President Obama defends his tax-cut deal with Republicans. The Supreme Court steps into the debate over illegal immigration. And a remembrance of the life of Elizabeth Edwards. A panel of journalists joins Diane for analysis of the week’s top national news stories.


  • John Harwood Chief Washington correspondent for CNBC; reporter, "The New York Times;" coauthor with Jerry Seib of "Pennsylvania Avenue, Profiles in Backroom Power"
  • Susan Page Washington bureau chief for USA Today.
  • David Welna Congressional correspondent, NPR.

News Roundup Video

Diane and guests discuss Elizabeth Edwards’ life and legacy:

Diane and guests discuss Congress’s consideration of The Dream Act, an immigration reform bill, and the Supreme Court’s hearing of a case centered on an Arizona immigration law affecting businesses:


  • 10:06:54

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. The Senate blocked legislation to repeal Don't Ask Don't Tell, dealing a major setback to the legislative effort to end the ban on gays serving openly in the military. President Obama says he believes the final package on tax cuts will be worked out, even as many House Democrats expressed open revolt over the deal he negotiated with Republicans. And we remember Elizabeth Edwards. Joining me for the domestic hour of our Friday news roundup, John Harwood of CNBC and The New York Times, Susan Page of USA Today and David Welna of NPR. Feel free to join us throughout the hour, 800-433-8850. Send us your e-mail to Feel free to join us on Facebook or Twitter. Good morning to all of you.

  • 10:08:06

    MR. JOHN HARWOODGood morning.

  • 10:08:07

    MS. SUSAN PAGEGood morning.

  • 10:08:07

    MR. DAVID WELNAGood morning.

  • 10:08:08

    REHMJohn Harwood, how would you rate this week for President Obama?

  • 10:08:15

    HARWOODI think it was an excellent week for him, actually. The tax deal that he struck with Republicans was surprising, to me, in some ways. The payroll -- I expected that the Bush tax rates would be extended. I did not realize that you would get this major payroll tax cut for workers that is likely to provide some significant stimulus to the economy, and you wrap that together with the expensing provision -- which as Larry Summers told some of us this week is the biggest incentive for capital investment in the history of the country. The president managed to cooperate with Republicans, do something that -- even though many House Democrats are not responding the way that he wanted to -- is likely to be more stimuli to the economy, which is a shared goal of all of them, than anything that we expected was going to be able to be enacted.

  • 10:09:13

    REHMSusan Page, David Brooks' piece this morning in The New York Times called this Obama's very good week. Paul Krugman, by contrast, calls it Obama's hostage deal. How do you see it?

  • 10:09:32

    PAGEYeah, not exactly the natural allies. They are coming -- people are not coming out in the way you might conventionally expect with the Democratic president. I certainly agree with John that the substance of this deal has a lot of strengths. And the more you look at it, in some ways, the better deal it seems to be. But President Obama has a revolt on his left with House Democrats, a lot of anger. The Democratic president has a deal, and a majority of the House Democratic caucus votes to oppose it. I think that's a serious problem.

  • 10:10:05

    PAGEYou know, the complaints that you hear from Democrats, in many ways, with this -- with the exception of the estate tax revision, which has become a big cause, are less on the substance of the deal than the way they got there. He got there by -- without keeping the House Democrats in the loop. He negotiated directly with the Republicans, and he did it without staging a public fight. And, you know, one of the questions about President Obama, who has many strengths -- one of the questions about him is, does he kind of have the guts to have a face-to-face confrontation, a kind of public showdown? He didn't have it in this case. Some Democrats think that was a lost opportunity.

  • 10:10:47

    REHMDavid Welna, how do you see it, the Democrats are hopping mad?

  • 10:10:54

    WELNAThey are. Well, especially the House Democrats who, yesterday, passed a non-binding resolution saying if the tax cut deal stays the way it is, we're not bringing it to the floor of the House.

  • 10:11:05

    REHMWhat did they want to change?

  • 10:11:07

    WELNAWell, mainly, what they want to change is the estate tax provision. They would like to substitute what they passed last year, which would be, basically, what prevailed in 2009 for the estate tax. It was $3.5 million per person or $7 million per household tax free limit. And then after that, a 45 percent tax on everything above that, as opposed to $5 million and $10 million in this deal and only a 35 percent tax rate. And one idea that they have is that when this tax cut package comes to the House floor -- if they let it come to the floor -- they would try to amend it to put that into the package. And that could possibly blow up the deal because Republicans might balk at that. That was the big sweetener for Republicans to accept this deal to put it in.

  • 10:12:00

    HARWOODDiane, there's one other set of things that the House Democrats wanted, which were actually put in the bill last night when Harry Reid laid down -- introduced a version of the deal. And that is renewable energy incentives which go some distance, not all the way, but some distance toward placating House Democrats. And we'll see whether their adjustments -- I would not expect that on the tax rate or the exemption level, they are likely to get adjustments in the estate tax.

