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tv   Morning Express With Robin Meade  HLN  October 9, 2009 6:00am-10:00am EDT

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standing behind it there because i think that accuracy very difficult position for the taxpayer. if we want the government to be providing credit support, i think we ought to do it, you know, in a more sort of direct fashion and say this is what we're doing. this is how we're limiting it. this is how we're pricing for it and so forth. >> thank you. >> senator? >> were you in line? >> i think senator greg may have been in line. >> the way i look at this is it is sort of an inverted pyramid. we got all this structure and everything like that but at the bottom of the pyramid is this person who borrowed money on a house and until you can get that
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done correctly, until the underwriting of that loan is done correctly, you're really not going to solve the problem. the congress has set up a lot of incentives to lend to that person even though the person may not be able to afford the house. . guarantees are out there that say, well, maybe the person can't afford the house, but we'll guarantee the loan anyway. all of these create incentives for bad underwriting. is there some way to create incentives for good underwriting? should we require recourse loans? should we require a percentage of -- that there be 10%, 15%, 20% -- can't be loaned to. 20% -- can't be loaned to. should we have coveredon something at that entry
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point in this process that we can do that doesn't undermine the public policy which is that we want everybody in america to own a house? i mean the two conflict, right? do you have any thoughts in that area? >> a couple, senator. first, i believe in diversification and diversity. i think one of the things that impresses me in the work i do is, you know, you look at mortgage lending. on the one hand, there's tremendous benefit that american households get from standardization of mortgage products. on the other hand, the american household is a very diverse entity. it's different ages, different structures, different income patterns and so forth. so i would hope that whatever sis testimony we come up with, i
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would not look for one answer, but, in fact, a market system that is as robust as this country is which is allowed for -- covered bonds might be an approach. recourse lending is an approach. i would note that the federal home loan bank system which we've not talked about, they for a number of years have had a mortgage purchase program. it's actually shrinking a lot right now. one mark of that program was, in fact, the initial credit risk on the mortgage actually went back to the original lender. the mortgages in that portfolio have performed better than sort of the average in the country this past several years. but i would look to more than one solution to this because i think we've got households in different situations that have different needs. and the richness that i think having multiple sort of
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conduits, if you will, between capital markets and these individual lending transactions allows for diversification of credit risk and allows for greater opportunity for individual ous holds. >> i do accept that as a very reasoned approach to this, you still have the problem that we have created these massive incentives in our system to undermine good underwriting. i mean, basically our guarantees undermine good underwriting. this idea that the originator is just out there for a fee really undermines good underwriting. so how do you -- what do you do to put back in the structure that does some discipline on the underwriting side? >> senator, that's -- i think that's a very fair question. it's one we all have to grapple with. if i could in some sense add to it with some additional information, we sent up to the congress a couple months ago a study that we were required to do on guarantee fees by the
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enterprises. one of the striking things about that study is what it reflects about the cross subs si dies asian of what was going on westbound the gle's credit book. you have borrowers that are in 15-year mortgages that are, in fact, paying morrellive to their risk than someone in a 30-year mortgage oov mortgage. you have someone a high credit borrower paying less more than a less credit worthy borrower. the motto we've put out there accepted and encouraged this sort of thing. when you do that, it does not create the best inscentives for people to have the most sound, you know, approach to taking credit. so i think, in fact, there's good incentives to have credit risk properly priced to borrowers. this gets directly at your
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question i think about underwriti underwriting. while i would acknowledge and share your view that this is something that needs to be addressed, i think i don't have a particular answer. i think the answer does lie someone in the decisions that policymakers make about what kind of role they want for the government in the future operation of the housing finance system. >> clearly that's the problem. i was sort of hoping you had a solution for us. thank you. >> senator witter. >> thank you very much, mr. chairman. thank you, mr. demarco. this sort of goes to senator menendez's questions. on june 30th of this year at a banking committee hearing
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secretary geithner agreed that fannie and freddie were a core part of what went wrong in our system. a core part. would you agree with that? >> clearly, senator, the failure of these two companies, the need to put them into government conservatorship and the amount of taxpayer money injected into them to keep a secondary market operating is a sign that they were central -- that their failure was a central part, a key part of the broader financial crisis that this country has been facing. >> i know you're not responsible for any of these broad regulatory reform proposals. but given that, don't you think it's odd that fannie and freddie reform are nowhere on radar? basically no part of those broad proposals? i'm not saying they should be
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the only part or they're the only problem. but isn't it logical for them to be a big part of that discussion? >> well, i clearly think, senator, that the administration and the congress need to deal directly with the issues of fannie and freddie and do that in the context of the broader housing system. with respect to regulatory reform, i may have said earlier this morning, but in any event, no matter what sort of path reform takes and what sort of system or set of entities that exists when congress is done, whatever that looks like, it strikes me as though there's still going to be multiple government agencies with key responsibilities for some aspect of our housing finance system. and so i think that it would be a prudent and wise thing to have arrangements whereby whatever
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that collection of agencies are -- and think about the department, not just regulatory agencies, but places like hud and the veterans administration and so forth, that there be sort of a systematic way for agencies with some responsibility for aspects of our housing finance system to themselves be coordinated and be sharing views on what's going on in the mortgage market, risks that are out there, whether they have to do with financial risks to investors or consumer protection issues where borrowers are at risk. and so whatever that reform discussion goes, i hope that given the huge size of the mortgage market as a particular credit market and how important it is to so many households around the country. i would say not just homeowners, this is very important to renters as well. this covers all the american people. i think we ought to be making sure we consider how we're addressing that kind of coordination. >> right.
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apart from fannie and freddie as institutions, it seems to me that the sort of perverse incentives in terms of safety and soundness that senator gregg was describing was clearly part of the problem as well. is that fair to say? >> sure. >> and again, maybe i'm missing something. but it seems to me there's little to nothing addressing that in these broad regulatory reform proposals. i know those proposals aren't from you. they're not your responsibility. i'm just asking for a reaction to that. >> well, i mean -- the administration has put forward a regulatory reform proposal and has pledged to have its ideas on the feature of the housing gses early next year. the administration -- that really is the administration to answer in terms of their thought process on this. i'm sure that they see the connections that are here that
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secretary geithner and the rest of the administration, i'm not going to speak for them in terms of the timing or staging of how they develop this. i will say this is a challenging -- not a challenging issue, but there's been so much effort focused on trying to get stability into the mortgage market right now and assess where we are to give that a little time to figure out where they want to go is i suspect part of what may be going on. >> this is just a statement on my part. it seems to me we're delving into regulatory reform, and in doing so, in terms of the big proposals put forward, there are a lot of things being proposed which, as i see it, have little to nothing to do with what went wrong, and there are whole gap ins the proposals including fannie and freddie where a lot of what went wrong isn't addressed, isn't being changed
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in any way including the perverse incentives senator gregg was talking about. i hope as the committee works hopefully in a bipartisan way on this we sort of use as a starting point what the real problems were that developed over the last several years. >> senator, if i may, just a couple things from the standpoint of my agency. first, you know, we are working on developing and implementing the authorities that were given to our agency last year in here. so that's a step along the way. i would just like to offer to you as i've offered to all the members of the committee, we would be glad to continue to meet with you all individually and collectively, to have discussions along this way, as we are working and having discussions with the administration. i do know the administration cares deeply about wanting to tackle this and are working on
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that and we're having discussions with them as well along the lines of the things i presented in my testimony -- testimony this morning. but i think at least we all can enter this sharing a sense that this is a challenging but important issue for the country, and we all want to see it done right. we're prepared to work with you, senator. >> great. well, i thought the administration was virtually always for comprehensive reform. i guess that breaks down when it comes to fannie and freddie in terms of doing it together with these other pieces. final quick line of one question. cboest maelts that the conservatorship will cost taxpayers $389 billion. would you roughly agree with that figure as of now? >> senator, i can't comment on that. it was actually just this morning that someone al lerlter
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that cbo came out with new numbers. i haven't had a chance to look at them or reflect on what those numbers represent. >> whatever those numbers are, they're clearly going to be very significant. what's the taxpayer exit strategy from that type of liability? >> well, senator, i think that's what we're working on and what we're talking about right now. the immediate strategy is to provide -- is to bring as much liquidity and stability to the mortgage market today as we can, to try to prevent as many avoidable foreclosures as we can because those foreclosures are only going to add to the tab. so i think that's where our immediate efforts are, is to bring liquidity back to the market and to try to stem this rising tide of foreclosures so we can keep individual homeowners committed to their home in their house, stabilize neighborhoods and start to see a curtailment in the credit losses that are widespread in our housing finance system right
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now. that's where the immediate focus is. >> but beyond that, shouldn't there be a strategy for exiting out of that type of liability for the taxpayer in the future? >> yes, senator, there should. i think that's very much what we're talking about when we're talking about the future of the housing finance system in the post conservatorship framework for fannie mae and freddie mac is how do we exit and how do we then create a structure that is morrow bust so we don't end up in this kind of situation again. i would agree entirely. that's what i hope my agency has been able to contribute in some way to that this morning. and we very much look forward to continuing the dialogue so we can achieve just that senator. >> great. thank you. >> thank you, mr. demarco for your public service. i appreciate your thoughtful
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testimony and welcome others to submit additional questions for the record. you may be excused. >> thank you very much, mr. chairman. >> the second panel will take its place. >> fed chairman ben bernanke speak to a board of governors. and on "washington journal" we will take your calls and talk about the health care debate. a senate banking subcommittee holds a hearing on credit access
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for manufacturers. that is live on c-span 3 at 9:30 eastern. the american enterprise institute looks at the federal government's role in the u.s. economy, live 11:00 eastern, on c-span. >> tonight, a rare opportunity to see personal interviews with current and retired supreme court justices. >> when you have the dissent, it is yours. you say what you want. if somebody doesn't want to join, who cares. this is what i want to say. when you are writing the majority, you do not have that luxury. you have to crafted in a way that at least four other people can jump on and you try to crafted in a way that as many people as possible will jump on. >> it is the first of three
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nights of interviews with the justices. that starts tonight at 9:00 eastern, on c-span. to see more videos, including all the interviews. our series, go to c-span.org/ supreme court. >> federal reserve chairman ben bernanke on financial commitments made by the fed over the last year. he spoke last night in washington for 40 minutes. to fight a recession, a banking system to interest rate. it would support economic growth. in the current downturn, the federal reserve has faced two historically unusual constraints on policy.
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first, the financial crisis increasing credit risk spreads has reduced monetary accommodation with reducing the federal funds rate significantly. second, since december, the targeted funds rate has been effectively at a range between zero and 0.25 basis points. to provide additional support to the economy despite those limits on traditional monetary policy, the federal committee and the board of governors have taken a number of actions and initiatives series of the programs that have increased the size and changed the competition of the federal reserve balance sheet. ipod would be useful this evening to review for you the most important -- i thought it would be useful to review all of this.
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as you will see, it provides a convenient means in explained the steps the federal reserve has taken beyond conventional reductions. for those of you who might be interested in learning more about our policies, an excellent source of information is the feature on the website, "credit and liquidity sources." this goes well beyond the basic balance sheet we publish every week. to get started, slide one, do you see that? slide one provides a bird's-eye view of the federal reserve
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balance sheet. as of september 30, the quarter ended. it has corresponding david just before the quarter ended for comparison. as you can see, the assets of the federal reserve total about $2.10 trillion. the sludge as the principal categories that we hold -- the slide shows the principal categories that we hold. the liability side of the balance sheet summarized in slide one consists of currency of the federal reserve notes. the bank reserve balances, funds held in accounts of the federal reserve by commercial banks and other depository institutions.
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our capital is about $50 billion. let's look to the balance sheet in more detail on the asset side. but the reserves and assets existed almost exclusively of treasurys. since late 2007, the share of their assets made from treasury securities has declined while our holdings of other financial assets has expanded dramatically. putting aside the miscellaneous other assets which include foreign exchange reserves, the assets on the balance sheet go into four categories. first, the short-term lending programs that provide a backstop liquidity to financial
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institutions like banks, brokerage-dealers, and money- market mutual funds. second, targeted lending programs which include nonfinancial bars and address the functions and credit markets. third, holdings of marketable securities including treasury notes and bonds, the debt of tse's, and agency guaranteed mortgage-backed securities. fourth, emergency landing to avert the collapse of systemically critical institutions. i will say a bit more about each one of these categories. the breakdown of the first category of assets, short-term lending programs for financial institutions, is shown on slide to. wo. these total about 12% of the assets on the federal reserve balance sheet. this category of assets consists
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of loans made in directly or directly to sound institutions. such loans are fully secured by collateral and by recourse to the borrowing institution and offered maturities no greater than 90 days. thus, they involve very little credit risk and the federal reserve has suffered no losses on these loans. from its beginning, the federal reserve, through its discount window, has provided credit to depository institutions to meet unexpected liquidity needs, usually in the form of overnight loans. the provision of short-term liquidity is a longstanding function of central banks. as we know, the principal told for arresting financial panic. a k? -- ok?
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liquidity for financial panic -- when short-term funding markets deteriorated in august, 2007, the federal reserve's first response was to try to increase the equity available to the market by lowering the rate charged for loans and making it easier for banks to borrow. however, as in past episodes of financial distress, banks were reluctant to rely on their credit. that frustrated our attempts to increase liquidity. the bank's concern was that their recourse to the discount window would lead market participants to perceived weakness, a stigma problem. to address this issue in 2007, the federal reserve established the term option facility -- au ction facility.
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the introduction of this facility seems to have solved the stigma problem. that is partly because of the sizable number of borrowers and possibly also because of the three-day period between option and settlement. -- auction and settlement. as of september 30, conventional discount window loans total $29 billion. these programs appeared to have helped stabilize the financial system here and abroad by ensuring to spot -- depository institutions could access and liquidity. in particular, increases in federal reserve loans to banks have been associated with substantial improvements in interbank lending.
