it was mainly sponsored by the arkansas phase of things to believe honestly mrs. clinton lied in her answers. that is what most of it had to do with his lobbying on the answer is not with the conduct itself was less significant. >> guest: he told me monica sade hillary because the office of independent counsel was so focused and thought they had the president in their sights they thought this would be a distraction into be fair about it their assessment was at this point the chances of actually convicting even at the indicted were very low, so they chose not to do it but that was going on right at the time that they were pursuing the prison on the monica lewinsky charges. >> host: to testify against the president and the secret

service presented then resisted that. and you tell that story. it devolved into were fbi agents were accusing the director of the secret service of participating to cover up. that is shocking. >> guest: i spent a lot of time on this in the book is you know and it is just a remarkable piece of the story. the head of the secret service who also happens to be from pittsburgh originally, decided to break his silence into talk to me and it was remarkable. he did believe, and really most of this story i checked out as carefully as i could. it was just remarkable that he believed the fbi was pretty much try to set them up to get him to agree that he was somehow facilitating liaisons' with the president and young women in the white house. >> host: feeding him false information hoping he could find out that false information. >> guest: having to do with the blue dress and telling them there was no dna on the dress.

>> host: finally a lot of people after the president was acquitted in the impeachment case said well live least the system works. if you look at the entire story in the world that the institutions of government play, to think the system worked at the end of the day? >> guest: the system worked in this case? the system worked in the sense that the american public put a stop to this finally. it was the pressure of the american public this said enough, we have had enough in this trial has to come to an end but they think both sides in this and here i'm not thinking about ken starr and president clinton personally but both sides got to the point that they really lost their heads and were ready to win at all costs. there was not restrained in this i think is what produced the just collision that occurred here that was not good for the country and my hope in writing this in one of the reasons i spent so much time trying to get this right greg is really had to

think we have to learn from this that we can never ever let this get to let ourselves get to this point again in the country. it was a devastating event when so many other things were neglected, so many of the things were happening which we now know terrorist starting to think about it tax on the u.s. and this is what we were focused on. >> host: one last question. henry hyde was the chairman of the gigi shahri committee, probably as responsible as any single individual for the impeachment of william j. clinton was defeated in the trial in the senate, but when you talk to him, he took pride in one fact and let me ask you my last question in this interview. ..

thank you for being with us this evening. president obama today spoke and the first anniversary of the 787 billion-dollar stimulus

package that passed the congress and he signed last february. here is a little bit of what he had to say and that we will get our authors reactions. >> we acted because we had a larger responsibility than simply winning the next election. we have a responsibility to do what was right for the economy and the american people. one year later, it is largely thanks to the recovery act that a second oppression is no longer a possibility. one of the main reasons the economy has gone from shrinking by 6% to growing at about 6%. this morning we learned that manufacturing production posted a strong gain. so far the recovery act is responsible for the jobs of about 2 million americans who would otherwise be out of work. >> host: amity shlaes what is your take, the president had to say about the stimulus package? >> guest: well peter i'm glad it is the stimulus anniversary because now we can say we are done with stimuli in 2010 will

be a non-stimulus word and maybe barry that wording get it out of our public vocabulary, because stimuli don't work all that well regardless of what the president claimed. >> host: now, the president said the stimulus package presented a second depression. >> guest: well, i regard that as hyperbole. the analogy here for our economy is not the u.s. in the 1930's but rather japan, where there were i believe ten stimuli over a series so of the anniversary of the stimulus to get another stimulus and in the end japan's debt was up there with zimbabwe's in jamaica's and unemployment went in the wrong direction during that period so we want to compare where we are now to the '90s, what became the lost decade in japan and that demonstrated the weakness of stimuli as a care.

plus could dean baker, same question to you. >> guest: wiley think president obama exaggerated the impact certainly but for example i don't think we did before the great depression. it requires not just one bad year but basically prolongs ten years of stupid economic policy and that something that was really in the cards but i think it did lead to growth, did lead to employment. there is a number of independent estimates in the congressional budget office, moody's, global so they are pretty much the same range somewhere in the order of 1.2 to 2 million might be a little high. 1.8 million jobs, probably closer to a percentage point added to and-a-half 3% of gdp or. that is a big deal. is not nearly enough and we are still looking at an unemployment rate that is almost 10% in projections are we are still even two years of looking at an

unemployment rate averaging 03% and are now projected to get back to normal levels of unemployment until five years out which is why i would like to see much more stimulus but it is important to put this in context that we should've seen much more class february, but it did have a big impact and a positive impact. we would be much worse shape without a. host: you would like to see another stimulus just as big or bigger maybe? >> guest: to put this into some context of the look of our lost demand why are we in the situation? we have this housing bubble. we are building houses like crazy. we had a bubble and nonresidential real estate. that purse. the bubble wealth around $8 trillion in bubble well, most of that has disappeared. that bubble wealth was feeling so you to add up how much lost we have because of the collapse of residential and nonresidential construction it