  • 10:12:27

    HARWOODI'm advised by some of the policy people in the administration there is some tweaking that could go as you fill out the details of these provisions that affect the scope of its -- of the estate tax's application. I can't honestly explain them to you. Some of it's pretty technical. But those might be something, again, where the administration or Republicans could give Democrats the feeling that they got something, but we'll see.

  • 10:12:53

    PAGEYou know, President Obama expressed a lot of optimism in the interview on NPR...

  • 10:12:56

    REHMWith Steve Inskeep this morning.

  • 10:12:56

    PAGE...that aired this morning that this would pass, and I think that the expectation is that it is going to pass largely intact. And one thing that's helpful is the cost numbers that came out yesterday -- $858 billion for this package. That is a huge sum of money, bigger than the stimulus package that was passed. It is, in effect, a stimulus package that there was no -- there is no other way Democrats could get a package this big through this Congress or the next Congress. So if your number one goal is to stimulate the economy, get the recovery going with a bigger head of steam, this is maybe the best option you have to do that.

  • 10:13:33

    REHMBut how about Paul Krugman's argument that what, in effect, is going to happen is what Republicans wanted to happen right along, which is to make these tax cuts permanent?

  • 10:13:50

    WELNARight. The tax cuts are extended for two years. Of course, that takes it right up to the next presidential election. There's going to be a lot of pressure on Democrats to prolong the status quo, and, in fact, the other provisions that were -- wins for Democrats, really, are in effect for only a year. The unemployment extension is until the end of next year, and the Social Security withholding reduction of 2 percent is also only for one year. So -- in fact, the overall size of this package, it may be $850 billion, but about half of that is just basically extending the status quo. The Bush-era tax cuts will eat up about half of that amount, so it isn't the gigantic stimulus package that we had two years ago.

  • 10:14:39

    REHMOne thing I want to have clarified for me. Those people who've already been receiving unemployment compensation for 99 weeks, will they continue to receive unemployment benefits beyond?

  • 10:15:01

    WELNANot beyond the 99 weeks. That's the maximum. But there are many, many people -- in fact, they figured there are as many as 4 million people who would lose those benefits through February because that was when the House tried to extend those benefits to. And so by restoring these benefits now, you have millions and millions people who will have checks coming to them that may not have otherwise.

  • 10:15:26

    REHMAnd, of course, as the president told Steve Inskeep this morning, he wants to clarify -- my word -- the entire tax code. How is he going to do that, Susan?

  • 10:15:39

    PAGEWell, it's -- you know, this is along the lines of a proposal that we saw in that debt commission report that came out a few weeks ago that would both reduce rates, but simplify -- eliminate deductions. And, you know, this would -- this is -- seems to me, this is such a smart idea for President Obama to talk about. It moves toward addressing the deficit and debt issue, which is a very serious one, and it gives him a powerful issue to talk about as he moves toward his reelection campaign. You remember when President Reagan ran for reelection in 1984. Tax simplification was a big issue on his plate. That actually got passed in 1986. It also leapfrogs this whole debate we're having -- extension of tax cuts in two years. You know, maybe instead of that, we'll have a whole new tax code that is simpler, has lower rates, but is broader.

  • 10:16:28

    REHMWhat do you think, David?

  • 10:16:30

    WELNAThat all sounds very good, except that you've got the Congress to deal with, and getting them to agree on something like this -- it took Ronald Reagan almost three years to get the last big reform of the tax code done in 1986. And he was dealing with a Congress that was controlled by the opposition at the time, but he was also in a situation where it was pretty clear the finances weren't working out. And, also, this was not really a reform that led to greater revenues coming in for the government. It was actually just shifting things around. It was pretty much status quo in terms of the treasury.

  • 10:17:10

    REHMJohn Harwood?

  • 10:17:11

    HARWOODI totally agree with David. It's an extremely heavy lift. But let me just give you the case for why this deal might serve the president's interests in more than just economic stimulus. One is that this president was locked into a promise not to raise taxes on anybody under $250,000. He's got a big debt deficit problem long-term. By making these tax cuts temporary, rather than permanent, makes it easier for him to get out of that promise. Second of all, as part of that -- as Susan just indicated, as part of that long-term effort for a big deal on debt and deficits, tax reform may very well come in the mix. I don't think it's going to come immediately. I don't think it's going to come this year.

  • 10:17:52

    HARWOODBut the idea of broadening the base, lowering the rates, perhaps finding a different source of revenue while you lower the corporate and the individual rates -- for example, a carbon tax, value added tax. These are all things that are in play as a result of these bipartisan commissions. And, I think, if you gave truth serum to President Obama and made him say what his real long-term plan is, I think all of those things might be in his head.

  • 10:18:17

    WELNAThere would be a problem, of course, with his campaign promise not to raise taxes on the middle class. And I guess that by taking away the mortgage interest rate -- interest deductions, you could say that's not raising taxes. That's simply taking away privileges. But he would have to deal with that.

  • 10:18:35

    REHMDavid Welna, congressional correspondent for NPR, Susan Page of USA Today, John Harwood of CNBC and The New York Times. Short break. Right back.

