The Federal Reserve said Wednesday that the economy was weaker but took no new steps to help. The House and Senate remained at loggerheads over whether to extend the Bush-era tax cuts. Presumptive Republican presidential candidate Mitt Romney returned from a week-long overseas trip. And Chick-fil-A fans and critics took to the streets following anti-gay marriage comments by the company’s president. Greg Ip of The Economist, Julie Hirshfeld Davis of Bloomberg News and Chris Cillizza of The Washington Post join Diane for analysis of the week’s top national news stories.


  • Chris Cillizza Author of The Fix, a Washington Post politics blog, managing editor of and author of a new book, "The Gospel According to The Fix."
  • Julie Hirschfeld Davis Congressional correspondent for Bloomberg News.
  • Greg Ip U.S. economics editor for The Economist and author of "The Little Book of Economics: How the Economy Works in the Real World."

Friday News Roundup Video

Following the unauthorized release of details about the Osama bin Laden raid, the Senate Intelligence Committee backed a bill last week intended to curb security leaks. Chris Cillizza, political blogger for The Washington Post, said the measure limits the number of national security officals who are authorized to speak to the news media. Greg Ip, economics editor for The Economist, said one of the effects of the bill is that reporters might seek less reliable and less knowledgable sources of information for their stories. “The public might end up less informed than before,” Ip said.


  • 10:06:56

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Unemployment rose to 8.3 percent, but the economy added the most jobs since February. The House of Representatives approved the extension of all Bush-era tax cuts, and Mitt Romney hit back at Democrats who criticized his tax history.

  • 10:07:19

    MS. DIANE REHMJoining me in the studio to talk about the week's top domestic stories on the Friday News Roundup: Chris Cillizza of The Washington Post, Julie Hirschfeld Davis of Bloomberg News, and Greg Ip of The Economist. I invite you to join us, 800-433-8850. Send us your email to Follow us on Facebook or Twitter. Good morning, everybody.

  • 10:07:52

    MR. CHRIS CILLIZZAGood morning.

  • 10:07:53

    MS. JULIE HIRSCHFELD DAVISGood morning, Diane.

  • 10:07:53

    MR. GREG IPGood morning, Diane.

  • 10:07:54

    REHMSo, Greg Ip, I'm sure I'm not the only who does not understand how the percentage of the unemployed jumps up from 8.2 to 8.3 percent when we have added 157,000 jobs.

  • 10:08:15

    IPSure. This happens actually quite a lot, and the reason why is, when the government actually measures the employment situation, they have two separate surveys. In one survey, they ask employers, how many people are in your payrolls? That's what told us there were 163,000 more people with jobs in July. In a different survey, they go to households, and they ask, how many of you are employed? That's how they actually got a drop in the number of people employed, and that's why the unemployment rate went up.

  • 10:08:40

    IPIn this case, the -- sometimes it's different just because you have different samples. Sometimes it's different because they actually define employment slightly differently. So, for example, if you're on unpaid furlough, you're registered as employed under the household survey but not under the other one. I think what really matters is, bottom line, did the economy get better or worse in the month of July?

  • 10:09:03

    IPMost experts say the employer survey is the more reliable one, and they would say this is a very welcome, positive surprise, the best employment growth we've had in four, five months after several very, very disappointing months. It corroborates with a couple of slightly positive other things we've seen. The number of people collecting unemployment insurance has gone down.

  • 10:09:23

    IPWe had positive signs from the markets this week. But we are not out of the woods by any stretch. You know, even if we were to sustain the types of job growth that we saw in July -- and, by the way, most people don't think we will -- we're a long way from getting the unemployment rate back down to anything anyone would consider normal.

  • 10:09:42

    REHMSo, Chris Cillizza, is there something here for both Republicans and Democrats?

  • 10:09:50

    CILLIZZAYeah, you know, Diane, I put it to folks on Twitter this morning. I said, what, you know, what's more important? Is the fact that the unemployment rate bumped up slightly, though Democrats will say it was kind of a rounding thing -- it was actually 8.254 percent, very close to 8.2, which it was last month -- does that matter more, or does the fact, as Greg pointed out, that 163,000 more jobs are created matter more?

  • 10:10:14

    CILLIZZAThe answers fall 100 percent on partisan lines. If you're a Republican, you say, well, of course, the unemployment rate matters more. It's been over 8 percent now for several years. This is -- it's now going up, not down. This is the wrong direction. If you're a Democrat, you say, people were saying 80,000 jobs created, maybe 100,000 jobs created.

  • 10:10:36

    CILLIZZAThis is double roughly what happened in June when we had about 80,000 job created, that this shows positive signs. So, like almost everything these days, I feel like in the public dialogue, Diane, what you think it means depends a lot on what you bring to the table in partisan terms.

  • 10:10:55

    REHMOK. And, Julie, the Fed met this week, decided to do nothing on the basis of this job report. Do you believe that they will move toward doing something?

  • 10:11:12

    DAVISWell, they certainly signaled when they met earlier this week that they were going to look to what happened with the economy, with the job market, and see if there was more to be done the next time they meet in September. And certainly, this report has plenty in it to make them think that they should take additional action when that happens. They said that the economy was still losing strength, but they opted not to take any action now.

  • 10:11:34

    DAVISBut there's certainly a lot of room when you look at all of the indicators. Also, consumer confidence is down. Consumer spending is down. I mean, there definitely is a sense that there is a lot of room for them to do something in September if things continue to look down.

  • 10:11:47

    REHMAre they also looking at housing, Greg?

