MS. IFILL: Wall Street reform passes, but other problems remain – not least of them Afghanistan. Can we turn the corner? We explore that tonight on “Washington Week.”
SEN. ROD BURRIS (D-IL) : Yeas are 60. The nays are 39. Conference report is agreed to.
MS. IFILL: Victory for the Democrats on Wall Street reform.
SPEAKER OF THE HOUSE NANCY PELOSI (D-CA): No longer will the recklessness on Wall Street of some cause joblessness on Main Street for the many.
MS. IFILL: But Republicans don’t see the connection.
REP. JOHN BOEHNER: I think it ought to be repealed.
MS. IFILL: And away from Washington, is it making anybody feel better? With the topsy-turvy stock market, slippery public confidence and skeptical voters, no victory seems to last for long.
PRES. BARACK OBAMA: I won’t be satisfied as long as even one person who needs a job and wants to work can’t find one.
MS. IFILL: That satisfaction is elusive, as elusive as success in Afghanistan. The good news always eclipsed by the bad. But why? Covering the week: Eamon Javers of CNBC, Dan Balz of the “Washington Post,” Doyle McManus of the “Los Angeles Times,” and Martha Raddatz of ABC 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 produced in association with “National Journal.”
ANNOUNCER: Once again, live from Washington, moderator Gwen Ifill.
MS. IFILL: Good evening. First, to the good news. The oil well in the Gulf is capped for now. And after weeks of vote trading and nose counting, Congress this week passed what the White House calls its Wall Street reform bill. Republicans, most of whom voted against it, say it’s a disaster.
HOUSE MINORITY LEADER REP. BOEHNER (R-OH): I think the financial reform bill is ill-conceived. I think it’s going to make credit harder for the American people to get, clearly harder for businesses to get and the fact that it’s going to punish every banker in America for the sins of a few on Wall Street I think it’s unwise.
MS. IFILL: Democrats, most of whom voted for it, predict it will tame Wall Street and turn the economy around.
PRES. OBAMA: What members of both parties realize is that we can’t allow a financial crisis like this one that we just went through to happen again. This reform will prevent that from happening.
MS. IFILL: As often happens, both sides may be overstating the new law’s impact, just a little bit, or lack of impact. Eamon?
MR. JAVERS: Yes, well John Boehner was against this bill before it passed and he was against it after it passed. So that’s not necessarily a shock here. What was fascinating to me was the degree to which we had sort of two separate debates going on at the same time. One was a deep and substantive policy debate about derivatives, the economy, the role of Wall Street. And then the other one was a political debate in which people were just throwing rocks at each other, and Democrats and Republicans, everyone trying to position themselves for the fall elections.
So you had to make these very complicated decisions about policy in this atmosphere, where they can’t get along at all. And so it was a very, very tricky deal to cut. And it came down to the wire. In the Senate, they had only 60 votes, which is the bare minimum they needed to get this bill done, but they finally got it done this week.
MS. IFILL: When the president and Nancy Pelosi say, we have passed Wall Street reform and therefore the economy will now turn, jobs will be created, everything is going to be better, is it a bit of a reach?
MR. JAVERS: It is a bit of reach. It’s very hard to see a link between passing this bill and some kind of job creation. It’s not hard to see a link, though, between passing this bill and giving policymakers in Washington the tools they need to do something productive the next time we have one of these crises. It’s also very controversial about whether or not this thing is actually going to do enough to prevent the next crisis. The president said it will. Democrats say it will. There’re a lot of folks, though, who say it doesn’t really change Wall Street in really bracing fundamental ways, and therefore what it does is gives them the tools they need to clean up after the next mess, but will not necessarily going to prevent another mess.
MS. RADDATZ: Eamon, can you pick it apart a bit? And what will be the most helpful? There was the Council of Federal Regulators to watch the threat, a variety of other things. What in particular might really work?
MR. JAVERS: Well, the Systemic Regulation Council that you’re talking about is important because what that does is it puts certain people, certain cops on the beat to say, you have to be watching for threats to the whole economic system, not just your little corner of the economic system, which is what we had before. So presumably that’s a good thing and helpful. But if you talk to the administration, they will say the main thing this bill does is it provides them with resolution authority. So if we get another Lehman Brothers or Bear Stearns that’s teetering on the brink of collapse, the government could take it over just like the FDIC does with the bank, wind it down, and prevent a panic, and prevent what could be a small problem from metastasizing into something really big and dangerous.
