MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Lawmakers are coming down to the wire on a debt ceiling deficit deal. The president picked former Ohio Atty. Gen. Cordray to head the new Consumer Financial Protection Bureau. And the FEC ruled the Edwards' presidential campaign must repay the government more than $2 million.

MS. DIANE REHMJoining me for the domestic hour of our Friday News Roundup, Naftali Bendavid of The Wall Street Journal, Sheryl Gay Stolberg of The New York Times and Reid Wilson of National Journal Hotline. You're invited to join us throughout the hour, 800-433-8850. Send us your email to drshow@wamu.org. Feel free to join us on Facebook or Twitter. Good morning to all of you.

MR. NAFTALI BENDAVIDGood morning.

MS. SHERYL GAY STOLBERGGood morning.

MR. REID WILSONGood morning.

REHMHow far apart or how close are we to a deal on this federal budget and the deficit and raising the debt ceiling, Naftali?

BENDAVIDWell, I guess we have to be relatively close because, in 11 days, the government is no longer going to be able to pay its bills. The thing that's emerged most recently is that John Boehner and President Obama have been talking all this time about what they call a big deal or a grand deal that would close the deficit by something like $4 trillion, perhaps $3 trillion of it in spending cuts and $1 trillion in tax increases.

BENDAVIDBut the details remain very fuzzy. There's still great disagreement on both sides. In fact, both sides are denying that they're anywhere close to a deal. And the dynamic we've seen recently is that every time something bubbles up, it's immediately shut down by people on one side or the other.

REHMWhy is that? Why is that happening?

BENDAVIDWell, you know, the stakes are very high here, and people have very strong feelings about this stuff. You know, we're talking about how we're going to handle the nation's finances for the next decade. There's a group of Republican freshmen in the House that are absolutely dead set against any tax increases, revenue increases of any kind at any time.

BENDAVIDAnd on the other side, Democrats are really starting to worry, as we saw in a fairly tempestuous meeting of Senate Democrats yesterday. They're starting to worry about Social Security and Medicare being cut without any commensurate increases in revenue. So tempers are getting short. You know, temperatures are hot in Washington.

BENDAVIDAnd the rhetoric is inflammatory. And it's just really kind of a bad atmosphere in Congress right now.

REHMSheryl.

STOLBERGYes. You know, this is going to be very painful for both sides, right? Democrats do not want cuts in entitlement programs, like Medicare and Social Security.

REHMBut they're talking about such small cuts.

STOLBERGThat's true. But Democrats were hoping to campaign in 2012 by asserting that Republicans were the party of cutting Medicare and Social Security. Now, faced with this grand bargain, if it goes through, they will be led by a president of their own party who wants to bring them along to doing the very thing that they campaigned against doing.

STOLBERGAnd on the other side, Republican freshmen, the ones that Naftali referred to, came to Washington saying, no new spending, and we're not going to raise this debt ceiling. We're going to cut spending, and we're not going to impose any tax increases, even if those tax increases are, you know, closing loopholes. So on their side, they're balking as well.

STOLBERGAnd, you know, when Americans look at this, if this kind of grand bargain goes through, it could be very alarming. It could, for instance, eliminate the mortgage interest tax deduction, a very, very popular tax deduction.

REHMOn homes...

STOLBERGOn home...

REHM...above $500,000.

STOLBERGRight. But still, Americans who file their taxes are accustomed to getting this deduction, and, you know, everybody is going to be in pain at the end.

REHMSo, Reid Wilson, President Obama wrote an op-ed piece for this morning's USA Today, talking about why cuts are necessary. He said a number of steps must be taken right away, extending tax relief for middle-class families, putting construction workers back on the job, building roads and highways. Did he make the case for the grand bargain?

WILSONWell, I think both sides are -- what both sides are doing at the moment is sort of laying the foundation to get their own members to vote yes on whatever eventually comes out. President Obama has a significant amount of work to do with Senate Democrats, with House Democrats, to get them to accept what they don't want to accept.

WILSONThe meeting yesterday, which the idea of a grand bargain broke while Senate Democrats were meeting with Jack Lew, the head of the Office of Management and Budget, was described by one senator as volcanic. It was not...

REHMBarbara Mikulski.

WILSONExactly. It was -- and on the Republican side, the Republicans -- John Boehner, who is negotiating this deal, has to get his own freshmen to move off this position, that they simply cannot vote for a debt ceiling increase at all, whether or not it comes with spending cuts. That was a little bit -- we saw that a little bit in the cut, cap and balance bill that went through the House.

WILSONBut there has to be a -- something larger to get to that -- the revenue increases. We have seen again and again and again these sort of presentations behind closed doors to House Republicans trying to sort of scare them off their position. Last week, it was a slide-by-slide presentation, day-by-day, what the government will owe in early August if the debt ceiling isn't increased.

WILSONAnd the message to freshmen was the problem gets really bad really fast. There is no getting around it. Just yesterday, bunch of officials from ratings agencies came in and met with House Republicans and warned them what happens if the national debt cuts...