  • 10:11:51

    IPOh, absolutely. And housing has been one of the major drags on the economy for the last three years. However, you know, paradoxically, it actually started to pick up this year while everything else is going down. The backlog of foreclosed homes is starting to shrink by just a tiny little bit. Prices are now picking up in most cities. The level of new home construction is actually the highest since 2008. Part of this is just driven by the fact that houses are so cheap. There's a lot of all-cash buyers, investors out there actually buying houses and renting them out.

  • 10:12:22


  • 10:12:22

    IPAll those are positive signs.

  • 10:12:23

    REHMYou know, it's fascinating to me that the FHFA decided to go against the White House on mortgage relief for underwater borrowers. How come, Julie?

  • 10:12:39

    DAVISWell, they said that they couldn't see that the benefits of doing that would outweigh the risks and basically that the amount of resources and potential taxpayer money that would have to go into that process would be something that, you know, would be outweighed by the potential risk of, you know, the people that they could help. And I think the estimate was about 500,000 people.

  • 10:13:02

    DAVISAs many as 500,000 homeowners could have been helped by this, that in the process of helping them, they could do further damage because they would be using -- the Treasury Department have actually offered that they would backstop this with some TARP funds that had not been used, with some of the financial bailout funds that were remaining. But the head of the FHFA, which has been independent from this administration, has resisted a lot of the housing initiatives this administration has pushed, said he didn't think that was worth the risk, that he wasn't going to do it.

  • 10:13:31

    REHMInteresting that Paul Krugman wrote a piece calling for DeMarco's firing, simply titled, "Fire DeMarco."

  • 10:13:41

    IPThere's a lot of tension between Ed DeMarco and the Treasury Department, even though DeMarco was, you know, technically put there as the acting because the administration couldn't get their guy through the Senate. What you see here is two very different philosophies and approaches to fixing the housing market. There's about 11 million homeowners out there whose homes are worth less than their mortgages. We call these people underwater borrowers, and a lot of those people will end up going into foreclosure.

  • 10:14:07

    IPAnd most people accept that it's probably cheaper in the long run for both the homeowner and the lender to actually modify that person's mortgage so they can stay in the house because, frankly, if the guy forecloses, they're not -- you know, the lender is not going to get back much more money than if they just sort of, like, write the mortgage down now. That's what the Treasury wanted Fannie Mae and Freddie Mac could do, who own a lot of these mortgages.

  • 10:14:28

    IPAnd they point out that, frankly, it's the government's money. We're asking you to sustain some losses on our behalf. You don't have to worry about it. It's all the same money. The attitude of Fannie and Freddie's regulator is as follows: If we give some people write-offs on their loans, there's a bunch of people out there who are still making their payments who are going to say, hey, what about me? They'll stop making payments. And, suddenly, the price tag is going to balloon.

  • 10:14:49

    IPWhat a lot of people who examined this data say is that the numbers don't back them up. If you actually read carefully the kind of opinions they put out there, it's almost a philosophical difference. DeMarco takes this attitude: People who took out these loans assumed an obligation with all their free will to pay that money back. There's enormous resistance among many people -- and he appears to be one of them -- to, you know, allowing people out of their obligations.

  • 10:15:13

    REHMBut if, in fact, the -- they did come through with new money to help these people who are underwater, would those other people who have kept up then say, I'm not going to pay anymore? And then do you create a larger housing problem?

  • 10:15:36

    CILLIZZAThat was certainly -- excuse me -- the argument that Ed DeMarco laid out, which is that it's a psychology. It's interesting. I always defer to Greg on these matters 'cause I think he is a man of significant...

  • 10:15:47

    REHMHe's brilliant.

  • 10:15:47

    CILLIZZA...smarts when it comes to this. And I'm glad that my initial read-out on it jives with his, which in some ways it seems less about, is the money there, could we do this than should we do this? It's more kind of a psychological, philosophical argument. You know, the DeMarco argument that I thought was fascinating was, well, this will encourage more people to default. We'll be in the same place that we were.

  • 10:16:11

    CILLIZZAThis doesn't help in any meaningful way, which is -- it's a fascinating thing. You have over 100 members of Congress. You have the White House. And Greg makes the right point that I wish (unintelligible) Fannie and Freddie Mae (sic) are controlled by the government. I mean, this is the government's money...

  • 10:16:24

    REHMYeah, right.

  • 10:16:25

    CILLIZZA...and the government is essentially saying, hey, we want to spend some of it here. And DeMarco is essentially saying, well, no, we're not going to do that.

  • 10:16:30

    REHMWhy do you think it is...

  • 10:16:30

    CILLIZZAI mean, it's the exact opposite, I would say, of most arguments as it relates to politics and government, Diane, which is people want to do something, but the money isn't there. This is -- the money is there, but people don't want to do that something.

  • 10:16:39

    REHMYeah, of course. Julie.

  • 10:16:42

    DAVISWell, this is -- I mean, this is not an old argument, as I'm sure Greg and Chris both know. I mean, when they were debating this on Capitol Hill a couple of years ago, when the housing bubble first burst and there was -- there were efforts by Democrats to try to get legislation in place to allow bankruptcy judges to order this kind of action for private lenders -- and we're talking about Fannie and Freddie -- but, I mean, there was a whole debate about whether that was the proper thing to do then.

  • 10:17:04

    DAVISWhere the government-sponsored enterprises are concerned, Tim Geithner put out a statement after Ed DeMarco decided this, saying that this was not best for the economy. And even though, as Greg said, some of the numbers back up that point of view, we did have a lot of investor groups and, you know, financial companies basically expressing the opinion that they were happy that this didn't happen 'cause they thought this would make it more likely that lenders would be -- would hold back in lending...

  • 10:17:32

    REHMI see.

  • 10:17:32

    DAVIS…because they would be afraid that this was going to happen to their loan in the end.

