Week In Politics: Unemployment Numbers; Debt Ceiling

Michele Norris reviews the week in politics with our regular commentators E.J. Dionne of The Washington Post and Brookings Institution, and David Brooks of The New York Times.

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NORRIS: And joining us now, as they do most Fridays, are our regular political commentators, E.J. Dionne of the Washington Post and Brookings Institution, and David Brooks of the New York Times. Happy Friday. Hello, both of you.

Mr. DAVID BROOKS (New York Times): Hello.

Mr. E.J. DIONNE (Washington Post): And happy Friday to you.

NORRIS: Now, as we just heard, unemployment numbers are up for the second month in a row and the White House didn't want anyone to read too much into last's month dip, but here we are again. Is this a trend? And I'm wondering how the White House begins to answer that question posed by Congressman Hensarling of Texas. Where are the jobs?

Mr. BROOKS: Well, the first thing that could be said is they've gotten it wrong and a lot of people have gotten it wrong. They didn't expect this. Remember when the stimulus passed, they thought unemployment rate would be down around 7, when it's up at 9.2 now. Then we have the summer of recovery, so we clearly don't understand the way the economy's going. And I think that's because their models project that a certain amount of federal spending would create a lot of jobs and the QE2, the monetary policy, would create a lot of jobs. And it's just not doing it.

Now, part of the problem is not their fault. When you have a financial crisis, you have a long, long, slow, very frustrating recovery. And we're sort of in the middle of a normal financial crisis recovery which is very slow and miserable. But the thing that can be done is, I think, over decades we've added weight after weight to the economy and made it less flexible, a little more rigid, made it hard for people to hire and fire with various regulations and taxes and things like that. And it's time for a generation-long effort to really reduce that stuff.

NORRIS: E.J., not their fault. Now, Republicans aren't buying that argument.

Mr. DIONNE: Well, first of all, I think the only thing that David said that I agree with is that the financial crisis has really - financial crises of this sort tend to create a long-term problem. The problem here isn't that the stimulus didn't work. It's that it wasn't big enough. The problem isn't that the fed tried to boost the economy. In fact, at their last meeting, they said we don't have to boost it anymore. Well, guess what? They were wrong. They need to boost it again because David is precisely right on the nature of how deep this is. They need to do a whole lot more than they were doing.

But politically, it's a huge problem for the president. Even if it's the Congress that's going to hold up action, this is starting to look like a boulder in the road, not just a bump. Washington is talking about deficits and the real economy is telling us that joblessness is the problem.

NORRIS: We're going to get to deficits in just a minute, though. But can the White House pull the levers to actually create jobs?

Mr. DIONNE: Well, they are talking about doing some things, but they don't have a lot of room to do things. They can try to pass another payroll tax cut, although it hasn't done much this year. They maybe can extend it to business. They're talking about their infrastructure bank, an idea which is a good idea, although it would take time to get moving. But again, given the make-up of this Congress, it's hard to see anything substantial getting through between now and the election.

NORRIS: And now...

Mr. BROOKS: If there's one thing we should learn from this - the government is really bad at short-term economic manipulation. It can lay the foundation for long-term growth, but manipulating jobs and the economy quarter by quarter, it's just beyond its power.

Mr. DIONNE: And just one thing on that, though. You know, David Leonhardt, a great blogger, economics writer at The Times, made the point that we've lost a half a million jobs in state and local government over the last two years and we're - if we added them at the same pace we were, we would've added a half a million jobs. That's a million jobs lost. Government can clearly affect government employment and the withdrawal of the stimulus from state local governments has been caused...

NORRIS: A lot of those were government jobs. You know, we're going to move to this debate over the debt ceiling talks and the sort of the sword of Damocles that's hanging over everyone's head. E.J., in your column yesterday, you say that the president's goal, at least politically, is to get through this negotiation and with a deal that keeps the government running, but also keeps his political center intact. And he's got quite a roadblock there in his own party, in the Senate Democrats.

Mr. DIONNE: Right. And among House liberals. It does seem that they are now really serious about this big deal, which surprises me. They have a logic for it. They think if the people in Congress are going to vote for a smaller deal, $2.5 trillion, it's just as crummy a vote as a vote for a big deal so why not go for a big deal?

