provision was incorporated and if it was only available through the exchange i suppose legally they could not buy health insurance. i think that is a real problem. i may be missing something. >> the second part is what happens to the large companies if benefits went away for each individual buying? i think that is the question. >> if you take a look at the large companies today the benefits are richer than individuals would purchase for themselves so they would definitely have benefits that are a little less than from what takes place and the cost may be slightly higher. >> i cannot imagine that happening although the

cadillac tax bothers me. like that a.m. tee that will grow and grow and at some point* we will see a very high percentage of the market is subject to that. that one major that it cut its employee benefits if not elimination altogether. ocrats right now are talking about abolishing -- that will not be in this legislation. >> two-thirds of the population is buying through their employer. where showing the employer-based staying in place. i cannot imagine that much dislocation. -- we were showing the employer- base. >> what happens under this legislation to undocumented immigrants who are under employer-sponsored plans? are they legally going to be

able to continue? >> they are not supposed to be employed. [laughter] but the legislation does not address that. >> fair enough. >> i wanted to ask john but any of you can answer, my assumption is that these small group market which shrank dramatically, most small employers might give workers a little bit more money and go shopping in the exchange as individuals, as opposed to trying to preserve the small employer groups. so you are hard on the house bill on the small employer pays , -- on the small employer peace, so could you speak to, would that be so bad to grow the individual market? >> i am glad you asked that

question because i probably miscommunicate it. i don't have a problem with the house merchant focus in on non- group. when you -- i don't have a problem with the house version focusing on a non-group. that is a huge undertaking and inappropriate task for a national exchange. i think that can work -- a huge undertaking and an upper brit task for a national exchange. -- and an appropriate task for a national exchange. i know massachusetts is exceptional, but there are a lot of small businesses around the country. when they are competing for your services, whether they offer health benefits as opposed to

somehow we can prove we pay you $1,000 more a year for you to go off to this exchange to buy at, there is not much of a comparison. -- go off to the exchange to buy it. he, i would not expect that to significantly diminished, -- and i would not expect that to diminish because now you have your employees being required to buy it. they are really looking for you to organize the choice and give them to -- give them money to buy it. i don't see small group insurance going away. >> both bills include provisions for tax credits to small businesses to cover their employees. they are short-term and not that huge, but the cbo sees them as having a significant effect. >> could you go into how

difficult it would be to administer a risk adjustment plan outside the exchange? at the senate bill work to cost as is, would hhs be the best system to do this? >> under the senate bill there are three different risk adjustment mechanisms. two of them short term and one long term. one is a reassurance program -- one is a reinsurance program. this ended up in the wrong bill because it talks about hhs paying premiums and they do not. the third is a risk adjustment program that will take -- that will be operated not through the exchange but some other kind of

entity. i guess the problem that i see with that is -- what the house bill does is it simply risk adjusts the premiums to account for risks. that is pretty doable, you will be dealing with in the exchange and will have a lot of data. it seems that is doable, although it does not address the problem of small groups, although it may be john is right there will be no problem because in the house bill you have a small group in and out of the exchange. with respect to the senate bill however, with this risk adjustment program, it can be done. there are many states to have risk adjustment pools, but it

will require collect in a lot of information the states do not collect. >> i want to thank the alliance and commonwealth and panelists for a great session. i would like additional clarity on how exchanges can help small businesses which is maybe a little odd, but i feel like this is not clear at all. there are big differences between the bills. they can purchase within and outside the exchange. i think i heard a panelists say there is no other way to do it. in one bill tax credits are available on both sides and the other can only get them within the exchange. in the senate bill the exchanges are a separate. -- the exchanges are separate. another thing that is very other is in the house bill -- another

thing that is very odd is that individuals and groups are put together in a separate exchange. could that possibly make rates higher for individual non-group participants? in general, i would like to know the panelists thoughts on what is a good way to help small businesses with respect to exchange design? thank you. >> let me start with the exchange itself. the question is, why is it good for small business? if you think about it and let's say -- typically i do a much smaller crowd and say we are one small business, but if you think about it the exchange brings simplicity and brings the choice for an employee based on their specific needs. we offer four a different health plans and a range of benefits,

-- we offer four different health plans. why is that important? if a company is choosing benefits they will choose from one carrier and they will have not what -- they will have one network, and typically in a small business the decision is based on where the owner wants to go. either the owner decides where their doctors are in their network -- now the employee can choose not to go to the owners' side, even though they are trying to provide a good benefit. they can now choose based on where the pediatrician is, based on anything they know even from a satisfaction side. hopefully at some point will have transparency of provider quality and rates so they can make those decisions.