REHMWas that enough?

WILSONWell, we'll have to see. Republican leaders, though, are in -- I mean, they're in this position in which they have to convince their own members to move off the position that those new members think they were elected to defend.

REHMThe big dime.

BENDAVIDYeah, I mean we're seeing a little bit of diversions of interest, I think, in both sides between party leaders and the party rank and file. President Obama and Speaker Boehner, they both really want this grand deal. They want it badly. I think they're thinking, in part, about the country, but they're also thinking about history and their legacy and how they want to present themselves.

REHMAnd next year's election.

BENDAVIDAnd next year's election, particularly, I think, in the case of President Obama. But the rank and file in both sides, they're very whetted to their party principles, what they see as fundamental, you know, things that their party stands for. They're also thinking about the next election. They don't want to face primaries. And I think the real wildcard in all this is the House Republicans.

BENDAVIDNobody knows what they're going to do. They don't feel this sort of loyalty or obligation to party leaders that we're used to seeing. There's two parts of this deal. One is having Obama and Boehner agree, and the second part is having them bring their own members along. And nobody knows how that second part is going to go. I don't even think Speaker Boehner and Eric Cantor know what the Republican freshmen are going to do.

REHMIs anybody -- or tell me who you think, doing this kind of bargaining, is truly thinking about the American people.

STOLBERGLook, I don't want to presume motive, but I will say this. I think that President Obama and John Boehner are more in keeping with where the American people are. And it's fascinating to watch these two men. You know, they played golf together a few weeks ago. They've obviously forged a working relationship together.

STOLBERGAnd if you look at the polls just out this week, you can see that the majority of Americans are right where John Boehner and Barack Obama are. The majority want to reduce the deficit through a combination of tax increases and spending. Fifty-eight percent in The Washington Post poll, published the other day, said their leaders were not doing enough to strike a deal. So, obviously, the public wants the leaders to work harder at striking a deal.

STOLBERGFully 80 percent, 80 percent of the public dissatisfied or angry about the way the federal government is working. You know, a lot of people out there in America, I think, are tearing their hair out at Washington. It's the kind of behavior that parents of teenagers just go crazy over, right, because they have a big problem, and they leave it to the last minute.

STOLBERGAnd you're constantly saying, why can't you get this done on time? And that's what's happening here.

WILSONAnd Sheryl just stole the numbers that I was about to cite, but, I mean, that same ABC poll shows just how angry people are with Washington, D.C. ABC-Washington Post poll talks about, you know, 63 percent of Americans say they're going to look around for somebody else to vote for rather than their own member of Congress. Only 30 percent say they'll vote for their own member of Congress in next year's elections.

WILSONThis -- I feel like there are a lot of parallels here to the 1992 elections. The -- when there were a lot incumbents lost their seats, there wasn't a big, giant shift as there was two years later in 1994 when the Republicans took over. But people were angry at Washington, D.C., and...

REHMSo putting aside the politics, what would it do if, in fact, the U.S. government were downgraded, Naftali?

BENDAVIDWell, I mean, I think almost everybody agrees it would be a disaster, and the ripple effects would be enormous. I mean, we're starting to see that a little bit because some states are now being warned that they may be downgraded simply because they're so reliant on the federal government. But, I mean, interest rates would go up for almost everybody. The stock market would go down.

BENDAVIDThe ripple effects on businesses and governments across the country, I think, would be terrible. And if the government wasn't just downgraded, but really stopped paying its bills, I think it would be cataclysmic. And that's what people are saying. But one of the dynamics you're seeing is that, I think, particularly on the part of the House freshmen, they're used to not trusting authority.

BENDAVIDThey sort of -- it's almost like an inherent principle with them, that they can't trust people who are elites. And so I think that that's one reason that it's been difficult for their party leaders to persuade them that this really would be a big deal if we defaulted on Aug. 2. I do think that's changing a little bit. But it's part of the challenge.

REHMThere is another element. What's the likelihood of the Federal Aviation Administration shutting down tonight?

WILSONYeah, remember when we had that rash of air traffic controllers falling asleep? Well, this is like the entire agency falling asleep all at the same time. The Federal Aviation Administration reauthorization bill is a -- has been a point of contention among -- between Republicans and Democrats, primarily over labor issues, for the better part of a decade. They've gone through something like 17 extensions.

WILSONAnd now it felt like -- earlier this week, the latest extension hit the floor of the U.S. House because everybody realized at the last minute, wait a second, the extension ends on Friday. So it's unlikely that they come to a deal. It's very likely that about 4,000 FAA employees won't be coming to work over the weekend.

REHMSo it's mainly operating to small communities.

STOLBERGThat's right. The big...

REHMIt's going to be affected right away.

STOLBERGBut the sticking point are the subsidies to flights, nonprofit flights to rural communities. Now, every -- pretty much every senator has a rural community, and they want this money to go, these subsidies. But that's where the fight is. And we might have nonessential employees laid off as late as tonight.

