The Senate blocked another component of the President’s jobs package yesterday: funds for teachers and other public sector workers. GOP candidates took off the gloves in Las Vegas to attack each other in their latest debate. With a Thanksgiving deadline looming, members of the Congressional deficit reduction “supercommittee” met with the “gang of six” behind closed doors. Monthly reports showed the housing market stuck in a rut. And some Fed officials are making a case for another round of mortgage-backed securities purchasing. A panel of journalists joins Diane for the domestic hour of the Friday News Roundup


  • Gerald Seib Washington bureau chief, The Wall Street Journal.
  • Karen Tumulty National political reporter, The Washington Post.
  • John Harwood Chief Washington correspondent for CNBC; reporter, "The New York Times."

Related Video

Diane and the panelists discuss the impact of the “Occupy Wall Street” and similar protest movements across the country, and respond to a listener’s email criticizing the panelists for being “out of touch” with what is going on with the life and intent of the movement:


  • 10:06:54

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. President Obama's jobs act hit another snag in the Senate late Thursday. Three Democratic senators voted with Republicans to deny funds for state and local governments. The Gang of Six met behind closed doors with members of the deficit super committee, and seven Republican presidential candidates clashed in a raucous debate in Las Vegas, Nevada.

  • 10:07:32

    MS. DIANE REHMHere for the domestic hour of the Friday News Roundup: Jerry Seib of The Wall Street Journal, Karen Tumulty of The Washington Post and John Harwood of CNBC. I hope you'll join us, 800-433-8850. Lots to talk about this week. Join us at Join us on Facebook or send us a tweet. Good morning, everybody.

  • 10:08:09

    MR. JERRY SEIBGood morning.

  • 10:08:09

    MS. KAREN TUMULTYGood morning.

  • 10:08:09

    MR. JOHN HARWOODGood morning.

  • 10:08:11

    REHMSo, Jerry Seib, this jobs act, does any part of it have a chance to become law?

  • 10:08:20

    SEIBI think the one part that has a chance to become law is the extension of the payroll tax holiday and perhaps the broadening of it to include not just the part that is paid by employees but the part that's paid by employers. Nobody thinks it's much of a panacea for anything, but nobody really finds very strong reasons to object to that. But I kind of think that's it, you know? I mean, you saw two pieces go down this week, and there'll be more that will fail. And I think we're gonna be, in a few weeks, down to that.

  • 10:08:53

    REHMWhat do you think, Karen?

  • 10:08:55

    TUMULTYWell, I do wonder if they might reconsider parts of what were in the bill that failed this week including the funds that would have helped states not have to lay off public employees like teachers.

  • 10:09:11

    REHMJohn Harwood.

  • 10:09:12

    HARWOODI agree with Jerry. I think the likeliest is that the payroll tax cut gets extended. And when you look at the bill, that's the majority of the money in the bill. So to the extent this was gonna provide any boost to the economy or stimulus at all, I think the president is likely to end up getting more than half of what he asked for. But nobody thinks, as Jerry said, that this is so much of a boost that it's gonna fundamentally change the economic trajectory of the country.

  • 10:09:39

    REHMOK. What I don't quite understand is with these payroll tax holidays, how does the Social Security fund make up what is not put in, Karen?

  • 10:09:55

    TUMULTYAt this point, they haven't actually figured that out. The fact is these payroll tax holidays are, at this point, likely to reduce the life of the Social Security fund. Now, of course, the best thing for the Social Security fund would be if economic growth picked up again. So, you know, again, these projections are pretty far out into the future, but if it helps the economy or if the economy itself gets back on its feet, that's the very best thing that could happen.

  • 10:10:21


  • 10:10:21

    SEIBAnd there is some concern about that on the left. I mean, people are saying, look, I mean, there is a deficit in the -- for the federal government's, you know, general budget, but there's also a looming deficit for entitlements programs including Social Security and Medicare. We are making that worse while trying to address the other problems and should we really be doing that. But that has become a pretty muffled argument just because of the great anxiety about the job situation here and now.

  • 10:10:48


  • 10:10:48

    HARWOODAnd also because there is an ongoing process to reduce entitlement spending and the insolvency of those programs in the super committee on the Hill and the broader effort. Once the super committee does what it does, which nobody expects to be overwhelming, I think we're in the beginning of a process that is a multiyear process of addressing that issue.

  • 10:11:08

    REHMI want to get to that super committee, but what happened to the Buffett rule, John?

  • 10:11:16

    HARWOODThe Buffett rule is a mostly a piece of political rhetoric. It's -- it is a statement of aspiration that the tax code should not tax anybody at the top of the scale at higher rates than people who are middle and working class. It's not actually a tax provision. And, again, in this ongoing discussion that we're having, both in the super committee and then assuming that that produces an underwhelming result in the Congress after that, we're going to have a discussion about tax reform.

  • 10:11:52

    HARWOODAnd I expect that given the current impetus of the Occupy Wall Street movements and others, Democrats are gonna dig in on some reflection of that rule in tax policy whether or not it takes the form of a millionaire's tax or the expiration of the top-end taxes.

