Negotiations to avoid the “fiscal cliff” continue. A fight over U.N. Ambassador Susan Rice heats up. And President Obama lunches with former Republican presidential candidate Mitt Romney. The week’s top national stories: what happened and why.
Washington bureau chief for The New York Times.
White House correspondent for The Wall Street Journal.
White House correspondent for NPR.
Friday News Roundup Video
President Barack Obama and former Republican presidential candidate Mitt Romney met for lunch Thursday at the White House. Ari Shapiro of NPR said the menu was one of the only known details of their meeting, which was closed to reporters. “I can’t think of a story in my recent memory that had so much interest and so little information,” Shapiro said. Wall Street Journal correspondent Laura Meckler said Obama hosted a similar meeting in 2008 when he dined with his Republican challenger, Sen. John McCain. David Leonhardt, Washington bureau chief for The New York Times, added that these sorts of bipartisan meetings are a good thing. “It’s a sign of the way things should work in a democracy,” Leonhardt said.
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Negotiations to avoid the so-called fiscal cliff continued. A fight over U.N. Ambassador Susan Rice heated up, and President Obama had lunch with former Republican presidential candidate Mitt Romney. Joining me in the studio for this week's domestic News Roundup: David Leonhardt of The New York Times, Laura Meckler of The Wall Street Journal and Ari Shapiro of NPR. Do join us, 800-433-8850. Send us an email to email@example.com. Follow us on Facebook or send us a tweet. Good morning, and happy Friday, everybody.
MR. ARI SHAPIROHi, Diane.
MS. LAURA MECKLERGood morning.
MR. DAVID LEONHARDTGood morning.
REHMWelcome back, Ari.
SHAPIROThank you. It is nice to be back from the campaign.
REHMI'm glad to see you. There was some optimism earlier this week about finding a resolution on the fiscal cliff negotiation. What is the mood this morning?
SHAPIROWell, yesterday, the White House presented an offer that Republicans sort of swatted down. It included $1.6 trillion in tax revenues over the next decade, about $400 billion in entitlement savings. The Republicans say this is totally unrealistic, you know, I can't say there is some good news which is all of us covered the debt ceiling talks last year when people were walking out of negotiations and not returning phone calls. It has not sort of devolved to that just yet, but the tone right now is not as optimistic as it was at the start of the week.
MECKLERYeah. I think that this is sort of to be expected. I mean, really, what the White House put forward yesterday was a collection of their wish list of everything they'd want. What President Obama has put forth in the past in his budget, he didn't go beyond that. A lot of Democrats welcomed that. They feel like he's negotiated with himself too often in the past.
MECKLERBut he put forward sort of everything as a wish list, and there are some new things too that haven't really gotten a lot of attention yet such as increased infrastructure spending, renewal of the payroll tax, reduction -- payroll tax rate reduction and, intriguingly, an end to the congressional approval for increasing the federal government statutory borrowing authority.
REHMWas that totally pie in the sky?
MECKLERProbably because Congress -- and this is a bipartisan point. Congress does not like to give up its authority. It likes to keep control over what's going on. And presidents of both parties in the past have had to work to get the debt ceiling increase, non-quite so hard as President Obama last year. But -- so that, I think, is a little bit more of a jurisdictional question than partisan question, but it's also partisan. And I highly doubt that Republicans are going to give up that kind of leverage that they have.
REHMSo, David, is there anything that they can agree on in this package, or is it totally up to the president now to go to the general public for his plan?
LEONHARDTWe still know what a final deal probably looks like. It -- look, the president has asked for $1.6 trillion in higher tax revenue, and John Boehner has talked about 800 billion. And so you can assume maybe they compromise somewhere near 1.2 trillion, right? You can assume it includes some cuts to Medicare. It probably won't have Social Security. You can assume it has some cuts to other things. So we know from a kind of substance of perspective what the final deal probably could look like.
LEONHARDTI think there are two questions. One, having won re-election, is Obama less willing to agree to entitlement changes than he was in 2011? He'll probably be a little less willing. Is he so much less willing that there is no deal there? My guess is the answer to that question is no. I think Obama actually wants to do some of this entitlement stuff. He almost wants the Republicans to force him to do it. He wants a deficit deal for his own kind of legacy and stature-in so he can move on to other things
LEONHARDTObama is more willing to cut Medicare than a lot of other Democrats. The second question is, can Republicans get their minds around the idea of higher taxes? And I think we don't know the answer to that question. I would -- yes, the answer to that question is yes, but I don't think we -- I don't think we know the answer to that question.
MECKLERWell, I think that the knob of the issue. I mean, what David just said is exactly right, where these two challenge orthodoxy in both parties. But we've seen a lot of flexibility with -- among Republicans on the tax issue. For starters, the day after the election, House Speaker John Boehner came right out and said that he was open to new revenue. So we started this debate in a very different place than we were, you know, 15 months ago when we last dealt with these sorts of negotiations.
MECKLERAnd we've also seen other people such as Congressman Tom Cole from Oklahoma who is no liberal at saying that, you know, let's just go ahead and extend the lower tax rates for the middle class, those earning the income less than $250,000 a year and let it expire for the upper income earners and move on with it which is the Obama position. So that, you know, that's striking. So now that's not the whole conference, but it is notable.