REHMSheryl Gay Stolberg, Washington correspondent for The New York Times. When we come back, we'll talk about why Elizabeth Warren is out.

REHMAnd welcome back to the domestic hour of our Friday News Roundup this week with Reid Wilson -- he's editor-in-chief of National Journal Hotline -- Sheryl Gay Stolberg of The New York Times, Naftali Bendavid of The Wall Street Journal. And to start us off on this segment, message posted on Facebook by Ruth. "How very, very wrong and cowardly it is that Elizabeth Warren is not the head of the CFPB.

REHM"She has the passion, the smarts, the moral vérité that insists on her leadership. But the people in D.C. did not show the courage necessary." What do you think, Reid?

WILSONWell, Elizabeth Warren was bypassed to -- as head of -- as President Obama's head of the Consumer Financial Protection Bureau largely because of the political reality. She may have all those attributes. The one other thing she has is a lot of enemies on the Republican side. Republicans already are angry at the Consumer Financial Protection Bureau because they say it doesn't have the protections and the sort of oversight from Congress that it needs to become a relevant agency.

WILSONThey're angry about that. They're especially angry at the fact that Elizabeth Warren was a -- is combative. She loves to fight with Congress. She loves to fight with...

REHMAnd she's criticized the banks, and that's why they didn't want her in there, Naftali.

BENDAVIDYeah, she definitely became something of a lightning rod. But it's also true that conservatives and Republicans in general don't like the CFPB. And they don't like the Dodd-Frank bill. And they've already signed a letter. Forty-four Senate Republicans…

REHMExplain what the Dodd-Frank bill would have done.

BENDAVIDWell, this was the broad banking reform bill. But the centerpiece of it, that attracted a lot of attention and criticism from Republicans, was this bureau, which was a very strong, independent, you know, some would say, powerful bureau that could -- you know, supposed to make sure that we didn't have the sorts of wrongdoing that we had, that led to the last crisis.

BENDAVIDBut the argument Republicans are making is it's just too powerful, and that its director would be a czar, wouldn't be subject to congressional oversight. And so they have -- in fact, the House passed a bill yesterday that would dilute the power of that organization. So it's not clear to me that they are going to confirm anyone. It's true that Elizabeth Warren was a lightning rod, but it's not clear to me that anyone would be confirmed.

BENDAVIDThey're sort of holding that position hostage until they get changes that they want in the structure of the CFPB.

REHMIs this the banking lobby at work, Sheryl?

STOLBERGWell, I think we know that the banking lobby did not like the Dodd-Frank bill and has been working very, very hard to undo some of its provisions, not only the Consumer Protection Bureau, but other provisions, the so-called Volcker Rule on too big to fail. So, you know, just because this bill passed, like the president's health care bill, it is this -- it is hugely contentious here in Washington.

STOLBERGAnd now we are seeing the fight over the implementation of it. Elizabeth Warren's being pushed aside as sort of the first line in the sand. But I think Naftali's absolutely right. The person that President Obama picked to head the agency, Richard Cordray, has no greater chance of being confirmed by the Senate than Elizabeth Warren did.

STOLBERGAnd I think what the endgame will be is the Republicans are -- just want to, you know, force changes in this agency or let it twist in the wind and not confirm anybody to give it a real leader until they can do that.

REHMWhat about an absentee appointment?

WILSONA recess...

STOLBERGA recess appointment.

REHMYeah. Right.

WILSONA recess appointment might be the only way that President Obama gets anybody.

REHMAnd then Congress threatened not to leave.

STOLBERGRight, right.

WILSONExactly.

STOLBERGThat's right. Some people thought the president would recess appoint Elizabeth Warren, and a lot of her admirers -- and she has many admirers -- wanted him to do that. And I suspect that liberals and supporters of Elizabeth Warren are, frankly, angry with President Obama at not nominating her to head the agency.

WILSONWe have not seen the last of Elizabeth Warren, though. She has had conversations with a number of top Democratic senators. They're trying to get her to run against Sen. Scott Brown in Massachusetts, where she lives and works, teaching at Harvard University. If she does that, if she decides to run against Brown, she'll have a tough fight. He's got a lot of money in the bank. He's very popular.

WILSONHe just released a new poll that has him leading every possible Democratic candidate. But, you know, she's one of those people who could develop a very wide national network of donors very quickly and compete with that. Democrats have been looking for somebody to take on Scott Brown, you know, in a state that's probably going to give President Obama 60 percent of the vote, coming up next year.

WILSONIf they get Elizabeth Warren, she's got a good chance of coming back to the Senate that would have rejected her.

REHMAll right. Here's another question about the budget deal. "Would your guests comment on Sen. Coburn's inclusion of reductions in congressional spending, namely staff, constituent mailing staff, travel allowance, et cetera? Citing Congress budget increase of 55 percent in the last 10 years, does the senator have a good point, and is there any chance?" Naftali.

BENDAVIDWell, first of all, Sen. Coburn -- I mean, we should just say he's a very conservative senator who has proposed a plan that would cut $9 trillion from the deficit in 10 years, much more than anybody else thinks possible. But he's been a very vigorous proponent of this. And he came out with a report, just a few days ago, sort of outlining the way he would do this.