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foreign banks with large dollar funding needs have also experienced a powerful quiddity pressures over the course of the crisis. this unmet demand from foreign institutions $4 was spilling over into u.s. spending markets, including the federal funds market leading to increased volatility and liquidity concerns. the federal reserve helped establish reciprocal currency arrangements. in exchange for foreign currency, the federal reserve provides dollars to foreign central banks so that they in turn lent to financial institutions in their jurisdiction. this lending by foreign central banks has been helpful in reducing spreads of of volatility in a number of dollar
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markets. the federal reserve was credit risk is minimal as the foreign central bank is the counterpart and is responsible for repayment, not the institutions that receive the funds. in addition, the federal reserve receives foreign currency of equal dollar value. the fed reserve also bears no exchange rate risk in these transactions pe. in march 2008, following a sharp deterioration in funding conditions and the near failure of the investment bank bear
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stearns, the federal reserve open up its short-term lending facilities for primary dealers. the discount window lending are part of the federal reserve's standard tool kit and are recognized with provisions identifying and authorizing each practice. however, the extension of credit to primary dealers is not authorized by routine circumstances. to make these loans, the board of governors imposed a general emergency lending authority provided by section 13-3 of the federal reserve act which allows us to make loans und unusual circumstances to any individual partnership or corporation. using this authority, the federal reserve made short-term, collateralized loans to primary dealers. in serving as the lender of last
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resort, the federal reserve supported broader market and systemic stability. reflecting a gradual improvement in financial markets, outstanding credit dropped to zero. the fell reserve also invoked this story to -- the federal reserve also invoked this action. the industry suffered a significant run in 2008 after prominent fund was not able to maintain an asset value of $1 per share. with an insurance program offered by the treasury, the lender activity helped end the run and stabilize the money fund. this shows the credit outstanding under the federal reserve program aimed at stopping the run on money funds has also dropped essentially to zero. the provision of liquidity by
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the central bank is crucial for the arresting a financial panic. by the same token, the pricing and terms of the central bank lending facilities should encourage firms to return to the private market when the panic subsided. this shows this has been the case. short-term lending to financial institutions financialzero in 2007 before the crisis began and exceeded $1.10 trillion at the end of leicester. currently, this category has  $264 billion, a decline of more than 74%. we expect this trend to continue as markets improve. the second category of assets on their balance sheets should targeted lending programs aimed at improving the functioning of key credit markets, providing critical support to the economy. unlike the first category of
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assets, some of these loans are to non-financial institutions. the current amount of credit outstanding under these programs, like talf, is great. the commercial paper market is important for short-term funding for financial and non-financial terms in the united states. -- in september, 2008, the collapse of lehman brothers set off a chain reaction. the run on the money market fund that ensued severely disrupted the commercial paper market. during this period, commercial paper rates spiked for the highest quality firms.
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most firms were unable to borrow four terms wonder than a few days, exposing the borrowing firms and the lenders to a significant role over risk. the federal reserve cpff address this risk by attempting to land at a three-month rate. this program appears to have been successful. since that was created, commercial paper spreads have returned to near-normal levels. as anticipated, borrowing has declined sharply from $334 billion to less than $50 billion today. before the crisis, securitization market for an important conduit of credit to the household business sector. some refer to this as shuttle banking. -- shadow banking.
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they were virtually shut down during the crisis. the federal reserve launched talf. eligible investors could borrow triple a rated mortgage-backed securities. the program originally focused on a credit for households and businesses, including credit card loans, auto loans, and student loans and small business administration loans. we added mortgage-backed securities to the loan. s. rate spreads for asset backed securities haps declined substantially. we're seeing some market activity. talf carries little credit risk for the federal reserve.
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this credit has increased over time as loans made under this program range from three-five years. the commercial paper program and talf are unconventional programs for central bank. i think this is justified to reflect the eve illusion of financial markets. sources of credit such as the commercial paper market and the securitization market are critical to the u.s. economy, especially compared to the economy we see abroad. by backstop in these markets, the federal reserve has helped normalized credit flows for the betterment of the general economy. the third major comic book -- a
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category of assets is holding high-quality marble secure is, treasury securities, agency debt, an agency-backed mbs. these holdings currently total about $1.60 trillion or about 75% of the federal reserve assets. by way of comparison, prior to the crisis, the federal reserve held $91 billion and these securities were treasury obligations. the federal reserve police of longer-term securities are set to continue to rise in the near term and will increasingly dominate the asset side of the balance sheet. our holdings of securities declined before the crisis to the beginning of this year. we announced in november 2008 that we would begin to purchase
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agency debt and agency mbs. in march, we announced that we would increase this in agency- backed mbs. we recently indicated that we expect to purchase "$1.25 trillion in march. the purchase of agency securities will be executed by the end of the first quarter of 2010. the federal reserve's purchase of treasury securities has served to bring its holdings of u.s. treasury debt back to the level we held before the crisis. the principal goals of our recent security purchases are to lower the costs and improve the availability of credit to households and businesses. as best as we can tell, the programs appear to be having their intended effect.
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30-year fixed-rate mortgages have responded very little to the federal funds rate but now have rates declining about 1.5 percentage points which helps support the housing market. in addition to these programs, we have provided financing directly to specific systemically important institutions. we used our emergency lending powers to facilitate the acquisition of bear stearns by j.p. morgan chase and company and also to prevent the imminent default of the insurance company a.i.g. from a credit perspective, these emergency loans carry more risk in the traditional provisions a set -- of central by liquidity. these loans amount to less to 5% of the federal reserve balance
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sheet. federal reserve lows of collateralized are quite small compared with their holdings of assets that carry little or no credit risk. second and more important, these financial risks were the result of actions taken to avert what likely would have been a substantial further intensification of the crisis. we undertook these operations with great discomfort and only because the united states has no workable legal framework for writing down its estimate the critical financial institutions in a way that would allow those companies to fail and their creditors to lose money without affecting massive damage on the system. government has joined the federal reserve in calling on congress create a new regime.
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the rules governing such a regime should spell out as precisely as possible the role that congress expects that the reserve to play in such resolutions. having reviewed the main categories of assets in the federal reserve balance sheet, let me touch on the liability side. the two main console -- components of federal reserve notes and reserves held at the federal reserve by depository institutions. as the government's fiscal agent, the federal reserve also holds treasury deposits. the amount of currency in circulation is determined by the public demand. the public includes non u.s. residence which is more than one half of u.s. currency by value. banks are required to deposit a certain quantity of reserves which depends on the amount of
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customer deposits that the bank hold. reserves exceeding the required amounts are called excess reserves. as you can see, a large majority of bank reserves are currently excess reserves. federal reserve funds if lending and securities purchases through the creation of bank reserves. the quantity of bank reserves has risen dramatically as the federal reserve balanchine has expanded. reserves are likely to continue to grow. currency and bank reserves together are known as the monetary base. as reserves have grown, the monetary base has grown as well. because banks are reluctant to lend in the current economic condition, growth in broader measures of money has not picked up remotely like the growth in the base. m-2 which comprises currency,
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checking accounts, retail money fund shares, is estimated to have been flat over the last six months. large increases in bank reserves are a characteristic feature of the unconventional policy approach known as quantitative easing. this provides banks with excess liquidity in the hope they will use some of that liquidity to make loans or by other assets. such purchases should raise asset prices and increase the growth of money. this may induce households and businesses to provide non money assets or spend more on goods and services. and a quantitative easing regime, this is sufficient to describe accommodation. although our approach entails substantial increases in bank liquidity and is motivated less
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by a desire to increase the liability to the federal reserve then by the need to address the crisis in specific credit markets in these programs, i have called our approach credit easing. this is tied more to the asset side of the balance sheet and the liability side. -- asset side of the balance sheet vend the liability side. -- than the liabilities side. my colleagues and i of the federal reserve believe that the accommodative policy will be warranted for it. tigard at some point, as economic recovery takes hold, we will need to tight monetary policy to prevent the emergence of completion problem down the road. looking at our balance sheet is
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useful in helping to understand key elements of the exit strategy from current policy. banks currently hold large amounts of excess reserves at the federal reserve. as the economy recovers, banks can find it comfortable to lend out their reserves which produced -- which would produce faster growth in to the thracian pressures. -- which would produce faster growth and lead to inflation pressures. excess reserves will automatically contract -- contract as conditions improve. the amount of credit outstanding in short-term
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lending and part of lending programs has already declined substantially. reserves could be reduced by about $200 billion per year over the next few years as securities held by the federal reserve mature or are paid. even of our balance sheet status large for a while, we have two broad means of tightening monetary policy paying interest on reserve balances and taken various actions that reduce the federal reserve's. we could use either of these approaches alone. to assure effectiveness, we would likely use both. congress granted thus afforded less fall to pay interest on bank balance sheets of the federal reserve. currently, we pay banks in interest rates at 1/4 of 1%. when the time comes to tighten
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policy, we can raise these rates as we increase the target for the federal funds rate. banks will not lend funds and money-market lower that bacon aren't risk free at the federal reserve. the interest rate of the federal reserve -- raising the rate paid on reserve balances discouraged its excess of growth in credit because banks will not lead to lend out the reserves at a rate lower than they can get at the federal reserve. the european central bank allows banks to place excess reserves in interest paying a deposit facilities. even as their liquidity
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operation increases its balance sheet, the overnight interbank rate has remained at or above the ecb deposit rates. the bank of japan, the bank of canada, and several other foreign central banks have also used their ability to pay interest on reserves to maintain interest rates. the ability to pay interest on reserves should be sufficient to allow the federal reserve to raise interest rates and control money growth, this approach is likely to be more effective when combined with steps to grow s -- excess reserves. the federal reserve could drain bank reserves and reduce the excess liquidity of other institutions by renting a large- scale reverse purchase agreements with financial market participants including banks, gse's and other institutions. reverse repos involving the sale
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by the federal reserve from the portfolio with agreement to buy back the securities at a slightly higher price at a later date. reverse repos drain reserves as purchasers transfer cash from banks to the fed. using the authority that congress give it to pay interest on bank balance sheets, we can offer term deposits to banks, roughly analogous to certificates of deposits that banks offer to their customers. the federal reserve could reduce reserves by selling a portion of its holdings of long-term securities in the open market. each of these policy options would help to raise short-term interest rates and limit the growth of money and credit, thereby tightening monetary policy. overall, the federal reserve has a wide range of tools for tightening of monetary policy when the economic outlook requires this.
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we will caliber to timing and pace of any future tightening together with a mix of tools to best foster our objectives of maximum employment and price stability. by using a balance sheet, the federal reserve has been able to overcome, at least partially, the constraints on policy imposed by dysfunctional credit markets. by improving credit market function in adding liquidity to the system, our programs have provided critical support to the financial system and to the economy. we have carried out these programs responsibly, with minimal credit risk, with a close attention to exit strategy. our activities have resulted in substantial trenches -- changes to our balance sheet. we will be prepared to tighten monetary policy when the time comes and return our balance sheet to a more normal configuration. thank you for your attention. [applause]
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it is late in the playoffs are on but i am happy to take some questions. [laughter] >> it is my understanding that the special circumstances relating to the gse may significantly impair the interest on reserves policy. i am wondering if there is any thing in the works to try and correct that situation. >> yes, prior to the, before we got the break down to 0.25 basis points, there was a larger spread. that was because of the supply of funds by the gse's in the
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funds market. they are not eligible to receive the interest fund reserves. we don't think that will be a problem. there is a strong incentive for banks to intermediate that process. as the base rate on reserves rises in the spread gets water, banks can borrow from the gse's and put money into the federal reserve. in addition, the gse's could do a reverse repos. one issue is that we may be pulling a lot of liquidity of the federal refunds -- the federal reserve market and we would think harder about how we identify the target for the federal funds rate. that particular issue is something we recognize and we think we can manage it.
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>> early on, you're trying to encourage banks to lend to businesses and households, wouldn't it have been a good ideaz to goodero on the interest rates? -- wouldn't it have been a good idea to charge zero on interest rates? >> we are close to that. we looked at this issue back in 2003 last time the interest rate of low. we had some concerns that rate of extremely low, money markets and the federal mopped funds market might not function well. those markets have functioned pretty well, in fact. we want to provide a bit of return and provide liquidity in
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those markets without going to zero. >> you have been very articulate about the absence of credit risk, as you see it in the federal reserve portfolio. imagine that there was a circumstance in which you did take some losses, is there any reason way central bank has to have positive capital? what would be different if your balance sheet showed liabilities in excess of assets to wherever you market them? >> we do not expect that to happen. [laughter] were it to happen, so long as there were sufficient assets to continue the market operations and get the money were you want, you would not impede effective monetary policy we feel that is
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not a particularly large risk. sorry. >> to what extent are you concerned that these actions may have exacerbated other problems and what is your sense about desirable proposals to deal with those problems going forward? >> and if nothing else, we are done. if we stayed in the status quo forever, now would be more significant. we have a serious too big to fill problem and we need to address that. the federal reserve has been
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very vocal in the need to address this problem as soon as possible. we have a number of proposals which are very much the same as the treasury has suggested. first, there is a need for strong supervision and regulation to prevent the excessive risk-taking that you allude to. we're working with the max baucus committee to develop additional capital charges and liquidity to requirements that would require phone -- firms who are deemed too big to fail. we would agree that to address moral hazard more effectively, you have to have more discipline with supervisory oversight. to do that, one year ago, a call for the creation of a special resolution regime that is an official bagger is a process
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that would allow the authorities to wind down systemically critical financial institution in a way that would not create cray chaos in financial markets but would allow the losses to equity holders and some creditors. i believe that can be done. i very much support that action in congress. it would have a tremendous benefit that would include markets that are not normally regulated. i think one of the major lessons of the last year is that too big to fail is an enormous problem. it is a problem in terms of a burden on the taxpayers, a problem in the financial markets, and going forward, it isn't -- it is a danger in terms
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of moral hazard. maybe one more question question ove>> do you think thae fed on a winding will proceed faster to the effect that the stimulus package is working? >> we want to see how the stimulus package affect the real economy. fiscal stimulus and monetary stimulus are substitutes. currently, looking at the amount of excess capacity in the economy and looking at the lowering of inflation, we believe that conditions will warrant policy accommodation for an extended period. the time will come when we have to tighten policy.
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we will try to make an assessment at that time. fiscal policy as part of a broad outlook. we'll take it all into account as we look forward as to what is the appropriate time and pace to tighten policy. thank you. [applause] >> tonight, a rare opportunity to see personal interviews with current and retired supreme court justices. learn about the effect of a new justice on the court. see what it is like to write an opinion. when you have the dissent, it is yours. you say what you want. if somebody doesn't want to join it, who cares. it is my decision. this is what i want to say. when you are writing the
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majority, you don't have that luxury. you have to crafted in a way that at least four other people can jump on and you try to crafted in a way that as many people as possible will jump on it. >> it is the first three nights of interviews with the justices. that starts tonight at 9:00 eastern on c-span. to see more videos, including all the interviews erred in our series, go to c-span.org/supreme court. >> a look at today's headlines and your phone calls live on "washington journal." the american enterprise institute to will look at the government's role in the u.s. economy, live at 11:00 eastern. we will also look at the role of white house economic advisers.
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in one hour, more about the health care debate with former comptroller general david walker. "washington journal" starts now. . host: herrity phone numbers. republicans, 202-737-0001. democrats, 202-737-0002.
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and all others, independents, 202-628-0205. here is what the chairman of the nobel committee had to say this morning. we will try to show you that a little bit later in a few minutes, as we wait for phone calls to comment. let me show you the "chicago tribune" headline. "obama wins nobel prize for extraordinary efforts to strengthen international diplomacy." here once again, we will try this. it is the chairman of the nobel committee earlier this morning on president obama winning the nobel peace prize. >> the nobel peace prize for 2009 is to be awarded to president barack obama for his extraordinary efforts to stage
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international diplomacy and cooperation between peoples. the committee has a statute -- has attached special importance . obama -- direct diplomacy has regained central positions, from the goal that the united nations is -- dialogue and negotiations are preferred, as an instrument for resolving conflicts. the world free from nuclear- armed -- host: president obama wins the nobel peace prize. that is the breaking news as americans are waking up. we want to get your reaction to it.
