gwen: on the front burner -- hand-to-hand combat over spending priorities, and the opening salvos in the 2012 campaign. tonight on "washington week." >> last week we were able to prevent a government shutdown. and the reason we were able to do it was because we agreed to spending cuts. gwen: that was just the beginning. >> we cannot afford one trillion dollars worth of tax cuts for every millionaire and billionaire in our society. >> we don't need a doubling down on a failed politics of the past. rather than building bridges, he's poisoning wells. gwen:: there will be fights

over taxes. >> washington has a spending problem, not a revenue problem. >> unless you're going to cut deeply into commitments we have made to seniors and to the disabled and to the poor, or ask the country to go borrow the money, you can't solve this. gwen: fights over medicare age. >> were trying to say that you've got to have a safety net for those who need it but not for those who don't. >> the debate ahead of us is about more than spending levels, it is about the role of government itself. gwen: and fights over raising the debt ceiling. >> the deficit is the symptom. it is spending that is the disease. >> nobody should be playing chicken with the debt limit. gwen: we look at the facts, the figures, and the politics of the great budget debate with susan davis of "national journal," john harwood of cnbc and "the new york times," janet hook of "the wall street journal," and jeff zeleny of "the new york times." >> award-winning reporting and analysis covering history as it

happens. live from our nations capitol, this is "washington week with gwen ifill, produced in association with national journal." corporate funding for "washington week" is provided by -- >> this rock has never stood still. since 1875 we've been there for our clients through good times and bad. when their needs changed, we were there to meet them. through the years from insurance to investment management from real estate to retirement solutions, we've developed new ideas for the financial challenges ahead. this rock has never stood still. and what's one thing that will never change. prudential. >> corporate funding is also provided by -- provided by boeing.

official funding by the annenberg foundation. andcontributions to your pbs station from viewers like you. by thank you. once again, live from washington, moderator gwen ifill. gwen: good evening. its not that often that the weeks debates boil down to such clear contrasts. but for president obama's democrats and john boehner's republicans, a vigorous political disagreement has shed new light on their drastically different visions of government. the president made his case before an invited audience at george washington university wednesday and again last night at a campaign fundraiser in chicago. >> we've got to reform defense spending. we've got to reform health care spending. but we're not going to sacrifice our fundamental commitment that we made to one another through medicare and medicaid and social security, the safety net for our people. gwen: house budget committee chairman paul ryan laid out his vision on the house floor today.

>> this is the most predictable economic crisis we've ever had in the history of this country, and yet we have a president that is unwilling to lead. every politician in this town knows we have a debt crisis. they know we are in danger. we cannot avoid this choice. to govern is to choose. gwen: ryan's plan to slash the budget is not likely to survive a senate vote, but his underlying arguments set the stage for a pretty important battle heading into 2012. what did this week's to and fro tell us about who the players are and what they are setting out to do? starting on capitol hill, susan? >> budgets, are political documents by nature. paul ryan said this isn't a budget, this is a cause. you talk to democrats and they say what obama said this was the opening salvo in the 2012

presidential campaign. i think we're seeing the broader agents -- arguments we'll have in 2012. it's going to be about fiscal responsibility and health care. medicine care and our social safety net is probably going to be the biggest clash between the two parties and we're going to have another argument over tax cuts. the bush tax cuts and the president saying this week, i extended them once, i refuse to do it again and having republicans on capitol hill saying we're not raising taxes. >> both you and janet spent your week prowling the granite halls on capitol hill and one thing that john boehner, the speaker of the house said, said he's succeeded in shifting the debate into a debate about spending cuts, not about spending. is he right? >> the frame of the debate really has shifted in that

direction, whether boehner is single-handedly responsible for it or he was carried by the political forces in his party. it is true. the first three months of this year have been dominated by a spending debate and it's kind of been a shakedown cruise for the parties and their leaders in this sort of new divided government. but it's true that at the beginning of the year we started out with a debate between a president who wanted to freeze spending for the current year at last year's levels and republicans who wanted to cut it by $61 billion. and the debate for three months was about we're cutting, how much are we going to cut? if you come out at 40 from 61 it looks like republicans got the better end of the deal. gwen: but did they? >> there was a last-minute flurry after the republicans had been declaring victory in this compromise, a last-minute

