President Barack Obama suggested he will seek a grand fiscal bargain with Republicans if he’s reelected. Obama told The Des Moines Register this week he would also work to win congressional approval of immigration reform. Mitt Romney’s campaign said he disagrees with Richard Mourdock’s comments on rape, but he hasn’t asked that an ad featuring him with the Indiana Senate candidate be withdrawn. New home sales rose to the highest level in two years. The Department of Justice said it will sue Bank of America over allegations it sold defective home loans to Fannie Mae and Freddie Mac. And a look at the legacy of George McGovern. Diane and guests discuss the week’s top national stories: what happened and why.


  • Michael Scherer White House correspondent for Time magazine.
  • Karen Tumulty National political reporter, The Washington Post
  • Jonathan Allen Congressional reporter, Politico

Friday News Roundup Video

The panel discussed the political implications of Indiana Senate candidate Richard Mourdock’s comment about rape in a debate earlier this week. Mourdouck said, “I think even when life begins in that horrible situation of rape, it is something that God intended to happen.”

Michael Scherer, White House correspondent for Time magazine, said the comment gave an opening to Democrats and liberals to label Republicans as “extremists.” “The politics of this is that all [election] cycle, Republicans have really struggled on social issues that in past cycles have played to their advantage,” Scherer said. Karen Tumulty, national political reporter for The Washington Post, said Republican presidential candidate Mitt Romney probably wouldn’t pull his ad endorsing Mourdock because doing so would focus the story on Romney.


  • 10:06:56

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. President Obama and Governor Romney campaigned heavily in swing states following their debate this week, federal prosecutors sued Bank of America for mortgage fraud, and the U.S. economy grew a faster pace in the third quarter. Here for the domestic hour of the Friday News Roundup: Michael Scherer of Time magazine, Karen Tumulty of The Washington Post, and Jonathan Allen of Politico.

  • 10:07:27

    MS. DIANE REHMDo join us with your questions, comments. You are always an important part of the program. Call us on 800-433-8850. Send us your email to Join us on Facebook. Follow us on Twitter. Good morning, everybody. Thanks for being here.

  • 10:07:51

    MS. KAREN TUMULTYGood morning.

  • 10:07:51

    MR. JONATHAN ALLENGood morning.

  • 10:07:51

    MR. MICHAEL SCHERERGood morning, Diane.

  • 10:07:53

    REHMMichael Scherer, let's start with the economy. What's the news we're hearing?

  • 10:07:58

    SCHERERWell, this morning, we've had new GDP numbers come out for the third quarter. They show 2 percent growth in the country over the last few months, which is higher than analysts' expectations of 1.8 percent growth. It's also much higher than the second quarter, which was a disappointing quarter by pretty much all accounts of 1.3 percent. It's matching what the first quarter was. Essentially, you know, the economy is continuing to inch forward.

  • 10:08:25

    SCHERERIt's not the kind of growth that either presidential candidate or either party would tell you we need right now in the country or that either presidential candidate is promising in the -- over the next four years. They're talking about growth above 3 percent. But it also will relieve some fears that the economy may be slipping back into a recession, given some of the headwinds internationally.

  • 10:08:48


  • 10:08:49

    TUMULTYYeah, I don't think it particularly changes the political dynamic in the country, coming this close to the presidential election. But one thing, I think, it could affect is the stakes surrounding the negotiations at the end of the year over the fiscal cliff.

  • 10:09:04

    TUMULTYMy colleague, Lori Montgomery, has a story on the front page of The Washington Post today that talks about how nervous, I mean, this recovery is still very fragile and how nervous people in the business community are, that apparently, the National Association of Manufacturers, for instance, is going to come out with a report today that warrants that if they fail to avert this crisis, that it's going to cost 6 million jobs between now and 2014.

  • 10:09:32

    REHMAnd, of course, Jonathan Allen, in the interview that President Obama did with the Des Moines Register, he said, we are going to fix this. He said that we will not go over the fiscal cliff.

  • 10:09:52

    ALLENAnd I think that that's something that everyone in Washington seems to agree on right now, that they're not going to let all the taxes expire, that they're not going to let the sequester go into effect as an across-the-board cut as it looks like right now. They're not going to let a variety of other tax breaks expire than just the individual income taxes that everybody cares about. That said, they still have a lot of work to do to get to the point that they can even punt it into next year.

  • 10:10:20

    ALLENI think one of the interesting things that the president said is they also put a six-month timeframe on that for the New Year, which backs him into a corner a little bit, maybe something he ends up having to walk back away from. It is difficult to get a serious deficit reduction in such a short period of time.

  • 10:10:35

    REHMSo what is this grand bargain he's talking about? Michael.

  • 10:10:40

    SCHERERIt's something very similar to what didn't happen in August of 2011 in negotiations between the president and John Boehner. It would be probably somewhere in the neighborhood of three-to-one relationship of -- for every $3 in cuts to what projected spending is. Now, you'd have one new dollar in revenue. It's not clear though. I mean, the real sticking point right now on these top-line numbers is how much revenue you can get and how much cuts you have to give in exchange for that.

  • 10:11:08

    SCHERERYou know, the interesting part of this is that everybody who's working on this on Capitol Hill and in the White House has been working with the exact same numbers for almost two years now. They know every combination that is possible. They know exactly where the compromises are. And, really, what they're waiting for is the election. And once the election happens, they're going to have to sit down.

  • 10:11:26

    SCHERERAnd they know the menu of options they have. There's no big surprises that are going to come here, and they're going to have to cut a deal. And we just don't know where that deal is going to be coming.

