On Sunday’s Meet the Press, host David Gregory challenged David Axelrod, President Barack Obama’s chief advisor, on two economic issues high on Washington’s agenda right now: trade, including the just-concluded G20 and the Seoul agreements, and tax cuts. The G20 did not see significant results, nor did Obama’s quest to convince China to rein in the yuan seem to have any effects. The trade talks with Seoul were unsuccessful as well. Gregory asked whether the president has “lost his ability to forge international consensus on the world stage.”
“Not at all,” replied Axelrod, pointing out that Obama’s first stop on his trip had been India, where “we saw American businesses walk away with $10 billion in new deals, 50,000 new jobs back here.” He cited other nations’ determination to preserve their own export status as an obstacle to the U.S. drive to increase its own exports—“They don’t want greater competition from us.” But he said that the president was “out there fighting for American jobs,” and that the trade agreement “on the table” with Korea “wasn’t good enough for the auto industry, wasn't good enough for American beef.” So, he said, negotiations would continue.
On the Bush tax cuts, Gregory played a tape of an earlier interview (Dec. 28, 2008) in which Axelrod said, “the question is on the Bush tax cuts for the very wealthiest Americans, and it's something that we plainly can't afford moving forward. . . .” and asked whether the president has “changed his view.”
Again Axelrod replied no, saying that “[t]he president still believes that we have to move forward on these tax cuts for the middle class . . . we can't afford to borrow another $700 billion to pay for tax cuts for millionaires and billionaires.” He then pointed out that Sen. John McCain, R-Ariz., had voted against Bush’s tax cuts in 2003, saying they were irresponsible. “And that is still the case.”
When pressed, Axelrod said that the president was still opposed to the permanent extension of tax cuts for the wealthiest Americans, but the implication was that a temporary extension might be negotiated if it led to tax cuts for the middle class.
Regarding the “draconian cuts” proposed by the debt commission, Axelrod would not commit to saying that everything was on the table, stating instead that the president “has shown his willingness [to negotiate] in the past two years.” He also pointed out that people “on both sides of the spectrum” said it was “unacceptable,” and reminded Gregory that it was not the final report. The best thing to do, he said, was to wait for the final report and “see where we can find common ground and move forward.”
McCain followed, and when Gregory asked him about his former opposition to tax cuts for the wealthiest Americans, he said, “. . . The economic situation is vastly different today . . . It is not the time to raise anyone's taxes.” He also firmly stated that “everything should be on the table” with regard to the debt commission’s preliminary report.
Former Fed Chairman Alan Greenspan and former House Speaker Newt Gingrich, R-Ga., were the next guests, as well as former Rep. Harold Ford Jr., D-Tenn., chair of the Democratic Leadership Council, and Bethany McLean of Vanity Fair.
Gingrich said that Ben Bernanke was “very foolish” for instituting QE2, because the problems were of another kind that he instead blamed on Obama. Ford disagreed with Gingrich’s characterization of those problems, saying that the Fed does have a role to play in getting the country out of the current crisis.
Gregory asked Greenspan if he feared a second crash, and Greenspan said he did not because the economy is moving forward, if too slowly to bring down unemployment. However, he said that if the bond market gets “spooked” by the long-term deficit outlook, that could lead to a sharp increase in long-term interest rates and mortgage rates, in which case the country could be in for a double dip.
Ford, saying, “you can't pay off the debt without either cutting things or raising taxes,” said that if Congress doesn’t deal with the deficit the global capital markets will. Gingrich said that the debt commission, “at the rate they’re going, will actually be a step backwards. . . .”
McLean said that she expected the U.S. to have the bond crisis Greenspan mentioned, and that “there’s less time to get our house in order than people seem to think.”
Greenspan concluded with a concern about the price of houses, and said that if they drop another 5-10%, “it's going to create a major increase in foreclosures. . . .”