Interview: Former Chief of Staff to Bill Clinton and Long-time member of congress
welcome to “money & politics.” the u.s. economy created 211,000 new jobs last month, more than expected. and the unemployment rate fell to 4.7%. the white house, quick to capitalize, president bush claiming credit, arguing his low tax policies are behind the gainsism the tax cuts i signed left $880 billion for the nation’s workers, small business owners and families. they’ve used that money to fuel our economic resurgence.
>> mr. bush expanded on his tax cuts and the need to extend them in an hour-long oval office meeting with financial journalists today. “you encourage small business growth and entrepreneurship by keeping taxes low and to change that now would be folly. the deficit will fall as a percentage of g.d.p. and there’s no need to raise taxes,” he says. “you’ll hear people say you have to raise taxes in order to balance the budget. that’s not the way washington works, you raise taxes in washington, d.c. and it gives appropriators more money to expend.” mr. bush says he expects a deal can be struck once congress returns from its latest recess. the president says he’s also anxious to get a deal on immigration. “immigration helps restore our soul.” he doesn’t think immigrants are holding down wages. what is? in part it’s because companies have to pay so much for healthcare, the president says, and a solution has to be found. he also says he’s still working on entitlement reform. to avoid the rancor that developed around his social security plan, the president says he’s calling people quietly to the table, congressmen and senators, to start working on a bipartisan approach that we can then present to the congress. everything is on the table. when i asked him if that meant his fiscal policies, he said, i’m interested in hearing what the democrats have to say. still, he addeds, my intention is to have this be a discussion of the entitlement process. the president says he’ll continue to press chinese president hu jintao to let the yuan appreciate. the two leaders meet 10 days from now. “we hope it would continue to move,” the president said. at that meeting, mr. bush will also press for action on protecting intellectual property and free trade issues. economy should be open so currencies reflect market values, he says, rather than intervene in currency markets , values ought to be market -driven. the president expresses dismay over the inability of congress to complete work on taxes, a budget and immigration. peter cook is following all the action or inactiona capitol hill.
>> the house and senate missed deadlines on a range of legislation important to the business community and investors. that list of unfinished business includes immigration, taxes and the budget. we’ll start, first, however, with the immigration debate, with both sides of the aisle blaming the other. a final vote on a bipartisan immigration bill hailed yesterday as a breakthrough is now on hold until after the recess. a failure to agree on amendments and a list of senators who will negotiate the final bill with the house forced the delay but supporters say the underlying compromise over a guest worker program remains in tact.
>> this fight is not over. we’re going into recess. we’ll bring it up and bring it up and bring it up until it passes because the issue must be addressed.
>> house and senate negotiators also failed to reach agreement on a long-awaited $70 billion tax package that will extend some of the 2003 tax cuts. will both sides support extending the current tax rate on capital gains and dividends and limiting the number of americans who will face the alternative minimum tax? the senate’s top negotiator says they remained divided over how many americans should be spared from the a.m.t. and other provisions.
>> i didn’t want to defend a bill that would tax 3.5 million meshes with the alternative minimum tax at the same time we’re using that revenue to give loopholes to corporate america.
>> grassley says he remains optimistic that a final agreement can be worked out when lawmakers return after the recess. finally, the house leaving town without reaching agreement on a budget resolution last night as republicans battled among themselves over spending limits. some conservatives pushing for greater fiscal discipline. the $2.8 trillion budget blueprint, while party moderates want increases in certain domestic programs. democrats said the stalemate was a victory.
>> good news for americans that we didn’t pass this budget. not so good news that we didn’t pass a budget that would reduce the deficit, that would make sure we could continue to expand the asess to higher education that people need.
>> the stalemate means there is a possibility the house and senate will not be able to agree on a budget resolution for this year. house majority leader john boehner saying he expects lawmakers will return and continue to work on the budget when they return after the recess.
>> peter cook on capitol hill. is all this politics as usual or are we in an unusually partisan time? and can the president turn around perceptions of his handling of the economy? one man who had to turn around impressions of a president is leon panetta, former chief of staff to president bill clinton, now director ofe panetta institute in monterey, california. the president says the economy is in great shape but people don’t realize it because other things are going on like the war in iraq. is that the case, from your vantage point? do you think that that’s overriding everything else he’s doing?
>> well, i think the reason people don’t feel good about the economy is because the economy, frankly, is not being very good to them. i think, you know, while, obviously the job numbers were good today, the problem is, if you look at the overall economy, i think we’re facing a slowdown. look at retail sales that were down, look at the housing market which is beginning to slow down, look at oil prices which are obviously going through the roof. the price of gas is now reaching record levels again. and then if you add to that this huge deficit that we’re confronting at the federal level where you have no budget, even being adopted on the house side, to confront that issue, i think all of that adds up, i think, to trouble in the economy. and trouble politically for the president.
>> trouble politically for the president. play devil’s advocate for a moment. if you were chief of staff, how would you turn that problem around?
