. And he said, I’m very glad that we were able to finally wind down this very aggressive program of de facto printing money in order to buy bonds because it finally worked.

That doesn’t mean that suddenly they’re going to start raising interest rates or tightening things up. Inflation is still too low. Unemployment is still too high. They’ve said they’ll keep rates at around zero, probably around – until around 2015. But I think that they finally do see the recovery they’ve been hoping for and pushing for all this time. And since this is Bernanke’s like last six weeks in office, it’s got to feel pretty sweet to him.

MR. WILLIAMS: How different would Yellen be if she in fact confirmed?

MR. IP: Now, today, the Senate actually voted to proceed to a confirmation vote, which would take place in the first week of January. It looks like a done deal that she will confirmed. This looks like it’s going to be the least eventful transition of a Fed chairman ever. Not only is she a known quantity, but she’s been at Bernanke’s side for the last few years.

And, in fact, Bernanke was asked at his press conference, did you consult closely with Janet Yellen about the decision to pull back on the bond buying and to wind it down over the next few years? He said, yes. We consulted very closely. He’s been consulting very closely with her for a very long time. It will be very hard to see any daylight between the policy that she pursues in three months’ time and the policy he pursues.

MS. DAVIS: Greg, there seems to be some disconnect in that the White House in the beginning of the year warned that the sequester would be really devastating to the economy. There were warnings during the shutdown that that would have tremendous impact on the economy. But yet, the indicators like you just mentioned, GDP growth, the Fed changing policy, all seem to be really signs of strong economic growth. What is the disconnect there?

MR. IP: Yeah. It’s really surprising. In fact, if you just go back to the shutdown in October, the White House Council of Economic Advisers were saying this is going to cost us 100,000 jobs, and October turned out to be one of the best job creating months of the year.

Well, I think the best interpretation is that there is an underlying groundswell of strength to the economy such that it would have grown even faster absent the downward pressure from the sequester.

So, for example, the CBO – that’s the Congressional Budget Office – estimates that we would have grown 1.5 percentage points faster this year; instead of two and a bit, we would have grown three and a bit percent absent all that fiscal restraint. That’s one of the reasons you can be relatively optimistic about next year is it’s not so much that a lot of great things are happening. It’s that we’re not constantly kicking the economy in the shins like we have for the last few years.

MR. BALZ: Give us a sense of what Bernanke’s last press conference was like. I mean, he’s been through an incredible period of the economy and had to deal with some terribly difficult things. Now he’s out the other side of that in a different way, in two ways, something that he’s about to end and the economy is doing better. What did he seem like?

MR. IP: Well, some of us thought that he might have been a little lighter in his step when he came into the room.

MS. IFILL: How could you tell exactly?

MR. IP: I don’t know. But another thing is that it was actually a rather long press conference. It went about 15 or 20 minutes longer. It’s not normally the sort of thing that a person who doesn’t enjoy being grilled like this tends to do.

But he was asked to reflect a bit on the last eight years. You know, he was a monetary historian before he took this job, and so he was asked how do you think future historians will look back on your tenure? And he talked about how the Fed returned to its roots as a lender of last resort, saving the economy from financial crisis. He talked about how it will be interesting to see how people think about – how they coped with the limitations of what do you do to help an economy when your main tool – short-term interest rate – is at zero.

But what I thought was most interesting is that rarely for a guy – rarely do you hear a leader, somebody at his level in Washington admit to mistakes. And he admitted that they were too slow to see the crisis coming and too slow to react.

MS. IFILL: It must be nice to actually be leaving town at which point you can then say, oh, by the way, I did make a few mistakes. Thanks, Greg. Thanks, everybody.

We have to leave you for now, but the conversation is going to continue online on the “Washington Week Webcast Extra,” which streams live at 8:30 p.m. Eastern Time and all weekend long at

While you’re online, you can find a few last-minute gift ideas – I know I need a few – on our winter reading list, where you can see what our panelists have been reading. Next week, be sure to watch for our special year-ender, where “Washington Week” panelists share the stories that shaped 2013. Keep up with daily developments now seven nights a week on the PBS “NewsHour” and we’ll see you right here, next week, on “Washington Week.”

Merry, merry Christmas. Good night.