LEONHARDTAnd that is a very big deal because while the fiscal cliff talks at most what been happening behind the scenes, what President Obama has talked about the most in public is pushing Congress to vote on this extension of the Bush era tax rates for, he says, 98 percent of the American people. The fact that Tom Cole is a powerful Republican in the House has said, yeah, let's go ahead with that and then deal with the top 2 percent later.
LEONHARDTIt would be a big victory for President Obama and something that I think many Democrats and outside observers did not expect him to get quite as easily is it looks like it might be on the verge of happening.
REHMHas he, in fact, drawn any line in the sand?
LEONHARDTWell, the -- you know, he -- the White House says the line is tax rates must go up on upper income Americans. They say the president is not wedded to any part of this plan specifically. Except for the principal, the tax rates cannot stay the same above $250,000 of income.
REHMAnd how come Tim Geithner was sent to deliver this message?
SHAPIROGeithner and Obama are pretty close. They seem to have a real fondness for each other and they have ever since they first met during the waning parts of the campaign. They're almost exactly the same age. They both have Asia in their background from growing up. Obama has a lot of faith in Geithner. Geithner is also on his way out the door.
SHAPIROAnd so if you were to send someone else who might be taking another position in the administration, you would worry that they would get some scars and build up some bad blood with the Republicans that could affect them going forward. I think Geithner is happy to sort of get some of those scars on the way out.
SHAPIROGeithner also is someone who can deliver a message, both to Republicans about, hey, guess what, we're not budging on this idea that the top rate must go up, and then he can turn around and say to Democrats, you got to accept some cuts to entitlements.
MECKLERListen, there are two interesting points here. One is that, as Ari sort of alluded to, the White House is not insisting that the top tax rate go back up to where it was before, which is what would happen under current law. All rates would return to their previous higher levels. And so there has -- there was shown some flexibility this weekend. We heard from the White House sort of indirectly that they were willing to let those rates go up but maybe not quite as high as they would under current law. So that is a subtlety, but it sort of points to a direction where a deal may be had.
LEONHARDTWhen Obama was asked in his press conference shortly after the election, must tax rates go up, as Ari and Laura have said, he said, yes. And then someone said must they go up to 39 percent, which is where they were under Clinton, and he very pointedly ducked the question.
LEONHARDTAnd so that's -- but when you imagine the compromise, that's part of the compromise. Thirty-seven percent, 38 percent, I don't know what it is. But it's somewhere probably between 35 and 39.
REHMHow much of a difference to the president and to the Republicans does the election itself make?
LEONHARDTOh, you know, as Laura said, the day after the election, we saw Congressman John Boehner say I'm open to new revenues. We've seen lots of Republican...
REHMBut then he backtracked.
LEONHARDTWell, he says he's not going to embrace higher tax rates, but more revenues is something that he offered the day after the election that I don't think we would have seen if Mitt Romney had won. Similarly, you know, the Grover Norquist anti-tax pledge that so many Republicans are backing away from now, I don't think we'd be seeing that if the election had gone a different way.
LEONHARDTYou know, there are all kinds of demographic issues here about young people, about minorities where Republicans see their base shrinking, they're trying to expand the pie. And I think all of that informs how they're negotiating.
REHMHow many have backed away from Grover Norquist's pledge?
MECKLERI don't know what the total is. I mean, I don't think we're talking like massive numbers of people.
MECKLERI mean -- but the signals from the leadership matter, you know, and they're not being asked yet, not -- the rank and file is not yet being asked, but they're being told right up from the beginning that there are tax revenues on the table. There's no way that this happens without taxes. And that wasn't 100 percent clear, you know, 15 months ago. In fact, we got through the debt ceiling negotiations without any increases on taxes last time. So I think that it's -- we have a very different environment, and it's directly related to the election results.
REHMAnd just to let our listeners know, Grover Norquist will be a guest here on this program on Monday. How much of a backlash is he likely to generate against those who step away from the pledge?
LEONHARDTOh, he will certainly try to generate a backlash against them. He's been very clear about that. I think the real question here is are we at the end of the great era of American tax cutting? We in The New York Times today have a big project where we look at total tax rates, federal, state and local. And what we discovered is that for the vast majority of Americans, nearly all affluent people, nearly all middle-class people, not all poor people, people are paying considerably less in overall taxes than they were, not only in 1980 but even after the initial Reagan tax cuts.
LEONHARDTWe've had basically 30 years of mostly tax cutting. That's a big reason why we have a deficit, right? Democrats have won on spending. We've increased spending. Republicans have won on taxes. We've lowered taxes. We're left with a deficit. And I think the question is are we at the end of that era?
LEONHARDTAnd the fact that we're seeing Tom Cole and some of this discomfort with the Grover no new taxes stuff raises the possibility that, in fact, Americans are going to side, you know what, I like low taxes, but I'm not willing to trade getting rid of the safety net, getting rid of Medicare, as we know it, for lower taxes.
REHMTwo points: Are we going to see a deal and when?
LEONHARDTWe'll, I think we will at least see a short-term deal to get us through the New Year.