firestorm broke out when the congressional budget reported that well, it cuts $38 billion in spending, the impact on the deficit right away is really quite small. that was upsetting to a lot of conservatives. >> gwynn said in the introthat the ryan budget has no chance of being passed in the senate. we had this government shutdown near-crisis last week and republicans said that's because democrats didn't pass a budget next year. is there going to be a budget resolution that passes both chambers this year and if not are we headed for a shutdown debate in september? >> it's not inconceivable they could reach a budget resolution but the participants are so far apart on the issues of health care and taxes it's hard to see where they get that compromise. republicans passed their budget and they're going to pass their

spending bills at their levels and have a confrontation over these in september. i think once again in the fall we are going to be having a shutdown conversation again. gwen: everybody is unhappy. that's the definition of compromise. >> that was something that boehner said this week. he said welcome to divided government. and they edged up passing the spending bill for the rest of this year with a very bipartisan coalition. who knew? the democrats voted against it and a lot of conservatives opposed it. >> we've had a week to see how boehner did in a -- this past week. how do you think he has emerged in this and where is he at going forward? he needed democrats with him this week. is that something that will continue? is that a risky proposition? >> i think that's something

he's going to be navigating throughout the budget debates. in this instance, i think it was insignificant those 59 republicans voting against him. i didn't find many saying that john boehner really screwed up here. they were saying it's a tough situation, as good as he could get but i don't like it. gwen: what you have is a lot of fiscal conservatives. they're fairly ideological about this. it's not personal necessarily. but they came to washington to cut this budget. is that setting the stage for the kind of fights we're going to see in the future? >> if you look at that vote, the 59 was sort of the high watermark so far. within that you have about two dozen that would most likely be considered the tea party republicans, this wave elected last november that are going to be a thorn in john boehner's side for the next year and a half. the republican party is never

going to go as far to the right as they believe they came here to push the party. you raise an interesting point about leverage the democrats have. in the debate over the c.s.r. i think the democrats felt they had no leverage. but when it came to the floor -- the bill that averted the shutdown. when it came to that vote they did knee some democrats? >> how many times did nancy pelosi pass a bill with 80 republicans? not very often, if ever. >> she hinted at that this week. we did it with our guys. they reached out to steny hoyer this week to say we're en-- gauging where the democrat votes are. that is pretty unusual. i don't think that the lock on the house they have is as strong as he would like to it be because of this.

>> should all the people who want to see the two parties work together see that as good news? >> i do think that democrats walked away thinking maybe we can force them to the center more than we thought they could. gwen: except two big fights looming and that is the debt ceiling vote and the 2012, the big, big budget. we saw paul ryan at the center of this, congressman from wisconsin, chairman of the house budget committee, rising power, i guess, in the house. does he have a chance of getting any part of what is a pretty spansive remaking of government, his proposal this week, getting that through? >> that's where the difference between the small bore budget we just did and the big one is involved. paul ryan's budget and the message from the president's

speech showed very, very different visions of what government is about and what needs to be done to address the fiscal problems. it's just much harder to compromise on those larger scale things and that's why there's this -- the other thing is that i think a lot of the compromising and the bipartisanship -- there was one thing both parties agreed to, they didn't want the government to shutdown and there was an action-forcing deadline or the government would shut down. people aren't exactly sure when we're going to hit the debt ceiling and also the solutions. everybody can say -- there's a consensus we want to do something about the fiscal crisis but it's not as clear as cutting spending this much or that much. gwen: isn't the dilemma about the debt ceiling that whether they act or not it sends tremors to the market, the idea that congress would not be