  • 10:17:36

    REHMAll right. And, of course, Mitt Romney reacted to the monthly jobs report. Today, he said the one-tenth of a percentage point increase in the unemployment rate is a hammer blow to struggling middle-class families. Greg.

  • 10:17:56

    IPThis goes back, I think, to illustrate perfectly what Chris was saying a minute ago, which is that, is this good news or bad news? Well, let's first check what party you belong to, and then we'll decide. Romney, obviously decided to see the glass half-empty. In these situations, you know, I look to the stock market 'cause there's a bunch of gimlet-eyed traders there, you know, who don't really care whether they're Republican or Democratic, who want to know whether it's good news or bad news.

  • 10:18:14

    IPApparently, right now, the stock market is up. So I'd say on that, this is probably positive news. Is it positive enough to help the president? Probably not.

  • 10:18:22

    REHMGreg Ip, he's economics editor for The Economist. He's also author of "The Little Book of Economics." Short break here. When we come back, your calls, comments. Stay with us.

  • 10:20:04

    REHMAnd welcome back to the domestic hour of our Friday News Roundup. Here's an email from Debra in Garland, Texas, who says, "Mitt Romney's comment about today's good jobs report is very telling. He and most all Republicans are rooting for failure for this country." Do you agree with that, Julie?

  • 10:20:31

    DAVISWell, Romney has to strike a very difficult balance here because he's running on what he contends are very severe failures on Barack Obama's part, and he has to point out the shortcomings. And when there's bad news, even when there's news that could be read as good or bad, like this morning's jobs report, he has to really hammer it, to use his word, as hard as he can. And he has a whole host of phrases that he used.

  • 10:20:52

    DAVISI think last month or the month before, it was a kick in the gut to the middle class. This time it's a hammer blow to the middle class. I mean, there's plenty bad you can say about the numbers. But his campaign -- and he really has to -- have to be careful not to be sounding like they're rooting for continued pain. His -- one of his top advisors, Eric Fehrnstrom said earlier this week, the economy is not just downshifting. It is slipping into reverse.

  • 10:21:15

    DAVISAnd to me that sounds like he's saying we're in a recession or at least very strongly headed in that direction. And if you look at the growth numbers, while they're not encouraging -- we had 1.5 percent in the last report. That's not a recession, and that's not actually a slowdown. It's slow growth. So he has to really be careful. He has to point out the difficulties here without sounding like he's rooting for the failures that are impacting actual voters right now.

  • 10:21:37


  • 10:21:38

    IPYeah. And, you know, in fairness, this is exactly what Democrats did in 2004 and 2008 in order to beat up George Bush and then John McCain. It would be one thing if the Republicans -- you know, let's face it. Their cause is helped if the economy looks bad going into the November election. If, for that reason, they opposed -- they refused to go along with policies that they themselves actually were good in the long run, that would be very, very hypocritical.

  • 10:22:02

    IPBut, you know, for the -- you know, in their defense, they actually do believe a lot of the polices that Obama has pursued, including stimulus, including principal reduction for homeowners are bad policies.

  • 10:22:12

    REHMOn the other hand, here's an email from Robert, who says, "I thought we needed 200,000 new jobs per month just to stay even with the population growth. New jobs fell short of that. The unemployment rates will stay high until more than 200,000 jobs are created for several months."

  • 10:22:38

    CILLIZZAThat's right. And, I mean, look, I think this is one of the difficulties, Diane, of providing a foolproof assessment of what the jobs report means politically, which is I think we are saying this is a good report for two -- on job creation for two reasons: One, because we had 80,000 jobs created last month -- and this has more than doubled that -- two, because the expectations such as they are -- ADP, some of these other indicators -- suggested around 100,000 jobs created. We went well over that.

  • 10:23:10

    CILLIZZATo the email's point though, Republicans constantly remind me -- and they send me a reminder every month, some of my economist friends who are Republicans that basically says the economy now needs to add 255,000 jobs a month -- 275,000 jobs a month as we get closer to the election for the unemployment rate to drop under 8 percent. I think we now know that is almost certain -- although, again...

  • 10:23:32

    REHMNot going to happen.

  • 10:23:33

    CILLIZZA... I defer to Greg -- almost certain not going to happen. And I would remind people the only incumbent president to be re-elected, the highest the unemployment rate has ever been, Ronald Reagan, 1984, it was 7.2 percent. So that's not to say Barack Obama can't win re-election. But if he does, he will be making history because no one thinks the unemployment rate is going to drop below 7.2 percent.

  • 10:23:55

    REHMAll right. And Congress has now left town. On Wednesday, they have this sequestration hearing before the House Armed Services Committee. John McCain, fellow senators are taking their protest on the road about across-the-board cuts, which could happen in defense spending. Greg.

  • 10:24:22

    IPIt's very interesting. There was a very, very acrimonious hearing on the Hill, where Jeffrey Zients, the acting director of the White House's budget office, was clashing with Republicans on whose fault it was that we were staring at these very steep cuts in defense spending. It's interesting. What the Republicans are focusing on right now is tell us where the cuts will be. They want to really put a spotlight on the pain, especially in the defense establishment that these cuts will occur in January.

  • 10:24:48

    IPThe response of the administration is twofold. We can't tell you precisely where the cuts will be because we don't have all the information we need. And number two, it doesn't matter whether we tell you. We all know it's going to be horrible. It's going to be chaotic. You're losing track of the fact that these cuts were never meant to happen. It was a sword hanging over our heads to force us to do a deal, and we didn't do a deal. So stop making excuses. Let's do that deal.