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we will get to your phone calls. let me tell you a little bit about the nobel peace prize for 2009. there were a record 205 nominations. the laureate, chosen by a five- member committee, wins a gold medal, and about -- and by jeff, on the republican line, what is your reaction? guecaller: when i first heard te news, i thought just that this was a joke, right? host: why is that? caller: what has he done? he really has not done anything to qualify for this. host: anything else? caller: i just do not understand why he would win the nobel peace prize. i do not think he should even qualify for it. host: we will move on to
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waterbury, connecticut. janet, democrats line. your thoughts? caller: hi, this is genet. i am absolutely thrilled. it has been a long time that i have been able to hold my head up high as an american, and i am just so excited, very happy about it. i mean there is a big mess that he has to clean up, but i think globally he has reached out and the world feels that. it is funny, i was in europe in january and all i heard was we are so happy that obama is president, we are so excited. he is extending a hand across the world. i am just thrilled by it. host: jeanette, let me show you a kenyan new site this
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morning, "daily nation." president obama's father is from kenya and he has spent some time there. we will try to show you other international newspapers this morning as we talk on "washington journal's" first half-hour about president obama winning the nobel peace prize. next caller. caller: i find it hilarious that republicans would make a comment about president obama not doing anything, but they accuse him of wrecking the economy. i think the president deserves this nobel peace prize because he is attempting, attempting to bring peace to the world. he is not going out trying to start wars. i definitely think he deserves it, and i think he should win another time before he leaves office.
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host: john, republican line. caller: well, i am happy for the president. i just hopes that the message -- i just hope that the message gets to the radical islamists that are trying to hurt us around the world. it was a great idea, give it time, but i do not know two weeks out of the inauguration if it was appropriate. i hope he will continue to do well. host: the committee chairman for the nobel committee has said it was not for the work that he has done or will do in the future, but for what he has done now and they hope the work that he has done now will be encouraged by awarding the nobel peace prize. your reaction to that? caller: well, i am sure it will continue to encourage him down the road he is going. unfortunately, at the same time we have groups in the united states that are coming out called wake up america and things like that that are
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basically connecting the dots as to how they feel that the president of the united states, although he is trying to work for international peace, is trying to create a socialist state in the united states by creating the nationalized economy and redistribution. so, i mean, as i am sure the world is applauding him because they like what he stands for, and usually when you have somebody that you can manipulate, you try to encourage them as much as possible. it is kind of a double-edged sword, so we will see what will happen. host: on november 27, 1895, alfred nobel signed his last will and testament in which he gave the largest share of his fortune to the nobel prizes. the nobel peace prize was dedicated to the person who has done the most in need best work for fraternity between nations,
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for the abolition or reduction of standing armies and the holding and promotion of peace congresses." and it says from wikipedia alfred nobel stated that the prize should be awarded by a committee of five people elected by the norwegian parliament. he thought that the price might be less subject to political question if awarded by norway. the peace prize is presented annually in oslo. also, alfred nobel died in 1896 and did not leave an explanation for peace as a category. the reason behind the peace prize is less clear than others. scholars have said it is a way to compensate for developing destructive forces. his inventions included dynamite and filicide, it says
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here. according to wikipedia this morning. democrats line tell me the name of your town, bob. caller: the name of the town is dracut. i have been watching this for a couple of all hours now and i find myself thinking, and a lot of people are going to be calling in because there are a lot of people in the country who just does like obama because they want to dislike him and it is the thing to do. but i find myself thinking that this is probably more of a repudiation of the last eight years than it is of the actual accomplishments of president obama because a lot of the things that he is trying to do -- he is trying to do. but i find myself thinking about the criminology that we have been living for the last eight
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years -- "axis of evil," "if you are not with us, you are against us." these are war like things, and this is a peace process, after all. it is not unlike somebody that is trying to create peace in the world. that is really all i have to say except for thank you for the opportunity to vent. host: there is an article that echoes what you said. "he had returned multilateral diplomacy in institutions like the un to the center of the world stage and appeared to be a slap at president george w. bush from a committee that harshly criticized his predecessor." as we go to the next phone call from pittsburgh on the independent line, we want to show you the city newspaper, their website.
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caller: i actually agree with the last caller, but i think that just because bush was not liked this not mean obama deserves it. obama has made several speeches in cairo, germany, and turkey, but yet the problem since -- the promises to pull out of iraq had yet to take full scale. closing guantanamo has not yet happened. bowling to russian pressure, the bo bowing to russian pressure. north korea has continued to defy the international community all while israel and the palestinian conflict has not been addressed. in my mind i do not think he is qualified. thank you for taking my call. host: joan on the republican line in stafford, virginia.
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we want to show you "the daily telegraph" from the united kingdom. go ahead, and joan. caller: thank you for having me. i just wanted to say that it is probably quite an honor for him to get the peace prize. i do not think that he was in office long enough to have made that strong decision to give this to him, and i stop and wonder -- he has just been asked to send 40,000 troops over to afghanistan, and he has not done it. did he hold off because he knew that he was in line to get this? i just -- you know, bush probably did some wrong things, but he did some wonderful things. you know, he gave the most money to aids in foreign nations.
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he did a lot of good things and people bashed him. nobody has reported the good things that bush has done. and he was the president for eight years. this gentleman has been president for the last eight months and has not done anything other than give speeches. there is no -- he has not proven himself. so he was given this honor. i think there were so many other people. the gentleman in afghanistan that built the schools by himself to get women into the schools. you know, there are so many other people that were probably more -- should have gotten this than the president. that is all i have to say. host: the nobel peace prizes have been awarded since 1901.
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"according to the nobel foundation, if none of the works under consideration is found to be of the importance indicated, the prize money shall be reserved until the following year." sandra on the democrats like, your thoughts this morning? caller: hi. host: you know what, sandra? we are having a hard time hearing you. let me put you on hold and see if we can clear that up, and we can come back to you. dayton, ohio, ricky on the independent line. caller: good morning. i do not feel that president obama should have won the nobel prize. according to a lot of reports, it is based on what he has done so far. he has not done a whole lot. host: do you think that the argument that he has changed the
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atmosphere, the international atmosphere, that he has put more emphasis on diplomacy, that that is a case for rewarding him the nobel peace prize? caller: i think that he has not really changed the political atmosphere. i think he has continued on with what pat presidents have done. bush in general with what past presidents have done. -- continued on with what past presidents have done. host: next call, sandra. caller: i am so glad. i am really happy that he got this. i think he deserves it. his whole campaign is positive, and i am in phoenix and, and guess who is running in president -- guess who is running for president in
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phoenix. mr. mccain. i love john mccain and i think he is a good guy, and i am from the east and i was raised to be prejudiced, and i thought my dad was going to kill me when i told him that i voted for mr. obama. but i just -- he reminds me of the days back in the kennedy era, where they are trying to build up the country. i do not think he is shady. i do not think he is just doing things like other people are telling him to do. i just think that he is doing what he wants to do, and he is trying to help our country, and i love it and i am really glad he won this. host: 8 tweet this morning from one of our viewers on to.com.
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-- on tweet.com. "people are not listening to the reasons why they awarded obama the peace prize. it is not just because he is the president." the prize has been awarded to 119 laureates, 96 times to individuals and 23 times to organizations. washington, d.c., rose on the republican line. caller: did you see there is a cash prize that goes with this as well? host: there is, according to the bbc website this morning. caller: that is interesting. besides president wilson, what other sitting president has gotten it? host: jimmy carter -- well, he was not the sitting president. three sitting president including barack obama. the last one was president woodrow wilson in 1919, and
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theodore roosevelt in 1906. caller: what somebody said before about this being a slap in the face to george bush by being awarded to barack obama. the same thing happened when jimmy carter got it in 2002, that that was a slap in the face to george bush. yasser arafat was given the nobel prize at one point as well, a known terrorist who killed people. at this point the state of israel, as far as barack obama's approval rating goes in israel, he is 4%. i do not ever remember george bush being 4% approval rating in israel.
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host: what information -- where do you find this information? what website do you go to. caller: i go everywhere. that is from "the new jerusalem post." i do not think the media does due diligence. host: other well-known names, rose mentioned yasser arafat. there's also mikhail gorbachev. mother teresa, henry kissinger, martin luther king jr., some other recognizable names that have won the nobel peace prize. john, good morning. your thoughts this morning on president obama winning the nobel peace prize for 2009? caller: it will give us something to talk around the water cooler about today at work. i find it hard to believe we
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live in a world where we consider leaders of nations that perpetuate pre-emptive wars of aggression as princes of peace. i do not understand that. president barack obama is not the u.s. president that -- where our country has been at war, and it just seems like there are people that actually promote peace that would be recipients of something like -- the word " symbolic" of peace. host: i want to show you the headlines in the papers this morning. here is "the washington post" -- "emerging goal for afghanistan: weekendaken, not vanquish,
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taliban." "those objectives appear largely consistent with general mcchrystal's strategy, which he says cannot be focused on ceasing to rain or destroying insurance -- insurgent forces but should center on persuading the population to support the government. some in the white house have cited hezbollah as an example of what the taliban could become." let me show you the "philadelphia inquirer" headline. "obama open to taliban role." here is "the washington times," "key democrats aligned with military buildup." lawrenceville, georgia, mary on
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the democrats' line. we are talking about president obama winning the nobel peace prize. your thoughts? caller: yes, thank you for answering my call and thank you for c-span. i just wanted to say kudos to the lady that was on just before the last gentleman. i really think that obama does deserve this. you know, he deserves to get the peace prize. but you know, a lot of people are not talking about issues. they do not see what he sees on a daily basis. and i can see where he is trying to make peace. he is trying to talk diplomacy with iran, and of course israel is angry with him. but as much as i still love israel also, what i am saying is that i just think they need to
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walk in his shoes and see what he sees on a daily basis. he says he is balancing things out, and i believe him. he does not strike me as the type of person, as i look the man in the eye, and he does not strike me as the kind that lies. host: let me read a couple of emails about the president winning the prize. i want to show you the correct website this morning and the headline there. "-- the haaretz web site this morning and the headline there. "this shed significant light on the leftist political orientation of the nobel committee." that is an e-mail from a viewer. "this is well deserved. we have a president willing to work for the common person. we need to thank god. the party of no is very jealous and will rewrite its ugly head now."
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ruth on the republican line. as you give us your views, we want to show you "the china daily news." caller: i certainly hope this is not an attempt to influence what obama decides to do about sending troops to afghanistan. this seems kind of bad that foreigners are trying to attend to influence us. host: you think the nobel committee is trying to influence the decision on afghanistan? caller: 8 could be a period to give someone the peace prize who is in the process -- it could be. to give someone the peace prize was in the process of making that decision, it seems like an odd time for them to be influencing us.
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host: president obama is expected to meet with national security advisers today about what to do in afghanistan. according to newspapers, he will not make a decision for a couple of weeks. let's continue with your phone calls. washington, d.c., carol, on the independent line. let me push the button. go ahead. caller: all i can say is what is wrong with this country? here is somebody that is inspiring us by being chosen so early just because he cares about this kind of thing, and here everybody is saying we do not think he deserves to have it or anything. i think it is ridiculous. i am an american and i am thrilled that anybody else thinks we are in that category. host: california, tracy, on the democrats like.
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caller: hi. host: good morning, tracy. caller: i really glad carol talked. i feel exactly the same way. for the past eight years, we have had a president who promoted nothing but war, and now we have somebody who, as you mentioned earlier, is changing the whole aspect of the american way of thinking, of getting away from fighting and trained to follow other ways instead of being proud and saying yes, this is the way america is supposed to be. we are proud that we have somebody finally representing this country. they find reasons why he should not have got a and tried to say that our former president did things to deserved it when he created the war that we are in. he put us in this position, and it is not like we can just pull out overnight. to say he does not deserve it
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because we are still in the war is just naive. i find it sad that we cannot support our president and be proud that the world's attitude about the united states is starting to change for the better. host: here is "the new york times" editorial this morning about ways and means chairman charles rangel. "speaker pelosi one her gavel with a promise to drain the swamp of corruption afflicting the previous republican majority. but protecting mr. rangel as chairman is a grave misstep that can only hand the ethics issue back to her opponents. that is "the new york times" this morning. usa today, their view is that the chairman should step aside now. "another reason for not waiting for the ethics committee is that it could take awhile.
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the panel voted to expand its inquiry to include his financial disclosure reports. formal disciplinary action can and should await the committee report, the failure to replace him as chairman cents a number of unfortunate -- of unfortunate signals, chief among them that house democrats considerably and ethical sloppiness to be no big deal." the opposing view in "usa today" written by a colleague of mr. rangel. he says "mr. rangel is a voice for the little guy, that members in the future will think twice about correcting mistakes ," noting that charlie rangel corrected mistakes on his taxes after review was perforce, and he says, "wary of entering partisan sniping and biased criticism from the national news media. mr. rangel is a lion of the house so he can take the
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partisan attacks. one is left with the impression that his opponents are trying to silence is strong progressive voice for health care reform and economic security for working families. it is a voice that needs to be heard now more than ever." we have a couple of minutes left to talk about president obama winning the nobel peace prize. john, on the republican line, good morning. caller: to me is a joke. we are in two wars, israel is still building settlements, and obama is fixing to bomb the month. do we own the moon? it is the whole world's moon. host: we are going to capture the video of that by nasa and we will show it to you later on in the program.
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linda, on the independent line, good morning. caller: yes. i personally do not know much about obama, but i know one thing. we should all get on our knees and start praying for this country, which is heading for disaster. host: that does it for our first half-hour, but we will continue this morning on "washington journal." up next, we will talk with ryan lizza about his peace and "the new yorker" on president obama's economic team. but first, john mercurio. we want to show our viewers and you the latest negative ads out of the race. >> if you drove the wrong way down a one-way street and had an
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accident, putting an someone in a trauma center, would you get away without a ticket? chris christie did. in both cases, he threw his weight around as u.s. attorney and got off easy. if you did not pay your taxes, ignored ethics laws, would you get away with it? chris christie -- one set of rules for himself, another set for others. >> jon corzine admits he is willing to raise taxes even more. jon corzine -- his negative ads cannot hide his failed record. >> here is what i will do as governor. i will cut spending, cut taxes, and restore property tax rebates, offering good jobs back to new jersey. i will make sure that all of our children get the education they deserve. host: john mercurio of "the hot line," what is happening in the new jersey race?