  • 10:20:03

    REHMWelcome back. I've got a last question for each of our journalists on this issue of the agreement between President Obama and Republicans on the whole issue of money. Is it going to pass, David?

  • 10:20:23

    WELNAI think it will. In the House, if all the Republicans were to vote for it -- I don't know if that's going to happen -- they would need at least 39 Democrats to go for it. I talked to one yesterday, Tim Walz from Minnesota. He said, boy, if we get some tax breaks for ethanol in there, you know, I'm there. And that's what they got. In the Senate, since we already know that there are these two Republicans who are going to vote against it -- Jim DeMint and George Voinovich -- there will have to be at least 20 Democrats who will vote for it. A test vote last night showed that most Democrats seem to be in favor of it.

  • 10:20:58


  • 10:20:58

    PAGEI think it'll pass largely intact. I think the people who will like this best will be independent voters. They like seeing both sides working together. These are voters who have -- their support of President Obama has eroded. Their support of Democrats has eroded. This is going to be a help for the president among those people.

  • 10:21:15

    REHMJohn Harwood.

  • 10:21:16

    HARWOODYes, it will. Bet on it. Nancy Pelosi will not let this deal go down.

  • 10:21:20

    REHMHere's an e-mail from Dave in Silver Spring. He says, "President Obama has been criticized for compromising. This is what good leaders do. He's been willing to compromise on the health care bill, the stimulus bill, tax cuts, and what has he received for his cooperation? Rock-hard opposition by Republicans, conservative funding rioters to disrupt town hall meetings, Democrats locking doors, pushing legislation without input from the other side. Thank you, Mr. President, for sticking to your promise to work with everyone. Too bad no one else has this leadership quality." Well, I guess he was not one of the people who voted for Republicans in this 2010 election. We've got lots of callers waiting, but I want to ask you about Don't Ask, Don't Tell. David Welna, a fatal blow?

  • 10:22:31

    WELNAI think it's looking very grim for getting that Don't Ask, Don't Tell policy repealed in this lame duck Congress because the defense bill that it's attached to requires a very large amount of time. I don't think they have the time left. There's the idea of introducing a standalone bill. But that, of course, would have to go through all of the big waiting periods that you need to get something through the Senate. I don't know if they have the time for that. I think that it's probably going to end up being the courts that actually overturn this policy.

  • 10:23:04

    REHMAnd, Susan, if it's not going to pass in the lame duck session, certainly not going to pass in the next congressional session?

  • 10:23:12

    PAGEYou know, a less friendly climate in the new Congress, the more Republican Congress. Even though a Gallup poll that came out yesterday showed 67 percent of Americans support a repeal, that's a -- that's a pretty decisive public opinion. Dave, of course, covers Congress more closely than I do. I just wouldn't -- I guess I wouldn't count a repeal out entirely in the lame duck. It's -- this is a measure that's had nine lives and does have the support of a majority in the Senate, so...

  • 10:23:38

    REHMSusan Collins, Joe Lieberman say they'll continue to push.

  • 10:23:42

    PAGEThat's right. And other Republicans, like Lisa Murkowski and Scott Brown, say they'll vote for it, but they want to do the tax cut deal first. So, I think, it is still conceivable that it gets through in the lame duck, but, clearly, the prospects for it are a little dimmer now than they were before the Senate action.

  • 10:23:56


  • 10:23:57

    HARWOODI agree with Susan. I think it's uphill, but I think it's still alive. There are some times in the Senate when you can hold your people on one vote or two vote or three votes, but ultimately, you get worn down. And Mitch McConnell held enough people to prevent them from getting 60 votes to move this yesterday. I'm not sure he can do that if it happens -- say, if it comes up once or twice more in this lame duck.

  • 10:24:24


  • 10:24:25

    WELNAIt would take a full week to get a standalone bill through the Senate. And there are tradeoffs here because President Obama wants the Senate to ratify the new START Treaty. There may be time for that, still, in this lame duck session, and I think they've sort of written off doing the defense bill at this point. And yesterday's vote, I think, sort of drove a stake through that. So I guess they have a choice: new START or Don't Ask, Don't Tell repeal.

  • 10:24:49

    REHMIs he going to get new START?

  • 10:24:51

    WELNAJon Kyl, who is the lead point man for the Republicans on this, is still saying he doesn't think there's time left in the lame duck session to do it. He'd rather do it next year when they have a lot more time to do it. But a lot of other Republicans, including John McCain, who's a very close ally of Kyl's, are saying, you know, they think that it could be done as long as the White House makes a few more concessions, crosses some Ts and dots some Is.

  • 10:25:15

    REHMAnd, of course, John McCain wanted the strongest opponents to overturning Don't Ask, Don't Tell come out very, very strongly. You know, I think we, as voters, get frustrated seeing all of this hard work delayed until the last three weeks of Congress.