it leads to a high satisfaction rate. we do a survey of the companies that participate in our program every year and we get high satisfaction. we go into a lot of different questions and what they -- what their experiences are. that is an explanation of why a small business his satisfaction to the business and employees, because it makes it simpler. there were also several other questions. >> it i t come back to my theme of humility. tim explained the theory of choice well and i would throw in the idea of employees deciding to buy up, maybe it is a better plan. if they are using their own money as the difference, god bless them. presumably that is our experience, most buy down and it

adds price pressure. that is the theory of managed competition. you asked a lot of other questions. i want to be humble and ask other people in this room to be humble, we don't know the answers to most of those questions. that is why i think you need to delegate to whoever was doing at some real expertise and latitude to adjust and figure it out and make changes as you go along. >> i am interested in what happens to the role of insurance agents and brokers with the exchange's, but if there are provisions in the bills and what the experience has been in massachusetts and connecticut. >> i think we both use brokers.

there were no brokers in massachusetts and that is where we focused, so we have not changed marker -- have not changed market practices. i want to give you an example of california where brokers dry the non-group market. there are 3 million uninsured in california. the broker it typically gets 10% or more of a premium in the first year. very different brokers situations. if washington were to dictate how to deal with brokers, on day one you would have two different outcomes. very possibly chaos in both states, so hard to know but when brokers are there they play an

important function. we can argue about how much they are paid, but there is a real function there. one of the reasons is no brokers in massachusetts -- we have [unintelligible] and other states brokers are critical to finding a carrier who will take you. it is different state to state. >> in the current marketplace the broker plays an important role. our average size company is seven or eight employees. they don't have a human resource department, some don't have access to the internet. there are so many different aspects to it that the broker typically is meeting with employees and helping them through complex -- they are personal decisions, said that play an important role for us.

-- they are personal decisions, so they play an important role for us. go back to california for something, it was a public- sector a change in 1995 as well. they came up with a program where the employer can determine if they want to use a broker, and here is what the cost would be. 75% had at the beginning used a broker and their sales were not as robust as when they said they would meet the market -. there are adverse selection issues where they had to do things the open market did not come up which created a real problem for them.

-- the open market did not, which created a real problem for them. >> originally the house bill said nothing about it and part of the blue@@@@ @ @ m @ @ @ @ @n the non-group market is hard for me to say a broker will -- it is

hard for me to say. there is an insurance agent in every lions club, every pto. some of my best friends are insurance agents. this is one of the most powerful groups in the united states. it is hard to imagine they will go away, and they serve a useful function in the group market. i would hope one of the things the exchanges can do would be to figure out exactly brokers are contributing in terms of value added, and make sure they are compensated. i don't see any need for 10% origination fees. it is like if you could buy through web-based travel

platforms and still had to pay a travel agent -- you have heard me. >> we have time for questions from folks standing at the microphone. first in the back of the room. >> thank you to the panelists and the commonwealth fund for putting this together. my question is about the state exchanges. in terms of going to scale, this health care reform is proposing to put 30 million people into an exchange and that is a large scale. in terms of having it happen on day one, i wanted to ask you what have been the obstacles for more states taking on a running an exchange that would move us towards that scale, and looking at what those obstacles are, if you could look through the senate bill which puts it on tuesday its first.

if they default or refuse, the feds step in. what in the senate bill helps states overcome that obstacle so we get -- of 20 million show up on day one it will work -- if 20 million show up on day one it will work? >> most state. the local exchanges failed because the value proposition -- most state and local exchanges failed because -- for the exchange to step in and improve, the affordability and value for small employers, and phil has done a great shout, -- i have an expert in insurance who runs a business and connecticut.

he loves the concept and is very enthusiastic. it is hard to believe, as i know. you can get the same product for 20% less. his association. the value proposition has been -- allah have tried this and found it was not sustainable. -- all lots have tried this. what is different -- a lot have tried this. that is all the difference in the world. that gives you the scale economies and the opportunity to develop what has taken phil 15 years to create the value, which is still a couple of points on the premium. people move for a couple of

points on the premium. it is great work, so what is the value for our unsubsidized exchange? it is the difference between spending a half hour on our web site and be unable to seek comparable products and make an intelligent choice, to having to spend a day on the telephone to read your notes as a decision making process. is the price any different? absolutely not. we are dealing with a fairly marginal differences except if you have a mandate to pay for the insurance. >> now the bottle. -- now the rebuttal. >> a lot of states looked at trying to bring up exchanges. a lot of it came to what was happening outside the marketplace and how they would have to run an exchange.