  • 10:12:09


  • 10:12:10

    TUMULTYAnd there was, in fact, a scaled back millionaire's tax in the bill that was in front of the Senate that failed. I think it had been scaled back to 0.5 percent of the surcharge. And given that that didn't even passed, it does suggest that, you know, the likelihood of this is pretty low at this point.

  • 10:12:28

    REHMJerry Seib.

  • 10:12:30

    SEIBWell, you know, the Buffett rule was basically -- the idea essentially is to raise the tax rate on capital gains and dividends because people at the high end of the scale get more of their income from that as opposed to earned income, you know, wages, than do people farther down the scale. So, as John says, the only way you really get at that in a systematic way is to reform the whole tax code, which, oddly and ironically, most everybody would like to do.

  • 10:12:54

    SEIBThere's actually bipartisan consensus that this would be a good time to start talking about tax reform. In this environment in which the deficit is weighing down on everyone and politics of 2012 looms just ahead, it's not really gonna happen now. But I think, oddly, there is a consensus building that the tax code is broken. It cannot be fixed in its current form, and we're gonna do something about that as a country in a couple of years.

  • 10:13:16

    REHMJerry Seib of The Wall Street Journal, Karen Tumulty of The Washington Post, John Harwood of CNBC. Do join us, 800-433-8850. So now, talk about what's going on behind close doors at the debt reduction super committee. Have they met? Are they talking? Is anything being accomplished?

  • 10:13:46

    TUMULTYWe know they've met. We know they are talking. Is anything being accomplished? That's what we really don't know. This week, among other things, they had a meeting behind close doors. Now, mind you, there are people like Nancy Pelosi who have been pushing that these deliberations should be done in public. But, you know, those -- anybody who sees how Washington works knows that even when meetings are in public, the real meetings are in private.

  • 10:14:12

    TUMULTYBut at any rate, the so-called gang of six -- this was this bipartisan group of senators, who, earlier this year, had come up with a plan based, in part, on the deficit reduction commission plan that would have reduced the deficit by $3.7 trillion over 10 years. They met with the super committee, which has actually a smaller mandate. They have a deadline now of Nov. 23 for coming up with $1.2 trillion in cuts. They made their case, but I don't think, at least in the public expressions, we heard anything beyond, oh, that was interesting.

  • 10:14:47

    REHMWell, is it that we're not hearing because they did nothing or is it that they're still talking? Jerry?

  • 10:14:57

    SEIBThey're still talking, whether they're, you know, that you do hear suggestions that they're reaching a point inside the room where they're bumping up against the same problem that everybody saw this summer, which is Republicans say no tax increases, revenue increases, and Democrats say, we can't touch entitlements without them. What -- the most encouraging things, if you want a deal done here, I think, that have emerged this week are signs that top aides to Harry Reid, the Democratic Senate leader, and John Boehner, the Republican speaker of the House, have started to talk.

  • 10:15:26

    SEIBAnd that the leaders themselves, Harry Reid, Mitch McConnell, John Boehner, have started to meet individually with members of the committee or subsets of the committee. So the conversations between leaders in the committee, which I think are really important here because whatever they -- the leaders want them to do, they can have some effect in making it happen -- have begun, and that's probably a good sign.

  • 10:15:47

    REHMJohn Harwood, generally speaking, how is the economy doing?

  • 10:15:52

    HARWOODBadly is the short version and the longer version is that it will be doing badly for a long period of time. We are growing. The private sector is adding jobs but at a very excruciatingly slow rate. And this is what we've seen typically after a financial crisis. There's a long period of digging out. And so if you're Barack Obama running for re-election in 2012, the challenge is explaining to people that we're headed in the right direction. It's just we're going really slowly and there's not too much we can do about it.

  • 10:16:31


  • 10:16:33

    TUMULTYAnd it was confirmed this week when the Federal Reserve put out what they call the beige book, which is something that comes out eight times a year. And essentially, it's a snapshot from each of the 12 regional Federal Reserve bank system -- what things look like in their own areas. What consumer spending, manufacturing, real estate trends? And the adjectives were all pretty depressing -- modest, slight growth and weaker or less certain outlooks for business conditions.

  • 10:17:02

    REHMBut then, you had housing starts jumping 15 percent in September, and analysts sort of poo-pooed it?

  • 10:17:11

    SEIBWell, for a couple of reasons. I mean, first of all, it's better to have them up than down...

  • 10:17:14

    REHMYou bet.

  • 10:17:15

    SEIB...but it's over a fairly depressed August level. And a lot of that increase in housing starts within multifamily houses, apartment buildings, as opposed to individual homes.

  • 10:17:25

    REHMWhat's wrong with that?

  • 10:17:26

    SEIBThere's nothing wrong with it. It's just that the great overhang, the inventory that's out there that isn't being soaked up is in individual homes, and to the extent people feel their economic future is in peril because the housing market is down and their house isn't worth as much as it ought to be. That doesn't change until the individual housing market picks up.

  • 10:17:44

    SEIBAnd so the number in this -- in September showed a very -- go back to Karen's word, modest increase in activity there. At the same time, the permits for future construction, you know, were still dropping overall. And, you know, it's still a picture of a housing industry that is very sick, and that housing history happens to be very central to the economy.