  • 10:11:35

    REHMRight now, what he's saying is that for every $2.50 that is cut, there would be $1 in new revenues.

  • 10:11:49

    TUMULTYAnd, you know, I think the question is what the frame of this is. I mean, is this...

  • 10:11:54

    REHMIs it Simpson-Bowles?

  • 10:11:56

    TUMULTYAnd is it part of a much broader tax reform effort, something that actually goes and tries to grapple with the long term problems around entitlements? One thing, you know, in those earlier negotiations that failed when we were at the fiscal cliff that Michael just mentioned, one community that sat by the sidelines was the business community. And I think you see them finally understanding the consequences of failing here and weighing in. Just this week, a group of CEOs, 80 CEOs signed a letter calling for them to avert it.

  • 10:12:31

    TUMULTYAnd the ingredients that they talked about, tax reform, included lower rates, broadening the base, raising revenues and reducing the deficit. And I think that if you have the business community on board for all of these things, it gives a lot more political cover to everybody. And again, another indication that this is probably where things are going is the fact that in Politico this week, Rich Trumka, the head of the AFL-CIO wrote a piece saying we don't want to grand bargain because it would involve cuts to Social Security and Medicare.

  • 10:13:06


  • 10:13:07

    ALLENWell, I think there is a quiet class, generally quiet, with the exception of Trumka there, a quiet class that isn't necessarily as worried about the fiscal cliff. You talk to some folks, certainly privately, and they'll say, look, maybe it's all right if taxes go up and then we come back and fix them the way that we want them in the new year, or if the sequester goes into effect, the Defense Department is going to live, you know, despite all the hue and cry.

  • 10:13:32

    ALLENAnd I think that there is some belief that actually reducing the deficit, which is what that fiscal cliff would do if we go over good or bad for the economy, it would reduce the deficit in the short term. I think there is sort of a quiet group of people in Washington who are willing to accept that idea even if they don't like it. That said, I think the great majority will find a way to punt this into the New Year.

  • 10:13:53

    REHMWell, isn't that Ruth Marcus' column this morning, saying that if President Obama wins a second term that during the lame duck session something will happen, and if Mitt Romney wins instead, they'll kick the can down the road? Karen.

  • 10:14:14

    TUMULTYAlthough even the president in his interview with the Des Moines Register was talking about a six-month timeframe, so I think it is true, as Ruth points out, that extraordinary, you know, that lame duck congresses can actually be very productive as...

  • 10:14:28

    REHMThey can do something.

  • 10:14:29

    TUMULTYYes, as the one in 2010 was. But I do think, no matter who gets elected, we're talking about this dominating our politics first half of next year.

  • 10:14:38


  • 10:14:38

    ALLENI think lame duck congresses often want to do something. You've got members of Congress who are no longer going to be members of Congress in January. And I think it's something that, you know, I don't know the origin of the phrase lame duck, but I'm sure that it was not a positive one. These are guys that are lame ducks, no longer going to be involved in the process, getting their last licks in before they leave Washington. That's not always popular.

  • 10:14:59

    REHMAnd women.

  • 10:15:00

    ALLENYes, ma'am.

  • 10:15:00


  • 10:15:01

    SCHERERThe other thing is that you don't have to solve -- the most difficult part here is to agree on the top-line numbers, exactly how much revenue, how much spending cut. You don't have to do the details before the end of the year. And you can -- if they can just get that top-line agreement, the basic ratio, the amount of money they're going to cut in the lame duck, then they can kick all the details to the next congress. Lobbyists will have a field day.

  • 10:15:21

    SCHERERThe next Congress will be very happy to, you know, get into the committee process and figure out which tax breaks they're going to get rid of and which cuts they're going to do. And they'd all have to work within this framework that would be agreed on later this year.

  • 10:15:31

    REHMBut is this President Obama backtracking on Simpson-Bowles?

  • 10:15:38

    SCHERERWell, the president always took a very complicated approach to Simpson-Bowles. You know, it was his commission. Then the commission put out the report, and he didn't embrace it, more than saying I'm really glad there's a report out there. He didn't want to go too close to it. But then he also has always said that the basic approach in Simpson-Bowles, which is this combination of revenues and tax cuts, is what he wants. It just differs on where the revenues come and some of the -- and, I mean, in some of the spending cuts.

  • 10:16:05

    SCHERERYou know, it's interesting that in this election season, Mitt Romney has kind of embraced Simpson-Bowles, but his position is actually further from Simpson-Bowles than the president's because he is yet to say he's really willing to take revenues. And this letter that came out this week from the 80 CEOs is really a product of Simpson and Bowles working together with the business community to basically stand up to this Republican bright line that says under no circumstances will we raise taxes at all.

  • 10:16:35

    SCHERERAnd I think there's some momentum here that's sort of putting the Grover Norquists of the world, who say we never increase any taxes ever, into a corner.

  • 10:16:44

    ALLENI think that what we saw last year in the debt limit negotiations was an acknowledgement by Republican leaders, certainly by John Boehner, that there's going to have to be revenue as part of this deal. What was on the table that the president walked away with included a significant, I think, somewhere along the lines of $800 billion over 10 years increase in revenue. Now, it was done with a sleight of hand, a scorekeeping sleight of hand.

  • 10:17:07

    ALLENWe're going to change our baseline to do it, but it was a concession from Boehner that he understood that taxes, that revenue was somehow going to have to be part of the mix. And I think that what you're seeing the president talk about, my guess is what you're seeing talk about -- him talk about in terms of that 2 1/2-to-1 ratio is returning to something along the lines of that construct that they had last year in which there wasn't acknowledgement from Boehner that they were going to have to do that.

