Congress expert Norman Ornstein on what the debate over the debt limit says about dysfunction in Congress, and his ideas for how to fix it.
The Obama Administration announced the first cuts in the Defense Department budget since 1998; Republican presidential candidates squared off in the second Florida debate as polls showed a dead-heat between Mitt Romney and Newt Gingrich; and the Federal Reserve announced it would keep interest rates at near zero until late 2014. Doyle McManus of the Los Angeles Times, Clarence Page of the Chicago Tribune and Ron Elving of NPR join Diane for analysis of the week’s top national news stories.
- Ron Elving Washington editor for NPR.
- Clarence Page Syndicated columnist for the Chicago Tribune.
- Doyle McManus Columnist, Los Angeles Times.
Friday News Roundup Video
A caller asked the panelists for their thoughts on President Obama’s policies geared towards helping black Americans:
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. The Fed says it will keep interest rates near zero for the next three years. The president took his State of the Union message on the road to swing states, and Republicans faced off in two Florida debates. Joining me for the domestic hour of our Friday News Roundup: Ron Elving of NPR, Clarence Page of the Chicago Tribune and Doyle McManus of the Los Angeles Times. I do look forward to hearing from you, 800-433-8850. Send us your email to firstname.lastname@example.org. Join us on Facebook or Twitter. Good morning to everybody.
MR. RON ELVINGGood morning, Diane.
MR. CLARENCE PAGEGood morning, Diane.
MR. DOYLE MCMANUSGood morning, Diane.
REHMGood to see you all. Ron Elving, are Americans beginning to feel that the economy is moving in the right direction, and is that going to affect President Obama in the polls?
ELVINGYes, to some degree, and, yes, to some degree. We've already seen that the number of people who feel the country is on the right track -- this is a number that's been so low for so long it doesn't even show on the landscape. but we've seen that number come up a few points. And, correspondingly, we have seen the, approve the president, disapprove the president, number move just a tiny bit, but into positive territory for the first time in six or seven months.
ELVINGSo the president now has a few more people approving of his job in office than disapprove. Now, it's very close. Within the margin of error, this is basically a tie. It's a statistical tie, but that looks a lot better for the president than where he was three months ago, four, five months ago.
REHMSo, Doyle McManus, given that the economy looks as though it's improving ever so slightly, how come Ben Bernanke announced keeping interest rates at zero for even longer than anyone expected?
MCMANUSBecause Bernanke and his economists at the Fed really delivered some underlying bad news there, which is that, yes, the improvement is going to continue. But it's still very fragile, and it's going to be agonizingly slow. The Fed, in effect, forecast growth rates below 3 percent -- this year, below 4 percent, next year, below 5 percent. You know, it will be three years before we actually feel like this is a normal growth, and what that, of course, means is that unemployment, which is always a lagging piece of a recovery, is going to continue lagging in this one.
MCMANUSThe political implication of that, as Ron suggested, is that what's going to be important for Americans as they make up their minds in this presidential election is going to be both the level of unemployment, which is going to remain high all year, and the direction.
REHMAnd to you, Clarence Page, what about housing? We seem to have hit bottom in the housing market, but have we?
PAGEWell, that remains to be seen, Diane, but it is trending in the right direction. We can only hope that it stays this way, just like the rest of the economy that's recovering slowly, but housing is a key element in an economic recovery just as it was a key element in the recession that came on in 2008. Well, what I think is important here is politics and the economy are both 90 percent perceptions. How do you feel? The average person out there, are they -- do they have a job as Ronald Reagan used to say? That's what's going to make a difference as far as their both -- next spring, or next fall, excuse me.
PAGEAnd is there -- a child who just graduated from college, does he or she have a job? Those kind of personal elements are important. So I think the polling is the most important number I'm seeing right now, that trending that shows the public is swinging back in Obama's favor as far as their approval of him. That's what's going to make the big difference for next November. By the way, we got a bunch of months to go, but we're moving in that right direction in spite of all the pounding he gets every night from the Republican debates and Republican campaign coverage.
REHMInteresting that Defense Secretary Panetta has proposed cutting the Pentagon budget for the first time since 1998, Doyle.
MCMANUSThis is a very large pivot that the Obama administration has been forecasting for some time. Yes, Panetta is -- and Obama are proposing cutting the defense budget, but these cuts are really quite modest. And the defense budget will still be well over where it was before 9/11, even in inflation-adjusted terms for some time to come. So, yes, these are cuts, and the places where the cuts are occurring -- downsizing the Army, downsizing the Marines -- are very significant.
