gwen: good news on the economy. more jobs, but standoffs over the federal budget. and the prospect of stalemate in libya. tell me again why anyone wants to be president? we'll ask that question tootonight on "washington week." a glimmer of good news for the economy. >> the unemployment rate has now fallen a full point in the last four months. the last time that happened was during the recovery in 1984, where we saw such a significant drop in the unemployment rate. gwen: but no sign of budget movement on capitol hill. >> april fools' america. this is joke, america. our constituents did not send us to washington to shut down the government.

they sent us here to make it more accountable. it's time to pick a fight. gwen: while, on libya, the president and members of congress struggle to define the end game. >> in my view, the removal of colonel gadhafi will likely be achieved over time through political and economic measures and by his own people. >> the united states must remain strongly engaged to force gaddafi to leave power. nothing less is desirable or sustainable. gwen: no wonder the 2012 campaign is off to such an uncertain start. who's really running? who's not? covering those stories this week -- greg ip of "the economist," naftali bendavid of "the wall street journal," yochi dreazen of "national journal," and karen tumulty of the "washington post." >> award-winning reporting and analysis. covering history as it happens. live from our nations capitol,

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station from viewers like you. thank you. once again, live from washington, moderator gwen ifill. gwen: good evening. finally, good news for the economy and, by extension, for the obama white house. a boost in hiring and a lower jobless rate. at 8.8% still high, but a full percentage point down from just last november. so is this the turnaround the administration has been counting on, greg? >> it's a little soon to declare, you know, the turn -round but it's definitely closer than we've been in this recovery so far. it's the first time, actually, -- actually, in over five years that we had back-to-back groce -- growths of payroll growth plus this nice news that the unemployment rate dropped. often we have months where the two go in opposite directions. this wasn't one. we've had good news on investment, on stock profits. it's never going to feel like a

recovery for most americans until we see it in jobs. gwen: but the trend line is heading in the right direction? >> it's heading in the right direction. by the standards of recovery it's still extremely week weak. we should have had unemployment down by several percentage points. the matter is recoveries are quite weak. that's one reason we need to be careful about reading too much good news into these numbers. last year we had a couple of good months and then the next few weeks it petered out. >> greg, one of the things that a lot of people have noticed is gas prices. how much of a gragg drag is in tv this going to be? >> it's devil -- definitely a drag. the outlike in the united states looks stronger. but no question if this

continues it's going to eat away at people's disposable income. one of the things that put us into recession a couple of years ago. >> what about the housing markets? how are things looking there? >> unlike the jobs market and unlike almost everything else, housing seems to be on the verge of going into another recession. new homes sales sat an all-time low. unemployment, although it's coming down, it's not coming down fast enough for a lot of people to buy their first home. gwen: i was in florida. they said that one in five homes are vacant. so they're already depressing the market. >> definitely. giving how fast households are glow grow egg in this country. it will probably take at least three years to clear out the

inventory of vacant homes. >> the flip side of high energy prices is high food prices. how important are the rising food prices and what can you do about it? >> well, rising food prices are are also -- also reflecting some of the same things that oil prices are responding too. emerging markets like india, china, and so forth. that's probably good news. the other things is that the united states is a net food exporters, great news for the food belt. most people that drive and eat toned see this in their pocketbooks. this also raises the inflation rate and might be pressure on the federal reserve. one of the things that got people worried this week is that a bunch of people from the fed were out talking about it, saying exactly that. my own guess is that the

leadership, ben bernanke are not at all concerned about the inflation. they want to see many more months of the growth we've been seeing. gwen: what kind of pressure does the instability we see everywhere, whether on the mee, oil prices or on japan, what kind of pressure to do these kinds of unexpected events have on our ability to recover? >> they have a very insidious and not well-observed impact. that i eat away at people's confidence. a year ago europe went into crisis. some countries were on the verge of default and even though american companies did not export a lot to europe. it rattled enough people here that they stopped hiring. that's why i say you can't be to come plavent. whether it's the spread of trouble in the middle east, renewed trouble in japan, those

can reawaken the recession. gwen: how about a cycle? a hamster's wheel? >> what we know from other countries, these recoveries are long, slow grindout affairs. i think we'll have four or five years of stop-start growth. gwen: mr. cheerful. the government appears no closer tonight to reaching a deal to keep itself open past next friday. conservative house freshmen have resisted all efforts at compromise. but the white house repeatedly suggests a deal is near. one thing hasnt changed. each side says the other is at fault. now the senate says we have a >> plan. well, great! pass the damn thing, all right? and send it over here and let's have real negotiations instead of sitting over there rooting for a government shutdown. >> we know that a compromise is within reach. it would be the height of irresponsibility to halt our economic momentum because of the same old washington politics.