  • 10:17:32

    ALLENThat aside, Grover Norquist and his pledge and the idea of not raising taxes still hold a tremendous amount of sway with House Republicans, most of whom come from very conservative districts. It's not like they have to appeal to a broad set of people to like get elected. They have to worry about their primary voters more than anything.

  • 10:17:50


  • 10:17:51

    SCHERERAnd this really speaks to the big intrigue of the next congress. You know, the projections right now are that the Republicans will keep control of the Congress, but it could have an incredibly narrow margin. And that means that, in practice, pretty much anything that happens in the next congress will have to be done on a bipartisan basis, which is not what we've seen in the past.

  • 10:18:10

    SCHERERAnd so you're going to have a situation in which for pretty much anything to happen on this issue, on other issues, Boehner is going to have to be able to -- he's going to lose some of his own caucus. And he's going to be -- have to be able to get Democrats. It puts Democrats at the table. And it could lead to actually some productive legislation.

  • 10:18:27

    REHMMichael Scherer, White House correspondent for Time magazine. We'll take your calls in just a few moments. Stay with us.

  • 10:20:04

    REHMAnd welcome back. Jonathan Allen of Politico is here, Karen Tumulty of The Washington Post, Michael Scherer of Time magazine, all for the domestic hour of the Friday News Roundup. This week, we had the last debate. Jonathan, what was the takeaway?

  • 10:20:25

    ALLENThe takeaway was that President Obama did show up again. This was the second straight debate in which he showed up after one in which he didn't. I think he had commanded the subject matter. He looked liked the commander in chief. The foreign policy debate is the one that is probably most on the home field to the president in terms of him actually having dealt with the leaders he's talking about, dealt with the nuances of the issues.

  • 10:20:47

    ALLENYou know, if you're scoring it like a game, although I'd try not to do that, I think you'd give the edge to President Obama, but Mitt Romney didn't fall all over himself. He didn't re-cross the threshold of viability as a presidential candidate as we were seeing from the polls right now, which, you know, there has not been a recession for Mitt Romney. There's an argument about whether the race is static, or he still has some momentum. Either way, he did not defeat himself in the foreign policy debate, which would have been a real danger for any challenger.

  • 10:21:17


  • 10:21:18

    TUMULTYYou know, I think sometimes when we score these debates, we sort of read them wrong because these guys go in there not so much debating each other, but very often debating our preconceptions about them. The reason that Mitt Romney so-called won that first debate was not because of any points he's scored against Barack Obama. It was because he so defied everyone's expectations of Mitt Romney. And the same was true was why the president so-called lost the first debate.

  • 10:21:44

    TUMULTYI think what Mitt Romney was trying to do there was to sent his -- I think his target market was a woman sitting in front of her TV in Ohio, who is worrying about all of the truculent, bellicose rhetoric that has been coming out of him this entire campaign. And, therefore, he was trying to convince her that he was not going to be a warmonger if he was elected. The problem with that was that he disappointed a lot of people on the right, who thought that he did not really draw the distinctions they wanted to see between what his foreign policy would be and what Barack Obama's would be.

  • 10:22:21

    REHMWell, how about on the other issues that did come into that debate on foreign policy, Michael? They did sneak in.

  • 10:22:33

    SCHERERNo. And very often, Mitt Romney was the one raising them. I mean, it was very clear, I think, for anybody who watched this debate that this was not the debate Mitt Romney really wanted to be having at that moment in time. He wants to be talking about the economy. His advisors have told him, and he believes, that he's not going to win this election on foreign issues. He might hurt himself on foreign issues, which is why you saw a very cautious Mitt Romney.

  • 10:22:55

    SCHERERAnd so again and again -- and really his strongest moments in that debate were when he returned to the -- to -- he would talk about how America has to be a strong nation internationally, and we have to be a strong nation home, and then he would return basically to his stump speech about the disappointment of the last four years and why he plans to do better than the president over the next four. And that's really the message he's driving home with voters right now.

  • 10:23:16


  • 10:23:17

    ALLENI'd also like to point something out, which is in the last couple of debate, maybe in each of the debates, there's this sort of zinger moment that's aimed at us. I think, you know, you've got the Big Bird and the binders full of women and the bayonets and the horses. And while they're made a big deal of, you know, by the spinners, I actually -- I get the sense that that doesn't have a positive effect for the president necessarily.

  • 10:23:45

    ALLENI think that, you know, when he's making light of something, I think voters right now, we get a lot of serious problems on our hands. And I'm not sure that that plays the same way to that voter in Ohio as it does to a reporter going, wow, what a great zinger. That's pretty funny. Let's make sure that's in the lead of the story.

  • 10:24:01

    REHMWell -- and now we see both President Obama and Mitt Romney having to move on a 40-hour swing state drive, Karen.

  • 10:24:14

    TUMULTYYes. It's really been just exhaust -- I am not on the bus even, and it's exhausting to me to watch it.

  • 10:24:20

    TUMULTYBut one thing that's really different about this election, this election is not only being fought in very few states, eight or nine, but also these are two campaigns with absolutely unlimited resources. So where four, you know, in 2004, for instance, John Kerry had to making decisions at the end, like had to pull out of Missouri and pull out of Arizona. These guys have the resources to fight in every single one of these battleground states.

  • 10:24:49

    REHMMoney is, overall, going to be the big story of this election. But, Michael Scherer, we have a Senate candidate, Richard Mourdock, who made some comments this week. Talk about that and then let's hear more.

