gwen: three issues that could decide who becomes your next president. gas prices. the deficit. and war. we walk you through all of them tonight on "washington week." as always, more questions than answers. can the u.s. dig itself out of its financial problems without getting into an even deeper hole? will skyrocketing gas prices cost more votes than skyrocketing federal spending? >> everybody right now is dealing with $4 a gallon at the pump. it hurts. because you know every time you go to work, a big chunk of your paycheck is being eaten up. gwen: will an open-ended war in libya and with gaddafi still in control? >> colonel gaddafi, the troops

continue their vicious attacks including the siege of misrata. gwen: and will republicans come up with a nominee who can beat the incumbent? we explore these questions tonight with david wessel of "the wall street journal," coral davenport of "national journal." martha raddatz of abc news. and dan balz of "the washington post." >> award-winning reporting and analysis. covering history as it happens. from our nation's capital, this is "washington week with gwen ifill." produced in association with "national journal." corporate funding for "washington week" is provided by -- >> we know why we're here. >> to connect our forces to what they need, when they need it. >> to help troops see danger before it sees them. >> to answer the call of the

brave and bring them safely home. >> around the globe, the people of boeing are working together to support and protect all who serve. >> that's why we're here. >> corporate funding is also provided by prudential financial. additional funding for "washington week" is provided by the annenberg foundation, the corporation for public broadcasting and by contributions to your pbs station from viewers like you. thank you. once again, from washington, moderator gwen ifill. gwen: good evening. it's a tough time to want to be president. tonight, we'll show you some of the reasons why. first up, the sluggish economy and burdensome national deficit. there is some bipartisan going on but little agreement on the common problems let alone the common solutions. after that, this week's ominous warning from the standard and

poor's rating agency. what should americans be most worried or even most optimistic about, david? >> there's certainly lots to worry about. everything from high unemployment to the sinking u.s. dollar to the fact that multinational firms over the last decade have done a lot of hiring abroad but cut workers here. i think it's worth remembering that the economy is growing again. and i'll bet president obama would rather have american problems than the problems that say the japanese or the europeans have. but i think this week was one in which washington kind of got a wake-up call from wall street that hey, we're watching and we don't like what we see. the standard & poor's warning that the debt rating might be at risk if they don't get their act together a little bit like that outlook reminder you get 15 minutes until the meeting and you aren't late but not yet. there was nothing new from people who have been following the deficit and hard to believe that rating agencies have any credibility whatsoever given the abysmal job they did during the financial crisis. but i think what they showed the congress was that if you do nothing, if you just argue,

that the u.s. triple-a credit rating could be at risk. gwen: does that mean that now the biden commission suddenly becomes critical and the gang of six bipartisan commission get to work? >> probably not. i think the first thing it means is that they'll get their act together and do something on the debt ceiling. the federal debt ceiling has to be raised because past spending and tax cut decisions have meant a lot of borrowing. and even if paul ryan's budget, the house republican patched in its entirety tomorrow, his budget calls for $7 trillion more federal debt than we have now. will they attach something to it to make people feel comfortable for voting for it? that something could be something that comes out of the gang of six. this bipartisan group in the senate. or this other group of six that vice president joe biden is leading. gwen: what do you think -- what do you think the republicans do when they -- when the campaign really starts in earnest? how will this change? what congress does and what they look at?

>> well, i think that -- i think the campaign has started. and if you had any doubt, the tone -- the president's speech sounded to me like a campaign speech and when he went out this week he sounded like it. i think the republicans are going to have an interesting time when they get back to washington after the break. they've been out there and a number of them have been beaten up by people who don't like what the medicare and social security discussions that they hear from washington. and so i think that they want to do is blame the president for the deficit not coming down. but they have to get some kind of coherent view about how they can be in favor of cutting spending but not seeming to be hard hearted in cutting the spending that the voters care about and it's tough. >> david, i would like to ask getting back to joe biden and the gang of six, what is biden up to? how is this going to -- >> well, the president called you and asked you to run something and you're the vice president you would do it. they're looking for some process where there can be some negotiations between leaders of the congress, particularly republicans, and the white house, so that if they attach some face-saving thing to the

debt ceiling bill they can give people some sense that there is some way to agree on something. so it has some credibility. so far, it really hasn't gotten off the ground. and i don't expect it will get off the ground soon. just a meeting room where if they want to negotiate, they have a venue for doing it. >> look further into the future beyond this immediate question of how they get through the debt ceiling vote and that is how do you get to a grand bargain to deal with the entitlement issues? what are republicans going to have to give on and what are democrats going to have to give on and is there any likelihood at this point of that happening? >> i think the first thing that's happened and this is positive, is that they've kind of agreed on a target. they've kind of agreed how much the deficit has to shrink and talking about $4 trillion in cuts ofe a decade or so -- cuts over a decade or so. the argument is thousand get there. s&p made a very tren chant point that you can only get there if parties agree and the compromise will be obvious. there is no way the democrats come to this without raising taxes on someone and no way the republicans come to this unless the democrats sign on to some