LEONHARDTIf not a long-term deal before the New Year then a long term deal after the New Year. I think it's important that, you know, to your question about both accountability and the consequences of the election, Pew and CNN both polled Americans and asked would you blame the Republicans or President Obama more if the country goes over the fiscal cliff? In the Pew survey, 53 percent said Republicans would be more to blame, 29 percent said the president would be more to blame.
LEONHARDTIn the CNN survey, 45 percent said Republicans, 34 percent said the president. So I think the Republicans realize that President Obama has the upper hand here, and that informs every aspect of their negotiation rate.
REHMQuick point, Laura.
MECKLERWell, I just love this quote that was in the Journal today from Congressman Rob Andrews who said, "In order to reach a deal, it has to look like there was a lot of fighting before you got the deal."
MECKLERBoth sides need to show that they're resisting.
REHMLaura Meckler, White House correspondent for The Wall Street Journal. Short break. More news when we come back.
REHMAnd we're back with the domestic hour of the Friday News Roundup. Now, turning to Susan Rice, the U.S. ambassador to the United Nation, she had some more setbacks this week in what is assumed to be her nomination to the secretary of state. She went up to the Hill. What happened, David?
LEONHARDTShe went up to the Hill to talk to several Republican senators, Susan Collins, John McCain, and these meetings were meant to smooth things over. Republicans have criticized her for the fact that she came out shortly after the attack on the American consulate in Benghazi and said some things that, it looks like in hindsight, were not correct. It also looks like at the time she was speaking with the best available intelligence.
LEONHARDTBut I think it's fair to say that in the initial period after Benghazi, the Obama administration did not handle it that well. And I would guess that part of the reason was they were nervous in the run-up to the election about what they were saying publicly. Susan Rice was really just acting as an administration spokesperson here. And so the idea that she was doing something fundamentally different from other administration officials is probably off.
LEONHARDTI actually like the people who have pointed out that the bigger reason to criticize Susan Rice is her role in Rwanda in the 1990s where she actually played a more substantive role, and there's more criticism there. But this whole situation is very odd. I mean, she hasn't been nominated yet, and she's going up to the Hill.
LEONHARDTAnd I guess we all assume she's going to be nominated because Obama doesn't have a record of making very surprising picks. But who knows?
REHMSen. Corker, the ranking Republican member of the Senate Foreign Relations Committee, said, "We want somebody of independence." What does he mean?
MECKLERWell, he doesn't want someone who's going to be going out there and just sort of, you know, repeating talking points if they aren't true, I think, is what he's probably referring to there. But again, this is really sort of a dicey situation. She's sort of taking the fall for this sort of mixed wrong messages that came our early. The concern that David alluded to in the run-up to the election was that Obama was running on a strong anti-terrorism record.
MECKLERHe talked every day on the campaign trail about decimating al-Qaida. It wasn't going to necessarily look real good to have a terrorist attack -- al-Qaida attack on the U.S. consulate, you know, happening in four Americans, including the ambassador being killed. You know, having said that, though, I think there are a lot of questions about whether, you know, how much of this is really her fault.
MECKLERBut it doesn't even matter at this point, really. It seems like whether it's her fault. The question, I mean, it matters in a larger way. But the political question before us now is, does President Obama want to say basically, you know, I don't care what you have to say, you know? Make my day. I'm nominating her. She is the one who I want for this job. He defended her enthusiastically at his press conference.
MECKLERHe -- at every chance he has, he does the same. Or does he say, you know what, I have enough on my plate with the, you know, fiscal cliff and everything else going on. John Kerry, who has been very loyal to him, you know, helped on the campaign and the debate preparations. You know, he's -- the Republicans are basically begging for him to be nominated for secretary of state. He wants the job. Why not just go ahead and nominate him?
SHAPIROI mean, Republicans have very successfully painted President Obama into a corner here because whether he was actually intending to nominate Susan Rice for the position or not. Now, if he does nominate her, it will look like he's picking a fight to kick off his second term. And if he does not nominate her, it will look like he's caving to pressure from Republicans.
LEONHARDTFrom a purely political perspective, I actually think the Kerry appointment would create more problems for Obama. I think presidents underestimate the damage they do to themselves by nominating sitting senators. Scott Brown could win that seat in Massachusetts.
SHAPIROHe's the most popular ex-senator in America right now possibly.
LEONHARDTYeah. And so Democrats say, well, we don't need the 55th seat. They do need the 55th seat. That's one closer to 60, and the map for the Democrats looks bad in two years. And so I actually -- I think it's sort of interesting to see whether the Democrats make what is a kind of narrow tactical mistake because of their -- because of Obama's admiration for Kerry.
REHMAre there other names out there?
SHAPIROOh, I mean, I think there are lots of other names out there floating around, you know, both from inside and outside of the current administration line-up. But Susan Rice and John Kerry are the two that we hear the most. And I think, you know, John Kerry would have an easy time getting to the Senate.
MECKLERWell, one name also we hear is Tom Donilon, who is the National Security Adviser right now. And one possible approach for Obama is to move Susan Rice as his National Security Adviser that does -- the position that does not need Senate confirmation. If she doesn't get state, I think that that is a likely second option for her.
SHAPIROBut having talked about the drawbacks of this fight for the president, there's also an advantage, which is that when, you know, an overwhelmingly white male Senate beats up on African-American woman in line for a very powerful position, again, to go back to this issue of demographics, it doesn't help the Republicans who were trying to expand their appeal to groups beyond older white men.
