>> deficits and priorities. the beginning and the end of bipartisanship. gays in the military and the politics of terror. tonight on "washington week with gwen ifill." >> one of the lingering problems in our financial markets, however, is access to credit for small businesses. this is why in this budget -- >> no, no, no, you can't make that type of statement with any legitimacy. >> fireworks at a budget hearing? fresh signs of broad zpwrimets in washington over -- disagreements in washington over spending in debt. >> we can't continue to spend as it if they don't have consequences. gwen: the balance of power and politics. >> that's part of the problem, bipartisanship. it's always 60-40. >> over who gets to serve his or her country. >> i can't escape being troumed

by the fact that we have in place a policy which forces young men and women to lie about who they are in order to defend their fellow citizens. gwen: and over who gets prosecuted for terrorism and how. >> i believe it is inappropriate to give the mastermind of 9/11 full constitutional rights of an american citizen. gwen: washington at war. we sort it through it all with the reporters for the week. jackie calmes of the "new york times." michael duffy of "time magazine." gazine." magazine." nancy and pete williams of nbc news. >> awarding reporting and analysis covering history as it happens. live from our nation's capital, this is "washington week with gwen ifill" produced in association with national journal. corporate funding for "washington week with gwen ifill" is provided by -- >> clearly it's tough times in our economy right now.

price volatility has put strains on the strongest of budgets. the economy needs energy to strengthen and grow and continued investment in energy resources over the long term. exxonmobil is investing at record levels. over the next four years, we are looking at spending more than $100 billion in products. we invest in the long term. >> additional corporate funding for "washington week with gwen ifill" is provided by exxonmobil, the annenburg foundation, the corporation for public broadcasting and by contributions to your pbs station from viewers like you. thank you. once again, live from washington, moderator gwen ifill. gwen: good evening. budget season is like cream here in washington. there are the true believers, deficits bad, spending good.

there are those who embrace it. one politician's investment is another's wastefulness. the buildup often outshines the payoffs. president obama and house republican boehner. >> in order to meet this challenge, i welcome any idea from democrats and republicans. what i will not welcome, what i reject is the same old grandstanding when the cameras are on and the summer responsible budget policies when the cameras are off. it's time to hold washington to the same stands families and businesses hold themselves. >> this economy went through a very difficult meltdown and over the course of the last year, the policies that are coming out of this administration have causes us to lose more jobs. and so we have got to change those job-king policies to get the economy going again and put americans back to work. gwen: depending on your point of view, either one could be grandstanding. jackie, you covered more than your share of budgets over the

years. what do we take over the week from this? >> we are not take a lot of hope of action to bring this down. the budget that the president has laid out for the coming fiscal year would be the third trillion dollar deficit in the row and before we even get there, though, the deficit for this fiscal year that we're in has gone up to an estimated $1.6 trillion. the reason behind all of this is chiefly the recession. the government is bringing in less in tax collections than it would normally get in good times from businesss and individuals and it's spending out more in the automatic stabilizers like unemployment compensation, food stamps. there is also the stimulus spending. really, that's a relatively small portion of this. what really it comes down to is for long-term spending reductions, you got to go where the money is. that's medicare and medicaid. it's some change in the tax code because we, even in good times,

got a gap between taxes coming in and benefits going out and that's called the deficit. debbie: we saw new unemployment numbers, 9.7% is the jobless rate as opposed to 10% which sounds like things are headed in the right direction but? >> well, it's a continuance of this trend towards recovery and job creation. we're still shedding more jobs than we're creating and it's a slow process. and frankly, i think it's too slow to give democrats much hope of a bounce going into the november election. one hopeful thing, there was an increase in manufacturing jobs, but there was a big decline in construction jobs. again state and local employment is going down which is going to in turn put more pressure on the president and congress to ask for more stimulus money for the states to avoid them firing more people. then that just invites another fight with republicans.