pretty significant changes and cuts to medicare and maybe even social security. gwen: from what you've been able to see, is it possible, i know this is a stunning thought, that the public is ahead of the politicians on exactly what is going to be necessary in order to solve these problems? or are -- are public -- is the public opinion saying just don't cut anything but fix the problem? >> i think the public was ahead of the politicians in identifying spending and deficits as a big concern. so in a sense, the public was very far sighted saying the next decade or two we have to fix this problem and the politicians are running to catch up. when it comes to getting beyond the contradictory impulses like i'm in favor of reducing the deficit as long as it doesn't involve cutting spending or raising taxes, i don't think they're there yet. but i think we're having the conversation. we're in the post-deficit denial phase. gwen: but there are other drags on the economy besides this -- these mixed feelings about the deficit. housing which is always going to stay as a drag, right?

>> what happens is when the polls, the cbs-"new york times" polls show that if you ask them are they worried about the deficit, yes, what are you most worried about, 39% said jobs or the economy. and 15% said the deficit. and that's everything from oil prices to housing prices to haven't had a raise in a couple of years if i'm lucky enough to have a job. gwen: let's talk about oil prices. thank you for that segue because next up is something which is more ease will he understood by the average citizen and by -- easily understood by the average citizen and by high gas prices. a poll of political insiders, 94 democrats, 102 republicans, and they ask, which party is hurt more by rising gas prices? on this, both parties seem to agree. with 75% of democrats saying their party will take the hit. and 94% of republicans say the same thing. the president said at a fundraiser in los angeles that if you follow the bouncing ball

of his poll numbers, you'll find gas prices at the bottom of it all. so how is this shaping the political debate? >> it has a huge impact on the political debate. pew did a poll that found the number one financial concern of most americans was gas prices. and that gas prices were more important to americans than reducing the deficit. it's such a visceral, concrete issue. it's an everyday issue. americans, even if they don't understand sort of the broad economic indicators, they drive down the street and see those gas prices. and so republicans have jumped on that. republicans are the party clearly linked with drilling, with production, and republicans have always -- this is an issue that has always played so well for republicans. in the political debate. we saw that so clearly in 2008 with drill, baby, drill. so they have jumped on it. they're starting hearings. there's clearly a strategy of injecting the gas price issue

right back into the campaign. gwen: and at the same time we see the president saying he's going to have his attorney general look into that price gouging issue which i feel like i've heard a lot of this before. >> my colleagues and i have covered the energy issue a couple of months ago. a couple of weeks ago saying we should just start calling up all the stories we wrote in 2008 because the talking points are the same and the proposed solutions are the same. what the president knows full well and what republicans who understand policy know full well is this is not an issue that the president can solve. this is not an issue that the congress can solve. there is not a policy that can be enacted that can make gas prices go down in the next couple of months. and that's one of the hardest things about this. there are policies that you can enact, it's pretty clear what you have to do to reduce the deficit. it's just a matter of how do you get there? gas prices, that magic policy doesn't exist. >> but sometimes gas prices can

push congress to do things. so if they were going to do something on energy, as a result of all this new angst, what do you think it would be? >> well, "national journal" did another insiders poll this week. and we asked our energy specific insiders will rising gas prices push congress to enact legislation and the majority of them said no. what will happen is we're already seeing a slew of bills being introduced, the house natural resources committee or the house floor is taking up three new bills to increase offshore drilling. next month. as soon as congress gets back from recess. so we will see lots of bills, lots of talking points. all of those talking points projected straight into the campaigns. but with partisanship so high, it's clear we'll see a lot of pushes for legislation. but it's also pretty clear that it will go as far as the campaign but it's very unlikely to see any actual legislation.

>> so what happens? so the public just sits and watches the gas prices rise and rise and politicians get more panicked and more panicked? how do you see an end state here? >> you know, it's -- it's interesting. we see -- we have seen this debate come back again and again and again. a couple of things that might be different this time. it's almost certain that we will see gas prices get back to a national average of $4 a gallon. we're at $3.84 today. that's the magic number. that's the thing -- $4 a gallon. >> terrifying. gwen: some of us have already -- >> here in d.c., we've been there for a little while. what energy economists are saying we could get to $5 a gallon this year. that would be -- the record high is just a little bit over $4. if we hit a new record high this year, i think that could have a very big impact on the

political debate and it could be a huge issue for the campaign. it could elevate the issue of energy. >> does anybody link this to libya? >> absolutely. this is one of the reasons why it's not -- the president really can't -- you know, one -- any one government can't really do anything to change this. the high gas prices are linked to market uncertainty due to libya. it's true. and it's a global market. and there are so many things in supply, in demand, in market uncertainty and speculation that affect these prices. there's no one thing that one government can do. so -- >> but if the republicans are trying to seize on this as an issue politically, put aside whether there's any practical solution, what doings the president do to counter that politically? >> so this is such a tough issue for democrats.

