call today that we are continuing to make progress on the path towards. >> dustin optimism rise or fall after the stock? >> i think the optimism continues to rise. we are hopeful and understand that the road ahead will not be easy. it is a complex and emotional set of issues that we look forward to working three. yes, sir. >> robert, two questions. first of all what does the administration's decision to remove the 250 billion-dollar placeholder from the budget say about your take on the bank's help? >> i think when we met in this room months ago at the introduction of the budget i think there were some concerns based on the health and

stability of our financial system that more money might be required and the president and the administration felt in order to be transparent about the budgeting process we should include that marker in their. removing it i think underscore as the efforts that have been taken to rebuild the economy through financial stabilization. another conversation that we had as part of this is that the introduction of the bank of stress test and there was a lot of consternation that at the end of these, you know, we would likely need hundreds of billions of extra dollars, that we now realize that banks were able to take steps and actions to raise almost all that money from private capital -- which i think is obviously a good thing. we've discussed pulling the

economy back from the brink, and particularly the financial sector back from that brink, in order to restore some confidence. we've even seen banks pay back with interest the money that taxpayers used to stabilize the system. and one of the -- i think one of the results of this is the mid-session review we would expect the deficit to be 1.58 trillion rather than the 1.8 trillion that the administration and the congressional budget office believed would be the case just a few months ago. part of that is the to under 50 billion that is not needed because of the stability as a result of the actions taken on the financial system, and outlays that are $78 billion

lower for fdic. >> taking those out -- and that makes sense that it would show some confidence in the financial industry -- but how would you describe the budget situation as of? is the budget situation improving, or is the budget situation deteriorated? >> the budget situation continues to be a great challenge. obviously -- i've talked in here about one of the best ways to bring down our budget deficit and to get fiscal responsibility is to get our economic house in order and get the economy back on track. i think it's no surprise, if you look back over the course of the last six or seven months, for a great period of time we have seen the economy in a very, very steep decline -- in some ways, and a steeper decline than anybody had predicted. and i think the budget picture in many ways will demonstrate

that resulting deterioration. >> continuing -- >> it continues to be a hefty challenge. >> what? >> ft challenge. >> the budget does? >> yes. yes, sir. >> the spokesman for samet majority leader harry reid said that one of the intent to -- their hope is that it will be a bipartisan health care reform effort, they will get health care reform accomplished by any legislative means necessary. and i'm wondering if you could walk cost through -- obviously people in the white house have been talking to each other, strategizing about different ways that this can be done. first of all, could you comment on today's wall street journal story about the discussions about possibly splitting up the bill? but also, what are the thoughts -- obviously we all know that your intention is that it be a bipartisan bill but beyond that what are you planning for? >> i said this this morning. i have -- i read the story in

the journal. i tried to get guidance from people. i have not been able to because many people get that from our are on vacation. we will try to get you better guidance on that in terms of splitting up bills. >> if you could give robert the numbers. [laughter] >> i mean jonathan story also had in their the president was going to meet with advisers next week on this and as i said in a gaggle this morning on less that is a meeting that includes martin on a golf course, that's -- >> i did not say that. >> can somebody go get me the newspaper -- >> that was not supposed to be on the budget. that was just supposed to be on the -- >> mabey john thune could clear up for both of us [laughter] >> are you going to take questions? [laughter] >> sounds like he needs to. [laughter] let me discuss a little bit -- obviously our focus as i said yesterday is on continuing this process in a bipartisan fashion. you heard the president say that again today. he has reached out and spoken

with members of congress, including members of the finance committee over the past several days. >> republican members of congress? >> yes. he talked with senator olympia snowe yesterday, talked with senator conrad yesterday, and as we've discussed, talked with senator baucus on friday. that is our focus is continuing to work this in a bipartisan way. i know the six senators on the finance committee have a conference call slate, according i think even to jonathan's report and others, that -- had a conference call on that tonight. >> does the white house have a presence on that conference call? >> not that i am aware of, no pity i think that it is part of a regular negotiation session that they have had that we have not taken part in. i am trying to get the extent to which conversations have been here looking into what possibilities are next.

i talked to the president briefly about it, and all he said was our focus was on doing something in a bipartisan way. >> do you agree with what jim manly said about by any legislative means necessary -- obviously bipartisan being the hope and the priority but you're going to get this on? >> well i think that the president has said on a number of occasions that -- excellent, thank you. [laughter] >> while. >> what is that? >> that's water. you didn't recognize the newspaper, chaka? [laughter] and all he did was mentioned to me that our focus was on doing so in a bipartisan way. i think that you continue even when he is out next week to talk to members of congress including additional members of the finance committee including republicans.

>> he also said the -- republicans conspired during the clinton administration to defeat any health legislation. he indicated that they might be doing the same. what do you think is going to break through that and why do you need them? >> well, as i said yesterday, we take people seriously that say they are working and want to work on a bipartisan result for health care reform. i don't think the president is under any illusions that he's going to get every republican to sign up for his ideas. the health committee approved a piece of legislation with nearly 200 republican amendments that had been added to i think he continues to be hopeful that we can continue to make progress and until we see otherwise that is what our focus is. >> even if all republicans are against it? >> we take at face value that

people -- that republicans that you read about in the newspaper are interested in working on a bipartisan solution to reform the problems that we all understand and health care. >> [inaudible] >> welcome that is what we are working on. that is what i assume will be discussed on the conference call today. >> test on that point the house republican leaders said they sent a letter to the president and may asking to work together on health care reform and there was no follow-up in terms of meetings. >> they have been down here to talk about health care. i think -- >> since may? >> i believe so. i will check. i don't believe it has been -- i don't with it has been since they were not. i will check on a series of what meetings have taken place. >> you think it is helpful to have as the president makes his case -- to have a top union official and rich trumka and essentially threatening democratic members of congress

that if they don't support a public auction unions will help defeat them in 2010? >> i am likely to get into some of the back-and-forth. i think that the president believes that, as you heard him say again on the show that he just 8i keep pointing their i guess it is over there, that the president wants to work with all members of congress, both parties and reiterated but he said earlier for many times on the public option. >> he has been trying to show flexibility as well so how could that be helpful to the president if some of his own alls in organized labor are easily threatening fellow democrats? it doesn't sound like flexibility in his party? >> i can't speak for everybody in the party. i can only speak for the president in saying that we believe it is important if we didn't believe it was important we wouldn't be undertaking it in order to get some bipartisan agreement. i think we have agreement on a lot of issues important to get

health care reform done. we have progress that still needs to be made and i think that is why the center of finance committee continues to meet. >> question of subject blackwater. there's various reports about the cia hiring blackwater against 2004 to help assassinate al qaeda leaders and obviously your director has already shut the program down, didn't think it was the right kind of program. my question is moving forward why is the obama administration still is using blackwater as a contractor? why do you continue to hire this -- >> i would have to wait and see what the extent is and why to to the cia. >> actually valerie was asked the past weekend at the netroots conference and to the collapse of the president has to balance with national security. how do you define that it is in the interest of the national security interests of america right now? >> i would feel more comfortable talking about this but i have more information on their contract. yes, sir. >> the president made a comment about that -- that the

republican leadership made the decision -- [laughter] [inaudible] he didn't have a cross word either. i thought he -- >> that's what happens when he stuck with a cross word [laughter] >> it's an easy one to date. [laughter] >> it is thursday, a little tougher puzzle. >> it's august. >> the president said the republican leadership made the decision to oppose him. is this his political analysis or is this what he -- i mean is this like he knows this as a fact? >> i think it's -- i think it is a deducing from comments that he's read -- i think if you read comments in today's paper you might come to that conclusion. >> said he doesn't feel like the republican leadership is stealing from -- he doesn't fairly any more? >> i think there is a difference between some members of the republican party. i did you have seen members the president of dimensions that are -- >> he singled out republican leadership.

>> boehner, a cantor, kyl, those guice? >> i don't think you have to go further than that. that represents the leadership and i think if you look at it in just today's paper you will find a hefty number of comments by the leadership you just mentioned. i think there is a difference between republicans and the leadership of obviously decided long ago that they have no interest in working with the president. >> when you guys get on this? >> negative we would certainly be willing to work with them if they were willing to work with foss redican i.t. we talked about this before this has to be a two-way street. the president -- i used this example before. the president went to speak to the republican conference and an offer before he left the white house the republican leadership and commerce announced their opposition to the plan the president was going to come talk to them out and take your questions on. >> after that experience --

>> president has an open hand and is ready to work with anybody that is ready to work with him. but the president can only do so much. the president can want to work with you but you don't want to work with him for not going to drive your car down a two way street. did i always find it a little curious that they put out a statement in opposition of a plan before the president was going to go up there and talk about the plan? if i gave you an answer to your question before you asked the question. it just seems a little off. >> the last time he talked to grassley? >> i will ask those folks. it hasn't been this week. it would probably be in the last few -- i'm trying to remember when they left. >> are you -- is the white house curious why he's still involved with this -- given the comments he's been making about -- >> no, i think -- >> you think he shod still be

involved in negotiations? >> i think -- again, we take his comments seriously, yesterday, but he believes that we should continue to seek a bipartisan solution. i think senator bachus believes that he's making progress with senator grassley. we hope that senator grassley feels like we are making progress, and hopefully we get something that he thinks is good for health care reform. >> do you take his comment seriously that he's not going to vote for the bill unless he can get a huge number of republicans? >> that is a big question for the huge number of republicans he's going to talk to. >> you were sequestered are named joe asked the president if he was getting a little weak need. >> yes. was that you? >> no, it wasn't me. [laughter] >> it was helen. >> i don't know joe. so is he going into this netroots on line questioning session today expecting to get flak from his base? >> welcome i do know, my sense is that when we talk to our

supporters, when we talk to the town hall meetings there are people that have questions and concerns. there are people that have that support costs. the president looks forward to dealing with whatever questions are all there. i think that today was a good example. you heard i forget the name of the call i think it was one of the first ones, a female caller who said on till the president just told her the government doesn't want to take over health care that is the impression that she had. we have seen pulling and i have watched newscasts just this week where people have said that illegal immigrants are going to get health care as a result of this bill despite the fact the president said -- policy -- six weeks ago that wasn't true and said 26 minutes ago that wasn't true. we will see if -- we will see if those rivers can finally be put to bed based on the truth. >> since you bring that up when will the american board children

of the legal immigrants be -- >> i don't know the provisions are on that base. i think a different -- i would have to look at that aspect of the bill but all too easily as you know different public policy has carved out different exceptions for that group of people despite their citizenship. yes, sir. >> quickly the president said i think he used the word we and discussed the idea putting the the guy under house arrest. did he personally make that call or who did make that call? >> our folks in libya discussed with exactly what the president said a minute ago. one, this individual ought to be treated -- first, let me say this. we oppose and deeply regret the decision that has been made for

release. our officials and libya talked with the government and delivering two primary messages. the president said first that this individual should be treated as he always ought to be, convicted mass murderer that took part in a terrorist activity in december of 1988 that killed several hundred people including almost 200 americans. secondly, we express our concern about the release and believe the libyans should treat the individual as somebody who should be under house arrest. buffaloes communicated again through american officials in libya directly with the libyan government.

spec would be the u.s. embassy? and did you get a response? >> i believe some of that communication happen as early as today. >> today's news is during -- wall-to-wall live coverage of this release and we appreciate the president's comments. in light of the fact this has occurred despite a protest of the at bat restoration what affect do you think this will have on agreements of this nature between the u.s., the u.k. and other nations in the future? >> well i hesitate to speculate about the future. i think it is just important to reiterate as i have done here our deep regret that the decision was made. our deep condolences with the families that as i said this morning have for many years lived with a loss of a loved one as a result of these horrific acts and we wish this decision had not been made.