  • 10:25:14

    SCHERERWell, Richard Mourdock was -- is the Republican Senate candidate running in Indiana. He's sort of an upstart candidate, was not favored by the parties, identified with the Tea Party, but he has a very strong shot of winning that race. It's a Republican-leaning state. And he was asked in the debate this week what he would -- what he supports in terms of abortion in cases of rape and incest and the life of the mother.

  • 10:25:35

    SCHERERAnd he said that he supports the possibility of abortion in case of the life of the mother. But when it comes to rape and incest -- and I'll read the exact quote because it's important here -- "I came to realize that life is like a -- that life is that gift from God. And I think even when life begins in that horrible situation of rape, that is something that God intended to happen." Immediately afterwards, Democrats and liberals latched on that, intended to happen, and created a firestorm.

  • 10:26:04

    SCHERERIt's the third or fourth one we've had this cycle, arguing that he wasn't just defending life in that situation, the idea that a life had been created, but that rape may have intended to happen. It was a distortion of what Mourdock said. He came out the next day and said very clearly, I'm not saying rape is a horrible thing. I'm not saying that was what intended to happen.

  • 10:26:25

    SCHERERThe politics of this is that all cycle -- Republicans have really struggled on social issues that in past cycles have played to their advantage. If you remember in 2004, the last time we had a close election, issues of marriage and life actually were helping them in a lot of swing states at that point. This time, given the gender advantage that Democrats have, a lot of it driven by social issues, Republicans have really been backed up against a wall.

  • 10:26:48

    SCHERERAnd this has allowed Democrats and the president's campaign to once again say that Republican Party and by extension, Mitt Romney, who does support exemptions in the cases of rape and incest, are extremists. And not only do the want to overturn Roe v. Wade, which is the position of the party and of Mitt Romney, but they don't understand the realities of what it's like to be a woman, the horror of rape, the real fear and trouble of a situation like this.

  • 10:27:22

    REHMAnd the question was, was Mitt Romney going to ask that his ad supporting Mourdock be withdrawn? Here it is.

  • 10:27:37

    GOV. MITT ROMNEYThis fall, I'm supporting Richard Mourdock for Senate. As state treasurer, Richard worked with Gov. Daniels to balance the budget and make government more accountable. As senator, Richard will be the 51st vote to repeal and replace government-run health care. Richard will help stop the liberal Reid-Pelosi agenda. There's so much at stake. I hope you'll join me in supporting Richard Mourdock for U.S. Senate.

  • 10:28:02

    MR. RICHARD MOURDOCKI'm Richard Mourdock, and I approve this message.

  • 10:28:05

    REHMKaren, this ad continued to run even after these revelations. I wonder whether you think that this ad supporting Mourdock hurts Gov. Romney in any way.

  • 10:28:22

    TUMULTYI think that pulling the ad would've have hurt him worse. He...

  • 10:28:26


  • 10:28:26

    TUMULTYWith the extension of this story. The calculation is that this was, you know, a comment that was of limited damage. Unlike, say, Todd Akin, who -- when he was talking about rape, he's the Missouri Senate candidate who somehow suggested that women's bodies have superpowers to not get pregnant in cases of rape. What I think that Mourdock was doing was expressing a rationale that a lot of people who don't support this exclusion believe.

  • 10:28:59

    TUMULTYYou know, in absence of the language of divine intention, it would not have created the stir it did. So here's Mitt Romney's problem: This is the only Senate candidate that he has cut an ad like this for. The ad began running the day before this debate. And the other problem is that Mourdock's position on the rape and incest exclusion is the exact, same as Romney's own running mate, Paul Ryan.

  • 10:29:25

    TUMULTYSo I think that keeping the ad on the air, not an easy situation. Taking it down would have raised all kinds of additional questions that would have kept this story focused not on Mourdock, but on Mitt Romney.

  • 10:29:39


  • 10:29:40

    ALLENIt's also interesting that President Obama and Joe Donnelly, the Democratic Senate candidate, disagree on abortion. And nobody's asked President Obama to back away from his support for Joe Donnelly. I think that...

  • 10:29:52

    REHMWell, Joe Donnelly has made comments akin to what Mourdock has said.

  • 10:29:59

    ALLENLook, there's obviously a divide of opinion...

  • 10:30:01


  • 10:30:01

    ALLEN...between people who support Richard Mourdock who believe that what he was saying was that lives that are created are created by God, whatever the circumstance is, and those -- his opponents -- who believe that he was trying to say that rape is a product of divine will. As Michael said, when he came up the next day and said, look, clearly, I wasn't saying that.

  • 10:30:23

    ALLENI think that what we've learned in politics this year -- and we should have always known this -- is it's always dangerous to get into explanations of your beliefs on rape and abortion, that that -- when you get past that first, like, here's where my public policy position is into Todd Akin's remarks, which were just sort of, I mean, so far out of the political mainstream or the American mainstream, is to question him at length and for a long time or Mourdock, which seems to be a smaller blip.

  • 10:30:51

    ALLENThis is a dangerous area for politicians to get into and one that, from a political standpoint, they would be well advised to stay away from.

  • 10:31:00

    REHMOf course, what's so interesting here is that, as the polls have indicated this week, more white men are moving toward President Obama, more white women moving toward Gov. Romney. Karen.

