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Josh Bolten, on the Record

By Michael Abramowitz
Monday, September 29, 2008

J oshua B. Bolten may be one of the most discreet White House chiefs of staff ever, seldom talking on the record to the press or appearing before outside audiences. But he made an exception Thursday, taking two hours out of a fairly intense endeavor -- saving the U.S. economy from a meltdown -- to appear on a panel hosted by his alma mater, the St. Albans School, in honor of the D.C. private boys school's 100th birthday.

At the Washington National Cathedral, Bolten and five other prominent figures in the nation's capital -- Sens. Evan Bayh (D-Ind.) John W. Warner (R-Va.) and Christopher S. Bond (R-Mo.); former congressman Harold E. Ford Jr.; and former Clinton domestic policy adviser Bruce Reed-- talked about some of the issues facing the next president. Bolten did not deviate much from White House talking points but did show flashes of the dry humor to which his West Wing colleagues have become accustomed.

Bolten spoke of what a privilege it is to work in the White House, not only on good days but on the "tough days" as well. "The last few days, I have been especially privileged," he joked in reference to the talks over a financial rescue plan.

When asked about the crisis, the chief of staff offered a familiar analysis, tracing the troubles to an overheated housing market. "We had a lot of people buying homes, which was a good thing," he said. "We had a lot of people buying homes on cheap credit. Which is normally a good thing -- but it turns out we had too many people buying homes on too-cheap credit."

Bolten said it was essential that the government act quickly to "prevent the seizure in our credit markets" that is going on. "We've lost orderly functioning markets," he said. He also predicted the ultimate bailout cost to the government might be much less than the $700 billion price tag mentioned by Treasury Secretary Henry M. Paulson Jr., noting that the government might eventually "get a pretty good deal" on many of the troubled assets Paulson is proposing the government buy.

"That's not $700 billion out the door," Bolten said.

Bolten also addressed the difficulties in getting Iran to abandon its apparent drive for a nuclear weapon, which he labeled as one of biggest foreign policy challenges facing the next president. He said that although he thought that there might be "opportunities to engage" with the Iranian people through cultural exchanges, it would not be a good idea to hold direct talks with the current leadership.

"It would be an enormous mistake for the next president to sit down with" President Mahmoud Ahmadinejad"without any preconditions," Bolten said. "We have limited leverage" with the Iranians, he said. "That is a chip which should only be granted in exchange for some modification of behavior."

Taking Ownership in the White House

Bolten's comments about the housing market were in keeping with the message from his boss. In his prime-time speech on the economy, President Bush argued Wednesday that excessive optimism in the housing market played a central role in the financial meltdown. The analysis was striking from a president who has frequently bragged about the government's role in increasing homeownership rates and in decreasing government regulation of the housing market, according to some research from my colleagues Dan Eggen and Madonna Lebling.

In 2004, for example, Bush told a group of carpenters in Phoenix that "the housing industry is booming, which means more people own their home. And that's positive."

"We want more people owning their own home. There's nothing like saying this home is my home," Bush said, adding: "I've called on private-sector mortgage banks and banks to be more aggressive about lending money to first-time home buyers. And the response has been really good."

During an October 2004 speech to the National Association of Home Builders, Bush talked about his administration's record on encouraging homeownership -- including a proposal to allow first-time buyers to make no down payment. He cast the effort as part of an "ownership society" that would also include health-care and retirement accounts, and he added that "we must remove the regulatory barriers on our home builders." The remarks garnered loud applause.

Two years later, in New Hampshire, Bush was still optimistic. "I think it's important for policy to promote ownership," he told an industry group. "There's nothing better than saying, 'I own my own home. Welcome to my home.' "

By last week, Bush's message had changed. "Easy credit -- combined with the faulty assumption that home values would continue to rise -- led to excesses and bad decisions," the president said, citing risky loans from lenders and borrowers who "took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher price later on."

"Optimism about housing values also led to a boom in home construction," he continued. "Eventually the number of new houses exceeded the number of people willing to buy them. . . . The decline in the housing market set off a domino effect across our economy."

This is probably not the ownership society that Bush had in mind.

Iraq and the Calendar

The White House is still hoping to wrap up a long-term strategic agreement with Iraq before year's end, but Iraqi Prime Minister Nouri al-Maliki offered a hint at some of the political difficulties in a little-noticed interview with Iraqi journalists earlier this month.

One of the big issues in the negotiations is Iraqi insistence that the United States agree to an "aspirational" date to withdraw U.S. troops.

"Perhaps one of the two most important points is deciding the final date," Maliki said, according to a U.S. translation service that monitored the interview. "Actually, the final date was really the end of 2010, and the period between the end of 2010 and the end of 2011 was for withdrawing the remaining troops from all of Iraq, but they asked for a change [in date] due to political circumstances related to the [U.S.] domestic situation so it will not be said to the end of 2010 followed by one year for withdrawal but the end of 2011 as a final date. Agreement has been reached on this issue. They are willing to respond positively because they, too, are facing a critical situation."

Why is this curious? A 2010 withdrawal date sounds suspiciously like the timetable being promoted by Democratic presidential candidate Barack Obama. Was the sometimes enigmatic prime minister suggesting that the administration was pushing for a different withdrawal date to show some distance from Obama?

The White House says emphatically that that's not the case, that any decisions made were based on conditions on the ground.

Conservatives have accused Obama of politicizing the negotiations. Conservative columnist Amir Taheri recently quoted the Iraqi foreign minister as saying the Democrat tried to get them to delay an agreement until after there is a new president -- an account vigorously shot down by the Obama campaign.

Trade Pacts in Limbo

As Congress heads for the doors this week, one bit of unfinished business from the Bush administration's perspective is the trio of free-trade pacts the president has been promoting with Panama, South Korea and Colombia. The White House remains hopeful that the House and Senate could take them up in a lame-duck session, perhaps in December, but prospects are looking increasingly doubtful.

The interim spending bill Congress is sending to Bush this week would fund the government through early March, so there is not much incentive for the leaders to return and approve deals that the president has described as vital to economic and security interests.

Quotes of the Week

"If money isn't loosened up, this sucker could go down."

-- President Bush on the economy at a meeting Thursday with congressional leadership.

"I don't care what somebody on some college campus says."

-- Bush at the same meeting in response to a letter from 192 economists (courtesy of Jonathan Karl, ABC News) .

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