MS. KATTY KAYThanks for joining us. I'm Katty Kay of the BBC, sitting in for Diane Rehm. Diane will be back on Monday. President Obama's Chief of Staff Rahm Emanuel is leaving the White House to make a run for mayor of Chicago. Congress passed a small business lending bill and a stopgap spending measure to keep the government running while members left early to campaign in their home states. President Obama hit the road to rally Democrats ahead of those midterm elections, and insurance giant AIG reached an agreement with the federal government to repay its top bailout. Joining me for the domestic hour of the Friday News Roundup, Ron Elving from NPR, Melinda Henneberger of PoliticsDaily.com, Michael Hirsh of National Journal and the author of the new book, "Capital Offense: How Washington's Wise Men Turned America's Future Over to Wall Street." Thank you all so much for joining me.

MR. RON ELVINGThank you.

MS. MELINDA HENNEBERGERThank you.

MR. MICHAEL HIRSHGood morning.

KAYThe number here is 1-800-433-8850. The e-mail address is drshow@wamu.org. You can send us a tweet. Find us on Facebook. We'd love to have your questions and comments. We'll be opening the phones in just a while. Melinda, let's start with the news in the morning. Emanuel out, Pete Rouse in, the headline in The New York Times, the swearing stops now.

HENNEBERGERI don't know if I'd go that far. Rahm might not have been alone. He was the only one who's quite so out there with it, perhaps. Rahm has slipped out the back door. He -- not unexpected, of course -- and the new -- not-so-new guy taking his place on an interim basis, they say, is Pete Rouse, who has been with Obama for a long, long time, was in fact Obama's first chief of staff in the Senate, someone who's very well-liked by people in the White House, and who may, we think, be staying in the job on more than an interim basis.

KAYRahm is not totally slipping out though, is he, Ron? He's getting something of a send-off from the president in what, about an hour's time?

ELVINGYes. The president is going to thank Rahm for his service over the last year-and-a-half -- almost two years. And he is going to, I think, try to use this as another occasion since he knows the media will be paying a lot of attention -- and some of the public perhaps as well -- to the departure of Rahm Emanuel, who's been a mediagenic figure. He's going to use this as an opportunity to make a case again for his first two years in office and to talk about the things that got passed by Congress, knowing, of course, that these are not fully positives for many Democrats who are campaigning for this fall. Still, the president is going to make the case for them. He's going to try to rally the base. Once again, he's going to thank Rahm for helping get health care passed and all the other things...

KAYIs he going to thank him with an endorsement?

ELVINGWell, I think that's a little bit more problematic. It would be, in a sense, an awkward moment in which to do it and perhaps premature. I think the president's people -- and many of them, of course, are from Chicago -- may want to keep their powder dry on that a little while because of the particular political dynamics of Chicago. And even Rahm may choose to have the president endorse him later if he even has the option of having the president endorse him.

KAYMichael Hirsh, Melinda suggested that there was a change of tone anyway between Rahm and Rouse. Is there a change in substance as well? What are you looking for in the new Rouse-run White House?

HIRSHWell, I think that's probably unlikely to know. Certainly, what's interesting here in this move and others is Obama is sort of returning home to comfort, if you will. He also appointed recently Austin Goolsbee as his chairman of his council of economic advisors. Larry Summers is departing. Again, Goolsbee, another long-time Obama aide harking back to the glory days of the campaign when he's, you know -- virtually could seem to do and say no wrong to now -- when a lot of his aides and strategists are mystified over what seems to be a long period of tone-deafness in terms of not reaching the public. I think that, you know, he will try to tout these accomplishments.

HIRSHThey continue to be somewhat confounded by the unpopularity of all of these initiatives. And, you know, clearly, in the case of Rahm, he was a key figure in making that happen but was also very controversial -- in some of the moves, for example, tossing out the public options so quickly as a giveaway on health care, which was attributed to him. And so Rahm remains a controversial figure for the Democratic base.

KAYMelinda, more than just being colorful and outspoken and somebody who spent a lot of time speaking to the media, has Rahm been a different kind of chief of staff? Has he been a more influential, powerful chief of staff than we've seen recently?

HENNEBERGERI don't think that's true because I think he lost a lot of the key battles and was certainly a huge disappointment to the progressive wing of their party. I think that, for that reason, Rouse will be welcomed by progressives who -- you know, Rouse, before he worked for Obama, was with Tom Daschle for a long time. And Rahm, I think, rightly, was seen as the person who argued against pushing for a lot of these bigger initiatives who, for a long time, thought that health care should be done very piecemeal, thought that we -- instead of pushing for a really big revolutionary health care reform bill should just try to stick to some of the least controversial aspects of it -- like, not kicking people off their health care plan mid-chemo. So I -- there are a lot of people in the party who really are breathing a sigh of relief that Rahm has gone back to run for mayor, even though he starts way in the back of the pack in that race.

KAYWell, Ron, what are his chances?

