MS. DIANE REHMThanks for joining us. I'm Diane Rehm. U.S. stocks dipped below 10,000 amid concerns the economic recovery is lagging. Embattled Alaskan Sen. Lisa Murkowski considers running as a Libertarian, and New Orleans, five years after Hurricane Katrina. Joining me for the domestic hour of the Friday News roundup, Naftali Bendavid of The Wall Street Journal, The New York Times' Sheryl Gay Stolberg and Michael Hirsh of Newsweek. Do join us, 800-433-8850. Send us your email to drshow@wamu.org. Join us on Facebook or send us a tweet. Good morning to all of you.

MR. NAFTALI BENDAVIDGood morning.

MS. SHERYL GAY STOLBERGGood morning.

REHMNaftali, Fed Chairman Bernanke is speaking today at a Fed symposium in Jackson Hole, Wyo. What do we expect him to say about this economy?

BENDAVIDWell, this is actually more of a long-awaited and eagerly anticipated speech than a lot of his, simply because a lot of economists, both inside and outside the Fed, have been all over the place about how strong action the Fed should take. There's a lot of disagreement about whether this is more or less a conventional recession that's experiencing a steady, albeit a very slow recovery, or whether we're really in a period of much longer and much deeper stagnation. And so the question then is how firm action should the Fed take? It has a limited number of weapons still in its arsenal actually.

REHMSuch as?

BENDAVIDWell, they can do things like put more money in circulation. They can do things like play around with the portfolio securities that they have. For example, buy more of them back. You know, they've already slashed interest rates to a pretty low rate. So that weapon is, perhaps, somewhat already been expended. And I think what people are looking for from Mr. Bernanke is a little bit more of a firm message about what kinds of things the Fed may do because the members of the Fed have kind of all over the place in recent days.

REHMMichael Hirsh.

MR. MICHAEL HIRSHAnd that has been a problem for the markets and the economy in general, is the lack of a unified voice both, you know, at the Fed and, frankly, in the perception of what the Obama administration has been doing. Beyond that, globally, you have a problem of dissension between where the Fed seems to go in with Bernanke, which is, for example, to continue his current policies to set a floor for many of these stretched assets he's going to buy up versus where the European Central Bank has been.

MR. MICHAEL HIRSHJean-Claude Trichet, the head of the ECB, you know, has indicated that he is ready to sort of consider things returning more to a normal type situation as we've come out of that European currency crisis, which means, in effect, more of a focus on concern is for inflation. And, of course, that is the source of dissension inside the Fed, is the sense that Bernanke has just put aside the whole issue of inflation. You know, what people have talked about is more of a danger of deflation and inflation. You've had dissenters like his host at the Jackson Hole meeting in Kansas City, the Fed chief, Thomas Hoenig, who have said -- who regularly dissented from where Bernanke is going. So this has all been a disconcerting message of disunity to the markets.

REHMAnd further on Tuesday, House Minority Leader John Boehner called on the President to fire his economic team. What was the reaction, Sheryl?

STOLBERGWell, the White House took it seriously and jumped right back in. Vice President Biden came out. He had a previously scheduled event. The President is, as many people know, on Martha's Vineyard. But Mr. Biden came out, and he was hard-hitting. He said, for eight years, before we arrived, they took $237 billion surplus that they inherited from the Clinton administration, and they turned it into a big $1.3 trillion deficit.

STOLBERGNow, let's not forget that Mr. Boehner is kind of the speaker-in-waiting, right? So he -- should the House Republicans gain the 39 seats that they need to win back control of the House, Mr. Boehner will be speaker. And so this speech was as much a hit on the Obama administration as it was an attempt to position himself as a credible leader for his party. I asked a colleague, "Was this a publicity stunt or was it serious?" And he said, "Well, it was a serious publicity stunt."

REHMWhat do you think, Naftali?

BENDAVIDWell, it's true. There wasn't anything terribly new in terms of policy prescriptions in that speech, although it was built as a major economic address. There was talk of tax cuts. There was talk of spending freezes. But, you know, this pithy idea of fire the economic team -- I mean, it's a talking point. I would expect to see it repeated by many Republican candidates in the coming weeks. And as Sheryl said, it was a, in a sense, attempt to position him as a potential speaker. I also think it was an attempt to sort of gain control and put a stamp on the mid-terms, which to many degrees have been sort of dominated by Tea Party activists, not by actual Republican leaders. And I think this is a way of sending a message that, I'm in charge. I'm sending a message here. You know, I'm the guy who's leading the party into these mid-terms.

REHMSo you have some economic indicators this week. The housing report was weak, but there was some positive response in the jobs report. So the market goes down. Today, the market is sort of hovering. What do all these signs tell us, Michael?