  • 10:25:40

    PAGEYou know, one question I'm curious about -- I don't know the answer for this -- but having struck a deal with Republicans on the tax plan, and that -- if that goes through, does that make it easier to get deals on some of these other things, just even in the final days? 'Cause you know that, even things that seem difficult, sometimes the stars just align at the end, and they happen. I think that is possible with the START Treaty and possible with Don't Ask, Don't Tell. Sometimes there are repercussions from cutting a deal, getting it through, building a little bit of trust.

  • 10:26:10

    HARWOODI agree with that. I mean, sometimes it can work in the opposite direction...

  • 10:26:12


  • 10:26:12 well...

  • 10:26:13


  • 10:26:13

    HARWOOD...because having cut one deal, members are eager to show they're not too accommodating to the other side because they've got problems with their own partisans. But I -- if I were betting, I would bet that the START Treaty passes and Don't Ask, Don't Tell is repealed before the end of this year.

  • 10:26:32

    REHMIn this lame duck...

  • 10:26:33


  • 10:26:34


  • 10:26:34

    PAGEWell, Dave might take that bet so...

  • 10:26:37

    REHMDavid Welna.

  • 10:26:37

    WELNANo. Of course, Congress aims to adjourn one week from today.

  • 10:26:42


  • 10:26:42

    WELNAThe soonest the Senate can pass the tax cut package would be Wednesday of next week, and then the House would have to deal with it. And if they make any changes to it, the Senate would have to deal with it again.

  • 10:26:51

    REHMWhy haven't some predicted they're going to vote on this on Christmas Eve?

  • 10:26:56

    WELNAWell, they -- if they were going to do any of these other things, they would probably have to come in the week before Christmas. And, in fact, I think most of them are resigned to that happening. They did it last year...

  • 10:27:07

    REHMYeah, yeah.

  • 10:27:07

    WELNA...and they could keep it up.

  • 10:27:09

    REHMWell, at least they kept the -- they voted to keep the government running, Susan.

  • 10:27:14

    PAGEWell, this bill's passed the House. I don't think it's passed the Senate yet. The Senate still has to consider the spending bill. I think the funding runs out Dec. 18, so the deadline is upon them to pass this measure. And what the House did was have this continuing resolution that funds the government act to go through the fiscal year, so 'till -- to Oct. 1, which would kick down the road until next fall a confrontation that we know will be coming between the White House and Republicans over the next year's budget.

  • 10:27:44

    HARWOODI do think one thing we can conclude from the fact that the Republican leadership wanted to make this deal with President Obama is that they're sensitive to the idea that as soon as they get in charge, things shut down. So I do not think they want a government shutdown of the kind that was a problem for Newt Gingrich and the Republicans. I think they want to show some capacity to govern and work with President Obama. How long that will last, I don't know.

  • 10:28:10


  • 10:28:10

    HARWOODBut I think it's true right now.

  • 10:28:12

    REHMOne of the elements of the tax package, namely some very conservative commentators arguing that Republicans did not get enough because they did not get these tax cuts made permanent.

  • 10:28:32

    PAGEWell, first of all, no tax cut is permanent. I mean, the next Congress can always change the tax rate. And this is one more reason why both sides are very anxious to get this done in the lame duck because you don't -- you got a lot of new members coming in, some more conservative members. Some of them have problems with the cost of this. They think it costs too much, not enough concern about the deficit in it. So I think it serves both sides' interests to get this done as quickly as possible.

  • 10:28:55

    WELNAAnd, Diane...

  • 10:28:55

    REHMIs this why Paul Krugman says, you know, you are just kicking this whole argument one more year down the road, that you're going to face the same issue over again?

  • 10:29:09

    WELNAWell, you know, at the same time, I think the argument could be made that because we're in the economic straits we're in, that doing something for two years is -- the idea is to stimulate the economy enough so that at the end of those two years, you'd be in much better circumstances, and you wouldn't have to extend that beyond that.

  • 10:29:24

    REHMBut then you come up on another presidential election.

  • 10:29:28

    WELNAAbsolutely. There's ...

  • 10:29:29

    HARWOODCan I just make one point about this, though?

  • 10:29:30


  • 10:29:31

    HARWOODBecause Democrats are making the same complaint Krugman is from the left, saying, oh, he caved in, he should have fought and all that sort of thing -- when we were in the heat of the campaign year, and Democrats -- before they got slaughtered in the election and they had unequivocal control of the agenda -- they were not willing to go to the mat to get rid of those top-end tax breaks in July or August or September or October. So it's a little empty for them to complain and rage at the Obama White House for making this deal now when they could have brought it up and voted on it and passed it, but they didn't.

  • 10:30:10

    WELNAAnd they may have lost more seats than they lost in November had they done that. That was the problem that they faced. And in the end, they got cold feet and decided to just punt it into the lame duck, and here we are.

  • 10:30:21

    REHMAll right. Let's talk about the DREAM Act. Again, another piece of legislation delayed in the Senate, Susan.

  • 10:30:31

    PAGERight. Senate Democrats brought this up. They couldn't get enough votes to move on to debate it. They...

  • 10:30:38

    REHMLet's explain what it is.