MR. BALZ: Eamon, what did it take to get this bill through in the end and what did the administration and the Democrats have to give up in order to do it?
MR. JAVERS: It was amazing the degree to which this all came down to the guy that I think we’re going to be talking for months if not years to come, Scott Brown, the Republican from Massachusetts. He was – he’s been the key on a lot of votes so far this year. He was the key here and you’ll not be shocked to learn that there were certain Massachusetts-based financial institutions that got exactly what they wanted in this bill because Scott Brown’s vote was the one that made the difference. So –
MS. IFILL: Like what did they get?
MR. JAVERS: – State Street, for example, was one that was concerned. Fidelity Investments is another. Fidelity was really concerned with the way that a systemically significant firm was going to be designed. They did not want it to be done based on a dollar amount. They really wanted it to be done based on how risky the firm’s behavior was because they thought that that would exempt them from that new level of regulation. They wanted to be outside that scope. That’s something that Scott Brown was able to do for them, deliver. The Democrats let him do that for his home state firms and in turn they said “now we’ve got to have your vote,” and they finally got it. Brown really held out until the last minute but they finally did get that vote they needed.
MR. MCMANUS: So when we had the cornhusker kickback on health care, this is what, the Boston bonus called?
MR. JAVERS: Well, Brown’s office is very sensitive about that concern and they point out that well, in fact this does benefit Fidelity but also benefits a whole other group of banks in that class and so therefore it’s not a carve out for anybody in particular. And they also say what Scott Brown was really concerned about here was making sure that the types of firms that caused this thing in the first place were the ones that have got more regulation, not firms like Fidelity, which was largely absent from causing the crisis.
MR. MCMANUS: Eamon, is this the end of the process? There’re still a lot of regulations to write here. Aren’t there?
MR. JAVERS: Yes, I think it was fascinating –
MS. IFILL: It’s a 2,300 page bill.
MR. JAVERS: – yes. The Chamber of Commerce put out a study which said that there are 433 new regulations that have to be written as a result of this. So for the lobbyists in town, for the Wall Street guys, the fight just shifts from Capitol Hill now to the regulatory agencies and that’s a little bit of a better ground for them because they can go in where there aren’t the TV cameras, where there isn’t the political heat and light. They can make their case in a very detailed basis, sort of behind closed doors. That’s a more favorable lobbying environment. The Wall Street guys are optimistic they can make some changes here.
MS. IFILL: And the lobbyists will remain employed, as they always seem to.
Well every day seems to bring a new poll that causes the White House heartburn, especially as the fall midterm elections approach. Here’s what the White House really worries about. President Obama’s overall approval rating has dipped to 50 percent, part of a steady, months-long side. More than half of those polled, 54 percent disapprove of the president’s handling of the economy. And the number of Americans who say they have confidence in the president for the future has dropped 18 points since he was inaugurated, from 61 percent to 43 percent.
How troubling is all of that, all those internal numbers, Dan, for the president?
MR. BALZ: Well, it’s very troubling, and you could see the reaction this week among Democrats around town when they saw those numbers. This is from the “Washington Post”-ABC News poll. It’s not frankly strikingly different than what we have been seeing and frankly other polls have President Obama’s approval rating at an even lower level, 46-47 percent. So the raw numbers themselves tell part of the story, but I think one of the things that was important about this was that there had been for a few weeks or months, six weeks, some indication that they might be turning things around. After he signed health care, the April jobless report was somewhat better. They looked like they might be turning a corner, and then they ran into all kinds of problems. They obviously ran into the problem in the Gulf. They ran into problems with the stock market. And the last jobless report showed anemic job growth.
And so this represents in many ways a setback for him and for the administration and therefore for the Democrats as they look into November. The only good news that they could take out of this was that in terms of public confidence, public confidence in Republicans in Congress is even lower than it is in the president.
MS. RADDATZ: Can you pick apart those polls and the subgroups? Who is he doing well with? Who is he not doing well with?
MR. BALZ: Well, I think for the White House the worrisome thing is that among independents he’s down under 50 percent. We have him at about 47 percent. Gallup has him at 38 percent among independents, the lowest they’ve ever had him. He is not doing well with white voters. He’s at 40percent among white voters. Now, he is doing well with younger voters. He’s over 50 – he’s 56 percent in our poll, but young voters –
MS. RADDATZ: And always has.