the rules are different all over the country. many of the state's we talked to will not be able to get critical mass -- many of these states we talked to will not be able to get critical mass. they have not been able to overcome that barrier of the market forces outside the exchange. they need to be similar to what is inside the exchange or there will be problems in be unable to run that exchange. it would take me longer to exchange what those pieces were, but that is where the states had to be careful and why they have not been able to become alive. >> i think someone mentioned that standard benefit packages would be in the house and senate bills. i see them as crucial, and would like to ask this question. as far as standardized benefits

packages, do you also need standardize co-insurance rates and co-payment rates as well? would that be included? who would design these packages? who would be responsible for leaving in kiev to care, dental care -- leaving in psychiatric care. >> there is the concept of the central benefits. it lists the things that need to be covered, like a physician services, pediatrics care and vision and oral healt. it leads to a process which is lined out in great detail in both bills. it is a process that would run through hhs in the senate bill

and it run by the commission of health choices with a representative advisory board in the house. then it would be updated through a process. that is the essential benefits package. both bills tier packages in terms of actuarial value. the senate has four tiers and a catastrophic plan available to some people. i forget what the other category is. the house bill has four tiers. cost sharing is then determined by those tiers. tiers are defined in terms of actuarial value, so they drive cost sharing. cost sharing is standardized and there are a maximum amount of

out-of-pocket limits in both bills. there are also maxim and deductibles, but there is a lot of flexibility in both plans. -- there are also maximum deductibles. if you want to have a high deductible health plan, you can do it. >> will that be a way of avoiding high-risk individuals? >> one concern i have is under the senate bill every insurer who participates has to market but the silver and gold plan, but they don't have to market the bronze plan, which means they can do it outside the exchange and higher cost sharing plans tend to attract healthier people. i see that as one of the wrinkles in the senate bill that makes me nervous. >> one of the things tim was saying worth emphasizing is well

these actuarial tiers project a level of cost sharing, we have used them with a $2,000 deductible. they can be very different kinds of cost sharing that have the same overall value from an actuary's perspective. your point about non- standardization, which is one of the reasons we have moved toward standardize benefits so that you do have comparability -- the range of cost sharing in massachusetts -- what we think of as minimum with the middle of the road in texas. these preferences and affordability issues are very different across the country and will be a real issue in the house version which has a floor at 70%, above what most small

employers provide. they provide more cost sharing than 30%. >> standardize benefits has been one of our key is. if we had not had this between the four -- one of our keys. it is very concerned. across the country it just varies tremendously. . .

they dropped to the system at that point, so this is the fixed to those markets if we do not build on the existing system and the issues that are raised in tim's paper and in this panel are critically important in terms of deciding on the provisions in the bills, federal vs. state control, and also implementing their bills and provisions over the next few years. >> thank you, sara and to our friends at the commonwealth for supporting some of the research and. thank you for your fortitude and listening to t of actuarial terminology over the last hour and a half. the me ask you to help tif the n

whatever form ru

courts. >> "washington journal" continues. host marilyn geewax is chairman of the national committee and a 12 step program for defeating the obama agenda. politically, if you were a betting man, how many seats do

you think that the gop will pick up or lose in the 2010 congressional election? guest guest the challenge with january as we continue the primary process. there's still a number of important districts around the country where individuals are considering running. we're having folks who are in, you know state legislatures decide together go to congress. there's a lot of moving pieces. it's hard to say exactly but the way the trend is going it bodes well for the republicans in the house and senate as well. retirements and fact that i believe there may be a few more blue dogs that decide to come the republican way because it's going to be hard to go back to their districts and argue for the spend and the growth of government in districts that have no toleration for it. so i'm looking forward to some significant pick-ups. i don't know what thats. i can't put a finger or number

on it in january. but i think that the work the,nrc and the national republicans congressional committees have been doing is going to yield some really good results in november. host: you going to have the money? guest: absolutely. and that's thing. it's an as speblth of last year that really has not gotten a lot of focus and a tension but hen you consider the fact that, we came into - i came into this job in february first. that was my official first day. the wave of legislation. president barack obama picked up 13 million new donors and the democrats are flying high and so over the course of the next year we're thinking we're the little engine trying but we've wound up raising over 80 million dollars. we beat the democrats in fund raising on a number of reporting

periods and at the end of the day i've had 8 - 9 million dollars to carry into this year, no double and i or debt. and i feel good about it. 14 million in virginia and new jersey and there's money going to build apparatus for operations on the ground and technologies that are going to be important for us this year and feel good about that. the budget i inherited had zero dollars at the end of the year in debt and i felt that was an irresponsible way to run the committee and it was not physically improved to start january with nothing. we did what we had to do to make sure we met our obligations to campaigns and our state parties and had money in reserve to begin the new year and i feel good about where we are. host: you outline some of the mistakes you believe e republicans made particularly in the last 8 years. guest: yes, and i think the