  • 10:18:05

    REHMAnd what is Ben Bernanke saying about the possibility of the Fed making new mortgage purchases?

  • 10:18:15

    HARWOODWell, I think the Fed is certainly -- has preserved all of its options, and we saw it with Operation Twist that Bernanke has not decided that he shot all the bullets that he's got. So I think the longer we're in this period of anemic recovery, the greater the likelihood that despite internal dissent within the Fed, Ben Bernanke will push forward on unconventional ways of trying to get the economy going.

  • 10:18:42

    REHMJohn Harwood, he's chief Washington correspondent for CNBC. When we come back, we'll talk to John about his interview with Chief of Staff William Daley.

  • 10:20:03

    REHMWelcome back to the domestic hour of our Friday News Roundup this week with, Karen Tumulty of The Washington Post, John Harwood of CNBC, and Jerry Seib of The Wall Street Journal. Here's a tweet from Aaron, who says, "With a Democratic president, a Republican-controlled House and a national election a year away, can we really expect anything to get done." And to answer that, John Harwood, you talked with the White House Chief of Staff William Daley this week. What did he say?

  • 10:20:43

    HARWOODWell, I think, Bill Daley is confronting the gloomy answer to that tweeted question, which is that it is not likely that we're gonna have big things done. In the super committee, we may get a deal, but I think the likelihood is that it would be a de minimis deal, not something exceeding expectations for their charge of coming up with at least 1.2 trillion in deficit reduction, more like a grudging deal that achieves the bare minimum. It's also possible we don't get one.

  • 10:21:13

    HARWOODAnd when you think about Bill Daley, he came into the White House as somebody hoping to repair relations with business, make deals with Republicans, sort of alter the course of the Obama presidency after the very rocky 2010 elections. And instead, what he has found is the persistence of both economic weakness and political gridlock in Washington. He tried very hard and they geared the entire White House strategy this year toward making a grand bargain deal with John Boehner.

  • 10:21:46

    HARWOODDavid Plouffe, the president's political adviser, was on board for that. He wanted to appeal to independent voters. Bill Daley was trying to make it happen. In the end, they couldn't make it happen because there was Republican resistance to the one thing that Democrats needed, which was a Republican give on tax increases. And now, he's left with trying to manage the aftermath of that. It's not easy.

  • 10:22:05

    REHMWho's gonna get all the blame for this, Karen?

  • 10:22:08

    TUMULTYWell, that's just it. I mean, the economic weakness and the political gridlock that John mentioned are not unrelated. And especially, you know, if you look the this Federal Reserve Beige Book, the -- they were -- their conclusion is that one of the reasons that the economy is so weak and that people are so uncertain is -- and so unconfident is because they see what's going on in Washington. They see what's not getting done. And think about the timing of this super committee recommendations.

  • 10:22:41

    TUMULTYRight before Thanksgiving, they have to come up with their deal, if there is one, and Congress has to approve it right before Christmas. To have another sort of political shock like this, if they go right to the edge, again, I think could really hurt the Christmas shopping season.

  • 10:22:58

    REHMAnd here's an email from Jonathan, "Is the GOP's stubborn fight against President Obama on every level at the expense of average Americans hurting Republicans or strengthening its base? This GOP wealth care seems as though it could bite them during elections." Jerry Seib?

  • 10:23:22

    SEIBWell, I don't think anybody knows that there's -- you can look, and we all have, deep inside poll numbers to try to find the answer to the question of who gets blamed if people are angry that Washington doesn't work better. And it's very hard to know. I mean, President Obama's approval ratings are down. The approval ratings for Congress are much lower still. Neither party is particularly popular. You know, there's been back and forth in our polling this summer about who do you want to run Congress, Democrats or Republicans. Democrats were down. Now, Republicans are down a little bit.

  • 10:23:51

    SEIBSo it's really -- it's very hard to know. I do think though that what happened this summer when there was this very ugly, very unsatisfying debate about racing the debt ceiling, really had a profound impact on Americans' views of Washington, and it will have political consequences, and it could affect all of the above. It's very hard to know right now because there's so much anger and anxiety out there.

  • 10:24:14

    REHMAnd, of course, President Obama went on a three-day bus tour this week. How effective was that, Karen?

  • 10:24:23

    TUMULTYYou know, I just -- I don't know. The president is back in campaign mode. He announced a new program to encourage businesses, to hire returning veterans. But I honestly don't think there's much evidence out there that this kind of -- the kind of campaigning that got him elected in 2008 is really making much of a dent in how people view him in 2011.

  • 10:24:50

    HARWOODDiane, the cross currents on this are really interesting. On the one hand, if you look at polling data about individual elements of the president's proposal, they're popular. The president is on the high side of the argument about whether taxes ought to be raised on the wealthy. That is in tune with the spirit of Occupy Wall Street, but it's also in tune with the spirit of mainstream voters. On the other hand, on the issue that Jerry was just putting on the table, who gets blamed when people are feeling sour.

  • 10:25:19

    HARWOODTo me, the evidence of recent history is the president gets blamed. So you have the offsetting pessimism, gloom that weighs down on an incumbent, and you have him being able to point to specific policies, and you also lately have had his campaign apparatus saying, making the argument, which is a very provocative argument -- I don’t know if people will find it credible -- that Republicans are trying to tank the economy for the purpose of winning the election, which is different from saying we've got a different ideological approach.

