Week In Politics: GDP, European Debt Crisis
MELISSA BLOCK, HOST:
And we turn now to our Friday political commentators, E.J. Dionne of The Washington Post and the Brookings Institution and David Brooks of the New York Times. Welcome back to you both.
DAVID BROOKS: Good to be here.
E.J. DIONNE: Good to be with you.
BLOCK: Happy birthday week to you, E.J.
DIONNE: Thank you.
BLOCK: Let's start with the GDP number that Jim Zarroli was just talking about. And we heard the Obama administration's take on that, that it's showing growth, more to do. Same time, though, strong corporate earnings, a mixed picture, a bleak picture? David Brooks, what do you see?
BROOKS: I'm like a broken record on this, but this time is no different. We have a financial crisis and it takes seven or ten years to get over it. You've got a sick housing market. You've got a lot of consumer debt. You've got companies really trying to get more efficient. You've got bad psychology. The history is, it just takes a long time to get over and there's no magic lever.
The spending, you can do some, monetary policy can do some, maybe some tax reform can do some, but you just can't get out of this. History shows that. And so to the extent there's a policy solution, we should be thinking about long term fundamental things we can do, really simplification of the tax code, maybe getting some long term fiscal balance. But the idea that we can do something for the next quarter, that's an illusion.
BLOCK: Well, E.J., the Mitt Romney campaign used these new GDP numbers as an example of what they call the president's failed record and offered this idea, there should be a reward for anyone who can find an agenda for Obama's second term. E.J., want to take the bait, get that reward? What's the agenda for a second term?
DIONNE: Well, first of all, I want to just reply briefly to David because I think what you're seeing in this sluggish growth is the fact that we should have done more to boost the economy earlier on. The stimulus should have been bigger. We were in a deeper hole, I agree with David on that, than we thought we were. And that it's a shame that we have let local governments lay off so many people, which has added to the problem.
I think there is a shortage of progressive ideas for the next term. I think there are a lot of people around town kind of looking at them. He's got a sort of semi-program where he is talking about a lot more investment in education, education reform, using the community colleges and job training to try to move people to better jobs. I think it would serve the president well to be more adventurous, but I also think it would serve Mitt Romney well.
It's notable that he came under a lot of attack this week, or criticism is a better word, from his own people, including The Wall Street Journal editorial page, for the fact that he has been very, very negative on President Obama without offering anything other than vague talk of lower taxes and smaller government.
BLOCK: I want to stay with you, E.J. You wrote this week about what you call Mitt Romney's magical capitalism. That was your term. You say, Romney has a utopian view of what an unfettered, lightly-taxed market economy can achieve. You want to expand on that?
DIONNE: Yes. I thought his victory speech on Tuesday night when, if there was any doubt that he had sewn up the nomination, it was put away by his primary victories. I thought that victory speech was very revealing because it had two halves. The first half was the core of his campaign, which is Obama didn't fix the economy fast enough. He asked rhetorical questions like, is it easier to sell your home? Are you making more at your job?
That's the campaign that if economic growth stalls, might actually work for him. But the rest of the speech was, as I say, about magical capitalism or capitalist utopianism. He basically talked about how all we need is to make the successful more successful and that would solve everyone else's problems. And I think it's that radicalism that the Obama campaign is going to have to go after.
It's that radicalism that made him endorse the Ryan budget, which would eviscerate government over the long haul.
BLOCK: Well, David, E.J. is seeing a magic kingdom in Mitt Romney's vision. What do you see?
BROOKS: Yeah. First, as far as the radicalism, look, look at the Obama numbers, just domestic discretionary spending, which is all the stuff on health education, welfare, according to President Obama's own budget, would be 2.2 percent of GDP in 2022. According to the Obama numbers, the Ryan budget would be 1.8. So that's a difference, 1.8 versus 2.2.
Is one radical? It's a difference. I don't think it's a radical...
DIONNE: It's getting rid of almost all of domestic discretionary spending.
BROOKS: Well, I don't think there's (unintelligible)
DIONNE: Because (unintelligible) it's a 50 percent difference.
BROOKS: Well, we got to work on E.J.'s math (unintelligible)
BLOCK: Take it outside, guys. Take it out.
BROOKS: What I would say about Mitt Romney's policies is that it's like searching through the Lucky Charms box for the prize. He has little kernels of policies, which he has announced. He rarely talks about them because they would require a little political courage. One of them is a bigger tax reform than anything the president has endorsed. The second is a Medicare reform, which I think is a smart idea because we don't know how to control health care costs and Romney would try to do a bunch of different things at once.
And so those are actually, I think, pretty responsible policies. He does not talk about them. Instead, he just does the blather about freedom and the rhetoric is vacuous. But in there, there's some serious policy. We got to try to drag it out of both candidates over the next couple of months.
BLOCK: I want to turn our attention to Europe. This week, we saw more signs of the effect of the bitter pill of austerity there. The Dutch government collapsed, a star performer in the eurozone, but a dispute over budget cuts ended up bringing it down. The next president of France could well be the Socialist Francois Hollande, who says that Europe can't just impose austerity.
Britain says it has now entered a double-dip recession. E.J., where is this heading?
DIONNE: I think it shows that the austerians - as Paul Krugman, David's colleague, said today - have lost the argument. There have been people in Europe saying, well, all we have to do is cut our budgets, this will increase confidence in the marketplace. Austerity has failed. Austerian sounds like that old group Question Mark and the Mysterians. But austerity has failed.
And I think it's actually something President Obama can use because he refused to go down that path. But I hope Europe turns around because the world can't afford Europe to go into a prolonged slump.
BLOCK: David, what do you make of the anti-austerity surge that we seem to be seeing here?
BROOKS: Yeah, I think it's sort of true. There are no austerians in the U.S. You can imagine there are, but you look at the Wall Street Journal editorial page, you look at the Weekly Standard, you look at the conservatives I know, nobody really thinks the German austerity emphasis is really the right one.
My point would be there's no European economy. Maybe the Greeks should be practicing austerity. There's no reason to think the Spanish should be, they're in a housing bust and they've got reasonably low debt levels. The problem is they tried to stick a single monetary union without any fiscal union, without any political and civic union, and therefore they're stuck with one-size-fits-all policies.
And it's going to be hard for them to get out of it. And it's certainly a mistake to impose German-style austerity on incredible diversity of economies.
BLOCK: Okay, we'll have to end it there. Thanks to you both.
DIONNE: Thank you.
BROOKS: Thank you.
BLOCK: David Brooks of The New York Times and E.J. Dionne of The Washington Post.
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