HIRSHWell, there were -- there was a positive jobs report in terms of new jobless claims going down, but -- and other numbers are a little bit mixed. Another positive indicator was that the number of household -- U.S. households that either missed mortgage payments or were in foreclosure also dipped, but other signs, you know, are not as positive now. And more broadly, you know, what you have is no movement in the unemployment rate. You have new numbers that just came out from the Commerce Department today, showing that the growth in the second quarter was lowered, the estimate of it, rather, was lowered to 1.6 percent.

REHMAll right.

HIRSHAnd that's a very grim scenario.

REHMLet's hear what Fed Chair Bernanke had to say from Jackson, Wyo. The AP is reporting that the Fed chairman says, "The Fed will consider making another large scale purchase of securities if the slowing economy were to deteriorate significantly and signs of deflation were to flare." His remarks came 90 minutes after the government said the economy slowed sharply in the second quarter to a 1.6 percent pace. Bernanke describes the economic outlook as inherently uncertain, says the economy remains vulnerable to unexpected developments. Sheryl.

STOLBERGWell, one thing we know about Chairman Bernanke is that he is a scholar of the Great Depression. And his studies have shown that he feels the Fed decreased (word?) supply too rapidly, right, during the Great Depression, adding to the problem. So he doesn't want to get himself in the same position as the Fed was back then. And I think he's leaving himself with a wiggle room here. He's not saying things are awful. He's saying things are inherently uncertain. That, to me, sounds like he's leaving himself a lot of leeway to act. He's not really committing himself one way or the other.

REHMNaftali.

BENDAVIDWell, what the main thing that I think he wanted to do is send a sign that he's not going to let things get too bad. And I think, that with that language, that's what he was trying to do. You know, there was some concern about this disunity. His leadership style is famously tolerant of dissent, which is something that some of his predecessors, perhaps, were more authoritarian. And in many ways, he's been praised for that, for letting 1,000 flowers bloom. But the problem is that the markets sometimes need a little more stability...

REHMYeah.

BENDAVID...and certainty and predictability. And I think this speech today was an attempt to restore some of that.

REHMI think there is an awful lot of gloom out there that's being promulgated by an awful lot of critics of this administration.

HIRSHYeah, no. Unquestionably. But the numbers tend to bear it out. I mean, you have to remember earlier in the year, there were indications that we were in a real recovery, one without any question. The unemployment rate wasn't moving very much, but all the other numbers were good. And then really, it turned out to be something of an aberration. Some of those early reports of declining jobless numbers, for example, particularly in April, and what you've had now, and one reason you have people like John Boehner out there smelling blood in the water and calling for the resignation of Larry Summers and Tim Geithner, is because this is a very serious weak point, not only for the Democrats but for Obama.

STOLBERGAnd I think among the most troubling news is the news in housing. Americans have long felt that their homes could be their nest eggs, that this was a safe place...

REHMThat's changing.

STOLBERG...to put their money. That is changing. And we saw this week, housing sales in July plunged to their lowest level in more than a decade. So that adds to the uncertainty, the psychic toll that this slow recovery is taking, you know, coupled with joblessness and the trade numbers, et cetera.

REHMWhich takes an awful lot of people to the thinking that, perhaps, for now, renting is better than trying to buy.

BENDAVIDYeah, I mean, a lot of people are in these really dicey situations. I mean, some people own homes they're not living in. The rent that they're getting doesn't cover the mortgage.

REHMRight.

BENDAVIDThey're trying to figure out, do they sell now? Do they hang on to their homes? There's a lot of uncertainty, and I think that contributes a great deal to the political anxiety that we're seeing, you know. But to go to the point that you made, Diane, I mean, there is a little bit of this phenomenon in which the Democrats accuse the Republicans of rooting against America, you know, rooting against the economy. And it's reminiscent of what the Republicans used to say about the Democrats during the Iraq War, that they were rooting for the Iraq War to go badly because it would benefit them politically. And that's one of the situations that we often get into when you're in the opposition.

STOLBERGThere's also an undertow here. If you listen to Mr. Boehner's remarks, he talked about the president needing real people around him, not just these fancy academics, like Larry Summers, who was formerly a president of Harvard, Christy Romer, who is his economic adviser, who's returning to her job at the University of California at Berkeley. And so I sense sort of this undercurrent of trying to send a message that the Obama administration is too much in the ivory tower.

HIRSHThe real danger here that the Republicans accurately sense is the combination of numbers of very low growth and continued high unemployment. Traditionally, incumbent parties can withstand very high unemployment numbers, such as 9.5 percent, which has remained there for a while. But you've got to have -- you've got to get the growth numbers up. And so if these numbers continue to be below 2 percent -- I mean, 2.5 percent is actually the rate in which you need to sort of really start to add jobs. And if that continues, then Obama and the Democrats are going to have trouble, not just in 2010, but in 2012 as well.