REHMTalk about a little bit of Susan Rice's role at the U.N. yesterday with the Palestinians seeking to gain some recognition. Laura.
MECKLERWell, you know, the U.S. was in a difficult position because the majority of the general assembly supported the Palestinian effort to, which was successful to be recognized, upgrade their status at the U.N. This has been obviously dealing with the Israeli-Palestinian conflict that the U.N. has been a long-term problem for Susan Rice. And most people think that she's actually done a pretty good job.
MECKLERThe bigger sort of fault line came about a little over a year ago when they were seeking recognition from the Security Council. And that was a more significant vote. And the U.S. really had to work it to get members, the countries that were serving on the Security Council at that time to oppose that move and succeeded. In doing so, that failed. And this move that going to the general assembly was a fallback for the Palestinian authority.
REHMSo, David Leonhardt, do you believe that President Obama will move forward and nominate Susan Rice to be secretary of state?
LEONHARDTI guess I like probabilities and I would put a greater than 50 percent chance on it. But I don't think it's at 95 or 99 percent.
REHMHow about you, Laura?
MECKLERI like the way David approached this, OK.
MECKLERI don't get boxed in. Yeah, I think we're in the 60 to 70 percent range. I think 'cause just because he has gone so far down the road, it's like some people have said he's practically nominated her already. But I do think there is a significant chance that they're going to look at this from a Realpolitik point of view and say, you know, we do need to pick our battles.
SHAPIROAnd whether at the end of the day he nominates her or not, his language about her has been stronger than the language I've heard him used to defend almost anyone else in his cabinet. At his press conference, he said, come after me. Don't go after her. Come after me. More recently, he said, "Susan Rice is extraordinary," during a cabinet meeting. I mean, these are strong unequivocal statements.
REHMAll right. Let's talk about the filibuster and the movement on Capitol Hill to reform the filibuster. Talk about how it's used, Ari.
SHAPIROWell, it's used by the party that does not have the majority to block the Senate from putting things through when they have 50 plus votes but not quite 60. You know, the filibuster has become sort of the de facto means of stopping anything in the Senate no matter what it is. And, you know, when the Democrats have the Senate minority, President George W. Bush was nominating judges the Democrats didn't like.
SHAPIROAnd the Democrats were filibustering. Republicans tried to change the rules, and Democrats said, you're breaking the rules to change the rules, trying to get to rid of this filibuster on just a 50 plus vote, a majority vote. Now, the tables are turned. Sen. Harry Reid says Republicans are abusing the filibuster. He wants to change the rules on just a majority vote. And Sen. Mitch McConnell, who is in the other seat the last time, says, now, it's the Democrats who are trying to break the rules to change the rules.
LEONHARDTIf you look at the numbers, first of all, the filibuster is not in the Constitution. It is something that has come up over the years. And so it's not something that would be that difficult to get rid off from a government perspective. It's not like a lot of other things in our government. If you look at the numbers, what you see is that each party, over the last 30 or 40 years, has increased the use of it.
LEONHARDTBut what the Republicans have done since being in the minority has taken it to a whole new level. And so I think the question here is, do we get some kind of change here? I think it's hard to argue that there isn't something wrong, or to put it without the double negatives, there is something wrong here. When George W. Bush nominates people, he should be able to get most of them to serve.
LEONHARDTWhen Barack Obama nominates people, he should be able to get most of them to serve. And even if you don't want the Senate to become the House, we seem to have gone too far in the other direction where it is difficult for government to do some of its very basic functions when you have people representing 20, 25 percent of the population who can lock up the Senate.
REHMBut, you know, I'm old enough to remember filibusters when people would stand up there and read the telephone book. Now, all they have to do is say, I'm going to filibuster, and that's it.
LEONHARDTThat's right. And that's one...
MECKLERAnd that's one of the reforms that Harry Reid was talking about...
MECKLER...is to force people to actually hold the Senate if you want to do that.
REHMStand up there.
MECKLERThere are really two things that are working against this, I think. One is that everybody who's in the majority knows that it could just be two short years before they're in the minority. So -- and this will be a technique that they want to have at their disposal. The politics change in the Senate on a fairly frequent basis, certainly from a historical point of view. Secondly, there -- the Senate is a body that really treasures its sort of institutional prerogatives.
MECKLERI mean, there's a lot of faith in the institution itself, and there's nervousness about the idea that they would change the Senate rules on a simple majority vote, which -- and there's some controversy over whether you're allowed to do that. The question is whether you're allowed to do it on the first day.
REHMOn the first day.
MECKLERSo this is just sort of an -- a short open window.
MECKLERSo, you know, there's people who feel like this is just not the right way to do things.
LEONHARDTWhat's interesting is the Senate talks so much about its history here, but the -- what we've had for the last five or 10 years is not consistent with Senate history. For most of Senate history, the filibuster was not an ordinary part of doing business. And so, to some extent, returning to the Senate of old is changing the way it is now.
SHAPIROAnd we should note that Sen. Reid is not proposing eliminating the filibuster. He's proposing eliminating the filibuster to begin debate on a bill and also requiring filibustering senators to actually talk, as you described. So the filibuster would still be a tool available to senators. It just wouldn't be as widespread and used as easily as it is right now.