ELVINGI think he still has a pretty good chance. He does have some money left over from his congressional campaign days. And let's face it, Rahm Emanuel can raise money. If he needs to, he can raise money. I don't think his problem will be money. I don't think his problem will be name recognition. There will be some difficulty for him because, as a Chicagoan, he is as much -- a well-much resident, perhaps, as a Chicagoan. He was born in Chicago, and his early years there -- but then he has a suburban taint, and in Chicago terms -- I should in full disclosure say my address was just south of Foster Avenue, and I did grow up in Chicago. There is a little bit of resentment to people who come in from the suburbs or from Washington, D.C. and say, now, I'm ready to be mayor.

ELVINGThat's not the Chicago way. So I think he's going to have some real difficulty, but this is a divided city now. It's about 44 percent, 45 percent white. It's a little less black than it was in her Washington days. The black population is down from around 40 to more like 35 percent, and the big growth is in the Hispanic part of the city. Now, it's only 15 percent of the electorate at this point, but it's -- well, it's over a quarter of the population and heading towards the third, so that may be the big key here.

KAYHow's Rahm's Spanish?

ELVINGWell, I don't -- there may be a Spanish candidate.

HENNEBERGERIt might be a few curse words.

ELVINGYes, well, I'm sure he could tell you what some words mean.

KAYIn almost every language.

ELVINGIn pretty much any language, but Luis Gutierrez, the congressman from the west side of Chicago might very well run himself, and that may be the king-maker position for him.

KAYOkay, Michael Hirsh, let's speak a little bit more about the president's week. He went around the country this week. He had a series of backyard meetings. He had a big rally in Wisconsin. To what extent has he started to change the dynamic of this midterm election race with his overt campaigning now?

HIRSHWell, I think clearly his rhetoric has changed. In what he said in the stump in an interview he gave to Rolling Stone magazine -- quite a long one, you know -- he talked about motivating the base. And you hear this -- you hear these signals from, you know, many people in the White House. What's wrong with you guys? Why is it that you're so, you know, seemingly malcontented? You've got to get out. He continued -- Obama did -- to sound the same note that we've heard really for the first 18 months, which is, look, your choice is us even though you may not be delighted with all the moves we've taken. Or you can go back to the same policies that drove the car into the ditch -- to use one of his favorite metaphors -- namely the Republican Parties in the last -- of the last eight years.

HIRSHAnd, you know, that's effective because he's coming up against a very fractionated Republican insurgency where you have, you know, even the party favorites obviously have not gained the support of the -- of many of the Tea Partiers. You have a lot of, you know, dissatisfaction there, which stems back to a lot of dissatisfaction what happened to the GOP under George W. Bush and the GOP in the Senate -- the House during those years. So I think that that's, you know, that's going to be his theme going forward -- generate more enthusiasm in the Democratic base. There's a lot of fear that they won't come out to vote whereas you have this very, very highly motivated Tea Party movement, conservatives on the right.

KAYMore people turned out for the rally in Wisconsin than had actually turned out during the 2008 rally that he held there famously. We had what, 26,000 people turn out. But do we know yet whether the president is still able to motivate people to actually get to the polls? Or is it too early to tell, from this week's meetings at least, whether that's the case?

HIRSHI think it's still related. I mean, Madison, Wis. is not exactly a typical place. It's one of the most liberal pockets in the U.S., and not surprising (unintelligible).

HENNEBERGERPeople were surprised that, I think, it was 27,000 showed up for this rally, but it's -- that's right. The question is, will they vote? And especially with these young people who were -- the millennials -- who were really the key to his victory in '08. And an interesting figure, I thought, is that more than a third of the millennials, 36 percent, have moved since '08, which means that they have to re-register. And some of those deadlines are passed. That's huge. Forty-five percent of millennials say they're not sure this election. This midterm election matters, and that's a problem. So it's one thing -- I do -- when I see him out there at this rally and others, I think, you know, he looks like he's got a little bit of his groove back, his whole thing as you mentioned about the ditch, you know. And there are the Republic...

KAYHe seemed to enjoy it. He seemed to be having fun out there.

HENNEBERGERRight. He was into it again. Why does he have to wait 'till the very last minute? We don't know, but he's out there saying, oh, and there are the Republicans on the side of the ditch looking down, enjoying the Slurpee, having a brain freeze. You know, I mean, he's into it, but again it's very late. The latest polls do show a little movement in the Democrats' favor, but it's very late to be doing this. And we'll see if we get that turnout when you do see that enthusiasm gap.

KAYOkay, Ron Elving. Telling people to buck up -- when was the last time it worked?

ELVINGWell, I don't think that telling people to stop whining has ever worked. And Joe Biden used that phrase, and some other people on the Democratic side have been using terminology and defensive words that, I think, are probably counterproductive.

KAYThe president included in his Rolling Stone interview.

ELVINGThat is right although when he gets out into this energized rally mode, that's much more effective. And there are four weeks. He can probably do what can be done, but I think the problem is, how much can be done? You have huge structural problems for this midterm if you're the Democrats.