REHMMichael Hirsh. He is senior editor at Newsweek, author of "Capital Offense: How Washington's Wise Men Turned America's Future Over to Wall Street." We'll take a short break. When we come back, we'll talk about this week's primaries, the winners, the losers and those still in question.

REHMWelcome back to our Friday News Roundup, the domestic hour. Sheryl Gay Stolberg is White House correspondent for The New York Times. Naftali Bendavid is national correspondent with The Wall Street Journal. He's the author of "The Thumpin': How Rahm Emanuel and the Democrats Learned to be Ruthless and Ended the Republican Revolution." And Michael Hirsh is senior editor at Newsweek. We'll take your calls in just a few moments. Join us on 1-800-433-8850. Send your email to drshow@wamu.org. And join us on Facebook or send us a tweet. Sheryl, what are the primaries that took place this week? Tell us about what could happen in November.

STOLBERGWell, they tell us a couple of things. One, they tell us that the anti-incumbent tide is not universal. John McCain survived a very tough challenge from J.D. Hayworth.

REHMHe spent an awful lot of money.

STOLBERGHe spent a lot of money. He took it very seriously. And a lot of people are saying that's what Lisa Murkowski in Alaska should have done because in Alaska, an upstart Tea Party candidate, Joe Miller, who is endorsed by Sarah Palin, seems to be beating Lisa Murkowski. I don't think all the -- are all the numbers in yet? I think we're still...

REHMNo.

STOLBERGWe're still waiting, but he's got a lead of about 2...

REHMNot until after Labor Day.

STOLBERGRight. He's got a lead. Last I saw, 51-49, very surprising, and people said Lisa Murkowski didn't take it seriously enough in Florida. Another incumbent, Kendrick Meek, won his primary, a Democrat. And he will be the Democratic candidate for Senate there. He'll face a tough race against Marco Rubio, Tea Party candidate, and Charlie Crist, the governor who had been a Republican and left the Republican Party to become an independent because he feared that he would lose his primary. And now we're seeing, in Alaska, Lisa Murkowski thinking about doing the same, thinking about running as a Libertarian.

REHMNaftali.

BENDAVIDRight. The situation for Lisa Murkowski is a little more complicated because it's too late for her to file as an independent. So she has essentially two choices. She could run as a write-in candidate, which is very hard because it requires people to obviously actively to write in her name. Or she could replace the current nominee of the Libertarian Party, which also we have some problems because it's not clear that she really is a Libertarian. So the future is uncertain there. I mean, I think one of the biggest questions shaping up in the upcoming elections is, will the Republican tendency to nominate a series of Tea Party-backed, fairly purist, fairly ideological nominees cut into their gains? And I think that's a big question. They've nominated half a dozen of these folks or so in -- out of 11, I think, contested Senate seats. And it's a really big question whether that's going to be a successful move or an unsuccessful one.

REHMSo what about the Palin effect?

STOLBERGWell, we've seen in a number of races that Sarah Palin has been, some people might say, a kingmaker, certainly in Alaska where -- you know, Alaska is kind of like the Hatfields and the McCoys, except for it's the Stevens, Murkowskis and the Palins. Those two branches of the Republican Party there really can't stand each other on a personal level. So she -- her endorsement gave Joe Miller quite a bit of pop in South Carolina. She endorsed Nikki Haley. She's now the -- running for governor as a Republican. I think Rand Paul in Kentucky got the Sarah Palin nod and is now a nominee there. So we've seen that she has the power to draw attention to a race, to lift unknown candidates out of obscurity and sometimes to turn them into nominees. Now, whether they'll get there in the general...

REHMSure.

STOLBERG...election, that's the open question.

REHMWhy is Joe Miller accusing the National Republican Senatorial Committee of meddling in the race, Naftali?

BENDAVIDWell, this has actually come up in a number of these Republican primaries. The senatorial committees and the Congressional committees of both parties, first of all they always support the incumbents of their own party. So the fact that they supported Lisa Murkowski, which, you know, angered Joe Miller, is something that they would just be expected to do as a matter of course. But it's also true that in a number of these races -- for example, Trey Grayson in Kentucky, they supported him very forcefully. And it turned out that the opponent, the Tea Party candidate Rand Paul, ended up winning. And they've been in a lot of trouble -- actually, the National Republican Senatorial Committee because they've supported quite a number of candidates who end up losing the Republican primary, angering rank and file Republican voters and making them look they're betting on the wrong horses.

HIRSHThis is really an extraordinary spectacle in terms of being a reversal of the usual dynamic. You know, the Democrats are -- usually, they're known as the party of all this public -- very public fractiousness. And here, you know, what you have is the Republican Party, on very public display, you know, fighting with itself on almost all fronts. And it's not clear what it's come to stand for, what the Tea Party movement stands for at all beyond a smaller government. And, yes, you know, Sarah Palin has had enormous star power. She's been enormously influential.