  • 10:25:48


  • 10:25:49

    SEIBWell, the other litmus test is that -- and I don't wanna creep into your second hour conversation here. But if you look at the successes on the national security front, I mean, Moammar Gadhafi is gone. The Libyan regime has been overturned. Osama bin Laden is dead. Anwar al-Awlaki has been killed. None of that makes any particular impact on President Obama's approval ratings. It's -- nor does minimal progress in Washington. You know, people forget there were three free trade agreements approved two weeks ago, which is some progress.

  • 10:26:19

    SEIBBut all that is overwhelmed by a feeling that the economy is not doing well and nobody in Washington is either doing anything or knows what to do to fix it. And that's the prevailing sentiment, and it's gonna have, as I said, a political impact, but on whom, we just don't know yet.

  • 10:26:35

    REHMSo you've got these groups, Occupy Wall Street, looming, beginning to spread around the country. What kind of an impact are they having, John?

  • 10:26:48

    HARWOODWell, they're having some impact on the debate already and in ways that are not altogether obvious on the surface. First of all, you've seen Republicans change their initial tone in response to Occupy Wall Street, first talking about the mobs and crazy people and weirdoes who are hanging out in Zuccotti Park. Now, they're talking about those demonstrations as a reflection of legitimate discontent with the economy.

  • 10:27:14

    HARWOODYou saw in a Republican debate this week, Herman Cain, who had been the hot Republican candidate proposing this 999 tax cut plan, was attacked by every other Republican, in part, for the idea that that was a regressive tax proposal, that it would hit people at the bottom. That objection is in tune with the spirit of Occupy Wall Street. Now having said that, how persistent are these protester going to be -- we know that Americans are unhappy with the economy.

  • 10:27:45

    HARWOODDo mainstream voters connect to the aspirations of Occupy Wall Street in a way that the president and his team can galvanize for him? I'm not sure of that.

  • 10:27:56


  • 10:27:57

    TUMULTYBut, you know, I was struck -- I was a moderator at the debate 10 days ago, and my first question to the candidates was, you know, is it right that no Wall Street executives have gone to jail as a result of what happened to the economy in 2008? And every single one, Michele Bachmann, Newt Gingrich, their answer was, no, that this is -- they're not to blame. It is 100 percent Washington's fault. And I was really struck by the fact that, you know, the presidential candidates are putting themselves at odds with 80 percent of American opinion here.

  • 10:28:30


  • 10:28:31

    SEIBWell, you know, I do think there's plenty of anger to go around. I kind of share John's skepticism that the Occupy Wall Street movement can be turned into something the way the Tea Party was turned into an actual force behind a particular political party, only because there are really -- there were two animating ideas in the Tea Party movement that were clear and that were consensus items. One was we don't like health care bill that Congress passed, and we wanna cut government spending.

  • 10:29:00

    SEIBOccupy Wall Street is, at this point, I think a very effective illustration of the anger and anxiety that people feel about the economy, but doesn't really take you to a particular bumper sticker action that everybody wants taken as a result of that.

  • 10:29:15

    REHMDo you think it could evolve into exactly that?

  • 10:29:18

    SEIBI think it could. I'm not sure what it is, but I think that the danger for the business community -- and I've written a column or two saying this -- is that this could morph into just general anger at not Wall Street alone 'cause Wall Street has never been particularly popular. Let's face that. But at the business community in general, I mean, that's the danger for people in the chamber of commerce world, I think.

  • 10:29:38

    SEIBYou know, you guys have a lot of money. You're creating jobs in India, why aren't you doing it here? That could be what this crystallizes into, but I don't think it's doing it just yet.

  • 10:29:46

    HARWOODInteresting slice of life, Diane, from Washington last night. I was on the -- with a large group of people on the receiving end of Occupy Washington at Union Station. There was a fundraising event for an environmental organization last night, Conservation International, and it was mostly progressive, pro-environment donors and activists and organizations who are represented. But you had corporate sponsors -- Northrop Grumman and Walmart.

  • 10:30:16

    HARWOODAnd right at the moment when people were arriving for this dinner, you had a, apparently, pre-planned group of people materialize in Union Station with a thunderous chant about ending corporate greed. And it was really interesting to see that not necessarily -- deployed against people who, in the ultimate sense, are probably on their side of environmental issues, but the fact that it was a fancy dinner in a nice location made them the target.

  • 10:30:46

    REHMInteresting. Karen, you were there at the debate. Tell us about it, and who came out strongly?

  • 10:30:56

    TUMULTYOh, wow. Who came out strongly? That's a very good question. This debate was the most raucous of the series of, what, eight debates that we've had thus far.

  • 10:31:08

    HARWOODYeah. You didn't get Mitt Romney to put his hands on Rick Perry.

  • 10:31:11

    TUMULTY(laugh) It's true. We even had him right there, standing at a -- sitting at a table together. And it was interesting because they sort of took turns ganging up on each other. It was -- you know, at various points, it seemed like it almost assumed a "Lord of the Flies" quality to it. But it was certainly a more animated Rick Perry than we have seen in the previous debates. Mitt Romney came under attack a lot more, and he also ended up actually touching Rick Perry, which is, I think, a violation of some sort of unwritten rule.