KAYRon Elving is Washington editor for NPR. Melinda Henneberger is here. She's editor-in-chief for PoliticsDaily.com. Michael Hirsh is here as well from National Journal. You're listening to the domestic hour of the Friday News Roundup. I'm Katty Kay, sitting in for Diane Rehm. We'll open the phones in just a while. Stay with us.

KAYWelcome back. I'm Katty Kay of the BBC, sitting in this morning for Diane Rehm. You've joined the Friday News Roundup. This is our domestic hour. I'm joined in the studio by Michael Hirsh from National Journal. Melinda Henneberger is here from PoliticsDaily.com. Ron Elving, Washington editor for NPR, is also here. The phone number here is 1-800-433-8850. drshow@wamu.org is the e-mail address. Of course, send us questions as well on Twitter and Facebook, and we will be opening the phones in just a while. We were talking about the president and how much he has done this week, the beginning, really, of his campaign, but also this interview he did with Rolling Stone magazine and the tone coming out of the White House, Michael Hirsh, which really reflects a level of frustration. They are clearly -- they can't contain their frustration that people are not more enthusiastic about White House policies and the amount that they've done in the -- they feel -- you can hear them feeling angry that they're not getting credit for what, they feel, they have done to stop the country getting worse over the last two years.

HIRSHI think it's some acts of desperation whenever you lash out, you know, at your base. I mean, going all the way back to Jimmy Carter's infamous malaise speech, you know, before he lost the presidency. Also, it sort of recalls -- to use the same term that Phil Gramm used, also infamously during the 2008 campaign when he derided Americans as a nation of whiners. This was, of course, in the early -- relatively early stages of the recession before we knew just how bad the financial catastrophe was. That was a real blow to the McCain campaign. Even McCain's own campaign strategists later, you know, said that the campaign was deep-sixed by what happened during the financial catastrophe. So I just think it's a -- it's not a wise move. It reflects frustration, but it's frustration you have to keep to yourself. As Melinda said, the key for Obama is to get out there and rouse the troops, not to lambaste them.

KAYRight. And it's kind of interesting that they haven't managed to keep it to themselves. There's been a sort of lack of discipline over the course this week. Let's talk a little bit more about the midterms and money, midterms and money. There might not be very much money around the country, but there does seem to be an awful lot of money in politics this year. Melinda, talk about the difference in the amount the Democrats and the Republicans actually have to spend because at the end of the summer, we were talking about the fact that the DNC had much more than the RNC. Now it seems that the tables have turned with these super PACs.

HENNEBERGERThat's the thing. As a result of the Supreme Court decision, Citizens United and a couple of recent FEC rulings, we now, all of a sudden have a huge infusion of cash into the campaign as a result of these super PACs, and Karl Rove running the biggest of them who have out-raised their -- the few Democratic groups that have started by 3-to-1. Now, these super PACs can give unlimited amounts, and the big difference from PACs is that they're -- they can fund candidates directly and can fund direct attacks. The only caveat is that they do have to have disclosure. They do have to say who they are. But for people who don't mind being out there, they are really tough to combat because it's all coming so late. It's all perfectly legal. I don't think there's any limit. And when Democrats said they were afraid of corporate America having no limit and really taking over the election, this is exactly what they were talking about.

KAYRon Elving, we had David Plouffe in the studio here yesterday -- and I heard the president saying this as well this week and David Axelrod saying this as well yesterday. The new line from the White House seems to be, listen, Republicans are getting an awful lot of money from the private sector in these midterm elections. If they are elected, do you think that money comes for free? And this seems to be a new line that we're hearing in terms of suggest -- trying to suggest to voters that Republicans would be in hock to the people that have funded their campaigns.

ELVINGYes. Another part of the Democratic comeback effort here is to try to turn the populism around. The populism this year and last year has largely been an energy on the right. It's been the Tea Party. It's been opposition to Wall Street and Washington and all things big, and all things bigger than the people may feel at a time like 2009 and 2010, or at any time. Now, that populism can go in any of a number of directions, politically speaking. But when you get down to an election that needs to go either Democratic or Republican because there are very few places where it has a third party alternative -- and right now it appears that the independents are breaking about as much -- these are people who don't identify with either party. They're breaking about as much for the Republicans as they broke for the Democrats in '06 and '08. That is dispositive. That decides the way American elections go.

ELVINGIf the independents break cleanly for one party or the other, that party is going to win. And we see 40 percent of the independents saying they identify with the Tea Party. Well, I think what they're identifying with there, in many cases, may be issues. In some cases, it may be personalities, but I think, primarily, it's the Tea Party capture of the populist energy that's always there in American politics. So what the Democrats are desperately trying to do here in the last four weeks is turn this around and say, look at billionaires like David and Charles Koch. These people have tens of billions of dollars, and they're now spilling millions of dollars into politics. Look at, for that matter, News Corporation, Rupert Murdoch, the folks who give us Fox and lots of other things. They're putting money directly into Republican politics, a million dollars to the Republican Governors Association, a million dollars then to the Chamber of Commerce, which is running very strong pro-business and pro-Republican campaigns.