party is in a period recovery and some people don't wanted to add mitt that. well that's not what a lot of folks in america say. i think the last rasmussen poll had in popularity, we were 22%. tea parties 35 and democrats 32. so we clearly have a gap between the american people and party. and i think it's the responsibility of the national chair and chairs around the country to fix that. and the way you begin to do it is to acknowledge this is where we've made mistakes when you grow government and spend money and go against the principals so important to defining the party for generations you walk away and create problems and we sought results in 2006 and 2002348 losses at the pole and loss of confidence and faith in the party and so i think now we have an opportunity once we

acknowledge where we've gone wrong and stand firmly on principals and lead into the future with positive ideas and a new direction. the american people will come to us and i think we've seen that in new jersey and virginia with their elections. host: your t book right now. are they the future of the republican party? guest: they are to the extent that they're part of a conservative network of activist. some of my friends there are former republicans. they're independents. they were identified as reagan democrats. it's a cross section of america. our opportunity as a party is to open arms and well come people that want to be part of what we think is a principals leadership that takes america and helps us build infrastructure and empower

people. so, i have reached out my and and said let's work together. we're fighting the same cause and fighting about the same principals of free market and free enterprise. lower taxes. a confidence marketplace and not trying cow down to those that do not have our best interest in line and with that kind of message - but then following it up with action, where we actually follow through and act on those things and make sure we control the spending in washington, that we lower it's influence in businesses in our daily lives i think we'll turn an important corner. host: is that part of a national platform for the republicans? guest: i think so. it really will come down to what individual candidates can do in their communities and how they translate the message and principals. you saw in virginia and take the

principals that define them and they're leadership and translate it into economic and transportation policy and people understood where they wanted to go and decided that was better than where they'd been. that type of relationship needs to be re-established. newt gingrich and dick army gave us a contract with america and they understood what america was looking for at that moment and they were willing to put their names on the line for the party because of those principals. what happened is since then we've strayed a way from the things we said we would do, and that's about coming back and doing something. host: if you'd like to talk with the chairman of the national republican committee marilyn geewax. iraqi want to show you a chance to articles. this article is about you. about the republican national

committee. don't know whether or not you consider him a friend of yours. host: says fire him or shut up. guest: little bit of a hot head. i'm very passionate about this job. i'm very passionate about this party. i gr grew up in this town and me a decision to become a republican because i heard a man talk about in america that recognized my potential and recognized what i could do as a black man in this city. surrounded by democrats talking about a whole lot of other things i couldn't connect to. programs and institutions. no one was talking to me about what individual cans do and how freeing sit to be able to access the american dream. my mother had a fifth grade education and worked in a laundry material in this town for 45 years before retiring makes 3 dollars and something an

hour. she understood why the american dream was denyd to her it would not to her son. she created that pathway and when i heard ronald reagan speak, he sounded like my mother and things she was saying to me that i could do. that connected me to the party at that moment. here i am some 33 years later sitting at the chairman of the chairman of the republican committee. that was apart of when i ran for the united states senate. i feel so passionately moving this party forward. i like to call it turning the elephant and embracing this new platform and ground. larkly created by abba rock obama that came on the scene and shook it up. how does the party reach out and touch this generation of voters and tell them that this party wants to empower you, not the

institutions of government? this party wants to help you create a pathway to have that relationship from the bottom up. i get a little hot headed sometimes because i don't understand all the noise. i know it's part of the job but i want us to focus on helping mitch mcconnell and john baneer in the congress push through the legislation to keep america moving in the right direction. and the folks out there in the grass roots feel this party will be true. it's principals and lead from the principals during this century. host: there was a new poll saying who was the face of the new party. john mccain came out on top. do you agree? guest: he's one of the many headers in this party. i remember the july when john mccain was up against the wall. i remember july seeing him in an airport in 2007 by himself

catching a flight and no one paying attention to him and his determination and perseverance through that campaign to come out as an nominee is a lot of something that people should admire. he represents so much this party has to offer along with mitt romney and sarah palin and governor palete. we have the leadership that's out there and guess what's going to happen? over the course of this year and early next year, individuals will begin to emerge who will contend for the presidency that want to represent the principals of this party nationally for the presidency and that's exciting to watch. you know i think people shouldn't be surprised that, the leadership is there and they're ready to get the job done. host: "washington post". steel'snalepublicans on the hunt for a muzzle is the headline. brad wood house of the

democratic national house committee says you're the gift that keeps on giving. guest: [laughs] well, try to wrap the gifts. the reality is look, this job is tough, it's important, but the more important thing that we do is that we build the team and put the resources in place, we run good candidates and they reflect the principals that define this party. if we don't do that it doesn't matter what michael steel says or congressional leaders. we'll not garner back the su part is in the face of the american people. we'll remain at 22% or worse in the poles in terms of popularity or identification and we'll have lost our way permanently and i don't believe that will happen and i don't want it on my watch. i remain to get out there and spend time on the streets.