  • 10:25:09


  • 10:25:10

    DAVISEspecially in the defense area, it's been a very contentious topic. And you did see Sen. McCain and Lindsey Graham and Kelly Ayotte, senator from New Hampshire, go out on the road to some hotly contested states politically to go and talk about, you know, the pain that these cuts would inflict. And indeed the deputy defense secretary was in front of the House Armed Services Committee and said, you know, these cuts would lead to an unready and hollow force. I mean, and Leon Panetta, the defense secretary, has been very clear this would be devastating. This is not a good thing to do.

  • 10:25:43

    DAVISBut as Greg said, the point was never to do these cuts. The point was never to inflict the cuts. The point was to have an incentive for a bipartisan deal that has not materialized. And the interesting thing is that now what we hear is that congressional Republicans and Gov. Romney on the presidential campaign trail are blaming these cuts on Democrats and say, look, the Democrats want to slash defense and decimate defense so that -- and also raise taxes.

  • 10:26:07

    DAVISAnd, you know, this is going to be awful for the economy, and this is going to be awful for our military. And that's true if the cuts happen. It would be awful for the military. But also if the -- if all the rest of the consequences of sequestration happen, it would be bad for social programs. It would be bad for consumers. It would be bad for everyone, and the point was that they were supposed to cut a deal to prevent this.

  • 10:26:28

    REHMSo what did Republicans do but pass a Bush tax extension across the board?

  • 10:26:37

    CILLIZZAThat's right, Diane. That was -- excuse me. That was on Wednesday. They passed -- again, remember, in the House, it is majority rules 100 percent of the time. Republicans have a majority...

  • 10:26:45

    REHMSo what was the political reasoning for doing that?

  • 10:26:48

    CILLIZZABecause the week before, Democrats in the Senate who control the majority passed a piece of legislation that said if you are an individual making $200,000 or above or a family making $250,000 above, your tax cut under the Bush tax cut will be wiped out. We would -- they would maintain them for everyone else. That, of course, is the Barack Obama position that he is using against Mitt Romney.

  • 10:27:10

    REHMSo this was get back at you (word?).

  • 10:27:12

    CILLIZZAI believe this is what's commonly known as tit for tat, Diane. Neither of these pieces of legislation will, in fact, become law.

  • 10:27:21

    REHMBut they are both part of the so-called fiscal cliff.

  • 10:27:25

    IPThat's right. I mean, everybody knows that there is this gigantic, like, you know, threat hanging over the economy at the end of the year. It's not just all the Bush tax cuts that expire. The temporary payroll tax cut and increase in unemployment insurance that was put in place a couple of years ago, that will expire, and then the sequestration comes along. We're talking about a hit equal to about 5 percent of GDP almost guaranteed to cause a recession.

  • 10:27:46

    REHMAll right. So Republican frontrunner Mitt Romney is now back in the country after his trip abroad. I think people want -- certainly Mitt Romney wants to put that trip and what happened behind him, but everybody is thinking about the Republican convention next month and who Mitt Romney may choose as a vice president.

  • 10:28:19

    CILLIZZAYeah. You know, Diane, look, we're up against it at this point. I don't think Mitt Romney is choosing today. I don't think he's probably choosing Monday, but he could well choose next week. Typically, the pick is made -- and I say typically, which is, you know, the last five or eight vice presidential picks -- it's usually made within the two weeks before the convention. John Edwards actually was a very early pick. John Kerry picked John Edwards quite early in '04. But broadly, that's when it happens.

  • 10:28:45

    CILLIZZAYou know, I think that we're down to a handful of people. In some ways, these are the usual suspects we've been talking about for quite some time: Rob Portman, the senator from Ohio, Tim Pawlenty, the former governor of Minnesota, Bobby Jindal, who's the governor of Louisiana, Paul Ryan, which would be a fascinating pick from -- a congressman from Wisconsin, author of the sort of Republican budget vision that Democrats have really seized on.

  • 10:29:07

    CILLIZZAAnd I was surprised to learn in my reporting -- I wrote about this this morning. I was surprised to learn in my reporting that Chris Christie, the governor of New Jersey, who I had kind of put on the second five list, not the first five list, that he is, in fact, very much still in the conversation. He would be a fascinating pick. This is someone, I believe, is probably the single most popular Republican politician in the country. He's certainly more...

  • 10:29:32

    REHMHe got the biggest hand at the meeting yesterday.

  • 10:29:37

    CILLIZZAYes, in Aspen. Absolutely.

  • 10:29:38


  • 10:29:39

    CILLIZZAAnd he's certainly more popular than Mitt Romney among Republican rank-and-file voters. He is someone who was elected in a blue state. He was elected in New Jersey. Now, at the same time, he is someone who, the second he was picked, would immediately overshadow Mitt Romney on the ticket. Does Mitt Romney want that?

  • 10:29:55

    CILLIZZAChris Christie's really only been in the national spotlight for, you know, two-and-a-half years, not as tested as a Rob Portman, who served in the House for a decade, then served in the Bush administration, now is in the U.S. Senate, or a Tim Pawlenty, two terms as governor, spent time in the state legislature. I just found it interesting 'cause I was ready to write Christie off. I found it interesting that they said -- people I -- who I believe know, which is always a questionable thing in VP reporting, but people who I believe know said, you know what, don't -- he's still in the mix.

  • 10:30:27

    REHMWhat about the fact that George W. Bush and Dick Cheney have both said that they will not be attending the Republican National Convention?

  • 10:30:39

    IPWell, that's certainly an eyebrow raiser. I mean...

  • 10:30:42


  • 10:30:42

    IPWell, past presidents often do show up in conventions...

  • 10:30:44


  • 10:30:44 order to coronate or to give their blessing to whoever is running that particular year. In this case, oddly enough, Cheney had to cancel appearance four years ago because of a hurricane, and now he told ABC News he's just going to go fishing. George Bush has let it be known that he's not going to attend. He's trying to stay out of the limelight.