MCMANUSThere's an enormous shift in emphasis going on within that defense budget. But, even at the end of the day, we're going to be looking at a defense budget between 500 and $600 billion a year. It's going to be, by far, the largest defense budget of any country in the world. It's going to be very difficult to argue that the American military isn't up to the challenges of any foreseeable problem.
ELVINGWhich will, of course, not prevent Republican candidates from saying that it is not up to those challenges and calling for more defense spending. In fact, Mitt Romney has been saying in recent debates that our current Navy is the same number of ships roughly as we had in 1917. And, thereby, we have the same Navy or about the same powerful Navy as we had in 1917. Now, of course, any one of those ships that we have today could've wreaked great havoc in the entire fleet of 1917.
ELVINGAnd the comparison between the sort of aircraft carriers that we have today and missile ships and so forth and that navy is rather absurd. But a point can be made that we have a similar number of ships, and that will be the kind of argument that is used, that we no longer have something we once had. Therefore, we are weaker, irrespective, of course, of what the rest of the world may be speculating.
REHMDoes this defense budget indicate to any other country that we are weaker, Clarence?
PAGEI have to laugh, Diane, you know. And we not only have the biggest budget on the planet, we got a bigger defense budget than the rest of the planet put together. And it's not the quantity. It's the quality. That's why Ron mentions that argument about the 1917 -- that's, you know, before radar, sonar, guided missiles, the -- of course, the big automated military that we have now.
PAGEWhat was interesting about Panetta's presentation was how -- it was very high-tech, very Star Wars generation, if you will, 'cause we're talking about the era of drones now, robot planes that can go out and fight your aerial war. We're talking about also the post-Iraq, post-Afghan world. This is what's interesting about this budget. Although, over the next 10 years, most of these cuts really come in several years from now.
PAGEIn other words, at least one election from now. So I personally ask whether or not we're really going to have that kind of a downward decline in spending over the next decade. In fact, I believe that we may just see a round of political sanity to come in after this next election, regardless of who wins, that a lot of the fighting going on right now is going to settle down. People are going to start getting back to what can I do for my constituents? What can I do for the people, et cetera, et cetera? And we'll see some realistic budget making.
PAGERight now, this defense budget is the result of the arguing over the debt ceiling, et cetera, that went on over this past year. And I think it really indicates two things: one, future military will have fewer people, more technology and, number two, things are kind of crazy in Washington right now as far as serious budget making is concerned.
REHMYou know, Clarence mentioned drones, but you look at what happened in Somalia with the SEALs. So you're using smaller forces to accomplish what you want.
MCMANUSSmaller forces and special operations forces, yes. The two places in this budget that are actually growing are drones -- 30 percent more -- and special operations forces. And those are the two areas in which the United States has an enormous advantage, an enormous quality gap over the rest of the world. So, in effect, it's leveraging our comparative advantage to get more out of it. But, you know, where there really is a turning point here is -- you can talk to people in the uniformed military -- after 9/11.
MCMANUSThey were given a mission to do everything, do it fast, not to worry about the price tag. We went to war in Afghanistan. We went to war in Iraq. That era is now over, and we are back into an era of very hard choices. And so where the cuts are being made are on big ticket items, as Clarence said, like the size of the Army and the Marine Corps, but also the pace of ship building and the number of F-35 fighters that will be bought.
ELVINGThis all makes an economic difference, of course, and this is why it gets to be an equilibrium game politically. We have just seen a GDP estimate release this morning, a gross domestic product number of 2.8 percent. That's an annualized growth figure for the fourth quarter of last year. 2.8 is below three as Doyle was saying a moment ago. It's certainly not four. It's certainly not five. It's not the kind of growth we all love to see to create more jobs and put more people back to work.
ELVINGBut it is growth, and it would have been greater in 2011, except for the biggest cuts in overall government spending that the country has seen in decades. I believe the estimate -- the year is 40 years. So we have to go back to the early 1970s to see the kind of cutbacks in overall government spending that we've actually seen in the last couple of years. Now, this is contrary to the popular imagination. Popular idea is that government is getting even larger, and that's because of a couple of things that the federal government has been up to in the last couple of years, particularly health care.
ELVINGBut if you take in state governments, 50 state governments, where there have been radical cutbacks and you look then to the local governments and universities and all the other government functions that are related to government, they have cut back quite drastically in the last couple of years so that overall levels of spending in constant dollars, adjusted for inflation, are actually lower than they've been in decades. And that has put many, many people out of work, and that is a huge contributor to the unemployment numbers.