is somewhere in the order of $1.2 trillion a year. the stimulus package president obama has drawn on the table people talk about 787 billion. 87 billion of that was technical tax issues from the stimulus, around 100 billion or so will be spent in later years so if you say what are we spending 2009/2010 it comes to roughly $300 billion a year so we are trying to replace $1.2 trillion in lost man with $300 billion in stimulus. that is not going to be enough. i think it was a step in the right direction and i'm glad we did it but is nowhere near enough stimulus. >> host: ms. shlaes, any reaction to that? >> guest: i have the supply orientation so i would ask and a lot of us would ask, what would make someone want to supply something to supply a job, to supply a new-product? keene is arguing more from a

keynesian perspective. i would argue from a classical perspective then when you have spending like that what happens if there are all kinds of distortions in the economy? to put it in common sense terms you don't know what the next emulous is coming if you are a little firm. you don't know where it will be. you know tax increases are coming to pay for the stimuli. you are worried about the health care situation. maybe that will help their business to have help from the government but it might put a mandate on you so you don't, you to not contribute to the economy and that very much is what is impeding our recovery. stimulus there gets in the way as opposed to helps. you can see purchases advanced over time. the government gives you get big enough offer you will buy a car this summer where the then next, but milton friedman, often you were moving around purchases he planned to make any way and you also by the way, sometimes don't

purchase of all because you think we'll mac that that looks big overtime in the government will have so much debt in my lifetime, maybe i will be a lot more cautious than i might it then five years ago so all of these are factors. us the good evening to you also. as the mentioned at the top this is a call-in program and we want to hear from our viewers. (202)737-0001. here in the mountain and pacific times sounds 202-73-7002. you can also ascendancy tweet at twitter.com/booktv or an e-mail at booktv at c-span.org. let me tell you a little bit more about our guests before we get to your calls. for speier going to start with dean baker, the co-director of the center for economic policy research. he is the author of numerous books including "plunder and blunder" and his most recent is

"false profits" recovering from the bubble economy. publications including "the atlantic monthly," "the financial times" and "the washington post" in currently writes columns for the american prospect, the guardian newspaper and trista or. if you want to follow his blog you can go to american prospect bought borgen click on the top of the tehjan blogs and you will find him there. his blood is called "meet the press." amity shlaes as a senior fellow at the council of foreign relations, syndicated columnist from bloomberg news service and a former columnist for the editorial board for "the wall street journal." she is written several books including "the greedy hand" how taxes drive americans crazy and what to do about it and the one we mentioned "the forgotten man," a new history of the great depression. she has a web site, amity shlaes.com. we want to show our viewers the federal budget proposed for 2011 along with the deficit then what

is left for discretionary spending. the obama administration has proposed this. about $3.8 trillion in federal spending. that $3.81.4 trillion is in discretionary funds and the projected deficit is the old phrase that mr. ornstein learned in college was to budget is to choose. we no longer choose and that makes the over focus on the tiny

share of the budget allocated to discretionary domestic spending so discouraging. amity shlaes, first of all is the deficit too big and do we not have enough discretionary spending funds? >> guest: sure the deficit is too big but what is different now safe from the 1980's or the '70s is exactly that tuition norm ornstein is the looting. were trapped by our entitlements, those created first of all and the new deal period such as social security. that is not the discretionary part and then you add to that the great society entitlements and also this is a bipartisan thing, medicare part d for example under president bush. they hog the budget and they hogget wider and wider in the discretionary spending is squeezed to decide. you want to mention also i believe defences discretionary people don't want to mess with

that so you have discretionary spending that they are-- very narrow thing. the economic theory that fits here is called public choice theory which says government is aggressive and what you see when you see a budget like that this government winning. >> host: so, what is the solution in your view? is it cutting spending? is that raising taxes? >> guest: we used to save the cut taxes it will be alright. this time you can't do that. you have to have to rearrange the budget and rethink the entitlements and start with the idea that young people don't expect social security to be there for them in any case and we also were rained some of these things. i was interested to see congressman paul brian has a new proposal that is rather thorough. he changes social security, he changes health care, he changes the tax code radically. including for many high earners probably increasing their tax

with the flat tax rate anyway of 25%, to rates ten and 25 and stop taxing capital gains and that is a big change. it is a completely-- that is the kind of discussion we need to have been there is more common ground i think in the two parties then one would imagine there. both parties have to talk about this, democrats and republicans about how the reform those nondiscretionary? >> host: dean baker. >> guest: first thought in terms of the budget deficit, we have big budget-- deficits. people like alan greenspan and ben bernanke gave us the largest downturn since the great depression. that is why we have a huge budget deficit. we didn't have a huge tax cuts. we had stimulus and response to the downturn. we have higher unemployment if we have not had that but let's be clear if we are upset about the deficit greenspan and

