Week In Politics: G-20, Deficit Reduction

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Melissa Block speaks with our regular political commentators, E.J. Dionne of The Washington Post and Brookings Institution and David Brooks of The New York Times, about the G-20 summit and a preliminary proposal from President Obama's deficit commission to cut the nation's debt.


So that's the view from Seoul coming out of the G-20: A weakened United States on the defensive; a rising China with new powers. And that's where we begin our regular Friday conversation with columnists E.J. Dionne of The Washington Post and David Brooks of The New York Times. Welcome back.

Mr. E.J. DIONNE (Columnist, The Washington Post): Thank you.

Mr. DAVID BROOKS (Columnist, The New York Times): Good to see you.

BLOCK: And, David, let's get your take first on the G-20 summit. Did we just see a global smackdown of the United States?

Mr. BROOKS: Well, sort of. There's no multilateralist in a recession. When you're scrambling to be an export country, you do what you need to do. And the U.S. has done what Ben Bernanke and Barack Obama thinks it needs to do. The Chinese are doing what they need to do. Everybody in the long term knows that over the long term we need to have a sort of balanced economy. Over the short term everybody wants to be an exporter. And they're willing to do what we need to do.

I'm not sure we should get too hyped up about our decline, though. The U.S. has never been able to dictate G-7s or G-8s or G-20s. The U.S. is still by far the largest economy, a significant share of world GDP. So I'm not sure this is a sign of massive decline, it's a sign that in the short term everybody does what they need to do.

BLOCK: E.J., were these fissures that we saw in Seoul troubling, do you think, in the long term?

Mr. DIONNE: Well, you know, I hate to say this, but I think I agreed with every word David just said.

(Soundbite of laughter)

Mr. DIONNE: I think, yes, it's obvious there are new economic powers in the world: China, also, India. And we are very upset with China, I think, legitimately over their currency manipulation. And we would've liked a little more out of this meeting. But I think that what's really different is this G-20 versus the G-20 in 2009. If you go back to that moment when the world economy was really on the edge of collapsing, all the rich countries got together and said, we've got to stimulate.

Now there's real disagreement and also competing interests over whether you should stimulate or whether you should cut back. And that's why this quantitative easing, QE2 - you like it, it's like a great old ship - was - it's unpopular with them and yet I think Ben Bernanke was absolutely right. It's the right step for us to take now. So, we're just not on the same page at the moment.

BLOCK: Let's move on and talk about the draft report that was released on Wednesday by the chairman of the presidential commission, looking at ways to slash the deficit, sweeping proposals to cut spending, including defense and to overhaul the tax code. David, how do you characterize what you saw coming out of that commission? Dead on arrival? Just a starting point for where we go from here?

Mr. BROOKS: A good package, but dead on arrival. I mean I thought as a package of ideas it's a very good one and a serious one. And some of it is painful: getting rid of the mortgage interest deductions, streamlining taxes, raising the retirement age. None of that stuff is easy, but I think it's all necessary if we're going to avoid a total fiscal catastrophe. So I thought they came together with a reasonable series of options.

I think what you've seen on the debate since is smoking out the people who were serious about this and willing to compromise versus those on the right and left who are not serious about this, who want a purist position and they are just saying hell no.

BLOCK: Well, saying hell no. Anti-tax groups hate it, E.J. The head of the AFL-CIO said the message to working Americans is: drop dead.

Mr. DIONNE: Right. Well, you know, I hated this plan. I think it's a terrible plan and it should be taken seriously. Now, how do I square that circle? I think it's a terrible plan because it's a deeply conservative plan that basically redistributes income upward at a moment when that's the last thing we need to do. They're all - they get rid of all kinds of middle class benefits -if you got rid of the entire mortgage deduction. They want cuts in the VA, co-pays.

There were all kinds of - getting rid of the earned income tax credit, one of the great programs we have for the poor, in order to cut the maximum income tax rate on the wealthy to 23 percent from 36. This commission wasn't supposed to do that. It was supposed to balance the budget.

On the other hand, conservatives ought to embrace this plan. If you - it is a serious, very, very, very conservative attempt to balance the budget. And there are other cuts in here that should be debated and are legitimate.

Mr. BROOKS: I wish it were what E.J. described. I mean they raised the capital gains tax, they streamlined the Medicare spending by really taking it out of the affluent and preserving it for the lower middle class. It may tilt more right than E.J. wants, but I don't think it's a conservative plan. I will say -and it's important to say - politically it's not even close to being passed.

You could take one of the ideas in the plan, say, taxing employer-based health benefits, getting rid of the mortgage interest deduction. Each of these things are political hand grenades. They dump about 40 of them in here. And so as a country, we're just not ready for this. So we need to do it.

Mr. DIONNE: Also, raising the Medicare eligibility age, if it doesn't hit a certain - if they don't hold cost down, good luck getting health insurance at age 66.

BLOCK: Well, David, you say we're not ready for this. Let me ask you about what you're writing about in today's New York Times. You say you see stirrings of a national movement unified around the love of country and a new definition of patriotism arising from shared sacrifice. You say you're an optimist, some people might say you're crazy.

Mr. BROOKS: I'm - I could be - but after 9/11, people said, we want shared sacrifice. Well, country, here's your chance. We're all going to have to take some hits. But if we're going to avoid a financial catastrophe, there has to be a movement to force politicians to do the right thing and unless there's that movement, we're going to face a real disaster.

BLOCK: E.J., that notion of sacrifice, do you see that as a real possibility, a willingness to assume gain for a future intangible greater good?

Mr. DIONNE: If people sense it's fair. And I think that's part of the problem with parts of this plan is that - and there is a great deal of mistrust in American political life now and people's assumption is whatever they cut, it's probably going to come out of me. And so it takes both real political leadership, but also something that lots of different people can look at and say, yes, this does fairly apportion the sacrifice. And I don't think people are seeing that yet.

BLOCK: And, David, briefly, you pose this question in your column, how can you love your country if you hate the other half of it?

Mr. BROOKS: Yeah. And as E.J. said, if we're going to have - we have to have a social movement that deals fairly. Everyone's got to take a cut. And I don't think it's going to start in Washington. It's going to have to be like the Tea Party, the Obama movement, people rallying, people organizing institutions, and then the politicians will feel safe enough to do this.

BLOCK: Thanks to you both.

Mr. DIONNE: Thank you.

Mr. BROOKS: Thank you.

BLOCK: David Brooks of The New York Times and E.J. Dionne of The Washington Post and Brookings Institution.

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