REHMRon Elving of the NPR, Doyle McManus of the Los Angeles Times, Clarence Page of the Chicago Tribune. We'll take a short break here. Do join us, 800-433-8850. I look forward to hearing from you.
REHMAnd welcome back to the domestic hour of our Friday News Roundup this week with Clarence Page. He's a syndicated columnist for the Chicago Tribune. Ron Elving is Washington editor for NPR. Doyle McManus is a columnist for the Los Angeles Times. I look for forward to hearing your phone comments, your email, and we'll take those messages in just a little while. Let's talk about the State of the Union message that President Obama is now taking on the road. What are the points he is going to make those potential voters, Clarence?
PAGEWell, he may -- he came on very strong with the populist pitch and the Buffett rule, the idea of fairness and is it fair for Warren Buffett's secretary to make -- or to pay a higher tax rate than Warren Buffett pays, who happens to have that same kind of dividend-related income of that an unnamed Republican candidate, Mitt Romney, happened to announce quite grandly this week, that Obama didn't have to mention Romney's name to -- for the message to come out that this is a key element in this year's election, and also an element of what Obama's view is going forward.
PAGEHe is coming out in favor of changes in tax policy and structural changes in the filibuster rule, et cetera, et cetera. Who knows how much of that he is going to get? But he was throwing down a marker, distinguishing himself from the Republicans, and also bolstering his own base, I think.
REHMBut how much is he likely to get accomplished, Doyle, even on this tax rate?
MCMANUSNot very much, and especially on the tax rate.
REHMNot very much? Yeah.
MCMANUSNo. Listen, changing taxes, and, in a sense, the biggest proposal President Obama made in that speech was a refinement of the Buffett rule that would impose a 30 percent minimum tax, essentially, on millionaires. That's a...
MCMANUSNo, not $250,000.
MCMANUSRight. But that's a big piece of legislation, and there's no earthly way that's going to happen this year. And it's -- it would be impossible to predict when and if that's going to happen. So what we were hearing really -- and this is campaign year, so it's neither unnatural nor immoral -- was a campaign positioning speech. And there were a couple of elements that linked together in an interesting way.
MCMANUSThe president talked about fairness, as Clarence said -- a bit of an adjustment there. He didn't talk about inequality as an abstract problem. He talked about equality of opportunity, fairness, playing by the rules. It was a little more Clintonian. He talked about taxes, as he has before, but he also talked about manufacturing, re-stimulating the manufacturing sector, bringing back manufacturing jobs, interestingly enough, a theme that Rick Santorum has been using in the Republican race.
MCMANUSAnd, to me, in a sense, what linked all this together was that these are all issues that should appeal to the blue collar working and middle class. There was a flurry earlier this year when some Democratic academic said, you know, Obama doesn't need the white working class anymore...
MCMANUS...and Republicans accused the president of abandoning that part of the electorate. Well, if there was any question about that, and there shouldn't have been, I think the speech probably laid it to rest.
PAGEBy the way, the Rust Belt swing states is the one place for manufacturing has been hit the hardest over the last 30 years. And so, yeah, there's certainly a political percentage of them coming up with that.
REHMOf course, he's speaking today in Michigan, which has brought back the auto industry.
ELVINGWith some help from the federal government...
ELVING...which stepped in in a highly controversial fashion and helped General Motors, helped Chrysler, General Motors, in particular. I believe General Motors uses the slogan, built to last, do they not? And where have we heard that more recently? Well, it was kind of the theme of the president's speech. And certainly the document -- they put out the blueprint -- they put out to go with the speech that was sent out as a PDF file to all of us covering the speech -- said right on the front, built to last.
ELVINGSo I think it was too subtle. There are short-term benefits from this particular kind of strategy that certainly Doyle was mentioning, that this is how you go back to some of these independent voters, some of these blue collar voters, independent, primarily white voters, primarily male voters who have not been very fond of Barack Obama, especially in the last couple of years, and are a problem for him.
ELVINGBut in the longer term, he's up to something else, and that is he is trying to readdress the changes that come to our tax code over the last 40, 50 years. And we've got a lovely little frame here. George Romney Sr. -- this Mitt Romney's father -- released his tax returns back in the 1960s when he was running for president. And he was paying a marginal tax rate of 44 percent on his substantial income. He was an executive in an auto company. He was the chairman of an auto company.
