Week In Politics Examined

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ROBERT SIEGEL, host:

So, who knew what when about waterboarding, and does it matter? A question for our two political observers, columnist David Brooks of The New York Times. Welcome back, David.

Mr. DAVID BROOKS (Columnist, The New York Times): Good to be here.

SIEGEL: And filling in for E.J. Dionne, columnist Harold Meyerson of The Washington Post, is also editor-at-large of the American Prospect. Hi.

Mr. HAROLD MEYERSON (Columnist, The Washington Post; Editor-at-large, American Prospect): Pleasure to be here.

SIEGEL: As we've heard, either Nancy Pelosi was not properly briefed or she's not remembering the CIA briefing properly. David, a controversy of substance?

Mr. BROOKS: I think so. I mean it goes back to the climate of the times when people were much more scared of terrorism than they are now, much more willing to tolerate this sort of behavior. And according to earlier reports of those intelligence briefings, members of Congress were encouraging them to do everything they possibly could. And so I think it's entirely possible they were briefed, though, I don't know.

I think the one clear thing we can draw is we should have some sort of commission looking into this. It should not be run out of the Congress because people there are just too conflicted. So we should have somebody outside the Congress looking into not only what happened in the executive branch, but the legislative.

SIEGEL: You like Peter Hoekstra's idea that the answers, the first answer should come from members of Congress, but maybe not the questions, is what you're saying.

Mr. BROOKS: Well, I'm not sure the first, but they should definitely be asked.

SIEGEL: Harold, what do you think?

Mr. MEYERSON: Well, at some level it's a he said or they said, she said controversy and there's no empirically neutral way to come at a solution for that one aspect. But in the broader sense this is laying the ground work either for going ahead with some kind of commission to find out what exactly happened and who was responsible for the torture that was employed under the Bush administration, or to downplay and avoid it, as I'm sure some folks, former Vice President Cheney high on the list, would prefer.

So, I think this is skirmishing around that eventuality. I don't think it makes any sense to be calling members of Congress to testify at that hearing. At least until, you know, ancillary hearing six because, really, the key question here is who in the Bush administration authorized what.

SIEGEL: Well, let's move on to the economy. Washington has checked at the banks, the biggest 19 financial institutions, all of whom passed the stress test that was administered. The April job losses are less than those of recent months, so they're pretty big. And I'd like to hear what both of you make of the Obama administration's approach to this recession into the financial crisis and whether you think it's working at all. We'll start, David, with you.

Mr. BROOKS: They've saved everything. We're floating free.

(Soundbite of laughter)

Mr. BROOKS: No, I actually think Tim Geithner comes out of this looking good. A couple of months ago, when things were much dicier than they are now, he took a couple bets. One was the financial system was not fundamentally insolvent. Second, there was private capital that would go in there if there was some stability. And finally, you should try the moderate course on banking regulation before you went to full nationalization. Those were all dicey at the time. They all look like better bets today.

And we're not out of the woods. My colleague, Paul Krugman, thinks these stress tests were sort of - masked the real problem. But I must say if you look at most economists and the markets, that the idea that the banking system was not fundamentally insolvent is looking like a better bet today, and Geithner's approach looking like a better approach.

SIEGEL: Harold, do you agree?

Mr. MEYERSON: Not entirely, no, I don't. The question of what to do with these toxic assets that are still all on the books of these banks remains a cloud hanging over the entire banking system. Now, the administration is another part of what Treasury and Tim Geithner have come up with - has essentially come up with a plan that says while private investors can purchase these for about seven cents on the dollar and through a variety of strategies, the federal government will come up with the remaining 93 cents. That strikes me as - there are two problems there.

First of all, the degree which the public is put on the hook for this is huge. And secondly, it still doesn't resolve the dilemma of the banks wanting a higher price than may, in fact, be bid for these assets. And until these assets are disposed of, we're far from being out of the woods.