i've you downtown halls. i try to reflect back to the hill, what folks out here are saying. their frustration when people are told they're un-american to disagree with what the government is doing. the republican party will step in and say that's wrong, we know better how to lead but we need to demonstrate that every single day. these people are watching and they're ticked off. it doesn't matter. remember people used to say i don't know about your congressman, but mine is a good guy. you know what they're saying right now. not only does your congressman stink, but so does mine. they're looking at this thing from both houses. leadership better pay attention and not take it for granted, otherwise we're going to be in a world of hurt in november. host: finally before calls, there's been criticism in the press about you're going own a

book tour pro moiting right now while serving as chairman. guest: i you know in 2008 before i became chairman. and due to publishing circumstances at that time, and then, you know, got into the chairman's raise, it didn't get published so the reality is i updated it to include things that have happened since then. then of course, sarah palins book came out and you didn't want your book on the shelves when that hit so this is something that's been in progress for a long time. i think it's an important way forward. i really do. i see it's a blue print to move forward. taking important steps. saying we have a br problem and owning them. we're the conservative party in the government. to try and stop the liberal, democratic party is a good political exercise and this is

one way for that. host: marilyn geewax is author of, right now, a 12 stefor defea first up. republican line? caller: good morning mr. steel. i'm going good. i'm a small businessman. been in business 34 years and i'm one of the 70 percent of the population or businesses that generate the jobs that everybody talks about and all they talked about as far as initial administration. finding a way for me to borrow money that i can't pay back to grow my business. my customers don't have jobs or they're not spending money. that's probably the problem 70 percent. small businesses have. we're not going to do the business because our customers are not spending the money because they don't have the money. my concern with the republican party s the fact that now we talk about poles and it's conservatives democrats and

independents. the last pole i saw, we had 40 percent of the nation is conservative. 20% in there is democrat and 36 independent. it bothers me the republican party doesn't even go into the poles. if guest: well i think tha@@@@r$ and nancy pelosi is on the hill.

how do you do that when your layering more regulation and taxes on top of them? why don't we cut the capital gains tracts and eliminate it. get rid of it? why don't we cut the unemployment tax or at least give a break in time for small business owners to be able to regain they're fiscal strength. create real pathways to credit and capital with not a lot of string as attached to it? there's proactive steps that should have been taken and can be to get small business owners back in the game. you're absolutely right. you're the one to turn this economy around. not these institutions and government and if we don't trust you and have faith in your ability to do it in the past, we're not going to get it done and everybody will wind up looking for the government to find the solutions. host: bob, democrat.

florida. you're on. caller: good morning mr. steel, in case you didn't know. racheled byo invited you on her show and i hope you go. you can demonstrate to the public how to officially the tea bag a person. host: try to keep this a civil conversation. please don't call in just to make cross remarks. tom independent line. please go ahead. caller: good morning mr. steel. okay. i got two quick questions for you. first, when you were running for senate, back in 2008. guest guest 2006. caller: did you not have a democrat bumper sticker on your

car? and number two question, why after criticizing rush limbaugh pretty severely one day, did you do 180 degrees the next day and apologize to the gentlemen? i can't understood that. host: tom who did you vote for in 2006? caller: the incumbent. mr. steel? >> there was no incumbent in the i raise. the incumbent retired. there was - i don't have bumper stickers on my car and certainly wouldn't have a democrat one on my car and with respect to rush limbaugh we're good friends there was no need to apologize because there was no offense taken. host: is rush included now in the book? guest: no. i don't focus on personalities

at all. i have a lot of people saying why isn't sarah palin in the book? this is not about a personality in the party but just about the party. those of us who are out here fighting every day to grow the party. in fact, the book is dedicated to the grass roots. everyone that's licked a stamp or stuffed an envelope and had a role to play in fighting for our issues so this is a very much a grass roots book written from a grass roots perspective because that's how i began. knocking on doors and having my face with doors slammed on it. but it's tough but it's important work and a lot of people do it every day to help usnd appreciate it. host: mr. steel, what are your expectations of the upcoming tea party convention with the former sara palin as headliner?