ELVINGSo he was paying 44 percent. His son is paying 14. The tax laws have changed since the 1960s. They were both legal, and Mitt Romney is a perfect symbol of how those tax laws have changed. And it won't change overnight. Doyle is absolutely right. This Congress will not do it. Probably the next Congress will not do it. But over the long haul, as we adjust our entire economic philosophy and political philosophy, those numbers are going to have come back to get them.
REHMOK. Let me understand through this email exactly what's going on. Cindy in Adrian, Mich. says, "I keep hearing reporters say Romney's 15 percent effective rate is far lower than what middle income folks pay. Really?" She says, "I made $151,000 last year -- all wages, no investment. I have a mortgage, charitable contributions, union dues, a few exemptions, just normal things. My effective rate was 16 percent."
REHM"The year before, I made about $120,000. My effective rate was 12.9 percent. I was in the 28 or 35 percent tax bracket. But how many people really pay that amount? Yesterday, Rush Limbaugh said, if you're making $250,000 a year and you pay 30 percent in taxes, you're stupid."
ELVINGWithout being a tax accountant or a tax lawyer and without knowing that much about any of these people's individual situations, there are too -- there is a distinction we can make between the marginal rate and the effective rate. As I understand it, the marginal rate is what you pay on the last dollar of income that you have that's taxable. So after you've finished with all your deductions and all your exemptions and all of that and you finally got your taxable number on the second page of the 1040 form, you then figure what you owe on that.
ELVINGAnd as you add one more dollar of taxable income, the rates you pay on that is your marginal tax rate. Now, if you're talking about a very well-paid professional, someone making hundreds of thousands of dollars a year, that's probably be going to be 35 percent as the marginal rate on that very last dollar. But if you then look at their total income and their final, bottom line tax bill, it's not going to be 35 percent. It's going to be something in the teens.
REHMBut see, we get back to Warren Buffett's secretary, and one is wondering how much money she actually makes working for one of the wealthiest men in the world and what her accountant is telling her about what kind of taxes she has to pay.
MCMANUSWell, one of the other issues here is we sometimes mix apples and oranges. I am not going to question Cindy's arithmetic 'cause it sounds like she's done a very diligent job here. But remember that middle income Americans pay not only federal income taxes, but also payroll taxes.
REHMOf course. Sure.
MCMANUSSocial Security and Medicare, and those are quite substantial. And then when you get down to lower income, when you get down to secretaries and entry-level folks, that can often be a very big chunk of what their tax burden is. And then, finally, Cindy said, that year, she made $151,000. She paid 16 percent in taxes. Well, that's more than Mitt Romney paid that year.
ELVINGThere you go.
REHMIt certainly is. I want to get off taxes and ask you about what happened in Arizona, when there was this angry exchange between President Obama and Arizona Gov. Jan Brewer. Clarence?
PAGEBoy, talk about a he said, she said story 'cause the basic facts are fairly clear, but interpretation -- in other words, who was really angry and who was not, whether this is a big deal or not. Obama arrived in Arizona. Jan Brewer says that she spoke to him on the tarmac, gave him a note, invited him to come look at the border and she would tour him around, buy him lunch, and that he responded testily, referring to her biography, what, the, "Breakfast with Scorpions," I believe is the title, or "Scorpions for Breakfast," and the way she described a previous meeting in the Oval Office with the president.
MCMANUSHe says that she -- I haven't read the book, but she apparently described it as a angry session and that he was not as civil or cordial as he might have been, and Obama didn't like that description. And Jan Brewer was shocked, and that's when the finger wagging happened. That was caught in a still photograph that's going around the world now.
REHMSo what difference does this make, Doyle?
MCMANUSWell, there was actually bad blood earlier, and that's the key to all of this. Look, Jan Brewer is one of the sponsors of the Arizona law that lets the state of Arizona enforce strictly, harshly -- in a Draconian way, according to many advocates -- federal immigration laws. The Obama administration opposes that. Jan Brewer publicly, at one point, accused President Obama of turning a blind eye to illegal immigration because he thought that would help him register more Latino voters in the Democratic camp.
MCMANUSNow, those are fighting words because the president is trying to say, no, he can enforce the law but do it in, you know, in a careful way as well. So what's at stake here? This was, in effect, a surrogate for the battle over immigration law and the battle over Latino voters. And there are signs, actually, that being photographed in an argument with Gov. Brewer can be good for President Obama among Hispanic voters.
REHMWell, it certainly shot sales of her book way up.
ELVINGExactly. Jan Brewer has a number of people that she would like to impress with the fact that she is at odds with President Obama. And so when he comes to town, she's loaded for bear. She goes out on the tarmac. She meets him, and she gets it going on with him right away. And as you say, there are reasons for the president not to take it, but to be giving back what he gets. And it's politically beneficial for his party.