>> as some say, regret is fine and condolences are fine but certain individuals like senator lautenberg are wondering where the outrageous. >> welcome the old age has been expressed directly to the governments that have made these decisions, from the white house to those individuals, and as well as the libyan government, and i think our actions have been in dect -- because we have direct concern about his decision. >> can i follow on bop one? what does this do to the so-called special relationship between the united states and -- >> i don't want to get in -- i think is best today just to discuss where we are on this activity. >> robert -- >> do you have a followup on that? i can't imagine that you do. >> you will come back? >> regrettably, yes. >> on this point, might there be

any steps the u.s. would take that might amount to repercussions in exchange for -- to the -- taken against the u.k. or scotland? >> not that i am aware of but i will ask the nsc. >> what about libya? of the agree to put them under house arrest? >> i can check on that. >> did anyone from the british for the scottish government contacted the united states to try to explain the reasoning? >> i can talk to the nsc. i assume we had discussions with them because folks here registered on behalf of our were government, this administration and our country the deep regret and opposition we had to the decision being made. >> can you get more specific on a series of questions about -- >> i will see if there's anything to add. yes. >> the president called cash for clunkers a victim of its own success. what does the administration do to sort of turn that around to make it successful in its own

success i guess and i think -- pulling themselves out of the program. >> let's understand this has been eight very successful program, okay? dealers have sold cars like they haven't sold them in quite some time. manufacturers are producing cars like they have not in quite some time and workers had been hired to make those cars to replace the inventory like they have not been in quite some time. this is without a doubt an unqualified success. we have negative with the president discussed we have added people to process. we tripled the number of people to process applications that are coming and. we understand some of the frustration, but i think it is also helpful to understand that we cannot -- we have seen applications that are legally incomplete that do not fit the

requirement. that requires us to go back to the dealer to get additional information. as the president said it would be illegal for us to send to eda or a check for an application that was not complete. dewitt be asking me if we did that why the chevy dealership got all these checks based on our investigation on incomplete applications that didn't comply with the law. if we were doing everything in our power to expedite the processing of these applications in a program that has been successful, again, for consumers, dealers, manufacturers and workers. >> so if someone went out today can they feel confident and can the dealers feel confident they will get the money? >> absolutely. that is what the secretary of transportation said and president said and, again, i think this has been a highly successful program.

>> yes, sir. >> the president said at the incident that the administration reached out to the families of the victim's of the bombing. can you tell how that has happened? >> i believe it was nsc officials that communicated the likelihood of a decision that would be made to express to the families the actions the administration had taken with u.k. and scottish officials about an impending decision, and again to express this government and our country's condolence for what happened. >> and that was the nsc? >> the ennis sea and through john brennan. >> there are a couple of reports about a bank loan to the brazilian government for offshore drilling and i am wondering if you can give an administration take why the investment in brazil and

exploration there is a good idea and helpful for the u.s. economy. >> i have all seen this story. i would have to look at this. >> and eastern told abc today talking about health care, quote, i feel we are talking losing control of congress if health care fails. it would totally in power republicans to kill all changed its hard to imagine the democrats convincing the public that republicans are to blame for health care reform going down the democrats of such large majorities. is their anything the white house disagrees with in that and is that any way under the allies as the white house what talk and may be such negative terms in the next couple of months? >> i have not seen the comments. i doubt it and don't know if the president has. we don't look at -- we don't look at -- we are not making decisions about health care, the economy, cash for clunkers, banks, anything based on

polling, based on what is going to happen in congressional election. that isn't our focus to read our were focus is as the president did today reminding people what is at stake in health care reform, reminding millions of americans we can't afford to wait. dealing with misimpressions and flat-out lies about what is involved in this bill and that is what his job will continue to be. i will let interest groups worry about whatever they want to worry about. >> one other question the president said he didn't want the government bureaucrats, and i forget the verb, interfering or meddling with people's insurance, he didn't want the in deer insurance industry meddling. this name seen cheeky but i'm trying to get to a serious point here. does that mean that the democrats wouldn't be involved -- who would be involved -- is this a world where it is just patients and doctors? >> in a world patients and doctors make medical decisions

absolutely. i think he said the same thing -- >> he said before -- >> sitting in an air hangar in montana. look, we remember -- >> i'm wondering how you get the bureaucracy of health care whether it is private property or government barack receipts. >> we don't want the government make health care decisions for doctors and individuals, and the president doesn't believe health insurance companies should make those determinations either. when they decide that you are too sick or when they decide -- i'm sure you could go on the air right now and get 100 viewers to call in that have dealt with their insurance company and found that it had to go through extra paperwork because our original the treatment was denied, or some extra hurdle was put in place that they had to jump over in order to receive the treatment they deserved. that shouldn't happen -- what in the world is that? [laughter] life like i am, like, never

mind. i'm not going to go -- [laughter] those decisions should be made role that the private insurance company currently has on health care, that seems to suggest those bureaucrats would still be there. >> well, i don't know who administers box's health care program by an sure fox's health care program will still be administered by the was people. the question is if your family member gets sick are you going to go to your doctor to get treatment or are you going to go to the cubicle where a tour insurance executive or bureaucrat six and ask him if your son or daughter ought to get the cancer treatment they deserve? that is the president speaks of. the decision shouldn't be made by the bureaucrat sitting in the cubicle about your family on a cancer treatment.

>> or yours. >> or mine or anybody in this country and it shouldn't be made at the government level, either. yes, ma'am. >> on monday the expectation

i think the administration has been very clear that we are pointed in going forward. that looking backwards is not what we believe is in the country's best interests, and that's what our focus it. >> robert? >> yes, sir. >> thank you very much. this is a two-part. does. >> i'm going to hold you to it, only two.

>> the first part. does our commander-in-chief believe that "the new york times" extensive august 16th august 16th record has warned g.i. jane quietly breaks the combat barrier is inaccurate? or does he believe women should be in combat? >> those are decisions left appropriately to the pentagon, and -- >> he is the commander in chief. >> he is. he has a very good secretary of defense, and an extraordinarily capable military that, lester, i know you're proud of. >> does he agree with "times" reporter, quote, women need separate bunks and bathrooms? or does he believe that neither gender nor any kind of sexual orientation should have a separate living facilities? >> i'm going to again leave those very appropriate and

important decisions up to the people that make a those for our women. to the back. yes, sir. >> do you have a comment on the afghan election so far? how it went? how does the president feel about it? >> look, i feel obviously the president is enormously proud of the millions of afghanis that ignored the threats of harm and violence to exercise their right to choose their president and provincial council leaders. i think it's heart 'king -- heartening anytime you see an exercise in democracy, particularly when it's don in --

done in the horrific type of threat we know existed. results will trickle in, and we will have some preliminary national results, i'm told, on september 3rd, and we look forward to awaiting those and look forward to working women whomever is elected president of afghanistan in continue to make progress in a very important part of the world. [inaudible question] >> i think he has seen the story. i have not talked to him about his thoughts on the matter. and he has not talked to either senator kennedy or governor patrick about the letter. i was asked this morning -- i believe the last time he spoke with senator kennedy was on june 2nd about health care.

>> do you remember how long the conversation was? >> i'm doing this from memory. i think the conversation lasted seven or eight minutes in june, to discuss where we were in the prress that was being made of health care but i don't have anything else. >> did he talk to the president about the visit. >> he talked to vickie and about the letter. >> robert, the president spoke with the organizing for america groups. do you think it's coming a little late in the process? would the bill be farther don the road if he has mobilized those volunteers, like before the town hall. >> i have not bought into the miss misperception that our

reporters haven't been out there for the meetings. i have seen them in montana, and in grand junction, colorado. we got 35% of the vote, i think in that area of colorado, and we see them on television, even in the splicing and edition that the media has done over these town halls. >> on another topic. tom ridge has a memoir out that says just before president bush's re-election in 2004 he was raised to raise the color alert, and he believed it was politically motivated. we haven't seen one. is the administration junking that? >> i believe, if i'm not mistaken, secretary napolitano is evaluating the system and its use. obviously just as i said earlier

about political decisions or things like that, decisions regarding the terror threats should be made based on the rise and fall of the threat, not based on anything else. thanks, guys. [inaudible] [inaudible conversations]

>> how is c-span funded? >> the u.s. government.

>> i don't know. i think some is government. >> public funding. >> private donations? >> my tax dollars. >> how is c-span funded? america's cable companies created c-span as a public service. no government mandate, no government money. >> over the next hour, author burt solomon talks about his book on franklin d. roosevelt and the constitution. he took questions. >> our summer reading tour continues with burt solomon, his new book is called fdr versus the conversation. what's the story you tell? >> guest: the story is about the court fight of 1937 when the supreme court had topperred pillar after pillar of the new deal, and franklin roosevelt decided to deal with it. and the way he dealt with it

directly, it was to expand the size of the court -- to propose it from nine justices to 15 so that the court would re that the way he and the majority of the electorate wanted them to rule. >> host: what was the reaction? >> guest: explosion all over. huge amounts of emotion. you hear about all the town-haul meetings on health care. very much the same kind of thing was going on. there was the most dramatic, most emotional fight that they country had been in since theologer of -- the league of nations, and many people were for it because the court was knocking down pieces of the new deal that people in address -- distress needed, and because people were opposed to it. business liked the court the way it was and conservatives liked the court the way it was burks a lot of people got worry evidence

about roosevelt having too much power, and this was a time of dictatorships around the world, and hit her -- hitler was in power and stalin and there was a lot of opposition to this that roosevelt never expected. >> host: we want to take your telephone calls. we will talk history and lessons with our guest burt sol mop. we invite your participation and will take your twitter comments and e-mail comments. why did you decide to write this story now? >> guest: well, actually, it was a coins dense. co-coincidence. i was reading a long article in late 2005 about the harriet miers nomination, and the issue

of roosevelt has lost the battle and won the war. and that was interesting to me. so i dove into it then. only really in a way, last fall, when i was reading the galleys for the book, i felt like it was deja vu all over again. because the economy collapsed last fall, very much like it had in the 30s, after a decade of too much prosperity and too much craziness going on, and everything felt similar to the way it is now. to the extent that the supreme court was set up in the same way, four liberals and conservatives and a big swing vote there was economic problems, and the electorate chose a pioneering democratic president, and a lopsidedly democratic congress, and some of the parallels were astonishing. >> host: who are the major cast

of characters. >> guest: president roosevelt, who was pushing to policy amibitions brought into effect. the supreme court, where the swing vote turned out to be a man named roberts, owen roberts. >> host: we have a photograph of them. which is roberts. >> guest: second from the right in the back row. >> host: okay. >> guest: it was the second most junior justice. and so he played a huge role in this, as did the chief justice at the time, charles evans hughes, who was able to work the court in way that ended 'opposing, quite openly, the president's plan to pack the court. >> host: what was the chief justice's own ideology? >> guest: he was a progressive republican, kind of a liberal republican. >> host: appointed by whom?

>> guest: hoover. >> host: what about the legislate legislature. >> guest: burton wheeler, a very progressive democrat. he was a new dealer, the first politician out of new york to back roosevelt for the presidency in 1931, so he had impeccable new deal credentialed. he ran on the progressive party ticket, and he was as reliable a new dealer as there was in the isn't that correct but he was much offended by what the considered a grab for power by the president, and an attempt to -- he felt sort of unbalance the government in unhealthy ways, so he led the opposition. >> host: what was the white house's action when they learned this important and new deal

senator was going to break with them. >> host: -- >> guest: they were disgusted. >> host: one of the dramatic scenes in the vote before the crucial vote, the majority leader of the united states senator, a democrat, dies of a heart attack. >> guest: and the building is still standing. joseph robinson, democrat from arkansas, and he had really helped power the new deal. a lot of the new deal laws through the senate. and so he probably, with some misgivings, agreed to support and defend and push the court packing plan, and he had a few votes in pockets he didn't tell anybody about, that he thought would, by a very simple majority, get a compromise

proposal passed. and when the senate was just getting to an actual vote on it, it was a very hot washington july, as we can all imagine, and he -- late at night he was reading the congressional record,, in his stifling apartment, and he got out of bed and made one step and had a heart attack and died, and that killed the proposal, because he had votes nobody else could summon up. >> host: i want to read one quote from your book. here is one. his plan to enlarge the court from nine justices to as many as 15, to pack it, as the opponents decried, was constitutional. the nation's founding document was silent about the court size. >> guest: this is actual lay surprise to me and to many people, is that the constitution says nothing about number of justices on the court, and it

started out at five, went to six, as high as ten during the civil war, when lincoln was worried that only by a 5-4 vote had the court upheld the northern blockade, and so he wanted to add an extra vote for good luck. but it stayed at nine since 1870 and has not moved since them. >> host: how quickly did the term "court packing" become adopted. >> guest: it was former president hoover who first brought it into the dialogue. it was an old term. in 1870 the court went from seven to nine, and grant, president grant, had these two appointments to make, and those two appointments reversed an important court decision on whether legal tepider, paper --

tender, paper money, would be legal to use. and the first court said, no, it was, not, and then with the exta justices, it was reversed. >> host: we have some interesting questions on franklin roosevelt's plan to pack the supreme court to tip the balance in his favor. it was his actual legislative proposal was not just about the supreme court. what was he exactly wanting to do. >> guest: it was for all layers of the federal judicially, and if the older one wouldn't retire, they could appoint one to sit alongside the old guy,