HIRSHPeople tend to forget that some of the other leading Republicans out there like Mitt Romney and Tim Pawlenty, two potential 2012 presidential candidates, have also issued a number of endorsements, but they've been largely ignored. The question is, where is Sarah Palin going to go with this? I mean, there's -- you know, most, I think, political experts feel that she's still unelectable as a presidential candidate because she really, you know, can't secure the middle. So it's a question of enormous and very unusual fractiousness for a party that traditionally was seen to align with itself whereas the Democrats were always, you know, seen as the in-fighters.

REHMWhat about the Glenn Beck rally that's going to take place this weekend at Lincoln Memorial? How does it figure into that fractiousness within the party you talked about? Sheryl.

STOLBERGWell, if there's one figure who's come to represent the Tea Party, it's Glenn Beck. He is sort of the embodiment of the anger and the frustration at the current administration, and he's certainly got a lot of followers. He's going to have this rally here in Washington, coincidentally, he says, on the anniversary of Martin Luther King Jr.'s "I Have a Dream" speech in the same place at the Lincoln Memorial. So this will expose the divisions that we're seeing in the country over issues of race and political philosophy in a very stark and televised way. I can't imagine that it won't be a divisive affair if only because Liberals and Democrats will react so viscerally against it. Now we'll see how many people Glenn Beck manages to rally to Washington. He is predicting 100,000, and they've got a permit for 300,000. I think he'll get a pretty big crowd.

REHMGlenn Beck himself said he was dumbstruck when he realized he had requested his rally permit for the anniversary of King's 1963 speech. Naftali.

BENDAVIDBut even if that's true, he's essentially embraced that. I mean, he's come out and said, "We are going to reclaim the Civil Rights movement."

REHMWhat does that mean?

BENDAVIDWell, it's a good question, and I think that it's calculated to both infuriate a whole lot of people who feel like the idea that he and his movement somehow, you know, have the mantle of the Civil Rights movement. But it also sends a message to the people, who support him and who follow him, that, you know, they're the real Civil Rights people now, that the traditional Civil Rights movement has somehow gone awry and no longer represents the people that it purports to. It was a very provocative thing to say -- and I think it doesn’t even matter whether it was a coincidence any more because he is now sort of celebrating the fact that it's on the same day and in the same place as that famous speech.

REHMHe said something to the effect that white people do not own Abraham Lincoln, and black people do not own Martin Luther King.

HIRSHI think, you know, they're -- the Tea Party movement is sort of claiming the mantle of the true populous grassroots movement out there. And in that very loose sense, I suppose they see themselves as the heirs to, you know, an earlier grassroots populous movement, namely the Civil Rights movement. But in other respects, it doesn't really make a lot of sense. The very theme of this rally, I think, is indicative of just how divisive the Republican Party and the Conservative Movement continue to be restoring, you know, military honor.

HIRSHIt's supposed to be to honor the military, and yet you've had, in recent months, top Republicans where Michael Steele, the head of the Republican National Committee, Newt Gingrich, come out and call into question the Obama administration's policy in -- policies in Iraq and Afghanistan, indicating that there should be, you know, at least in the case of Steele, withdrawal from Afghanistan much more rapid than the one that Obama is calling for. So you have, in policy terms, a lot of dissension there. And it's not clear what this movement stands for. It seems to be in direct contradiction to what many of the leaders of the Republican Party are saying.

STOLBERGI think, you know, in the end, Americans will be paying a lot more attention or absorbing not only the words of this rally but the images. And we've seen in past Tea Party rallies some frankly racist images of President Obama in white face or embellished with, you know, a Hitler-style moustache. These have been very provocative, divisive images that have characterized past events. And if that is the sort of thing that we see here in Washington this weekend, I think frankly, it could backfire a little bit against Glenn Beck and I think...

REHMI think...

STOLBERG...we'll see a visceral uprising from Democrats and Liberals and defenders of the president. And we will descend yet again into this debate about who is racist, which we saw several weeks ago as you remember with the whole Shirley Sherrod incident and Tea Partiers accusing the NAACP of being racist. And all that goodwill that we had when President Obama was elected, and people thought that we had moved into a post-racial society, we will...

REHMAnd, by the way, I think we ought to mention that Shirley Sherrod declined the offer from Secretary of Agriculture Vilsack to accept not only either her old job back or a new job back, but is holding, biding her time. I think she'll speak out, except that she is looking to sue the blogger who posted the incorrect information about her on his website. Talk about mistakes -- Alan Simpson, Naftali Bendavid.

BENDAVIDWell, Alan Simpson is co-chairman of the deficit reduction commission that was a bipartisan commission appointed by President Obama. He is a former Republican senator from Wyoming. And he made a comment in an email to an activist comparing Social Security to a milk cow with 310 million -- he used a more vulgar term for teats essentially -- and that sparked a huge outcry from women's groups, from people who are supporters of Social Security. This plays into this larger fight.