REHMAll right. Let's talk about the debates this week. As you said, Romney released his tax records, showing he pays less than 14 percent. The other issue that came up -- two issues: one with Juan Williams, one with John King. In all of this interaction with the press on the part of Newt Gingrich seems to be helping him a lot, Doyle.
MCMANUSIt has helped him a lot because, you know, in the conservative two-thirds or -- let's shorthand it -- of the -- of Republican primary voters, the mainstream media are seen as nefarious and terrible, and bashing them is just a terrific thing to do. And, you know, last night, there was a debate in which, for the first time in recent memory, Speaker Gingrich didn't successfully attack the moderator. And most of the pundits went away, saying, gee, he seemed kind of flat and off his game. So maybe we've grown to expect that this is part of the Gingrich shtick here, and we're disappointed when it doesn't happen.
ELVINGIt has been part of the Gingrich shtick, back to June, back to when the debates began, which seems, you know, an age, an epoch ago. We've had 19 of these things. And right from the beginning, one of the questions was about would you, you know, choose one of these other people, or which of these people do you find most? And he says, I'm going to resist. This is Newt Gingrich, back to the moderator.
ELVINGI'm going to resist, and I ask all the other candidates to resist all efforts to set us against each other so as to defend Barack Obama. The audience cheered wildly. And at every junction throughout the entire season of these debates we've had, wherever he needed it, Mitt Romney has gone back to that well -- excuse me, Newt Gingrich has gone back to that well.
REHMRon Elving of NPR. And you're listening to "The Diane Rehm Show." It would certainly seem as though establishment Republicans are very worried that Gingrich could win not only Florida, but win the nomination, Clarence.
PAGEAnd now they're getting vocally worried. In the past, they've just been Washington whispers about, oh, my God, we can't let Gingrich win. Now people like former Sen. Bob Dole and other more responsible, shall we say, establishment voices, as well as on the right, with the firebrands like Ann Coulter, Matt Drudge and various others have talked about it would be disastrous because, as Sen. Dole said, if -- that a Gingrich nominee could -- nomination could bring down Republicans all the way down the line, and they can possibly lose not only the Senate, but the House.
MCMANUSYeah. There are really two or three things going on there in the mind, if you like, the collective mind of the Republican establishment. One is the question is Newt Gingrich really electable? Can Newt Gingrich sustain a presidential campaign without blowing himself up, as he has tended to do in the rest of his political career? There's a bit of irritation there that Gingrich went after Mitt Romney so hard on the issues of Bain Capital and tax rates and Swiss bank accounts, the accusation that Gingrich is attacking the free enterprise system.
MCMANUSAnd then, finally, there's the remarkable fact that most of the people arguing against Newt Gingrich are people who have actually worked with him, served with him in Congress. Newt Gingrich has left a trail of wreckage during his career, and the people who like him least tend to be some of the people who know him best.
REHMYou know, what I'm not sure of is whether this is good for America. Are we having debates that make sense to the American electorate, that elevate the ideas that need to come forward, that help people decide what's really important for this country now?
ELVINGDebates are good. I think having candidates on full view, talking about issues, even if some of the debate is somewhat debased, is still a good thing because what do you put in its place? You cannot require people to do all the reading that they might do. You cannot expect people to devote the time to it that they might benefit from if they have the time to devote to all of these issues and so on.
ELVINGI thought the best debate that I've seen in months was the first one in Florida, on Monday night, moderated by Brian Williams of NBC. And they told the audience, they asked the audience, please stay out of it. Let's not have a Colosseum scene here. Let's let the candidates talk. And I thought we heard more from all four candidates: Ron Paul and Rick Santorum, as well as Gingrich and Romney.
REHMHow did the candidates feel about that?
ELVINGWell, Newt Gingrich objected and said that he wasn't going to debate anymore unless they let the audience express itself. And I don't know if that's the reason that CNN went back to the previous. I think CNN might very well have gone back to the previous let him rip and roar. Anyway, it makes better television. But from the standpoint of a good debate, I thought that the NBC debate was the best.
PAGEThank you. Two things. Number one, one of the reasons why we're having so many debates, why we're seeing so many, is the ratings have been through the roof. The American audience loves it. They're tuning in. I think they're confusing it with "American Idol," but it's working. Number two, I think that Wolf Blitzer showed how to handle Gingrich last night with his persistence. Unlike John King, I think if Diane Rehm had been handling this debate, we'd have seen the same kind of thing. He wouldn't be able to wiggle his way out in front of the audience against the moderator.