KAYWell, let me ask you a little bit more about that, Michael Hirsh. This million dollars that we hear that News Corp. has given to the U.S. Chamber of Commerce -- of Congress, what exactly does it mean? Sorry, Chamber of Commerce it is. I had it right first time.

HIRSHWell, it means that News Corp., Rupert Murdoch, you know, are pretty plainly siding with one side. It's a little bit ironic in light of Murdoch's testimony before House Judiciary Committee just yesterday in which he openly embraced a broad immigration overhaul that many Republicans oppose. So he continues to be something of a maverick in personal terms. But I think, you know, what we're seeing here with the super PACs, with the impact that it's having already on some races as in Florida, with these donations by News Corp. is, you know, the opening stages of the impact of the Supreme Court decision. You know, what is this going to do? How deeply is it going to transform American politics? Will this attempt to generate, you know, a populist backlash against big money as we were just discussing? Will that hold water? I suspect not, but it may, you know -- this is really going to -- this election is really going to be a major test case for this.

KAYMichael, have we got so used to money in American politics now that even though each election has record-breaking sums being spent, at a time when the country is in recession -- we have unemployment attempts, and many voters don't have enough money -- and here we have the paradox that there is so much money in this campaign and almost no questioning of it?

HIRSHRight. Which is why -- you know, which is why this Democratic message, if they stick with it -- in other words, you -- if you vote for these candidates, you're going to be voting for people who are not only recklessly spending money but who are going to be in hock to the big corporations that are backing them, which is why that that might resonate during a time when, frankly, the recession is technically over as we've all heard. But for many people, perhaps even most people, it still feels like a recession -- 9.6 percent unemployment and very slow growth, 1.6 percent growth, not nearly enough economic growth to replace all those jobs. It feels -- it's what economists call a growth recession. So it may well be that that political message resonates.

KAYMelinda, there are a couple of races that seem to have shifted a little bit during the course of this week. Let's talk, first of all, about California...

HENNEBERGERMmm.

KAY...where we had the debate between Brown and Whitman one night, and the next day, revelations from a former housekeeper of hers, who is apparently an illegal immigrant, saying that she'd been employed by her for nine years and that Meg Whitman knew that she was an illegal...

HENNEBERGERRight.

KAY...immigrant, at the same time, of course, that Whitman is running against...

HENNEBERGERRight.

KAY...employers who hire illegals.

HENNEBERGERWell, Jerry Brown seems to have -- after being in a more or less dead heat in that race -- come out a little bit ahead in the most recent polling. And I watched that debate, and it was a very interesting one. As somebody who hadn't -- as a non-Californian who hadn't really seen Jerry Brown in action -- the last time I'd seen him, he was wearing a black turtleneck and lecturing his fellow presidential aspirants pretty uncharmingly. And so I was surprised to see this kind of scrappy, humbler, very energetic guy who showed up for the debate with Meg Whitman at the same time that she was sticking so closely to her talking point. She really never got beyond quoting from her own commercials in a very kind of low-risk but low-yield strategy. And devastatingly for her, one of the things that she really hit hard on was, as you said, the immigration issue of who should we go after here? It's not anti-immigrant. I don't support the Arizona law, for example, but we have to go after these horrible employers who would employ these people. And then, of course, the very next morning, her own former housekeeper was saying that she was treated very poorly, that...

KAYSo how much does this hurt Meg Whitman?

HENNEBERGERI don't think that a Nannygate, as we would say, situation would have hurt her much except for the hypocrisy of the very night before saying, you know, really this very harsh language against anyone who would employ -- knowingly employ an illegal immigrant and then being exposed the next day as one such person.

KAYSo this could have an impact on her chances?

HENNEBERGERI think it could have an impact, especially given the fact that she wasn't -- Brown seemed to have been breaking ahead a bit even before that. It certainly makes things worse for her.

KAYOkay. Let's go to the phones. Let's go to Morris in Rockford, Ill. Morris, you've joined "The Diane Rehm Show." Hello?

MORRISYes, hello. There is an old adage that bespeaks rats leaving a sinking ship. Rahm Emanuel isn't the only one that's -- who's going to says -- has taken off lately. Does Rahm and the others know something we don't know? Does that have anything to do with the fact that the Republicans may take over this after this -- after the midterm elections? I don't know. I've just -- you know, he's not the only one that has left recently. It makes me wonder, you know, why the exodus?

KAYRon, part of this is the natural process of the White House term, right? People leave at this sort of stage.

ELVINGI would say that Rahm leaving is the end of an era that was ending anyway. Michael mentioned earlier Larry Summers is leaving. I don't think that was a shock to anyone. Most of these people who have left recently were the people -- and I would include Christina Romer here -- who were in for a two-year hitch. Now, they could have stayed until after the election. The election is not going to go well. It's just a question of how bad it's going to be for them. They would be happy right now with a decently bad election. And if it's not an entire disaster, they'll probably be able to declare a victory. So the time to go is probably now. Go now. And Rahm Emanuel needs to get back to Chicago and try to re-establish his clear residency, maybe get his house back from his tenants. And so there's no point in sticking around until January, even if the Republicans should fail to capture the House or the Senate. And right now the wind is at their backs. If they should fail, it really -- these people would still go. It's time for them to go.