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guest: i think you have republicans that think the biggest issue they can use against jon corzine is the economy, the huge budget deficit of the state, and you have democrats running against chris christie, believing he is vulnerable on ethics, which is ironic because he was an attorney that tried to come into the race on an anti-corruption agenda. jon corzine has closed a gap of eight to 10 points against the republican challenger, chris christie. there are three new polls out there that show that the race is essentially tied two or three points each way. that is still not good news for jon corzine. as a record -- as an incumbent, he should be higher at 45% or 50%. he is trailing in a huge funding
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advantage that he has been in this race. chris christie is stuck at raising no more than $11 million. jon corzine did not accept public funding. he is a former goldman sachs executive who is extremely wealthy. he is going to spend at least $45 million in the race and is on his way to doing so. there is a reason that this race has closed the gap chris christie refused to say -how he would close the budget deficit, which has been part of the case he has been trying to make against jon corzine. it is a traditionally democratic state that win 4 barack obama, john kerry, al gore, and other -- that went for barack obama,
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john kerry, al gore, and other democrats. we are going to see both barack obama and michelle obama in the state before the election on november 3. michelle obama campaigns, it will be her first public campaign appearance as first lady, which will be interesting to watch both her, how she performs there, and where else the white house decides to deploy her over the next several weeks. -- the next several months, i am sorry, going into 2010. i just want to mention briefly, we have interesting numbers coming out of california in a new field poll both in the governor's race and the senate race. first, to the governor's race. republican mega r whitman is neck and neck with tom
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campbell, to replace arnold schwarzenegger, so democrats are very optimistic about taking back the governor's office in california. senator barbara boxer is up for reelection, and it is essentially the same story. you have two republicans in the race, both of them essentially tied, losing a lot of ground in the last month or two. that is a little bit of what we're looking at at "the hot line." host: we appreciate it. we're switching gears now, and ryan lizza with "the new yorker" joins us to talk about his
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peaciece on larry summers and te white house economic team. i want to get your reaction to the headline this morning in "the washington post," " politicians struggle on the best bet to fix the economy. "liberal economists are urging democrats to consider public works programs in another round of aid to states, including many that are facing budget cuts projected to cost 700,000 jobs over the next two years." when is the discussion about when it comes to possibly another stimulus package? guest: most of the money in the original stimulus actually has not gone out yet, so over the next six months the bulk of the $787 billion is going to be spent. they are of the opinion there should be a little bit more waiting and seeing what the effect of that spending is.
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aid to the state is one of the issues that they debated when they put together the state aid, and it was reduced in the debate both in the white house and in congress. it is a very easy way to pump a lot of money into the economy very quickly, so i think congress will take another look at that. the white house has started to lord of -- to think about whether they should spend some more. i think the word stimulus has become politically poisonous in washington for various reasons. i do not think that either democrats in congress or the white house will announce we have another stimulus package on the way because it will be seen as admission that the first stimulus package did not work. i think there will be programs, extensions of the first stimulus that will probably go out if necessary, but you will not
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actually see anything called the second stimulus package. host: we're talking with ryan lizza of "the new yorker," who wrote an in depth piece about the white house economic team. you talk about the debate that happened between members of the economic team about the first stimulus package. tell us what happened in those meetings. guest: one of the things that you learn in talking about the three big issues that i look at, what to do about the banks, stimulus, and car companies, the debate happening among economists in the public is the same thing happening in the white house. the stimulus, among democrats on the center-left was held big to go. do you fill the entire all but gap, or can you get away with a little less -- ca-- do you fill the entire input gap, or
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can you get away with a little less? the output gap is the difference between what the economy can potentially produce and what it is producing at that time. the whole point of a fiscal stimulus is the government as a last resort coming in to fill that. do you fill the entire $2 trillion whole or not? she is spending a lot of her time studying the great depression, and one of her conclusions was that it was monetary policy, not fiscal policy, that got the united states out of the depression. conclusion was that fdr passed spending programs were not big enough -- her conclusion was that fdr's spending programs were not big enough to pull us out of the depression.
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congress had no appetite for stimulus above $700 billion or $800 billion. that was very hard to argue with because most people who said it should have been bigger do not have a response to the question of, if you believe it was bigger, how are you going to get it through congress? there was something more associated with larry summers. he believed that if they got too big, fears in the market would shift away from unemployment and the economic crisis and toward the deficit. even in this recession, even though everyone agrees you need some fiscal stimulus, you could not go so big that it would spook the bond market and shift fears to the deficit. there were more mechanical arguments that peter orszag and others made, that the government cannot simply spend as much money as would have been necessary to fill the output
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gap. those views eventually prevailed. when bigger than the conventional wisdom when they were thinking of putting the package together. a lot of people thought $500 billion or $600 billion was the way to go, and white house thought it -- and the white house it. host: "the treasury secretary during this crisis when it was going on --" in your reporting, you find the same thing? what is the influence of wall street on this economic team? guest: geithner is funny because a lot of the time he is viewed as being from the wall street world. when he was testifying on capitol hill not long ago, someone said, "secretary
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geithner, you were a banker." he said, "excuse me, i was never a banker." if you are the treasury secretary and you are trying to solve the banking crisis in the united states, you had better be on the phone with bankers a good chunk of your time. we do not know what the conversations were. we do not know if he was telling the bankers do not worry, you know, the obama administration is going to take care of you, or if he was saying, look, you guys had better do x, y, and sez or the economy is going to crumble. we have to know what the nature of the conversations were. host: let's get to phone calls. vero beach, florida, john, on the republican line. caller: one might have -- when
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my household has problems because my cash flow out is larger than my cash coming in, i readjust my budget and to rid of items that are not necessary. i have never been able to go out and borrow more money from banks and that we get me out of debt. what the government has done right now, the return on investment is going to be very low from sending out all the tarp money. number two, who was going to wind up paying at the end of all this? it is going to be taxpayers. so now you are going to try to pump up the economy, get it running again, and ask for higher taxes. i do not have the money for higher taxes. and i have less to spend, so that is less going into the economy. the government does not have its own money. they've bankrupted medicare and social security by giving us treasury bonds. guest: on the tarp money, i
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think the jury is still out over whether that is going to be a good deal for the taxpayers. some of the tarp money has come back, and the government has made money on it. we get the financial crisis. the 1994 crisis was highly unpopular for the united states to step in and give a huge chunk of the total bailout package that the international community came up with for mexico. bill clinton tried to get congress to give him the money, congress rejected it, and the treasury department figured out a unique way of using an existing program to spend the money, they sent it to mexico, and nobody like that. several years later, mexico paid it back with interest. there are always extremely unpopular at the time, but after the fact there are some examples where the money comes back with interest. tim geithner told me a story -- actually, it was one of his people that told me the story --
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that he had met the former president of mexico, and he said to the treasury secretary, " these things are extremely unpopular at the peak of the crisis, and they get more unpopular when they start to succeed, so do not expect that people are suddenly going to be celebrating the tarp bailout." host: in your reporting, what was the debate like within the white house, within the economic team, about how you bailout the auto industry for says the banks, and why was there a different approach? guest: i think the debate over bailing out the banks was basically -- i do not think there was any debate to the white house about whether or not you had to do something about the banks. it was what you do -- do you nationalize, come up with good
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bank, bad bank, tried to raise the money privately, which is what they decided to do. in the auto industry, there was a sense that auto companies are not necessary for the u.s. economy. the banks are. we do not necessarily need car companies. it was a much more divisive debate about whether to save the car companies, particularly chrysler. the council of economic advisers, which tend to be the pure economists, studied the issue extremely closely. they came to the table with the argument that if you save chrysler, you will hurt ford and general motors. remember, ford did not need a bailout, and gm did. but if you save chrysler and keep three car companies, perhaps gm is not going to survive and chrysler is just going to be on its feet for a couple of years and will then go
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under. on the other side of the debate were people who said, look, fiat has a deal on the table to get chrysler to work. they sort of reinvented themselves over the past couple of years. we have to give this a deal and give it a chance. the white house was split on this question. larry summers at one point took a vote in his office with the key automotive task force advisers. the vote was 4-4, four for, four against. the last to speak was steve ratner. obama asked him to give the final recommendation on saving korean war, and he said -- on saving chrysler, and he said, " in my experience, these deals usually get worse, not better
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pickup with that final recommendation, the president said, "alright, we will give it a shot." host: next call, good morning. caller: i had the uopportunity the other day to see michael more's movie, "capitalism." it gives you an insight as to why we are in the situation we are in now. warren buffett was even saying that his secretary's tax rate was higher than his, so i think partly the issue here -- and a gentleman previously called from vero beach, florida saying that you have to cut something or make more money.
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i think we are trying to make things too complicated. host: mr. lizza? guest: i think once the economy shows signs of improvement, the obama administration is going to do some form of tax reform proposal, and they will have an important decision to make about what parts of the bush tax cuts they keep and get rid of. obama has stacked himself into a corner on taxes because he has made this pledge -- i do not know if he intended to in the campaign, but at the end of the campaign they had locked into the idea that they would not raise taxes on families making under $250,000. probabhost: michael, on the republican line, from new york. caller: good morning. i have a couple of observations
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about the effects of the stimulus plan so far. this market dislocation and economic events falling out of it are very different from the great depression. the great depression was mostly a blue-collar depression. this one is a white-collar depression. you can see the fallout on wall street, and we see people suffering depressed billing rates. the second aspect is that i think it is premature for elected officials to begin already delivering -- deliberating whether we need a second stimulus plan, when only some of the $800 billion has been released so far. guest: i am very sympathetic to that argument. you have to look at what has been spent and what the facts are before you start talking about doing more. -- and what the effects are before you start doing more.
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it does not look like this stimulus is going to fill the output gap as far as repairing infrastructure and jobs programs, if this does not work. host: "the new york times" this morning, "the fed is split on how and when to begin raising benchmark interest rates." the headline refers to a speech that fed chairman ben bernanke made last evening, not getting -- not giving any hint over what the fed is expected to do. we have been covering the speech. if you are interested in watching it, go to c-span.org. guest: there is a big debate when you are in a recession as severe as this. when do you switch policies and when you shut off some of the programs of relief? when they were designing the stimulus, they made sure that
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the stimulus had what congress called a tael. it's sort of gradually declined. one of the lessons of the great depression is that they shot off some of the programs too early and we got these what looked like recovery, but it turned into another downturn. the fed and the white house are very sensitive to make sure that you do not stop the programs prematurely. host: philadelphia, mississippi, john, on the independent line. caller: i was just wondering how far down the road this is supposed to, as we were promised in the election, when does this turn to a trickle-up economy, if there is such a thing? guest: i spent a lot of time over the last couple of months reporting on the early decisions the obama administration made. frankly, i think they have a pretty good case that they brought the economy back from the abyss.
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things really were quite bad. of course, we will never know if we were in a depression. some economists would argue that we may have been. you do not get credit as an economic team for making things less bad, you only get credit if you make things a lot better. i do not think there will be any cheering for this team until we actually see the unemployment on a downward trajectory. when that will happen, i am certainly not qualified to answer. host: scottsboro, alabama, donald, democrats line. caller: yes, i wanted to speak about the gm rescue. if gm had not been rescued, there would have been probably
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millions of jobs, hundreds of thousands minimum, maybe a couple of million of jobs of the suppliers that were attached to -- it would not just be general motors workers. there are all kinds of suppliers, and the republicans from the south here, in my state in particular, they railed against the gm bailout, but they never mentioned all the money that the state of alabama -- by as a taxpayer in alabama had to fork over to honda and mercedes and toyota to bring those companies to our state, which i think was a good idea because it did provide a lot of high-paying jobs. you know, i think that it was
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necessary to bail out gm, and one other thing i would like to say, i would like to congratulate president obama for his being awarded the nobel peace prize. host: just to be clear, i think -- guest: just to be clear, i think the debate over gm was a lot more clear than the debate over chrysler. we are going to make a commitment to gm, partly owned by the government. then to chrysler, sacrifice gm and ford's profitability. there was a much bigger debate over what to do about chrysler. host: new york, charlie, on the republican line. caller: i missed the beginning of the segment because i was watching the moon crash.
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are you a business reporter? guest: i do not report exclusively on business. host: let me show you the front page of the latest "new yorker." within that, ryan lizza has written a piece about -- called "inside the crisis," a lengthy piece looking at president obama's economic team. go ahead. caller: earlier you had someone who called who watched michael moore who said that income taxes are a disproportionate. if you were a business reporter, you would understand that 90% of the top taxes are paid by higher income earners. warren buffett does not pay anything in tax. his money is from capital gains.
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capital gains tax is lower than income-tax. to imply that his secretary is paying more income taxes and warren buffett is simply a lie. guest: i heard the warren bucket -- i heard it warren buffett, and, and it is due to capital gains, which were lowered during the bush administration. host: the focus on larry summers -- why did you focus on him? guest: well, you need to have one character to sort of tell a story. his life was extremely interesting, especially -- here is a guy that after he left washington in 2002 as treasury secretary, he was at the peak of his career. he goes off to harvard and does
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not succeed. after five years he is ousted from harvard, essentially. and i thought the story of him climbing back was sort of interesting. host: did you talk to him before the peace? guest: i did. host: did he give you his thoughts of what was going through his head at the meeting? guest: yes, it was a meeting between larry summers and jennifer granholm in a roundtable discussion between autoparts suppliers. they were listening to their concerns and figuring out what the white house would do with respect to manufacturing policy and respect to the auto parts suppliers who were still struggling. so, yes, i watched the meeting between granholm and the folks and talk to larry summers afterwards and pieced together what was going on. host: of this economic team, if
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it is deemed that this stimulus package and other efforts worked, who do you think gets the credit? guest: at the end of the day, the president always gets the credit. it is a good question because romer was instrumental in putting together pieces of some of the stimulus. she did a lot of the projections, a lot of the hard- core mathematical economics about what parts of the package would have what impact. summers is the head of the economic council, where all economic policy get coordinated. he is sort of the maestro that puts all this together. i do know if i know enough to choose one of them as far as who
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gets the most credit. host: ryan lizza, washington correspondent with "the new yorker." "inside the crisis." thank you for joining us. when we come back, david walker, the former head account for the country, will be joining us. we will speak with douglas eak in. we will speak to him later on in the program. we will be right back. .
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it is my dissent. this is what i want to say. when you are writing majority, you don't have that luxury. you have to crafted in a way that at least four other people can jump on and you try to crafted in a way that as many people as possible would jump on. >> the first of three nights of interviews with the justices, starting tonight at 9:00 a.m. eastern on c-span. to see more videos, including all of the interviews, go to c- span.org/supreme court. >> this weekend on "book tv," did the brooklyn book festival with panels on the media come up for mobility, the future public scene -- publishing. tom ridge, on establishing the department of homeland security. and then a humorous take on
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reducing carbon footprint. find the finals scheduled on book tv.org. host: david walker from the peter peterson foundation, former head account for the country as former u.s. comptroller general for the government accountability office. your reaction to the health care debate, the news that came out wednesday that the congressional budget office estimated the cost of the senate finance bill to be around $800 billion. as this debate goes forward, what are your thoughts. guest: first, congratulations to chairman baucus. he was in a difficult situation. he crafted a bill that kept his promise, and that is not adding to the deficit for 10 years and not beyond 10 years. that is the good news. the bad news that some of the ways he accomplishes that are
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frankly unrealistic. the assumptions about what is going to happen to provider reimbursement rate -- rates frankly did not pass the straight face test. and the senate finance bill was just one of several bills that ultimately have to be recognized -- reconciled to be something congress can act on. there is no question we need comprehensive health care reform. but we need to keep in mind, we already have $38 trillion in unfunded obligations for medicare alone and we have been a sure we are making progress on that rather than just adding more promises that we may or may not be able to keep overtime. host: here is the "new york toast -- "new york post close what editorial. money from tax hikes starts coming in three years before cash for benefit start rolling out. which makes it pretty easy for revenue to top spending if you are looking at the balance sheets through just 2019, which is what the congressional budget
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office does. they say the cbo account does not account for an economy that will react badly to obama's tax hikes. when the taxes kill off the job and strength rape -- wages and with them all go sam's tax receipts. guest: first, you have to keep in mind washington tends to have a 10-year horizon. kind of like the flat earth theory. things will ended 10 years. that is totally inappropriate. my understanding is the cbo said that things should be better after 10 years. but again, i come back to what i said before. they are based on unrealistic assumptions based on what will happen reimbursement rates. host: can you explain that? guest: of what they assumed is you wave a cut -- what they assume is you wave a current year cut in provider reimbursement and then you will have a 25% cut the next year and all of a sudden you will get
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religion and be real tough with regards to providing reimbursements when you have not been. the cbo is required to score that. here is the bottom line. for health care reform to be fiscally responsible it must think -- meet four tests. number one, it must pay for itself over 10 years. number two, it must not add for deficit -- to deficits beyond 10 years. number three, it must then the total health care cost curve as a percentage of the economy down, not up. number four, it must result in significant reduction in the tens of trillions of dollars in unfunded promises we already have. that is the test. it will be very difficult for congress to meet the test. host:, sonntag years ago when you were the head accountant for the country, you went on a fiscal wake up to or -- two years ago.
