Week In Politics Examined

The week began with news of the Treasury Department's plan to buy toxic assets, and ended with news of a new strategy for Afghanistan and Pakistan. Regular political commentators E.J. Dionne of the Washington Post and Brookings Institution and David Brooks of The New York Times discuss the week.

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ROBERT SIEGEL, host:

From NPR News this is ALL THINGS CONSIDERED. I'm Robert Siegel. The situation is increasingly perilous. Those words from President Obama today were used not to describe the economy, but rather the situation in Afghanistan and Pakistan. Mr. Obama unveiled his new strategy for the region this morning, a strategy that increases both troop levels and funding. He summed up his goal this way.

President BARACK OBAMA: To disrupt, dismantle and defeat al-Qaida in Pakistan and Afghanistan and to prevent their return to either country in the future. That's the goal that must be achieved. That is a cause that could not be more just, and to the terrorists who oppose us my message is the same: We will defeat you.

SIEGEL: The president's focus on foreign policy today capped a week dominated by talk of the economy and how to fix it. On Monday Treasury Secretary Tim Geithner announced his plan to create a public private partnership that would buy up some of the toxic assets weighing down the banks.

Secretary TIMOTHY GEITHNER (Treasury Department): This is the best way in our view to protect the taxpayer. The alternative approach is (unintelligible) buying all these stuff, taking on all the risk under the balance sheet would be more expensive to the taxpayer. The alternative of letting it just sit there, let these assets just sit on the balance sheets of banks would risk creating a much longer, deeper recession.

SIEGEL: Secretary Geithner talking on CNBC on Monday to walk us through the week. We are joined by our regular political commentators - E.J. Dionne of the Washington Post and the Brookings Institution, and David Brooks of the New York Times, welcome.

Mr. E.J. DIONNE (Political Commentator, Washington Post and Brookings Institution): Thank you.

Mr. DAVID BROOKS (Political Commentator, The New York Times): Thank you.

SIEGEL: Nice to see you guys again. Let's talk first about the Geithner plan -the public-private partnership - looks like Wall Street liked what it heard. Do you guys really think it's going to work, David Brooks?

Mr. BROOKS: Wall Street's incredibly stupid. The, you know, a couple of weeks ago you had the same plan, they hated it. Now the guy's the second coming of Adam Smith. What strikes me about the plan is that it's prudent. The other alternative was to essentially nationalize the banks as he indicated. And when you do that, that's sort of irrevocable. Now we don't really know if that's necessary. So, he took a more modest step which is this public-private partnerships and if we have to nationalize, do something more drastic, maybe we'll be able to do it now. But it strikes me as a very prudent way to approach things.

SIEGEL: E. J., it was criticized by some as too good a deal for the private end of the partnership.

Mr. DIONNE: Right, indeed it was. I - I think that President Obama and Secretary Geithner are playing things down the middle, or at least a very particular middle. On the one hand they are offering a bailout plan for the banks that could well enrich those terrible folks at the hedge funds. And the critics on the left are saying that they're really not challenging the basic structure of the finance industry.

On the other hand Secretary Geithner also spoke in a very tough way this week about new regulations that he and the administration want to impose on the finance industry. This will get them criticism from Wall Street, from some folks on the right. Either this will be not too much of this, not too much of that, just right, or they will find themselves under constant attack from both sides. At the moment, because the stock market looks pretty good, people are feeling a little better. So, they're having a fairly good week out of it.

SIEGEL: Do you think that between the public-private partnerships and the move for greater regulation and the stress tests, that all of this is pulling together some kind of coherent policy or is it a lot of various improvisations that are addressing one problem after another, David.

Mr. BROOKS: I think it's a coherent temperament at least, which is a temperament of activism but yet not completely trusting government A) to set prices to know how much assets are worth, so to try to preserve some sort of market mechanism. So, I think you do a very moderate temperament there and a desire not to go too far, not to nationalize when it may not be necessary.

SIEGEL: E. J. let's move on the budget. Are congressional Democrats likely to cobble together a budget that looks anything like the budget that Barack Obama sent them.