  • 10:31:45

    TUMULTYThe next day, I don't know that there was a clear winner. Certainly, for instance, Mitt Romney's staff was saying this just proves, you know, he can take a punch. But then some of his friends were saying he can't lose his cool like that.

  • 10:31:58

    REHMKaren Tumulty of The Washington Post, and you're listening to "The Diane Rehm Show." Jerry Seib, tell us about Gov. Perry's flat tax plan.

  • 10:32:14

    SEIBWell, it's not quite there yet. We know there's going to be one, but it is going to basically take an idea that was pioneered in presidential politics by Steve Forbes some years ago. And...

  • 10:32:24

    TUMULTYOr Jerry Brown before him.

  • 10:32:26

    REHMYeah, exactly.

  • 10:32:26

    SEIBThat's true. I forgot about Jerry Brown, that's true, the true pioneer. And it is -- the idea is to wipe out the tax code, and, in that sense, it has a lot in common with Herman Cain. And just impose a flat tax on all income. Eliminate deductions and credits and all those things, and tell everybody that this is fair because everybody pays the same flat tax on everything. It's -- political problem is that if you tell people that you're gonna have a flat tax at 15 percent, they'll all say, great.

  • 10:32:55

    SEIBAnd then when you say, well, that means, by the way, that your home mortgage interest deduction is gone, they'll say, wait, that's not so great. So that's the political problem. You know, the economic problem is it's hard to make sure that you calibrate it so it doesn't become a revenue loser. But what it does do, which economists really like, it basically shifts the tax burden from income to consumption. It's a much more pro-savings tax code, which is why economic wonks like the idea, but politics are difficult, though.

  • 10:33:24

    REHMAnd, by the way, Herman Cain is scheduled to be on this program on Nov. 3. John Harwood, turning to you, is New Hampshire going to have its primary in December?

  • 10:33:43

    HARWOODNo. The -- I can't prove that. That's my instinct because I think that would be a calamitous event for the New Hampshire primary by devaluating -- devaluing it. If you put it in advance of the turn of the year -- I think the turn of the year is a natural focal point for people, and you have a momentum process that begins with Iowa, then goes to New Hampshire. I think...

  • 10:34:05

    REHMWhy are they even considering this?

  • 10:34:08

    HARWOODIt's a game of chicken with other states about whose prerogatives are gonna be protected. My own belief, now that Iowa has set its caucuses for the third, is that New Hampshire will go a few days after that, seventh or the tenth the following week. And then you'll have Nevada, and we'll be off to the races.

  • 10:34:28


  • 10:34:29

    HARWOODI wanna make one more point on the flat taxing...

  • 10:34:32


  • 10:34:32 Jerry mentioned. The other political problem is that it is a declaration of thermonuclear war on the Buffett rule because the Steve Forbes flat tax, when he ran in 1996, in addition to having a flat tax on income, eliminated the taxes on dividends, capital gains and interest income. That is directly opposite to the spirit that we've been talking about. That doesn't mean it's a bad idea economically, but it's a steep hill to get up, justifying that on fairness.

  • 10:35:02


  • 10:35:03

    TUMULTYI was just gonna say on the campaign calendar, you can say as you can say with so many things in presidential politics, blame Florida. What started all of this was Florida deciding to move its primary up to Jan. 31st. And since then there's been a whole series of dominoes. Nevada moved. But we do have Iowa set for Jan. 3, so, hopefully, that'll...

  • 10:35:28

    REHMTell me what difference these who-goes-first makes, Jerry.

  • 10:35:33

    SEIBWell, first of all, I don't know if anybody who thinks this is a good process that -- and that this moves up in the calendar are a good idea. That's what's crazy about it. Everybody will agree this is a bad idea and a bad way to run an election, but it happens anyway. So that's the first thing. The second thing is, you know, it does benefit Iowa and New Hampshire -- and, I guess, to some extent now, Nevada and South Carolina -- to be early in the calendar. They get more attention.

  • 10:35:58

    SEIBIt -- and they basically become places that benefit economically, and then also get to hear their economic -- excuse me, their political grievances heard more than any other states. So...

  • 10:36:09

    REHMHow do they benefit economically?

  • 10:36:12

    SEIBWell, we all go up there and spend a lot of money in hotels and restaurants in Iowa and New Hampshire, for one thing. And, by the way, if you own a TV station in Iowa or New Hampshire, you're in a pretty good place right now. So all that is just -- is true.

  • 10:36:25

    SEIBIn the long run -- and I think this is this -- if this is a cloud, and I think it is, the silver lining is that 2008, particularly on the Democratic side, where Hillary Clinton and Barack Obama slugged it out all the way through into the summer, shows that we can get past even a crazy early schedule 'cause this is the same schedule we were stuck with in 2008. It's -- there's nothing particularly new here. It's equally crazy. But, in the end, in 2008, it was not determinative, and that's a good thing, I think.

  • 10:36:50

    REHMAnd the fact that people may not make up their minds until much later?