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you said there was a fiscal cancer growing. he pointed to medicare and medicaid. what are your thoughts about some democrats wanted a so- called public option, be similar to medicaid and medicare. guest: of medicare alone has 38 trillion dollars unfunded obligations. it is true at administrative cost of less from private insurers. no doubt about it. at the same time it is also true that fraud, waste, abuse, and mismanagement is much worse. if you look at the public option, you need to be considering that as one of a number of options. it should not be subsidized furthered by taxpayers as compared to other options. it should be done as a last resort and not as a first resort. the government does not have a good track record.
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host: the first call comes from long island. caller: thank you for taking my call. i wanted thank you for your work. trying to help our country. you are a good man. if you can just a educate the people. people. no carrierringconnect 12
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hohoswe have to focus on cost first and ultimately achieve some kind of useful coverage that is affordable and sustainable over time. i believe is going to take an extraordinary future commission that will engage the american people with the facts, the truth, where we need to act with the consequences if we do not,
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that can set the table for an up or down vote in congress, for statutory budget control, social security, health care, and tax reform. we must make a significant down payment and are $63 trillion- plus financial hole, and we must do it before we pass the tipping point. host: lincoln, nebraska, you are next. caller: if we can afford these wars, how can we afford health insurance? why don't we cut the military in half? what is the correlation between all these -- all this free trade and people not having health insurance, and us going in debt? callerguest: do not let anybodyd you to believe that that is not a lot of money. but the kind of numbers we're talking about with regard to
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provide health care costs on a universal basis are much greater than that. the wars are not going to last forever. they will come to an end, and they will start drawing down cost here in the not too distant future. with regard to the military, we spend 20% of the federal budget at least in 2008 on defense. that is down from 46% in 1968. yes, there is waste in the military. there is no question about that. but do not deceive yourself. we are going to have to reimpose statutory budget controls, reform social security reform our health-care system, reform tax system, and taxes are going up for a lot more people that make under $250,000 a year, and the reason is that the math is not working.
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host: steve and in florida, go ahead. caller: it is nice to listen to you, and i think you are an honest man. i would just like to get your ideas on it. when we first established social security, i think -- to tell you the honest truth, if you keep up and with inflation, i would think it would be more like a firsthand millionaire. i kind of have a problem with the fact that i think if you -- i think people who make lower amounts of money are paying a higher effective tax rate. we cannot itemize or take stuff of our taxes, and we end up paying anywhere from 25% to 20%.
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if you are smart and you have a tax lawyer, you can get that way down. i would just like to hear your comments on that. guest: as you know, social security was created in 1935. people are living longoer. i do not know what inflation has been since 1935. i have just written a book which will be coming out in january, and i one of the things i do recall from the book was that in 1913 when the income tax came in, the dollar has been devalued by 22 tons, so what a dollar was in 1913, it now takes $22 today to have the same
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purchasing power as a dollar in 1913. with regard to the tax rate, you make a good point. if you look at the effective tax rate, you need to consider payroll taxes and income taxes, and most americans pay more in payroll taxes than they do in income taxes. but understand this. those payroll taxes cannot adequately financed the programs that they are earmarked for. . host: the name of your book that is coming out -- why did you write it?
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guest: i wrote it because as comptroller general there are things you can do and cannot do. one of the things he can't do is end up advocating specific solutions with regard to budget control, social security, health care, taxes. you can't and the talking about needed political reforms. in this book that basically talk about two things -- how the country has strayed from principles and values from which it is created, which made it great, and they need to come back. timeless principles and values. second, the key sustainability challenges that we face as a country and how we can go without addressing them so that we can have a comeback and so our future could be better than our past. right now, a significant majority of americans believe the life of their children and grandchildren will not be as good as theirs. that is not only unacceptable, but an american. host: randy on the republican line. virginia. caller: when you talk about
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waste, fraud, and abuse i am far too familiar with that. just to give you an example of the local health foundation created after the sale of our hospital, which had $100 million given to it. here in the school division we were able to give a million dollars a year for a student health initiative. but less than 1% is in the classroom. through consultant and administrative staff. this is the challenge local communities have, we call them the owners down here, and who they choose as beneficiaries for public money. it is blatant down here, this waste, fraud, and abuse. i'm a public health program owner recognized by the cbc. this million dollars had 1000
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participants of a 10,000 student school system and it made a proposal for 100,000 to take care of 85,000 students participating routinely in this health program. i find locally with the payroll and the paycheck, i almost have to bite the hand that feeds me. i tell people i'm far more valuable than they are to the children. those are the folks i have to get to sign my checks. guest: people talk about waste, fraud, and of use. it exists but it is not a line item in the budget so you cannot do a line item veto. the biggest problem is not fraud, although that is pretty extensive. the real problem is waste. failure of the taxpayers as a whole to receive reasonable --
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health care and education. we spend in this country way more than the other countries on earth on education and on health care per person. and we get below average outcomes. you cannot make incremental reforms. we need dramatic transformation of reforms. we need dramatic reforms on what coverage levels are, how payment systems work, what kind of taxpayer subsidies people are going to provide. we are going to have to deal with and of life issues. they are going to have to be decided by physicians and not government workers. but every other country on earth does that. and we also will have to have a budget how much they will allocate. even socialized countries have a budget. they know you can bankrupt a country by writing a blank check for health care. host: on education, paul krugman writes -- the uneducated
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american. he says with a college graduation rates slightly below average across all advanced economies. but the crisis placed huge additional stress on our cracking education system. according to the bureau of labor statistics, the united states economy lost 273,000 jobs last month and of those lost 29,000 were state and local law education. he says that may not sound like much but education is one of the areas that should normally does keep growing even during recessions. markets may be troubled but that is no reason to stop teaching our children but that is exactly what we're doing. guest: i think we have to separate between how much money we spend and what kind of results. part of the problems of government at every level is score how much direct spending it gives and how much exclusion's it gives. the more money that it passes out, the more it shows it cares and the more it thinks it is doing.
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but in reality, if you are not generating positive outcomes, you really are not accomplishing very much. we are going to be dramatic changes in education and health care. keep in mind, three areas for the first time in america's history of averages and our society are going down. number one. in come. number two, averages vacation levels. no. 3, average health status. -- number two, at average education levels. we do not need moderate reforms, but dramatic and fundamental reforms. host: which class is the biggest hit? guest: the fact of the matter is if we look at this, there is a growing gap between haves and have-nots. more and more income and wealth is concentrated in a smaller percentage of the population. the people near the poverty
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level have a government assistance programs. the people who get squeezed the most are the near poor, those who are working, near poor, they get squeezed the most. host: bay st. louis, mississippi? is that right? caller: thank you for allowing me to express my opinion. what i would like to say it is, if the government is not doing its job, privatize all the nuclear bombs and send it free to the rest of the people. this is how ridiculous things are. energy is the number one problem of this country. i have a daughter, 4.0 average, and she is struggling two jobs and going to college. i think energy is the number one problem. that is a reason why we are in a
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war. i would like to hear your opinion about that. thank you. guest: thank you. if you are correct in saying our current energy policy is one of our largest problems, at a key sustainability challenge. we must become more conservation oriented. we are gluttons for consuming energy. we have to become much more energy efficient. there are lots of ways to do that. we are going to have to look for alternative energy sources. we are over-relying on fossil fuels, and that does have implications with regards to how we can otherwise engage ourselves and conflicts we might not have to. personally, i am not for privatizing nuclear weapons. personally i and for getting rid of nuclear weapons. we do have a different type of weapon. tom friedman talked-about of this week. look like the only bomb we needed to worry about was the
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nuclear bomb. now we have a debt bomb that threatens the future of this country and the future of our families. rather than trying to take steps to defuse the bomb, washington is making it worse. host: on the democrats' line, thomas from pennsylvania. go ahead, thomas. caller: he mentions a 40% -- 40% of the people did not pay taxes. that is an awful lot of people. a lot of them are out of work. a lot of them are working. of those that are working, what kind of pay are beginning? guest: what i said was over 40
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percent, heading over 50% don't pay income taxes. obviously we don't have 40% or 50% unemployment rate so most of these people are working. they are paying the payroll taxes, 6.2% to a social security, the 1.5% from medicare, not only deducted from the paycheck so that employers are matching it so they are paying that indirectly, too. what that are not paying the income tax. obviously the people we are talking about are people that don't make as much money. in fact, in number of the people actually get money back through the earned income tax credit. my point is that everybody should pay something for the constitutional role as the federal government's task of reform -- federal government has to perform. security, foreign policy,
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treasury functions. these are essential functions that obviously those who are better off need to pay more. there is no question. we need a progressive income tax and maybe frankly progressive consumption tax. but we should not have as many people who are free riders as we do today. host: new york city, pauline on the republican line. caller: @ thank you for your information. i am sorry? guest: thank you. caller: you're welcome. thank you. a comment and question. i think we are missing the big red elephant in the room, we are not discussing the impact of illegals. how much to do you think we could save by actually enforcing our immigration laws and also by not allowing amnesty? guest: i don't have the numbers off the top of my head but understand this, the reason
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people come to this country is because of economic opportunity for themselves and families. both those that they bring year and back at home. obviously the illegal issues as far as the flow has decreased in recent months because we are in a recession and there is not as much opportunity. in fact, there is some evidence some illegals are going back. we need to have better border security. but we need to be able to have much tougher laws and sanctions for hiring illegals. that is the problem. that is why they come here. in need to keep in mind this with regard to immigration. this country was built by the immigrants. right now our birth rate is 2.1. that is replacement rate. each female on average has 2.1 children. the only reason why this country is growing right now is because of immigration. with regard to immigration, we do not need to nest -- also
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focus on quantity but quality. if you have above average and education and skills, that will help us over time. if you have below average education and skills and is going to hurt us over time. so immigration policies need to be modified to place much more emphasis on what will enable us to basically compete and grow and continue to improve our standard of living. host: wally and louisiana. -- in louisiana. caller: i want to reconcile something you brought up, that the dollar dropped 22 to 1 cents 1913 when the federal reserve came into existence. you mentioned income-tax. it is a fact, sir, that everything you mentioned, the 40% are not paying, that is not one single penny of income tax goes to one single service but it actually goes to pay on
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interest on a debt driven society, the federal reserve is a fiat currency. it is by nature a debt-driven by the get go. the problem it is the federal reserve bank, if the income tax pays nothing but the interest on the debt that the federal reserve gives up by loaning us back our own mining, which is unconstitutional to begin with -- direct tax on wages which in the constitution makes it illegal. how can, with the services you are mentioning, not funded by the income tax -- host: we will leave it there. guest: you are correct that the fed will reserve was created in 1913. it was also when the modern income tax came in, 1913 as
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well. we were on the gold standard for many years until the 1970's. therefore, our currency was not a fiat currency until more recent times. people have a debate about whether or not we ought to go back to the gold standard. we will not get into it now. let me say this. the real key is how we are handling fiscal policy, which is taxing and spending, and how we are handling monetary policy, which is the federal reserve. right now they are both a problem. right now they of both doing things to try to help the economy in the short term but we are digging our whole deeper over time and when the economy turns the corner, which it will, will we start to grow again, which we will, the fact of the matter is we have a number of inflationary pressures that can end up causing us some real problems if we don't start doing some of the things we are talking about.
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we became addicted to death in this country within the last several decades. from 1789 until several decades ago, this country did not run deficits and accumulate debt levels unless we were at war, recession, or depression. nowadays, it has become acceptable and it has been that way for a while. it has been acceptable to run deficits when we are at peace, when the economy is growing. therefore when things are bad, we run very high deficits like this last year, 11.2%. irresponsible, and prudent, and sustainable. -- imprudent, not sustainable. host: this headline, u.s. stands by as the dollar falls. your view of this headline. the democrats are considering additional tax on insurers. house speaker nancy pelosi put on the table a windfall profit
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tax on insurance companies to help pay for health care. your thoughts? guest: i would have to see exactly what the proposal is. here is one of the concerns i have. on the one hand it is laudable to be able to say they want to be able to pay whatever health care bill they come up with. but frankly, that is not adequate. because we already have tens of trillions of dollars of unfunded obligations that are not doing anything about. let me give you an analogy. let us say our health-care system is a house. it is built on a sinkhole of sand. the foundation is correct. the plumbing is leaking. the roof needs repair. and it is mortgaged for more than it is worth. so rather than trying to fix it up and make sure that we can make our payments today and tomorrow, we are going to add a new wing. maybe we are going to pay for the new wing but the new wing is going to be built out of the same flawed materials and
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attached to a structure that is not sustainable. they don't have their eye on the ball. there is one serious problem not being dealt with. washington likes to give people the ice cream and not have them eat the spinach. that means coverage first. people want to do coverage first. and we need to do to achieve some level of universal coverage but if we don't get costs under control, this can bankrupt the country. health care. all health care. host: for every person? guest: cost per person. the way you do that you must make dramatic changes to the payment system, the way for fee- for-service and start paying on capitation and outcome-based, you need to get away from providing a lucrative tax incentives for a very generous health care programs, the way for providing taxpayer subsidies for middle and -- income
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individuals who voluntarily sign up for programs like medicare part d, move to evidence based standards, reform the medical malpractice system. you need to do these things and more. and for the most part washington is kicking the can down the road with regards to this. host: on the rising cost of health care. "the baltimore sun" this morning. americans seem cutting back on care, citing cost. pennsylvania. david on the democrats' line. caller: good morning. it is really a pleasure, a pleasure and honor to even hear a person talks so intelligently like this man is right now. i had a good paying job and i lost it. i bounced around for a job to job $8 an hour, $10 an hour. and i had to pay for my own insurance, which had a high deductible. it gets to the point where i am sick right now, cannot go to the doctors because i have no health insurance. i quit the job because i was
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given be in down, be little, and i finally had enough and i said i will retire. 62, going 163. i am on a fixed income. i should go to doctors right now but i can't. it is just a shame, this country. they don't want to help you with health insurance, they say we don't have money. let us say would go into pakistan, we will stop them from getting a nuclear bomb and destroying the world. and all of a sudden, here is $1 trillion. it flies out of the treasury so fast. but the own people who pay taxes, you can get nothing. i will just stay off the line. i would love to say a lot but i do not want to -- i just want to hear your reply. thank you very much, mr. walker. guest: david, thank you very much. i like your name, by the wicked i hear that you are hurting and frankly there are a lot of people hurting. my own family, my daughter is still unemployed.