>> giving these builtin problems with the budget, will it get below a trillion without huge changes? what is it about a trillion? gwen: the deficit? >> yes. >> it will get below a trillion after 2012, the year after the coming year which is the year where you're going into a campaign. it won't be much under a trillion. chiefly the reason it comes down and continues to go down for most of the coming decade is because of economic growth. once the economy recovers, you're bringing in more taxes and you're not paying so much in unemployment compensation and the like anymore. but by the end of the decade, you pick up again. and what that represents is the, really the bulk of the baby boomers reaching retirement age and drawing benefits from medicare and social security and medicaid to the point where it's unsustainable. >> was there any sign this week

that either the democrats or the republicans are serious about when they talk about definite silt reduction? they're always fairly serious about talking about it, is there any signs they intend to do anything about it since that was something president obama talked about himself? >> you nice one of the things that came up with the budget was a new twist. it was a proposal to have a bipartisan commission. the senate voted down creating such a commission by law to come up this year with a plan for reducing the long-term debt to sustainable levels. so the president said, all right, i'm going to have an executive order to the the same thing. the difference is he can't force congress to act. the leaders said we will hold a vote on it, but the republicans still don't believe it. there is no sign of two things. there is no sign that the president has reached out to republicans yet to be part of this bipartisan commission and there is no sign that if he did, the republicans would say yes. so we're going to get this standoff here and see whether we can even agree to talk about it,

let alone do it. >> jackie, you mentioned that there was an effort to help those in manufacturing jobs. who else came out ahead in this budget. what were some areas where the president tried to help groups out? >> the winners, as far as it went, were in education and in scientific research, civilian research, and in some of the innovation programs they call it, clean energy programs for both subsidies, tax subsidies and spending subsidies. in the scheme of things, it isn't a lot. in fact, if you took everything the president has proposed and you just didn't do any of it and let the budget sort of stand pat, you would still have a deficit over a trillion dollars. gwen: hard choices have to be made and the president starts the ball rolling. this was supposed to be the week when we would be able to gauge what happens when the president talks turkey to both republicans and democrats.

last week we saw his in your face exchange with the opposing party. this week, the counsel he offered his own party went like this, don't cut and run. >> if anybody is searching for a lesson from massachusetts, i promise you, the answer is not to do nothing. the american people are out of patience with business as usual. they're fed up with the washington that has become so absorbed with who is up and who is down that we have lost sight on how they're doing. gwen: so is picking on the republicans and nudging the democrats the west wing's new definition of partisanship. >> it sounded like triangulation. it sounded like he was running for president there. this is the week that both parties realized there is a limit of how much the public would take in terms of delay and bickering and finger pointing. there wasn't a lot of movement off into something more helpful, more constructive. there was really no sign,

despite the widespread acknowledgement that something had to stop and enough was enough. there was a new way forward in terms of cooperation between them at all. in fact, there were signs that they might be farther apart at the end of the week than the beginning. there was a lot of symbolism and a lot of theater. the president met with members of his party and cattle-prodded them into action or tried to, he met with business leaders forever for lunch. he is having some other for the super bowl and he is sitting down next week with members of both parties to try to figure a way forward legislatively. these steps are important signature nonetheless to send. the public is desperate and so thrilled that it is happening. they haven't seen that kind of thing. we're talking about meetings here. one of the things, there is no sign that anyone has anyone less dug in than before. the republicans said we don't see that it's in our interests to give the president a win on anything, which is why the

president and unusually explicit terms on thursday night at a fundraiser after 10:00 at night said here is what we're going do -- we're handing the olive branch of cooperation and if you don't play with us, we're going to swat at you. it's not clear they have moved much past sort of the stalemate they were in 10, 12 days ago. gwen: didn't he have republicans into the super bowl watch party last year, too? >> yeah. it helped a lot. we saw financial regulation stalled again. we saw senator shelby say he had is going to put a blanket hold on the nominees. everything old is new again. >> there is some talk at the white house that they have to take a hard look at the filibuster process. every time there is a vote in the senate to slow things down or delay things, they need to make the filibustering senators come to the floor actually come

to the floor. that may not be good for them in the future. they may want to hold back. it was a collection of actions that seemed to add up to, again, more talk, not much progress, a lot of politics which both sides seem to be trying to figure out, is there any percentage for us to actually work together. a couple things perhaps on a jobs bill, there will be a little bit of cooperation, but very much at the margins. financial regulation, that seemed to hit the skids again this week. it wasn't going well for starters. again, not a lot. >> how about health care? >> one of the things that happened in that meeting with the democrats this week is that you could -- they got up one after one and essentially pleaded with the president to say show us the way we need to go now. it's stalled. we're not quite sure how to proceed. he said at one point, ok, basically all of us need to get in a room and decide what we think. after all, it's the democrats who can't agree yet on the measure. gwen: they're still in the majority. >> he said this week we're going

to come up with something. he did not say how long or when or how long it would take them. once we have an agreement between us, we'll go to the republicans and say got any ideas? if we don't like them, we're going to have a vote. he is saying, once we get our act together, we're muscle this through. that isn't the soul of compromise and bipartisan thip that we're talking about. >> what legislation is he more apt to put forward now? are there some pieces that are more appealing in this environment or less appealing given all the effort to reach out and talk and create a climate of bipartisanship? >> the list is shrinking. 2010 is an election year and republicans are mindful that's nine months away. the other signal that we were able to get is they would like to put a jobs bill through. they have some money, depending on how you count it, left over from some of the money they got back in tarp. it's borrowed, too, but it's coming back in. they want to spend some of that on construction and unemployment.