bernanke, i don't know why we reappointed bernanke. in terms of the entitlement programs, yeah we have a public pension program, which is hugely popular. you look at polling day that-- i was at a conference this morning in social security is over 90%. they ask people would you be willing to pay higher taxes to sustain sosa security benefits and 70 to 80% said yes. i don't see any problem with running a pension program through the public sector. what is the problem with the? it is usually popular. health care costs, medicare again. we are providing medicare health care benefits for seniors. that is also hugely popular. you have these tea party people out there yelling don't let the government touch medicare. they are anti-government but they want medicare. medicare is a government program. these are success stories. our health care costs are out of

line in such as security has not been rising in its share of the budget and it will in the near future is baby boomers are retiring and getting benefits. in fact it actually fell a few years back but in any case that is not the big share of the budget. medicare because we have they broken health care system and president obama was trying to address that, but that is the direction you have to go, so we want to talk about getting our budget in line really this is a health care story and one point to understand here, we pay more than twice as much per person as people do in any other country we think is comparable, germany, canada, whatever country you want to point to. with we have the same for person health care costs we would have enormous surpluses as far as the eye can see. so we have an enormous health care problem and that is dealing with special interests, the pharmaceutical companies, the medical supply companies, the

doctors, the insurance companies. congress is not anxious to tackle those but if we are worried about the long-term budget situation it is the health care story. >> host: it is time for your calls. carlynn indianapolis, your efforts. >> caller: hi, my question is for dean baker and it involves the viability of the campaign stimulus. let me first-aid i'm a lifelong democrat but i have major questions on how any keynesian stimulus will work when the conditions that allowed the keynesian stimulus to work under fdr namely, that we had very limited in flow of workers the immigration. not what we have today. we have massive inflows of new workers, i think 1.5 million issued new visas every year according to the census department and i don't know how many illegal entries for workers. it seems to me the keynesian

stimulus worked precisely because under the 1924 immigration act there was relatively little in flow. >> host: mr. baker? >> guest: i don't think immigration changes the story. i think your numbers are a little high. mini emigrants, accounting undocumented workers and illegal immigrants but many of those are not workers. some of those are families, kids and parents of people who work here but in any case that has some medpac that would say on wages that there is a lot of research showing wages of less educated people tend, there is downward pressure but in terms of that total employment picture that is a relative drop in the bucket in the scheme of things so i think we should be talking about immigration policy because they think the current policy is a complete disaster, having millions of people work off the books is that for them in bad for workers and i would like to see those people in a situation where they can work on the

books. they actually did not break the law. the people that hired them for of the lahsa we could throw people in jail for hiring undocumented workers and we could talk about that but i think we should be performing immigration law but that is not what is preventing the economy from growing and that is not why we have 70% unemployment. >> host: thomasville, pennsylvania. thomasian on the line with amity shlaes and dean baker. >> caller: how are you doing? great programming c-span. i have a couple of quick questions. one is the regulation of derivatives, there is none as of yet and i think that was one of the reasons what has happened with this debacle, and also, it is one of the things where the pendulum sometimes swings too far and you can't regulate too much, where you fort growth but you have to regulate somewhat

because of the things we just saw like thomas jefferson said if men were angels there would be no need for government. also come on the one gentleman, mr. baker mentioned about another stimulus package. where are we getting this money? is that just seems to be building and building and building. >> host: amity shlaes would you like to address those concerns? >> guest: thank you for that question. the regulation of derivatives is important because there was a big what we would kindly call disingenuousness on the part of the market and regulators since derivatives fell between regulators they didn't have to be regulated and we have lived with the consequences of that but i would also save one reason we need to regulate derivatives is the too big to fail doctrine, and a better way to go about this is to let those who invest poorly in derivatives failed. then they want next time make

the wrong that. if you overregulated and overregulated and then press ewind westy you have a postal system, very team, not susceptible to strong growth, makes the u.s. less competitive so the standard for derivatives regulation should be transparency, markets and clarity not arbitrary prosecution and beating up cases where the agency goes after this person or that person but if you have lots of clarity about how derivative should be traded and were, that is fine. it is time to cooperate internationally. what is not find this to make prosecutions out of it and again the problem behind it is the too big to fail doctrine because then too big to fail banks will trade in derivatives. host: the gentleman referred to our programming last night. we had discussion of the wealth of nations by adam smith. amity shlaes one of your books is called "the greedy hand." is that any reference to adam smith's invisible hand?