  • 10:30:40

    PAGEWell, the DREAM Act would provide a path to legal status for people who were children when they were brought to this country illegally and who have gone to college, have served in the military. It gives them a process to become legal in this country. It's criticized by opponents as a form of amnesty. It's supported by advocates as the right thing to do for people who grew up here and view themselves as Americans.

  • 10:31:07

    REHMAnd what's going to happen to it?

  • 10:31:09

    WELNAWell, the House passed it, and -- now, the Senate had already scheduled a cloture vote to move ahead on its own version of the DREAM Act. But the House went ahead and approved its version, and so Harry Reid tried to call off that vote yesterday. Republicans insisted on holding the votes so he just held that -- tabled that motion. They want to take the House bill, pass it in the Senate, and at that point it will be enacted. It can go right to President Obama's desk. Whether that's going to happen...

  • 10:31:40


  • 10:31:40

    WELNA...who knows.

  • 10:31:41

    REHMNow, opponents argue that this is the camel's nose under the door -- under the tent that, in fact, what you really need is a package of immigration reform, a big package and that this is just one step, John.

  • 10:32:02

    HARWOODI agree that is what the Republicans want, and I think this is one that's not going to make it in the lame duck. I don't think they've got the votes to break a Republican filibuster on this. I think this is going to be on the table over the next two years. I don't know whether or not you can get a comprehensive immigration deal in this Congress because Republicans and the president are pretty far apart on the primacy of enforcement as compared to a path to citizenship. Don't think they can do it in this lame duck.

  • 10:32:35

    REHMJohn Harwood, chief Washington correspondent for CNBC and a reporter for The New York Times. You're listening to "The Diane Rehm Show." And there's the Supreme Court Arizona Immigration Law that is currently under consideration. What's this case about, Susan?

  • 10:32:58

    PAGENow, this is not the famous Arizona law that has been so controversial that would allow or require law enforcement officials to check on the legal status of people they encounter if they suspect they're here illegally. This is an -- this is a different law that Arizona passed that would revoke the business license of companies that knowingly hire illegal aliens, so it's another way to try to -- and that is a very tough measure for a company because if you lose your business license, of course, you can't operate in the state. The argument is that it conflicts with the immigration law -- the federal law that was passed in 1986 that laid out ground rules across the country, and it said that states can't pass their own rules. These federals rules are the rules that have to apply.

  • 10:33:40

    REHMAnd doesn't this also involve if your business -- if your company doing business in Arizona and you own another company doing business in another state, that that would also be affected? Am I wrong?

  • 10:33:59

    PAGEI don't know that.

  • 10:34:00

    REHMNo answer.

  • 10:34:00


  • 10:34:01

    REHMOkay. David.

  • 10:34:02

    WELNAIt could cross state lines, yes. I mean...

  • 10:34:03


  • 10:34:04

    WELNATypically, it's been a fine of $500 or so for hiring people who are undocumented. In many ways, this is like stripping a doctor of his license to practice.

  • 10:34:14


  • 10:34:16

    WELNAWell, in Arizona, if the doctor happens to be there. But some of these companies do have franchises and branches elsewhere, and if they lose their license, especially if they're based in Arizona, that would have a big impact on the other operations.

  • 10:34:29

    PAGENow, based on the way the arguments went in the Supreme Court, I think court watchers think this law is likely to be upheld because you need to get -- the lower court upheld it. You need to get five justices to say -- to knock it down. Court watchers say, based on the questions that were asked and so on, the predilections of the justices -- that this law may well stand.

  • 10:34:53

    REHMAll right, let's talk about another element of justice. The State Department is saying that Julian Assange is not a journalist. What does this mean, John Harwood?

  • 10:35:10

    HARWOODWell, he doesn't strike me as a journalist either. I think it's -- it goes to the question of whether you can prosecute Julian Assange and WikiLeaks for disseminating this information. Journalists have not been subject to prosecution for information they receive and publish on First Amendment grounds, but the -- but leakers can be prosecuted. So is Julian Assange a leaker? Is he a middleman? I think that's the stakes in the discussion, and, you know, we'll see what -- once a prosecution is launched of Julian Assange -- which I would expect -- we'll see whether that view is vindicated.

  • 10:35:48

    WELNAWell, he has not even been charged by the U.S. government yet. I would call him a disseminator. And given the lack of any kind of international boundaries on the Internet, you know, this kind of thing is -- I think maybe we're only beginning to see the beginning of what could be just a whole movement towards putting stuff out there and having retaliatory attacks against those companies, such as Visa and MasterCard or PayPal, that restrict contributions. I mean, that happened this week as well and...

  • 10:36:22

    REHMBut, apparently, that was because of the actions of one 16-year-old who has now been arrested. But if the Justice Department -- if Eric Holder, on whose shoulders this whole thing rests, decides to prosecute Julian Assange -- I mean, there are some people who want to label him a terrorist. What would that mean for the likes of NPR, USA Today, The New York Times? Disseminators? Give me a break. I mean, we're all over the place.