there are some republicans that are trying to work out with democrats perhaps a payroll tax freeze for new workers. that isn't done yet. a couple of weeks perhaps. they are very mindful that jobs are their number one problem. gwen: is it me or is it a circular firing squad, the democrats are yelling at the president saying tell us what to do. he is saying you democrats ought to be taking the lead and everybody is frozen in place. >> a lot are up for re-election and probably don't see a lot of percentage in signing on to some of the things that the president would want to do, particularly in states where the races are close and the voters are more restive. gwen: let's move on to another big moment on the hill this week. a few of us around the table here remember the early days of the clinton presidency. in 1993, he made what is now regarded as his earliest stumbles trying to keep a campaign promise to keep gays and less bees open in the military. they settled on a compromise. if don't advertise your

orientation, no one will kick you out. military leaders said don't ask, don't tell never worked. mike mullen led the charge. >> putting individuals in a position that every single day they wonder whether today is going to be the day and devaluing them in that regard just is inconsistent with us as an institution. i have served with homosexuals since 1968. everybody in the military has. gwen: some members of congress including celebrated veteran john mccain disagreed. >> this would be a substantial and controversial change to a policy that has been successful for two decades. it would also present yet another challenge to our military at a time of already tremendous stress and strain. gwen: so, nancy, what if anything has changed? >> legally, nothing has changed because it takes an act of congress to end the ban on gays and lesbians openly serving in

the military. but admiral mullen's statements were surprising to everybody in the pentagon. when they appeared on the hill, they expected ron earth gates to say what we did, that we would commission the review and look at ways to implement this, that we would honor what the president called four in the state of the union address. admiral mullen made a personal and impassioned plea for lifting the ban. it really resonated indeed the building. even if the law hasn't changed, the tenor in the building has changed. he has spoken. gwen: you were at the enter gone the day after the announcement, did you get a reaction? were people surprised or accepting? >> people were surprised. it caught everyone off guard. here he came out and said it with such conviction. at one point on the hill, a congresswoman on the hill said to the chairman, i appreciated you sharing your feelings.

he corrected her and said these are my beliefs. at one point sessions questioned him and said this is our job to change, not ours. the chairman said this is about leadership in terms of why he said what he said. it caught the building off guard. you heard a lot of talking in cubicles and lines in serving with gays and lesbians in the military, what it means to cohesion and morale. it was an interesting discussion where people are saying it's not a matter of if, but when. >> i don't think there is in society as a whole, ideas have changed hugely since 1992, particularly among the group of people who is most likely to go into the teenagers, much different than that. is inside the rank and file uniformed military, has it changed, or is that culture -- and the pentagon is one place. when you get outside of washington, has it changed or changed more broadly inside the

military culture? >> it sent a shock wave, if you will, through the building. the top leadership are still hess stability on general james conroy said he is opposed. the army chief of staff says not while we're engaged in two wars. in you're a soldier serving in iraq and afghanistan, it won't be tolerated. there is no more joking and harassing. the highest ranking military officer has spoken and said this is not acceptable. i want a military where people don't have to lie about who they are to defend their country. gwen: do you see the same generational divide? >> younger soldiers have no problem with it because they grown up their whole lives, their adult lives under a don't ask, don't tell, this is not a new issue for them. for the older rank and files, they say this fundamentally changes the culture of the military. this is a family-oriented unit. this will change how we serve.