  • 10:31:16

    TUMULTYWell -- but we had a poll on the front page of The Washington Post today that suggests that the racial divide in this country, in this election, is bigger than it has been since 1988. The -- where Barack Obama lost among whites by 12 percentage points in 2008, our latest poll suggests he's running 23 percentage points behind. I think that the electorate this year is being so sliced and diced and split and divided, and I do think that's going to be one of the most kind of unfortunate legacies of this election.

  • 10:31:54


  • 10:31:54

    SCHERERYeah, I agree. I think, you know, when this is all over, we're going to have to look back at the numbers, and one of the things we're going to see is that blacks and Hispanics voted one way. White -- especially non-college-educated white men voted a very different way. Women voted one way. Men voted a different way. And we have a country that is not just divided by ideas, but divided by identity.

  • 10:32:17

    SCHERERAnd I do agree that that -- it's a kind of combustible mix. If people, especially in rural areas and the Heartland, white people feel they're not being represented by their government and that, you know, people who don't look like them or who have different priorities are, you know, are taking over or vice versa, you're allowing -- you're setting the ground for very problematic conflicts in this country that we should probably avoid. It's better to have debate on the issue.

  • 10:32:47

    ALLENYeah, I mean, I think we -- I think it's cyclical. I mean, the politician's job is to exploit these differences among us to get us to vote one way or the other as much as possible, and now they micro target. So now they can come into my household and get me to divide from my wife on something and feel they've done their job.

  • 10:33:04

    REHMAnd you're listening to "The Diane Rehm Show." Karen, you mentioned Mitt Romney's vice presidential running mate, Paul Ryan. What's happening with his congressional reelection campaign? By virtue of Wisconsin's law, he can run both for vice president and for reelection.

  • 10:33:27

    TUMULTYThat's right, and we had Joe Biden in the same situation four years ago. I believe Joe Lieberman was in the same situation as well. Obviously, he does not have time to go home and campaign a lot, and -- but he is spending a lot of money on advertising in his campaign. He has spent $2 million on ads. He has run eight ads so far, will be running another one before Election Day. I think this is probably still a pretty safe congressional seat for him. His opponent is a businessman who has outraised him, but Paul Ryan is still sitting on a lot more money.

  • 10:34:06

    REHMAnd Paul Ryan is not debating his opponent at all.

  • 10:34:11

    SCHERERNo. And he benefits, as other people on the ticket have in the past, from the fact that Wisconsin is, at this time, a swing state. There's a ton of advertising going in, and Paul Ryan and the idea of Paul Ryan and Romney are everywhere in Wisconsin. Wisconsin is actually -- I mean, if you take not just his congressional district, Wisconsin is not a terribly inhospitable place for Republicans right now.

  • 10:34:32

    TUMULTYYou know, the very first presidential campaign I ever covered was 1988, and election night in 1988 found me in Austin at Lloyd Bentsen's party that was both celebrating his reelection as Texas senator, but...

  • 10:34:48


  • 10:34:48

    TUMULTY...they were trying to ignore that other story that was going on.

  • 10:34:50

    REHMExactly. Jonathan.

  • 10:34:52

    ALLENI think Michael makes a great point, which is that any voter that thinks that Paul Ryan isn't campaigning in Wisconsin is crazy. It may be by television ad. It may be by various other methods. But I think voters in Wisconsin will be probably sick of seeing Paul Ryan's mug, not the other way around, not like he's left the area.

  • 10:35:13

    REHMMichael Scherer, let me ask you about why the federal government is suing Bank of America.

  • 10:35:21

    SCHERERThis is the latest in a string of big criminal complaints -- and, actually, there are also civil complaints -- against the big banks for the way they handled mortgages during the housing bubble.

  • 10:35:33

    SCHERERBasically, the situation -- the accusation here, which comes largely from whistle-blower complaints that the feds have gotten a hold of, says that Countrywide Financial, which was purchased by Bank of America, was cutting corners during the height of the financial -- the height of the housing bubble in 2007, 2008, so that they were proving mortgages without basically doing the due diligence that would find fraud and errors and the likelihood of default, and then repackaging and selling those mortgages to basically government-backed institutions, Fannie and Freddie.

  • 10:36:07

    SCHERERAnd as a result, when those mortgages defaulted, the government-backed institutions took -- the federal government is now saying -- a $1 billion charge. And so this is basically a fraud lawsuit that's saying because of fraud by Countrywide and, by extension, Bank of America, the taxpayers have lost $1 billion, and we want to recoup that money.

  • 10:36:26

    REHMYou think we'll get it?

  • 10:36:28

    SCHERERI think, you know, if you look at the statements, the -- I don't know the legal intricacies here, but if you look at the statements coming out of Bank of America, they're really contesting the amount the damages should be more than they are contesting whether anything wrong was done here. So I'm sure there will be some settlement at some point. I don't know what the settlement will be, how much Bank of America will be on the hook for. But, you know, Bank of America is not claiming right now that Countrywide was above the board on everything they did during that time.

  • 10:36:59

    REHMAnd then you've got Rajat Gupta getting a sentence this week that some people thought was lighter than it should have. Karen.

  • 10:37:08

    TUMULTYThat's right. He -- if -- he was sentenced to two years. And if you look at the federal sentencing guidelines for the kind of insider trading that he was doing, it's -- you know, they would suggest eight years. Just to go over a little bit of what was happening in this case, he is the most prominent figure yet to face government crackdown on insider trading.

  • 10:37:32

    REHMKaren Tumulty of The Washington Post, Michael Scherer of Time magazine, Jonathan Allen of Politico. We'll take just a short break here. When we come back, your calls, your email. I look forward to speaking with you.