  • 10:31:02

    IPI think this actually fits nicely for both sides: Bush because he genuinely has tried to keep a low profile, and for Romney 'cause, frankly, Bush's approval ratings are still pretty low. You know what I mean? Having him up there on the stage is going to cause a lot of unpleasant memories to come back.

  • 10:31:18

    REHMWhereas you have both Bill Clinton and Elizabeth Warren invited to speak at the Democratic National Convention. Julie.

  • 10:31:28

    DAVISYeah. That's right. I mean, the contrast here between the Republicans and the Democrats is quite striking. I mean, you look at the last Republican president and the -- he wants to have nothing to do with the RNC. And I think Mitt Romney is probably not that unhappy that he's not going to be a big focus at the Republican convention. But Democrats really do want to focus on the last Democratic president, who was immensely popular -- still not only with Democrats, but, you know, with a lot of swing voters who Barack Obama really needs, an electrifying speaker.

  • 10:31:58

    DAVISAnd then Elizabeth Warren, who's in one of the highest profile Senate races, she's raised the most money of any Democratic candidate for Senate. She's running against Scott Brown, whose staff -- interestingly, he shares with Mitt Romney or some of it. They have some of the same top staff. And she's really sort of the personification of Obama's argument about this election.

  • 10:32:17

    DAVISShe is somebody who is associated with cracking down on financial firms, standing up for the little guy after the meltdown. And she has really been very tough in her speeches about what a Mitt Romney administration would mean and how he wants to roll things back to the battle days when, you know, the little guy, the middle class, was really doing poorly.

  • 10:32:37

    REHMAnd what about Julian Castro?

  • 10:32:40

    CILLIZZARight. Fascinating figure. The Democratic National Convention Committee announced this week Julian Castro will be the keynote speaker. This is not an insignificant honor and not an insignificant launching pad, I would say, to a political career, young Hispanic mayor of San Antonio. It is no secret that the Hispanic community is, by far, the fastest growing and the most up for grabs. If Democrats locked down the Hispanic community, Diane, by locking down 65-35 winning in national elections, it is very hard to see the Republicans being a majority party in 2020 and beyond.

  • 10:33:19

    REHMChris Cillizza of The Washington Post. You're listening to "The Diane Rehm Show." I want to ask you all about the security leak investigation that's going on and legislation that was approved by the Senate Intelligence Committee. Chris.

  • 10:33:40

    CILLIZZAWell, you've seen Republicans, particularly Mitt Romney, seize on the fact that so many of the details -- there are a number of examples, but the one he has seized on is that so many of the details of the raid that killed Osama bin Laden have made it into public, that essentially what the White House and the White House national security team are doing are leaking a -- leaking out details that make the president look tough, look decisive, that they are doing -- they are breaking with national security protocol in order to tell a political story.

  • 10:34:14

    REHMThat's the charge.

  • 10:34:15

    CILLIZZAThat's the charge.

  • 10:34:17


  • 10:34:17

    CILLIZZANow, President Obama has come out and said, we're going to actively pursue this. We know the FBI is actively -- there are sort of two parallel tracks here. You've got the Senate Intelligence Committee moving legislation that would limit the number of people in the national security world who can speak, who are authorized to speak to reporters in any way, shape or form. So you have that track moving legislatively.

  • 10:34:39

    CILLIZZABut you also have this investigation spurred by the Obama administration out of a concern that some of the national security secrets were being leaked out. I always say this is not like covering campaign politics, which is what I do on a daily basis. When something leaks in campaign politics -- so and so is going to endorse so and so -- no one dies, or at least there's no potential anyone dies. When these things come out, there is at least a potential that lives are put in danger. I think that's why you've seen the Obama administration move so forcefully to try and shut it down.

  • 10:35:07


  • 10:35:08

    IPYou know, all that said, one of the puzzling things about the legislation that the Senate is now considering is that it would go after the aligned agencies, you know, by restricting their access to reporters and limiting the number of people who can give background briefings, but not the White House and some of the other executive-level agencies. Now, this is not stuff I'm privy to, but, allegedly, that's where a lot of the leaking occurs.

  • 10:35:30

    IPAnd one of the perverse effects of this -- we're all journalists here, so I'm somewhat biased. But one of the perverse results of this sort of legislation is that it would cause reporters to pursue less reliable and less knowledgeable sources of information for their stories, and they -- the public might actually end up less informed than before.

  • 10:35:46


  • 10:35:47

    DAVISWell, Dianne Feinstein, whose committee is in charge of this, actually sort of stepped in a little bit the week before last by saying that, you know, she was pretty sure that some of this was coming -- the White House had to acknowledge that some of this is coming from them. And Mitt Romney's people and Mitt Romney himself were just thrilled with that statement because it came just before he gave a big speech that...

  • 10:36:04

    REHMAnd then she took it back.

  • 10:36:06

    DAVISAnd then she sort of walked it back a bit. But -- and then you look at the bill, as Greg said, and it doesn't talk about the White House. It just says that, other than the director of central intelligence and his deputy, other senior analysts at these agencies may not talk to reporters without attribution, knowing, of course, that they're never going to address any of these topics for the record.

  • 10:36:26

    REHMHow serious can we argue that these so-called leaks actually were?

  • 10:36:35

    CILLIZZAYou know, Diane, I think it, like almost everything, depends on your perspective. I think for -- take out the partisan, what Republicans are saying and what Democrats are saying...