REHMAll right. I want to ask you about Arizona becoming the latest state to decline to set up state-based health insurance exchanges. What does that going to mean, Laura?
MECKLERWell, the larger story here is that it's up to individual states whether they want to run their health care exchanges under the new Obama health care law, and if they don't, then the federal government will do it. This law was created and intended for the states to run these. And, you know, there have been quite a few states now that have said -- I think there's an up to nine that have said they won't. I think there are 17 that have said that they will.
MECKLERThere's -- they -- states have until the middle of December now to make their decision. They don't just get to create any old exchange. They have to do it under federal rules, and that's the complaint of these Republican governors, is that, you know, I don't have any flexibility. I just have to follow so many different -- so many guidelines that are prescribed in the bill that -- what's in it for me?
MECKLEROne of the big questions and why this, I think, matters the most is that there's an open question as to whether the subsidies that are at the core of the bill that help people buy health insurance will be available to people who get their insurance through the federal exchanges rather than the state exchanges. There are a lot of conservatives who argue that the bill is written in a way that excludes that if these exchanges are run by the federal government.
MECKLERAnd just one final point, just to -- for people who might not understand what the exchange is, what that is is essentially a marketplace, a government-setup marketplace where private health insurance companies will compete to sell people insurance.
LEONHARDTSo here I guess I am willing to make a prediction, and I should say that there are a whole bunch of people who disagree with this, both liberals and conservatives. But I would predict that, ultimately, these states will overwhelmingly sign up. These are basically, if you get away from the technical part, these are programs to make it easier for people who don't have health insurance and can't get it to get it. That tends to be popular.
LEONHARDTIf you look at the history of these federal programs, when Medicaid was started -- Sarah Kliff from The Washington Post wrote a really nice piece about this -- when Medicaid was started in the '60s, only six states originally signed up for it. And so if you think about the politics here, it really takes only one governor, Democrat or Republican, in the history of the state, to sign up. So maybe it'll take some states three years and others 10 years.
LEONHARDTBut I think, eventually, what you will see is these are basically governors who can get federal money for their citizens. Once they do, it'll be almost impossible to reverse.
REHMDavid Leonhardt of The New York Times. You're listening to "The Diane Rehm Show." Finally, before we take a break and go to the phones, Ari Shapiro, were you a fly on the wall at the lunch yesterday?
SHAPIROThe white turkey chili was delicious.
MECKLERJust the three of you.
SHAPIROI -- just the three of us: just me, Barack and Mitt, you know? I can't think of a story in my recent memory that had so much interest and so little information. I mean, people at the White House were begging for any morsel of detail about what they talked about.
REHMSo -- well, they got the food.
SHAPIROWell, yeah, we got the food, that it was white turkey chili and a Southwestern chicken salad, which some conservatives said could have been a jab at Mitt Romney. And then they also put out -- the White House put out this sort of, you know, bland statement about they talked about American leadership in the world and how to preserve that, and they promised to keep in touch. And, you know, there was like this grainy photo from a distance with a super powered zoom lens of Romney entering the White House as though it were like Lindsay Lohan going into a rehab or something. But yeah.
MECKLERWell, I think that most people who have watched this are not expecting a new partnership between Barack Obama and Mitt Romney. It was interesting, four years ago, Obama had a similar meeting with John McCain. That meeting, I think, had a lot more sort of import to it. John McCain was in the Senate.
MECKLERNow the two of them ended up working together on, as far as I can tell, precisely nothing, but they did have potential for it. This time around, you know, who knows what Mitt Romney is going to do? He may not even know yet, you know? But I would not be holding my breath for the next, you know, collaboration between these two guys, who made little secret of the fact, during the campaign, that they really did not like each other.
LEONHARDTThere's a lot to joke about here -- the turkey chili. The photo was pretty awkward of them shaking hands in the Oval Office. I would simply add, though, that I still think it's a good thing that they did this. I think it's a sign of the way things should work in a democracy. These guys don't like each other. They ran a nasty campaign. There were times during the debates where you thought they wanted to get into some sort of physical altercation.
LEONHARDTAnd the mere symbolism of greeting each other in a civil way says, hey, you know what, this is a democracy, and we can fight these issues out, but that doesn't mean we can't be civil at the end of the day.
REHMAll right. And we have had an email from Paul in Oklahoma City, saying, "Why not the great explainer, Bill Clinton, for secretary of state?"
SHAPIROI don't think he is quite ready to take orders from Barack Obama, frankly. That would be my short answer.
MECKLERWhy would either of them really want that? I mean, why would Bill Clinton want to return to a cabinet job like that when what he has now is, from his point of view, I think, so much better? He has his Clinton Global Initiative. He's doing all sorts of things in the world. He's incredibly popular. You know, he knows how hard that job is, having watched his wife do it, not to mention his own secretaries of state.
MECKLERAnd I don't really think, as much as Barack Obama is grateful or should be grateful for Bill Clinton's help during the campaign, I don't think he really wants somebody of that stature there.
REHMAny hints about what Hillary Clinton will be doing?