Mr. DIONNE: You know, I think when you were looking at accounts this week, on the same day you had stories saying that the Democrats are really changing Obama's budget a lot. And then you have Peter Orszag, the budget director, saying well actually we're happy with this. We're winning a big victory. What's going on here? I think what's going on here is that the Democrats in Congress are going to make some superficial changes and some of them are kind of sleight of hand changes.

You know, they may cut foreign aid here but then throw in later in a supplemental budget. They've cut the window on Obama's budget. They've gone back to certain gimmicks, you know, instead of looking at a 10 year budget we are going to look at a five year budget.

I think the one area where you are seeing the administration give ground and accepting it is on cap and trade.

SIEGEL: Cap and trade is the system where the government sets a limit on carbon dioxide emissions and then sells permits that give companies the right to pollute.

Mr. DIONNE: Right. It does not look like you're going to have robust action on cap and trade this year. But on balance I think, the administration is not unhappy with what it's getting.

SIEGEL: David, agree? And what role will Republicans play in that budget process?

Mr. BROOKS: Well, I more or less agree. I think cap and trade is largely gone, which is a very important part of the energy budget. It's also an incredible source of about $650 billion in revenue. I think the changing the costs of the deductions to charitable giving, I think that revenue idea is gone. So, you're losing a lot of revenue. And whether this is going to be end up being even more expensive then we thought, I think is the core issue. We're going to have deficits probably in the trillion dollars a year. And that to me should be the main Republican talking point, it is. But they have not been particularly effective since their budget is not - it's semi-joke, let's be frank about it. But the rise of deficits as far as the eye can see should be cause for a great concern.

Mr. DIONNE: Could I just say, I think cap and trade may not be gone for ever. I think that it's not going to happen this year. I think what's going to - the focus this year will be much more on healthcare.

SIEGEL: Let's get back to where I began, which is with Afghanistan policy. David Brooks you're just back from Afghanistan, where you addressed the, well the overarching question: Is the war winnable there?

Mr. BROOKS: Yeah, and I really went there very skeptical, because it's incredibly poor country. It's incredibly ill-educated, you've got high school teachers who are illiterate. And so, can we really turn this into a functioning society. And I must say the people who are there were unified in their optimism and commitment. And they're incredibly impressive sort of people.

SIEGEL: The Afghan people...

Mr. BROOKS: Well, the Afghan but also the Americans who have been there, who've been for Iraq. They feel the Afghan government is making some progress. The military has learned a lot, we're really focusing on law and order for the first time. The military is learning. And so, one comes away with - impressed by the idea that it is a winnable war, especially if you do as Barack Obama has done, which is to double down, which is to really send some troops into the south where the terrorists have had free reign. And to really focus on civil society. It's a very ambitious thing he's announced but it flows organically from what the experts on the ground want to do.

SIEGEL: E. J., do you have confidence in this new strategy that's been unveiled?

Mr. DIONNE: Well, I think the first thing is that he's defined success down, or to be more charitable, he's set more realistic goals. He's really not focused on fully transforming the country. He's talking about containing and defeating al-Qaida. I think that what he's buying into is a very long commitment in Afghanistan just to keep a lid on things. And I think the most troublesome part of this, which would exist with or without the new plan, is that developments of Pakistan are very alarming - worrying that border between Pakistan and Afghanistan is essentially an artificial border, nobody there really recognizes it. And so, I think that he, whatever chance of success they have in Afghanistan will also depend on Pakistan not blowing up on them.

SIEGEL: Notably this was the strategy announced regarding Afghanistan and Pakistan.

Mr. BROOKS: Right. Most of the safe heavens are over in Pakistan. I think that's the weakest part of the Obama plan - the idea that we are going to sort of seduce the Pakistanis into actually enforcing those borders and cracking down the terrorists, that's a pipe dream. The one area do I disagree: this is nation building to the max. We're going to go valley by valley, village by village, trying to change that country.

SIEGEL: David Brooks of the New York Times, E.J. Dionne of the Washington Post, thanks to both of you.

Mr. BROOKS: Thank you.

Mr. DIONNE: Thank you.

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