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she was working with a home builder and obviously you know what happened to them. my son has taken a significant pay cut, reduction in his 401k contributions even though he is with a great company, because of economic hard times. you obviously are drawn so security sense you said you were 62, but you can't get medicare until you are 65 so there for you are exposed. my view is this. we need to move toward universal coverage or what i referred to as basic and essentials health care for all. that would mean the following. preventative and wellness and protection against financial ruin due to unexpected catastrophic accident or illness. that is in our broadbased societal interest. that is affordable and sustainable. it is not what we have right now. what we have is much more lucrative benefits for seniors and certain other segments of the population and nothing for
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those especially the near poor who are working. that has got to change. that is dramatic change that has to be phased in over a number of years. but we need to get started now. host: last phone call for mr. walker, little else, texas. tom on the republican line. caller: good morning, mr. walker. can you hear me? ok. the problem the young man just describe where he lost his job and he is really struggling is nowhere near the amount of people throughout the nation experiencing the same amount of trouble. the trouble started -- back in 1991. my iq is 180, by the way. 99 the one i proved wto was starting to gather countries up to members.
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under this they would wrap up all the problematics systems of each -- like, the united states has states and other countries have regions. these things like in our country, nafta and gatt was compiled and shoved into wto, therefore causing a backlog of industry not able to export huge amounts. the export now but no where near the amount four experts. -- the amount for export. people start believing mid-1994 and people started demonstrating. by 1999, december 31 with the last day, then you saw people lose their fully funded pension plans and referred to under pbg
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c, pension benefit guaranty corp., it is a federal agency, to a guaranteed pension plan which is far less. and a new mortality table. 72t was replaced with a new mortality table. therefore if you look at the structure in, say, a large legal firm, they have a graph that showed you would have to be almost 72 years of age to get the same amount of money after this money was rolled over from a pension plan, if you had one. host: i'm going to need to jump in here. we are running out of time. guest: i like the fact that you referred to david who you say is 62 as a young man. i like that. there is no question this country needs to do more to promote exports, especially with regard to small and medium-sized business. we can learn a lot from japan
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and other countries to take a much more prone active role to try to help partner with the private sector to promote exports. a lot of people think the lower dollar right now is good because it helps exports. but on the other hand, we got a much more serious problem with the dollar, and that is what is it going to be worked overtime and what is the impact on interest rates. with regard to that -- i used to have the pension benefit guaranty corporation. q. you are right, it is a government agency. and also like most government agencies in the insurance business, it is under water. its liabilities far exceed the assets. while it's got adequate cash to pay benefits, it will be able to overtime. host: david walker, teamwork -- thank you for your time. amy walter from hot line joins us for another political update. before we talk, i want to show
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fnt page of "the washington post." mcdonnell widens lead over creigh deeds. it and showing the viewers the latest ads. >> what kind of person write a thesis cause -- calling working women detrimental and then lies about his opponent to cover up his own record. the post said bob mcdonnell took office and began passing his social agenda and the post confirmed he voted to deny access to birth control. they said mcdonnell even opposed -- will pay for women. no matter what his ads say, bob mcdonnell can't cover up his record. >> i'm creigh deeds, and my kid a sponsor. >> i'm bob mcdonnell, and i sponsored this ad. >> i am not going to raise taxes. what did you mean? he said i am not going to raise taxes. what does that mean? >> what that meant in a general sense -- i will not raise general fund taxes. i know we will have to raise money for transportation. >> will you raise other kinds of
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taxes? >> i meant what i said. i have no plan to raise general fund taxes. >> what kind of taxes would you -- >> everything is on the table when we consider how we raise money. >> is it that and -- the general fund? it would not be covered under -- >> i think i made myself clear, young lady. >> i am sorry, but -- >> job killing policies.com. >> amy walter, give us the latest. guest: you were right. the new poll out showing that -- a race that had earlier in the summer looked like it was tightening up now bob mcdonnell the republican opening up a wide lead, this despite the fact that creigh deeds has been with that ad and a similar add to that
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suggesting that bob mcdonnell's pieces, something he wrote back in the late 1980's, questioning women's role in modern society, was going to be an indication for how bob mcdonnell would govern. democrats hoping that that would sort of changed the focus of this race, and given momentum but instead we found that almost the opposite. agilent bob mcdonnell coming up on top by a very big margin. i think we will see -- and there were two other ads indicative of the race -- both are focusing on transportation issues. i think that is really what we are going to look toward in the virginia governor race outcome. on motivation, "the washington post" poll showing is the big problem for deeds is the fact that the obama coalition, those voters who turned out giving barack obama 53% of the vote in virginia last time are not as motivated to come out and vote
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in this election. only half of those who said they supported obama in 2008 said they will vote in this election. meanwhile, two-thirds of the voters said they supported john mccain in the last election are coming out. among african-americans, who made up 20% of the electorate in 2008, only 12% said they would turn out and vote. a big problem for deeds who is also underperforming in areas democrats traditionally do well, places like northern virginia where the issue of transportation of always big. it is a fast-growing region. the roads are constantly clogged. and candidates for governor are always looking for an answer to how to solve that. what the post poll shows, though, is on that issue, mcdonnell, the republican, has a 12-point advantage. deeds is hoping to make the case that mcdonnell was willing to raid a general funds, which
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helped fund schools, in order to pay for his roots plan. that has not seemed to make much traction for voters even in northern virginia. the issue with taxes is one of the top issues in this election. on the issue of taxes, you saw it in the ad that you ran, where it deeds is saying he could raise taxes to pay for transportation. that is very unpopular on the issue of taxes here. bob mcdonnell has a 15-point lead on the issue of who would do a better job on that issue. what we are seeing here is a turn out right now that looks to favor in terms of motivation more republican-leaning voters turning out in this election, will ultimately support mcdonnell, and on the issue of transportation, an issue deeds had hoped to gain traction, that is not getting very far. instead, it is mcdonnell flatley
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as the lead on those two issues. there is still 20 more days to go. gov. tim kane, current democratic governor and also runs the democratic national committee, suggesting the race is far from over. the question now is, of course, will president obama come back to the state before this election to help motivate these obama voters who -- from 2008 to come out. joe biden, vice president, just in town last night but at a private fund-raiser. the obama white house has been very quiet in the last few weeks here. we are waiting to seeing if turn out by the president will help democratic turnout in the election. guest: executive editor for the hot line. thank you very much. at the top of the hour we are going to be speaking with douglas aiken, head of the but
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congressional budget office. we will return to our conversation on health care. but we want to get your reaction this morning to present obama winning the nobel peace prize. many of you are probably aware of this, the breaking news out of oslo that he was chosen to win the prize for 2009. i want to give you a little history as we wait for the phone calls to come in and get your reaction and thoughts. according to the nobel.o prize knoblauchrg -- the nobel prize .org website. also a little bit more about past presidents who have won the prize.
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sitting president include just three -- president barack obama. in 1919, president woodrow wilson, and 1906, president theodore roosevelt. in 2002, former president jimmy carter won the prize as well. flint, mich. dear david on the democrats' line. what do you think about the news this morning that president obama won the nobel peace prize? he is expected to speak about it at 10:30 a.m. eastern time in the rose garden and we will cover it. caller: thanks, greta. i am very excited and very happy. it is very unexpected. i think he is the greatest president ever. host: what do you think about internationally? caller: i think the world looks on barack obama as a more peaceful person, peaceful
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leader, someone who is not imperialistic minded. someone for the world uniting and being a peaceful place to live in. i think that is why he won it. i think it is a great change for america. host: we want to show you a spanish newspaper, had lied on their web site as the news broke. philadelphia, help me with your name. go ahead. caller: welcome back, greta. you were very well missed. i hope the baby is well. it is very early for him to win. when you think of the former u.s. presidents who won it, jimmy carter -- al gore. it's up about what he has done, but if you look at the israeli-
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palestine conflict, there has not been progress and with the nuclear disarmament talks, we got russia to lower their nuclear arsenal but that treaty was already planned. it really has not been anything. this is more may be against the past administration and their way of doing things. you may be setting him up for failure because there is no guarantee he can get anything done. the nuclear disarmament he did do, that was already planned with a strategic review. it was not saying anything he initiated or started. host: the associated press this morning says that the announcement shocked observers because obama took office less than two weeks before the february 1 nomination deadline. obama's name had been mentioned
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in speculation but many watchers believed it was too early to award the present. speculation had focused on zimbabwe's prime minister, a colombian senator and afghan women's rights activist. we will show you a french newspaper and their reaction. but third, massachusetts. eddie on the independent line. caller: i think it is something that should be applauded. i think it is more so based on his -- you know what i mean? his whole change in tone that he had when he first came in office, the way he reached out. i know some people think that maybe he was maybe selling america short or throwing america under the bus but i did not think that. i think he wanted to present america as a nation willing to cooperate with other nations. i think it is a great accomplishment. host: next phone call, hunter mill, alabama. victor on the democrats' line.
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-- huxtable, alabama. caller: can you hear me? obama is doing everything right and the whole world has been noticing. every part of bob world are -- every part of the world is standing to cheer this man on and those who voted against him cannot even see. let me remind you, fellow americans, when you and it cannot tell your truth -- regard him as your enemy, you are lost. obama is going to do more. but if you were trying to kill him and succeed, you will see the demise of america all over the world. if you harm obama the whole world will come against you. so, please, get online and share this man on.
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host: of the nobel peace prize has been awarded to 119 laureates, 96 times to individuals and 23 times to organizations. tracy on the republican line. caller: how are you? i do not agree with president obama getting the nobel peace prize. what has he done? can you answer that? what is it that he has done? host: what you think he hasn't done? caller: i don't think he has done anything. he increased our deficit by $1.30 trillion. i do not see anything the president has done. how dare they give him the nobel peace prize? president reagan fought to bring down the wall, he did not receive a nobel peace prize. what has obama done other than -- i don't see anything. host: there were 205 nominations for this year's prize.
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chosen by a five-member committee with the gold medal, a diploma, and $1.4 million. texas, andre on the independent line. caller: my question is, obama goes over here to try to get the olympics over here and then when he don't get it the right, they sit there and applaud this not understanding that this would bring jobs to the economy in chicago and then when he wants to have the children's thing in the schools, some of the school's block it and now this man has won the nobel peace prize and the right is against him on that and then there are so many things that the bush administration left for him and now he can't do everything at one time. but what is the united states coming to one we've got people going against the president. you don't have to respect the man but respect the office in which you hold. my question is, why are people
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just so against everything he is trying to do? host cut jacksonville, florida. emanu-el on the democrats' line. caller: i just think this award was premature. what is happening is you are seeing the european nation giving a message, sending a message to the world. because america is no longer trying to enforce its will upon the world, like the bush administration, plundered our economy and ruined lives. i think this nomination of barack obama to be the nobel prize winner is based upon the europeans sending a message. i would like to comment on the woman who spoke from atlanta. ronald reagan had nothing to do with the walls coming down in berlin and the communist changing their tactics from the cold war because the communists
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had no money. that is why they changed. they could not afford to take care of all of those soviet satellite nations. as far as ronald reagan is concerned, i do not think he should have been. host: david from mississippi on the republican line. caller: how are you doing? good morning. i just listen to a lot of the democrats and it sounds like they are sheeples. they want the government to lead them into green pastures but they run the big picture that the federal reserve is running as into the dirt. the president's hands and tied because he is bought and paid for, all of them since woodrow wilson. if they quit being sheeples -- and this hero worship out here. host: a little more about out for ignoble. it said he died in 1896 and did not explain why he chose peace
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as a prize category. chemistry and physics -- because it was a trained engineer. but they say it is his way for compensating for developing destructive forces such as guns and dynamite. louisiana. quarry on the independent line. caller: i would like to tell you what he has done. what this man has done, the first act he did was bombed pakistan. we have more people overseas fighting wars now than when bush was in office. raddling the sabres for iran to start another war. this is nothing but a propaganda stunt. when kissinger, probably the biggest mass murder in history, got the nobel peace prize everybody should know it is nothing but bowl. it is because barack obama's numbers are falling because of
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this guy is a failed president. nobody can -- it is absolute bull. what has he done? created more war and more debt than all the other presidents combined, and that is including bush. host: on afghanistan, president obama is expected to meet with his national security team to continue discussions. here is theeadline in "the washington post." emerging goal -- weekend and not vanquish the television. -- we can, but not vanquish the taliban. caller: i would like to say people disagree with obama winning, they never thought about this man, how he started his career, helping people. people that he has helped to come to this point. so he is becoming to be a good president right now. this country is going to destroy
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itself if people don't come together. and i would like to say thank you and i will listen to your comment on the air. host: let us go to columbus, ohio. kelly on the republican line. i want to show the viewer to the canadian newspaper. are you with us? i don't think we have -- are you there? caller: can you hear me? good morning. i'm calling, first of all, i just want to say one thing about the guy who said about east germany and berlin and everything and reagan. i lived in east germany when the wall was still up, ok. and i watched what went on behind the wall -- traveled through east germany, etcetera, etcetera, being watched by the east germans as we traveled through. thank you, god, for president reagan.
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ok, now on to obama winning the nobel peace prize. i'm not a supporter of his because of his ideals -- first of all. i am a desert storm that, i am a disabled veteran and has watched this one man -- and it is not to say republicans were perfect. they are not. bush made mistakes. both parties. both parties are wrong and how they conducted things. and i wish people would get over that. republicans, democrats, independents, etcetera, stop it. we are all americans and we are all in this together. if we don't want to see our country go down we better start doing something and paying attention to what is going on. .