  • 10:36:57

    TUMULTYThat's -- and, certainly, that is the case that we saw in Iowa last time. On the Republican side, you know, Mitt Romney was doing really, really well until just about this point in the year when suddenly Mike Huckabee comes in from almost nowhere. So there is, even in the short time frame, the -- you know, the ball can take a lot of unexpected bounces.

  • 10:37:18

    REHMKaren Tumulty, The Washington Post, Jerry Seib, The Wall Street Journal, John Harwood, chief Washington correspondent for CNBC. Short break, and when we come back, time to open the phones. Stay with us.

  • 10:40:03

    REHMWelcome back. It's time to open the phones during this hour -- domestic hour of the Friday News Roundup. First to Tampa, Fla. Good morning, Leo. Thanks for joining us.

  • 10:40:17

    LEOHi. Thank you, Diane, for having such a great show. I sent an email. I sent one up to you, but I sent letters to the congressmen, only in West Florida, and the senators on a proposal I had to possibly stimulate the home market and reduce foreclosures. Basically, what it was is for the first two years, the people -- it could poll out all people but -- that are near or in foreclosure would only pay the interest and the escrow on the loan.

  • 10:40:48

    LEOThe third year, they would pay the interest, the escrow and, like, 10 to 20 percent of the principal for the month. The fourth year, they'd pay the interest, escrow, 50 percent of the mortgage payment. And the fifth year, they're back to normal. My feeling was, one, it would reduce the court's burden there with all the foreclosures and stimulate reconstruction for new houses since there wouldn't be a glut of foreclosed -- keep -- foreclosed houses on the...

  • 10:41:19

    REHMAll right. What do you think, Jerry Seib?

  • 10:41:21

    SEIBWell, it's -- look, it makes sense on its face, logically. The problem is it would require banks and, more importantly in this case, people who have bought mortgages, who are secondary mortgage market participants, to take less than they bargained for when they got into the game. And that's -- people have been trying to convince them that's in their interests but have been failing to do so.

  • 10:41:46

    SEIBAnd it's one of the things that -- well, I think if you went -- if you got an Obama administration official in a room and said, just tell me what you really think, I think they would say I really think we should have tried harder to get something like this done two years ago. But it's been difficult.

  • 10:42:01

    REHMAll right. And just to alert you, on Monday, in our first hour, we'll be doing a program on the housing crisis. Let's go -- yeah, sure.

  • 10:42:12

    HARWOODDiane, let me just add to Jerry's point. The problem in housing is somebody's got to take a hit. Is it the homeowner who's getting foreclosed upon, which he's not the only victim in that? His neighbors are the victim as well and the housing market, in general. Do the banks take a hit? Does the entire economy take a hit? In fact, the entire economy is taking a hit.

  • 10:42:37

    HARWOODAnd so it's a very difficult conversation of democracy to try to figure out how you can stop the bleeding. But when you stop the bleeding, somebody has got to accept that nick in their income just for the purpose of making the entire economy healthier to tough problem.

  • 10:42:57

    TUMULTYAnd there's also the moral hazard argument where people who didn't go out and buy houses that they couldn't afford will go, why are you bailing those people out?

  • 10:43:05

    REHMAll right. Let's go to San Antonio, Texas. Good morning, Chip.

  • 10:43:10

    CHIPGood morning. I just wanted to comment on -- and I hate quoting this person, but Grover Norquist, who said that we will never allow a Democrat to govern as a Democrat ever again. And here we are with, basically, a Congress that will allow absolutely no solution no matter what. And I just wonder if people understand what a vice the middle class is stuck in when no solution will be allowed. And I appreciate your time. Thanks.

  • 10:43:41

    REHMThank you. Karen.

  • 10:43:43

    TUMULTYWell, first of all, Chip, I'm envious of you being in my hometown of San Antonio. I think you could argue, however, that the Democrats very much did govern as Democrats and in the first two years of Barack Obama's term. They got a lot done. They, you know, they put in a Keynesian economic stimulus. And there was a very strong reaction from the electorate.

  • 10:44:10

    TUMULTYSo I don't know that this is just Grover Norquist, you know, but again, I mean, I think that the history of the Obama presidency is going to be written about the, you know, very sharp turn that they had to take as a result of the very big setback they got in the midterm elections.

  • 10:44:26

    REHMOn the other hand, I think we cannot and should not forget that Senate leaders like Mitch McConnell and John Boehner have said, right at the outset, this is gonna be a one-term president. We're gonna see to it. That -- and Rush Limbaugh saying we want him to fail, you know, it's not easy for the American public to hear those kinds of comments and to believe that there really is an effort to put the American public first. John.

  • 10:45:05

    HARWOODWell, I think that's true. But I also think what Karen said is right, in that, you know, the way -- there are two ways that you can have the American political system move forward. One is if you've got a divided government, you have both sides cooperating with one another. The other is one side seizes clear control and implements its program. Democrats did that in 2009, 2010. They passed health care. They passed stimulus. They passed financial market regulation.