>> guest: not really, although it is related. it is from tom paine who spoke of "the greedy hand" of government, thomas paine, making our prosperity its prey. when i wrote this book we had prosperity. it was the '90s but it seemed that taxes for some of getting in the way so i was trying to capture that. thomas paine was a great pamphleteer from around the time of america's founding. >> host: very quickly what is your opinion of adam smith and alimport missy today? >> guest: he is very important and he is worth bringing in. i am just trying to think of something pithy to say about him, including his concept of the comparative advantage. because it does matter for example what we do about labor prices. now we are in a competition. globally we should make what we make baston and you have you

know for example stimulus money we often make what we don't make best because there is a stimulus subsidy for it so i say read adam smith and don't right stemi why. us cabeen baker, are you a fan of adam smith? >> guest: we have all learned from adam smith just as we have from keynes. in terms of this idea of the division of labor comparative advantage, you know, one of the points i often make is that we often read this so selectively so we have this idea somehow we are going to be the smart people and get the labor from the developing world. that is nonsense because they are plenty of people in india and china who are every bit as smart as the player and the reason we tend to get the smart jobs is because they are smart people get congress to give them protection so it is easy for someone from mexico or developing countries come to the united states and work as a cabdriver or worked in

restaurants or construction and very often off the books for code is very difficult for them to get a job as a doctor or lawyer so we have protectionism. we just tend to conceal it so i learned a lot from adam smith. i just wish more economists would learn from adam smith. >> host: richard from brooklyn, thanks for holding. you are on with amity shlaes in dean baker. >> caller: first of all thank you for c-span. i am listening to this discussion and you hear it constantly on all of the news programs. we really have 17% unemployment rate in this country. it is not 9.7 or ten and what amazes me is that the american people just stand by and put up with all of this stuff that we hear on television.

i would just like to know-- >> host: koehler can you give an example of the kind of stuff you were referring to? >> caller: i mean, you know, i mean it means the unemployment rate, people are suffering and did most other countries there would be demonstrations in washington. the american people are just not cut out for that. they just stand by and wait for their politicians to do something. we know how bad congress is. we know so many of the things that are not being taken care for the american people. >> host: let's leave it there. let me add something to that for both of you to respond to. here is an art from this morning's "washington post." leaders henline for budget panel, president obama will name allen simpson and erskine bowles and the clinton white house to chair a commission to solve the nation's budget problems and he will be announcing that

tomorrow. to build on what the caller said about the american people, not protesting as much as he thinks they should and appointing this new budget commission, what do you think about both of them? why don't we start with amity shlaes? >> guest: well, a commission is not a solution and there we hear what the caller richard from brooklyn is complaining about. wer is still true growth, mostly in the private sector. i would disagree with the caller. i can think of countries alas

such as latin pheaa which is suffering i believe 20% unemployment right now because the people have decided they want to be in the currency of the euro. they are sacrificing something. with people's something to believe in, if future hope for growth, they will do a lot and that is important to know. i think if we had a more coherent vision about our own reform the country would pull together and do that. >> host: mr. baker? >> guest: lotfi it is an interesting example and i think people are putting up with it because they realize there aren't any other alternatives. their debt-to-gdp ratio would be too high. but that aside, we care about the united states first at four mustin i am actually amazed, we are not the country designed to have high unemployment so if you compare the united states to europe we as a matter of design have got rid of essentially

non-work supports. we had welfare reform in '96 and we said you know, we expect people to work so if you don't work you don't get health care, you don't get normal income. you really can't get by in nonetheless we are looking at a situation where we are looking at again the official unemployment rate projected to be over 9% next year or 8% the year after investing get back to normal levels until the 2015. we are talking about an extended period of their high unemployment. when it candon people working part-time and voluntarily, discourage workers you are up 17% so we really are talking about a disastrous situation and i am surprised there is and more anger. there is a lot of things but it does not manifesting itself in any sort of organized political effort. itis take that as many people are very frustrated but clearly there is anchor and people looking at wall street, the banks getting record bonuses and people basically brought us this mess.

they got their bailout and now they are happy and tossing around millions of dollars and crediting themselves on the back for being so smart. maybe they are because they ripped us off. but no, we don't see the political movements. i wish they were there but they are not. >> host: mr. baker you reference congress in an earlier statement. do you think the political leaders are abdicating their budget responsibilities? >> guest: no, i mean i don't think there is a budget responsibility. i see this as a huge distraction. we have accused-- we are talking about the deficit. it is really kind of silly. it is sort of like our house is on fire and we are using a lot of water to try and put it out in we get these guys to run over and say you are using a lot of water. it is close to crazy. the media concern should be getting people back to work in the longer term issue, somewhere down the but we have to fix our