  • 10:37:04

    PAGEAnd in a world in which anyone can start a blog or an e-mag and write articles and post them, the definition of a journalist is something we're debating. We're not like doctors, you know? There's a licensing process for doctors. For journalists and -- historically, if you're writing stuff and publishing it, you're a journalist. That debate is getting a lot more complicated.

  • 10:37:24

    HARWOODWait, I think you need to have a license to be on this show.

  • 10:37:26

    REHMYeah, right. And you got to sign as you leave. Now, let me just add a postscript. The Russians issued a statement this morning, saying Julian Assange should be given the Nobel Peace Prize.

  • 10:40:03

    REHMWelcome back. Time to open the phones for your comments, your questions. Let's go first to Clinton, Ark. Good morning, Barbara. You're on the air.

  • 10:40:15

    BARBARAYes, good morning, Diane.

  • 10:40:16


  • 10:40:16

    BARBARAThanks for taking my call.

  • 10:40:17


  • 10:40:18

    BARBARAI think we're spending way too much time worrying about whether rich people pay 55 percent or 35 percent on their estate taxes. Those generate relatively small percentage of the tax revenue of the U.S. government. We need to permanently put in place the research credits so companies can be comfortable in starting research projects that generate jobs. We're just diddling about details, and we really need to focus on how we develop our economy. We already have in place something that has been useful, but companies aren't confident until they know that that's going to be available next year and the year after.

  • 10:41:01

    REHMAll right. What do you think, David Welna?

  • 10:41:03

    WELNAWell, in terms of the cost of the -- this estate tax scheme, if the estate tax were to go back to what it was in 2001, the treasury would be taking in $68 billion more than it will be with the 35 percent rate in the $5 and $10 million ceilings. And as far as certainty with business -- I mean, I hear this a lot on Capitol Hill, too, but we need certainty. But doesn't everybody? I mean, you can provide maybe a bit more certainty, but who knows what the economy is going to be like three years from now? You know, there are lots of other factors than tax policy.

  • 10:41:44

    PAGEAlso, just to note, the research and development tax credits were -- are extended in this tax cut deal.

  • 10:41:50

    REHMAll right. To Portsmouth, Ohio. Good morning, Richard.

  • 10:41:55

    RICHARDGood morning. My question is in regard to the extension of the tax cuts. If I have been correct, we made use of the place since '01 and '03. So I would think there'd be evidence of how effective they've been in job creation or anything in that arena.

  • 10:42:16


  • 10:42:16

    RICHARDAnd if you can clarify that for me, I'd really appreciate it.

  • 10:42:18

    REHMOkay. David Welna.

  • 10:42:20

    WELNAWell, that's an argument you hear a lot from Democrats. If these tax cuts were so important, why is it that we didn't have the kind of job growth that is needed right now? In fact, keeping them in place is just status quo. It really doesn't kick up the economy anymore. I guess the big concern is, if you take that income away from people, you could have a big hit in consumer spending, and you can have more of an economic slowdown. That would be for the tax cuts that affect people with modest incomes. The thinking is that for very wealthy people, taking the 4.6 percentage points -- or keeping their taxes from rising 4.6 percentage points probably won't make much difference because that was an income they were going to spend anyway.

  • 10:43:04

    REHMHe kept -- President Obama kept referring to wanting to shield lower-income people from waking up Jan. 1 finding their taxes much increased. To what extent do you think he made his point well and clearly, John?

  • 10:43:27

    HARWOODWell, I think he made his point as clearly as it's possible to. He's been trying to make this argument for some time. I think his argument was augmented by the fact that he's offering a big new tax cut for people in the form of this payroll tax reduction. So, where in the stimulus plan, his Make Work Pay tax credit gave $400 per person, $800 a couple. If you make $75,000 a year as a couple, you're going to get $1,500 instead of $800. So that is a substantial increase. And, you know, the president's got to -- in the end of the day, the president gets judged on results in the economy. The results have not been there for the first couple of years in ways that people can appreciate it. If we get job growth and economic growth going in a more robust way, he will get his reward for this deal.

  • 10:44:21

    PAGEBut, you know, the Make Work Pay tax cut that most Americans got, people didn't realize it. You go to -- during the midterm campaign, I was traveling all across the country. People kept claiming that they had not gotten any tax cut. And -- so you've got to make -- you got to explain to people...

  • 10:44:36


  • 10:44:37

    PAGE...what it is you're doing.

  • 10:44:38


  • 10:44:38

    PAGEAnd I think that's something that the president has not done as well as he might.

  • 10:44:41

    REHMAll right. To Laurel, Md. Good morning, Leon.

  • 10:44:45

    LEONHi. Good morning, Diane. They're -- all the callers have been dead-on, and I am a -- as blue as you can get and an Obama supporter. But what the frustration that I have is the fact that he spoke on the campaign trail, about 85 times, talking about he would allow the tax cuts -- the Bush tax cuts to expire. He ran on that for, essentially, two-and-a-half years, and then he goes and makes a deal with the Republicans in a nonpublic way. And doing it privately has frustrated a lot of folks like me because he has not communicated to American people the value of what it actually is in numbers.