here's what the president is trying to do. the republicans have a nice clean, easy message. drill. what the president is trying to do is claim some of that drilling message for himself. we've seen over the past couple of weeks the -- gwen: the moratorium is lifted. >> the moratorium is lifted and they've been issuing new permits to drill in the gulf. and every single one of those new permits has -- the first 10 were accompanied by huge press releases. press conferences. big announcements. this is not usual. you don't usually tout -- this should be just a standard thing, new drilling permit. so the president is trying to show i support drilling. this administration is pro drilling. gwen: you get the feeling that this is just the beginning of their argument that we're going to have about this as long as the prices keep going up. we touched on challenge number three there which is that nothing is getting better in libya. and defense secretary robert gates announced today that u.s. unmanned drones will now be allowed to fire on gaddafi's forces. but the deadly standoff in

misrata continues. two photo journalists including oscar nominee tim heatherington were killed covering the front lines. where does this leave foreign policy -- our u.s. foreign policy in the region, martha or as some people like to think nonpolicy? >> i think a lot of people are saying nonpolicy. the policy is basically we'll help the civilian population. we'll help the opposition. but the u.s. role on -- in early april, the u.s. basically turned over control to nato. gwen: right. >> and a lot of those air strikes have not been as effective. the rebels are in desperate shape. and you've got john mccain who's going in there now and saying you rebels are my heroes. let's see what we can do. you got $25 million of aid that the u.s. is now promising. gwen: nonlethal. >> nonlethal aid. but we're talking about body armor. we're talking about transportation trucks. we're talking about equipment. we're talking about that kind of incremental addition to the fight in libya.

>> doesn't this just add up to mission creep and the classic sense? what's next? >> what's next is exactly right. because i think about three weeks ago, none of us would say that they will be supplying body armor. one of the big questions still remain -- who are the rebels? and i think there's still a great deal of nervousness within the administration about who exactly they're sending that body armor to. who exactly is going to be trained by france and britain? and they're sending in military advisors now to help the rebels organize to try to figure out some way to defeat the gaddafi forces. and at this point, they don't seem to have a prayer of doing that. gwen: john mccain when he got to libya said not only the rebels were his heroes but that there should be increased arming of the rebels. something which the u.s. has stopped short of. >> and you can -- you can talk about giving body armor is sort of certainly a passive way of arming the rebels. it goes back to david's question. gwen: it's not a gun. >> not a gun but helps protect you from the other guns. and they have said again and again they're not sending boots

on the ground. they're not going -- president obama has been very firm about that. but let's talk about those drones for a minute. pretty precise, pretty deadly. and you look at those, those drones, and they can do some pretty specific damage. >> what can they do? what was behind that decision? what can they do that the nato air strikes are unable to do? >> i'll tell you what they can do. because there are no pilots -- gwen: tim heatherington, his last tweet from misrata was no sign of nato. >> no sign of nato. and that the gaddafi forces are truly attacking the rebel forces in misrata and of course tim and chris hundres were both killed. let me talk about the drones a little bit. what they can do to help in that fight. one of the problems is you -- they still got surface-to-air sites, surface-to-air mixes -- missiles, mobile surface-to-air sites, they can take out airplanes. these drones do exactly what the nalm predator implies.

they can fly low. they stalk their target. they can loiter over an area really literally all day or all night. and then they can blow that target up. and they can spot people, they can spot snipers. they can do things that airplanes can't do. >> is one of those targets going to be gaddafi? >> well, the u.s. will say we're not -- our mission is not to go after gaddafi. but if i were muammar gaddafi i would be a little nervous. these are the same kind of predators that we've used in afghanistan, in pakistan, in yemen, and what they're used for there is to go after high-value targets. quade, the taliban. so -- al qaeda, the taliban. so -- gwen: you can't worried -- can't worried if mccain is saying what the administration doesn't, go after gaddafi. >> wink, wink. we will not fight what john mccain is saying and john mccain will not stir up too much trouble for the administration.