health care system, better sooner than later and i can give the 20 ideas on how to fix the health care. we know how to do it but no one, the politicians still want to tackle those powerful and as groups and would rather go blah, blah, blah about the deficit. >> host: our next call comes from westcliff come colorado. dennis, go ahead. >> caller: hi, how are you folks doing? i would like to note there could be a systematic financial collapse worldwide and the reason i say that is there has been talk of the world global bank and if the bank, the banking system right now was talking about a global tax for a central bank, and my concern is that there is no involvement of the world bank or the imf can any of these individual countries' problems with financial issues, and my concern

was if there is a global bank that is there going to be possibly a world currency, and the financial collapse of each individual country so that we have a one world order? >> host: amity shlaes? >> guest: one of the things we have been talking about at the council on foreign relations is what is the next currency going to be? you get the argument will it is going to be a global currency, a dollar plus zero instead of the dollar but we have also talked about the possibility a global currency might come from the private sector because technology makes that possible. you see and ads of the credit-card companies they like to treat themselves as money, gold credit card, the currency credit card. you will see those phrases in ad campaigns of the big names. i think the threat to the dollar will come not just from the chinese currency or from the euro but also from the private sector somehow or other.

if you entered qa 20-year-old in india and say which the trust mark yourself phone company or the u.s. dollar, he might hear the cell phone company name. that is interesting and finally that is not necessarily horrible, to have a private money or a free money. it is good to have competition among monies so the more virtuous money has an opportunity to show its virtue and free fail. >> another call from colorado, this one from erin in denver. >> caller: good evening to you folks in keep up the good work c-span. mr. baker you mentioned earlier economic mismanagement and ms. shlaes mentioned entitlement programs as some of the reasons why we have a negative effect on our economy right now. i am actually a master students studying international security. i have a keen interest, excuse me i am feeling under the weather coming in foreign policy and it particularly the effects of our foreign policy has on us

domestically. the dod recently requested a budget in excess of $1 trillion. how is this going to affect our economy and if we slim this down how will this policy-- positively affect us? >> host: amity shlaes let's start with you and then then the maker. guess delicti chartered defense spending in kobach to world war ii you will see we are nowhere near up to that in the pentagon always ask for lots of money but you want to see what they get and where it fits in the size of the economy and it is a surprisingly small amount. i remember a few years ago writing about the fence. 3%, 4%, 5% like that. you don't see 20, 30 or 40%. in world war to the defense was about a third of the whole economy and we are nowhere near that so this idea that the fence is what has failed us, that is

wrong. it is housing, it is banking, it is the too big to fail doctrine and the policy that ails us in the market policy. >> guest: i would say defense spending did not put this into this but it is a drain on our economy and if you go back to 2000 look at the projections for how much we would be spending today. the project we would be spending half as much. they projected our budget in 2010 and went before% of gdp instead it is five. the difference is 350 billion the year so that is not a chump change. we are curious about this so we contracted with global, one of the alvis forecasting firms in the country who said show us what does your models show the impact would be of prolonged increase in defense spending? weise said 2.5% of gdp. leagis said 1% of gdp in their models showed in the long run that lowered employment by

600,000 jobs, 600,000 jobs. given we are talking to .5 times as much as buckbee asma modeled we are talking about a loss in the order of perhaps 1.5, 1.6 million jobs because we are looking at the higher level of defense spending so it is a big impact and apart from what we might think of the wars in afghanistan and iraq let's just talk about the cost and we haven't had that debate. when we start to say okay you want to fight the war in afghanistan, let's talk about the cost and be clear to people, are you still willing to fight that and then people runyan scream, we can't talk about that. if there were that we should be willing to pay for it and for rather for reason our politicians in washington are reluctant to have that conversation. >> host: this is booktv well congress is in recess for the week. we will be live from 8:00 to nine mikuak all week and last week we talked about adams smith and the wealth of nations in

tonight the current economic situation. tomorrow night we will be discussing the afghanistan war with two authors and friday night we will be discussing silent spring, rachel carson's book from the early '60s. debbie in everett, washington you were on with dean baker and amity shlaes. >> caller: thank you very much for your program i am so appreciative of the people in our country that are addressing the concerns that we all have. i know your topic here is the current economic situation. i have got kind of to sort of questions/comments. one has to do with tea parties. i think that's when mg is bringing up the fact that we have eight real policy problem in politics in the united states

in general, one of the things that upset me so much is the idea that no taxes, that's copping out the citizens in terms of responsibilities not contributing and managing the cost seems to be rising especially with the tea parties and some of the really right wing republicans. and i think that is pretty shameful. so, i wanted to hear a comment about that because i know relative to other western countries, again heart attacks base per capita tax base is pretty low and i think it is time that we started having leaders that could address the fact that we need to pay for the