LEONHARDTI think it's very hard to know. I'm not sure that she knows. I have heard people who are fairly close to the Clintons in senior Democratic circles predict it both ways, which I think means that either she doesn't know or she hasn't told people. I always assumed if Obama lost, she would almost certainly run. Attention would turn to her immediately. All Democrats would have imagined, whoa, how did we mess up?
LEONHARDTYou know, how did we not nominate the person who's going to win two terms here? Now that Obama has won, I think it's a trickier calculation for her. I think if she's smart, one of the things she wants to do is try to figure out how valuable the Democratic nomination is, how strong a position Democrats will be in, and I just don't think we'll find out yet.
REHMAll right. We shall watch that space and take a short break here. When we come back, it's your turn. We'll open the phones. I look forward to speaking with you.
REHMAnd welcome back. David Leonhardt of The New York Times, Laura Meckler of The Wall Street Journal, Ari Shapiro of NPR are here to answer our questions. We'll go first to Rocky Mount, N.C. Good morning, Melanie.
MELANIEWell, good morning, Diane. I would like to know how the Republican Tom Cole can say that we should go ahead and pass an extension of the Bush-era tax breaks for those making under $250,000 and get that out of the way and then address some of the other concerns of the fiscal cliff and be told by the Republican leadership that that would dilute their bargaining power, and yet John Kyl and Kay Bailey Hutchison have introduced a Republican version of the DREAM Act, which does not offer a path to citizenship and only addresses a portion about immigration problem.
MELANIEAnd they are touting that as a way to solve something first that everybody wants done. And yet we can go later on, piecemeal down the road, addressing the other immigration issues.
MECKLERWell, I think that those issues are a little bit different. On immigration, we've seen a lot of movement on the part of Republicans, and I think genuine movement, not just bargaining position of wanting to address this issue partly for just pure politics. Mitt Romney lost badly, badly with Hispanic voters who are a growing portion of the electorate. It was remarkable. He won white voters by 20 percentage points and still lost the election because he did so poorly with minorities. So this is something Republicans want to address.
MECKLERAs far as the Kyl-Hutchison bill that -- a lot of people didn't put a lot of stock in that legislation. They are both retiring. They sort of were putting it down as a possible marker. It's probably not going to really have a lot of impact. That's not an ongoing negotiation. Whereas what Tom Cole said was part of a very hot ongoing conversation right now and does, to some extent, dilute the Republican bargaining positions. So I think that that's true, whereas on the other side, you basically have just another kind of idea being put out there.
SHAPIROAnd immigration doesn't have the same deadline looming that the tax cuts did.
REHMQuite right. To Front Royal, Va. Good morning, Joe.
JOEGood morning. Thank you. Part of the benefit of the long Thanksgiving is to be able to -- for benefit or detriment depending on -- like you said, to be able to watch a lot of the media on this topic. And I would say, outside of The Wall Street Journal, the print and the broadcast media has just been obsessed with the tax part of this.
JOEAnd even if you assume, you know, lets take President Obama's numbers, $80 billion is only 8 percent of the deficit problem that we're trying to address. And yet when you follow the media and follow the stories about it, I would say 92 percent of the stories are about Grover Norquist and everything else. Why aren't we hearing 92 percent of the stories and 92 percent of the coverage about the SEIU, about AARP, about, you know, the more liberal, if you will, interest in keeping this spending up?
LEONHARDTWell, first of all, I mean, I'd say that New York Times led the paper a few days ago with the fact that Democrats are struggling to come up with spending cuts. So I don't think it's right that the media is ignoring the spending side. But I think it is true that the media is giving more attention to the tax side, and that's because the politicians are.
LEONHARDTHere's the way to think about it: Obama ran on tax increases for the wealthy. Republicans did not run on short-term Medicare cuts. They ran on this long-term change, but it achieved no savings in the 10-year window. And so if you have one party running on tax increases and you don't have the other party running on spending cuts, it's naturally going to focus more of the debate on one side of the question. I completely agree with the caller that in the long-term, there is no way we have a solution without both. I don't think it's 90-10, but I don't think there's any way we have a solution without both.
REHMAll right, to Houston, Texas. Teresa, good morning.
TERESAGood morning, Diane. Love your show.
TERESAI'm having a problem understanding why the Democratic Party does not come out and state that the tax cuts that we started talking about or that the tax relief that Obama is talking about will affect the people who make less than $388,000, and that the increase on taxes for those people who make more than 338,000 or $388,000 a year are paying the same tax rate as me, who might made $250,000 with two people working. Now, why is it that the Democratic Party doesn't spell this out?
LEONHARDTI think the caller's referring to the fact that everyone gets a tax cut even with the Obama plan relative to what would happen if we go over the cliff because it -- and she makes a good point here, which is Obama has not done that good a job of explaining that if you make a million dollars, you still would get a tax cut on your first $250,000 of taxable income. And by extension, the media, we haven't done that great a job of covering this. We often lapse into the phrase tax cut on people. It's tax cut on income, and it applies to people who make more than that income.
SHAPIROWell, right. I mean, I agree with David completely that it's also, I believe it's $200,000 per individual and $250,000 per couple, which is another distinction we've not been very good at making.
LEONHARDTAnd it's taxable income, so it's actually higher than that. I mean, if you make $300,000, there's a very good chance you'll have absolutely no tax increase under the Obama plan.
REHMInteresting. All right, to Melbourne, Fla. J.D., you're on the air.