  • 10:45:37

    LEONIf someone is making $100- or $150,000 or, as an example, if he wanted to make the tax cuts -- the taxes go up on people making $250,000 or more, that number should be stated by the him publicly. He needs to have a press meeting and say, look, if you make $400,000 a year, you are going to pay $5,000, and that relationship or ratio should be explained. Okay, you're making $400,000? Then, sure, yes, you are paying $5,000 in taxes. But our country is only as strong as the weakest of us.

  • 10:46:18


  • 10:46:19

    WELNAWell, one clarification. When President Obama was campaigning, he campaigned to make the tax cuts that applied to income under a quarter million dollars per household permanent and let the other -- the tax cuts affecting income above a quarter million expire. Now, he, in the end, did not stick to either of those promises. It was a temporary extension of the tax cuts for the lower levels. And, also, he is saying, let's have two more years of the tax cuts for the upper income levels. This was the price that he felt he had to pay to get the concessions that he wanted, especially for unemployment insurance.

  • 10:47:02

    REHMAll right. Here's a question from Scottie in Richardson, Texas. He says, "I fail to understand how the reduction of individual's Social Security tax contributions will ever be allowed to expire in one year. There is no possibility the Democrats will ever be able to support extending that tax holiday. That reduction in the tax rate will never go back up again. This deal was really just the latest salvo in the Republicans' 80-year long fight against Social Security. And this one is, in effect, a time bomb for that program. If the deal goes through, historians will mark this moment as the true beginning of the slow death of the new deal." David.

  • 10:48:01

    WELNAI spoke with House Democrats yesterday who were very, very concerned about the money that Social Security would be deprived of because of this one-year program, and they wanted it to be offset for spending, to be cut elsewhere to make up for it. Some of them even suggested taking away the cap on income that is susceptible to the Social Security tax. Right now, it's capped at around $106,000. If you took that away and taxed all income for Social Security, you would basically solve the problem of the Social Security deficit.

  • 10:48:35

    REHMRight here and now, John.

  • 10:48:39

    HARWOODI understand the caller's point, but I think history has shown us that the Social Security program is not that fragile. I think that money will be paid back. I do think we will have, some time in the next handful of years, a compromise on Social Security that will lift the cap to some degree. I don't know if it will be lifted all the way, and they will deal with Social Security's finances. But this money is not going to go away from the program forever.

  • 10:49:03

    REHMHere is an e-mail from Leslie who said, "I heard Lamar Alexander on "All Things Considered" yesterday say that the extension of tax cuts for the wealthy would create jobs. Why haven't these jobs been created already since these tax cuts or rates are in effect right now?" We talked about that a little earlier, Susan.

  • 10:49:31

    PAGEMm hmm. You know, it's hard to imagine that extending the current tax rates for the wealthy creates jobs. I think the -- there's...

  • 10:49:39

    REHMHe refused to call them tax cuts, by the way.

  • 10:49:42

    PAGEYeah, the -- but there's a -- Diane, it's perfectly fair to argue it doesn't have a positive effect. The argument is, if you fail to do this, would it have a negative effect and cost you jobs because you had raised the tax rates for the wealthy in the middle of a very fragile recovery?

  • 10:50:03

    REHMAll right.

  • 10:50:03

    WELNAAnd I will say, Diane, that there are few economists who will say, it will have no positive effect. The argument is over how much positive effect...

  • 10:50:11


  • 10:50:12

    WELNA...and whether it's as positive as other ways in which you could spend the money and stimulate the economy.

  • 10:50:16

    REHMMm hmm.

  • 10:50:16

    PAGEThere might well be better ways to spend that same amount of money, in terms of stimulating the economy, but those are not ways that are going to get approved by this Congress.

  • 10:50:23

    WELNABingo. The CBO found that it was, in fact, the least productive way to spend money to create jobs, giving these tax cuts to the wealthiest. So I think that...

  • 10:50:32


  • 10:50:34

    HARWOODI mean, of all the options, they chose the worst option...

  • 10:50:37


  • 10:50:37

    HARWOOD...but it – politically, that seemed to be the one that they had to choose.

  • 10:50:40

    REHMAll right. To Warrenton, Va. I think Tom is ready to get out into the streets to protest. Are you, Tom?

  • 10:50:49

    TOMYes, ma'am. I'm a liberal people. I'm a Democrat. I'm 55. I'm left of McCarthy -- left of McGovern. But I am fed up. I don't have a violent bone in my body.

  • 10:51:04

    WELNAThank goodness.

  • 10:51:05

    TOMI'm a self-employed carpenter, and I'm just fine. I have no health insurance. I'm in good health. I'm worried about my children. In the town where I live, Sentara Health continues to build beautiful new hospitals while the public schools disintegrate. I have offered to take over empty public school buildings and hire all the men -- I'm a carpenter -- all the men I know to renovate these buildings. I'm getting no response. I've got nice form letters from President Obama, from Senator Webb, from Bob Goodlatte, but all I get are form letters. So I am ready to protest. I do not own a gun, but I will take the torch, even though I have children.