benefit of the social programs that the people need and want, and that kaupthing out of that responsibility is just not community minded. plus cud debbie we are going to have to leave it there. let's start with dean baker. >> guest: certainly debbie is right that our tax rates are among some of the share of our tax take, what portion of the economy goes to taxes is among the lowest in the wealthy countries. we are closer to japan but were well below germany, france and england. we are well below those countries and there's this mythology that some of those economies are suffering enormously. if you look of the most important measure of vitality, productivity, what are you producing in an hour for their clothes and in some cases menez michelle france for example has higher output per hour of work. belgium also said this idea somehow europe's economies are

stagnant, that really just isn't true. i want to go crazy about taxes but i think we probably do with the end of the day need more revenue. my favorite ways taxing financial transactions. we had a modest tax, if you tax say stock trades, 0.25%, a quarter of 1% and have very small taxes, say tax credit default swaps, 1/100th of 1%, when you had a trade than you could easily raise well over $100 billion a year. that won't necessarily solve all the budget problems forever but that would be a pretty good boost and have little impact on the vast majority of people and affects some of the very wealthy and infect people engage in speculation, which my attitude towards that is if you want to place abed in the state lottery and you want to go to the casino we taxi and if you want to place your bets on wall street in derivatives that is fine but we are going to tax you.

>> host: amity shlaes? >> guest: i was interested the caller said no tax. you want to remember what the original tea party was about. it wasn't about no tax. it was about no taxation without representation. so there is a feeling now that politics is broken and you are compelled to pay taxes and entitlements taxes for things you are not sure are a good deal or believe need to be fixed so it is not no taxes. it is a change in the tax relationship with government. we all believe, even those of us to write a lot about how taxes are bad, believe there should be some taxes, some tax relationship with government. indeed one sort of creepy thing about the u.s. now is the bottom half pays almost no income tax at all. the top earners pay a greater share of it then they used to pay so you look to the top 5% paying i don't know, the nasonex

gurganus, one-third of the taxes? it is skewed enough already. what i think is interesting about the tea party is is they are saying it is broken. they are saying it is broken and that is what the original people dumping that he in the harbor were saying. our relationship is broken. maybe we@@ in his last year in office. he publicized in the proximal 500 billion-dollar deficit,

which was not true and it is the same thing with obama now. if you take the surplus from social security and medicare away from the general fund, which in george bush's last year in office was a 500-dollar-- there was-- which made his trip projection $860 billion i don't know how much it is now under obama but they know it is probably approximately $200 billion plus. >> host: mr. baker? >> guest: there are different measures of the budget surplus or deficit that's the case may be and if you want to blame someone here you really should blame the media because every single budget document i know of includes the deficit, both with and without the social security

surplus, so you know if anyone wants to find and you conducted the economic report of the president, you could look at the official budget, every document i know includes the budget both with and without the social security surplus. i am happy to use either, depends on the purpose. i would use one or the other. there's some occasions he would want to use with counting the surplus and others wouldn't but there isn't any great mystery here. if we think the better number to report is the number that does include the surplus, and that the gross government debt, that is fine. it is all available. anyone who wants to can get it and if we think the media, fox news or whoever might be reporting the budget not counting the social security surplus then complain to them because they are the ones to control what they hear. not president obama. he can't prevent them from hearing the correct budget.

>> host: paul, good evening to you. >> caller: thank you for taking my call. i appreciated and i love c-span. up with this stimulus package and i am sort of what obama did that because the banks are okay now and we are becoming healthy as a bank and that is one thing that amity never said in terms of for speech about the stimulus not working. this is not the 1930's were the banks just completely collapsed but i have another thing i want to ask amity. she worked for bloomberg financial and "the wall street journal." where who is she when all this stuff is getting ready to help and then everything was going down the tubes? we heard things are great and rosie in 2008, 2007 and if you think there's going to be a financial collapse, you are crazy. >> host: amity shlaes? >> guest: thank you. i wrote more than once about fannie and freddie, but they did not write in of about

overleveraging, so that is where we are. also in that period i wasn't concentrating hard on "the forgotten man" book, my book which is about the possibility of a downturn, so i am for getting your second question. what was the second question? >> host: i think you address what he was talking about, that you were writing about that at the time. are you working on a book currently? >> guest: i am working on three books, but to which are proximate. one is the graphic version of "the forgotten man" book. is 140-180 pages. abel be "the forgotten man" graphic like with comics and i am very excited about that. i am working with to artists and an adapter, chuck dixon and an actual illustrator who is in canada come to make forgotten