  • 10:36:43


  • 10:36:44

    CILLIZZA...because it's an election year and they're going to disagree. One says the sky is blue. The other will say the sky is green. That's just how it is. You can make arguments that -- and arguments about it -- that lives are put in danger when these sorts of things leak out. You know, again, because I'm not a national security reporter, I can't attest to the credibility or verifiability that that is the case.

  • 10:37:10

    CILLIZZABut I would say we do know that the way that you report on national security, what you report, what you don't report is very different than the way that you report about the economy or the way that you report about campaign politics. So I tend to defer to those folks, but it's clearly -- the stakes are clearly higher in terms of human cost.

  • 10:37:29

    REHMChris Cillizza, Julie Hirschfeld Davis, Greg Ip -- they're here this morning for the domestic hour of our Friday News Roundup. Short break, and we'll be right back.

  • 10:40:04

    REHMAnd welcome back. It's time to open the phones, 800-433-8850, first, to Beavercreek, Ohio. Good morning, Leonard.

  • 10:40:17

    LEONARDGood morning. I believe I may have discovered an elephant in the room. You know, the National Association of Manufacturers and the U.S. Chamber of Commerce have both state as a goal the defeat of President Obama. Many corporations are recording -- record profits, and a great many more are setting on terms of cash. Could it be that those two organizations are urging their members to hold back on employing until after the election?

  • 10:40:48

    REHMWe've heard this before, Chris.

  • 10:40:50

    CILLIZZAI mean, the question is, could it be? I guess, in the sense that I could make the NBA at some point, but it is very unlikely that that is going to happen.

  • 10:41:01

    REHMGreg Ip.

  • 10:41:02

    IPI find it really hard to believe.

  • 10:41:04


  • 10:41:04

    IPI mean, some of these people are die-hard Republicans. But, you know, they're also money-making businessmen and businesswomen. And if hiring an employee will help their business and make money, they'll do it.

  • 10:41:14

    CILLIZZAI would just add to Greg's point, I think the motivating interest of almost every company in this country is to make as much money as possible, not necessarily score partisan points.

  • 10:41:20

    REHMAll right. To Greensborough, N.C. Good morning, Amy.

  • 10:41:27

    AMYGood morning. I just wanted to say I actually am a successful business owner, thankfully. I can't go through the working middle class. And what are your views? I see that the elected officials are playing chicken. They're more worried about pointing the blame at someone than actually fixing this thing. You talk about Bill Clinton being incredibly popular. Bill Clinton had the power to go sit down in a room with anyone, Democrat or Republican, and say, let's fix this. And it got fixed. And my business flourished because of it. Why don't we see that today?

  • 10:42:03

    REHMBecause, Greg Ip?

  • 10:42:05

    IPWell, chicken is exactly what it is. I mean, we were talking about the fiscal cliff and these, you know, this kabuki show of competing tax cut bills in the House and the Senate which are going nowhere. I mean, you have the two parties both behind the wheels of very fast cars heading for the cliff and daring the other one to pull off first. And I think, you know, it's two-fold. One of it is just making politics.

  • 10:42:24

    IPBut also it's -- these parties have profoundly different visions about how the country should be run. One party that wants, you know, the rich to pay more of the bill of supplying public services and the other side that wants a much smaller government.

  • 10:42:36

    REHMAll right. And to St. Louis, Mo. Good morning, Bruno.

  • 10:42:41

    BRUNOGood morning. I've constantly hear during President Obama's campaign stops that the Republicans want to go back to the failed policies of the Bush administration. I just recently read the book "Reckless Endangerment" by Gretchen Morgenson.

  • 10:42:57

    BRUNOAnd in her book, she clearly states that those failed policies that caused the housing crisis started under the Clinton administration at the instigation of Barney Frank and Chris Dodd and the disillusion of Glass-Steagall and also the policies that preceded this whole thing. So I wonder what policies President Obama is referring to that caused the current crisis that we're in.

  • 10:43:23

    REHMGreg Ip.

  • 10:43:24

    IPWell, the current crisis was primarily caused by the housing market going bananas, prices going up too much, people buying houses they couldn't ultimately afford then. And, frankly, there's bipartisan blame to go around on both sides under...

  • 10:43:34

    REHMWhen did that actually begin?

  • 10:43:37

    IPWell, frankly, you could trace it back to the early 1980s.

  • 10:43:39

    REHMOf course.

  • 10:43:39

    IPThere have been policies put in place by numerous administrations of both parties out of design to encourage homeownership because, after all, that is every American's God-given right, isn't it?

  • 10:43:47

    REHMAmerican dream. Chris?

  • 10:43:49

    CILLIZZAThat's exactly right. And, you know, I think the caller hits on a very good point which is -- and people always say to me in my reporting, well, tell me what the facts are. Just tell me who's right and who's wrong. And the caller point, that's -- it makes it so hard. It's -- you can't lay the blame for the current state of the economy entirely at the feet of Barack Obama. Nor can you lay it entirely at the feet of George W. Bush, nor can you lay it entirely at the feet of Bill Clinton or George H.W. Bush or Ronald Reagan. And that's the problem, is that the economy does not exist in a vacuum.

  • 10:44:20

    REHMExactly. Julie?

  • 10:44:21

    DAVISBut we also have to remember that in this political environment and with the tax cuts on the table right now, that is a lot of what President Obama is talking about. Whether you agree with him or not, that's an argument that he's making that...

  • 10:44:31

    REHMThe tax cuts.

  • 10:44:32

    DAVIS...that George W. Bush, his signature initiative was these big tax cuts of 2001 and 2003, and that's -- we're still dealing with the hangover of that in that, you know, Congress has to figure out a way to either extend them or deal with them some other way. And their argument would be that that was something that helps the wealthier, you know, hurt the middle class or didn't help them enough in a time of rising economic uncertainty.