KAYMichael Hirsh.

HIRSHYeah, I mean, in the case of Rahm, he had clearly long made it clear to people that he wanted to run for mayor. The moment arose. But the caller is right. I mean, this is a housecleaning, and you're right. There's a certain amount of natural tendency midway through on the first term perhaps. If this is...

KAYListen, they've all been surviving on three or four hours sleep a night.

HIRSHThat's right.

KAYThey are exhausted. And in a way, we want a change because maybe it's better for the country to have...

HIRSHYeah...

KAY...a little bit of people who -- few people around who have had some sleep recently.

HIRSHTrue, but this is also a striking housecleaning. I mean, the entire...

KAYThis is a big wave.

HIRSH...economic team disintegrating with the exception of Tim Geithner, basically all leaving, Rahm Emanuel, David Axelrod. Of course, he's going to go off and prepare to run -- prepare Obama's 2012 election. You know, Gates at some point, the Defense Secretary will go. The next person up, actually, I expect to be Jim Jones, the national security advisor, particularly in the wake of some of the controversial comments that came out on Bob Woodward's book. So you really have this amazing clean slate which, you know, may in the end be good for Obama.

KAYI'm Katty Kay of the BBC. You're listening to "The Diane Rehm Show." And if you'd like to join us, please do call 1-800-433-8850, or send us an e-mail to drshow@wamu.org. We can also take your questions on Twitter or on Facebook as well. There's another story that we should get to this morning, which is AIG reaching a deal to repay taxpayers from the bailout. Of course, TARP has been a four-letter word for a very long time for very many voters. But, now, news said that actually it may not have cost taxpayers as much as we thought, Ron Elving.

ELVINGThat's entirely possible. And I was actually a little surprised this news did not play more prominently in the morning newspaper, so perhaps it will be discussed more today. And I think it probably should be. It doesn't fit the narrative, of course, and TARP has been incredibly important to the narrative of the last two years. It wasn't just that it may or may not have saved the entire credit and banking system from collapse. That will be argued of course. But at the time, it was a little hard to argue that something needed to be done. And in September of 2008, this was what resulted. And it was, of course, President Bush and his economic team, supported by the Democratic majorities in the House and Senate, supported by Barack Obama.

ELVINGThey decided this was the only way to keep the whole economic game going, and they made this decision. But that was hideously unpopular among the kinds of populous I was talking about earlier. And this has caused not only the Democrats much of their standing with the public, but it's cost a number of incumbent Republicans who voted for TARP, people like Robert Bennett, a tremendous -- like Mike Castle in Delaware. These are people who would be in the Senate next year if it had not been for TARP.

HIRSHWhich is why no one really wants to remind anyone of this -- there's a certain amount of bailout exhaustion here. But this AIG story, the question of the government trying to finally unload a substantial portion of its AIG shares, a company, you know, that's really still way down in terms of its stock price, is -- it does remind people of perhaps the most controversial aspect of the whole bailout, which was to -- $150 billion worth more than for any other company, making whole many of the counterparties to AIG, like Goldman Sachs -- in other words, paying them 100 percent on the dollar. This was, in many ways, the worst aspect of the whole TARP plan. And so the government -- the Obama administration is going to go ahead and try to sell these shares very slowly without taking a huge loss and hope that it doesn't make any headlines at all.

KAYAnd how risky is this exit plan, this AIG exit plan for taxpayers, Michael?

HIRSHWell, it's very risky because, you know, they need to sell these shares at, you know, I think more than, say, $25 a share in order to make back the investment. And it's very unlikely they'll be able to do that.

KAYMelinda, do you think that there is any way that -- if TARP does end up costing a lot less, we could see the narrative change for voters between now and the midterms. Or is this fixed installment? I mean, I hear it whenever I go around the country -- the things that are bad, health care, the bailouts. Well, actually, if TARP ends up costing taxpayers much less than we thought or perhaps even bringing in a profit, could it -- could the White House at all use this to help Democrats or not? Is it too late?

HENNEBERGERThat's the thing. It goes back to the Democratic frustration we were talking about before. There doesn't seem to be. And that's why I think you have them lashing out in what you call desperation and this kind of unappealing crankiness, is that there's not a lot of correlation between the facts -- always -- and the narrative. And this is just one more example. I mean, I think that you see the Democrats saying, hey, you voted us in. You apparently supported the agenda. We've done everything on that agenda. We've done everything that was asked of us, and you're very angry. Why?

KAYMelinda Henneberger is editor-in-chief of PoliticsDaily.com. Ron Elving is Washington editor for NPR. Michael Hirsh is chief correspondent at National Journal. He's also the author of a new book "Capital Offense: How Washington's Wise Men Turned America's Future Over to Wall Street." The phone number here is 1-800-433-8850. The e-mail address is drshow@wamu.org. We'll be taking more of your calls, questions and comments after this short break.