BENDAVIDAnd he did emphasize the fact that one of the things that he would do is cut congressional expenditures -- that is, expenditures of Congress on itself. It's not a huge amount of money, but I think it's very symbolic. And I think that's why he put it out there, and he talked about how Congress' budget has increased. You know, my sense is Congress probably, just like everybody else, you know, could cut some of its expenditures.

BENDAVIDThat's obviously not where the answer to our financial problems lies, but it is a symbolic thing to do.

STOLBERGAnd it's not at all surprising. You know, when President Obama took office, he froze the salaries of federal employees, much to the consternation of a lot of people who work for him. So I think Naftali's right. It is a symbolic measure. It's an attempt to tell voters, look, we're serious about this, and we're even including ourselves.

REHMHow did Minnesota finally solve its problems, Reid?

WILSONWell, Gov. Mark Dayton, the Democratic governor, gave in to a lot of what the Republicans in the state legislature wanted, with a few conditions here and there. At the end of the day, though, it was the Republican bill that went through the legislature and was signed by Gov. Dayton. You know, the fact that so many licensing offices were closed in Minnesota meant that a lot of bars and restaurants were starting to run out of booze.

WILSONThey couldn't get their license, so they couldn't buy, you know, liquor and beer and wine. And when something like that starts to impact a population that just wants to go out and have a beer at the local bar, that's when pressure really steps up on some of these leaders.

BENDAVIDYeah, we're seeing, in a way, microcosms of what's happening in Washington playing out in states across the country. And it's playing out a little bit differently because, in some states, Republicans are in control, in others, Democratic. And like in Minnesota, there's a split government, just as we have in Washington. But I think if there's a message here for Minnesota, for D.C., it's just the disgust that people in Minnesota felt.

BENDAVIDI mean, I haven't been there, but, by all accounts, people who are there, you know, were very upset about this licensing provision. But they were upset, in general, about the fact that the government couldn't get its act together and that, starting on July 1, their government, essentially, had a shutdown. And I think there really is a message for people in Congress that -- about the way people feel about what's going on and how it's being handled by lawmakers.

STOLBERGNo, I think that's right. I was actually in Minnesota recently during the shutdown to report some stories on Michele Bachmann. And it was, frankly, as a reporter, very frustrating. You'd call the state offices for information and you'd get a recording saying, I'm sorry, I'm gone until further notice because of the government shutdown all around the Capitol. The Capitol was closed.

STOLBERGThe public was not allowed into the Capitol, although lawmakers were inside working. But Gov. Dayton actually had to have a press conference outside on the Capitol steps because reporters couldn't get inside. And you could feel the level of frustration among ordinary people in Minnesota.

REHMAnd you've mentioned Michele Bachmann, who, apparently, suffers from migraine headaches. It's now become a political issue, I guess. How much does it matter, Neal, that -- sorry, Reid, that, in fact, she has migraine headaches?

WILSONI don't think the migraines matter. I think what the story really tells us about Michele Bachmann is that she is doing well in the polls, and that there are a lot of people in the Republican Party who don't want her to do terribly well in the polls. The story was originally leaked out by ex-staffers of Bachmann.

REHMEx-staffers.

WILSONShe has a lot of ex-staffers. There is -- she has gone through a number of spokespeople, a number of chiefs-of-staff. And a lot of them have been very outspoken about not wanting her to be the Republican nominee for president. Her former chief-of-staff was the Republican Party chairman in Minnesota, a guy named Ron Carey. He has not been shy about saying Michele Bachmann should not be the nominee.

WILSONJust today, a prominent Republican named Fred Malek here in D.C. has an editorial suggesting that Michele Bachmann doesn't have the experience to be president. So there is sort of this organized effort to knock her down a few pegs. When she is one of the three frontrunners, two polls out this morning have Michele Bachmann, Mitt Romney and Rick Perry essentially at parity on the Republican presidential fight.

REHMSheryl.

STOLBERGI might take slight issue with something Reid said about the migraines not mattering because I do think it raises the issue of the health of our nominees. Being president and running for office is a very, very grueling process. And, as anybody who has had migraines knows, they can be very difficult.

REHMThey can knock you out, yeah. Right.

STOLBERGThey can really knock you flat. Now, that is not to say that Michele Bachmann would be incapacitated. I interviewed her son this week who's a medical resident in psychiatry, and he's familiar with what -- with her experience. He says, you know, she's absolutely capable of answering questions and of assessing information, et cetera.

STOLBERGBut the fact is that voters do have a right to know about the health of their candidates and whether or not they have any medical issues that could affect them. So I do think it's a legitimate issue for discussion. And separately, we are seeing a lot of discussion because there are a lot of migraine sufferers out there who know what it's like.

REHMNaftali, we've heard -- I don't know how accurate these reports are -- that the headaches are stress-induced. She gets them every week. They can leave her incapacitated for days. Those are unconfirmed reports.