  • 10:40:04

    REHMAnd it's time to open the phones. We'll go first to Oshkosh, Wis. Good morning, Wayne.

  • 10:40:13

    WAYNEHi, Diane.

  • 10:40:14


  • 10:40:14

    WAYNEGood show as always.

  • 10:40:15

    REHMThank you.

  • 10:40:16

    WAYNEMitt Romney mentioned that he and Ronald Reagan were able to work well with their respective legislatures. The commonality being that they were Democratically controlled legislatures. Obama has had difficulty in the last two years working with the Republican-controlled House, and very little has been accomplished. Does this not argue for the idea that which party controls the House is perhaps more important than who controls the White House?

  • 10:40:44


  • 10:40:45

    TUMULTYI don't necessarily think that because there's a lot of things that the president can do. And nothing's...

  • 10:40:53

    REHMBut what's not able to do.

  • 10:40:55

    TUMULTYBut there's a lot you can do with the executive order, with the bully pulpit. I think that the idea that the last three presidents were elected on this idea that -- and I'm going Bill Clinton, George Bush and Barack Obama -- that they were the kind of figures who could come to Washington and fix this mess, fix if -- bridge the divisions. It's really interesting that nobody's really running on that this year. I do think that the big difference between this election and the past ones is these two guys are both arguing. Essentially, somebody's got to win this argument.

  • 10:41:28


  • 10:41:29

    ALLENThe president can go to war without the House of Representatives. The House of Representatives cannot go to war without the president. The president doesn't need the House of Representatives to appoint people to various positions. He doesn't need the Senate, although fewer and fewer of those positions are confirmable.

  • 10:41:44

    ALLENThe health care law was largely left -- the implementation largely left to the secretary of health and human services, therefore the administration -- so much that the president can do without the House. That said, any one chamber being in control of one party with the others or, you know, the levers of power being in one party and the others -- and the other allows a one party veto.

  • 10:42:05

    REHMAll right. To Woodstock, Ill. Good morning, Lydia.

  • 10:42:10

    LYDIAYes, good morning. Thank you. I was wondering if any reporters checked into what I consider to be the fourth women's firestorm that was pointed out by Reince Priebus who is the head of the Republican Party earlier this year when he chose the word caterpillars to explain why the Republican Party obviously has no war on women. I, as a person who was familiar with the term caterpillar that they used to negotiations, would like to point out that in that type of negotiation, you want your opponent to remain a caterpillar because at long as it is a caterpillar, it can be squished.

  • 10:42:55

    REHMI don't understand that.

  • 10:42:57

    TUMULTYI do not think that that was necessarily the context. The war on caterpillars was a comment that was given quite a bit of coverage at the time, and, in fact, I wrote a page one story on it at the time. But I don't think that Reince Priebus was sending some subliminal message here with this because he would've -- it would've been more effective to just say that.

  • 10:43:21

    REHMAll right. Here is an email representative of I cannot tell you how many we've received. It's from Brian who says, "I think your guests are misinterpreting the importance of Mourdock's comments on rape. His comments support the overarching narrative of this campaign season that Republicans oppose the right of women to control their own bodies. It's implicit in their position on access to birth control, and it's explicit in the comments of Akin, Mourdock, and the Republican Party platform."

  • 10:44:08

    TUMULTYLook, their views on abortion, the large question, whether it should be legal, whether it should be illegal, were very clear before these comments. So it isn't like he was suddenly revealing some position that people didn't know about him before.

  • 10:44:23


  • 10:44:24

    SCHERERYeah. I think the email writer is correct that this has become a big issue in this campaign, especially for women. You see it in the gender gap in the polls which is as big as it's ever been a this point in presidential elections and probably in the exit polls will be as big as it's ever been.

  • 10:44:40

    SCHERERBut there is a distinction between the policy disagreement here, which includes funding for Planned Parenthood, the Obama care reforms that improve coverage for women, the -- whether or not you want a Supreme Court justice who's likely to overturn Roe v. Wade or whether you want a Supreme Court justice who's probably likely to uphold Roe v. Wade. And these things about, you know, what a Senate candidate said here which seem to speak more to his own religious faith and his won understanding of when life begins and how he grapples with that than it did these policy groups.

  • 10:45:17

    SCHERERIt's -- there's no doubt for people in Indiana that if you are voting for Richard Mourdock, you are voting for a pro-life politician who's going to do everything he can to limit abortions in America. I mean, that is his position, and if that's something that moves you, you might want to look elsewhere.

  • 10:45:33

    TUMULTYBut by the way, so will his Democratic opponent in this race.

  • 10:45:34

    SCHERERYeah. But Joe Donnelly -- right. That's right. In that race, Joe Donnelly is also pro-life, but it's -- but, you know, because Donnelly's a Democrat, he's going to be with his party and probably on the margins, you know, there might be differences.

  • 10:45:46

    REHMAll right. We've heard from Mike in San Antonio, who says, "Yesterday, there was a brief news article that the attorney general of Texas is challenging international election observers if the try to monitor or interfere at polling places in Texas." Can you clarify what's happening here, Karen?

  • 10:46:15

    TUMULTYWell, I don't know that international election observers are going to, you know, determine much of anything at polling places in Texas.

  • 10:46:21

    REHMBut they are going to be there apparently.

  • 10:46:24

    TUMULTYYeah, but I, you know, again, I think that any challenges to the -- any election results and, again, in the presidential, there's no secret which way Texas is going to go. But I think that probably the people -- if the political parties themselves and their armies of lawyers are probably going to be a lot more important in challenging any kind of election results in Texas, then...