BENDAVIDYou know, as this commission prepares its recommendations, which are to be released on December 1. The people who are afraid that it's going to recommend cuts in Social Security are gearing up and guarding for battle, and the people who are afraid that it's going to recommend tax increases are, too. And it's likely to recommend both, and these two sides are sort of shoring up their positions. This, to some degree, played into the hands of the people who are afraid about Social Security. And their seizing on this is an example that Alan Simpson can't be trusted as a supporter of Social Security.

REHMBut -- and the White House came out and said they were not going to fire him. They said it was an unfortunate statement, but they thought he was a good man.

STOLBERGThat's right. You know, people inside Washington know Alan Simpson as a kind of a charming, funny, irreverent and frankly, somewhat moderate Republican. And he's kind of given a pass here because people who've been around here for a long time know that he is prone to making these kinds of verbal gaps. And he himself said, "I've often stuck my size 15 foot shoe in my mouth." But people out in the country don't see that. All they see is, you know, former Republican senator deriding Social Security, a beloved program and...

REHMAnd many who receive it are women.

STOLBERGAre women. And in fact, you know, we have the National Organization of Women asking members and supporters to send $5 for the organization so that it can send baby bottle nipples to the White House in its effort to recall Alan Simpson. But, you know, Alan Simpson angered his own party too. People in the GOP don't trust him because they think he might sign on to tax increases as part of this commission so...

REHMSheryl Gay Stolberg of The New York Times. You're listening to "The Diane Rehm Show." Let's open the phones, 800-433-8850. Send us your email to drshow@wamu.org. Let's go first to Saddle Book, N.J. Good morning, Israel. You're on the air.

ISRAELGood morning, Diane, and good show. First thing I want to say, Social Security didn't add even a penny to the deficit, even a single penny. So I don't know where Simpson is coming from. The job -- Ben Bernanke cannot do not nothing about the job unless there'll be some manufacturing here. Unless the people creating something and getting fit for work that is done, it doesn't matter if you put -- (unintelligible) stimulus. I mean, where did the money go? It go to China, go to Libya. Unless you're making something in this country, and I think (unintelligible) go, unless they were going (unintelligible).

REHMMichael.

HIRSHYeah, well, actually the caller is technically accurate about Social Security which continues to be able to pay for itself through payroll taxes. In fact, I don't think it's until the year 2032 that it is expected to go into deficit. I should also add that Simpson's comments about it didn't come out of the blue. He's been, you know, agitating against this program for a long time, back when he was -- since -- when he was senator.

REHMSo why was he put on the commission if he has been so blatantly opposed to it right from the start?

BENDAVIDWell, I don't think he would say he's opposed to it. I think that he would say that changes need to be made in it in order to prolong its life. I think what President Obama was trying to do was to pick respected, moderate people of both parties to chair it. So you had Erskine Bowles who is a former chief of staff under President Bill Clinton, well-respected but also not the most liberal Democrat. And then you had Alan Simpson who is known as sometimes deviating from conservative orthodoxy and a Republican. And President Obama's calculation was these two guys could perhaps stir this fractious group to some kind of consensus.

REHMAll right. To Albuquerque, N.M. Good morning, Anne.

ANNEHi, Diane. Thank you very much.

REHMSure.

ANNEI'm puzzled by people's reaction to the economy that we had under George Bush and the economy we have now. It seems to me that for those eight years, the economy -- it's not like we made anything. It's not like people made more money during those years. It was really fueled by, seems to me, the housing bubble, all those construction of houses that now sit empty. And we used up all that surplus. So do people really think that in a year and a half, all of that can be corrected? I'm a small business owner. I'm no socialist, but I'm just puzzled by people's attention span.

REHMNaftali.

BENDAVIDWell, that's very much an argument the Democrats are making. One of the things that they're saying -- and a lot of economists, to be fair, backed them up on this -- is that without the stimulus, without the aid to the auto industry, things would be substantially worse. The problem with them politically is, things could be worse, is a bad political slogan. It doesn't get you very far. And one of the things that the Democrats have started doing with increasing vigor is talking about the Bush years -- not to blame Bush -- but to say that if you elect Republicans, we're going to go back to the policies that got us in trouble in the first place. So far, it's not clear to me how much that's resonating, but clearly, I think that's an argument that they have to make.

HIRSHWell, I mean, that's what Obama has been doing from day one. He's got his favorite metaphor about the car going into the ditch, and you don't want to put the same driver in the driver's seat to get it out of the ditch, namely the Republicans. Actually, I think that's been -- what we'd been hearing now for more than 18 months. And I think it's really wearing thin, and that's one big problem for Obama. This is seen as his economy now, his set of economic problems and not Bush's because Bush is obviously fading from memory.