  • 10:51:41

    REHMIt's fascinating that while we sit here, you see these protests breaking out in England, in Britain, over the increase -- the tripling of the tuition costs. And you saw the car in which Camilla and Price Charles riding yesterday attacked.

  • 10:52:04

    WELNAI think it's going to be very interesting next year to see what the House Republicans choose to cut from the budget. And, you know, there's been a lot of talk about we have to spend less, but there's been very little concrete about exactly what are they going to cut. And when they actually push ahead with that, who knows what the reaction is going to be here?

  • 10:52:26

    PAGEBut one thing you hear from Thomas is liberal unhappiness on a whole store of fronts, which include this tax cut bill, no public option in health care, failure to repeal Don't Ask, Don't Tell, you know, a whole string of things that liberals thought they were going to get out of this administration that they haven't seen yet.

  • 10:52:41

    REHMAnd that is the voice of Susan Page. She's Washington bureau chief for USA Today and a frequent sit-in host for me on this program. And you're listening to "The Diane Rehm Show." And as always, Susan, I thank you.

  • 10:53:01

    PAGEThank you.

  • 10:53:02

    REHMLet's go to Tony in -- I think it's Geneseo, N.Y. Good morning.

  • 10:53:08


  • 10:53:09

    REHMHi, Tony.

  • 10:53:11

    TONYLet the tax cuts expire. You know, I think that it puts pressure on the Republicans to compromise. Fifty percent of the Republicans themselves in this country want the tax cuts to expire in the most wealthy, and then we could use that gain by letting those tax cuts expire to pay for the things that we need to pay for, like unemployment insurance. I think there'll be tremendous pressure on Republicans, if these things expire, to give some tax cuts to the lower end of the income scale and give unemployment compensation. There's no way that they could possibly withstand that for more than a month.

  • 10:53:50

    REHMWhat do you think, David?

  • 10:53:51

    WELNAIt would be a Congress that is fortified very much in a -- the Republican ranks next year that would deal with that. And I think Democrats think that they would probably get less than what they're getting right now by making this deal. You can't let the tax cuts expire for the upper income brackets right now because Republicans would not agree to letting the rest of the tax cuts be extended. So, I mean, you're in a situation where you let everything go, and Democrats are afraid that they would take the political hit because they're the ones in charge of the Congress that would let them expire. And they face the prospect of getting much less than they may get right now with the Republican-dominated Congress next year.

  • 10:54:34

    REHMHere's an e-mail from Ted in Phoenix, Ariz. He says, "To hear Susan Collins tell it, the repeal of Don't Ask, Don't Tell failed in the Senate yesterday because of Harry Reid. Is that correct? I do believe Harry Reid supports repealing this. But did that fail yesterday because Reid had higher priorities for other matters to get accomplished before the Senate adjourns?" David.

  • 10:55:04

    WELNAReid had been negotiating all week long with Susan Collins. He had offered Republicans 10 amendments on the defense bill, Democrats, five amendments. The only disagreement was over how much time that they would spend on it. But I think Reid just, in the end, got exasperated. He just showed up on the Senate floor and said, let's have a vote. And I think that it was actually Republicans making this compact that we're not going to go ahead with anything until the tax cuts are dealt with that spelled the doom of this vote yesterday.

  • 10:55:32

    REHMSusan Page, Elizabeth Edwards died this week. She stopped all treatment. The cancer that initially was breast cancer had spread to the liver. How is she going to be remembered?

  • 10:55:47

    PAGEYou know, I'll remember her as not the stereotype of a political wife. She loved politics. She loved being engaged in it. She loved talking politics. She was an important strategist for her husband. I think many Americans, though, remember her for grace under pressure, with dealing with the infidelity of her husband and then dealing with the harsh cancer that then, in the end, took her life.

  • 10:56:11

    REHMHere's an e-mail from Paul in Raleigh who says, "I believe the planned picketing of Elizabeth Edwards' funeral tomorrow by that little Baptist church is an abomination and downright rude." John.

  • 10:56:27

    HARWOODI couldn't agree more. I think those people ought to understand the need to give respect for people who are grieving. And this has come up in other contexts before, and I think that it's contemptible what they're doing.

  • 10:56:44

    REHMAnd one last comment from Edith in St. Louis, who says, "I can't help but thinking that Elizabeth Edwards is the one who should have been running for president." John Harwood, Washington correspondent for CNBC, reporter for The New York Times, coauthor with Jerry Seib of "Pennsylvania Avenue: Profiles in Backroom Power." Susan Page, Washington bureau chief for USA Today. David Welna, congressional correspondent for NPR. Thanks to all of you.

  • 10:57:25

    PAGEThank you.

  • 10:57:25

    HARWOODThank you.

  • 10:57:26

    REHMHave a great weekend, everybody. Thanks for listening. I'm Diane Rehm.

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