BENDAVIDYeah, they are unconfirmed reports, and so it's a little bit hard to make a judgment without knowing. I mean, reports also said that she, at times, has been hospitalized for days for them. So, you know, there's a wide, you know, variety of reports. She -- and I have to say, I was kind of impressed that her campaign reacted fairly quickly to this. And they put out a letter, saying, you know, she takes medication. This doesn't incapacitate her at all.

BENDAVIDI think they realized this was a potential threat. And I think it's probably going to become clear in the coming weeks exactly, you know, how serious this is. But it's inescapable that she has roiled this race. I mean, she sort of came out of nowhere. You know, Mitt Romney was and is, I think, the frontrunner. But she, you know, filled the gap that perhaps people thought might be filled by Sarah Palin.

BENDAVIDAnd there's no question that, in poll after poll, she is at the frontrunner's heels. And there are a lot of people in the party that are concerned about that.

REHMReid.

WILSONMichele Bachmann is, hands down, the most interesting person in this race so far. There are a lot of unanswered questions about her that I think people are very interested in. I think the last time I was on your show, Diane, we talked a little bit about Bachmann and her -- the fact that everybody in Iowa knows that she has had 23 foster kids. It's that little detail that tells you that she's sort of percolating down into the Republican electorate.

WILSONShe's got a base in some states that's going to be pretty hard to shake. And yet, people don't know the history of her church. They don't know the history of her -- of this clinic that her husband runs. There are a lot of questions that profile writers around the country are going to be -- going to have a lot of fun digging into.

STOLBERGYeah, I've actually written several of those profiles about her, her time as a foster mother, her church. I would say this. At bottom line, she is a person of deep Christian faith. This is who she is. This is really at her core. And she talks about it. She makes no bones about it. So her policies, her politics are deeply interwoven. Her decision to become a foster mother grew out of that.

STOLBERGHer views on homosexuality, she rose in Minnesota as an opponent of same-sex marriage. All of this is interwoven with her faith, and that makes people on the right and the Republican Party happy. It makes a lot of liberals nervous.

REHMSheryl Gay Stolberg. You're listening to "The Diane Rehm Show." Let's talk about Rupert Murdoch and his son who appeared before a parliamentary committee in London on Tuesday. Now, new questions being raised as to whether James Cameron, the son -- James Murdoch, the son, actually told the truth, Reid.

WILSONThese questions are sort of perpetuating the scandal that, I think, has really grasped everybody to an extent that, I think, I was at least surprised by. Everybody in D.C. was watching the testimony. I can't remember the last time all three cable news networks broadcast a hearing of Congress, much less of the British parliament. It's -- you know, this is something that's been -- that's really captured everybody's imagination.

REHMYou know, it's interesting, Naftali, The Wall Street Journal, which is a News Corp. paper, is reporting that the Justice Department is preparing subpoenas as part of a preliminary investigation into the company. So the question becomes, to what extent do you think the company here in the United States is going to be affected or infected by this whole imbroglio?

BENDAVIDWell, it's true. I mean, I work for The Journal, which is a paper that is a part of the News Corporation. You know, I mean, I don't get any sense at the moment that it's affecting us in any way. There was the chief executive of Dow Jones who stepped down. But in terms of the sort of day-to-day operations of the paper and the way we go about our business, I haven't seen any change or -- nor would I necessarily expect any.

REHMSheryl.

STOLBERGYou know, I think this is one of those stories that it's fascinating because we don't really know how it's going to play out. And it just seems to be growing and growing. It started with these revelations of phone hacking into the voicemail of a murdered girl in Britain. Journalists for the News Corporation, and now defunct News of the World, hacked into these phones. It's now embraced the prime minister of Britain.

STOLBERGExecutives of the News Corp. have resigned. We're seeing this Justice Department investigation now. A whistleblower in Britain was found dead. Murdoch apologized, saying he's sorry in big newspaper ads. We're seeing reports now of Murdoch's financial contributions, including to President Obama. So it's just one of these webs that seems to keep growing. And I don't think we know where it's going to end up.

REHMYou know, it's interesting because there's been some criticism of The New York Times for taking on this story in such a big way.

STOLBERGThere has been criticism of The New York Times, and The Wall Street Journal wrote an editorial saying, the schadenfreude was thick. And our columnist Joe Nocera said, well, you know, it ought to be thick. You know, I think these are difficult questions journalistically. When a newspaper is under attack, how do other newspapers respond?

STOLBERGCertainly, we, at The New York Times, had our own issues some years back with Jayson Blair. And that was a very difficult time for us. He was a journalist who fabricated stories, and we were the subject of news coverage. And it was very, very uncomfortable. And so I feel for my colleagues at places like The Wall Street Journal.

STOLBERGNaftali and I were just talking this morning, and I said, I feel for you because, you know, I can honestly say our colleagues here in Washington -- I can safely say that nobody is hacking into phones here, at least in this town. But...

REHMAnd yet what seems to be happening is that the FBI is starting to look into whether victims of 9/11 phones were being hacked into.