REHMMichael Hirsh of Newsweek. We'll take a short break. And when we come back, your messages from Facebook, your email, and your tweets.

REHMAnd welcome back to the domestic hour of our Friday news roundup. Here's an email from Frank in Mooresville, N.C. who says, "So Glenn Beck isn't aware that 8/28 is the anniversary of Martin Luther King's famous speech and then claims it's, quote, 'divine providence?' Have people lost their minds? Can't folks question such a glaring contradiction?" Naftali.

BENDAVIDWell, I'm not sure why that's a contradiction. If he's saying that it was a -- that he didn't know, but I -- probably God did know, and that's why it all worked out this way. I mean, you can strongly disagree with it, but, you know, this is -- I -- you know, as I say, once he realized that, you know, assuming that he didn't realize to begin with that this was the anniversary, he's embraced it. I mean, he's not running from that at all. He's not apologizing. He's saying essentially, we are the new civil rights movement. And that kind of statement is the exact kind of thing that gives, I think, comfort to his supporters who feel aggrieved and infuriates people who feel like they're the heirs of the Civil Rights Movement. They were perhaps in it. And they can't believe that this guy is trying to usurp it.

REHMAll right. To San Antonio, Texas. Good morning, Richard.

RICHARDGood morning. I've got a question about the Democrats. Most of the discussion this morning has been about the Republicans and the Tea Party. But I was wondering if the Democrats have some sort of an overriding strategy to retain the House in the Senate? And is there a -- something part two in the wings that will enable the Democrats to retain control of the House in the Senate?

REHMSheryl.

STOLBERGWell, maybe we should ask the author of the "The Thumpin'," but I think the overriding strategy is it was worse under the other guys. And that has been their argument. And maybe the best news for Democrats, frankly, is all the division within the Republican Party. It's helpful to them that their party seems divided between Tea Partiers and more mainstream Republicans. But Democrats have a very, very tough case to make. The economic news of this week has not made that case any easier for them. And their strategy is simply to say, stick with us. It's going to take a long time. We're on the right track, but don't go back to the policies of the past because we know where that got us.

REHMLet's go now to Clemson, S.C. Good morning, Abel.

ABELGood morning, Diane. I have a quick question and quick comment. I really don't understand why the Democrats don't call the Republican and Tea Party to the table and ask them, show us your card. Tell us what you would do to fix this economy. All I hear is complaints about what President Obama is doing, the stimulus and all of those things. And to me, the stimulus, it worked. They've got -- kept a lot of people in jobs, and the other thing was the -- even the bailout. The government is making money from the bailout that they gave to the different companies. And it's money that we can use to pay off the debt. I just don't understand why the Democrats have not been smarter and...

HIRSHWell, I mean, that was exactly what Vice President, you know, Biden said in his speech in his response to John Boehner. I mean, show us your card. Show us what you would do when, in fact, they haven't had a coordinated program. You know, interestingly enough, the leadership banner had detailed some of the Republican leaders in the House to develop a sort of later day contract with America, which I think was -- is supposed to be rolled out sometime after Labor Day.

HIRSHBut again, the message coming from the conservative and Republican movement has been so divided, so fractious that there's no sense that anyone wants to hear anything like a contract from America ala 1994. And you have the agenda such as it is driven from people outside Washington, like FreedomWorks, Dick Armey's group, which has been funding the Tea Party movement, but, again, with the very, very simplistic message, smaller government and nothing really beyond that.

REHMHere is an email from Frank who says, "A significant downward revision to GDP growth in the second quarter makes it clear this recovery is losing steam. Spending the stimulus has been incompetent at best. Cash for clunkers, housing tax credits felt good, but the impact was short-lived. When will politicians address this issue with long-term strategic solutions? The White House in particular seems more reactive than visionary."

STOLBERGWell, I think that's a lot of Americans complaint. Of course, Mr. Obama would say the very deficit commission that we talked about earlier with Alan Simpson as co-chair is an attempt for a long-term strategic solution. But I think, frankly, the caller has a point. We are seeing a recovery that's losing steam. Some economist on the left would argue that the stimulus, frankly, wasn't big enough, that government should have done more and that the reason it hasn't had a bigger bang is because the bucks weren't big enough.

REHMSo some economists on the left and the right are predicting a double-dip recession. Others are saying the housing market has now hit bottom. We're not getting a double-dip.

BENDAVIDYeah, I mean, it's striking how -- I mean, we talked about this a little bit at the beginning of the program. People really don't know.

REHMYeah.

BENDAVIDI mean...

REHMExactly.

BENDAVID...including incredible experts, people who study this stuff and who really know a lot. You know, there's one theory that, okay, it's a little bit slow, but we've probably hit bottom. And you know what? It's going to be steady and we're just going to be okay. And there's another theory that we're really in a bad way. And whether it's a double dip or not, it's a long period of terrible economic conditions, and we really have to do something a little more dramatic. And it's been kind of -- I think it's been kind of outstanding to watch the disparity of opinion among respected experts.