and the idea was to also include the supreme court. >> host: how many justices were over 70? >> guest: six of them i believe. >> host: were all of them unified in their dislike of this proposal? >> guest: yes. all of them were, including -- the thing that really hurt, personally, roosevelt the most, was that the oldest justice at the time was louis brandeis, who was 80, and was the most liberal justicees on the court, and he was deeply offended. he had a long-standing relationship with roosevelt, and he was offended that roosevelt thought he was too old. >> host: let's go your phone calls. this is rob on our democrat line >> caller: i just wanted to ask the gentleman a question, and then make a small comment. who would rule on the

constitutionality of such a court packing, and what would -- how would they overturn it? would it in the supreme court themselves? if that's the case, why -- what's wrong with packing? you already said that it has been packed. reagan did it, and it's been -- until the court changes what could be the constitution. thank you very much. >> guest: there's no constitutional problem with its proposal, and nobody said there was, until it -- it was up to congress to decide if the number of justices were to be increased. the problem with it is the precedent it would set. yes, it had been done before but it had been many, many years since i it happened, and the fear was if one party controlled the presidency and congress,

they could use that control to also control the third branch of government and then have all three branches of government under their control. >> host: here's another passage from the book, locking homers was -- would you take a moment and go through those examples. thomas jefferson. >> guest: right before he game president and after he had been elected president, john adams appointed a second cousin of jefferson, john marshall, to become chief justice. >> host: now referred to as the greet chief justice. >> guest: he was the great chief justice and created the concept

of judicial review that allowed the supreme court to knock down laws as unconstitutional, which had not been the case before. and so the federalists who still controlled congress changed the nature of the court -- confirmed john marshall and changed the number of justices in order to take appointees away from jefferson. jackson, who was a great populist disliked the power of the court which the electorate could not get at because the justices are appointed for life, and so once they're appointed you don't have any control over them. lincoln was worried that the court would fracture the ability

of the union to fight the war. >> host: richmond hills, georgia bettye. good morning. >> caller: i agree with what roosevelt did in a time of crisis, but i am worried about today, compared it about today, is the healthcare reform. roosevelt was for the citizens of this country, but the party in power it can't be because in the healthcare reform it's going to allow people to get help that are not citizens. they have taken out and put down in the amendment that would give the coverage citizenship. >> host: i'm not going draw you into the healthcare debate. we have a program coming up on that. chicago, pete, talking about the

history of fdr and the court-packing proposal. >> caller: i would like to ask the gentleman there bad -- roosevelt was a pompous man, hang around with wealthy people, and he was the champion veto president in the history of the country. he vetoed over 300 bills or acts of congress and i think it's unprecedented, his attempt to pack the supreme court, of course, was just arrogant because he was told, from what i read, i wouldn't work, and he continued on and on and on. i wish you would comment on that. >> host: thank you. >> guest: he was aristocatic, he was in his way arrogant. he certainly showed a great deal of hubris, but he never pretended to be anything other than he was, and so he was not talking down to the american

people, and one of the real powers and authorities of his presidency was his ability to speak with respect to the american people, and when he was preparing his first fireside chat in 1933, he looked out the window at one of the workmen who were disassembling the bleat -- bleacher, and he decided he wanted to speak to the american people in a way that that workman could understand him. he was appealing to the best in that workman, and the most responsible in that workman, and so he had a serious respect for the people -- his subjects, so to speak in a way that really worked -- i mean, not an accident that his photograph was

on many of -- millions of americans' walls for many, many years, more than most presidents we have ever head. >> host: we have a photograph of one of the fireside chats. will you talk about how fdr used the fireside chat specifically to sell his court proposal. >> guest: he did. he went on the air to give his best arguments for the proposal. and there was some success at it. but in this one he really hard a hard time pulling the country with him. the country was evenly divided. polling, scientific opinion polling had just begun, and they were testing this proposal a lot, and the results were always very muddled. people would say yes or now, but a few permanent points they no. ifhey were given a vague choice, should we deal with in

some wearing it would come out, third, a third, a third. so roosevelt in the fireside charts -- scholars caller: went over the language he use, and i think 85% of the words he used were among the most thousandly used words, and they were short, and punchy words, his language was almost as regular and common as possible. >> caller: i think this court, packing scheme shows that checks and balances in our country are missed, and in particular, why do we have more federal judges today than we have representatives? in fact, when they no longer

represent the judge because with more federal judges than representatives, the court has leaped over the other two branches? >> guest: one submitted evidence that the majority of the country had a great deal of affection for him, including the common people, in that he was elected four times, and nobody anywhere before that had been elected more than twice. and now of course they can't be. the number of federal judges has to do with expansion of the country, and some of the early increases in the supreme court and federal bench came because more and more people were added and there was more business for them to do i say in fact the checks and balances worked quite nicely in this case because the proposal was defeat by the senate and they never did take

effect. >> host: burt soloman is our guest. how many books for you? >> guest: three. >> host: the publisher is walk and are company. i want to turn to the craft of writing. i found your scenes filled with rich detail, what rooms looked like, what people wore. how did you find such level of detail? it was such fun. newspaper accounts, die riz, memoirs. to me, what makes history come alive is the feeling of being there, knowing how -- what people sound like and what rooms look like, and there was a lot of material out there some of the -- actually some of the speeches, the fireside chats, they're roared, and so you can go to -- recorded and you can go to the library of congress and

archives around the country, and listen to them, which is great fun. i also tried to include a lot of dialogue. every bit of it real. from news accounts, from memoirs, transcripts, all sorts of places. if you look hard enough you can fine it. >> host: keith, independent line. >> caller: good morning. this court-packing thing, i have studied. to my understanding, roosevelt roosevelt wanted to force at the court to make decisions that he wanted rather than the plain language of the constitution and the framers. i think the problem with the court is the decision that allows judicial review, and the court's later decoration that the constitution is a living document. so that's what we do now. he have change by fiat rather

than amendment. what do you think about that? >> guest: i think the constitution is not nearly as clear about what things mean as you are perhaps suggesting. there was a school who was -- scholar who wrote in 1941 in a book, there's 6,000 odd words in the constitution, and only 150 of them really matter in terms of figuring out what the constitution means. things like liberty, necessary and proper. due process, no law. what do those mean? ... so, a justice must decide what liberty means. it does not necessarily mean what the founding fathers believed it to mean. people can legitimately read different definitions into those

words and it has a huge effect. host: the next question or comment for a burt solomon comes from new jersey on the republican line. caller: hello, i would like to know -- you said earlier that fdr might have lost the battle, but ultimately won the war. isn't that pretty much what happened? even though legislation failed one by one the justices started retiring and stop ruin against the new deal. wasn't it ultimately a successful attempt at intimidation? >> guest: that is a very interesting comment you make because in fact he did win the war and some of the was by intimidation but i think not. he had won the war before it got to make any appointments at all and the reason is that in the middle of this fight, this wing justice, owen j. roberts who had been voting with for conservatives all along in order

to knock down pieces of the new deal switched sides and started voting with the liberals. roosevelt then the people around him believe that if they had intimidated him into doing that, but the actual fact of the case which was a nun at the time is that at least his first which have already happened about two months before the proposal was ever made or anybody knew of it. they hadn't been made public because he had switched on a particular case involving the minimum wage for women. one case in june of 36, he voted with the conservatives to knock that down in the case involving new york law and ten months later he voted with the liberals to uphold almost an identical lot from washington state, so he had already switched sides before this proposal saw the light of day. now he switched sides a few more times during the next spring after the proposal was made and it is really hard to know what

exactly was in his mind because justice roberts burned all of his papers before he died. us that we are talking history with burt solomon. in next telephone call is from fort worth. this is robert on the democrats line. >> caller: yes, i would like to know how this justice involved, how much they were against roosevelt when the war happened, world war ii when we were attacked by the japanese, that he made camps out there in arizona and he put all the japanese citizens and there. that is one thing i think we should do with the muslims. we are having a war with the muslims. we should put those over there in the united states. i understand all of the justices were against roosevelt when he did it, but he did it and we won

the war. >> host: robert, thank you. >> guest: they did up called the japanese internment camps and some of the justices said later they really regretted that boat but by the time of the war had broken out roosevelt had the opportunity to nominate all but two members of the court said the court really was his at that point. >> host: we have got the number of twitter messages want to know whether or not another motivator for fdr was in 1933 plot against him by ceo's a business plot to overthrow fdr involving people such as jpmorgan and dupont for code do you know anything about that? >> guest: i've heard about it but i know very little about it. i don't think roosevelt needed the additional motivation to do that. the malefactors of great wealth. glasco the next telephone call is from campbell's bird, indiana. robert, go ahead please.

>> caller: i am a first-time caller. >> host: yes sir, welcome. it is a survivable experience, i can promise you. >> caller: my question was, many people think that fdr was for the people but, did he not had the emergency war powers act enacted during the administration, which was enacted by the wilson administration, and was that really an act that help the american people? >> host: thank you. >> guest: i would again submit as evidence that roosevelt was for the people, their willingness to elect him over and over and he turned the to be an enormously popular president and still lives. >> host: one of the freezes the came out of this was the expression, a switch in time that saved nine. >> guest: this refers to the

change in's as i was mentioning before, from the minimum wage in new york which the court knocked down and then the minimum wage in washington state which the court approved. this happened at the climax of this fight, and the humorous in washington, of which there are a few occasionally, did say they took from the ben franklin maxim of a- in time saves nine and made a clever and in fact there was truth to it because when the court switch sides after roberts changed his mind about how to interpret the constitution, and so the court ended up accepting and endorsing rick least approving the various laws, the new deal laws that the democratic congress had passed, that's if the court was doing what the electorate wanted and what the president wanted, a lot of the reason for taking this

fairly if not radical but at least sort of scary step of changing the way that the size of the court and the way it operated, there seem to be a lot less reason to do that the court was doing essentially what the people why. >> host: when fdr had the opportunity to make appointments to the supreme court, did he appoints people who were under his age limit? >> guest: yes he did, yes, all along. >> host: did he really have a philosophy about the age? >> guest: no, he had no philosophy about the age. is real motivation was to change the way the court ruled and they age was say too clever by half idea that his attorney general had found as a way to justify what he was doing, but he really had no interest in age at all. >> host: tell us about franklin roosevelt attorney general.

>> guest: homer cummings was kind of a political hack from connecticut. he had been a democratic party chairman, three times the mayor of stanford, connecticut. he was not originally supposed to be attorney general. roosevelt had chosen a senior senator from montana who died two or three days before his inauguration so he had to come up with an appointment fast so homer cummings was a tolerably good attorney general. he actually had some popularity because he was, he was the man that made j. edgar hoover this major figure because all of the game lands slings were going on at the time. he was writing a huge, boring tell me about the history of the justice department at the time and in the course of this had found a proposal during wilson's administration some years before

to add to way point additional judges, the lower court judges when they reached 70 and a half. some of the charm of this proposal from his standpoint was that the former attorney general who had made this proposal was no one of the arch conservatives on the court that was giving them such this, and so when he ran into this idea that this conservative have proposed years before that they could then reposed themselves, this was too good to resist. >> host: next call is from fort wayne indiana, republican line. thank you. >> caller: thanks for taking my call. my observation was listening to my grandmother and my mom about fdr and the similarities of president obama's today are basically that these two presidents are so similar for one simple reason, they want control of big government and they want to speak to the people from a higher authority that we don't know what is good for us and i wanted to speak about

mr. obama having so many stars today, which is totally legal and the similarities between both, they are almost socialist and ideas and i wanted you to comment on that. >> guest: they are certainly ambitious in policy. they are ambitious than what they think the government ought to do, and there is some-- roosevelt had a problem with hubris, at least in this case in a way and i think the next the made him a better president and obama i think we really don't know that yet. >> host: you talked about the parallels with politics today as our caller just it. we been reading a lot of. profiles about the influence about chief of staff rahm emanuel. tell us about tommy the cork, corchoran. >> guest: he was a very young, very smart, very ambitious. he had been actually a valedictorian at harvard law

school and valedictorian at brown university and before that he had been a law clerk for oliver wendell holmes. he and then call on had co-written a lot of the new deal legislation. cohon was a guy he was quiet and stayed in his room and broke the legislation. tommy cochran was the arm twister that roosevelt would send out to capitol hill and elsewhere and he was the one that was sent to capitol hill in order to get this thing passed. >> host: and how good was he at this job? >> guest: he uas pretty good at his job, except not in this case. >> host: when barry connecticut, cliff, democrats line. >> caller: good morning. this gentleman is talking about roosevelt and i wanted to ask a question because i was amazed when this happened. what happened with the nuremberg trials? what constitutional right did