KAYWelcome back. I'm Katty Kay of the BBC, sitting in for Diane Rehm. You've joined our Friday News Roundup. Let's go straight to the phones to Steve in Potomac, Md. Steve, thanks for joining "The Diane Rehm Show."

STEVEHi. I never heard you talk about the GOP pledge act. And I'm particularly interested to hear the panel talk about the allegations and the way that the GOP are targeting federal employees who's overpaid, particularly because Feds are basically defenseless. They're protected by the Hatch Act from campaigning and making comments during campaigns. And, you know, government is more essential to American life than it probably has been since World War II. So which part of what Feds are doing isn't needed in the congressional districts of the people who signed the pledge?

KAYOkay. Thanks, Steve. We actually haven't talked about the Pledge to America because, of course, that actually came out last week. And we did discuss a lot during last week's Friday News Roundup, but to pick up on Steve's point about the Feds, Melinda.

HENNEBERGERWell, the pledge is pretty unpopular and controversial, even for Republicans. I mean, all of these ideas in this pledge have been around for a long, long time on the right. There is really -- we're near saying that something is brand-new, and there's not a single new point in it. Going after federal government is hardly a revolutionary thought. And social conservatives were very upset that there was nothing in there for them, that this was a pretty strictly economic plan. So even the -- we had a piece on -- by Walter Sparrow -- even on the theatrics of it, if this is a purely theatrical event, what was the -- he called it the lumberyard logorrhea. You know, what was the point of having the stacked wood -- and, no. I'm not talking about the politicians behind -- the whole thing was odd.

KAYOne other piece of news this week or rather, perhaps, non-news this week, Michael Hirsh, was Democrats deciding to punt effectively on letting the Bush tax cuts expire or not.

HIRSHYeah...

KAYWhat happened there? And how significant is it?

HIRSHWell, it was decided that, you know, there's no way that they could come to a conclusion before they all had to rush off to campaign, which is what they've just done.

KAYAnd too many Democrats were saying...

HIRSHNo.

KAY...to the leadership, we don't want to go into this election with any hint that we're going to raise taxes.

HIRSHExactly. And, you know, you really have battle lines drawn here. I mean, you know, even relatively moderate Republicans like Olympia Snowe of Maine have come out and said there's no way we are going to let -- you know, the big controversy, of course, is the top rung -- those who earn $250,000 or more -- whether or not the tax cuts would be ended for them as the Obama administration has asked. And, right, you have the situation where the toxicity of, you know, suggesting a tax increase of any kind is so great politically that they just -- they simply defer that.

KAYThe leadership just decided they couldn't afford to do this. Melinda.

HENNEBERGERIt was very interesting that Nancy Pelosi was willing to go down and break the tie herself. And what that really means is that she clearly allowed those 39 Democrats, who voted against having the vote, to go back and be able to go back to their districts. It was more important to her just to have them, be able to go back to their districts and say that they wanted to extend the tax cuts, then for her to save face by not having to go down and cast the tie-breaking vote.

KAYRon Elving.

HIRSHThere's a mystery here to me. And that is why they can't negotiate what appears to be a fairly easy out here for the Democrats, which would be, make it a millionaire's tax -- if you limited the people paying the highest rates to those making $1 million a year or more.

KAYWhich is exactly what several Democratic strategists have suggested.

HIRSHIf you do that, you still capture 80 to 85 percent of the revenue over the next 10 years. And if revenue is really what we're talking about here, as opposed to punishing somebody, then why not just make it a millionaire's tax as it was at one time? In fact, many, many years ago, generations ago, the only people who pay the income tax were millionaires. Why not go back to that for this top rate? It seems like that's something mostly Democrats can sell.

KAYAll right. Let's go to the phones again to Henry in Margate, Fla. Henry, you're on the air.

HENRYYes, thank you very much for taking my call.

KAYYou're welcome.

HENRYSo for me, I consider myself a hardcore Democrat. I grew up in a socialist Sweden. Okay.

HENRYDemocrats, they are so undeserving of running this country. These people lack collective backbone. The Republicans came out early and said, we're going to oppose everything they did. But what did these stupid, ignorant Democrats -- what did they do? They spent all their time -- especially that guy, Barack Obama, spent all his time running down...

KAYOkay, Henry, I can hear the frustration and the anger in your voice. I think personal insults don't actually get the conversation very far, but we do have a situation. And actually, I'm looking at the callers that are coming in and the e-mails that are coming in, where clearly you have a base of people who turned out and worked for and campaigned for and voted for Barack Obama in the 2008 election and for Democrats, for the local Democrat members of the Congress who are now feeling incredibly frustrated, Melinda.

HENNEBERGERYes. And I think for Barack Obama, the scary thing is that some of these backyard events he's been having, the people who come up to him, who voted for him, who say, I'm eating frank and beans every day, I'm exhausted, where does this end? And I think part of the frustration, not only from the White House but from the average Democrat and maybe even from the person we just heard on the phone, is why is it that every election -- not just this one -- that you can ask a fifth grader on the street, and he or she will be able to repeat back to you the Republican talking points that health care reform, socialism, socialism? And the Democrats, they all say something once or twice, get bored with it, and they never -- that's why they -- message never seems to form an answer.