HIRSHAnd the majority of economists still believe we're not headed for double-dip recession, which means, you know, not just 1.6 percent growth but actually negative growth. But there is a general sense that Obama has kind of played himself out of the -- you know, any big moves. I mean, it wasn't just economists on the left, but there was general sense that they tended to be more of a leaning. But there was a general sense that the stimulus should have been a lot bigger than it was. What it did do was probably bring unemployment below 10 percent. But another same size or substantial stimulus might have brought it down to, you know, 8 percent.

REHMHmm.

HIRSHAnd that's no longer a political -- politically viable. I mean, Obama simply doesn't have the support for that any longer. And with Bernanke almost out of tools -- you know what? There aren't any really big tool solutions.

REHMAll right. To Toledo, Ohio. Hi, Cathy.

CATHYWhen people are terminated from their jobs and they apply for unemployment but their application is denied, where are these people represented in the employment stats?

REHMOf course, I don't know the particulars of what you're talking about, Cathy.

CATHYMy daughter was terminated from her job when she was on sick leave, medical leave. She applied for unemployment, and her application was denied.

REHMNaftali.

BENDAVIDWell, that would necessarily determine whether or not she's counted in the unemployment rolls. The unemployment rolls are designed to detect people who are looking for jobs and unable to find them. There's a secondary number that has to do with sort of people who have given up looking, and people call that the real unemployment rate or things like that. And so there are attempts to pull these people into the numbers so we get a full picture. That number I believe is -- I mean, it's quite high -- it's 15 percent or something like that.

HIRSHYeah, something like that, 15, 16 percent.

BENDAVIDYeah, and so often these days, you're hearing that the unemployment rate is 9.5 percent, but the, quote, "real" unemployment rate is about 15 percent.

REHMLet's go to Columbia, Mo. Hi there, Casey.

CASEYHi, Diane. How are you?

REHMGood, thanks.

CASEYI'm calling -- I'm kind of backpedaling on your topic, so I apologize.

REHMThat's okay.

CASEYBut it's a really important point. I moved to Alaska -- well, quite a number of years ago after graduate school in Chicago, and I lived there over 16 years. And I heard your guest earlier from air, Hatfield's and the McCoy's in Alaska are similar to Murkowski, Stevens, McAllen. And the Stevens and the Murkowski's have a long history in Alaska and, you know, for better or for worse, no matter how you view them. The reality is that the Palins really have never had any influence or importance in Alaska. Alaskans, when they go to vote, they vote -- and this is just the way it is in that state -- they tend to punish people with their vote rather than elect on merit, and that has just been a long history today.

CASEYSo when Palin was mayor of Wasilla -- I mean, technically, if you looked at the -- her time as mayor, she ran the fiscal part of her job into the ground with the -- the town was all but bankrupt. However, in Alaska, whoever is Republican will most likely be elected. So we had a governor, Murkowski, who was hated at the time. Poll numbers were in the toilet, everybody wanted an out. So if I had run on the Republican tickets, I who have run -- won as governor. So...

REHMInteresting. Sheryl.

STOLBERGThat is interesting. And certainly, a few politicians have had this long history in Alaska, as the late Ted Stevens. My point was simply that not only are there philosophical divisions between Sarah Palin and Lisa, the Murkowskis and Ted Stevens, but also I think, frankly, bad blood. I mean, they just don't like each other.

BENDAVIDYeah, there was -- when Frank Murkowski needed to appoint a senator from Alaska, there was some thought that Sarah Palin was in the running. Instead, he appointed his own daughter, the current senator, Lisa Murkowski, and then when Sarah Palin ran for governor, she defeated him in that primary that the caller is talking about. She defeated Frank Murkowski. So it's been a lot of very personal conflicts between the two parties.

REHMAll right. Then to Atlanta, Ga. Hi, there, Will. You're in the air.

WILLYes. Hello, Diane. I wanted to call in because, you know, just some of the comments that were made earlier about the economy. My family owns a small business, and my parents are now retired. We lost virtually everything in this small business during the Bush years and especially toward the end of the Bush administration. And we live in a state with a Republican governor that worked really hard to take away our tax exemption for a homestead exemption.

WILLYou know, there are some grandfather clauses in there that protect some people. But the point that I'm trying to make here is that, you know, looking back -- yeah, I am much better off than I was during the previous administration, been in the years of the previous administration. I don't know how people in America can expect to go through eight years of building up to this bursting of the bubble and then expect one year to -- for everything to be rosy again.

REHMWill, I want to ask you a question, why did you lose everything during the Bush years?

