PAUL JAY, SENIOR EDITOR, TRNN: Welcome back. We’re live at McClatchy Newspaper offices in Washington, DC, our Real News Network coverage of the presidential elections 2008. We’re joined again by Steven Thomma, chief political correspondent for McClatchy Newspapers. Thanks, Steve. So we were talking in the last segment about the [inaudible] Obama, President Obama—and I guess we’re all going to have to get used to saying that now—President Obama’s going to have—within his own party, he’s going to have a big choice to make here. There’s two very clear sections of the party and two different roads he can go down: in the way you described it—please the bond market, please Chinese creditors, please Wall Street; or please the people that elected him, more or less, who he promised real change. And "real change" is not going to be pleasing the bondholders and creditors. So talk a bit more about what you think is—.
STEVEN THOMMA, MCCLATCHY CHIEF POLITICAL CORRESPONDENT: Well, you know, one of his first things—and he talked about this all through the fall—was this big tax cut, which is very expensive, for, as he says, 95 percent of working families. A lot of independent groups say it’s about 81 percent, but, regardless, a tax cut for everyone who makes less than $200,000. A lot of it is a refundable tax credit, basically a cheque to people who don’t pay income taxes. And to pay for that at a time when the annual deficit’s going to be pushing $1 trillion because of the bailout, the up-front bailout, that’s going to be very difficult. That money’s got to come from somewhere else if he insists on paying for everything.
JAY: There’s only three places money can come from: taxing wealthy people more, which he says he’s going to do; cutting back some of the military budget, where there’s a lot of money; or three, print it; or, I guess you can add, borrow more.
THOMMA: Well, it’s interesting about defense, ’cause he has always suggested that he would get $10 billion a month by withdrawing the US troops from Iraq. That assumed two things: one, that he’d be able to do it in timely fashion; and two, that he’d withdraw all of them and save all of that expense, which he’s actually never said. He’s always said he would keep some troops there.
JAY: And move more to Afghanistan.
THOMMA: And he has to spend to send some of those troops to Afghanistan. Exactly. So I’m not sure how he comes up with $10 billion a month or $120 billion a year.
JAY: But there’s almost $1 trillion in the military budget. If he really wants to go at it, there’s ways to go at it, including some changes in the assumptions of US foreign policy, but I don’t think we’ve heard that.
THOMMA: Right. I mean, we’ve seen the proposal—just Barney Frank, a liberal member of the House from Massachusetts, talking about a 25 percent cut in defense spending. But he’s already been pushed back by other Democrats in the House like Jack Murtha, who’s actually on the appropriations committee that approves that spending. Barney Frank’s on the banking committee—he has nothing to do with that. But you can see there’s going to be an appetite, particularly in the House Democratic caucus, to cut defense spending. Obama has not talked about a big cut other than saving from Iraq. So he’ll have some cross-pressures with the House Democratic caucus.
JAY: The extent of the economic crisis is going to be such that if there isn’t some purchasing power put back into the ordinary people’s hands, most economists that we’ve been talking to don’t see a way out of this crisis. You cannot actually get out of the crisis, many economists say, simply by pleasing the bond market. There’s got to be consumer power that’s more than credit cards. So somehow he has to take on this sector that doesn’t want to have higher taxes amongst the wealthy and are fighting unionization. He’s got to do something to get purchasing power back. Or does he do nothing, in which case the economic crisis spirals even more out of control?
THOMMA: Well, what is the right economic choice is above my pay grade. I mean, I’ll believe what the economists say. But clearly that’s why he talks when he’s pressed, "What might you have to sacrifice because of this bailout clause?" that he insisted he would not sacrifice the middle class or working class tax cuts, ’cause I think he sees that as a way to prime the pump, to get more money out there. Now, where the money comes from, as you say, could come from borrowing or other things, but he wants to get that money into people’s hands, particularly the working class, and it’s a core Democratic Party philosophy that they are the ones who will spend it much faster than the wealthy would.
JAY: Well, thank you very much for joining us.
THOMMA: My pleasure.
JAY: And maybe later in the evening, after you’ve written your final piece and you’ve called the election—although, as I said earlier in the broadcast, the British bookies called this a long time ago—you’ll join us again.
THOMMA: I’d be happy to.
JAY: And thank you for joining us. And please return in a few minutes with live coverage from The Real News Network.
Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.