man graphic because though "the forgotten man" has been translated into languages there have been many people who have said i liked the story so much can you spell it out more and the economics gets too boring. why don't you just tell the story and so for homeschoolers, for adults who like graphic novels and especially for places like mexico we are doing this. in mexico they don't need explanations about what inflation or deflation are. they have experienced it personally but they do want to hear the stories. the other is i'm writing a pyett garfield calvin coolidge. i have been working with the calvin coolidge memorial foundation in vermont on this. they have been a great help and we have a blog. we invite you to go to it. i am doing that with joe thorned iq's just about finished with a book about taxes and the roosevelt era. >> host: mr. baker, what about you? what is next? >> guest: i am caught up in

the debates today about financial reform, financial transactions but i do have a book coming out, taking economic seriously which is to my mind beating up the conservative set their own game because what i tried to point out in this book is that in fact the conservatives are people really very much wanting government intervention. they just want up to it. to give a couple of examples, bill gates is a wealthy man not because of the free market but because the government will rest me if i start this jim thing copies of windows without his permission. copyright, government intervention in the economy. drugs, prescription drugs. they are very expensive. we are projected to spend $260 billion a year on prescription drugs this year. if we did not have protection we would go to walmart and buy them for for $5 shot. the government intervenes in the economy and all sorts of ways we don't typically talk about and

this book is trying to call attention to that. i think we have to rethink this so there is a conventional stereotypical view you have conservatives that want the free market for every person for themselves and then you have your liberals out there who are saying they want the government to do everything in what i argue in this book is that no actually what goes on its conservatives that the government read the rules to redistribute income upward and the liberals aren't smart enough to recognize that so they make silly arguments about the market when in fact we both want the government in the market. the question is what we want the government to do? >> host: czar rash in washington d.c. your honor was amity shlaes and dean baker. >> caller: thank you for taking my call. my question was addressed but let me ask anyway. my question is about bank regulations, like for example the bang gann-- most of the

banks in india are doing very well during the financial crisis because they are run by governments for a good to you think we need to see more of that in the united states? >> host: mr. baker? >> guest: that is a very good question. the legacy dates back from the progressive era about 80 years now and it is quite a successful role. it makes money for the state and help support the economy. you have examples in other countries. i was in brazil or i guess i should say let's do they have a number of things that help foster development. china has extensive systems, state banks that help them stimulate their economies of china rather than going into a downturn they have a great% growth last year. lot of that was because they had state run banks where they could tell them make loans, keep things going. i am intrigued by that. what i would like to see is something, we could do more

experiments along the north dakota model where you could have state run things that compete. i don't want to hand big wads of money to the state run banks and tell them do whatever you feel like but the north dakota bank, that is not what they do. they compete and do so fairly successfully so i think you can explore those market niche is going on now. we already do that to some extent that the small business administration. so i think there are routes like that that could be pursued. we have to do it cautiously. but i think it can be more room for state banks that compete with the private sector and in fact give additional competition and keep them on this. if it turns out they can't do it, that is great. the private sector is more efficient, find that ilc-- >> host: amity shlaes. >> guest: the question you want to ask is this the state one bank make capital available to the person who will create the jobs and in india there was a long history of government in

the financial sector and the capital was not available. they even have this idea the rate of growth could never be strong in india and it only change when india deregulated, went capital from elsewhere became available to india through capital markets so a state-run bank can put a clamp on an economy and say you can grow in a little bit but not a lot. what you get then is well, the growth rate below where you wanted to be come a larger unemployment in sorrow. you look at a country like germany and there are a lot of good ideas in germany. a lot of people who would create jobs that they could get the money for their ideas in for a long time they didn't because of the dominance of the whole state structure or japan, the post of things. they want exactly liberating for entrepreneurs who chose to come to the n so the rest of the world was a free rider on our

banking system for a long time foreclosured had floods and the policy now was wrong. too big to fail is wrong. we are going to have more trouble because of that doctrine, but i wouldn't say private things are bad. on the contrary, they create growth and i want to mention also that someone like bill gates got something from government but he also created crichton number of jobs. why don't agree with the in that class and that with medicare, yes the government in seniors lamek to themselves about medicare and medicare is for the government that property is important. it is the number one thing for getting our economy back, for getting past that extremely pessimistic tragic plan that the government is putting forward if unemployment is going to go down slowly until 2015, we don't have to follow that pattern and if property rates are expected you will get those private sector jobs. >> host: ted, sunnyville

california he wore on booktv. >> caller: i was said the conference in baltimore in early 2004, and mr. baker gave a presentation and called the housing bubble right on, almost to the percentage. i really wish he would have gone into the obama administration and mary-- maybe head larry summers job but my question has to do with manufacturing. in june of 2000 we started losing 100,000 manufacturing jobs a month which really seem to come out of nowhere and six months later george bush got into office and alan greenspan shortly started to lower interest rates. i remember a quote at the time that alan greenspan on into-- which were basically low taxes, deregulation and laissez-faire government. so, i think you have argued that the housing bubbles are responsible for the artificially low interest rates of the