roosevelt or truman have to push these trials? was there a treaty? was something broken, as far as the treaty? i would just like to know the story because i am sure this gentleman knows. thank you very much. >> guest: i hate to disappoint you because i actually don't know. the nuremberg trials happened after the episode i'm writing about, but one thing that is interesting is that the chief judge said believe that the nuremberg trials was the supreme court justice, robert jackson who had been a fairly close aide to fdr before he appointed him to become attorney general and then on the court. in fact some of the best material i found in terms of the appointment of hugo black it was roosevelt's first choice for the court, which happened in 1937, came because cents robert jackson was at nuremburg and the

other justices were here there were a lot of letters written back and forth to keep jackson apprised of what was going on back in washington and those letters from frankfurter and some of the other justices were very useful and gave behind the scenes material that otherwise it would have been able to find. pustka we have photographs of 1935, 36 was the year the supreme court went into its own headquarters building, the supreme court we also know well today. we have photographs of its prior home in the u.s. capitol building, the old corchoran, the old supreme court chamber from 1819 to 1860. right below that is a black-and-white photograph of the chamber so familiar to us and said the new court building. when the court was inside, housed inside the capitol that it operate differently? >> guest: no, i don't believe it did. i find it shocking thinking there was not a supreme court building and the year lafont when he was designing the capital he said okay we are going to put the president's

house there and put the capital there but there was nothing about where the supreme court was goingo be and it was kind of shunted aside. i found it actually quite shocking that the third branch of government would be physically located in the basement of the capital but i guess it didn't really bother anybody else, because it was like that for many years. it was actually, the force behind the new building was william howard taft who was the only person in american history who was both president and chief justice, and so when he was president he wanted a place, a separate building for the court and then when he became chief justice he made sure that it happened. >> host: were they going to have a terrific chapter. you may scenes botts but let me put information on the air. we have been allowed by the court to bring high definition television cameras inside the building. emad asim prior projects in the

capital of the white tester record of the art work inside the building and we have had sit-down interviews with ten of the current and retired justices thought about their jobs and about the building itself. all of this will be airing beginning october 4th in the project were calling the supreme court, home to america's highest court. there will be a very rich web site so that you may be educated about their job in the roland society in their views of that and all of it will be available including the entirety of our interviews on the web site we will show its u.s. the new court term opens up. the next phonecall is from manchester, new hampshire. this is joseph, independent line. >> caller: i am a first-time caller. i have two points of want to make. first an earlier comment on the japanese internment camps. i always thought that was the big blemish on american history and to say we should round up muslims and put them in the camp, to meet is a tremendously ignorant thing to say but my question to you was fdr--

congress immediately pushed through taft's afterwards on term limits but it is my understanding the republicans were largely responsible for that and what was interesting to me was afterwards ike cam long or gidley was tremendously-- and could have been elected had not been overturned and i was very surprised that the elections were not overturned after that and i was wondering, have there have been any real significance -- >> host: challenge? >> caller: yeah, the think it will come on again? >> guest: it came up again when ronald reagan was about to leave office and there were a lot of people who wanted him to have the possibility of having a third term but clearly it was not powerful enough to get anywhere. >> host: but for the mounting a constitutional challenge or

were they going to write the legislation? >> guest: that would have to be new legislation. >> host: this is jerry on our independent line. >> guest: because it was a constitutional amendment it would have to be another constitutional amendment and the founding fathers made it very hard to do constitutional amendments so it could be very tough to do. >> host: jerry, go ahead please. are you there, jerry? are right, sir i am sorry mr. cop. let's move on to the democrats line, madison wisconsin. caller, are you there? >> caller: yes lamper cow i am going to be 88 next month and i remember at the air. i was a political junkie and i remember my dad supporting him all the way until he tried to pass the supreme court and that changed his opinion of him, but fdr was a great man and i think the fact that we didn't have a

revolution during the depression that we could attribute to franklin delano roosevelt. also, his wife. she did a great job. >> guest: i have rewith you entirely, that there was some feeling in 1932 that this was the last shots that this country had in avoiding hate dictatorship. that things were suhr or an edge in the economy was in such terrible trouble and it was not clear that this city and the central government would respond in a effective enough way and i think now we to consider this as an idle nightmare, the possibility that we conclude that-- is our democracy but it 1933 that was not the case because hitler and mussolini and stalin and so forth, that things looked a lot scarier than we can imagine in retrospect.

>> host: the caller mentions eleanor roosevelt. i went to lefsky, we'll voice presented an picture rove eleanor roosevelt as a very involved lady. >> guest: she was away a lot. she was involved in the country, but she actually kept going out of washington in going all over the country. one of the problems with court-packing, roosevelt had nobody around him really at the time who could say no to him in a way that he would listen. he had had a very close, intimate aide named lilly hal who had been with him since roosevelt had been at new york state senator and he really was the one that's got roosevelt to be president, that saw the possibility in roosevelts even after the yet polio, both before and after the thing that is also something we take for granted now. the idea that a man in a wheelchair could be elected

president of the united states and we overlook that because roosevelt was elected four times, we know that but i think if you looked at it from that point outward, it is much more impressive that this happened. lilly how had died in the previous spring and there was really nobody around roosevelt except for the possibility of eleanor and missy lehand, who is sort of is right-hand woman if you will, who we would listen to but neither of them got involved in this fight. >> host: was harry truman in the senate? >> guest: harry truman was in the senate. he voted in favor of it, of backing the court but he also, i did quote in my books saying basically if the court is doing what the country wanted, what was the point of doing it? bodhi did look for it. host: the next question from arguers comes from jerry, independent line. sorry to push the wrong but an

earlier. >> caller: good morning mr. sulliman. i fully intend to read your book but for someone to tell you something. i'm looking at the front page of the newark times, 1937 and it says-- and it goes on in the article to say the supreme court had previously turned it down. lehman was a very progressive governor and of course they did get the bill passed. i just want to say one other thing about roosevelt. my parents of course were tremendously devoted to roosevelt as i did the rest of our family became and i remember when he passed away, my mother just collapsed in tears, something i had never seen my mother do in my life. roosevelt had overcome so much ignorance, so much opposition from the opposite party ended this the same situation we face today with so many issues.

i just wish people like senior citizens would not be in such fear and use their heads. thank you very much and i intend to read your book. >> guest: thank you. one of the important episodes in how this whole fight played out was one herbert lehman, who was the government of new york exceeded roosevelt come in and roosevelt became president lemon became governor and did a crucial moment in this fight, lehman wrote a letter that was released to the public that he was against this court-packing fight. the court backing proposal and that really did have an effective roosevelt was very upset about that. >> host: march 29, 1937 you kahl white monday and say this was the gateway to the liberal era. would you explain? >> guest: this was a switch in time that saved nine, when the owen roberts moved from being

enhanced the kind of new deal legislation, which requires a fairly liberal and loose interpretation of what congress is permitted to do. for example, the interstate commerce clause and so for many, many years the interstate commerce clause and then there are other ones too have been interpreted in a way that basically prevented the central government from stepping in on people's behalf, so let the government wanted, if there is a mismatch say between a worker's leverage in terms of negotiating salaries and working hours and so forth versus the employers leverage, the question is whether the central government is fermented to basically step then on the workers' behalf to make the employers pay sais amounts of money per hour. so you can interpret this one way or interpret it the other

way. when owen roberts switched and started to interpret the constitution and the liberal way, allowing washington or the state capitol, state legislatures to step then on workers who are the poor people-- on the poor people's behalf. this would really change everything and what happened was, the change of heart became public on march 29, 1937. and from then on, from then on and sense it is an accepted that the federal government in the state governments too cannon facts that then with social legislation. >> host: why did to get the name white monday? >> guest: in contrast to black monday which had been several years before, when the national recovery act and other important pieces of legislation had been toppled by the supreme court. >> host: illinois, rich on the democrat line.

>> caller: i just wanted to say that perhaps roosevelt felt justified that the supreme court had become a political animal which with its proven when republicans appointed judges in turn appointed a republican president who would then want to point more republican judges, powered by the accession burdening the democratic process, which proved the supreme court is totally political animal and perhaps should be restructured in a way that it has to be judicial and not connected so the president can't appoint a judge. >> host: you write that the supreme court has always been political. >> guest: the supreme court is always been political from the beginning and if you go back to john adams appointed john marshall, thomas jefferson, that was political perkins and political all along into some extent has to be because you have to have come of the elected branches have authority to

appoint an confirm. the hope is that i have think life ten year, that politics can take a bit of a back seat but only a bit and i agree with you, bush b gore in one of the two cases involved, think every justice voted kenseth they had been in the voting booth and i suspect that that the legal arguments had been reversed it still would come out the same way. >> host: the monitorist monitorist-mexican corker sees 8,000 petitions the year cases each year and sets about 80. what is the courts petitioning like in the 1930's and how many did they actually do arguments for? >> guest: there were many few petitions to have the court appeal it and i think they accepted many fewer as well. >> host: many less than eight cases? >> guest: i think actually but i'm not sure. >> host: states bill north carolina, this is lampert on the republican line.

>> caller: good morning. i would like to ask the gentleman if the new deal was not set up-- because i am in 84-year-old and i lived to the depression and i know what went on and i know pretty well the history of this country and the constitution and all that. if the new deal roosevelt set up was not patterned on joseph stalin's deal and one more question i want to ask him. the active october 6, 1917 called the emergency powers act, he went into that end 1933, he took that act that the federal reserve presented to him and went straight to the congress and they claimed it illegal. it went to the supreme court in 35 then they ruled against

roosevelt. now, in 37 he changed to the supreme court members and it went back to the supreme court in the change the last-- of october 6, 1917 and said we were there in the may of the federal government and therefore it was legal and we have been under that act diverse sends. that is the reason we have the agriculture department's, federal school system and all of these other federal government interfering in private industry. that is strictly against the constitution if you know the constitution, because i do. >> guest: well, there are many ways to read the constitution and that is changed over time. i think that roosevelt's new deal actually had, was a stepchild or a child of teddy roosevelt's square deal and they were fifth cousins and teddy roosevelt was about 23 years older, and franklin roosevelt

idolized him and than that followed his career path almost exactly. from the new york state senate to the governorship and in between the assistant secretary of the navy, he wanted-- and when franklin roosevelt was in college while teddy roosevelt was president the other guys that harvard started to laugh at franklin roosevelt because he would go around saying bully, bully, bali as is cousin like to do. >> host: we have a viewer who wanted to specifically to compare fdr ran tr on his-- of truman. following him in office. >> guest: i don't know how to react to that. >> host: and also the national parks program. sorry sasha, can't take that. annexed is that right, vistas hank, go ahead please. >> caller: this is the most educational program on tv,

washington journal. i really enjoy the fact that you can listen to other people and call in and get our opinions, which makes it what it is. >> host: thanks for watching, sir. >> caller: [inaudible] were the case went to the supreme court and gore was like six and a thousand votes ahead in the national election. i have always been confused by that because i think that was most on their decision that could have happened and it changed the history of the world because really, what happened here. when we have these delegates like, kubic the whole system of our democracy, it is just not

fair. this president has initiated-- and my-- has cut more people in the high school then this guy represent. i am saying that millions of people in new york, they have delegates. they have from the. i'm confused because there's so much static, it is like coming out right. >> host: thanks, let me jump in. he is talking about the power that small states have over the large and it reminds me again of senator wheeler the represented a small state in the united states senate but had a great big role to play in the court-packing program. >> guest: he very much did and actually the number of small states also affected roosevelts

thinking and how to go about this because one of the alternatives to packing the court was to have a constitutional amendment of some sort and he was afraid that if the constitutional amendment had been passed by congress that a few million dollars spent in 13 small states could have blocked any constitutional amendment, so the problem would have been left unsolved. wheeler, because of the way, the original compromise in creating the constitution because small states were afraid of the large states just taking over everything, that he got to senators, giving them outsize power and in this case it really made a big difference because a lot of the opposition to it came from the smaller states. >> host: waukegan, illinois, paul. >> caller: yes, our family-- i am sorry. our family was starkly in the

roosevelt. not only our family, but friends and relatives but in retrospect, i think that roosevelt was correct in trying to bring, modernized the supreme court expanding the commerce clause. one could highly-- hardly imagine a moderate national, the economy that and then for the supreme court finally understanding that the federal government had a role in interstate commerce and the expansion close, the regulations with regards to accidents in the industry. well, there's a whole range of things and i would like to hear your comment on that.