  • 10:44:58

    DAVISAnd if we did that again that, you know, that this is the wrong time to do that again. This is the wrong time to go back to that. So that's a big part of this is there's obviously the regulatory picture, but the tax picture is a big part of that argument.

  • 10:45:08

    REHMAnd the AP is reporting that stocks are on the rise after the government reported that employers stepped up hiring in July at the fastest pace in five months. One other story this week that has on its surface very little to do with politics, Chick-fil-A has become the center of a national debate over same-sex marriage in the country. What's happening? Why has it continued to spark outrage?

  • 10:45:49

    CILLIZZAWell, Diane, this is -- you're right. This is a story that I think none of us thought would become as huge a story as it has. The president and chairman of Chick-fil-A, a guy named Dan Cathy, came out and said that they believe in traditional marriage. They are opposed to same-sex marriage. Now, I would say, while he publicly reiterated that position, Chick-fil-A has been a very clearly evangelically-aligned and owned company for some time.

  • 10:46:19

    CILLIZZAThis is not a new ownership or new position. This is a company whose stores -- this a fast-food restaurant, let me reiterate, whose stores are not open on Sunday. So they are open only six of the seven days of the week. The theory being on Sunday is the day to rest, so...

  • 10:46:35

    REHMHe has a right to do that.

  • 10:46:36

    CILLIZZAYou know, it's not -- I would say, in some way, he has a right to take the position he wants. And if you would like to protest or boycott it, you also have that right. You know, I think it's become politicized because everything come -- becomes politicized...

  • 10:46:51

    REHMBut there are a number...

  • 10:46:52

    CILLIZZA...and because you've had Rick Santorum and some of these people saying, just ate at Chick-fil-A. You know, the Republican politicians really -- Mike Huckabee called on this past Wednesday to be Chick-fil-A Appreciation Day. Basically go in and say you affirm their stance on values.

  • 10:47:05


  • 10:47:05

    DAVISWell, I think, you know, one of -- the outcry came when you had some big city mayors who are Democrats, like Rahm Emanuel, say, well, we don't want Chick-fil-A in our city if that's the kind of agenda that they espouse. And so then you had, as Chris alluded to, people saying, well, we're going to boycott Chick-fil-A because of this. And, you know, politics and fast food, I don't think, mix very well because...

  • 10:47:25

    REHMAll right. Now, here's...

  • 10:47:26

    CILLIZZATalk to Bill Clinton.

  • 10:47:27

    REHMHere's an email from May in Silver Spring who says she doesn't care about the issue of free speech, but she says, "There is extensive documentation showing the company donates money to organizations that actively work to ban same-sex marriage, fight anti-bullying and job discrimination legislation, and even write laws in Uganda making being gay punishable by death. The company -- the money this company earns directly harms gay people."

  • 10:48:11

    CILLIZZALet me say this, Diane, and this is not an endorsement of anything that -- any of the positions that Chick-fil-A has outlined in any way, shape or form. But you do not have to support them. You do not have to go there. You do not have to...

  • 10:48:24

    REHMOf course not.

  • 10:48:25

    CILLIZZAThe best way, if you disagree -- and I think a lot of people do. If you disagree with all the things that you've just outlined that they give money to and the positions they -- do not eat there. I can tell you from driving from my house to the studio, there are any number of other fast food options that you can pick. That's one thing I don't understand. The best way, if you want to make Chick-fil-A feel it, if you disagree with them, don't go there.

  • 10:48:50

    REHMAnd that's it. All right. And here's another email from Putney, Vt. Arlie (sp?) says, "Ed DeMarco is a Bush administration holdover and, in fact, the acting director, not the director of the FHFA. Furthermore, to quote Paul Krugman, 'So we have an administrator refusing to implement the president's policy,' he should be removed from his position."

  • 10:49:26

    IPWell, one of the problems is if you remove him, who do you replace him with? The reason he's acting is because the administration couldn't get their first choice, you know, through the Senate. It is perhaps the case that his own views are somewhat leaking into the policies. But let's remember something. He's not the only guy in the country who feels this way that people should not be allowed to like, you know, pay back less than they borrowed.

  • 10:49:45

    IPThe whole Tea Party movement began with a rant on television by, you know, by Rick Santelli of CNBC saying, why should ordinary taxpayers have to bail out their neighbors who bought more house than they could afford? So in some sense, he is channeling a feeling that is very broadly felt. And if you actually look at what the Treasury has proposed and the sorts of size of the program they were talking about, even if Fannie and Freddie did precisely as the Treasury wanted, the impact on the stock of foreclosed homes or people who are in trouble there would probably be pretty small.

  • 10:50:15

    IPThis is one of the problems that has bedeviled efforts to deal with this foreclosure problem actually, from day one, is that whenever they put out a program to help these borrowers, they put on so many conditions to make sure that nobody is abusing it that very few people end up qualifying.

  • 10:50:30

    REHMHere's an email from Robert, who says, "Bush and Cheney's skipping the convention are talked up, but what about the many Democratic politicians who will skip that convention? Why aren't they mentioned?"

  • 10:50:47

    CILLIZZAFair point. If you look at any -- most Democratic senators, particularly who are running in swing Republican-leaning states, they almost certainly will not be at the Democratic National Convention. There are some Republicans who are running in swing states who will not be at the Republican National Convention.

  • 10:51:03

    CILLIZZAI would say the reason that George Bush and Dick Cheney get attention is Jon Tester, the senator from Montana, is not at the same national profile as the former president of United States and the former vice president of United States. So when they don't attend, it's a little bit different. It's not that it's not worth mentioning because it is worth mentioning. It's just not exactly the same thing.

  • 10:51:24

    REHMAll right. To Charlottesville, Va. Hi there, Dave.