REHMAnd that's Clarence Page. Short break, right back.
REHMAnd it's time to open the phones. We'll go first to Atlantic City, N.J. Good morning, Gary. Glad you're listening.
GARYGood morning. Thanks. I preface the question by saying that I was a Republican for 30 years. I've been a Democrat for two. During that debate last night, is it possible there was a tipping point reached with the self-deportation of illegals and Mitt Romney? I mean, I really don't believe that he believes the stuff he's saying. I mean, I think Newt Gingrich has only scratched the surface when he countered Romney by saying something about churches and sanctuaries in churches.
GARYI mean, that's just the beginning of a trouble that a Republican would face if he was ever elected president concerning the 12 million people here illegally.
REHMAll right. Ron Elving.
ELVINGThis is a larger issue for the Republican Party for the decades to come. The statement by Mitt Romney, for example, that he would veto the DREAM Act -- and this is legislation that would allow children who were brought here by their parents illegally but who have grown up here and never lived anywhere else, no other country, allow them to get their citizenships from going to school or serving in the military.
ELVINGTo say you would veto that with unqualified certainty and then to talk about this self-deportation fantasy and so forth is really hurting him. I can only imagine that he and his advisers are planning to choose a Hispanic vice presidential candidate to make up for this. Otherwise, he is really seriously torpedoing his chances.
REHMAll right. To Indianapolis, good morning, Alexander.
ALEXANDERGood morning. I'd like...
ALEXANDERYes, ma'am. I'd like to ask Clarence, in particular. What, as an African-American journalist, do you think the President of the African-American electorate, given that there is so much time devoted during his election campaign and over the course of his term -- excuse me, about his ethnicity, and in particular, when unemployment numbers have always been historically at least twice the national average amongst African-Americans, what is his duty? He and his wife introduced legislation that African-Americans recognized as substantive for them.
PAGEWell, President Obama's approach has been -- I hate to use the term color blind 'cause it's so hackneyed, but his approach has been with an eye toward class and inequality between the upper-income and lower-income folks and putting people back to work because that would disproportionately help those who were disproportionately hurt right now, including African-Americans.
REHMBut Alexander raises a fair point in that the African-American unemployment rate is so much higher than that of the rest of the country.
PAGEWell, yeah, and I know, under Bill Clinton, unemployment for everybody went down and -- because we had economic prosperity. That's what Obama wants to bring back, and he has said that. It's important to note how is the African-American community taking this. From the time of Obama's election, blacks and Hispanics, according to Pew and other pollsters, long-range polling showed, for the first time, blacks and Hispanics have a more optimistic long-term view of their futures than blue-collar white Americans.
PAGEFirst time since the beginning of polling. So even though right now on the short term, blacks are doing worse, they feel just better about their future now. What President Obama wants to do is to get white folks feeling better about their futures, too.
REHMAll right. Thanks for your call. Let's go to St. Louis, Mo. Good morning, Robert.
ROBERTGood morning. How are you doing?
ROBERTI just had a question about the Romney tax rate. Everybody talks about the effective rate, but I think that it misses the point. If he sees a marginal rate of 35 percent by wage earners, his effective tax rate would be much higher. I think the issue should be is why do the rich get a preferential tax rate over people who work for wages?
MCMANUSWell, that's --that is, in fact, precisely the issue. Or to make it a little more academic, should -- why should income from investments be taxed at a lower rate than income from good, old-fashioned hard work?
MCMANUSAnd it hasn't always been so. But it has been a mainstream economic doctrine, although there is still considerable debate over this, that you need that tax break to encourage more investment and encourage more job creation. That's one-half of the argument. The other half of the argument is that much of that investment income actually has already been taxed before through the corporate tax rate.
MCMANUSNow, that investment -- that argument gets a little weakened as companies find more and more ways to get out of corporate taxes. But this is absolutely the core of the argument.
REHMBut, Doyle, if that were the case considering the past 10 years, wouldn't employment have gone up?
MCMANUSWell, yeah. Of course, the reasons employment goes up during any one particular period comes from many, many different causes. But you're right, Diane. It is impossible -- you cannot take the graft of the capital gains tax rate and the graft of job creation and find any clear correlation there. So it is an absolutely legitimate economic debate in effect. The actual stronger argument may be the double taxation argument.
REHMAll right. Let's go now to Jacksonville Beach, Fla. Good morning, Jay.
REHMGo right ahead.