>> guest: the early conservative-- in regard to the interstate commerce clause, it there was say they steel factory in pittsburgh or a coal mine in west virginia that was owned by a larger national steel company, the earlier interpretation said, this coalmine, this factory is in a single state mac period so therefore the central government and the national government has no authority to control anything there, wages, working conditions would never. what happened in the spring of 1937 and it was really the chief justice, charles evans hughes, who masterminded this legal argument, is that it said this is really out of whack with how the country really works and that if, on the crucial case had to do with jones and laughlin steel company, so there was a

factory in pittsburgh that stopped working, if there was a strike you said this would definitely affect interstate commerce so therefore, because the lack of this, the absence of this factory or coalmine for the national economy would have this effect on the other states, that it really was that reality was that this really was a national economy, and by insisting on regulating it's as if it wasn't the national economy just didn't work and it was out of, and it was out of touch with the way the world really works. >> host: you talk about the number of the parallels in the time period today. we spent so much time talking about social networking and its influence on the political process. is the 1937 version. franklinville no roosevelt was part of a democratic dinner organization which had 500,000

democrats gathered at dinners in 43 states around the country to hear a national radio hookup of fdr to speak to them. and, that use of technology did what for him? >> guest: it made him a national figure in ways that no president had been before. it is hard to imagine now, but there had never been a time when the president before could really speak to the people and everybody heard the same thing at the same time. i mean, earlier presidents have done this but they were just giving regular speeches that are then put on the radio. in this case, he could really talk to, so somebody in the tenements in new york city or a farm in montana would hear the same thing at the same time and it was the beginning of an interconnected nation that lord knows we all know about that. >> host: i can tell you had a lot of fun with this story. this is the book, "fdr v. the

constitution." burt solomon co. it is widely available in your bookseller. thanks for him being with us.

next month primetime. tv, the former investment banker, john talbott, author of so forth. elicitor elicits little less than an hour.

>> thank you all for coming. it is a rainy night out there i found out the hard way. i am going to give you some a short opening remarks and leave plenty of time for questions. i would like to thank the folks from c-span for being here today and filming us. i just returned from an economics conference in italy for the one of the sessions was a mock trial in which the economists of the world were put on trial, accused of completely missing the warning signs of the current crisis. not predicting it, doing nothing to prevent it, and thus far doing little to help in that smart reforms to end it. i had to give a talk on my book at the same time as the mock trial across town in italy, but i didn't want to miss it so i sent roberta pretty, the chief

prosecutor of the trial and himself a top economist, the following memo. it was in title with this for the prosecution, and it read as follows. roberto, i see you were speaking at noon today as the prosecutor asking whether economists are to blame for the current financial crisis. i wanted to attend but i am speaking at the same time across town on my new book. i wish you success with their prosecion and although i generally am against the death penalty, i think that would make an exception in this case. your prosecution reminds me of a story i heard about john mckay, the first coach of the tampa bay buccaneers. unfortunately lyndsey row wins and 16 losses in their first season of pro-football. in the locker room after the last game, coach mckay was asked by a journalist what he thought about the execution of his team on the field. the case said he was all in

favor of it. [laughter] how did have one question roberto dhi which u.s. during a prosecution. could u.s. whether the defense believes that professors of finance, economics, option very andrew this or conflicted in writing and discussing about the potential for a crisis given that the same professors were earning hundreds of thousands of dollars from our biggest banks and hedge funds in the form a speaking engagement fees, honorariums, an expert witness fees at trials and consulting and business partnerships with some of the worst offenders on wall street. today, i want to address the real causes of this crisis because of we don't get the right, there's little chance of obama's suggested reforms will

be effective in either ending the crisis were preventing something like this from occurring in the future. for an end to those of you who believe the crisis is over, i have some swampland in florida i would like to sell you. first, i would like to caution you against believing those with very simple, easy to understand explanations. this crisis is very complicated and unfortunately some of our brightest are saying some of the stupidest of about what caused this mess. you have ellen greenspan and other defenders of completely unregulated markets, suggesting that such a downturn is normal, that is part of a normal business cycle, that it was completely unavoidable arguing that it was almost like an act of god, as random and unpredictable and natural as a 100 year flood to use greenspan's language. there is nothing normal about what the world is experiencing today. to suggest otherwise smacks of

they let them eat cake elitism that shows that alan greenspan is far removed from the actual pain and suffering the crisis is causing the average american family. similarly, hadith tashman be suspicious of this to try to blame capitalism for this crisis. capitalism has done more to create growth and reduce poverty and inequality in the world than any economic system in the history of the world. let's be careful not to throw out our baby, capitalism, with the bathwater. global capitalist and knows no country borders and recognizes no national boundaries, so it is not surprising that it has helped-- is this working-- it is not surprising it does help the poorest of the world and china, india and age of the most in escaping poverty even if it meant greater hardship to the middle class, the u.s. and

europe. but if you look past nationality, what is wrong with helping the poorest in the world first? finally, always hold last is an explanation of the situation you don't completely understand an accusation that those who participated in our cost the crisis were somehow irrational or even stupid. i work with these folks on wall street for ten years and i can promise you there are many things-- they are many things that they are not stupid. similarily to blame the crisis on wall street by calling wall streeters greedy to me seems to miss the point. greed is what wall street does and has always done. there is no wall street without greed. why else would someone watch his life disappear as he watched a 19-inch computer screen only to grab a morsel or crumb of profit in try to get rich off of it. greed his been in our genes for

hundreds of thousands of years. the genes have not mutated so they in the last 30 years to make is more greedy. and to those behavioral economists out there, who were quick to accuse others of irrational behavior, i can think of no greater public pronouncement of your own inability to define the true causes of this problem than trying to label all those around you as a rational. it is a very dangerous game he were playing because it lays out the seeds of an argument that says what we need is greater protection from our irrational selves and who is always there to offer this service? and elite class of bureaucrats to pretend to know more about what makes me happy then i know myself. 58 chris rf grable to prove that markets or most of their participants are irrational it will be a very sad day for those of us who love and hold dear are individual freedom, our

individual choice and our basic rights as humans. if the key participants in the current financial crisis were irrational, please help me identify it was that is irrational, who are we talking about? was it the homebuyers real estate agent who was earning 20 to 50,000-dollar commissions with no risk, but only if his or her client was the winning by air. the you see wide was in their interest to get their buyers to bid more, not less. certainly unethical and unprofessional but not irrational from their perspective. with a vast number of financial middlemen, from the appraiser is putting out crazy high appraisals for a fee. to the rating agencies to repay billions of dollars to called junk securities aaa, to the congressman who took bribes to listen industry regulation, to the investment bankers to repay hundreds of billions to peddle this stuff, to the mortgage

brokers who falsified mortgage applications to guarantee approval. again, highly unethical and in some cases completely criminal, but not a rational. what about the home by themself? are leaky risk irrational to pay 50 to 60% premiums more than holmes drew worth but what if i told you that most of these homebuyers were playing with other people's money, that they had borrowed all the money they needed it to to 3% with no down payment of their own funds. certainly a terrible way to arrive at the fair price for a home but such a buyer would be motivated to buy the biggest home he could con missy but want to maximize his upside profit in a boom market. he would be insensitive to prize as he knew he would enjoy it all of the upside but it the market turns out he could avoid any laws by allowing the bank to take the property back in foreclosure. sounds pretty rational to me.

if the bar where is getting such a sweet deal, surely the lender, his commercial banker was acting rationally in giving him alone, but the world of commercial banking has changed dramatically in the last 25 years. banks today don't sit on most loans they make. they securitize them and sell them upstream too principal investors. like pension funds, solvent governments, municipalities and insurance companies. the commercial banker has few rational reasons to care about the quality of the loan he has created for goeth the default t-boned liz any thing. we now know that some of these banks didn't position some of his toxic waste on their own balance sheets and their losses turned out to be huge. large enough to bankrupt many of these firms. sounds pretty stupid, doesn't it? but what if i told you the same banks were making tens of not

hundreds of billions of dollars in profit from their mortgage operations and their bank managers had seen their bonuses increase from less than a million dollars a year to something sometimes more than $50 million per year. now it doesn't sound so crazy or stupid, does that? so with the end of this on ethical, fraudulence, most likely criminal food chain stands the principal investor, the pension fund or insurance company that got stuck holding this worthless paper. certainly, he or she has to be stupid or a rational to have made such a poor investment. actually, no. well many of these institutional type investors are not the sharpest knives in the drawer, they did do what modern finance theory told them to do. they diversify their holdings, but they did it so well that they held so many different investments spread all over the world that they couldn't

possibly find time to properly evaluate them or analyze their value and certainly did not have time to supervise the individual managers of each of the underlying companies and assets they held. in addition, their most trusted advisers were telling them that these were state investments and that all three of the rating agencies were giving these investments their highest rating, aaa. to call the victim of such a fresh attempt to deceive a rational would be like calling the hogge victim of a home burglary or car theft irrational. we may not like or approve of such behavior but that does make the victim irrational or necessarily stupid. so maybe there are real reasons why this crisis occurred, that have not as yet been discovered in the fund will prevent this from throwing out our beloved baby, catch up allyssa merck calling those involved stupid or rational. maybe there's something about

the banking industry itself that makes it different from other industries, that makes the deals it did for the type of competitive capitalism that seemed to create long-term sustainable values in other induries in which competition is encouraged and allowed to foster. bank deposit insurance guarantees were instituted in the 1930's to stop runs on banks during the great depression but they may have created the very moral hazard that is causing today's financial crisis. quite ironic, isn't it? banks today can dramatically increase their leverage, shift into riskier assets such as derivatives and businesses like investment-banking and they won't lose depositors and they won't even see the cost of their debt funding increase because of the guarantee provided by the federal government to their depositors. in the 30's, when the deposit

insurance was introduced, everyone understood that banks would therefore have to be aggressively regulated by the government since the market no longer could. unfortunately overtime, this lesson was lost or forgotten. the banks of the last 30 years have used their increased lobbying and political strength to undo and eliminate most of the original legislation meant to effectively regulate them. in 1999, they got less steagall removed so they could get into the investment banking business. in 2000, they were successful in ensuring that the derivatives business would remain unregulated. in 2004, they love it successfully to remove restrictions on how high their leverage might go, and as we have seen their leverage over the last 30 years has increased from eight to one to something like 30 or 40 to one. over the years, banks to use

their size, power and political muscle to rewrite the rules of the game to benefit themselves but at the same time threaten the entire financial system with collapse. did i mention that these same all-powerful banks also own and control of the federal reserve system and its board, the group that is supposed to be regulating its. these banks are so large as to be "too big to fail" which violates the first premise of capitalism, the badly performing businesses must be allowed to fail. because of their heavy involvement in the credit default swap markets, these banks are also to interconnected to fail. the credit default swap market makes every but he important and too big to fail because of its huge complex network of default guarantees. it also violates the precept that markets must allow failures or creative destruction to occur

and because of this the credit default swap market needs to be shut down immediately. bank said sui of sedar highly leveraged and it becomes when you are so highly leveraged rational for their management teams and shareholders to begin to act like option holder's ," rather than equity investors who must also be concerned with downside scenarios and the risk of insolvency. i believe that we mated just one change, if we limited leverage of the banks in the world to just eight to one we would eliminate the major cause of most booms and manias and thus avoid almost all future busts, recessions, crises in depressions. we have new leadership in washington of course and they were elected on a promise and platform dedicated to change. radicals like me will never be happy with the pace of change

especially as innocent families suffered as a result of this crisis. if it were me, i would attack the biggest problem first. derosa the impact of money and lobbyists and corporate power has on our nation's capitol. but that would most likely fail. the powers that be, congressional incumbents of both parties, big banks and big corporations and their lobbyists and corporate owned, sponsored and controlled media would swap-- swat me away like the annoying pests, a journalist can be. but barack obama has a different approach. his years of community organizing experience tell him to accomplish real, meaningful change especially against an entrenched and powerful opponent come acute take small steps first. you move gradually, as you move incrementally. nothing built the grouper phos

confidence like success. you can build a powerful majority of re involves citizens by winning small battles first, before taking on the big battle against the machine, against the system. then, once you have real power and there is no power greater than the people united, then and only then do you accomplish real reform and bring real change to a corrupt system. thank so much for listing. i would like to open the floor for questions and please remember there is no such thing as a stupid question, especially given how complex this solis. if any of you listening would like to get involved and the drama out how we can organize the americans to clean up their government and throw the corporate lobbyists out of washington, please contact me at my e-mail address, john talbott at hotmail.com. why of got some ideas but i would very much like to hear yours and i will open the floor