WILSONSomething that Rupert Murdoch said he had not seen evidence of. But, of course, I think that his word at the moment is probably not something the FBI is going to take.

REHMReid Wilson, he is editor-in-chief of National Journal Hotline. Short break. And when we come back, we'll open the phones.

REHMAnd it's time to open the phones. First, to Peter in St. Louis, Mo. You're on the air.

PETERI suggest a Democratic agreement with all Republican tax cuts, even for the largest corporations and biggest, richest taxpayers, but only if with their tax returns, they can submit this one declaration that all their investments are in the U.S. and agree to stiff penalties for lying. This could restore (word?) economic growth in the U.S., rather than in Asia, killing the incentive to use tax reduction in order to move factories to Asia.

REHMAll right. Sir, thanks for your call. Naftali.

BENDAVIDWell, that's not a specific proposal I'd heard anyone raise now -- you know, raise so far. But it does bring up an issue that people are talking about, which is this idea of companies kind of relocating off seas and transporting jobs overseas. And there are plenty of proposals in the context of tax reform for redoing the American tax structure to encourage investment here instead of overseas.

BENDAVIDI haven't heard it proposed exactly the way the caller did, but that is an idea that's being talked about.

REHMAnd to Bruce, who's in Dallas, Texas. Good morning. You're on the air.

BRUCEHi.

REHMHi.

BRUCEI'm calling simply to lay this out there, though I don't think I heard you guys say it today. I've heard it in your program before, how both sides engage the same kind of stuff in terms of vitriol. And I just want to point out this Debbie Wasserman Schultz incident, where she referred to -- and for the life of me, I can't think of his name...

BENDAVIDAllan West.

BRUCE...from Florida as, you know, the gentleman isn't for the bill, unbelievable. And then his response was, you're the most vile, disgusting person in the Senate or the House and, you know, on and on and on. And to me, that is a microcosm of what's really been the problem in governing the country for a long time because governing requires cooperation and negotiation.

BRUCEAnd when one side is going to act, as Sheryl said, you know, behave like a teenager or (unintelligible), it's not helping.

REHMNaftali, you know all about this.

BENDAVIDWell, I mean, the incident was largely, as the caller described, you know, Allan West sent out, I think, an email perhaps, you know, that talked about her, Debbie Wasserman Schultz, who's the chairwoman of the Democratic National Committee and also member of Congress, as being, I think, despicable. And he said, you're not a lady, and a few things like that. And that did get a lot of attention.

BENDAVIDAnd I think it does, to some degree, reflect the tone in Washington. I mean, it's not really an aberration. It perhaps stands out in its -- the strength of the language that was used. But the fact is, every day in the floor of the House of Representatives, people get up and say pretty horrible things about each other and what they stand for. And the atmosphere is pretty bad.

BENDAVIDAnd I think that that both causes and reflects a lot of what's going on and does make an agreement more difficult. And I also -- I guess I have to say, I think a lot of people elected in the last election, you know, came to Washington with an understanding that compromise was itself a bad thing, you know, the idea that people had compromised too much.

BENDAVIDAnd it's not just a question of the strength of their beliefs, but the idea that compromising on them was a form of corruption and weakness. And I think that, too, is a cause of a lot of what's going on.

REHMReid.

WILSONThe problem in -- with this whole Allan West-Debbie Wasserman Schultz incident, it really proves just how broken Washington is. Both sides now, the Democratic National Committee and Allan West's own campaign, are fundraising off this incident. They're fundraising off the fact that two members of Congress who, by the way, happen to live in the same congressional district -- Debbie Wasserman Schultz is Allan West's member of Congress.

WILSONHe is -- he represents the neighboring district. Two members of Congress are saying bad things about each other and then raising money off it. Just this morning on NPR, the "Morning Edition" interviewed Mark Warner and Saxby Chambliss, two senators. And they both admitted that the leaders of their party are thinking about the election next year. They're already thinking about it in terms of this spending debate, this debt ceiling debate.

WILSONThat's the whole problem in D.C. There is never an off moment for an election.

STOLBERGYou know, I think we look back on the 2008 election. President Obama came to town vowing to change the tone in Washington. And when you see an incident like this and so many incidents like this, it is clear that he has not been able to change the tone. This becomes an issue for him, and I think it circles us back to why he and John Boehner are working together and why he is, in essence, throwing his own party under the bus by pursuing proposals that are making Democrats unhappy.

REHMAnd here's an email from Warren in Arlington, Va., on that very point. He says, "It just kills me to say this, having had such hope, but President Obama is turning out to be a huge disappointment. He's afraid to lose, afraid to lead, afraid to decide, afraid to speak out -- just plain chicken. Even with the majority of public opinion on his side, America is going to get the government it deserves, even if it's the end of America."

BENDAVIDWell, I know that a lot of people in the Democratic Party have that criticism of President Obama. They feel like he hasn't been a forceful spokesman, that he's been too willing to compromise and that he's conceded points, even before the negotiations began. I do think in Washington you can't win. I mean, I think if he had come out more forcefully and aggressively, then he'd be being criticized for being far too partisan.