JAYWe hear about how we need to lower personal income taxes as well as corporate taxes to stimulate growth. However, taxes aren't keeping businesses from growing and hiring people. The lack of demand is. So taxes really aren't the main thing that's stifling growth. Specifically, European countries have lower corporate taxes because they have higher personal income taxes. And this is always highlighted that we have to lower our corporate taxes to be competitive with Europe. Finally, follow me on Twitter and Facebook at (unintelligible).
REHMAll right. Thanks. Go ahead.
ELVINGWell, the caller makes excellent points. The corporate income tax and the personal income tax work to some degree in tandem. And as Doyle was suggesting, it is possible, given all the things that can be done to avoid corporate taxation, that this entire argument could be obviated by saying, we're going to essentially eliminate the corporate tax, but then we're going to substitute European levels of personal tax on investment income, on people like Mitt Romney and see how many votes you get for that in a Republican Congress. I suspect you would not get many.
REHMAll right. Let's go to Goshen, Ind. Hi there, Cecil. (sp?)
CECILYes. Good morning, Diane.
CECILHi. Can you hear me OK?
CECILI enjoy talking to people, and I just enjoy listening to your program all the time.
CECILOne of the things that I was noticing, as far as Nancy Pelosi's concern the last two or three days where she said, concerning Newt Gingrich, that he is not going to become president, she was pretty adamant in her statement. I always kind of consider what she says as far as votes are concerned in the House, and she pretty much is accurate with everything that she did.
CECILAnd I'm just kind of wondering if Newt Gingrich sort of has a feeler that she know what she's talking about and he sort of backed off last night because he just was not himself. He was not feeling that whatever it was that she knows or...
PAGEWell, I think Newt Gingrich is probably listening more to his own consultants and advisers more than to Nancy Pelosi, who have told him he came off a little too hot in South Carolina, that, while he turned on the Republican conservative base, he turned off swing voters. It has scared the Republican establishment that -- because he was more subdued with that first Florida debate the other night.
PAGEAnd then, last night, I think Mitt Romney provoked him quite a bit because of his relentless assault on the Gingrich record. And Gingrich was visibly angry and upset about that. But I think that we are seeing throughout this campaign Newt Gingrich trying to control his own impulses. Doesn't always work.
REHMAll right. To Charlotte, N.C., good morning, Marie.
MARIEGood morning. Thank you for taking my call.
MARIEI have a question/comment. If Newt Gingrich does not do well in the Florida primary, what are the chances of him dropping out and throwing his support behind Rick Santorum? 'Cause I really like Rick Santorum. I'd love to see him move up in the polls. My comment is we should all be so lucky and blessed in this world to be as successful and have as much money and leave the legacy that Mitt Romney is leaving to his children. So that's just my comment. Thank you. I'll take my...
REHMAll right. Thanks for calling. Doyle.
MCMANUSWell, Marie, amen to your last statement. If we were all as successful and lucky as Mitt Romney, we wouldn't have a lot of these problems to be talking about. OK, Newt Gingrich and Rick Santorum. First, you know, one of the reasons for the longevity of all of these candidates is one of the unintended consequences of the Citizens United ruling, the ruling that allowed super PACs corporations and others to donate virtually unlimited amounts of money because...
REHMAnd he just got new infusion of $5 million.
MCMANUSThat's right. Newt Gingrich just got $5 million more from the Adelsons out in Las Vegas after his first $5 million. So, you know, Newt Gingrich doesn't have to win Florida to stay in the race. In an old-fashioned race, you know, if you lose enough times, your money dries up, and you drop out. As to the question whether Speaker Gingrich might drop out and endorse Rick Santorum, I imagine Mr. Gingrich would rather it went the other way around.
MCMANUSBut there's not a lot of love lost between those two. Sen. Santorum has been a pretty rigorous critic of Speaker Gingrich's big government tendencies over the years.
REHMWhat about Callista Gingrich? I got an email this morning from a listener saying she is described as a devout Roman Catholic and the reason that Newt Gingrich became a devout Roman Catholic. And this emailer wanted to know how in the world she could be such a devout Roman Catholic if she was having an affair with a married man. Clarence.
PAGEI wish I could answer that question. It sounds like, you know, the Barack Obama asked about abortion, you know, when does life begin? He said, it's above my pay grade. That's how I feel. But, you know, the list of contradictions that are -- that surround Newt Gingrich as a paragon of moral virtue is somewhere between moral virtue and what he would call pious baloney.