guest: that's going to be exciting to watch. i'm not unfortunately, have gotten all the background what that event will be like, but i expect it'll be across section of america coming together to express strus administration and also aspiration that leadership will do one thing and that's listen to them. and that's something i've tried to emphasize in my book right now. listen. my mother used to tell me when i was a little boy. the first thing you got to do is shut up and listen to people. when i ran for office in maryland and so forth, you know we took the time to listen to people and that's what these folks are going to be gather the information and hear. i think it'll be exciting to hear sara talk to them. host: gary. baltimore. republican line. caller: i want to take a moment to thank you for the work you're

doing and there's a lot of republicans out there that have been on the fence and we appreciate the work you're doing and direction. all the effort. my question for you is this, in the next run of elections when hopefully we do get a little more control back we're not going to be the party and will continue to push healthcare reform. there is lot of good work that needs to go on there although what we're seeing is not the best route to take. i want to hear we're going to continue fighting that good fight. guest: my goodness. absolutely. you have to give enormous gratitude to the leadership on the hill who have fought valiantly to get those issues before the american people. we've watched mitch mcconnell and john baner and team on the floors of the house and senate propose, measure after measure, tort reform.

how do you do healthcare without tort reform? i don't understand that. so small businesses can pull their businesses and get competition going. reforming the healthcare saving as count provisions to expand them to allow great eer flexibility. there's so many aspects of what needs to be done in healthcare that i'm not in the bill that's before the congress right now for consideration. that we'll continue to fight for and be able to close the gap or indeed take control of one or both chambers. you bet we're bringing those issues back to the floor. host: you see similarities between this year and 1984? guest: that's good question. i think some aspects are similar but the environment is different. the attitude is different. your seeing, almost like it's accelerated.

newt gingrich and i were talking about this and he's such a phenolal understanding of - not just history, but where we need to go and he was talking about how in 1994 he and dick army were able to bring the contract with america to america in september of that year. a lot of people think it's long and drawn out but it was a short period of time part of the political discourse. now we're at a point where something like that is relevant. people looking and they're hungry for seeing what direction they're going to go in and what the leadership will be doing and where the stakes are. this is a very much an accelerated process. people are much more energized as we've seen over the summer with town halls and 91 event last september. there's a level of activism two years out and certainly out from this fall's election that we've not seen before.

that's why i've been very direct with elected officials around the country. don't look past this. don't take any of this for granted. you better calculate that people are watching your votes and actions and they're taking note and they'll come after if if you don't get it right. host: gary, indiana. randall, democrat. caller: yes, i have a couple of quick meant comm comments. i hope you bear me out on this. i never understood why educated people have the views that there are really black and white people. if the premise is wrong in the beginning, the conclusion ultimately is always wrong so i they say i've never met a black or white person. they're political tools. republicans have stateed so many

phoney arguments over the summer from the president's birth. it's just been the political disthe course m has been so phoney that i really just can't even take the republican party serious as an alternative even though i will say this and grant you this, there are things that you say your party stands for that i do share those values. cutting capital tax gain, helping small business. but because of the political discourse it's so phoney you understand what i'm saying? . .

let's be creative in our process. and what i think certainly what the republican leadership is trying to do is get those issues in front of the people to show, this is what we think a better alternative is. and i think that's where people want to see the debate ultimately come down. what are our choices? i hear people say, what do the republicans stand for on health care? what are you going to do? i check off the list that

members of congress have proposed or whatever, and what i realize was a lot of it was they didn't know. so we need to educate, we need to inform, we need to be out there in the community sharing these messages but not doing it in the context that randall discussed where you're doing hot rhetoric and making a lot of noise, talking loud, as james brown said, and saying nothing, but really focusing on what people are trying to do. that's what kris christy and bob donald did in their races. they talked about the issues that they were concerned about and then people responded. host: one person in "the washington times" said that the traditionally large donors were not giving -- they were dissatisfied with your leadership. newt gingrich was quoted of saying, some old timers in the party are uncomfortable with you because you come from a different background. i'm paraphrasing quite a bit there. but i just wanted to get your

response from that. guest: i do come from a different background. i come from this background. i grew up here in washington, d.c. i'm an urban kid. i cut my teeth on the politics of this city with the likes of david clark and john ray and marion berry and eleanor holmes norton watching them maneuver and fight for this city. and so my experience is very different that most state chairman and certainly national chairman. but with respect to, you know, our major donors, you know, ralphie boyd doesn't know how this works. i don't know who he's talking to. in typical fashion, you know, a lot of things are gotten wrong. if you have a major donor for the republicans or democrats, those individuals run businesses that got socked by a recession that was one of the worse in 20 or 30 years.