gwen: so i don't know what to believe. is a deal in eight or not? >> the truth is that both sides are negotiating very hard on a deal with the figure of about 33 billion for this year. there are tactical reasons why the democrats want to suggest that a deal is at hand. that what i fit falls through they hope people will fault the republicans. john boehner doesn't want to reflect that there's a deal. i think there are reasons why we're hearing different perspectives from different sides. there are a couple of stages to this thing. but party leaders have to reach an agreement and then that has to be sold to the rank and file. we'll see what happens. gwen: the other day on the floor of the house. people were getting quite exercised about this idea. they were having a spending debate but also a debate about

the constitution and a debate about the money and who gets to vote and the senate is the bad guy. what was that about? >> every once in a while the house has a debate that's completely theater and this was one of those. house republicans have been getting incredibly frustrated that the senate hasn't passed anything regarding spending cuts this year. it always happens. members of the house get frustrated at the senate, a ponderous slow-moving body. today house republicans proposed a bill that says if the senate does not pass anything, our bills go into effect. the republicans want to make a point they're fighting to their last breath. democrats had a field day on it. every once in a while you have one of these in the house. people let off steam. >> but coming into an agreement on the numbers is one thing.

but there's a lot in this house-passed bill that's foot about the numbers. thingsed like planned parenthood and environmental regulations and, you know, repealing health care. are these kinds of things going to end up being stumbling blocks or go by the wayside? >> they're definitely stumbling blocks. right now there's talk about what the spending level should be. republicans want 60 billion in cuts. right now they're talking about 30 billion in cuts. but there are other issues. they mean a lot to the people involved. the republicans have proposed not leading the e.p.a. enact greenhouse regulations. there's a measure that attempts to block president obama's health care law. one that blocks funding to planned parenthood. these things have to be resolved and they're adding a whole other twist to this. if they can figure out the number of dollars they want to cut, they also have to figure out how to thread the needle

when it comes to eyed cal issues. >> do you -- yooddfer ideological shutdowns. >> do you think boehner would rather have a deal? >> he's said that the last thing he wants is a government shutdown. both participants say that. gwen: sounds like it might be true. >> they do but they both have lines to cross. this is big test for john boehner. arguably his biggest yet. on the one hand, there's pressure in conservatives and tea party folks and freshmen who want a certain amount of money to be cut out of the go. on the other hand he's under a lot of pressure to get stuff done. if he can thread this needle he'll build his credibility to a tremendous degree and if he can't it's going to be a

challenge. >> what kind of roll -- role has the president been take something? he was addressing it today but he seems to outsource a lot of it. >> no question, people are from both parties have noticed he's taken a low-profile role. negotiators from the white house are involved but the president has chose on the step back a little bit. that's his style, whether it's health care or the stimulus. he likes too let congress fight amongst themselves and he steps in at what he deems to be a key, important moment and help to bring the plan home. the democrats and some republicans are frustrated too that he's not playing a bigger role. gwen: next friday may be the big key moment on whether there's a shutdown. on to the fighting in libya, when which remains to grow

closer to stalemate every day. while at home lawmakers are asking what are we really trying to selfish? the administration's chief defender is robert gates, who warned against going in the first place. >> i think we have considered the possibility of this being a stalemate. it's hard for me to imagine circumstances in which we would be content to deal or tolerate a government that still had gaddafi at its head. gwen: that's a nice goal but what is the u.s. or anybody else willing to do about that? >> this is the war they're dare not speak about. we know, almost everyone knows what the u.s., france wants, is gaddafi out of power. but nobody's willing to say that. we're funnling money. we have c.i.a. operatives who

have been on the ground for several weeks. so as this detective was playing out in washington, there were already cia personnel on the ground in libya. we already have a no-fly zone, which has grown to be a zone that attacks ground vehicles and clusters of troops. we're heavily involved but we can't yet say publicly what we're trying to do, even even though it's clear to everyone what that is. gwen: watching him in these hearings, he doesn't seem enthusiastic about his role. you traveled with him on his recent trip abroad. what sense did you yet get? >> he's always been a local song. we saw him on the -- soldier. we saw him on the hill sponging advice. my sense is he's not enthusiastic about it. when he came into office he wanted to wind down iraq, get

afghanistan stable. he feels like he's made progress on those. he doesn't want a third war. he realizes that it's a slippery slope. we saw this in afghanistan and potentially we're seeing it in lipia. >> people talk all the time about we're not going to have ground troops, not be there. but there have been a lot of reports that the cia is there and has been for some time. how do those two match up? >> it's like one of those definitions of what kind of boot? we have our own cia personnel. m.i.-6. the c.i.a. has a much bigger presence. the british have a huge quantity of special elite troops. we have our personnel, british personnel. i would also be stunned if by the end of this we did not have elite american special