John Boehner seems generally interested. Washington never ceases to surprise. Who expected an Obama/Boehner mind meld? I think Boehner wants to get out from under the Ryan budget, and maybe a big, big plan will get some votes for him. And a trillion dollars, if Obama can get it out of a Republican Congress, would be a lot of revenue.

I'm still skeptical. There's still a lot of liberal Democratic mistrust. The just say no wing of the Republican caucus is very big. I still think you end up back with some smaller deal. Although, who knows how they pass it? But now, at least, Obama can say to elite opinion, well, I tried to get the big deal. And he can say politically to everybody else, look, you know, the Republicans interested in cutting the deficit or not? So I think that's where it ends up.

NORRIS: Whenever you have a sort of high-level negotiation and this kind of brinkmanship, there's a little thing called leverage that often determines where you land. In the end, David, who has the leverage in this case?

Mr. BROOKS: It's both parties think the other the other one does right now. And I've spoken to both today. The Republicans think: Hey, if we don't reach a deal, the Democrats will just close the national parks, they'll close Social Security and they'll blame it on us. And so they're a little nervous. The Democrats, on the other hand, think: Hey, if this thing goes down and we have a big crisis, they're going to blame it the president, and so we're out of luck.

And so both of them are feeling very vulnerable, and I think that's one of the reasons you see so much movement these days. I think what's happening in Washington is kind of great. You've got Republicans and Democrats, serious negotiators doing serious things. Liberals on the left, on the extreme left and extreme right are very unhappy. But this is the first time in years we've begun to see real talking on big stuff. I think it's kind of great.

NORRIS: You know, I talked to a senator today and he described this sort of disconnect that when he goes home, he's here are some people who think, oh, they're going to work it out, they're not going to shut the government down. They'll get a deal by August 2nd. And he says the people who are actually in the room and involved in the negotiations aren't so sure about that.

Mr. DIONNE: The best and scariest metaphor I've heard in the last week is the Guns of August, and the whole idea that we kind of - the world blundered into World War I because a lot of people miscalculated. I think a lot of people are fearful that that could happen again.

But I think - I agree with David's general analysis of leverage. But I think the biggest problem is President Obama cannot preside over the catastrophe that would happen if we don't raise the debt ceiling. And that limits his options in a way that doesn't limit the Republican options.

But Boehner is thinking like an incumbent, not just like an opposition person. He does seem to take seriously what this might do to the Republicans in the long-term.

NORRIS: I'm curious about what both of you think about Boehner's negotiating tactics and his role in all this. I guess he and Senator McConnell are not necessarily in the same place, negotiating from the same place. And Obama seems - President Obama seems to see a possible dance partner with Boehner with all these meetings and the two of them playing golf.

What do you think about his role in this and his negotiating skills?

Mr. BROOKS: I think he's been masterful for a year. And I think he's exceeded expectations on all fronts. He's doing a very delicate dance where he's being open to a lot of stuff, a lot of revenues, a lot of changes that Republicans don't like. At the same time, he's very mindful of the fact that he's got to pass it through his body.

And so, I think the sense, I know in the White House, is that they can get maybe get 60 votes from the Democratic House side to pass this thing. But they would still need a lot of Republican votes. And so they're very mindful, can they get the group to actually support this thing?

If it were up to Obama and Boehner, we'd have a deal.

NORRIS: So you - praise for Boehner but you say the Republican Party, in your column this week, may not even be a normal party anymore.

Mr. BROOKS: Right. And I think Boehner is a normal politician. Whether the Republicans in the Michele Bachmann base is ready to go along with him, that is a very open question.

NORRIS: E.J.

Mr. DIONNE: See, I think Boehner's interests are very different from Mitch McConnell's interest. Boehner runs a majority. McConnell sees a majority around the corner. The Republicans are well set up to take back the Senate, and so he doesn't really want to do much of anything to rock the boat.

Boehner's problem is he is stuck between a Democratic rock and a Tea Party hard place. In order to get Democratic votes, you've got to have some revenue in whatever deal they have. But if you put too much revenue in, you start losing Republican votes. And Boehner has the possibility of a rebellion against his leadership. So he's in a very difficult position.

NORRIS: E.J. Dionne of The Washington Post and the Brookings Institution, David Brooks of The New York Times, thanks to both of you. Have a great weekend.

Mr. DIONNE: And you, too.

Mr. BROOKS: You too.

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