MR. BALZ: – he did very well with them obviously in November, but they don’t tend to vote in midterm elections. And so he’s upside down. Among older voters, he’s at about 44 percent. So all off those subgroups who may be critical in November election, he’s not doing well with.
MR. MCMANUS: So Dan, what do these numbers tell us about how November may go? You’re a scholar of these things. Is it the president’s approval rating? Is it that generic “I prefer the Democrats to the Republicans” or vice versa number? What is it?
MR. BALZ: Well, it’s a little of all that, Doyle, and you can pick whichever one you want and we know that Congress is more unpopular than the president, but that’s almost always true. If you look at presidential approval there is a fairly direct correlation with what happens in midterm elections. Presidents over 60 percent, for example, tend to be able sometimes to defy the historical trends. Bill Clinton in 1998, George Bush in 2002. Presidents who are below 50 percent often see their parties take a real beating in the midterm elections and that’s why people are worried now.
MS. IFILL: Isn’t that why we saw some of the unseemly – back and forth is a nice way of putting it – between White House Spokesman Robert Gibbs – I want to read something that he said last Sunday on “Meet the Press.” He said, “I think there’s no doubt there are enough seats in play that could cause Republicans to gain control.” Now, coming from a pundit, that sounds like conventional wisdom. Coming from the White House spokesman, it must have made people really unhappy on Capitol Hill, Democrats.
MR. BALZ: It made people terribly unhappy. And it is a reminder of the sort of the weight of the words of a White House spokesman because other people around the president have said this. David Plouffe, who was his campaign manager in 2008, said this recently in an interview that I did with him and it got very little attention. And nobody really cared. But when the White House press secretary says it, it rattles through Washington. And House Democrats in particular were outraged for two reasons. One is they know they’re in a tough fight. It wasn’t a surprise to them. One is he didn’t finish the thought, which is they could take it over, but in the end they’re not going to, we have ways to prevent them. And the other was there is this tension between Congress and the administration, and particularly House and the White House, that they’re more focused at the White House about 2012 re-election and less on what happens in the House. Now, you talk to White House officials, they say that’s not the case at all because –
MS. IFILL: Look at all the campaigning we’ve done, the money we’ve raised.
MR. BALZ: Right, but nonetheless that’s out there. And that’s what triggered this uproar in the House.
MR. JAVERS: So what does Obama have to do to in terms of mending fences? Does he have to go out and hit the campaign trail for some of these House Democrats? Or does he have to say something different? Or does he have to rein Gibbs in for a week? Or is there something he can do that will –
MR. BALZ: He has to do a couple of things, Eamon. One is he’s got to get out there and really make the case. And he has started to do that. His trips recently – his recent trips to Nevada and Missouri – he began to frame the election in the way they want, which this is a choice. It should not be a referendum. But the House Democratic leadership was pretty strategic during this week and got further commitments for more visits. They’re getting a fair amount of money. They’re getting – the three national party committees are getting $25 million from the DNC to help, so there is stuff they’re doing but he’s got to do more.
MR. JAVERS: So there’s horse trading in Washington.
MS. IFILL: Yes. Well, let’s pull back a little bit because often overlooked in the back and forth over the economy is the sound of dominoes falling far from Washington. That’s what happens when chronic joblessness, slumping home values, and overall anxiety have a long-term effect on society as a whole. Perhaps that’s why the president doesn’t seem to get the credit, Doyle, even when has a victory.
MR. MCMANUS: I think it’s a big part of the answer, Gwen. And those poll numbers aren’t the only ones giving the White House heartburn. The unemployment rate still around 9.5 percent, likely to stay around 8.5 percent next year, the Fed says. That’s the other set of numbers. And those numbers have some obvious effect. When unemployment goes up, home foreclosures go up, whole communities suffer, state tax revenues go down, school budgets get cut, obvious effects. But there’re some things that aren’t quite so obvious and that go beyond that.
One is that when the economy slows down, the birth rate drops. Families decide that this is not the time to get bigger and that’s especially the case in places where mortgage foreclosures are high. If you look at the statistics, in California, Arizona, Florida, the birth rate has really taken a drop and those kids that didn’t get born this year, they’re not going to be there for 90 years to come. Depression goes up. I don’t mean the economic kind of depression. I mean psychiatric depression. Historically suicide rates go up in a recession. We don’t have statistics this time, so that’s – I’m just reasoning from history there. And perhaps surprisingly, participation in community organizations and community activities goes down. People go to social clubs less. They join volunteer organizations less. There are even cases where church attendance goes down. So the social bonds that keep a community together get weaker. And this all combines to make people very pessimistic and very grouchy.