so they didn't have the resources, the extra cash, if you will, to play politics. and there was a lot of slowdown and a lot of, you know, lack of access to those dollars to do the things that you would normally do. however, we have put in place some creative strategies to bring our donors back and beginning in july or so we started seeing major donors coming to the table and being a part of the game again. whether they were old-timers or whatever, it doesn't matter. my goal is to create the environment so that people want to give and support the party. we're also targeting a lot of young donors and new donors who can help us and want to be a part of this. last month we made our budget for our major donors, we were 262% of budget. so we were well in excess of what we needed to raise in

december, the same in november, the same in october. so a lot of that is a ruse that some folks want to put out there, he can't raise money, but i raised $80 million and i broke a lotfrw#w@@'"g '

shouldn't be beating them. major donors are major donors. these are individuals that have the wherewithal in good times to give. in tough times they are concerned about their businesses and their families like everybody else and politics becomes a luxury and they don't give or don't give as much. so you need to be creative and find ways to incentivize them and i think we've found ways to do that. host: independent line. you are on the line for michael steele. caller: good morning, mr. steele. guest: how are you? caller: i am in a hospital. i am so glad to be able to talk to you. i have a few quick statements. some that you may not be familiar with. i was a tea partier before tea partier was cool. i'm a conservative.

i'm a constitutionalist. and for years, you know, we're the people that supporting ron paul and protesting against the taxes and the taking of our constitutional rights and so forth. and what happened was when it grew and began to get attention and the people started coming out was when the democrats began to see that obama was just like bush. guest: uh-huh. caller: i wanted to make a statement just quickly. the fact of the matter is we were called patriotic because we did not, conservatives did not support the war in iraq. iraq having nothing to do with 9/11. and now we're still called unpatriotic because we don't support obama. but i want to tell you -- excuse me -- i'm so sorry. host: can you wrap this up? caller: mccain is a republican. ron paul is a conservative which means the protector of constitutional rights.

guest: well, i appreciate that. i think she reflects -- hopefully you feel better, by the way. i think she reflects again a growing sentiment that's out there in the country that's reflected in a new kind of activism. as i said, it's accelerated. it's moving beneath our feet. the question for both parties -- are you prepared to move with it and how do you capture these moments? not capturing these individuals saying, be a republican, be a democrat, but capturing the spirit of what they're talking about. this constitution of ours means a lot to a lot of people. and while we may not jump up and down and wear it on our sleeves every day it's in our hearts and it's in the things that we do. and so when we see it threatened and see it undermined or when we see it being used in a way that is not reflective of its purpose we become concerned. and i think when you look at, for example, the fact that we're going to be trying

terrorists here in the u.s. courts, that has real concerns to those who see the constitution being used to wrap around and protect the very men who want to destroy that document and destroy the principles and the foundations of this nation. and so individuals like dani and others are very concerned and leadership has to address that. you know, you can't sort of gloss over it and say we're doing this to show that we're better, that we're standing up to what we say we are as americans. well, i don't think that does that. i think that that is looking at a national or an international situation through a criminal justice system and not what it really is. terrorist acts against the united states. and so you need to treat that differently and you do not give the people that want to

undermine the constitution to use it against us. host: if president obama gets health care legislation and signs it, will that be one of the issues that you use in the election? guest: absolutely. health care will be an ongoing issue until it gets resolved in the way when the government doesn't stand between the doctor and the patient and you're looking at a system that is bottom up. the situation is you've created a bureaucracy to solve cost problems. so if cost is the issue, if that's the driver, then what do we need to do to address the costs, to bring those costs down that creates greater competition in the marketplace so insurance companies, there are not only three insurance companies you can go to in my state. i can go to the four over there or the seven that are over there. you create competition.

and you do other things. the other thing is if you have 40 million, 33 million, 10 million people who are uninsured, look at the systemic reasons as to why they're uninsured and begin to address that. that again does as the republican leadership has been saying eight or nine months doesn't require a whole cell takeover of 1/5 of the economy. you have to figure out how to bring those people in that is consistent with your effort to lower the cost does not increase the cost. and yet this administration wants to bring in 33 million people and has yet to tell us exactly how much it's going to cost and how do we pay for if. host: time for a couple more calls for the r.n.c. chairman michael steele whose book is "right now: a 12-step way to defeat president obama and the democratic agenda." caller: i'm a bit of an amateur