but he is sending that message that we want gaddafi out of there. the u.s. wants gaddafi out of there. they want to make him nervous and these drones have got to make him a little more nervous. >> so is -- so all this talk about we're not for regime change, that's just a lie? >> i think that's not a lie. i think they would very much like him out of there. they've said that specifically. but they're not going to go in there and saying we're going to kill him and kick him out of there. gwen: but internal upheaval. >> they say again and again and robert gates said that yesterday and secretary clinton said it's up to the libyan people to get rid of him. but we would like to see him go. gwen: so we move on. because as the current president is working his way through all these challenges, the republicans who would oust him are preparing to exploit his weaknesses. but they have weaknesses of their own. "washington post"-abc news poll out this week finds that less than half of republicans and republican-leaning independents are satisfied with the g.o.p. field. and a "new york times"-cbs news

poll out today shows the president's approval rating sliding on everything from libya to the economy. so let the political positioning begin, right, dan? >> it's clearly beginning. and i think if you look at sort of the totality of the polls this week, you can see that everybody, president obama, all the republican rivals, have got work to do in order to get in shape for 2012. we start with the broad view of these polls. what we've been talking about all session here, a lot of economic pessimism that we are seeing in the polls. it's clearly tied to gas prices. and i think the unrest in the middle east. our polls showed a two-year high in the number of people who say the economy is getting worse. "the new york times" has found similar. they got a two-year high point on people saying the country is going in the wrong direction. these are numbers we haven't seen since the depth of the recession right at the beginning of the obama administration. so people are uneasy about where things are going. that has had a clear effect on president obama's approval ratings.

and he is down in almost everybody's polls compared to where he was in the post-abc poll. he was at 47%. that's down seven points since his high point in january. 57% disapprove of the way he's handling the economy. and our poll in "the new york times"-cbs poll just out, he's down 10 points on his approval of how he's been handling libya. gwen: how does that compare to other presidents at this point in their presidency, economy aside? >> well, he's -- the two that they watch closely at the white house are ronald reagan and bill clinton. both were in the 40's at this point. and the issue for the president, if you're over 50%, in approval as you near the election, you're going to be very tough to beat. history says if a president is over that mark, they're in good shape. if you're below 42%, below that, you're in real trouble. he's in that kind of nether world. vulnerable, not in clear danger zone but certainly not in a

comfort zone. >> how about that republican field? and who we've seen the most of lately, donald trump. but is he leading? gwen: it turns out somebody has to beat the president? is that what you're saying? >> somebody will have to beat him. donald trump has gotten an enormous amount of attention. most of it self-generated. he has made himself available -- gwen: with some aid and comfort by people who do what we do for a living. >> made himself available and all of us have climbed onboard to do interviews. and in some polls now he is at or near the top of the pack. it's quite remarkable. he is a celebrity and celebrity we know in politics today is important. the three people who now are at the top rank are former arkansas governor mike huckabee, former massachusetts governor mitt romney, who a lot of republicans think is the weak frontrunner, and now donald trump. and everybody else is kind of trailing in their wake.

gwen: including people like sarah palin who used to get a lot of attention. >> sarah palin has faded some. she's not been helped by either the emergence of donald trump who has great celebrity or congresswoman michelle backman -- batchman who has a similar appeal to tea party republicans. >> who does the white house most people feel? -- -- >> romney. they are as confused as anyone else. they want to know what everybody else thinks because they're trying to puzzle it out, too. and they see others, they see mitch daniels, the governor of indiana, who it's not at all clear is going to get in the race as somebody who would be a serious opponent if he were able to make it to the general election and somebody who is carrying the message of taking on debt and deficit. they have a lot of respect for haley barbour's political skills. they're not sure whether he's capable of really doing it as a candidate.

so there is as much confusion on the democratic side as to who the nominee is going to be as there is on the republican side. >> the president is raising a lot of money. he's kicked off his campaign. at this point, much more active than any of the republicans. why is that? on both sides? >> well, the interesting thing when you talk to democrats and some of the people around the president, they are a little bit baffled as to why the republican field is moving as slowly. because their view is this is a big enterprise that we're taking on. they raised north of $700 million last time and raise more this time. it takes a long time to raise that money. but just as important for the obama team, they still have this kind of grassroots mentality. and they know that their organization needs energy, enthusiasm. it needs to be rebuilt. they do that in a very particular way. one on one, a lot of work at the grassroots. they know that that also takes time. and they're trying to make sure

that they've got organizations in as many states as possible. well in advance of the general election. so they're out doing the nuts and bolts at this point when the republicans are not. gwen: ok. thank you, dan, everybody else, before we go i would like to congratulate dan balz for winning this year's white house correspondents award for excellence in presidential coverage on deadline yet. thank you, dan. congratulationings. >> thank you. gwen: the conversation has to end here for now but it continues online in our "washington week" webcast extra. check it out at pbs.org. keep track of daily developments on air and online with the pbs newshour. and we'll see you again next week on "washington week." good night. >> "washington week" was produced by weta which is soley responsible for its content. >> funding for "washington week" is provided by --

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