KAYOkay. Here's an e-mail from John who writes to us exactly what Melinda has just been suggesting. "The Republican stand for lower taxes, limited government, strong defense. What the Democrats stand for? Can it be articulated as simply?" Michael Hirsh.

HIRSHIt's -- well, that is precisely the problem. They can simply say big government, socialism, more big government -- and the Democrats -- and this is the problem with the base -- are having a hard time getting behind a lot of these initiatives. And, frankly, if you look at the guts of them, I mean, the way that the health care reform bill was partially gutted at least, the (word?) with which they threw out the public option, for example. The Financial Reform Bill, which also took more than a year to enact, the extent to which that was continued to be friendly to Wall Street, in a lot of respects, and was much criticized by the left. You had this sense that what the Obama-ites are so proud of in touting is not something that excites the base, whereas the Republicans can easily come back and say, look, this is just -- all of these initiatives you're touting is just more big government.

KAYLet's go to Hamish in Sycamore, Ill.. Hamish, you've joined "The Diane Rehm Show."

HAMISHYes, good morning.

KAYGood morning.

HAMISHHi, I'm calling in regards to the fact that the president that we had back in the old days is not any really different than what we have today. The difference is we have social problems to help alleviate -- our social programs to help alleviate some of these problems. Back then it took a little over 10 years and a world war to get us out of that depression. For somebody to come up and say, yeah, the recession ended a couple of months ago, had -- that sounds like a plan to get across the idea that we're going to go into another recession right away. And second of all, what is the matter with us that we allow our -- the people who are elected to go home when they want to without finishing the job? Excuse me.

KAYWell, hey, Hamish, you got a pretty good point there because I think most people if they're working, certainly, for a small business or a company, if they try to go home before they'd finish the job, they'd be read the Riot Act. Ron Elving.

ELVINGThe job is what in this particular instance? Is the job to pass appropriations bills? Most people, I don't think, think very much about the appropriations process. Is it to pass a formal budget or something of that nature? Or is it, in some sense or another, to serve their constituents? And I think that the conclusion that they've reached here is that any further votes they would take at this point, given the block voting by the Republicans, given the filibuster situation in the Senate, given the difficulties that they face even within their own party ranks, would be -- at this juncture for them -- probably counterproductive. Better to go back and talk directly to the people.

ELVINGNow, Congress only comes into Washington for about three days a week, especially in the House, Tuesday through Thursday. So obviously, nobody has a job like that either. I mean, this is a job that they do to a large degree by being back in their districts with their constituents. And if they don't do it that way, if they try to live in Washington and work five days a week and spend their weekends here, they will be voted out of office quickly enough for that.

KAYDoes the fact that Congress only passed a stopgap spending bill this week -- they'll set up a budget battle in November -- doesn't matter?

ELVINGOh, absolutely. And another budget battle next year with the new Congress. If say, one of the two chambers is Republican at that point, you're going to have something, I suspect, of a throwback to what we saw in 1995 and 1996 when the Newt Gingrich-led newly Republican Congress had a confrontation with President Clinton and the government shutdown twice.

KAYOkay, let's have an e-mail here. Actually it's from -- comes to us on Facebook. Valerie writes, "I don't think Rahm Emanuel has made the kind of difference that is important in this country. He is a capable man and politician, but I think the president needs someone who is not from Chicago to get a different view on things." Michael, there has been a lot of discussion about this, about whether the president shouldn't bring somebody from the outside.

HIRSHYes.

KAYPerhaps even somebody from the business community, or at least somebody who is not part of his inner circle. And I think Valerie gets to a broader point about whether the president has been too surrounded by...

HIRSHYes.

KAY...a small group of trusted advisors, which is, of course, what President Bush was also criticized for.

HIRSHYeah, one hears that particularly on the economic front. Someone described Elizabeth Warren -- who Obama just appointed to at least set up the new Consumer Financial Protection Bureau -- as one of the very few people on his team who doesn't have Robert Rubin's number on her speed dial, which means the former treasury secretary -- most of these others, like Larry Summers and Tim Geithner described as acolytes of Robert Rubin who oversaw the deregulation of the financial sector in the '90s. And you have the sense that there was a very narrow debate. And I'm not sure that -- I mean, I think Pete Rouse certainly represents -- you know, he's on the more liberal side of the spectrum, Daschle's former chief of staff. But I think that apart from Elizabeth Warren, you don't have -- you don't see a lot of new voices. Again, he sort of, you know, go home to mama and always going back to some of his original campaign advisors like Goolsbee, and now Rouse.

HIRSHSo I think that they're still rather confused, and I wouldn't be surprised, for example, to see yet another former advisor, Susan Rice, come back. She's at the U.N., of course, as ambassador. She was his closest foreign policy advisor during the campaign. If indeed the National Security Adviser Jim Jones goes, I wouldn't be surprised to see Rice come back as well.