MS. IFILL: Well, I wonder if people vote less. People look at that as a form of civic participation and they just think, why bother?
MR. MCMANUS: Voting trends, and Dan can talk about this too, depend an awful lot on what kind of year it is, what candidates are running, how much enthusiasm there is politically. But yes, there is evidence that people vote less for the same reasons that they engage in group behavior less. The one civic group that may be booming this year is the tea party movement and that’s because they’re so angry.
MR. JAVERS: So this being Washington, what we all want to know is how does it affect Democrats and Republicans in the struggle in November. Does this play out better or worse for any particular political party going forward or is it a wash across the board?
MS. IFILL: You mentioned the tea party, for instance, which is largely Republican. They’re energized, not depressed.
MR. MCMANUS: They’re energized – well, this – it’s hard to draw a one to one correlation to how people are going to vote, although obviously when people are pessimistic about life in general, as they are, when people are angry or disheartened about the economy, that makes them anti-incumbent. And when the Democrats are incumbents, it’s an anti-incumbent year.
The same thing happened to Ronald Reagan in 1982. So it’s not partisan in that sense. That’s part of the anti-incumbent thing.
This has been a really interesting recession because it’s hit different groups in different ways. Unemployment is longer term. People who are out of work are staying out of work twice as long as they did in the last recession and there’s been this huge drop in wealth, in household wealth and in savings and 401(k)s. And who has that hit? Well, I’m very sorry to report that it has hit the middle-aged generation you are looking at on your screen.
MS. IFILL: I don’t know what you’re talking about. (Laughter.)
MR. MCMANUS: Interestingly enough, elderly people in this recession have come out pretty well. Their investments were more conservative. They’ve got their pension incomes. And they haven’t changed their attitudes all that much. Younger people have been hit terribly in the job market, but they’ve got their whole lives ahead of them. They’re quite optimistic. The group that has turned the most pessimistic as a kind of a shift has been baby boomers, the people who are going to retire over the next 10 years.
MS. RADDATZ: Doyle, what turns this around? Obviously when things get better it turns around, but does it take longer to lose the depression that they’re suffering, to get back into community groups to be more interested in what’s going on in the country? How long does that take?
MR. MCMANUS: It does. That’s not – consumer spending – when the economy recovers, consumer spending turns around. People start buying houses and cars and washing machines again. But there’s a sociologist at UCLA who studied a whole generation of people in Wisconsin and found that being unemployed once in your life reduces your civic activity for 20 or 30 years after. There’s a real scar there that lasts. And that’s going to be there after this recession is over.
MR. BALZ: And what – in what ways is society prepared to deal with these kinds of problems? There are all the things that the government tries to do to stimulate growth but there doesn’t seem to be anything out there for people who are suffering in these ways.
MR. MCMANUS: There is no program for this. In fact, mental health budgets go down in a recession. In a sense, we’re doing the wrong thing counter-cyclically. You really have to wait for the long term of a new generation, that optimistic generation of 20 and 30-year olds to come along and lift the community spirits in a sense. That happened after the Depression. It’s eventually going to happen after this one.
MS. IFILL: Thanks, Doyle. That’s interesting. I really liked that story you wrote this week. So as Americans are sorting out their domestic woes, the war in Afghanistan continues apace with record casualties among NATO and Afghan forces, but General David Petraeus’ arrival on the scene seems to merit a second look. That’s what Martha did when she returned to the front lines last week for – how many times have you been there now?
MS. RADDATZ: I can’t keep track.
MS. IFILL: I can’t either.
MS. RADDATZ: But I was there almost a couple of weeks.
MS. IFILL: I know the assessment. What did you see?
MS. RADDATZ: One of the things I saw is that every place I went they were trying very hard. They were trying very hard at the training. They’re trying very hard to cut down casualties. They’re trying very hard to reach out to the villagers. But all these pieces of this puzzle, I felt like even each piece is doing well, but I don’t know how it fits together yet. And I think there’s a real sense over there that if you threw that puzzle up in the air, it would land in the same piece as you started with and not form a cohesive unit there. So that was upsetting.