  • 10:45:33

    HARWOODThe problem is that the economic circumstances are so bad, whether they're -- the president deserves any responsibility for that or not, and if you look in the polls, a lot of Americans blame the previous administration. But it doesn't allow the administration to point to what we did and say, you see how good this was. That is, you know, life isn't fair sometimes, but in -- from the administration perspective, they're gonna look back when the history is written and say, we did the right things, but we didn't get any credit for it.

  • 10:46:05

    REHMWe're getting lots of emails defending the goals of Occupy Wall Street. Here's an email, which says, "Your panel seems unusually out of touch on the issue of Occupy Wall Street. The movement reflects far more than the fringe, it appears. The fortunate among us have day jobs, but the support is huge."

  • 10:46:33

    SEIBNo. I don't doubt that at all, and I don't think any of us have suggested otherwise that this is a -- look, the -- if you look at the signs of economic distress in the country, they are -- they're enormous and they're alarming. And there's been -- if you watched -- this is just one example. If you look at the Michigan consumer confidence index over the last year, there's been a collapse in consumer confidence. The anxiety that people have about whether the economy is going to get better over the next year, it's almost as stark.

  • 10:47:02

    SEIBAnd -- so I don't think that anybody doubts that. I think what we're wondering was what does this crystallize into. It is clearly a -- an accurate reflection of deep economic anxiety and some angst and, yes, some anger that is very widespread. I think the question that we're raising had much more to do with so what does it turn into? How does it crystallize?

  • 10:47:22

    REHMAll right.

  • 10:47:23

    HARWOODTea Party said cut spending. What does Occupy Wall Street say that is...

  • 10:47:29

    REHMCreate jobs.

  • 10:47:29

    HARWOODThat somebody can make a program, yes.

  • 10:47:30

    REHMCreate jobs. That's what Wall Street -- Occupy Wall Street says. We want and need jobs, and nobody is doing it.

  • 10:47:40

    HARWOODWell -- and the question is how you do that. And in fact, the Obama administration is pushing an agenda, which involves increasing spending for that purpose and, in that way, puts the Occupy Wall Street on a collision course if that, in fact, is the method that they seek for job creation, puts them in a direct collision with the Tea Party.

  • 10:47:59

    REHMAll right. To Detroit, Mich. Good morning, Kevin.

  • 10:48:04

    KEVINGood morning. Just to piggyback on the point that Karen made that I think is completely false. Actually, in that first two years, there were a record number of filibusters that were pursued -- that the Republicans utilized to obstruct over 200 pieces of legislation that the House -- Nancy Pelosi's House passed.

  • 10:48:28

    KEVINAnd, you know, so that -- this conservative point, that talking point that, you know, the Obama and Democrats got everything that they wanted in that first two years is really false. And it goes toward my point that I'm calling in about, is the fact that the Republicans have not submitted one single piece of legislation to create jobs in this country. Nothing has been submitted to the CBO for scoring or any economic nonpartisan analysis.

  • 10:49:01

    KEVINThere has been no questions from the media asking where their jobs plan is, OK? You wanna reject the president's job plan, fine. Where is yours? And when is the media going to -- when our mainstream journalists, such as yourself, gonna stop giving Boehner cancer a pass on that point?

  • 10:49:24

    REHMWhat about that, Jerry?

  • 10:49:26

    SEIBWell, look, I mean, the Republicans would respond, we've -- we have offered what we consider to be jobs plans. They're not what Democrats would call jobs plans.

  • 10:49:34

    REHMLike what?

  • 10:49:34

    SEIBWell, for example, you know, there was one that was voted down in the Senate yesterday, which was to eliminate that provision that requires the government to do some withholding from corporate payments on government contracts the same way taxes are withheld from payrolls for workers. That was defeated because for -- in a 50-50 vote. And they would argue that bills that we have proposed to reduce the corporate tax rate, for example, are, in our eyes, job-creating legislation.

  • 10:50:07

    SEIBThat's what we think is standing in the way of job creation, not that -- and they simply disagree with the idea that the government should take some proactive Keynesian stimulus action to create jobs. That's why we're stuck is because there was actually a philosophical disagreement.

  • 10:50:21

    REHMAnd you're listening to "The Diane Rehm Show." Karen.

  • 10:50:25

    TUMULTYWell -- and back to Kevin's earlier point. Yes, there were a lot of filibusters, but I think you cannot dispute the fact that the first two years of Barack Obama's presidency, an extraordinary amount of stuff got done. The stimulus...

  • 10:50:39

    REHMFor which he has gotten very little credit.

  • 10:50:41

    TUMULTYRight. But the stimulus package was pretty much written exactly the way the Democratic leadership wanted it. They got through health care reform, which was an extraordinary accomplishment. They got through financial reform. And I think probably the...

  • 10:50:56

    HARWOODThe auto companies were bailed out, were saved.

  • 10:50:58

    TUMULTYYes. And I think the only major piece of legislation that got through the House that didn't make it through the Senate would have been Nancy Pelosi -- what she calls her flagship issue on climate change.

  • 10:51:09

    REHMAll right. To Austin, Texas. Good morning, Andy. Andy, are you there? I guess no.

  • 10:51:19


  • 10:51:20

    REHMYeah. Go right ahead, Andy. Andy, are you there?