up to questions now. >> i don't think it is working. >> i will talk loudly. >> he says it is working. >> okay, i am sorry. my question is really twofold and completely disparate. one is obviously you think less steagall should be reinstated number one. number two what is your concern about inflation in light of all the deficits that we are incurring? thank you. >> absolutely i think glass the goal ought to be reinstituted. something even stronger than glass-steagall because the world this change in 70 years. we have to have a prohibition against banks getting into risky business. it makes no sense to deposit your money in a bank expecting

you can get it back and find out the managers of that bank have gone embedded on derivatives and investment-banking and hedge funds type activities, so absolutely something even stronger than glass-steagall knees to be reinstituted in the second half of the question is a very good question. i am a big supporter of the theory that the can spend $4 trillion in guarantees some $13 trillion in assets and not have significant, significant government costs going forward. if the government has significant cost going for it is not clear where they will get the money. but theroux projections they are showing 2 trillion-dollar deficits each year and that forecast allows for 4% growth from 2011 and on. i just don't see how we are going to get back on that road record so we are going to fund the basic operations of the country and putting out $2 trillion a year of new debt borrowings and then we have all

these guarantees that might come back to haunt us, so it looks to me like and the banks haven't finished with all of their losses yet, so it looks to me it is clear the government is going to have to come up with a lot of money. it is not crazy to think that we will print some of that rather than barwick in that they start turning on the printing presses were going to have inflation. warren buffett said when treasuries were yielding 2% it was the next mania or boom and it was crazy for the world to be lending to the u.s. government debt to present and how that is jumped considerably so i think is going to jump considerably more. what it does u.s. investor is the careful if a bond salesman tries to move you out of the stock market into the corporate bonds are long treasuries. they have a real price risk to them that inflation comes back. >> i think you could easily argue that the majority of the populace of our nation don't

even slightly understand the complexity of the economic situations, wall street, what have you and that's the way the media presents it, just ends of scaring more and more people into believing whatever is the scariest myths oh how do you propose going forward we handle the media's effect on the population on the economy and how you propose i guess, educating the majority of the people on a basic level understanding of where the money goes and what happens to it? .. we have becoming argentina. there is 100 events countries in the world and 50 very poor countries of the world and what almost all 50 countries that are

poor share in common is that a dictator or somebody military controls their legislatures otis very hard for the people to write reform legislation and he controls the media. i mean to suggest there's some dictator in the united states the controls both of those but there is a broad class of the very wealthy and the most powerful corporations into a very good job in controlling those entities. they don't do it as if they meet lated night with their secret commissions. they have the same motivations to make profit, and so when you turn on any cable news one network news program other than pbs it is corporate sponsored. they can't say anticorporate messages because the corporations are finding their entire programming and their corporations are some of the biggest lobbyists in washington on the slate of finance front but all the issues important to them as media companies with media concentration whether they have to pay for free air time

etc.. so it is a very difficult battle. if you think of the corporations of america being very strong and government being very strong and i think almost equal third leg of the tough triangle is the media again very powerful and the individual sort of stuck in the middle of this triangle how do we get out? we could have endless elections on and on and on and which republicans take the side of big business and democrats take the side of big government and nothing changes so we have to break out of the striking gold. and the good news is we have the methodology to do it and that i believe is the internet. the interfax internet software has not been taken over although they tried three different times and it allows for individuals to communicate with each other and organize. the question you have to ask yourself is why haven't individuals organized today? they have had lots of

opportunities. i used to think they were stupid. i used to think they didn't understand the issues. i used think the media fooled them. i no longer believe that. i travelled the country. my family is from kentucky. i talk to people all over the country. my good friend in kentucky has a tenth grade education and can explain this better than i just did. they know they are getting ripped off. they know big businesses ripping them off, credit card companies are ripping them off and they know their governments are ripping them off. life and they are at this stage of asking themselves what can we do? how do we organize and that is what i would like to get at next. >> we have another question here. >> john, you mentioned in your book the 86 biggest lies on wall street am curious for you out of the 86 biggest lies which one is the biggest and why do you think so? >> that is so funny because you try to anticipate questions you will get when you do things like

this and all i never anticipated that question, and it's not the way i wrote the book. i didn't write the book with number one being the worst or the most offensive. the way i wrote the book was the first two chapters try to explain the current crisis and flies that got us into the crisis. the second chapter tries to identify why is preventing us from getting out of the crisis they might take a bigger broader view of general lies on wall street that prevent us from doing what we want to do which is in fast and make money so i look at stock investing and bond investing the law is so i don't have any one favorite. i will tell you law number 21 because i think it is a big one and that is diversification has been held up by modern finance theory and all of wall street as the reason why and how you all to invest, how assets are valued, how risk is valued it is the foundation of the model, the foundation of all modern finance.

i think it's wrong. i don't think you in that saving money by diversifying and i will tell you why. a german pension fund who tries to diversify in germany in south holding three or 5% of his assets in california mortgages. he's never been to california. he's never read the mortgage. after the crash he tried to find the mortgage. nobody has a. the investment bank doesn't have nobody knows where it's wild. the judge says you can't have a lien if you can't find the security. so what happened was this german pension fund felt he could hold 33% of assets around the world and be protected though these assets were much more correlated he thought they were and he didn't know whether he paid a fair price because he never had time to do the analysis. he depended on middlemen who themselves were conflicted to decide the price paid and finally if you wonder why me be

america and businesses and other businesses are around the world are not so tightly managed as you would hope they would be it's because the shareholders are like this durham in pension fund manager. they each have hundreds of investments and don't have the time to monitor any of them so this theory of diversification sets up beautifully for middlemen to come in and tell this ignorant pension fund manager what is best for him except they don't. they say what's best for themselves and their own cash flow so it turns quickly into a corrupt system. yes? >> we have seen major reductions in the stock market down 30, 40%. we had 300% declines, a lot of bondshe curia treated in value. these people came up with

subprime mortgages obviously if you have a mortgage with 3% backing or 4% backing you have a slight change in the value of the property you are underwater very quickly. first question is do you think the market here has reached a level the asset values are attractive and why? >> this is a funny time to be getting this talk because we are in the middle of a supposed recovery and it is a fny citibank stock went from 57 to one and it's up from two and half or three but it's true the last three months the stock markets rallied some 25% from the low. they are still off considerably off 40% from their highs. but i don't believe is sustainable and i will tell you why. there were something like $60 trillion of wealth in the world between homes and office buildings and the stock market fell use of companies and the

decrease to $30 trillion over the last three years there was about 65 trillion of debt just in the united states and that hasn't declined hardly at all. the banks have written off about a trillion. i'm sure there have been others we don't know about so what you have is this on sustainable world where the assets true value market value has dropped by half yet you have a huge debt overhang and how this that overhang get taken care of either banks have to continue to write down and take further enormous losses which is bad for the banking system which is bad for the economy or people have to struggle and with much less income and much higher unemployment and low were asset values continue to pay the debt off and the debt overhang will cripple them for years to come. on the housing site is true that housing is adjusted out the percentages i predicted in a book i wrote in 2006 called the

end of the housing bubble. i predicted santa barbara and san francisco and the los angeles would come down 30 to 50% and the country as a whole would come down some 25% and there are towns in california that are now off 55, 60% said there is a chance certain towns are starting to reach a bottom but not all of them are and the reason is these banks use to land about seven to nine to ten times the combined income of spouses to buy a home and realize now that was a mistake and are going back to lending 3.5 to 4.5 times combined income. unless you want to put up a substantial down payment is hard for that bank credit evaporation to support the types of housing prices we have seen and it's funny the poor neighborhoods in each of these cities or the middle class neighborhoods are the ones that adjusted the quickest because they had the

most foreclosures. middle-income people don't have other assets. they don't have other income when the bankomes calling to foreclose their mortgage. but the wealthier areas along the coast of san francisco, san diego and l.a. have adjusted somewhat maybe 20% declines but have not seen the full decline because they haven't had this for pleasure we get but it doesn't mean they won't adjust. they had the largest appreciation, the wealthiest neighborhoods have the biggest percentage increase, they saw 500% appreciation the last 15 years so they will adjust downward and away the adjustment will work is you will walk out of your million-dollar home in la hoya and look down the street at five similar homes with for sale signs and one of them will tell you he sold for 500,000 you are not going to keep paying your million dollar mortgage i don't care what interest rate they charge if you know your home is worth $500,000. >> it is a pleasure to read a comment and then the question.

i am a commercial real-estate broker and everything you said is spot on especially appraisals. if they didn't like the appraisal the went and got one that suited them. however the banks did land on something called projected income. the in, was never there but you could come in and say i will buy this and a year from now it will be sold for much more and what happened as you see and new york even with biggest developers it did not materialize but most people did run after it and the other thing is the concept of short selling. i know some people who are short sellers who feel they have gotten a very bad rap for what is going on today. the whole thing is very confusing. are the to blame for any of this mess or is it part of market forces? thank you. >> i don't believe so. short sellers, they were the only ones the were right. they saw the market was overvalued and sold short of stock and made money. you can't accuse somebody of will play for that.

the reason people get the idea that these commercial bankers and real estate players were ignorant or stupid is because all of us know if you go to an individual and you don't ask him to verify his income, don't ask to verify his job, don't make a phone call to his employer if you don't even ask him to fill out an application you know who that is going to attract as a client and all of us know that person is likely to default so we must immediately conclude my god the person who extended must be an idiot but what you're not seeing is what he did with the piece of paper created when that person and his signature to the bottom of the market and that is he didn't hold it, he immediately sold it and who is crazy enough to buy it? the created an instrument called cbo, collateralized debt obligations which they put this worthless paper in a pool and got the rating agencies convinced if the worst offenders

and biggest default went to the lowest trauner first that the upper be a 65 or 75% junk paper would be rated aaa. so it is a question of mathematics and you have to ask yourself questions how bad the world can get and with the default rate is going to be but let tell you the people pushing this paper and taking out the enormous fees i know what their worst-case scenario was. they ran their risk analysis and the worst case scenario they could imagine is what a free listing only increased 5% a year the next 40 years? not one of them and i have a friend who investigated six of the biggest banks not one of them asked the question what if real-estate prices decline at all, 1% and never ask the question what if the decline 50%? that is the important question to ask when you deal with mortgages because when house prices are going up and somebody has a medical emergency or loss

of a job and have to default on their mortgage they don't because home price increase every here created equity in the property so what they do rather than putting the home to the bank is sell the house, take their profits and pay off the note. but now imagine the same person has a job loss and declining real estate environment. now he's under water. now he has no incentive to sell the house in the private market because he will be working for the bank because the proceeds are going to go to the bank. he isn't going to clean equity so what does he do? what's rational and meals the keys and says it's been nice renting from you the last two years. >> i just want to ask a follow-up on the example that you used. i am sure -- does that mean global the investments are doomed? global investments, does that mean they are not a good idea of the whole?

