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Washington Post blogger Ezra Klein on the deficit discussion

Thursday, February 17, 2011

HH: I’m beginning this hour with Washington Post writer and blogger Ezra Klein, because I’m trying to get a sense from people on the left what they think about the meltdown on the Republican side in the House. Hi, Ezra, how are you?

EK: Hey, Hugh, how’s it going?

HH: Good. As a guy on the left, when you look at the House, what do you think is going on there today?

EK: You know, I was just writing a post on this for the Washington Post. I have to tell you, I’m a little bit impressed by Boehner. And I want to clarify this a little bit. He’s not running a very efficient House over there. He’s being slow, he’s getting beat on votes, he’s getting rolled by the Tea Party, he’s made some verbal gaffes. But I have to look back to what I wrote when he gave his initial speech. And you know, I was reading his speech again, and his big theme was he was going to be an open Speaker. And I said look, that would be great, but every speaker comes in here saying they’re going to be open, they’re going to allow amendments, they’re going to allow debate, and none of them ever do it. And I have to say this, and it’s impressed me about Boehner, and I’m not saying it’s good for people who want to see his legislation pass, but he’s willing to take hits to sort of live up to those standards he set himself. So I do have to say I have a grudging respect for it.

HH: All right, that is actually good, and I think both sides will respect that. But I’m more concerned, because I had Tea Party people on earlier today, and I’ve been pushing members and the leadership all week, and it appears as though the Beltway Republicans, the old guard, the appropriators, are really in the saddle, and that the freshmen had a symbolic win last week, but they’re not getting anything they want today and yesterday. What’s your take on that as a guy who’s watching it from the other side of the aisle?

EK: That hasn’t been my take. I mean, it did look to me that on the crucial question here, which is what is the level of cuts they were going to go after, that the Tea Party essentially won that battle. And you know, I think we’ll see another example of that, perhaps, when we get to the budget, the 2012 budget, I’m sorry. I will say that this does tend to be the way these things go, right? That you come in, I was talking to a Hill insider, I guess is what we call them, yesterday, and he was saying to me, you know, just watch. This is the way it always goes. Everybody comes, and they’ve got a lot of revolutionary fervor, they are pushing and pushing and pushing, and the leadership is giving them some big wins. But as time goes on, they basically get worn down. They get lethargic. It’s just too much of an uphill battle to be doing this all the time. And so he said the test is not going to be today, and it’s not going to be tomorrow. He said look where they are in six months. Are they still winning these fights with Boehner? Or have they sort of settled into a more, you could call, pragmatic relationship with the leadership, where they’re trying to act as a more efficient machine, because they’re just tired of losing votes and seeing media stories about how they’re all in chaos, and you know, basically running the House in a loose an sort of a slap shot manner.

HH: Now the interesting fight, though, I don’t even know if it’s on your radar screen, though, is Steve King’s rule motion to basically waive the rules so that the full defunding of Obamacare could be considered. And that was voted down, causing an eruption of upset among, say, and others. Has that even crossed your screen, Ezra?

EK: I can’t say I was following that.

HH: Okay, that’s the real, that’s what’s interesting. Sometimes, when we look at the Capitol, my side sees a different battle than your side sees. Tell me what the left is looking at right now in terms of upset with President Obama, since the right is upset with the House leadership.

EK: I can’t speak for anyone but me. I can’t speak about other than the stuff I write, I guess I should say. What I can say is I think there’s been a broad consensus among, I’d say, wonks who are more of the constituency I’m familiar with that the budget was a fairly modest document, that compared to things like the Fiscal Commission, did not open up the playing field on, you know, the long term deficit problems, or even the medium term deficit problems in the way a lot of people thought it would. It was very modest on everything from defense cuts to entitlements to tax expenditures. Now the thing that I think is the big wild card here, and the thing I’ve been trying to report out and figure out is that this does tend to be the way the Obama administration works. They never come out with the plan that everybody wants them to come out with. They’d prefer to let Congress take the lead. They signaled they’re willing to cut a deal. And then eventually, they do cut a deal. And this has been pretty successful for them. So you know, I said today that I wouldn’t be shocked to see Obama’s name on a big deficit reduction bill one year from now. But right now, when people look at the thing he actually put out on paper, they’re not seeing, I think, the type of policy ambition or budget ambition that maybe many of them are hoping to see.

HH: Are you disappointed that he did not suggest any kind of a solution on the easiest of the entitlements, Social Security?

EK: Well, I don’t know. Did you actually read the Social Security portion of that?

HH: No.

EK: So there is, and this is, I think, one of the more interesting parts of the budget, and it got very little attention except on my blog, which all of your people should read. There is a serious portion on Social Security, and he says he would like to have a series of talks, and this is the White House’s starting negotiating position. Here are their, I believe it’s six underlying principles. So actually, much more so than, say, on Medicare and Medicaid. He created…a framework for how the White House would approach an overall deal, which is again why I say that the fact that there isn’t a plan for Social Security makes me, it isn’t enough for me to say they’re not interested in dealing with it. So I wouldn’t at all be surprised again to see a Social Security deal within a year. But if you’re interested in the Social Security portion, go back and look at that. It’s a very interesting piece of this. And given that any Social Security deal is going to have to be a bipartisan deal, it’s exactly really what you would expect as an opening bid. You would not expect a proposal on its own.