  • 10:51:26

    ANDYOh, yes, I am. I -- especially now in the heels of hearing the last comment about what Obama's administration and the Democrats have accomplished and got through, and then thinking back then your earlier comment, Diane, about the resistance to Obama's actions by Republicans, you know, I'd rather ask the question, is there some other motive on the part of the Republicans? Like this is the first time anybody has been fought this vigorously.

  • 10:51:57

    ANDYI'm an African-American, retired military officer, and I, you know, I'm not one to look for a race-baiting or hatred based on race or anything, but I've got to wonder if people are resisting this man because of who he is. It just comes down to that. I mean, in the African-American community across this country, that is the overwhelming sentiment.

  • 10:52:17

    REHMI think there are a lot of people out there who find value in what Andy has said. Perhaps, reporters here in Washington feel removed from that kind of comment and would not wish to validate it. But at the same time, I hear it a lot, John.

  • 10:52:44

    HARWOODWell, I mean, if the issue is removed from the comment -- everyone around this table is white, so we will not feel the same impulses and the same reactions to political disagreement than people who are not white will feel. I understand that sentiment is widespread. My own perception is that, given the way our parties have developed over the last couple of decades, that there is intense, visceral and vigorous opposition and mutual attack and loathing that is shared no matter who the occupant of the White House is.

  • 10:53:23

    HARWOODBill Clinton felt that, and Barack Obama is feeling it now. So while I wouldn't dismiss that as a strain of some of the opposition to Obama, I wouldn't consider it a dominant strain.

  • 10:53:36


  • 10:53:37

    TUMULTYYeah. I mean, I do think there, you know, I mean, this is a country that still has a lot of racial baggage. And certainly, you know, we have not seen previous presidents have their citizenship questioned, their religion questioned in that sense. But I also think there is a lot of conservative outrage out there that is driven not by race, but actually by policies.

  • 10:54:01

    SEIBYou know, and I don't think anybody is naïve. I mean, as you noted, Diane, I mean, Mitch McConnell said, the week that they took over control of the Senate, my top priority is to make Barack Obama a one-term president. I mean, that -- he said it. Nobody made it up. And he will tell you that he meant it. And so I don't think anybody is under any illusions here.

  • 10:54:18

    SEIBThe mystery, I think, to a lot of Democrats is -- and you also referred to this earlier, Diane -- is why Barack Obama doesn't get more credit for accomplishments that he made that by any Democratic standard, as Karen said, are big. That's the mystery. But there's also a reality. And this predates Barack Obama -- and John and I wrote about this a lot in the book we did together a few years ago -- this has become a very partisan place. It's true on both sides.

  • 10:54:44

    SEIBAnd if you go back over the last year and look at voting in Congress, the percentage of votes that are partisan, which is to say everybody on the Democratic side votes one way and everybody on the Republican side votes the other way, keeps creeping up and up and up. And that's been going on for a decade now or more, and that's the real problem. Nothing happens in the middle. There's no compromise.

  • 10:55:02

    REHMAll right. And to Geneseo, N.Y., good morning, Tony.

  • 10:55:09

    TONYGood morning. I'm calling just to alert people to say that in New York, Gov. Cuomo, who, on one hand, says he supports the Occupy Wall Street protesters, is proposing to lay off 3,500 state workers to save $100 million on one hand, but on the other hand is also proposing the elimination of the surcharge on higher income people, tax surcharge that would essentially give them $5 billion in tax cuts. That's 50 times the amount that he proposed to save. $5 billion is 50 times 100 million. And I think it's completely unfair.

  • 10:55:48

    REHMSee, that's why I have trouble. Jerry, you talked about Republicans offering to reduce corporate taxes in order to create jobs. Americans are no longer getting that connection.

  • 10:56:05

    SEIBNo, I understand that. I mean, and the fact is the corporate America is sitting on a lot of money, not investing it. And I'm just saying that's the Republican view of this is you have to create a climate of certainty so that money will be invested because they have $2 trillion and we, in the government, are broke. So that's where the money is gonna have to come from.

  • 10:56:24

    REHMAnd what about Gov. Cuomo?

  • 10:56:27

    HARWOODI don't know about that provision, but, I mean, that is a distillation of the challenge for Occupy Wall Street into translating what they -- their discontent into something actionable. Even Democratic governors are feeling tremendously squeezed financially laying off people.

  • 10:56:48

    REHMJohn Harwood, Karen Tumulty, Jerry Seib, the domestic hour of the Friday News Roundup. Thank you, all.

  • 10:56:57

    TUMULTYThank you, Diane.

  • 10:56:57

    HARWOODHave a great weekend.

  • 10:56:58

    REHMAnd thanks for listening, all. I'm Diane Rehm

  • 10:57:02

    ANNOUNCER"The Diane Rehm Show" is produced by Sandra Pinkard, Nancy Robertson, Susan Nabors, Denise Couture, Monique Nazareth, Lisa Dunn and Nicki Jacks. The engineer is Erin Stamper. A.C. Valdez answers the phones. Visit for audio archives, transcripts, podcasts and CD sales. Call 202-885-1200 for more information. Our email address is And we're on Facebook and Twitter. This program comes to you from American University in Washington. This is NPR.

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