  • 10:51:29

    DAVEDiane, hi. I've got a little bit of different slam on Mr. DeMarco.

  • 10:51:33


  • 10:51:33

    DAVEI have been fighting with the FHFA and the federal government for three-and-a-half years. Mine's a simple situation. I've talked to you before. I built my own house. I've got 50 percent equity in the property. I pay my bills on time. My income has been decimated by the economy. I've gone to these folks and said, look, H.R. 1424, the EESA law, says you need to maximize assistance to homeowners, do everything you can to keep people in their homes.

  • 10:52:04

    DAVEAnd they do just the opposite. I'm paying 6.675 on the note now. I should be able to refinance thing -- this thing for 3.75 now. I'm being disallowed because the house is not 100 percent complete. It's a couple of percent away from being complete. And although they were going to allow me to refinance it several years ago at 6 percent when the going rate was 4.25, they continue this stuff.

  • 10:52:32

    DAVEAnd what they did here is because I persisted on this refinance issue, they took my mortgage out of Fannie Mae's portfolio, which they had for year-and-a-half, knowing full well that I had 50 percent equity and I paid my note on time and sent it back to the bank out of retaliation so that now the bank is making out like a bandit, and we're struggling to stay in our home.

  • 10:52:56

    REHMDave, I'm sorry to hear about all that. Greg Ip, what do you think?

  • 10:53:01

    IPIt sounds like a very, very, you know, troubling situation. You know, one of the tragedies of what we're going through in the housing market now is that all the lenders, including Fannie and Freddie, are looking back at the mistakes they made five years ago and now trying to implement the policies they wished they'd put in place five years ago. Now, as a result, there are lots of people out there who would ordinarily qualify for a mortgage or refinance who are not getting it.

  • 10:53:21

    REHMAnd you're listening to "The Diane Rehm Show." To San Antonio, Texas. Good morning, Dave.

  • 10:53:29

    DAVEGood morning, Diane. Every time I hear Republicans criticize the economy under the president, I always have to remember that Republicans vowed from day one of his presidency to do anything they could to prevent his re-election. In fact, the Senate Minority Leader Mitch McConnell even vocalized this, which I think was kind of unprecedented. In fact, the Republicans even voted against bills they had previously supported presumably because they would positively impact the economy.

  • 10:53:57

    DAVESo to criticize Barack Obama for an economy when they've really done nothing but propose the same policies that got us into the mess to begin with and to oppose bills that possibly could help the economy is highly, highly hypocritical.

  • 10:54:12


  • 10:54:12

    CILLIZZAI think, to get the right context in this, you have to go back to the aftermath of the 2008 election, Diane, in which Barack Obama had just won 365 electoral votes, carried states like Indiana, North Carolina, Virginia, that no Democrat had carried in decades. Republicans were very much on the run politically and were starting to talk about, was this a post-'64 Goldwater moment? Was this a time where the party needed to sort of do a fundamental reanalysis of who they were and where they were positioned?

  • 10:54:39

    CILLIZZABarack Obama did two things -- the economic stimulus package and the health care law -- that united Republicans in a way that literally nothing the Republican Party or any leader within the Republican Party could have done. Now, what Mitch McConnell said -- I think the caller hit on it right, which is he said publicly what every Republican in a Democratic administration or every Democrat in a Republican administration thinks privately, which is we want to beat this guy.

  • 10:55:04

    CILLIZZAIn return, I think Greg makes a really good point. I think that -- and he's done it a couple times when we've been on together -- is these two parties just fundamentally disagree about the right way forward for this country economically and in almost every other way. It's not...

  • 10:55:18

    REHMAnd that's what the election is all about.

  • 10:55:19

    CILLIZZAIt is, and that's what this election -- that's why it matters.

  • 10:55:21


  • 10:55:21

    CILLIZZAThis is not, I would say, kind of a malicious attempt to wound the president. McConnell clearly does not believe that Barack Obama should be anything more than one-term president. But I would say it's because he disagrees with the basic approach that Barack Obama takes broadly to governance not because he's rooting for failure of the country.

  • 10:55:40

    REHMAll right. And an email from Peter in Tarrytown, N.Y., "Did any heads roll over..." -- pardon me -- "...the outing of Valerie Plame talk about putting people at risk?"

  • 10:55:59

    CILLIZZAAbsolutely. And this is, again, I feel like in some ways there are new problems, just old solutions. We -- or old attempts at solutions, which is these talks of national security leaks -- and I would say targeted national security leaks is the other thing, Diane, to remember, that it's not everything. It's things that the other side says is being used to influence a political debate, shape the way in which is a individual is perceived. This is not new, and we'll see. This seems to me to be a more serious -- from the FBI and what the Senate is doing, they're a more serious attempt.

  • 10:56:33

    REHMVery quickly, Greg.

  • 10:56:35

    IPI think one of the other things I think that needs to be remembered here is Republicans are very upset about these leaks because they think that they were designed to burnish Obama's image. Now, we can agree that's probably not the most noble reason to leak something.

  • 10:56:46

    IPBut if you clamp down on the ability of journalists to get out this kind of information, you also lose the ability of the Fourth Estate to do its job, to keep an eye on stuff that probably isn't very good. Would the Pentagon papers have been published? Would we have learned about secret CIA prisons in Eastern Europe without that kind of relationship?

  • 10:57:02

    REHMGreg Ip of The Economist, Julie Hirschfeld Davis of Bloomberg News, Chris Cillizza of The Washington Post, thank you all.

  • 10:57:14

    DAVISThanks, Diane.

  • 10:57:14

    CILLIZZAThanks, Diane.

  • 10:57:15

    IPThank you.

  • 10:57:15

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

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