  • 10:46:45

    REHMBut how is it going to look if the U.S. has an attorney general who turns away international observers?

  • 10:46:55

    SCHERERIt's -- this is an attorney general playing to his political base...

  • 10:46:59


  • 10:46:59

    SCHERER...more than anything else. I mean, the issue of election observers is that America has long been in other countries a real advocate of open and fair elections. And as part of that, we encourage international election observers to go to other countries when they have elections to point out fraud and document it when it happens. And so it's very difficult for us to then say, well, we're not going to let them come look at our elections.

  • 10:47:19

    SCHERERThere isn't really much concern that there's going to be any widespread fraud in this election. And if there is, we should find it, and it would be great if international observers do find it. But here, you know, in Texas, you have a politician playing to his base.

  • 10:47:34


  • 10:47:35

    ALLENI would say I would be very careful if I were a Swiss election observer trying to interfere with somebody's ability to vote in the state of Texas.

  • 10:47:45

    REHMAll right.

  • 10:47:45

    ALLENI don't think that's going to be an issue. As Karen pointed out, 38 electoral votes in Texas, they are going to Mitt Romney. The odds of an international election incident happening in Texas are pretty small. Seems like a side show to me.

  • 10:47:55

    REHMAll right. To New Orleans and to Glen. Good morning.

  • 10:48:01

    GLENGood morning. I believe that the president's economic plan worked in the last four years. And when it began, we were losing, like, a million jobs a month. And if that million-jobs-a-month rate would've kept up for four years, the economy would've (unintelligible) we would had over 100 million people out of work. So I would say it worked, and he ought to get a Nobel Prize on economics.

  • 10:48:26

    REHMHe's already got one.

  • 10:48:27

    ALLENHe's already got a Peace Prize.

  • 10:48:28

    REHMYeah, right. Michael.

  • 10:48:29

    SCHERERYeah, you know, one thing you're -- an interesting thing you're pointing out is that if, you know, there were economists who were projecting from the beginning of this what a financial-induced recession would look like. And the economy has pretty much matched what those projections were. We're coming back. We're talking about the GDP numbers. That's pretty much. This is a long-tailed, not a V-shaped recession, sort of an L-shaped recession. It's coming back slowly.

  • 10:48:52

    SCHERERAnd chances are that -- I mean, obviously, the stimulus bill early on had a big effect on the U.S. economy. All economists will say that. But the president has really not determined the course of the economy. And chances are, in the next four years, the president will not be the one to determine the course of the economy. This is a cyclical downturn that happened because of a very deep financial crisis, and these things take a long time to recover from. And that's what's probably going to be happening.

  • 10:49:17

    REHMIt was interesting to hear Gov. Romney say that if his plan were put into place, it would take eight to 10 years to work. So...

  • 10:49:29

    TUMULTYAlso, if Barack Obama wins Ohio, the reason will be probably that the auto bailout there did so much to get that state up off its back and that the, you know, a lot of these swing states are performing a lot better than the national economy as a whole.

  • 10:49:43


  • 10:49:44

    SCHERERWell, another interesting thing here is that Mitt Romney's promise right now in jobs is 12 million jobs in the next four years. And, you know, the irony of this projection is that there are lot of economists out there who say, we're going to get 12 million jobs in the next four years whoever wins. And so in some ways, Romney is really promising in his campaign ads to allow the recovery to happen irrespective of who is president.

  • 10:50:07

    ALLENAnd, yeah, that's sort of taking credit for the sun coming up. It's actually a really smart political thing to do because you set the bar low. It's easy to clear. We have a story in Politico yesterday about Mitt Romney's transition team, and they're doing a very similar thing, which is they are trying to set the bar low with the Republicans in terms of their expectations of what would happen in the first period of a Romney presidency. They're not talking about the first 100 days. They're talking about the first 200 days.

  • 10:50:31

    ALLENThey're talking about some things that they might be able to do by executive order, but they want people to understand that Obamacare is not coming down on day one of the Romney administration.

  • 10:50:39

    REHMOh, really?

  • 10:50:40

    ALLENRight. But there may be some...

  • 10:50:40

    REHMThey've changed that.

  • 10:50:42

    ALLENWell, I mean, there are certain things that I think he would undertake, that he would, you know, could try to do to start up overall.

  • 10:50:46

    REHMBut he said that right along, on my first day in office.

  • 10:50:48

    SCHERERHe said, I will begin to take it apart. There was always -- he never said I would take the whole thing apart...

  • 10:50:54


  • 10:50:54

    SCHERER...and get rid of everything. He said, I will begin the process.

  • 10:50:56

    ALLENBut that bar is getting lower and lower the closer it seems to reality that he might be president.

  • 10:51:00

    REHMAll right. To Alexandria, Va. Good morning, Jack.

  • 10:51:05

    JACKGood morning, Diane. Thank you for show. You're a national treasure for this show.

  • 10:51:08

    REHMOh, thank you.

  • 10:51:10

    JACKMy question is regarding sequestration, and I wanted to ask your panel if they could give a percentage likelihood for it actually is going to pass. In my opinion, there's probably a 95 percent chance it doesn't occur. I think Congress' rate, you know, they're approval rating is so low right now that they would be remiss to allow it to actually come to pass. I'll take my answer off the air. Thank you.

  • 10:51:31


  • 10:51:32

    TUMULTYI would be stunned if it happened. I just...

  • 10:51:33

    REHMWould you?