BENDAVIDAnd it's worth remembering that President Bush also came to Washington promising to change the tone. That was one of his big promises. Everybody said he failed. Now, everybody says President Obama has failed. I think it's worth noting one big exception to all this, and that is this group called the Gang of Six over in the Senate.

BENDAVIDWe have three Republicans and three Democrats, with a lot of people on both sides supporting them, that have come out with a bipartisan -- couldn't really call it a plan 'cause it's not detailed, but a framework. And they said nice things about each other. They've worked together. And that's...

REHMWho is in a Gang of Six?

BENDAVIDWell, they don't like being called a gang, by the way. They don't like that term.

REHMOkay.

BENDAVIDBut everybody calls them that.

REHMAll right.

BENDAVIDBut on the Democratic side, you have Mark Warner and then you have Dick Durbin and Kent Conrad.

REHMAll right.

BENDAVIDAnd on the Republican side, it's Saxby Chambliss, Mike Crapo and Tom Coburn, who was temporarily out of the group, now back in it. But they recently came out with a big plan to cut the deficit. More than 30 senators have signed a letter, more or less, supporting them, members of both parties. And so it's this little kind of pocket of bipartisanship in an otherwise fairly partisan environment.

BENDAVIDBut it has to be said that that plan was immediately attacked by both sides in very harsh terms. So on the one hand, it's -- it proves that bipartisanship can exist. On the other hand, it proves what happens to it when it sticks its head out of the ground.

REHMReid.

WILSONIn this whole deficit ceiling debate, there are these outside organizations that are playing this huge role that are attacking the Gang of Six proposal right off the bat, whether it's the Democratic groups headed by, you know, former Vermont Gov. Howard Dean in their -- his organization that doesn't want any cuts to entitlement programs and is encouraging Democrats to stand up against any entitlement cuts.

WILSONOn the Republican side, it's groups like American Crossroads or Crossroads GPS that are running advertisements. There are other sort of more shadowy organizations that are just waiting for any kind of debt ceiling vote. And I've been told that they're already starting to plan. If any Republican votes in favor of a debt ceiling vote, they're going to get a primary challenge next year. So...

REHMAnd that's thanks to Grover Norquist.

STOLBERGThat's...

WILSONThat's actually -- those are larger -- these are larger groups that aren't necessarily associated with Grover Norquist. They're sort of getting ready to make what is already a very conservative Republican conference even more conservative.

REHMAnd in the midst of all these, President Obama is now backing the repeal of the Defense of Marriage Act. Does he now support same-sex marriage, Sheryl?

STOLBERGWell, this is a question I spent a lot of time examining. Some people would say he was for same-sex marriage before he was against it. I think this is not a surprise. The president has always said that he objected to the Defense of Marriage Act, even as he himself did not advocate for same-sex marriage, as he preferred civil unions. But it is one more step along this evolution. He keeps saying his views are evolving on the issue.

STOLBERGSo we saw him evolve toward instructing the Justice Department not to defend the Defense of Marriage Act in court. Now, he is formally backing a legislation that would repeal the Defense of Marriage Act. Will he come out in favor of same-sex marriage before the 2012 election? I bet not. I think his advisers are just too worried it would inject a side issue into the election and roil the waters.

REHMAll right. Let's go to Brighton, Mich. Good morning, Frank. You're on the air.

FRANKThank you, Diane. I'm a retiree dependent mostly on Social Security. And I heard one of your panelists earlier say that Obama compromising on Social Security, that leaves Democrats running for Congress next year unable to run against the Republican approach to modifying Social Security and Medicare. And I just wanted to emphasize that as far as I've been able to gather, the two approaches are quite radically different.

FRANKOne adjusts COLAs. Maybe he does a means testing, stuff like that. And the Republicans, as evidenced by the Paul Ryan budget, basically want to do away with Social Security and Medicare. I just wanted to make that point for your panelists to respond to.

REHMAll right, sir. Thanks for calling.

STOLBERGThe caller is quite correct. Their approaches are radically different. But I think the fear among Democrats is that they will be conflated in the minds of the voters. And Democrats don't want to be connected with anything that smacks of cuts in these cherished programs. And they have argued very strongly that they are the party that would defend Social Security and Medicare, so just the idea that a plan would alter them makes Democrats nervous.

REHMThe AP is reporting that the Senate has rejected the House GOP plan to cut spending and acquire a balanced-budget amendment. The vote was 51-46. Let's go to Indianapolis. Good morning, Amber. You're on the air.

AMBERHi. Thank you for taking my call.

REHMSurely.

AMBERI just want to call and say that, during the week, I mean, you've had shows every week about this subject. And a lot of the times it suggested that if we are to give the -- take away the tax breaks from the rich and the industries, that they'll somehow retaliate against this and make -- and try to tank the financial system of America.