>> globalization has been pushed as a great idea. you have to examine to see what are the shortcomings. one of the clear shortcomings which nobody analyzed in advance is for whatever value created from increased trade there was going to be a hug cost to the working poor and middle class of advanced countries who are going to be put in competition with indians, low-wage chinese, low wages of americans and mexicans and so i don't care how hard you work in america people in these countries were going to work for a dollar or less per hour and it was going to hurt your lifestyle. so an aggregate the total wealth of the united states might have increased the last 30 years but i can assure you the lower 50% of americans declined so that's one problem with globalization. the other problem of globalization we see now which is these unanticipated crises we don't predict which are highly correlate across a lot of different asset classes and

countries they hit everything every country can't be contained. it is as if a virus broke out in africa rather than containing a small village because of globalization and widespread use of air fare it quickly spreads around the world. look at the most recent bayh riss you can see it started in mexico but within two days it was an almost every country of the world so globalization is dangerous in this regard if economists don't understand economics perfectly if our politicians don't know how to plan the future if there is always on uncertainty and risk we are no longer exposing it just to one state or city or country we are exposing it to the global economy and that is very dangerous. >> a few questions. number one with the debt overhang issue is it the only

possible solution to deanne fleet, create inflation in order to decrease the real value of that? >> that's the conclusion i came to and how disturbing to read in the paper today bin bernanke went to congress and promised them the one thing he would never do is to inflate the currency. he's reading out of the playbook that is 30-years-old. we know that inflation is harmful to an economy. we found that during the carter years but the onetime inflation might do good is when everybody has to much debt. corporations, businesses, governments, municipalities, individuals, everybody is levered so there is almost fair to go ahead and inflate and not back those debts. you can argue the holders would be upset but they bought into much debt. they never should have invested in that and the debt should be treating 70 or 80 cents on the dollar. the other thing the other way to

get rid of this and it ought to be happening and it's not is companies and banks in trouble ought to be a restructuring them. fannie mae and freddie mac over the weekend basically went bankrupt without claiming it and basically came out of bankruptcy monday morning without going in and creditors got paid 100 cents on the dollar. the creditors 1.6 trillion, 500 billion held in china got paid off on the whole. how did they get off on the whole? u.s. government taxpayer ghaith $4 billion of the clock is still ticking. we could eventually pay them a trillion. it makes no sense so all these bailouts, the wall street bailout, although bailout's it's a broad as long as they are happening and not punishing certainly the shareholders but also that investors and just writing checks from the taxpayer it isn't fair. >> that is my second question. i read about the debate why the

banks were not nationalized, why the bond holders were protected. what is the reason for that? why did that happen? >> in a complex world this is an easy answer because they lobby the government and what is amazing is they lobbied your government when they were market to valuations of 100 billion to $200 million. for a while when citibank stock was one or $2 market capitalization south of $10 billion. i would have thought that would have taken some of the mosul away but they were not stupid of their small market capitalization and the money they took from the government the didn't cut back on their lobbying effort so they continued to lobby strongly in washington and i think it is a simple explanation why they are getting away with this. >> it seems like there are so many other lobbies. why would bond holders and banks be special as opposed to holders of bonds and other corporations?

orland the bonds held by mutual funds and pensions? >> you're right there's lots of lobbyists in washington but as far as i can see none of them are having problems right now. they killed the global warming initiative and have set back any sort of public alternative discussion for health care. they basically emasculated the credit card reform and had a vote in the senate 70 to 25 to put a cap of 15% on credit cards because the companies are charging 33% so it's hard to imagine enough hours in the day for the congressman to meet with all these lobbyists. i lived in washington when i was six and 9-years-old and was a small town. it was a small town less than 300,000 people. now the greater maryland virginia washington area is 4 million people. the wealthiest suburbs in america are suburbs of washington, d.c.. there is no industry. they don't make anything the only people there supporting themselves are lobbyists and

it's become a very, very big business. it's the answer to all of this. i could also write a book about the pharmaceutical industry, hospitals industry, health care problems it would have the same final chapter it is all about lobbyists and getting control of lobbyists. >> [inaudible] >> thank you. welcome. do you feel obama will have success against the three headed monster corporations, healthcare and lobbyists and do you feel the clinton administration went up against them at all and was part of the scandals involved in that administration effort by using an old word military industrial complex to quash that type of activity? >> you will hear this often because most people are either democratic or republican and i

happen to be independent. people on the liberal side owsley and are slow to say anything negative about the democrats but there is one democrat i have to mention a and that is bill clinton. bill clinton was a capable smart man. he tried to accomplish good, but what he was most interested in was raising money for campaign commercials. he understood because he was smart that's the way you get elected and to his credit we may have never heard his name if he didn't figure this out but as a result of figuring this out, he ended up selling the democratic party to the big corporations because back then they were 90% of the money contributed to a campaign. the republican party was already controlled by big corporate money so the world after 1992 became republican corporate money versus democratic corporate money and if you think since then there hasn't been any real debate between the parties i think they falsely create

issues some people care a great deal about but they are not important to the world economy or the u.s. economy. they are not in our welfare on a daily basis and allows these corporations to basically steal money from us. the average wage in america has been flat to down in real terms about 20 years. union membership has gone from 35% to 9%. i've already discussed the great majority of americans have been asked to be put in competition with not only low-wage workers around the world but most of them from the communist nation that for his labor unions if you mention the word labor union and for daily job in the communist china they will take you out back and shoot you and that isn't an exaggeration. so we have changed whenever moral balance we have between money and the people we develop from the 30's and 50's and the eisenhower years. we've changed radically towards the corporation and now we need to take it back.

whether obama will be successful, he hasn't indicated he will to date so our only hope is he is being stealth that he's building momentum and trying to build a coalition of all the people because it is going to take all the people to accomplish this and we hope in another year in the second term he then turns and puts the pressure on. it would fit his modus operandi because this is six ackley how do community organizer. you organize people first before you take on the big issues and so i'm hopeful that is what his plan is. he certainly is much smarter than i am so i know he has a plan. >> we are going to take two more questions. >> good evening. i am not sure if you answered this question, but obama passed a law recently i am not sure if he did pass or will pass it will be effective february, 2010 and will make it hard for young people to get credit cards, and

i am kind of confused because for the young people like myself responsible for the little credit they have how do they expect costs to establish credit cards once this bill is passed, once it is effective in february, 2010 for the once is responsible for the credit it is kind of confusing. i wonder do you have any suggestions or what is coming on? i don't understand. >> i haven't read the bill so i don't know all the details. the problem he was trying to address is the credit card companies had been invited onto our campuses around the world around the country and the reason they were invited on the campuses is because they made big donations to the universities and the university's end up putting daremblum on the credit card letting them set up outside of the bookstore and giving credit cards to the students. ain, you might think bankers are stupid when i tell you they were giving three, 5,000-dollar credit lines to students who by definition had no jobs, no income and no means of

repayment. be careful bankers are not stupid. what they did is let the student not only charge the 5,000 they let them continue to charge seven, nine, $10,000. some of these students had better stereo's than i ever saw in my college days and then graduation day came and the students wrote and said i don't really have any money. i don't know why you gave me this credit card. i don't have a job or income and the credit card company wrote back and said that's okay our next letter is sent to you it is to your parents and they wrote to the parents say in your son or daughter has or not $10,000 of credit and if they don't pay us back, we will destroy their credit the next eight years and did i tell you credit rating is the first thing an employer looks at during an interview so i think it was a massive game, massive fraud and that is what obama is trying to shut down. i bet you he didn't go far enough and i wouldn't worry if i were you i assure the credit card companies are going to allow you to get credit.

>> i'm wondering if it is unfair to put so much blame on lobbyists when at the end of the day they are not the ones casting any votes. >> that is a fair question. i first identified this problem 15 years ago if you go back and look at my six or seven prior books regardless of the title i always have a chapter about lobbying that seems to influence everything. either that or i am obsessive about it. i don't know which but until about two years ago i focus my attention on cleaning up government. i thought government was the problem for taking this money than i realized and thought it through something my sister would teach me where is the power, follow the money. it's not these congressmen to read these congressmen and senators seem powerful to you they are inconsequential compared to the money behind a lobbyist behind these corporations and so if you are

going to change washington you can try to accomplish it through the vote but i believe you will be on successful. i believe not only if you run for office thinking he will clean up your congressional district will be run into an incumbent with tinted $15 million of money to run campaign ads some strikingly against you some you wouldn't recognize when they get through with you and if you run for senate the of 25 to $30 million but in addition to that, did i tell you they gerrymander they reorganize their entire congressional districts of the congressional district is republicans now and who allowed that? the democratic crosstown who redrew his district so his district is democrat in the re-election is inevitable so i don't think there is beating incumbent or the vote means anything now. so i am going upstream following the money going after the corporations and the question is how can we get corporations to see it is in their interest to get out of the lobbying business and quit giving money to the

government? >> john, you want to take one more? one more question >> what about asian liquidity? underpriced asian currency relative to the u.s. dollar, could any of this have been possible if the had liquidity from asia had not been available for it to be put to use in the united states and europe? >> this is one of the great warning signs economists. for ten, 15 years we had a great inflow of money from china into the united states. where was it coming from? the average chinese was making $1,200 a year seating 40% of it. the average american was seeking $45,000 a year and had negative

savings. didn't save a dollar. this is the first time in the history of the world on a knoll where the poorest country on earth was lending 40% of its income to the richest country on earth. that should have set off alarms and the story that nobody would tell in the media because their sponsors supported is it is clear the americans were on a consumption binge and they were buying anything that moved because they were not spending their money so the chinese were making this product cheaply. a lot of the products to go into wal-mart and body would cost ten times as much if not for the chinese but do not only bought the product you bought a lot of the product because your body that with their money so they gave you the financing and low-cost product. who could avoid that deal? so i think it is a huge warning signal. i am not sure it was causal but it was indicative of this status seeking consumption by u.s. and europe were in the last 15 years.

>> this is the last one. >> it looks like we have taken a big standard of living hit in the country and its continuing. we have roughly 1 million college graduates a year how are these young college graduates being absorbed into the economy and what can the federal corporations do to help this problem? >> it is a big problem. i wished i were 30 years younger. if you remember back in the 60's they said don't trust anybody over 30. well i am not quite 60 yet ply and way over 30 and i don't know if i can lead the revolt of the young people but the need to get in the streets because when you look at what we have done on every front we have caused the collapse of this system by ignoring its warnings. we have not prepared adequately because we have allowed unfettered access to the congress. we have borrowed 13 trillion from these young people to

guarantee our problems and we have spent 4 trillion of their money. we are running 2 trillion-dollar deficits which they will have to pay and in addition social security is 30 or $25 trillion in deficit, and medicare is $72 trillion in deficit. again, we are passing the cost of the care of our elderly not to us that our children and grandchildren. so, you know, we know why they get stuck with these things because they are too young to vote but even now for the first time they have come out in big support of barack obama. the of registered to vote in big numbers but they still are not in the streets and have not been part of this discussion as to what to do with this collapse. it doesn't make any sense to me that we would spend $15 trillion of our children's money so that our style of living and said this level doesn't have to decline two or 3%. we have already said it is an unsustainable level supported by

phony debt and lending from the chinese. i would love to be 29 again and trustworthy because i think i could lead the revolution. thank you for coming. [applause]

want

prime time book tv continues with richard wolffe on his book, "renegade: the making of a president." >> this is one hour. >> host: we want to welcome richard wolffe the author of the new book, "renegade: the making of a president." thanks for being with us on c-span. >> guest: it's a pleasure to be with you. >> host: what did you learn about barack obama and did your view of him change in the two to three years to cover him on the campaign? >> guest: it did because he changed. he struggled being a candidate to begin with. it's easy to look back now and say he won and is president so everything was wonderful and smooth and it was just a single, simple trajectory of the way up, but there really wasn't. people have remarked on his coolness under fire, his

calmness. that is true for the most part, but there are a moods that track his performance and the people around him, he can get angry, frustrated. and again, that first year watching him at out, watching him learn how to be a candidate in this painful crucible of national attention, international attention was itself a fascinating journey and fascinating thing to watch. >> host: i want to begin where he began july 27, 2004. the keynote address at the democratic national convention in boston. here is an excerpt. [applause] >> out of many, one. [applause] now, even as we speak there are those who are preparing to divide us. the spin masters, the negative ad peddlers who embraced politics of anything goes. well, i say to them tonight there is not a liberal america and a conservative america. there is the united states of

america. [applause] there is not a black america and a white america and latino america, and asian america, there is the united states of america. >> host: interesting sight he used the same line in a speech in cairo last week. >> guest: not his line of course but, yes. he stays with the consistency in his attempt to appeal to voters will be on the democratic party and independent voters are the ones who put him over the top in the general election and also in on what to begin with with his campaign and they are still the most important so for this administration as they move forward and roll out various policies that a group of voters has grown over this period in addition to the age when you look at that video the eckert of disaffected republicans who make up the independent voters who traditionally have decided

elections in the recent election cycles. that is the target. those are the people who gave him north carolina and indiana and virginia, and they are still the most important target for him, and i think, you know, one of the things people didn't realize early on is how he theiss people together. he says my story is like your story and your story is like the guy down the street. that is a technique as well as rhetorical device. it is a way to bring the crowd together to connect from the big party come to the people in the street and people on the floor something he learned as a community organizer and i think it is proven very effective for him in the white house and before. >> host: in the book you outlined evolution he went through from being a state senator, being elected to the senate, his insistence on meet the press with tim russert he wouldn't run in 2008 and then he began to hedge that statement. walk us through. >> guest: he did and it's interesting watching because he's actually quite honest. he doesn't try to fake it.