HH: What’s the most controversial part of it? What’s the most controversial part of it? Did he propose extending the retirement age? Cutting benefits? Indexing benefits? Anything like that?

EK: No, but that’s sort of my point, that what he came out with, and I don’t want to do this by memory, because there’s six of them, and I haven’t read them in 36 hours. But you know, he said listen, I’m not willing to cut benefits for current retirees. But he sort of didn’t say that he wasn’t willing to cut benefits for future retirees. But he didn’t come out and say listen, here are the four policy ways I want to do it. He said here are, essentially, the values I walk into the negotiation with. I mean, look, everybody in Washington, not everybody in Washington, but the Social Security policy space has well understood that we know what these sort of ten, fifteen, twenty, I mean, if you look at CBO documents, there’s literally a table of thirty different things you could do to Social Security. We know what they are. So the question is not which one is he saying he’ll do, because nobody’s going to commit to them until the other side says you know what? I’m going to jump into the pool with you. Nobody’s going to stick their head out like that. Or if they do, they’re going to have some trouble afterwards. But they came out and said we would like to begin these negotiations.

HH: Does that fit your definition of leadership?

EK: It depends if it works. I mean, I’ll say there has been nothing, and you’ve watched this happen, there’s been nothing that has frustrated liberals more than the fact that this guy never stands up, you know, like, I guess, in the West Wing they always do, right? Jeb Bartlett always does, and gives a barn-burning speech, and takes on the unpopular issue, and persuades everyone. Their style of getting things done has been much, much more frustrating. I mean, they let things like the public option hang out there for a long time. They never say listen, we’re going to veto this bill if it doesn’t have a public option, or we’re going to veto this bill if you guys try to extend the tax cuts for the rich. But at the end, they tend to be pretty good at making a deal and getting something along the lines of what their legislative goal was. So it isn’t a very emotionally satisfying form of leadership. But I think if you care about the budget, or you know, in your case, if your goal here is Social Security reform, what is the eventually, the way you judge success is whether or not it happens, not whether or not you sort of got the thrill in your throat when he stood behind the podium.

HH: Well, we’ve got thirty seconds, though. The one difference here is that there is a prospect of a sovereign debt crisis, a Greece or a Spain in the American credit markets. And not acting, as the President, and I’ll give you the last 30 seconds, invites the international markets not to take us seriously.

EK: I don’t really think we’re anything like a Greece or we’re anywhere near anything like that, particularly given that we have a reserve currency and they don’t. And our situations are very different. But again, the question is going to be a deal. The sovereign debt, the markets don’t care about speeches. They care about legislation, they care about the budget outlook. If he gets a deal, they’re going to be happy. If he doesn’t get a deal over time, they won’t be. So that’s what I would watch for. I wouldn’t watch for speeches, and I would guarantee you they’re not going to be watching for speeches, either.

HH: So you don’t worry that all of a sudden there can be the kind of debt crisis engulfing America as engulfed Greece or as engulfed Spain?

EK: No, I don’t think that there is any, I mean, I think there’s a chance that interest rates could go up in the next couple of years. I’m not saying we could have no issue from the markets. But we are not in the position of Greece, and look, I think that most people get that. Greece is a very tiny country. It doesn’t have its own central bank. It can’t set its own currency. It doesn’t print its own currency the way we do. It’s a very, I mean, we are the United States of America. We are the world superpower, and frankly, the way we can pay off any debt we want is we can print enough money. That would create inflation at a point, but it doesn’t do what Greece does, which is it is lashed to the E.U., has no real way to go its own way on getting its way out of a debt crisis, and as such, is being shorted by the rest of the world, because they see how few options it has. We have a lot of options and a lot of power, which doesn’t mean we don’t need to worry about our debt. But it does mean that we don’t have a gun to our heads the way they did.

HH: Yeah, it sounds like you don’t feel a sense of urgency about the debt in the way that many people on both sides of the aisle have said there is urgency for this very reason.

EK: I think that the debt is something we very significantly have to deal with, particularly in the medium and long term. I think that at the same time, you know, the Greece and Ireland examples are overstated. So I try to keep it in perspective. But look, I’m a deficit guy. I worry about this stuff, I think about it all day. I’ve posted a lot of graphs on it, and I think it would be a good thing if we got to a deal that was good policy on this. So you know, at the end, I think the important thing here is that you get to the right outcome on policy. I don’t think it’s sort of speeches, and I don’t think some of the fearmongering is always a good step.

HH: Ezra Klein from the Washington Post, where he blogs at Wonk Book, thank you.

End of interview.

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