willing to raise the debt ceiling? >> yes, i think that's exactly right. it's going to be a tougher debate but at the end of the day i think it's almost an easier vote to get. democrats aren't going to oppose it. they're going to side with the president. and i do think fundamentally members understand that if you mess with these kinds of things -- this debt limit has far greater consequences. >> the debt limit has always been this sort of -- the party out of power votes against it. they'll never vote to raise the debt limit. the dynamics are different this year. >> if you mess with the debt limit you're also messing with the big money people on wall street. jamie diamond spoke to the chamber of congress and said you are crazy if you press that button. we'll -- we'll have catastrophic and unpredictable

results for the financial markets and interest rates and all that if you even raise a question about u.s. default. you combine that with the tremors going through elderly voters with a debate about medicare, it's a very volatile moment. gwen: for democrats, the volatility seems to be the unhappiness on the left and the volatility on the republicans seem to be the unhappiness on the right. do the two ever meet? >> it's interesting, the tea party has been klaining -- complaining about the house republican leadership, just when obama says it's a budget armageddon going on among republicans. the tea participant held a protest vote before they voted and truth to tell, not many showed up. gwen: the stakes couldn't be higher, especially for president obama and the democrats positioning themselves for re-election.

this week the president tried to shift the momentum and paul ryan game the punching bag. was that the plan all along? >> i think so. the president came out of the 2010 election always intending to run for re-election and try to deal with the long-term deficit problem. he knew that the solution he favors involves some tax increases as well as cuts in big spending programs. but republicans were not going to play in the tax debate so the is the -- president took the approach of sitting back, smoking out the republicans, having the fight over the 2011 spending. then the republicans laid down their budget and they went after the big program that every knows about, medicine care. remember, medicare is where bill clinton bested newt gingrich in the government shutdown of 1995.

bill clinton got healthy for his 1996 re-election campaign and he chose this moment, right after getting the 2011 budget passed to hit hard against the paul ryan approach and say he would give -- extend tax cuts for millionaires and billionaires and take the money from senior citizens. that was a powerful message. it got republicans very upset with him. liberals loved that speech. many republicans said there's the kickoff of the 2012 campaign. gwen: wasn't it? it seems at some point he has to focus on 2012. >> right. in the official beginning in the schedule of the white house issued on monday said the campaign begins on thursday. i thought it began on wednesday when he was giving his speech at george washington university. he completely brought any skeptical democrats to his side

when he mentioned medicare. he said he was going to protect it. he mentioned things we haven't heard him talk about that much. gwen: like the poor. >> like the poor. and he was absolutely -- and this is all following this script that almost seems too perfect. it's repeating 1995-199 . i'm not suggesting it's going to end like that. but without a doubt, this white house has everyone, i think, where they want right now. the liberals are sort of quieted down back on their side. the republicans are on their heels. and 2012 republican presidential candidates are worried about this now. how do they campaign for votes in florida, for example. mitt romney was there today. at some point he's going to have to say up or down on the ryan plan and all of them to a person came out and said we praise them for their boldness but no one is signing on to

this because it's trouble for them. >> while hitting hard at paul ryan, he did invite republicans to negotiate with him because he does need to get the debt limit done. gwen: sitting in the front row, paul ryan and jeb hensarling being slapped around. they didn't look happy. >> right, and there's going to be disagreement over what sort of negotiations but they are going to have talks at the leadership level over some sort of gesture that will allow people to vote for that debt limit. paul ryan, after the president whacked him in that speech was on television and asked how can you work with the president on the debt limit after you received an attack like that? he said he's the campaigner in chief. it was all politics. i didn't expect that from the president, however, i'm going to set that aside. the debt limit is something

different. i thought that was a sign that in the end there will be a resolution of that. >> truth to tell, the republicans have taken heavy hits on the president's little. so it's not like partisan is foreign to them. however, i think they felt blind sided because they didn't realize they were being invited to the opening of the president's re-election campaign. >> one of the things the president said was this is not of the republican plan. this is not of the america that i'm familiar with. some thought he was right on the edge of calling them un-american. of course, there's a significant chunk of the american public who thinks the president himself is not an american. >> i don't think you can underscore the dangerous politics of this. when you talk about medicare and seniors, obviously, but of the 150 congressional districts with the most seniors in them, 9 are held by republicans.