he doesn't say i never said that. he says given the response to what i have seen i am thinking about it. i haven't thought about it with the seriousness it deserves. that is what he told tim russert and what he was seeking through 2006 was a tremendous amount of public attention. he had a book coming out. he engineered a book to work where he was also supporting congressional candidates. and the crowds he was seeing, you know, he told me one key signal is when people started scouting free tickets to see him at a bookstore he realized this was getting out of control. they also fueled the speculation. he went to iowa to the tom harkin steak fry and they sent out a political operative who had no relationship, a guy called steve hildebrand just to observe and see if they could bond to staff up senator obama at the time they knew that would trigger a round of speculation among the political media in

washington and it did and on some of the other campaigns and when that was bubbling up they said okay let's calm down, wait until the mid term in 2006 and then start the process deciding whether or not to run. >> host: so he announced in 2007 springfield illinois. here is one of those moments. >> that's why i will have to set priorities. people have to make hard choices and although the government will play a crucial role bringing about the changes we need, more money and programs alone will not get us where we need to go. each of us in our own lives have to accept responsibility. for instilling ethic of achievement and our children for adapting to a more competitive economy, for strengthening the communities and sharing a measure of sacrifice. let us begin. let us begin this hard work together. let us transform this nation. >> host: yet he began with

that speech huge crowd in springfield illinois than he began to struggle and a lot of backbiting or dissention or concern within the campaign. >> guest: right. he raised a lot of money to begin with which none of us expected. but around the summertime, things started to deflate, and his debate performance was weak. he did in prep for, he thought the tv debates were trivial. his stump speech based on that announcement speech started to get on wielding. his aides were sniping at him. he didn't like the public attention which is weird though its ambivalence in deciding to run in the first place he told one of his friends he thought the experience of being a candidate was like a public colonoscopy, and he missed his family. his family -- it had been incredibly hard. by the way he was raising money in that period the old-fashioned way. it wasn't from the internet. so he does bring back-to-back fund-raisers as well as trying

to manage the media, deal with its debate issue, and by the summer he was losing altitude of lott and frankly people in washington thought he was never going to make it. >> host: every campaign has a couple of moments we want to share if you with you and the audience and have you give us the back story and remind you phone lines are open and we will also take e-mails at charnel at maximus ban.org or send a tweaked at c-span wj. this is the jackson dinner in the fall of 2007, november 10th to be exact, here is what than candidate barack obama had to say to these democrats in iowa. >> i ron for the presidency of the united states of america because that is the party america needs to be right now. what [cheering] a party that offers not just difference in policies but difference and leadership.

a party that doesn't just focus how to when but why we should. a party -- [cheering] a party that doesn't just offer change as a slogan but real meaningful change. change that america can believe in. [cheering] that's why i am in this race! that is why i am running for the presidency of the united states of america! to offer change that we can believe in! [cheering] >> host: richard wolffe, was that a defining moment in the primary? >> guest: it was, it really was. a turning point if you will. a couple of things, he needed to show he could fight and had the stomach for the fight and remember the person he's talking about not mentioning by name is sitting maybe 12, 20 feet away

from him. hillary clinton, now secretary of state. he is accusing her of tough things and the other thing to notice about that is that he was not using it teleprompter. he had to memorize that speech and was a tough moment of performance. he rehearsed it in secret, he didn't tell his aides he was doing it. he turned on the tv in his room loud and rehearsed the hell out of it on his own then when he came up with a final run through the aids had no idea he had spent any time memorizing it. he already had it. that performance is important. that event is what helped al gore beat bill bradley, what helped john kerry and beat howard dean, tremendous amount of organization went into it to mobilize people and his performance was up to the moment. it really put him on the launch path to winning in fallujah. >> host: our guest is richard wolffe. the book is "renegade: the making of a president." democratic line.

>> caller: good morning. i would like to ask richard first i would like to say i watch him on msnbc. and i would like to ask him to questions. what does he think about the president's cabinet and what does he think about all of the flip-flop that he has done? >> guest: that is a good question. the most striking thing about the cabinet is frankly hillary clinton's presence and given the bitterness there was between the two individuals actively in many ways there was more bitterness or rancor among the people around them and most of them are now working together at the staff level. i think it was an extraordinary move to bring her in and has told me in the oval office as i tell in the book is was a decision before the primaries were over so when the feelings were still high and wounds haven't healed so any cabinet is a mixed bag. he obviously has a number of republicans and they have been smart about pulling in

republicans again not because they think they are going to get republican support. i don't think they believe congress is going to flip over because ray lahood as transportation secretary. but they do think that it sends an important message about his willingness to reach out and be reasonable and take the middle ground. the flip-flopper question is interesting. there is a -- the supreme court to beat is very alive right now and as i recount in the book when justice roberts was appointed to the court then senator obama wanted to vote for roberts. he was convinced by the staff not to because of the flak he would take from democratic base. but having voted against roberts he then went out and wrote a piece on the dailykos saying, you know, you progressive liberals out there, don't go attacking my fellow senators who voted for john roberts. there is a -- there is a desire may be a pattern in his behavior

to pick a fight with people who were naturally supporting of him and a challenge them and test them and maybe show some separation. but on the policy i think if you look back even in the last few months his policy is firmly to the left of center. >> host: guest is richard wolffe formerly with newsweek magazine now with msnbc. frank is treading on the republican line, michigan. good morning. >> caller: when i first turned this, thought i was listening to a paid political commercial. for obama. the gentleman says that obama doesn't flip-flop, i can't think of an item he has promised during his campaign that he hasn't flip-flop on. he flip-flop on taxes. taxes are going uphill. he has unemployed people. more people are being unemployed. the economy generally is bad. i mean, i realize that you people think that most americans are stupid, and maybe you're right. i don't know. maybe i'm one of them --

>> guest: frank, let me stop you right there because i don't think americans are stupid. far from it. i have deep respect for all of the americans i met along this campaign and many others. but i don't know how -- look, the economy went south well before president obama took office. it is not clear when the economy is going to come back. they've obviously spent a vast amount of money trying to pull it back on track. it is too early to know. i don't know that you can accuse him of flip-floping because the economy isn't yet the -- isn't yet back on track. on taxes he said he was going to have this tax cut for 95% of working americans and they did that. you may disagree with how big is or whether it should be on the basic percentage rate of income tax but he did what he said. you may not agree with it.

>> host: barack obama wednesday on what caucuses on a thursday, travels to new hampshire friday expecting the momentum will carry just a couple days later and was the first time in moder history we had such a short period of time between iowa and new hampshire. what happened the weekend in new hampshire and how did it come apart? >> guest: you know, it was a ridiculously short amount of time, and what happened is they got cocky, arrogant and lost track of the things they had gone through the course of the last year in iowa. a lot of the rebuttal of the kind of attacks the were taking from the clinton campaign for instance on which place. the clinton campaign had a very effective ground operation and road calls where they were saying that obama who had 100% pro-choice voting record in the senate was weak on choice. they didn't respond to that because they were believing their own hype. they felt they had this momentum going and then they started to get suckered into this debate about the meaning of hope.

there was one to date at the gate where actually obama says you are likable enough. are you going to do this? >> host: i have this. from january 5th, the only debate in new hampshire before the primary, the weekend before the primary, sponsored by wmur and abc news. >> what can you say to the voters of new hampshire on the stage tonight receive your reza may and like it but are hesitating on electability issue where they seem to like barack obama more? >> well, that hurts my beelings. [laughter] >> i am sorry, senator. i'm sorry. [applause] [laughter] but i will try to go on. [laughter] he's very likable. i agree with that. i don't think i'm that bad. >> you're likable enough, hilary. [laughter] >> host: richard wolffe. >> guest: well, look, he

wasn't very likable himself, and i think there was a backlash against that kind of arrogance, against the kind of the miscued approach that he had, that he wasn't connecting with people to read a number of independent voters ended up in new hampshire switching to the republican primary because i think a lot them felt it was a done deal. there is another piece of this obviously this was a volatile period the obama campaign stopped pulling up 24 hours before the voting began in hampshire and this was a huge mistake they didn't repeat but as i explained in the book they lost track because it was over. there are going to sail through. >> host: monday morning at the cafe espresso in portsmouth hampshire. were you there? >> guest: i was not. i was still with obama. this is somewhere else. >> host: this is 24 hours before the polls opened. one of the early morning defense that senator clinton was conducting. here is what happened.

>> it's not easy. it's not easy. and i couldn't do it if i didn't passionately believe it was the right thing to do. you know, i have so many opportunities from this country i just want want to see us fall backwards. no. [applause] this is very personal for me. it is not just political. it is not just public. i see what is happening and we have to reverse it and some people think elections are a game like who is up and who is down. it is about our country, our kids' futures and about all of us together. some of us put ourselves out there and do this against some pretty difficult odds and we do with each one of us because we care about our country. but some of us are right and

some of us are wrong. some of us are ready and some of us are not. some of us know what we will do on day one and some of us haven't thought that through enough. >> guest: a critical moment. when they came out, the obama campaign realized pretty much every single undecided woman voter went for hillary clinton. you can pay get down to that moment and what is fascinating to me is obviously she was emotional. i don't think there is a question about that although the question started out as she looks so good. it was a fairly innocent question how do you look so good and do your hair every morning. she pivots effectively from that moment of emotion to a blunt attack on the man who ended up being her boss seeing some of us are ready to lead and some are not. some believe in change and some don't, and what is interesting is the reaction inside of the obama boss was testosterone filled. this was a guy surrounded by other competitive guys and a lot

of them were thought she melted down. it was an ed muskie moment in his hampshire and his reaction was different. his reaction was based on his own difficult period in the year before and he said listen you guys don't know how tough this is. i think there was a certain amount of empathy. look, he wanted to win but i think he understood the kind of pressure that would lead you to an emotional moment on the campaign trail. >> host: we are talking with richard wolffe, the book is "renegade." clay is drawn from a dustin georgia. good morning. >> caller: good morning. thanks for c-span. this really saddens me when i hear people criticize president obama. some people think that he's supposed to be moses or something and take his stick and part of the sea. this man adopted basically something that george bush left

for eight years that he was in office. he left this in a big mess so they ought to give him a break. they really should give him a break. people like rush limbaugh and i cat think of the name on fox news, he really irritates me. i mean, barack obama cannot do anything, he can't even -- with all the people sittingomething critical. but i want to ask a question, sir. do you think he's going to become a great president? >> guest: it is too early to say. how can you do that? or could be a great president was something that he thought about at the earliest stages of trying to decide whether or not to run. and again this is pretty much the second chapter of the book where, you know, he and his friends are discussing what makes a good president, in his opinion the sort of mixture of the person and the time and that is why he thought ronald reagan was probably the great president and even though he opposed pretty much every single one of

his policies the character, the leadership of the individual with the time and the country boss ready for that kind of change. now he went public with that approach and that observation around the time of the nevada caucus and the south carolina primary and frankly it drove president clinton crazy. crazy is a figurative crazy. it prompted him to react in ways very undisciplined and a distraction for the clinton campaign. so coming back to the question, i think that you can only tell the greatness of a president in hindsight and we are living in the middle of this tumultuous event. he's obviously a historic figure. there's no question about that. i would say he is an iconic figure. the the world reaction and images associated with him. we haven't seen anything like its sense i would say probably princess diana. >> host: there were many other democratic candidates but the third candy to touch on briefly john edwards. did the obama administration

have any indication there were stories of their about the former north carolina senator? >> guest: if you're talking about his personal life, i don't think so although there were plenty of rumors buzzing around everywhere. the rumors were kind of dismissed out of hand by most people. a lot of reporters and political operatives. they were deeply concerned about john edwards to tell you the truth. the projection in on why is the but come in a good second after it words. they felt that he had this block of solid support they couldn't shift. he had a lot of union support. they were concerned about 527 groups funded by unions. india and in the final week or two of iowa, edwards was the target. it was and hillary clinton. so that is one area of concern and he faded off as a challenge quickly. >> host: an e-mail to the earlier planned sinking mr. wolffe why did the press continue to say hillary cried when it is obvious that she didn't? >> guest: good question. i don't think she cried, she

tears up maybe. her eyes became moist. there was a lot of hyperventilation about that moment as it sort of. people said she melted down. i spoke to people in the clinton campaign for the booker said that, you know, de -- the first response -- people didn't see the video immediately and by the time they heard about it was a full nervous breakdown and clearly it wasn't. so this was an intensely febrile emotional today's and everything got tight, and maybe didn't get york, good morning. caller: good morning, the morning. i have been following you on cnbc. guest: msnbc, please. [laughter] caller: i am sorry. i have been living in this country for many years. i was a hillary clinton supporter.

we have a family that debates hotly in politics. by switched over to obama, persuaded by my daughters. guest: a common story, by the way. children convincing their parents did. caller: it did not take that much convincing. following hillary clinton's statements, moving over to obama, it brought back memories of how very much i was going for mrs. clinton. then obama came up. i had not heard of him that much. i had to catch up on a lot of reading. i am looking forward to reading your book, sir. host: why secretary of state and not vice president?