AMBERAnd that kind of just really doesn't talk well about the rich and the industries. Are they really going to be that selfish and -- I even say -- unpatriotic as to do that to us? And also, has anybody taken a poll of the industries and the rich and find out how they feel about being taxed? And are the Republicans working for their constituents or they just kind of fighting with Obama?

REHMThat's interesting. Naftali.

BENDAVIDWell, I haven't heard the argument that they would intentionally tank the economy if their taxes were increased. I heard the argument on the Republican side that it would make it harder for them to create jobs and to invest in local and domestic industry. I mean, that's the argument that I've heard. You know, I think there was a little bit of Republicans just wanting to oppose Obama, although I think it probably -- it takes place in both parties.

BENDAVIDBut there was an incident when Obama came out and very fervently embraced the Gang of Six approach. House Republicans were fairly open about the fact that made them suspicious of the Gang of Six. His very endorsement of it made them question it, and they really weren't afraid to say that out loud. So I think there's just a great deal of distrust in both sides of the aisle.

STOLBERGI think that's right. I think, you know, we're seeing President Obama take a very aggressive stance in his messaging, his public appearances. He's had three press conferences in as many weeks. Today, he'll have a town hall meeting in College Park, Md. He's really trying to take his message to the people. We saw an op-ed piece in today's USA Today. And he's got to be careful.

STOLBERGHe's got to walk a fine line because if he does endorse something, it is the kiss of death for many in the Republican Party. So if he really wants to achieve something, he might actually have to hold back a little.

REHMAnd you're listening to "The Diane Rehm Show." Let's go now to Columbia City, Ind. Good morning, Linda.

LINDAGood morning. I just am reiterating what many people have said. The middle class families in this country had been struggling since 2008, and they are losing ground. Most responsible families know it takes two things to make it work. They have to cut their expenses. Maybe they don't have cable anymore. Maybe the kids don't have dance lessons and karate lessons, many things of that nature.

LINDAThey also know that they have to bring in more revenue. Sometimes they work more hours. Sometimes they get second jobs. And they sell things. Around Middle America, garage sales are intense. They're all over the place. People are selling cars, ATVs, motors, boats on their front lawns to make money. And yet our Congress can not get it, that it takes two things to make the situation right, cutting expenses and bringing in revenue.

LINDAI think most middle class Tea Party members would agree that people and companies that make more than a million dollars a year are not sharing in the sacrifice. And they haven't really felt this recession to the degree that middle class families have.

REHMThanks for calling, Linda. Reid.

WILSONThere is a sense around the country of distrust, of -- I call it pervasive pessimism. People are hurting significantly. This economic recovery has been so slow as to be almost not felt in a lot of places. The unemployment rate ticked back up in a number of states. State like Nevada, that was actually recovering, just last month, their unemployment rate just ticked back up.

WILSONSo around the country, we're seeing a lot of people who are just depressed, upset, and they don't believe that they are handing off a better world to their children than the one they received.

REHMAnd one more point, John Edwards got some bad news yesterday. Naftali, he's got to return $2.3 million.

BENDAVIDYeah, I mean, in one sense this isn't really related to his broader problems. I mean, it has to do with an accounting error, and apparently it's not that unusual. On the other hand, you can't help feeling like nothing is going right for the guy, and that he is somebody who, at one point, was sort of a golden child of American politics. And he's fallen quite far. And so this is a sort of a final blow that he has to return this money.

REHMWhat about the possibility of an indictment, Sheryl?

STOLBERGWell, he was indicted last month on six felony charges for allegedly using more than $900,000 in campaign contributions to -- in an effort to, what, keep his -- the woman he had gotten pregnant out of sight during the 2008 campaign. He says, you know, absolutely not. He did nothing wrong. And, you know, and...

REHMAnd he had hoped to use that money to pay his legal...

STOLBERGRight.

REHM...bills.

STOLBERGRight, so, you know, I guess we'll see how this plays out. Ultimately, I guess, I think, it's just very sad for John Edwards and his family. As we know, his wife, Elizabeth, died. And he's got these young children. And, you know, the whole sorry business seems to me a sad affair.

WILSONThere is. There's a cadre of former Edwards staffers around the country who still keep in touch, and they are all quite saddened by this whole prospect, the fact that they worked for a guy they believed in so much who turned out to be so much different than what his public persona was. As for this FEC hearing, Naftali is exactly right. This is an accounting error. It happens with almost every presidential campaign that takes public matching funds.

WILSONIt's just a sort of a problem with the calculators.

REHMReid Wilson of National Journal Hotline, Sheryl Gay Stolberg of The New York Times, Naftali Bendavid of The Wall Street Journal, thank you all so much. I'll be on vacation next week. My colleague Susan Page will be sitting in for me. Back with you Monday after next. Thanks for listening, all. Have a great week. I'm Diane Rehm.

ANNOUNCER"The Diane Rehm Show" is produced by Sandra Pinkard, Nancy Robertson, Susan Nabors, Denise Couture, Monique Nazareth, Sarah Ashworth, Lisa Dunn and Nikki Jecks. The engineer is Erin Stamper. Katie June-Friesen answers the phones.