J.D.Good morning, Diane. Good morning. I would like to pose a question to your panel. And as I understand it, Obama wants to increase the tax burden for the very wealthy and the Republicans believe that that would reduce the spending power of the citizenry. Romney, on the other hand, his program was to reduce or to eliminate deductions. But by eliminating deductions, you would also reduce the spending power of the population. So is there any real difference?
J.D.What you do is to increase the revenue for the government and reduce the spending power of the population, and the Republicans don't want to respond because they think that will kick us into recession. However, if you eliminate deductions, you, again, reduce the spending power of the population.
REHMAll right, Laura.
MECKLERWell, one thing is that Gov. Romney was not talking about a net increase in taxes. When he was talking about reducing deductions, he was talking about that as a way of paying for other tax cuts. So let's just keep that straight in terms of what Romney was proposing. What we're hearing right now, though, from House Republicans is that they don't want rates to go up. They are willing to look at closing loopholes as they say. And that is, yes, you know, taxes are taxes, but they're sort of orthodoxy within that Republican Party that says that tax rates themselves need to be lower.
SHAPIROIt's important to remember that everybody wants the wealthy to pay more. The question is do you get them to pay more by eliminating deductions or do you get them to pay more by raising tax rates.
REHMBut you can't get enough.
SHAPIROAnd the White House says eliminate all the deductions for the wealthy you want. It's just not going to get you the revenue you need.
MECKLERBut they -- yeah. They put out a memo yesterday that essentially said if you do this in what they refer to as a realistic way, in a way that's sort phases it in, in a way that spares charitable donations because people are very concerned about a drop-off in charitable giving, you really are only going to get about $450 billion from closing deductions on the wealthy which, compared to 800 billion or one trillion.
REHMWhat about the mortgage interest deduction?
LEONHARDTThat's part of what Laura was talking about.
LEONHARDTSo the thing is you can't just say well, hey, if you make a lot of money, you can't have any mortgage deduction. You could say you can't take it on a second home, you couldn't move the ceiling down from, what is it, $1 million now. So you could do things like that. But that's part of that package that gets you to about a half a trillion. That's not nothing. I mean, a half a trillion dollars in the scope of this is a significant amount of money. It just can't get you to the kind of targets the White House is talking about now.
SHAPIROBut to another aspect of the caller's point about spending -- boosting the economy, one sort of below-the-headline part of the plan that President Obama proposed yesterday was infrastructure investment and government spending that he says is necessary to boost the economy.
SHAPIROI heard Rand Paul, interviewed on Marketplace this morning, the senator from Kentucky saying, no, no, no, spending does not boost the economy, which is this classic divide that we've seen all throughout the election. Now that President Obama has won, he says, all right. It's time to invest in government infrastructure to boost the economy.
REHMAll right. To Vienna, Va. Tricia, you're on the air.
TRICIAThank you, Diane, for taking my call.
TRICIAI'm a middle-class taxpayer. And if we go back to the Clinton rates, the wealthy will pay 800 billion. If we go back to the middle class, it's three trillion. We need to go back to those rates. We cannot be carrying this burden to our children. And I just -- I feel like we should all be pitching in. And it's all -- it's not a Republican or Democrat thing. We all need to pitch in. And at some point, the middle class is going to pay.
LEONHARDTI agree. At some point, the middle class is going to have to pay more. You can't solve the long-term deficit just with tax increases on the affluent. I think that if you look at the trends of the last 30 years, taxes are falling, by far, the most on upper-income people, by far. And so there is an argument that you start there. That's the argument that the White House is making. I think one of the really interesting questions here is is Obama willing to go over the cliff?
LEONHARDTAnd we were talking at the beginning of the show is how the -- about how the election had affected this debate. And I think it's possible that the biggest way it will ultimately affect the debate is Obama will be willing to go off the cliff because he doesn't have to run for office ever again. And going off the cliff means you have all the tax cuts go away. It is wonderful for the deficit. It does -- it almost eliminates the medium-term deficit. It doesn't deal with the long-term health care cost, Medicare deficit.
REHMAnd taxes would then go to?
LEONHARDTTaxes would then go to the Clinton rates. But it's no quite as simple as that for two reasons. Its -- I think there's a real argument against that as well. The argument against it is twofold. One, we still have a weak economy after a financial crisis, and as Ari was talking about, that pulls money out of the economy. And two, this isn't the late 1990s. The middle class and the poor have just had a really bad dozen years economically. And taking away a couple thousand dollars from a typical middle-class family would be quite painful.
REHMHow are you defining the middle class?
LEONHARDTYou know, that's a fair question because it's defined in some silly ways, right? I'm sort of defining it in just sort of broad sections. I mean, for the purpose of this, you can think about the bottom third being lower income, the middle third being middle income, so that puts you kind of, you know, in the 40, the 90,000 realm for household income very roughly and then the upper income.
REHMBut the president keeps talking about 250,000.
MECKLERRight, which is...
LEONHARDTThere's a bipartisan conspiracy to define the middle class at a crazy level.
MECKLERI mean, which is 98 percent of taxpayers are in the "middle class" under that definition, which is, you know, a pretty big middle.