key states like pennsylvania and florida have significant senior populations. she looks over with the republicans on the other side of the aisle and said do you all realize what your leadership is making you do? gwen: they're changing medicare as we know it. >> and steve who runs the campaign said if we do this, this vote will be the start of the campaign. >> i think that's extraordinary that that is even a possibility. we're not even six months beyond the mid terms. i don't know how great a possibility it is but republicans are far more concerned about holding the house than they were a couple of weeks ago. >> but voting against this budget. >> that's true. the thing we don't know in all this. when i talk to voters you do get a sense that people understand i think more than before that this is a serious thing. i'm not exactly sure that all

the old rules apply that seniors will definitely vote out someone because of this. it is a different time and more serious and the deficit has been drilled into pipe so much. there may be more flexibility. gwen: when we see the president come out and make speeches like this it felt like he was pulling the mantle of deficit slasher from paul ryan's hands and saying no, no, me. >> he was on one hand but we'll see how much he actually does. he is trying to do all of it. but running against an incumbent president is not all that easy. he has used the power and the visibility of the presidency pretty well over the last couple of weeks. certainly throughout the budget deal and zips to chicago. he is going to be running at a loftier level and meanwhile all the republican candidates are driving around in minivans in

new hampshire and florida. he has a bunch of advantages. >> he'll be able to put away a lot of money pretty quickly. >> in chicago on thursday night it was a little more than $2 million. i think they'll have a very strong second quarter. gwen: let's kick off some of these presidential wannabe candidates. i can't keep track but we've seen them all. and this week, of course, mitt romney has announced. has he weighed in on this or has he stayed far back from the general issue as he seems staying away from the ryan plan? >> he's about halfway through. he criticized the president every chance but he did not come out against the bunt deal. i think he is halfway to a pragmatic person. he's not criticizing john boehner. haley barbour from mississippi, a potential candidate. he supported the speaker. a former minnesota governor,

tim pawlenty said that it was a bad deal. republicans shouldn't vote for it. so you're going to see the republican presidential candidates sort of insert themselves in these congressional debates. it's easy for them because they don't have to take a vote on this. the one potential candidate the white house is keeping their eye on is john huntsman. he comes back from china in a couple of months. gwen: he's the president's ambassador to china. a republican former governor of utah. >> they'll smother him with love. they'll see how that works. but they are agitated by him and i would say the white house is slightly preoccupied by him. gwen: somebody happened to leak some conservative online publications that he'd written all these nice letters about the president saying he was a remarkable leader, whichic i guess is what you say about your boss. >> the president could smother

mitt romney with love on health care too. mitt romney signed the massachusetts health care bill that has some resemblances to the president's. gwen: from the democrats' point of view, not only in the white house but those who are not necessarily yolked to this president, is the idea of compromise good or dangerous for them? >> i think it's dangerous in terms of disspiriting the base. you didn't see nancy pelosi anywhere about the budget talks. i think the compromise is an agitating factor for democrats. it does not inspire you to give money or knock on doors for the president or democratic candidates. they'll have to give the liberals something. >> most of the big things the president wanted from the congress he got in the first two years, except for keeping

the government running and maybe getting trade deals in there isn't a lot he needs from the congress. the most important thing that happened for 201 is the fight framed for medicare. gwen: i get the feeling we're just at the tip of the iceberg in all of this. thank you all very much, especially those of you running around on the hill. as political as all of this seems, these debates are actually turning out to be about substance. keep up with them every night on the pbs news hour and follow all of us at pbs.org. congress is out of town for a couple of weeks but we'll be here as always around the table next week on "washington week." good night. >> our coverage continues online. see more from our panel about the week's top stories. it's the webcast extra at

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