SIEGEL: Yeah, it's still the same question when we talk about those assets, is they're still trying to figure out how to arrive at evaluation for these - the T in TARP was troubled, as I think most people think it stood for toxic instead.

(Soundbite of laughter)

SIEGEL: Harold, you've contrasted the Obama administration's approach to the auto industry with its approach to the banks.

Mr. MEYERSON: Well, in some ways you have similar industries. There are great differences, but these are both industries that the administration has judged are too big to fail. But their approach to them has been very different. In auto they've essentially preferred a structured bankruptcy. And if they can do this without actually having to go through bankruptcy of General Motors…

SIEGEL: Fire the CEO.

Mr. MEYERSON: Yeah, fire - they fire the CEO. They do not regard the bond holders as sacrosanct. It's the diametric opposite of what they've done with the banks where they've largely left management in place. They haven't done anything to increase government equity in the banks, except for they've absolutely had to in the case of Citigroup. So it's the quite the reverse of what they've done in auto.

SIEGEL: David?

Mr. BROOKS: I agree it's the reverse, but I like the financial system better. I mean, my problem with the whole thing on - with auto - is essentially we have two companies, Chrysler and GM, who have been for 30 years in terrible shape. You look at the Consumer Reports evaluation of their fleets, they're basically near the bottom of all the world's car companies. And so what's happened is they…

SIEGEL: The (unintelligible) at the bottom is much closer to the top - just give them that in their defense. Go ahead, yeah.

Mr. BROOKS: So we need fundamental change agents. And so, basically we've got new shareholders, the UAW and the federal government. Are these really the change agents that are going to turn around the car companies? So I agree there's a discrepancy. I think the approach of - the more market-friendly approach they've tried on Wall Street is the sort of approach, generally, they should've tried in Detroit.

Mr. MEYERSON: The UAW, actually, I think, only really wants to hold these shares until they can find private buyers so they can fund their health care systems better than they are. The UAW is taking a huge risk, but they have no alternative. And that is, they're accepting the equity in the company because the company cannot cover its obligations to its retirees. So they're getting the stock in the company as sort of option two, not option one. And I'm sure if there's any way they can dispose of it to fund their health care funds better, they would be happy to do it.

SIEGEL: One other topic, here's the headline on the lead story in today's Washington Post. This is about President Obama's proposed budget cuts. The headline is "Democrats Assail Hit List, Lawmakers Vow to Protect Pet Programs." I guess this is a short answer question. Lawmakers versus the president, the Congress usually wins in these disputes, no?

Mr. MEYERSON: This is sort of a so what else is new story, not to denigrate my own paper. They needed to run it. But no, I mean lawmakers have pet programs, some of them - some of those pet programs are even meritorious. I saw Dianne Feinstein doesn't want to cut the amount of funds that the federal government wants to give to states for incarcerating illegal immigrants, which is a federal problem. So, but I think the lawmakers will probably come out on top.

SIEGEL: But David, do you think that Barack Obama has to become a more normal president in his dealings with his own party over this budget?

Mr. BROOKS: A more brutal president. Normal is to let Congress have its way and we run up the deficit. But the problem is we now have deficits about 12 percent of GDP. And the Obama administration, to its credit, has taken some gestures toward fiscal responsibility. And Congress is basically shooting them down one by one. On these things, about 17 billion in cuts, that's small change.

SIEGEL: Won't the Republicans come to (unintelligible) on this since this is what they want to do?

Mr. BROOKS: We'll wait for the courage bell to strike over there.

(Soundbite of laughter)

Mr. BROOKS: You know, there are bigger things, you know, the cap-and-trade bill is supposed to yield 640 billion. That's basically being gutted. There was a - Obama had tax increases on charitable deductions for affluent people, that's been gutted. They've proposed some agricultural cuts - that's being gutted. So the spending parts are all sailing through, the revenue and paying for it parts - not so well.

SIEGEL: David Brooks and Harold Meyerson, thanks to both of you.

Mr. MEYERSON: Thank you.

Mr. BROOKS: Thank you.

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