What was more troubling was the casualties and I spent time with some para-rescuers from the Air Force, so I got some firsthand thoughts and sights of some of the casualties. Certainly June was the deadliest month of the war. July is on track to be even more so. But it’s the wounded that really got me. There have been more wounded in the first six months, or about the same number of wounded in the first six months than the entire year last year.
MS. IFILL: This is U.S. forces we’re talking about.
MS. RADDATZ: Yes, we’re talking about U.S. forces and general casualties. And I went with a general, the division commander – the 101st Airborne Division. And one of the first things we did is we went to a memorial service. It was for a 20-year old soldier and I couldn’t help sitting there thinking a 20-year old soldier who was 11 years old when this war started. So I saw that really firsthand.
MR. JAVERS: Is there anything that you saw in the training? So much of this depends on this ability to stand up this very wobbly Afghan force. Was there any cause for hope that you saw in the training that you watched over there?
MS. RADDATZ: Yes, I actually spent a day with some of the trainers and I have the comparison to Iraq. So I can look back and think they’ve really come a long way in what they’re doing, how they’re doing it. But at the same time, some of the recruits they’re getting – one of the officers said to me they can’t shoot. They can’t drive. They can’t read. They were doing the most rudimentary training you can possibly do. It was driver’s training. A lot of these guys have never been in a vehicle. They can’t read, so they can’t read the license plate numbers if they’re going out to be police officers in these local areas. But I think the training is going well. It’s just that we’re so far behind everybody has their eye off the ball.
MR. MCMANUS: So the other big missing link that everybody in Washington talks about is the effectiveness, legitimacy, corruption of the Afghan government, the relationship with Hamid Karzai – is there any sign of progress there?
MS. RADDATZ: Well, certainly since David Petraeus took over, and that was July 4th because I was there for that assumption of command, I think that’s something he’s really going to push. And let’s talk about David Petraeus and the changes there and what I saw there.
I think he’s really just putting his head down, trying to figure out what to do next. He’s met with Hamid Karzai several times. He wants these local neighborhoods to defend themselves basically, to have a defense force in these local neighborhoods. Hamid Karzai said he didn’t like the idea unless the government can have some control over that. They work out something together, so they’re going to do that.
Now, to do that, that means you’re going to have a lot more special operations forces. You’re going to have a lot more U.S. forces going out into these villages, certainly being more vulnerable, certainly more casualties to reach out to these village elders, to reach out to others, to try and defend themselves against the Taliban. Because one other thing about Afghanistan – it’s so vast – you can’t really have a central government over all these different areas and have them know what’s going on in all these areas. So that’s – part of the plan is to have these different tribes, which is very, very complicated. It’s very different than Iraq, when it was the Sunnis and that was the Sunni awakening. This isn’t West Side Story in Afghanistan. You’ve got a whole lot of tribes.
MR. BALZ: Is there enough of a force there to do the job and in the timetable that the president set out? We’re a year away from the July, 2010 –
MS. RADDATZ: A year away from when we’re going to start leaving, they say.
MR. BALZ: – right, it’s so much –
MS. RADDATZ: I think there’s so much skepticism about that and I think you even heard it in President Obama in the last few weeks. We’re not closing the doors. That’s not turning out the lights. We’re going to be there. He wants to assure the population certainly.
MS. IFILL: But there still is going to be still a cap on the number of American troops.
MS. RADDATZ: That’s exactly right. There’s a cap, a 30,000 on American troops. And what I saw on the ground is an enormous number of contractors. So in some ways, I think you’re having contractors coming in there to do things that American troops probably wouldn’t. It seemed like there was a lot of transport being done by contractors, instead of American troops. So they can hold the number of American troops down, but you’re still trying to get the job done. But there is just zeroes and ones going on all the time to make sure they stay within that –
MS. IFILL: And it sounds like it’s privatizing the war almost.
MS. RADDATZ: – in some ways it has and that started in Iraq, but it seems even more so this time.
MS. IFILL: Okay. Well, thank you. We’re always glad to see you back safe, Martha.
MS. RADDATZ: Thank you. Me too.
MS. IFILL: Okay. Thank you everybody else as well. We’re done here, but the conversation continues online. Check out our “Washington Week” and my new blog and Twitter feed at pbs.org. I don’t know how I feel about that yet, but you go check it out at pbs.org/washingtonweek. Then keep up with daily developments on the PBS “NewsHour.” And we’ll see you here around the table next week on “Washington Week.” Good night.