they'll bring up things like we'll have to get separate facilities. what would it be like if gays and lesbians were allowed to show public displays of affection on base. it will change the culture. >> as a practical matter, what happens if congress, if they do repeal the law, fewer separations? >> secretary gates spoke to this. he said we're no longer going to have third parties come forward and be allowed to out gays and lesbians in the military. since 1994, 13,000 servicemen and woman have been forced to leave under don't ask don't tell. 80% were those that came forward on their own. the secretary is trying to address the remaining 20%. it's trying to get at the main intent. if you're a gay or lesbian military person and you don't want to serve, you don't have to, but we don't want a climate where people are persecuted, witch hunts going on searching for gays and lesbians and forced them out. gwen: they stopped enforcing

them for quite some time. >> at the peak in 2001, it was 1,273. eight years later and two wars later, we're down to 428 in 2009. >> a year. gwen: a year. >> why does it take a law, if it was originally a presidential policy? >> don't ask, don't tell is an instruction sheet on how to implement the law on the books that says gays and lesbians can't serve. so you have to get rid of the law, which was would nullify the order. gwen: thanks a lot, nancy, finally the debate that never goes away. how best to fight terror. this exchange at a senate hearing left a distinct impression that the u.s. could be under imprint threat. >> what is the likelihood of another terrorist-attempted attack on the u.s. homeland in the next three to six months, high or low, director blair? >> an attempted attack, the priority is certain, i would

say. >> mr. pineta. >> i would agree that. gwen: even washington's newest senator misread. >> the c.i.a. director said there will be another al qaeda attack here in the united states in the next three to five months. and obviously, this is frightening news. gwen: i didn't hear that. the president's budget also makes clear that another anti-terrorism goal, closing dwan is fartherer -- guantanamo is farther out of reach. an approach that has come under sharp attack in the case the alleged christmas day bomber. pete broke the story that he is talking again. why are we hearing that now? >> we're hearing because he is talking again because the word was starting around about it and the administration is eager for people to know this. ever since he was arrested, he was initially questions, he talked for about an hour. he went into surgery for the burns on his legs. when he came out, they tried to question him again and he said enough. so they finally gave him the

miranda warning and he clammed up. the administration has been hammered by administration who said you completely mishandled this case. he should have been an enemy combatant in the military justice system and we could have exploited him for the intelligence. the obama administration is eager for the public to know that, no, putting him in the civilian court system hasn't stopped him from talking. he is talking now. he is giving all the names, dates, places, who he met with, where he went, how the plot was organized, who put him up to it. they said the miranda warning is not the end of the day. >> isn't some of the back and forth about this part of the leftover fight from the bush administration about whether the entire war on terror and the change in the way they defined constitutional rights was the right step then, and how much of this is really important to prosecuting this case and finding out who sent him and whether we can get that guy? >> well, i suppose -- i think there is probably equal amounts of it. there is some very legitimate

concern about whether this was a missed opportunity. the government says no, it wasn't. look, he is talking. and they say, by the way, that what got him talking again was the decision to go find members of his family in nigeria who is from who would come over and persuade him to talk. the administration insists if he had been an enemy combatant, his family members wouldn't have come here. they say there is no guarantee that putting somebody in the military justice system will somehow make them more likely to talk to us. they say there is experience with people in the criminal justice system talking, even after they're arrested, even after their given the miranda warning and there isn't that history with defendants in the military justice system in the u.s. gwen: is she talking, do they think, because there is sort of deal that he feels he is going to get? >> they insist that while there are plea negotiations or the possibility of a plea is going on, i shouldn't have said gosh -- he is not talking in return for some offer. if you talk to us, we'll give

you this. we'll try to cut you sentence. they say that sort of deal cutting is not going on, it does seem very likely that this case will end with a guilty plea and not a trial. >> going forward, what does it say about how you go about deciding whether to prosecute someone under civilian court or under a military commission? gwen: that's a question about guantanamo and what is happening at many levels. >> i'm not sure it provides an answer. what they say that in this case, look, we can use the civilian justice system. we can still get him to talk. now, what the republicans are saying, yeah, but he was silent for a month. the fact is the obama administration is willing to put some people on trial before military commissions. for example, the defendants who were accused of attacking the u.s.s. cole yemen. they will be in sin trials. gwen: in new york. >> no easy answer to this. gwen: we'll be watching all of it. thank you all very much. we thank you as well. we have to go now and dig ourselves out of a washington

snowstorm, but you keep up with daily developments every night at the pbs news hour. we'll see you next week on "washington week with gwen ifill." good night. >> download our weekly podcast and take us with you. it's the "washington week with gwen ifill" podcast at washingtonweek.org. >> "washington week with gwen ifill" was produced by weta which is solely responsible for ifill" was produced by weta which is solely responsible for its content. >> corporate funding for "washington week" is provided by -- >> we know why we're here. to connect our forces to what

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