KAYI'm Katty Kay. You're listening to "The Diane Rehm Show." And if you'd like to join us, please do call 1-800-433-8850 is the phone number here. You can also send us a-mail to drshow@wamu.org. Find us on Twitter and on Facebook as well. Let's go to Steve who is calling us from Ocean Springs. Steve, you're on the program.

STEVEHey, guys. I wanted to give you the Southern Republican view. The worst thing that our party could possibly do right now is win this election and take control of Congress.

STEVE(unintelligible) are completely incompetent. We're very good in the minority, just so you know. But if we actually got to take responsibility for some of this mess, I can guarantee you that Obama is getting the (unintelligible), it's a great move, probably (unintelligible). He didn't have to take responsibility for it. And then when everybody -- we give everything up like we do every single time, and they overreach and they overreact. And they'll probably do a government shutdown, then the populous would vote all the Republicans out. People are beginning to get the gist that they got duped. They just can't figure out whose fault it is. But clearly whoever is heading the ship, it's like being the captain of the Titanic. It's impossible...

KAYSteve, I'm going to cut you off because your phone is breaking up a little bit and also because I can see that all my panelists want to jump in on this one. Ron Elving.

ELVINGWell, this is a gentleman who should probably get into the political analysis business if he isn't already. I think he's on to something. I don't necessarily think that the Democrats would be willing to test the thesis by giving up either chamber of Congress, but it is generally conceded that Bill Clinton turned his presidency around and helped himself to a second term in 1996 for two reasons. One, because the Republicans took over and did not cover themselves in glory in their confrontations with him in '95 and '96, and, two, because the Republicans nominated somebody that Bill Clinton could run in contrast to very effectively. That was Bob Dole.

ELVINGSo the caller is on to something. If the Republicans have a lot of success this November, they're going to have a lot of responsibility for what's going on in the country next spring. And I suspect there will be much to answer for.

HIRSHWhich is where the rubber meets the road for the Tea Party movement, let's face it. I mean, this is a visceral, powerful movement. Everyone agrees. But what is its agenda, you know, apart from small government -- more small government. So to the extent that the Republicans do have to take control of some of these committees -- if they takeover the House, for example -- this will be a test. So the caller is right about that. And, you know, getting back to what Ron was saying, I mean, Newt Gingrich to this day is still defending -- trying to defend himself against what he did during the government shutdown period of '94 and '95, which did indeed lead to a dramatic re-election for Bill Clinton.

KAYWell, Melinda, I think this is a really interesting question. Is -- if assuming the Republicans do pretty well in November, the big question is, what does Obama do in response? And we know that the White House at the moment has been having conversations with Bill Clinton. Are we looking at a '95, '96 scenario where see Obama step further away from the base, which is as we've heard during the course of this program, already disappointed with him and triangulates towards the center?

HENNEBERGERI don't know that he has shown any ability to triangulate. I think that -- again, back to this Rolling Stone interview -- I thought he came across as fairly naïve in thinking that because the country needed to pull together, it would. I -- you know, he has been told every time he wanted to go work with the Republicans in Congress that he was going to get a no vote before they even heard him out. So I'm not sure that that would happen. I think the caller's absolutely right that you can never make a mistake as long as you're not in charge, as long as all you do is criticize and raise mountains of money.

KAYAnd Ron Elving, we are looking at a slightly different country than the one in 1995 and very different parties.

ELVINGThat's correct. But the country is actually demographically changing in ways that benefited Barack Obama in 2008 and would theoretically benefit him again in 2012. The electorate we're going to see here in November is going to be substantially wider and older and more male and more Republican than the one we saw in 2008. The question about 2012 will be which of those two electorates shows up?

KAYMichael Hirsh.

HIRSHI agree that, you know, this is going to be a big test for, you know, the agenda of the Tea Party, as I said earlier. The response of Obama, does he stick to the center? Does he move left? I mean, I actually think -- and I agree with Melinda's analysis -- I think he's been naïve in terms of his outreach to the Republicans. But I think he's also awkwardly -- in Obama's part, he's trying to triangulate. I mean, part of the problem with the bills, the reasons the Democratic base is unhappy with them, is that there were all these compromises.

KAYMichael Hirsh is chief correspondent at National Journal. Melinda Henneberger has been with me. She's editor-in-chief of PoliticsDaily.com. Ron Elving has also been here. He's Washington editor for NPR. I'm Katty Kay from the BBC, sitting in for Diane Rehm. Thank you all for joining me.

HENNEBERGERThank you.

ELVINGThank you, Katty.

HIRSHThank you, Katty.

KAYAnd thank you all so much for listening.

ANNOUNCER"The Diane Rehm Show" is produced by Sandra Pinkard, Nancy Robertson, Susan Nabors, Denise Couture and Monique Nazareth. The engineer is Andrew Chadwick. Dorie Anisman answers the phones. Visit drshow.org for audio archives, transcripts, podcasts and CD sales. Call 202-885-1200 for more information. Our email address is drshow@wamu.org, and we're on Facebook and Twitter. This program comes to you from American University in Washington. This is NPR.