SHAPIROIt's worth remembering that what we're describing as a fiscal cliff is not just tax rates going up to what they were before the Bush tax cuts. It's also this sequester package of deep cuts in spending in discretionary programs and in the Defense Department. And even if you want to cut that much spending, say, from the Pentagon, the sequester says it has to be across-the-board cuts. So you can't say, well, this program is obsolete.
SHAPIROWe'll eliminate it altogether and do the cuts that way. You have to lose 10 percent from this, from that, from the other thing. Nobody wants that to happen.
MECKLERBut, you know, I think that David made a really good point about Obama being willing to go over the cliff, and that is the big difference between what we see now and what we saw in August 2011. At that point, Republicans appeared willing to default on the U.S. obligations and not raise the debt ceiling. That gave them tremendous power in those negotiations 'cause the White House was not willing to do that. President Obama has made clear that he is willing to let this happen.
MECKLERHe is for his own -- perhaps his own politics or his own negotiating power, whatever you have put together, it means that the balance of power is different.
REHMLaura Meckler of The Wall Street Journal and you're listening to "The Diane Rehm Show." To Boston, Mass. Good morning, Russ.
RUSSGood morning, Diane. I have a quick but important question. Since everyone is talking about entitlement reform, why isn't Social Security on the table? I'd like to see the cap for contributions removed. If you're a millionaire, you can pay the same percentage of your income for Social Security that I do and for means testing it. If you're millionaire that, you know, couple thousand a month or couple hundred a week that you get after retirement really isn't all that important. It makes a huge difference to lower-income and middle-class people.
MECKLERWell, I would say two things. Number one, its possible there will be pieces from Social Security that do end up in this. In 2011, the president was willing to reduce benefits through a change in the formula in order to get a deal that obviously never happened. Secondly, though, the reason why people aren't talking about it, though, is that Social Security is not a driver of the current deficit. Social Security has its own long-term solvency problems.
MECKLERBut the federal government owes Social Security money because, for years, the Social Security was giving surpluses to the government, and they have this bond that are essentially due the program. Now, that's all kind of on paper. Some people say it doesn't really matter. But what experts and Social Security will tell and certainly what advocates for the program will say is that this is not a driver of the deficit. It belongs in this own separate negotiations.
MECKLERSo, you know, I don't think -- I wouldn't rule out, though, the idea that we do end up with this Social Security piece. But the more likely path and the probably the one that makes more sense is to really deal with Social Security, and that will no doubt involve a combination of benefit reductions and tax increases.
REHMAll right. To -- finally, Cincinnati, Ohio. Good morning, Brad.
BRADGood morning, Diane. I've got a couple of points. First of all, you know, the Democrats are always considered compassionate compared to Republicans. I mean, in the media, we hear that all the time. But yet Obama, for political reasons and for other reasons unknown, is willing to go over the fiscal cliff. And how compassionate is that for all the people that will be adversely affected by that?
BRADPoint number two, historically, Ronald Reagan was promised by the Democrats spending cuts for every dollar of tax increases that he was willing to take by the Democrats. And he went ahead with it, never got the spending cuts, but we still got tax increases. And then Bush Sr. was promised by the Democrats $3 of spending cuts for every dollar of tax increases that he was willing to accept, and he went along with that Democratic plan. We got the tax increases.
BRADGeorge Bush Sr. never got re-elected because of it, and we got the tax increases but no spending cuts. So I don't know why the Republicans should trust the Democrats here to ever enact spending cuts. And the last point that I want to make is that this will affect sub-chapter S corporations. This $250,000...
REHMAll right. OK.
LEONHARDTThere's a lot there. So I would say that both parties have been guilty of not cutting spending. Certainly, Republicans and Democrats have been guilty of that. I think on the first point, the question is why would Obama be willing to go over the cliff? Think about it this way. He just ran for president saying, I want to raise the top rate from 35 to 39. He won. It was arguably the point he made most. Now, let's say Republicans come to him and say, no, sorry. We're not willing to compromise at all. It remains at 35. No deal.
LEONHARDTHe has in his back pocket this fact that if nothing happens, it defaults to 39. So what should he do from his perspective? He ran on 39. He won. If Republicans say, no, sorry, we won't compromise at 37, should Obama say, OK, I forfeit, I give up, we keep it at 35? Or should he say, you know, what, I'm willing to let it go to 39 until you're willing to negotiate with me? I think that's it from his perspective.
REHMAll right. Here's what I want very quickly. Will there be an agreement and when? I'll start with you, David.
LEONHARDTSo I'll go back to percentages, and I'll put a 50 percent chance that we go over the cliff and get a deal in January. I'll put a 40 percent chance that we get a deal shortly before Christmas, and I'll put a 10 percent chance that we get something much earlier or in the week between Christmas and New Year.
MECKLERI think we will get the deal. I think it'll be right before Christmas.
SHAPIROYeah, right before like hours because that's the way Washington likes to do things. And I think that the tax cut for under $250,000 income will definitely happen this year.
REHMAri Shapiro, White House correspondent for NPR, Laura Meckler of The Wall Street Journal, David Leonhardt of The New York Times, thanks for a great Friday News Roundup.
LEONHARDTGreat to be here.
MECKLERThank you, Diane.
REHMAnd thanks for listening, all. Have a great weekend. I'm Diane Rehm.
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