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host: we talked with chairman tom harkin. here is what he had to say about the process. >> i think with the ceo scoring they gave to the finance committee, it with the wind at our backs. i think it has given a little bit of comfort to some of the more conservative members of our party to be able to support it. i hope t, to some of the more moderate members of the republican party with the score they got from cbo pri host. host: joining us now at our "washington journal" table is douglas eakin, now a fellow at
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the manhattan institute. let's talk about the cbo score that came out wednesday. first of all, the congressional budget office put out this estimate. they are calling an estimate, a $829 billion. what does it mean for anybody outside of washington d.c., and why does it matter? guest: pc the dock to the cbo has the job given to it to estimate the -- the cbo has the job given to it to estimate -- they do thousand of these a year. this one happens to get a lot of attention. the exercise is simple. you simply look at the bill and say what will this do to the revenues that come into the treasury, to the spending that goes out, and how does it add up. the senate finance committee sent down their version of the bill, the cbo look at it, and did its best to an estimate over the next 10 years how much
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spending they will meet. the number was $829 billion. how will we pay for that? the answer to that was reductions in medicare spending and new taxes on high-cost health plans, basically on the health industry. host: how accurate is the cbo? guest: the cbo will be wrong as the inevitably are because they are projecting on what we have not tried before. there have never been any such thing as an insurance product for outpatient prescription drugs, so you do your best estimate the impact there is an enormous amount of research built into their work, but they know it is not possible to get it exactly right, so their goal is that they know that they are as likely to be too high as too low. host: what is your thought, your opinion on the latest coming out of this debate, as they move forward on capitol hill. they are trying to put together
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different pieces of legislation between the house and the senate. guest: the most important thing is to recognize that the cbo scores whenever the senate finance committee sent to them. whatever is written down, they have to take at face value. it is fine if you believe what is written down, but they're good reasons that we should be skeptical that we will get with the score says. a key part that was left out of the bill is paying medicare doctors. had that been put in, it would have been above the $900 billion mark. that is not the cbo's fall. that is what the sants -- what the senate finance committee sent them. i do not think that is ever going to happen, and i do not think any seasoned political person would concede it would happen. i do not think $900 billion is a realistic estimate of the cost, that is the senate finance committee's billing.
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we have never seen medicare reimbursements to hospitals of the type written in this bill. you have to question the political reality underneath the assessment. host: what do you think about the effort to overhaul the system all at once? is it politically realistic that congress and the obama administration can go forth with this effort and pass something into law? or is there another strategy that would be more realistic? guest: i think circumstances matter, and there should be no great dispute that we have enormous needs to change the health-care system, but we are doing it in the context of overwhelming debt. we will still be running deficits of $1 trillion a year, $800 billion of which is just to pay interest. you have to set the bar very high about the kind of debt that you have any health-care bill.
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so in this one, i think the strategy of covering so many people without having the money to do it is a flawed strategy. i would prefer one where we change the delivery system so that we get care at a quality cost. host: you wrote an internal memo to republicans when back in september the finance committee and chairman baucus were establishing this bill. in that memo you said his health care proposal will cost consumers as much as $130 billion in insurance premiums over the next 10 years. do you believe that, and why write those to republicans to provide em no-to provide "ammo to fight the baucus health bill ." guest: who pays it? it does matter what the distribution is.
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there are provisions in this legislation, a tax on cadillac plans which insurance companies are supposed to pay, but the reality is companies do not pay taxes. they pass the taxes on to consumers in the form of higher prices, or to workers in lower wages and shareholders in lower dividends. the same is true for the billions of dollars of fees that the drug companies and medical device manufacturers and insurance cummings are going to be obligated to pay under this bill -- that insurance companies are going to be obligated to pay under this bill. if you look under conventional methods where it would resign, the vast majority will be on the middle class. that was the essence of the memo, we should know who is being impacted by this. since i wrote it, the cbo has echo the findings. host: let's get to phone calls. first one comes from lynchburg,
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virginia. sam, on the republican mantra good morning, sam. caller: good morning. yes, i just wanted to -- host: sam, you are having trouble because her television is on. you need to hit the mute button. i'm going to put you on hold. we will move on to fort worth, texas. joe, on the independent line. caller: good morning. it is kind of a strange position i find myself in, to think one of your guests for reading a bill. you have a lot of politicians on their it seems like many times that get by without reading it. i would invite your guest to run for office and you have an advantage foover some of these guys. what is your opinion over the status of the dollar in the world economy, based on what i
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consider irresponsibility when it comes to the enlarged bills, when it comes to spending? thank you. guest: i personally am very concerned about the outlook for the federal budget. there are enormous deficits as far as the eye can see, and given the tradition of low savings, that will put a lot of pressure on the dollar. the primary objective should be to save enough as a nation to take care of the needs of the next generation and leave behind an economy that is stronger than the one we inherited. host: minneapolis, minnesota, democrats line. caller: good morning. it does not matter what the president tries to accomplish. the republicans, you all are just not going to try to help president obama because you all are sent out to try to make him
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fail. you all do not want him to accomplish anything. every american needs health care coverage, and all you republicans -- in-li host: we lost her. go ahead. guest: no one would deny partisan politics. if you dial the clock back to february, i was clear that i thought this was an opportunity, and there is a consensus we need this reform. unfortunately, there has not been the kind of effort where republican ideas would be protected throughout the process. so republicans in the senate in particular wanted to be assured that if they negotiate in good faith with senator baucus, for example, that when we got to the final conference in the house, their ideas would not be stripped out. host: next phone call, mark, on the republican line. caller: good morning. i would like to say one thing
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i. i lost a friend who ate his gun after losing a job. i am still unemployed and i live in monroe county, michigan. the health-care debate, gone on and on and on, and we're talking about a trillion-dollar spending. i find out today that barack obama just won the nobel peace prize, which i -- there is a $1 million prize right there. he is living high on the hog, congress is living high on the hog. i just want to know one thing. what are we supposed to do? thank you. guest: first and foremost, i am sorry for lost, and the personal distress you are obviously going through. but this is i think why -- to
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say that i am against health care reform is an inaccurate notion. if we get partisan reformer democrats, the republicans will of mind. then the democrats will seek to undermine what the republicans do. i still hold out some hope we could get that. it will be more durable and it will solve a problem that obviously is out there in united states and sold it for the future to come. host: chairman tom harkin is our guest on "newsmakers" this week. he said, "make no mistake about it, the public option proposal will be part of the bill that goes to the senate floor for debate." what is your reaction? guest: i think that is one of the clear lightning rods in this debate and will preclude a
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bipartisan solution. there are things democrats simply will not tolerate and things republicans have strong feelings about. the principal compromise should respect that and you will get a bipartisan bill as a result. if they insist on a public option, we will see a bipartisan bill. host: nancy pelosi has put forth the option of taxing windfall profits on insurance companies. guest: you have to pay for this somehow permit first and foremost, the scariest situation for me is a bill that is not funded in any way. it is clear the house is not fun -- is not fond of the financing in the senate bill because it is clear it will hit the middle class. but the windfall tax on insurance companies also has to come out of somewhere, and they are just as likely to turn around and raise premiums to cover that. you cannot fool yourself that there is an easy place to get this money. it will be hard. host: hartford, connecticut, michael, independent line.
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caller: good morning. what puzzles me the most and hurts me most is that if you look at america today, it took us a very long to get to where we are at and the erosion that is taking place. but right now that america feels that this can be corrected overnight, they are blaming obama. but this took a long time. america was sold out many, many years ago. now it is going to take all of america to get back to where we can all work together, that we can stop talking just about the middle class and the rich. what about the people that are the exhaust of the insurance company, the past presidents, the company's, all this stuff? when are we all going to wake
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up and realize that this is going to have to be a world wide team effort by america to get us all back on top? because if we keep going the way we are going, these other places are going to soon foreclose on us. so we had better stop all of what they are doing. you can blame obama all you want, and when he is out of office you can blame everything every president has ever done on him. but let's see what happens. let's see what happens. thank you very much. guest: we cannot budgetary ago on the way we are at the moment, and there is no question of that. the course of correction remains to be seen. we hope that when president obama leaves office, he will leave the budget in better shape than it is now. a key aspect to the health-care debate is you cannot get this done without having everybody change the way they do business.
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it is not just insurance and drug companies. is hospitals, doctors, a device manufacturers, an enormous effort to do this. that is one of the reasons you are seeing this so hard to get across the finish line. it is important to do because the last time we tried and failed we waited 15 years to try again. host: what are your thoughts this morning given this headline? "health care industry concerned about reform measures." the health-care industry is concerned about the not-included $200 billion in higher medicare payments, leaving 25 million people without coverage in 2019? guest: i think this is business as usual. there is a lot of attention paid to insurance and drug companies, in the end, health
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care costs in america are hospitals and doctors. that is one of the reasons this is so hard. you are going to hear complaints about having to change the way they do business. the key is to make sure that pain is equally distributed. everybody in the system should understand that something will be asked of them to do better in the future. host: disarray, democrats line, new jersey. caller: we are being left with massive debt due to two wars we cannot sustain, but we are debating about health care that people cannot get. insurance companies have denied me over and over again due to a pre-existing condition. what are we going to do about people like me? we are going to have a debt were the health-care system as it is now is becoming unsustainable due to the fact that, regardless or not, there are going to be people that have to go to the
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hospital. there are going to be those few that have medical attention but do not have the resources to get it. guest: it is true that at the end of 2008, the federal government had 5.8 th$5.80 triln debt. but there is no reason to move toward $17 trillion in debt. in terms of the kind of reforms, there are other options that should be on the table. one that i would like is that in every state there should be an open enrollment period for anyone with pre-existing conditions or anyone could sign up for an individual health insurance policy. if you did not sign up during that period time, you have a late-enrollment policy that would cover pre-existing conditions. and the healthy would not have a
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late-enrollment penalty. insurance companies can then have known -- handle the burden. we cover the insurance problem and we get people in sharon's early in life. if you then allow for automatic -- insurance early in life. if you then allow for automatic renewals, there a way better incentives of what to cover under invention -- under prevention. host: what do you like about the current proposals on the table? guest: i think the things we're doing in terms of getting more people covered makes sense. we know that the vast amount of uninsured has consequences on the bus down the line. expanding coverage is sensible. what i do not like is opening coverage up to universal coverage without fixing the system underneath it. if you just wrote everybody into a system that remains broken, it is going to be too expensive down the road. that is the lesson in
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massachusetts where they wanted everybody in, and now they have enormous budgetary and cost problems. it is a mixed bag and i would prefer a different sequence. host: skip, on the republican line. caller: yes, my question is i am all for health care, i am a retired veterans on disability. but my daughter and law -- my daughter in law went down recently to see about getting some that work -- some dental work and getting feminine hygiene things taken care of. because she is under 18, because she is not pregnant, and because she is not over 65, she is denied everything. what does my daughter in law do now? she has impacted wisdom teeth. we cannot afford the money that this is going to charge. i cannot afford to take her down to get the gyn problems.
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what does this young lady do now, not in the future but now? guest: am not familiar with state-level programs, but there are typically cases of this type that the states have the provision to cover them. i would encourage the caller to investigate those. the larger lesson is one that shows up in many places, that we should not have our focus on different procedures -- we are going to cover this procedure, not that procedure. we should be focusing on good outcomes, having people be healthy, and the route to that healthy outcome does not matter. if we had a system more focused on that instead of fees for katonah services, we would have better care with lower cost. host: "states facing health crunch," out of "the baltimore sun." the have a reaction to that?
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guest: again, a political weakness to the bill is in an effort to take the sticker price below the $900 billion, the offer some of the costs to the states. you can imagine the states are not happy about that, but we are going to hear about this. host: virginia beach, independent line. caller: good morning. what we have here is the star of the beast. this is the ideology of the republican party, that they will pay the corporations. is a much easier circle for them. they pay the corporations at election time, the corporations pay them for their campaigns, and that is a very easy circle. that surcoat excludes the people of the united states, -- that circle extrudes the people of the united states. if they were so concerned about the financial difficulty, they would have eliminated the bush
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tax cuts, which are still in effect, borrowed from china. guest: the whole notion of starting the beast is a great phrase, but there is no effort of starving -- of starving the beast is a great phrase, but there is no evidence that works. the bush administration passed a completely unfounded medicare expansion, we have enormous cost in iraq and afghanistan, and balancing the budget did not add up. i am not here to defend that and i do not think anyone should. my concern is that as the nation is -- we do not want to move on two felonies on the budget now. we have to get serious about this. host: florida, democrats line, good morning.
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caller: thank you for taking my call. i am really upset about the fact that the whole debate when from talking about health care reform to health insurance reform. we do not need insurance, we need access to doctors and medical care at a reasonable cost. then we need to determine a way for us to be able to pay those bills once we encourage them. they are trying to force us into paying ahead of time when lots of people do not even need care for years and years. and then when they do, of course you want to be able to get it, but at a reasonable cost. insurance companies are taking enormous profits. what are they doing with those profits? where are they and testing them? host: this is a fabulous question because there really are two different things. healthcare has cost the united states the use of doctors, hospitals, pharmaceuticals, all that. the second is health insurance, which is a financial product
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that is supposed to insulate you from going broke because you had a health condition. we in turn makes them a lot in the u.s.. my concern about the current state is that we have left out the health-care reforms. the changes in the delivery system that really will cost us to get better coordination of care, a focus on quality and outcomes. and a lot of the problems we have our problems that we create. medicare, for example, pays hospitals a fixed amount so they have incentive to keep down what they give to patients. if doctors get more, they doom -- if patients get more, they do more. we can fix that up and do better with the health-care part of the equation. host: london, ky. david, on the republican line. caller: good morning. i have a suggestion. a suggestion regarding this health care problem that is more
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of an economic suggestion. i believe that part of the reason that our health care is so expensive now is because of insurance and government intervention. it is kind of like the reason that higher education is so expensive, because there are so many guaranteed government grants and such and such, universities know they are guaranteed a minimum, so they are never going to charge below that minimum. with our doctors, we are in effect creating with a guaranteed minimum payment, a minimum wage for doctors, effectively, aren't we? guest: there is no question that financial incentives matter in
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the health-care industry, and there is lots of evidence of that. we know that some of the incentives we put in from federal programs are not the best, and we should change them in my view. it is also true that if you change insurance and an open- ended gold-plated policy, you do not care about the cost, and neither do hospitals and doctors. while there are separate issues for health care and insurance, they do in iraq, and that is why in the and you need reform. -- they do interact, and that is why in the and you need reform. host: next call, good morning. caller: people do not mind paying if it is going to something not based on someone trying to make a profit. that is why there will be a lot of backlash if we are forced to pay premiums to an insurance company where their main goal is to make money. i want my money -- i do not mind
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paying somebody if i know all that money is going to go to my health care. how come nobody ever talks about the antitrust exemption that health insurance gets? i do not understand it. i do not want -- i do not know why c-span does not make a big thing about this, investigate this. i think that will break the insurance companies' monopolies. guest: first, i lived in syracuse for many years, so say hi to everybody for me. the second thing, you really do need better competition in health insurance. i think there is nothing wrong with the pursuit of profit. it is very effective in delivering an enormous benefits to the u.s. in other parts of our economy, but you cannot have the pursuit of profit without the loss of competition. that would be one of my recipes for better health care reform.