  • 10:51:34

    TUMULTYYes. I think the -- nobody wants it. And so even if it means, you know, putting the whole system together with Band-Aids and chewing gum and keeping it going a few more months to find a way around this, it just -- the stakes and the consequences are just too high.

  • 10:51:47


  • 10:51:48

    ALLENThere are outs other than it happens or it doesn't happen, including giving the administration the authority to pick and choose the cuts for a short period time or for a longer period of time. So as its written now, I would also be shocked if it went into effect.

  • 10:52:01


  • 10:52:02

    SCHERERAnd the irony here is that there are lot of Senate races and House races in which this idea that Democrats and Republicans want to cut your defense budget are really -- in Virginia right now, the primary message of George Allen, the Republican Senate candidate, is that Tim Kaine and the Democrats support massive cuts to defense. Mitt Romney is also using this line, massive cuts to defense. It's just not really true.

  • 10:52:22

    ALLENThis sequestration is, you know, is a device for forcing some sort of compromise. It's not a thing that anyone, including Democrats, intends to have happen.

  • 10:52:33

    ALLENWell, except for that it has happened in the past. So that, I mean, when the president went out there on the debate stage and said it will not happen, he was saying something different than what his guys were saying a year and a half ago, or at the very least, his guys were pushing this. They wanted the defense thing to be there as the trigger. And they know fully well that there is -- that it's hard to get things done. That it's possible that once you put it in that place -- that into place, that it could happen.

  • 10:52:56

    REHMWho put forth the word sequestration first?

  • 10:53:01

    TUMULTYWell, it's -- by the way, it's an old concept that goes back to Phil Gramm and Warren Rudman in the '80s.

  • 10:53:06

    REHMRight. But in this...

  • 10:53:07

    TUMULTYAccording to a book by my colleague Bob Woodward, it was the president who put this on the table. Now, the White House denies this, but Woodward stands by his report.

  • 10:53:17

    ALLENAnd let me also say, having done some reporting contemporaneously, wherever sequester came from, it was definitely the White House that wanted to insist on the defense side, which is the politically difficult side right now.

  • 10:53:27

    REHMJonathan Allen of Politico, and you're listening to "The Diane Rehm Show." And to Ann Arbor, Mich. Good morning, Charlie.

  • 10:53:38

    CHARLIEHi. Good morning, Ms. Rehm. I have several points. In the debate, I was shocked that the president -- he mentioned once -- didn't emphasize the Supreme Court more. I just disagree with one of your callers. I think that's most important branch of government right now. The other point is I think that he -- Mr. Romney has changed -- by the way, I'm a registered Republican, but I am the endangered species of being a moderate one -- but he changed his policy so much.

  • 10:54:04

    CHARLIEI think if the election had gone off or the debate for 20 more minutes, he would have endorsed President Obama, you know? The other point I would bring up is that the whole Benghazi thing totally distracted from the very fast Mr. Romney attack on the tweet from the Cairo demonstration where he called an apology. I've read -- if you read all three paragraphs, all he did was endorse America's values.

  • 10:54:32

    REHMAll right. Thanks for your call. Do you agree that had that debate go on a little longer you would have seen even more of Gov. Romney's support for the president's positions shift?

  • 10:54:51

    SCHERERYeah. I mean, what you saw in that debate was Mitt Romney not wanting to create any daylight between him and the president on the policy of foreign policy. He wanted to make the claim that there was going to be stylistic differences. But on the real policy of, you know, what we're going to do in Iran, what we should be doing in Syria, what we should have done in Libya, he was basically saying, you know, the president and me are on the same page.

  • 10:55:18

    SCHERERYou don't have to worry about me being trigger happy in office. And then he would go on to say, but President Obama has not been strong enough. America is weak. He's failed in all of these other regards.

  • 10:55:30

    REHMAll right. I want to ask you all about governor -- or Sen. George McGovern who died Sunday at age 90. The late senator was last on "The Diane Rehm Show" in August of 2011. We did rebroadcast that interview in the Washington area on Monday afternoon, and you can listen to that interview online at How is he going to be remembered, Karen?

  • 10:56:05

    TUMULTYYou know, I listened to that rebroadcast, and I really would highly recommend it, just the, you know, kind of wisdom of a man looking back over all those years. But when I heard that he died, the first thing I thought of, interestingly enough, was not his electoral defeat in 1972 but the work he did with Bob Dole on eradicating hunger, both in this country and around the world.

  • 10:56:26


  • 10:56:26

    TUMULTYThis is a Republican -- a conservative Republican and a liberal Democrat who worked out a compromise that got overwhelming support, that expanded the school lunch program and reformed the food stamp program. And I was sad because I couldn't even imagine that kind of bipartisan shift in this atmosphere.

  • 10:56:43


  • 10:56:44

    ALLENI think what's really fascinating and amazing about that is that mark was left by these two World War II heroes, the greatest generation, as Tom Brokaw talks them about -- talks about them, and what they wanted to do with this social need, this hunger need.

  • 10:56:57

    REHMExactly. Michael.

  • 10:57:01

    SCHERERYeah. You know, the history books will briefly say McGovern lost terribly in 1972 -- he only won 17 electoral votes, only Massachusetts and D.C. -- that he was the face of the anti-war Democratic left. But I think his legacy is far broader than that.

  • 10:57:17

    REHMMichael Scherer, Karen Tumulty, Jonathan Allen, thank you all.

  • 10:57:22

    ALLENThank you, Diane.

  • 10:57:22

    TUMULTYThank you.

  • 10:57:23

    REHMThanks for listening. Have a great weekend, everybody. I'm Diane Rehm.

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