PAGEBut what's amazing is in South Carolina, where the religious right doesn't get more religious or more right, they poured out in droves for Newt Gingrich. So there's apparently something more important than our traditional view of morality involved here.
REHMOK. Here's an email from Dan, who says, "I find it strange Newt Gingrich would try to make points with Florida's Cuban community by blaming President Obama for not inspiring a Cuban spring, as he called it. The Arab Spring was totally organic, wasn't it? I didn't think Newt Gingrich considered the president an inspirational figure." That's an email from Dan.
ELVINGSome ironies there on Dan's part. I don't think that Newt Gingrich really ever expected that Barack Obama would inspire either the Arab Spring or some sort of uprising in Cuba, but it is -- it does make a rhetorical point that the president has been more focused on other parts of the world than he has been on Cuba. Whereas when you get down to Florida, the Hispanic population within the Republican Party there, which is not huge, is almost entirely Cuban.
ELVINGNow, there is a much larger Hispanic community in Florida that is not Cuban, and that is growing much faster. And it should also be said that the Cuban population in Florida is nowhere near as monolithic as people treat it or regard it, and it is particularly in the younger generations much more up for grabs for both of the parties. But the tradition is the tradition, and Republicans go for the Cuban vote in the way that they always have.
REHMAnd you're listening to "The Diane Rehm Show." Doyle, the Supreme Court ruled on whether police need a warrant to attach GPS to any individual's car. But the ruling left a lot of questions open. How do we deal with that?
MCMANUSIt did, Diane. It's a very interesting case. The particular case here was about the police in Washington, D.C. who attached a GPS device to the jeep of a suspected drug dealer and tracked him for some weeks. What this opens up is a much broader area of how police can use the new technology that is available: GPS -- but not only GPS, tracking people on the Internet, facial recognition cameras in airports and other public places and all of the ways data can be assembled. Are there any limits on the use of that?
MCMANUSAnd, up until now, because it's really been a new area, there have effectively been very few or no limits. Now, this -- the -- some of the initial reports on this case gave it a little too much shorthand and said the court had ruled unanimously that the police need a court warrant, in effect a search warrant, every time they want to use a GPS device. It wasn't quite that clear.
MCMANUSIn fact, it was -- there were five justices on a narrow decision saying, because this was a physical GPS device attached physically to the man's car -- this is Justice Scalia's argument -- this was a physical trespass, and that needs, in most cases, not necessarily all, a court warrant. So the other four had a broader argument. This is the beginning of a very interesting debate, but it's not settled yet.
REHMAnd, Ron Elving, Congresswoman Gabby Giffords announced she would resign to concentrate on regaining her health. Boy, that was an emotional moment in the Congress.
ELVINGBoth Tuesday night and Wednesday morning...
ELVING...it was enormously, enormously emotional. And many people wept, and other people laughed and cried at the same time. And this was both a sorrowful and a joyful moment because, after all, just a year ago, it seemed a fight for life and death for her. And then, of course, her recovery was very long and very difficult and always kind of touch and go, never quite certain whether or not she was going to be able to continue to make progress.
ELVINGSo for her to be able to come back from the State of the Union looking so great and being able to communicate with people, even though she wasn't really going to get up and give a speech -- she was able to communicate with people -- she seemed herself. She looked great, and people were embracing her. The president embraced her. And, of course, Wednesday morning, the tributes to her, you know, Speaker John Boehner speaking for the Republicans, and he wept.
ELVINGAnd it was a good feel-good moment we all needed. Let's face it. We could really use more of this. But there's also sorrow that she's not yet back to 100 percent and needs more time for recovery, and that's why she's stepping down.
REHMAnd she may well get to that 100 percent and get even back into the Congress, Clarence.
PAGEShe said, I shall return, and I -- you know, the symbolism around this...
PAGE...is just so incredible. And she and her husband have just been marvelous throughout this whole sordid affair, this terribly tragic event, the rising up from the ashes of it all and giving everybody, regardless of party, a reason to feel encouraged. What's really sad here is that she was shot while she was out there meeting her constituents, doing what she did so well, keeping in constant contact with her constituents and hearing what was on their mind.
REHMAnd she closed that circle by going back...
PAGEYes. That's right.
REHM...to her constituents. We certainly wish her all success in her healing process. And the country needs healing, too. I hope as we move forward in this election process, we can find a way to come together. Clarence Page, Chicago Tribune, Ron Elving, NPR, Doyle McManus, Los Angeles Times, have a great weekend.
MCMANUSYou, too, Diane.
REHMThank you. And thanks for listening all. I'm Diane Rehm.
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