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they do not have an exemption from antitrust, but each state has its own insurance laws, and a real question is whether that makes sense and the 21st century. as we do with auto insurance, maybe we should have a nationwide competition. host: hamilton, new york. mike, democrats like caller: about the public option -- they're already -- they are always talking about it might be in the plan, it might not in the plan. who are they kidding? the whole premise for the health care reform is so the government can insert itself and have universal health care in the united states. the whole premise was so that the u.s. government could assert itself into controlling it. yes, we all need affordable health care and at the top of these corporations is corrupt with big pharma and we all know how much money they charge. it is a huge debacle. but this is just a symptom of something bigger because if you
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look at what happens with all the bailout and how you are told we need all this stuff, it is good for us, that our elected officials know best -- what i do not understand is how everytime they do these things they screwed it up even more. we are trillions of dollars in debt, we are never getting out of that. how can they even talk about deficits or surpluses when we are bankrupt? this country does not need reform, it needs a revolution. thank you. eight. guest: there are serious concerns about the public option, especially the one that says we're going to use medicare reimbursement rates. we had a public option and it delivers huge financial problems. i would rather not employ the flaws of the -- i would rather not import the flaws of the medicare system into the larger
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health-care industry. host: some observers have said why does the cbo put out estimates on such things as health care legislation, and why doesn't the office of management and budget do that sort of thing? what is the difference? guest: the office of management and budget works with the president of united states. it has the capacity to do its own estimates of what the policies due to the budget and how its effect is on an insurance, but in 1910 before the congress decided after a little fight with president nixon that they wanted their own capacity to do that, and they created the budget committees and the congressional budget office to have an independent look solely dedicated to the congress' need to understand legislation. host: last call, a republican line. caller: i live on the canadian
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border. i see people coming from canada to newport to the hospital to get health care. a lot of my relatives live in canada, and people who think they are getting "free health care" should talk to my relatives where the federal government of canada takes 70% of their paycheck. so nobody gets anything for free. i wanted to mention that the president used to be a community organizer. i used to live in a town called dary new hampshire, and there are no state taxes. they did a collaboration between the local hospital, pharmaceutical companies, and doctors. it was not a freebie or a handout. you had to have income, even if it was only child support or a small income.
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but if you have in, and no insurance, you can go to the community health system and with the collaboration they had, everybody had to pay a certain percentage if you needed surgery. you had to pay a copayment for prescriptions. so why hasn't the president addressed it on a more state and local situation where communities can help themselves and try to impose this kind of community system so that not everybody -- because you know what? no matter what they do, not everybody is -- you can pick people up and bring them into a hospital. they are not going to go for health care. guest: i am a big advocate of the idea that this reform should more heavily engaged the state. we have vast distances -- we have vast differences across our states with regard to medicaid, the ages of our population and the diseases we face.
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i think we should take advantage of that. we have seen massachusetts, a blue steak, utah, a red state, that has done bipartisan reforms. this route that we're seeing is a much more federal approach. host: thank you for your time. as many of you know, nasa bombed the moon early this morning, sending two spacecraft into demon. we want to show you some of that video from earlier today at 7:31 a.m. eastern time. here it is. so as we are showing you this video, you can see it courtesy of nasa. it happened around 7:31 a.m. eastern time. we have about a half-hour left here in this morning's "washington journal." we are going to turn our
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attention now to an article that was written by chuck rush, a national writer. he is on the phone this morning to talk about his column, his piece that is headlined "turn off the cameras in congress." mr. rush, tell me about why you wrote this piece? guest: it was because of all the attention paid to a couple of fairly large heavily covered episodes from the floor. it turned into more than anything, rather than an enlightenment, a fund-raising opportunity for both sides. evolved into that -- it devolved into that. host: you wrote, "do not misunderstand, i have always argued for transparency. for 30 years, brian lamb of c-
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span has energized in living room about democracy, but the c- span2 effect has delivered us barnum & bailey." your saying the cameras in the room are causing members of congress to act out? guest: i did not think there is any doubt of that. if many of them were put on truth serum, they would probably say the same thing. whoever heard of these two gentlemen before in a legislative context? my point is not necessarily that they had done that or the opportunity was there for them to do that, of what happened almost simultaneously to that end after it, there were a email appeals to right and left for both sides going out using links both to the speeches and to the words that they utter that they were out there raising money right and left on it. i would submit that it did not
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advance the debate on health care in any way, shape, or form, either mr. grace and or in the context of joe wilson earlier, which i also cited in the peace -- which i also cited in the piece. host: how you relate that to what is happening in the congress? guest: i talked about a one-year moratorium. i think you get transparency by covering exactly what they are doing in congress from a journalistic standpoint, and not allowing it to turn into sometimes these circuses. there is a reason why the supreme court, which i know you are featuring now on supreme court week on c-span -- there is a reason why the supreme court is not televised. they are very adamant about what
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the presence of cameras might do to the judicial process, and i think you have got to ask the question, is there transparency in the supreme court? yes, i think there is. the decisions are covered, explained. the point that justice alito makes is that some lawyers going before the court would use the occasion to address the audience for political purposes. i think that is exactly what we saw in these two circumstances. this was about pure politics and settling scores more than about inventing legislation or issues. host: you are a reporter in washington. talk about your experience in covering congress. has it changed? guest: i was not here before the cameras. i do think that there is what i call the back-venture culture there, that people who are low on the totem pole on the
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seniority level who probably in particular, if you are in the minority party in the house, there are many times were you probably feel like you do not have a lot of power. rather than working the legislative route and building ledges of credentials and working up to committees and working on issues, what ever, the temptation is there to go out and become a cause celebre in moments like these. my point was if the cameras are in this circumstance using it -- if they are being used to fuel that kind of atmosphere and that kind of ethic, why not try it without it for a while to see if we can get back to the more legislative agenda and a more compromising agenda? there is absolutely no reason at no impetus for someone who is raising tens of thousands of dollars off a controversial statement to come back and compromise and/or apologize, or
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whenever -- or what ever. host: yours can also see british parliament on our network, and there it -- the viewers can also see british parliament on network, and there is often very vigorous debate there. where do you see the difference? guest: i do not see a difference. but this article was not about british parliament, it is what is going on in our own congress. host: we want to thank you for joining us on the phone this morning. you started a discussion for us, a question we want to ask our viewers this morning about what they think. should the cameras be turned off in congress? we turn to you now. should cameras in congress be turned off in the house and in the senate, as chuck raasch puts forward? not a permanent situation, but a
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moratorium on camera for one year? here are the numbers. republicans, 202-737-0001. democrats, 202-737-0002. independents and all others, 202-628-0205. you can also send us a week on -- a tweet on twitter.com/cspanwj. front-page of "the new york times," "anti-gay attacks are hate crimes." "a step that would extend new protection to a lesbian, gay, and transgendered people." the article goes on to say that "under current federal law, the crimes under federal jurisdiction are defined as those motivated by the person's race, color, religion, or
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natural origin. the new measure would broaden the definition to include those committed because of gender, sexual orientation, gender identity, or disability. republicans criticized the legislation, saying violent attacks were already illegal, regardless of motive. the measure was a motive to create class of thought crimes." that is "the new york times" this morning. first phone call on turning off cameras in congress comes from wisconsin. mike, on the independent line. good morning. caller: i would like to see the cameras stay on. host: why is that? caller: because i do not frankly trust the journalism coming out of washington on the local news. they are not giving me everything. i want to hear it from the
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person's own mouth. host: all right. go ahead, are you done, mike? caller: thank you. host: alright, ernest on the democrats' line. caller: my concern is that the health care for the government, for the people, is right because let me tell you something. i went to see a doctor. the people who work for the doctor told me if i want to see the doctor, i have to have $250. then the doctor put it on a computer, nobody saw me, and at the time they put me on collection for $323. at the time i did not see any doctor because i did not have money. so health care reform is good for everybody.
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host: ernest, let me ask you -- are you watching the debate on the house floor? caller: yes, i am watching it. host: how closely? do you watch every day? caller: yes, i am watching now. host: michigan, dorothy, on the republican line. good morning. caller: my thoughts are that, absolutely not, the cameras should always be on. if they were turned off, people would be so much less informed. it is essential that we are able to see what is going on and the way the process works and how things come about. with the cameras off, it would be like the american people would even be that much less clear list because what the media tells us, is it true? you cannot tell -- you can i get
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answers from the media. host: columbus, ohio. cindy, on the independent line. caller: she is absolutely right about that. i have been watching c-span since its inception. to turn off the cameras would be a travesty to the american people. host: since you have been watching, how have you seen the dialogue change on the house floor or the senate floor? do you think it has become more partisan and less about substance? caller: i do not think it has become more partisan. i think it is always going to be partisan since we have two parties. it just depends on who is in power, as we know. it does not matter in terms of republican or democrat. i am a displaced worker and i was able to watch the health care hearings. there was a lot of bipartisanship, but i think there were some holdouts over politics.
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also, as far as the cameras, we need to have the cameras on. this is the only way to get information. my friends was the regular news, and they do not hear hardly anything, or they hear a spend about what is going on. i really appreciate c-span. host: we are talking about cameras in congress. a piece by chuck raasch believes they should be turned off. we're asking what you think this morning. a note to all of you, the cameras are not controlled by c- span. the cameras are controlled by the house and senate, and we bring you the coverage. next caller, good morning. caller: good morning, and thank you for c-span. definitely the cameras have to be on. the fun thing about it, the fellow who wrote the article, he probably would not have the
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information he has now pretty reason he does is he can watch it on c-span, too. as they hold their hearings and everything else, we can learn who is in whose pocket, and it is exposed. if we did not have the cameras, everything they did would be a back room deal, and we know that most laws that are passed, the people in the country do not like. it is in the back rooms. exposure, some like disinfectant, so we need the cameras. in fact, we need more. i would like to have a little camera and everybody's office to see what really goes on. host: st. thomas, virgin islands, mark, a republican line. caller: yes, i think the cameras are a wonderful thing, especially now when it seems that so many different laws are passed and they seem to be rushed through.
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it just gives all of us a chance to be able to look at our individual representatives, and even the representatives from other states, and to be able to see where the people stand. thank you so much for c-span. host: how often do you tune in and watch floor debates? caller: i am addicted to it. my grandfather was a world war ii veteran, and he is still with me -- and he instilled in me to keep watching politics. the cameras really give us all a chance, whether it is being used for political purposes or not. it gives us a chance to see where our elected officials stand on different issues. it is a very good thing to have the cameras. host: dallas, texas, ken, on the democrats' line. caller: i definitely think the cameras should be on around the clock.
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this should be on in their offices, homes, and everywhere else they go, because we need a true picture of what is going on. i find it ironic that somebody would suggest during the health- care debate that the cameras should be turned off. it is just utterly ridiculous, to wait on this info-tainment media that we have right now. host: next call. caller: nancy pelosi said this would be the most transparent administration. we both know that they're lying. i think the democrats and republicans should challenge their lives. they are both lying. why don't they stay at -- why don't they stand up and say, obama, quit lying. with the bill on the computer.
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nancy pelosi, starred in transparent. quit all this behind-the-scenes negotiating and all that. i think you guys do a great job as far as you can, as far as the congress will let you. host: other headlines for you this morning -- the emerging goal for afghanistan is to weaken, not vanquished, the taliban." "the goal is to weaken the taliban to the degree that it cannot challenge the afghan government or reestablish the have and it provided for al qaeda before the 2001 invasion. the objectives appear largely is done with mcchrystal plus strategy. president obama as expected -- is expected to meet with national security advisers today to continue discussions about what to do next on afghanistan." the papers are reported this
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morning that he is not expected to make any sort of announcement for a couple more weeks. the president also this morning is expected to react to the news coming out of oslo earlier this morning that he won the nobel peace prize for 2009, and that is at 10:30 a.m. eastern time. you can go to c-span.org to watch it there and also find out where we are covering it on our networks. madison, wisconsin, morgan, on the independent mindfreak caller: how are you today? host: doing well -- on the independent line. caller: when politicians grandstand, people can see for themselves and be educated that perhaps those people need to be removed from congress by votes. that way possibly we can get people working for the people rather than for the money. host: i just got a note from the producer here that we will be
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covering president obama's reaction to winning the nobel peace prize here on c-span. so keep your television on this network, 10:30 a.m., eastern time. woodbridge, virginia, democrats like 3 caller: thank you for c- span. i believe the cameras should stay on, but i also believe it is really not helping with the fact that the vote -- it shows that republicans vote against the bill that would protect women from harassment in the workplace. we still are going to have people who is still not vote for republicans. for the simple fact that you still have a big microphone like that and still have people saying they are confused about health care, what is going on,
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that means c-span is not doing good work to inform people. when you have the guy like your last post comments and lying to the people about health care. if you are for health care reform, usage thank -- used to -- you should think president obama. host: "the new york times lead editorial this morning, "sinking with mr. rangel. "speaker pelosi promised to drain the swamp and has delivered on some of that promise, creating a new ethics oversight office. but protecting mr. rangel is a grave misstep that can only hand the ethics issue back to her opponent's." 0 usa" says that she should make the chairman stepped down now. another piece written by john
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lewis, "invoice for the little guy." given on the republican line. caller: good morning. i would like to first thank c- span for its coverage. we have to have the cameras on in order to keep these people honest. i cannot even believe that you would consider shutting them off, especially at this point. host: i do not want them to be confusion -- i do not want there to be confusion. the house and senate are not considering turning the cameras off. an article was written by chuck raasch that the cameras should be turned off for a year in order to get away from partisan statements and get to, as he
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says, more substantive debate. caller: maybe they should get down to business more than worrying about partisan politics and being concerned about whether the cameras are on or not. host: next call it host: i think -- next call. caller: i agree that when the camera is on, everybody is grandstanding and making a show, but that is all we get to see. you never get to see how the legislation is worked through and the process is come to. that was all done in secret meetings behind closed doors with people who have monetary interests. and the people suffering from the decisions of the people in their ivory towers have no idea how they got to where they are. as far as charlie rangel goes, i think the people who elected him should stand up and say they are not going to put up with this. the government works for us.
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we do not bowed down to them. they should have a camera on them whenever they are on the job. host: we turned our attention now to c-span's annual student competition. merritt joins us to talk about the 2010 competition. this year students are asked to create a documentary on one of two topics. -- one of our country poskitt strings or a challenge the country is facing. tell us how it works. guest: it asks students to critically analyze issues, and for the first time we're giving them a chance to choose between the two topics. to choose one of our country's greatest strength, or a challenge our country is facing. host: meredith, what are the
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prices for this -- what are the prizes for this competition? guest: we offer $50,000 for the grand prize. host: how is this competition -- we offer up to $50,000 for the prizes. host: what kind of response do you have from teachers and parents? guest: last year the response was overwhelming. students really get into the competition. when we talk to them, they really realize the importance of analyzing these issues because we always -- we also require students to insert the various points of view. they can take a side on the issue, but they have to take varying points of view so they can critically analyze the issue. parents and teachers as well recognized this is a wonderful competition to get students to do that. it offers the opportunity to win
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cash prizes, and the top-winning videos will air on c-span. host: what are some of the other requirements for these documentary's? guest: they have to meet the criteria of the time limit, 5 to 8 minutes, including varying points of view. they also have to insert c-span programming that supports their topic and a website list to show where they are getting their information from. host: 10 any student and roll? do they have to be of a certain age? guest: the ages are sixth grade to 12th grade. host: our past ages have been -- our past winners have been what ages? guest: about 12 to 18. what you're seeing on your screen right now is the website, www.studentcam.org.
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those who are thinking of entering can look at videos from the past four years to get an idea of how to put the documentary together and what winners have done in the past. host: can you walk us through the website a little bit more? where would you point people to go to? guest: i would look first on the homepage, and that will give you information on the topic as well as the requirements. there is a tab at the top four f a queue -- for faq's. we provide some ways to technically insert c-span programming into their video. the other area i would point out is there is a section on teaching studentcam.

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