>> i think the president has to confront the crises that are out there. he’s very good at talking to those problems and saying that somehow we’ll come out of these issues. but, you know, my experience is we either govern by leadership or crisis and i think too many of the issues right now are largely be controlled by crisis. it means that the president has to exert some very strong leadership here. on the immigration bill, for example, if he really wanted an immigration bill, frankly he should have asked the senate to stay in session both saturday and sunday and into next week to complete work on that because the fact that they’re going away now leaves them vulnerable to two weeks of additional pressure that issue. on the budget, rather than having the house walk away from the budget process, he should have demanded that they stay in session to complete the budget process. he has got to be able to exert some pressure from the white house, not just by talking, but by actually inviting those key players down to the white house to see if they can’t find solutions to the problems that confront this country.
>> let’s talk about some of those failures on capitol hill. is it an unusually partisan time? sore is this―sore is this -- or is this business at usual in an election year, it’s harder to get something done?
>> i have to tell you that the over 30 years i’ve been in and out of politics, this is the worst partisanship i have seen in close to 40 years in washington. they’re in trench warfare, both the democrats and republicans. it’s all about winning, it’s not about governing this country. and i think into that setting you can see absolutely no resolution on these key issues that are facing the country and it’s largely because both parties, and particularly in an election year but i think this is something that’s developed over the last 10 years, you just have huge partisan differences that are keeping both parties from solving the problems that this country needs to face.
>> to be fair, go back to 1993, say, republicans were making the same comments about democrats and they said they would be a lot different once they got into office. you’re saying they haven’t been different but suppose democrats take over the house this fall. is it ever going to change, now?
>> well, you know, when i first went back to washington and i think others will say the same thing. when i went back, there were moderate republicans in the senate, there were democrats. you had everett dirksen working with lyndon johnson on civil rights legislation. you had jacob jabets working with phil hart on education legislation. by virtue of that bipartisanship, this country was able to adopt important legislation for the country. that bipartisanship is gone right now. there is no ability to work across those kinds of differences. even bill clinton was able to work with newt gingrich on welfare reform and budget issues and get some things done. we are now in a situation where literally very little is being done either by the president or by the congress to deal with major crises we’re confronting and i think that has to be a real concern to the american people.
>> thank you very much, leon panetta, former chief of staff to bill clinton and long-time member of congress. coming up on “money & politics” snrrks any hope for anything on capitol hill this year, especially tax and budget? our budget expert, stan collender knows, stay with us.
点击播报
Listen Interview: Budget expert
>> members of congress thought they had a deal on tax cuts, hoped they had a deal on the budget and announced they had a deal on immigration. they left town today with none of them. meeting with us today, president bush expressed confidence that real deals can be concluded when congress returns. is he too optimistic? stan collender joins us now. any hope for any of these bills?
>> look, as the year gets closer to the election, it’s going to get more difficult, not easier. remember, congress is in pretty much turmoil. we’ve got leadership problems, we’ve got elections coming up. everybody’s worried about narrow majorities and what the population’s really thinking. chances are things will get more difficult. what i’m hearing is that a lot of these issues will be pushed off until a lame duck session or next year.
>> let’s talk about the budget. if they don’t get a budget, does it matter?
>> probably not. it will make things marginally more difficult proceduraly over the next couple of months but members of congress don’t want to vote for a $400 billion deficit and they don’t want to vote for the things that would reduce the deficit and since they’re not planning on doing any reconciliation and they could probably pass on this one and with the exception of a few people, no one would notice.
>> the tax cuts, or the whole tax package is important because there’s the alternative minimum tax.
>> right and that’s the one thing i’m pretty sure they’ll end up doing this year unless they want the u.s. equivalent of the peasants storming the castle with pitch forks, they have to do something that will prevent a whole lot of middle class people will be thrown into that a.m.t. problem and that almost has to happen before the election. >> how?
>> probably a stand-alone bill probably in both houses, defined as the middle class tax cut or preventing middle class taxes from going up. it will pass easily.
>> what happens to the other parts of the tax package, say, the capital gains and dividend tax cut extensions?
>> my guess is they’ll be held over. there is talk that they’re close on capital gains and the dividends but as i said, as they get closer and closer to the election, the politics will be more and more intractable. it could easy easily be held until next year.
>> the argument is that businesses need certainty but these bills don’t expire until 2008. can businesses wait?
>> right. first of all they can, second of all they will. there’s no doubt the business community believes this will happen at some point.
>> if they don’t do that, they do do a.m.t., where does that leave the budget and how do they make up the shortfall from the a.m.t.?
>> the easy thing is they don’t. all we’re talking about is increasing the deficit compared to what it would otherwise be. no one’s talking about offsetting revenue or spending increases for anything so the $15 billion added to the supplemental spending bill, they’re not talking about offsetting spending but they believe the deficit will be higher than anticipated and the pressure on government bonds will be greater and putting pressure on interest rates.
>> does this have an effect on the budget, on the economy, and it matter whether they do it this year or not other than in a political sense?
>> it matters in a lot of senses, obviously, political being the most important. for millions of undocumented aliens, it obviously matters a great deal and for businesses that rely on them for workers, it matters, but from a budget tax perspective, almost none at all. >> do they pass it?
>> i don’t think so, i think that’s another one they’ll hold until after the election.
>> thank you very much, stan collender, our budget expert. more on the president’s view of the economy and the world and the view from the st. louis fed when “money & politics” continues after this.