media junky. i'm not terribly political. i call myself centrist with a little right leanings. abc comes first and then nbc comes second and then i watch some of the fox guys and cnn guys just to see how the tone is different. back in the day the news media tried to stay in the middle. even though you could tell they were leaning a little to the left. guest: right. caller: now it seems to me they are not even trying. they were pretty much entrauveraged in the left. and i'm wondering as a political person, how you can -- how we can call them out on that and try to get them to at least come back to the middle? guest: that's a good question. if you figure out how to dabble in this area let me know. it is a conscious decision by the network or the individual sfation and how they want to

project the news. that is why you find now, you know, folks relying on programs like this where they have unadulterated access to conversations and hear directly from individuals' perspectives that they've not been exposed to before and they go fought internet. and they can then more freely decide where they want to go. if i want to see a particular piece i can download it, look at it and move on. i don't have to be indoctorated to a whole other things. the media is going through a whole enormous transformation. the political parties are trying to figure out what it means. certainly at the r.n.c. we invested a significant amount of money and beginning to upgrade ourselves to get at least the parody with in new landscape. getting rid of websites and creating web platforms so we can more intertangably connect people to events and issues.

we can create the social networkings that are important out there to carry on the conversation and more and more importantly listen to what's being said. so i think what we found right now is while you have, you know, fox, you have msnbc, you have all these other networks that are doing their thing, people are realizing, i have a little bit more freedom and a little bit more choice here than a lot of people think i have. and they're beginning to access it. so i don't know if that will necessarily change the behavior of some networks, but i think in the long run it will because they will want to be more of a spot that will draw people in, not the ones that will always agree with them. host: james in maryland. go ahead with your question. caller: good morning, mr. steele. host, what is your name? host: peter. caller: i'm a first-time caller. host: welcome, james. caller: i was calling to ask

mr. steele where he said -- listening to the people. if he listened why does him and governor earle lose the race? he would have heard what they were calling for, the republicans weren't doing the jobs that needed to be done. for eight years they were in charge more or less. and nothing was done about health care except for the part d medicare which me snuck through in the middle of the night. i watched it all night. i am a democrat but i listen to fox. i listen to glenn beck, hasity, o'riley, chris matthews, keith observerman. i christen to it all -- keith olbermann. i listened to it all. i didn't graduate high school. i went back and got a job and

they sent me back to school. the constitution says -- i hear you saying about the constitution says this and says that. the constitution never said that you had to have firemen to take care of anybody's house to take care of a fire. the constitution never said you have to have insurance on cars. if you have a car you have to have it insured. host: james, what would you like michael steele to address? caller: why did they lose the race in maryland if they were such a great listener? guest: well, governorer lick and i did -- governor erlich and i did the unthinkable. the last republican governor before governor was speer agnew. and the people of maryland decided they wanted to take a different course. i think when you look at governor erlich's record and

think of my responsibility on behalf of governor of small business reform and certainly dealing with a number of other issues, we met, i think, what we were asked to do. and we were able to reach people and talk to them. we, like so many others, got caught up in the political climate of that day. there was a general mood, anything republican was a problem for folks. what you have to understand, james, is that governor erlich was retired from office with a 62% job approval. and it had very little to do with what the governor was doing but had everything to do with the fact that people wanted to send a message to the republican party and he was the only republican governor that year to lose. we are still a very democrat state in maryland. and they -- and they felt that they wanted to send a message. and i've had a lot of democrats since then say, boy, did we get that wrong in 2006.

but my hope is that the governor comes back. my hope is that the republicans come back and re-establish the opportunity for maryland to be a two had been party system where the voters get to decide and competition is a healthy thing. so governor erlich was not unelected nor did i lose the senate race because of our views on the issues. we did listen to the people and they responded. but i know the governor heard, i heard many times, i just couldn't vote for you. i had to send a message to the party. you know, that's what happens in politics. people find ways to get a message through. sometimes their casualties in that process. host: what would republicans do different this time? guest: donna, what would we do different? i think what we would do different first and foremost is acknowledge that we've learned the lesson, that we have -- we

have made the mistakes that have put us on the outs, if you will, with the american people and that we will now step forward with a bold vision in bold colors, as reagan used to say, that reflects the concerns of the american people and that are addressed through the policies and the programs that we think will empower you and uplift you. the government is not -- should not be in the business of managing and controlling and deciding. the government should be in the business of creating pathways so that you can access the american dream however you define it for yourselves. and so our party, the leadership of our party, elected on the hill, our governors around the country and certainly the political leadership in the states wants to create those pathways to empower families and communities to achieve the american dream. and we're going to fight for that but we're going to start

by listening and definitely stay true to what we believe, the principles that have grounded us for generations. host: michael steem is chairman of the republican national convention and autho 1ñax1x1x?fqé