operations personnel there too. there seems to be a slippery slope that starts picking up snow. by the end you have american troops on the ground. >> the president gave a very big speech on monday night. he described the goal of this mission as preventing gaddafi from slaughterering his own people. but what if at the end of all this there is a cease-fire but gaddafi is still in power. will this have succeeded? >> no. i think that's in many ways a high probability but it's the worst of all worlds. you're seeing tension between washington and its allies. tensions between washington and paris, france. the no-fly zone we had over iraq was in place for a deck. it's very costly and there was no fighting going on. so you could imagine in a war

zone, this would be financially and diplomatically costly. >> this might sound like a strange question, but for all the blood and terror being stilled -- spilled does libya really matter? are there other things that the region that matters more? >> that's a good question. i think that's what gates was implying, that it doesn't. our strategic interests depend on egypt being stable. th depends on saudi arabia and i reign i ran. those countries matter a whole lot more. gwen: i guess the best of all worlds would be that libyans rise up and get him out of there and get gaddafi out on their own. watching all of this from the sidelines is a clutch of men and women, all republicans, who would dearly like these problems to become theirs.

these are the current and former lawmakers and at least one big business mogul who are engaged in contemplation about whether to run for president. and as surprising as it may sound there are already late out of the gate. why is that? >> i'm sure that does sound rather like a bizarre thing to most people out there. they're saying wait a minute, the iowa caucuses are almost a year away. by this time four years ago we had almost 20 declared presidential candidates and when they held the first republican debate in may of 2007 on the stage of the reagan library, there were 10 republicans standing on that stage. gwen: with the big plane? >> that's right. this week they announced they're going to have to put that debate off until september, but -- because they don't have any declared candidates out there. and there are a number of things going on.

one, the whole dynamic of a presidential contest, when you are running against an incumbent is very, very different. that is why in 1991 bill clinton didn't even announce until october. mario cuomo didn't announce he wasn't running until december. it's a different kind of calculation you have to make. one of the lessons from 2008 was it started too early and went on too long. there's only a certain amount of money to be raised and once you start one are -- running you start spending. which is why we saw john mccain, the frontrunner, essentially run out of gas. gwen: tim excellenty is the former -- paul lenty, the former governor of minnesota. others are out there. are they on the ground hiring people, hiring staff? >> for all intents and purposes they are running.

they are constantly in places like iowa, new hampshire, south carolina, florida. they are hiring their key operatives. they are raising money by and large through their political action committees, working on their messages and lining up supporters. so really the lot of the work of a presidential campaign is well underway, even though a lot of these people not only haven't declared but are acting as though they haven't made up their minds yet. >> how late is too late? literally how much more time do they candidates have before they finally have to throw their hat in the ring? >> one key moment is going to be a decision on whether or not they are going to really run in iowa. one of the early tests in iowa is this august straw poll, and if you are a candidate who wants to be taken seriously in that and compete in that, that

means you really do have to be organizing and getting ready starting maybe in june. and that does suggest -- i interviewed mike huckabee a few weeks ago. he thinks he doesn't necessarily have to make this decision until the fall. but if you're not only on the ground and working by early summer in iowa, you'd have to be making up a lot of ground. >> there is a democrat, the president. >> oh, him. >> how geared up is he? i guess there's always this balance between being president and being a candidate. where is he in this transition? >> he will be declaring relatively soon he is running for re-election. his campaign manager is already hired. jim mussina. he's already moving people to chicago and perhaps most importantly they've begun giving their big fundraiser some big targets. the assumption is that barack obama is going to have probably

$1 billion at his disposal this time. >> you mentioned the big take place names, tim pawlenty. mitt rom nip. what about sara pail season >> two months about everybody thought that is sara going to run or not is the big question. but sarah has not done anything that you would expect a candidate to do. gwen: she's kind of m.i.a. right now. >> when i was in iowa republican act vists were there saying you would expect to hear her doing something. the assumption increasingly is that she is not going to run and a lot of that energy that she excites congresswoman michelle bachman from minnesota would be probably the likely

person who may be best positioned to tap into that. gwen: she had some big numbers today. >> she did. over $2 million fundraising for the last quarter. that's better than mitt romney raised. of course, she does have a congressional campaign funding. gwen: thank you very much. before we leave you tonight, we want to add our condolences to the flood of those already sent to geraldine ferraro, historic breakthrough and woman from queens. the 1984 vice presidential nominee was saluted this week but both sarah palin and hillary clinton and for the same reason. she made their careers possible. she would have enjoyed that. keep up with daily developments on the pbs news hour and we will see you here again next week on "washington week."

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