WILLWell, what I mean by that, our business basically went -- well, my family's business -- basically went under. It was -- we had the -- we were not in a position to get tax breaks. We were too small. The tax breaks didn't apply to us. We were not in a position to be able to secure the capital from banks and so forth to run our business. I have since revised it. I'm an engineer, so I kind of chucked everything and came in to the business and try to start all over again.

REHMInteresting.

HIRSHYeah, I mean, this square is also what the previous caller was saying about how long it really takes to work out from something like this. I mean, let's face it, there was a false prosperity such as there was prosperity during the Bush years fueled entirely by credit, which became in this enormous bubble that crashed. But, I mean, this is an indication of just how broad and systematic the bubble was. This wasn't just a market crash on Wall Street. This was a whole culture of taking, you know, easy credit, on easy terms that infected the entire economy well beyond the housing market. And so, I mean, there's a legitimate argument that it's going to take a lot longer than...

REHMOf course.

HIRSH...say 18 months or so.

STOLBERGI think this also plays into the point you made earlier, Diane, about Republicans attacking the President over the economy. I mean, the Democrats could rightly say, look, it's -- and on our saying, it's going to take time.

REHMTime.

STOLBERGGive it some time. That's still a tough argument to make with an impatient electorate that is suffering.

REHMSheryl Gay Stolberg of The New York Times. And you're listening to "The Diane Rehm Show." A number of our callers have pointed out something I should have said earlier, which is that Glenn Beck is banning any signs at his rally. He says he wants this to make sure that no images depict any racist bant. Is that going to succeed, Michael?

HIRSHIt might. But I think as one somewhat aligned with the civil rights movement said in one of the pieces we have read today, the fact that he had to ban those signs is an indication of how potentially, you know, dangerous and threatening this movement is, if you have to be worried about what your own supporters are going to be putting out there.

REHMLet's talk about New Orleans five years after Katrina. Naftali, are -- is this country -- is that area any better prepared for a natural disaster than it was five years ago?

BENDAVIDWell, I think it probably is better prepared. I think they -- when it happened, it was unimaginable that a major American city would be under water and completely lawless for a few days. But what's striking to me about this five-year anniversary is at the time, people were saying, look, maybe now we'll finally take a serious look at the problems of poverty and race that are in our inner cities or really examine these issues that we prefer not to look at, and it seems to me that five years later, we haven't really. I mean, there's no more talk about the fact that millions of Americans live in inner cities and in difficult conditions that many of them are minorities than they were back then. So New Orleans and Katrina have become the sort of part of our cultural, political discourse. But where they've actually affected the way we do anything from a policy perspective, I'm just not sure that that's made a difference.

STOLBERGRight. And if I could give a plug to my competition, Mike Fletcher in The Washington Post has a terrific story today, headlined the "Tale of Two Recoveries," in which he talks about how white people and the more affluent have really benefited and have -- are more back to normal than minorities and the less affluent. That the -- there have been serious disparities in the recovery.

HIRSHAnd, I mean, I would just add on a more practical level the redesign of the levee system in New Orleans five years later is still not complete. I think it’s scheduled to be finished by the summer of next year. But it certainly raises questions about what many people perceive to be not quite as much public but public and private investment in New Orleans as they had hoped for. Even though there has been a great deal of investment in education and by some reckoning, as I've heard, some 75 percent of the so-called diaspora has returned to New Orleans.

STOLBERGWe'll see President Obama go to New Orleans on Sunday, part of a parade of federal officials on the sort of we-will-not-forget-you tour going down there. I think, Education Secretary Arne Duncan is on his way and the Homeland Security Secretary and the FEMA administrator are all going to mark the five-year anniversary. But, you know, one of the lasting impacts, I think, of Hurricane Katrina is -- aside from the physical devastation -- is frankly the loss of confidence in government and a feeling among the American people that government is not competent to handle disasters. And I think that's a psychic scar that we won't recover from before a long time.

REHMSheryl Gay Stolberg, she is White House correspondent for The New York Times. Michael Hirsh is senior editor at Newsweek. Naftali Bendavid is national correspondent with The Wall Street Journal. And speaking of people we will not forget, Jonathan Smith, one of our senior producers. He is leaving us today for going to another public radio station, New Hampshire Public Radio in Concord. We're going to miss him a lot. He has been just an amazing producer and we all wish him well. Thanks for listening all. I'm Diane Rehm.

ANNOUNCER"The Diane Rehm Show" is produced by Sandra Pinkard, Nancy Robertson, Jonathan Smith, Susan Nabors, Denise Couture and Monique Nazareth. The engineer is Toby Schreiner. Dorie Anisman answers the phones. Visit drshow.org for audio archives and CD sales. Transcripts from Softscribe and Podcast. Call 202-885-1200 for more information. Our email address is drshow@wamu.org. This program comes to you from American University in Washington. This is NPR.