greenspan era in this whole decade that i guess the decade from hell, i wonder if this decade this lost decade is a manufacturing crisis and whether what we have is a free-market economist covering up for their free trade policies? >> host: mr. baker? >> guest: i think the loss of manufacturing jobs is the result of one of the mane and balances in the economy. we have a badly overvalued dollar which leads to the large trade deficit we have in this story come at least my story of what happened in the 90's in this decade we have strong growth at the end of the '90s driven by a stock bubbles lapook i.t. what was going on in the economy the clinton people will tell you it was investment for coinvestment did not increase much and we compared the share of the economy to the peak of the business cycle in the 80's are the '70s and does not particularly impressive. what did increase was consumption because we had

trillions of dollars, $10 trillion to stock bubble well. that collapsed in 2002 and gave us the recession in the 01 and then to keep the economy going to boost the economy. eventually but that the economy going with the housing bubble so we went from one bubble to the other. what we would have liked to have seen as the dollar falls so that our goods became more competitive internationally. when you have an overvalued currency and i will say that the dollar is overvalued 20 a 30%, it is the exact same thing is if we had a subsidy of its one-year 30% on all the imports to come into the jana and we put a tariff, a tax on all exports. what you think is going to happen if we subsidize imports and put a tariff on our exports? rather than deal with the overvalued currency we have this talk, the strong dollar, blah, blah, blah and what that meant his we lost millions of

manufacturing jobs and that set up the situation where we were losing a good thing jobs but also we are sustaining the economy with this bubble that of course is going to burst and that is what i get so mad at people like ben bernanke. most economists, god knows what on earth was going through their heads as they watch the bubble keep grow and grow and grow and said everything was okay. now they are surprised fukuda agnone?

on at home so if you called on our various leaders that the fed or at the white house over time under, in this period under president bush,'s september 11 you would say are you concerned about fannie mae? they would say absolutely, here's the data and they are going out of control, fannie and freddie and we will be have legislation about it. did the right legislation come to pass? nolan they think a lot of that had to do with concern about international and concern about the war. one of the casualties of war is that it is hard to do domestic reform during the war but we all knew that fannie and freddie were a problem. that and the problem was uber only paying episodic attention to them instead of sustained attention and that is a matter of political will. >> guest: the worst loans or

not fannie and freddie. the worst loans were coming from goldman sachs, citigroup. fannie and freddie were relatively late to the game in terms of worst loans. i was critical of them at the time, but in terms of the worst actors in this story they were the private issuers of mortgage-backed securities. >> host: ms. shlaes? >> guest: i would disagree with that. i think the notion of housing and to own a house as a privilege but it is morphed into an entitlement in the u.s.. we speak of ownership and the general sense. we don't really take property seriously and that contributed mightily first to people being willing to take the sub-prime loans, a 40 year mortgage is assuming they would always be able to pay, assuming they could throw the keys in the mailbox and start over. it is a different notion in which we corrupt and it was central to the whole story, combining with the ratings agencies, combining with

international capital with a pool of money flowing in but the ownership and the prospect of economy when it became flog that contributed to the crisis. >> guest: these loans are being backed by countrywide. >> guest: this is also about our decisions as individuals, what do we sign? are we infants or are we adults? we signed things that makes sense that to do with their financial future. we are not such fools that we can beat dupes in we can all just assign blame to individuals. this is a lot to dean about individual responsibility. >> guest: my point is this was and fannie and freddie. it was goldman sachs and-- >> guest: fannie and freddie through their web site and culture promulgated the data leak diary of the american dream that the idea-- >> guest: if you want to blame them for promoting the dream that is fine. >> host: i think we are going to have to leave the discussion

for a later time. very quickly to both of you, did you know each other before tonight and have you read each other's books are materials? >> guest: i have read some of them in the's books. i think we have been on radio shows. >> guest: i have read much of being's work and i admire his perseverance and his center. >> host: amity shlaes, the most recent book is "the forgotten man," the industry the great depression and the bacon's most recent book is "false profits," recovering from the bubble economy and they have joined us from our new york studio here on booktv. they are both working on the books. amity shlaes.com, american prossed.org are the two web sites. thank you very much. we appreciate it. we have two more hours of booktv tonight in coming up in just a minute is tim carney on his new book, "obamanomics" and then falling back is an aftermath we just take about a book that was just released

yesterday. this is called death of american virtue, clinton versus starr. it is ken marlee-- lorilee boss book. it talks about that period of history during the clinton impeachment era. so those are the next two hours of booktv coming up tonight. if you want to follow booktv update's you can go to twitter.com/booktv. that is their address and we send out of dates throughout do we can certainly over the weekend when booktv airs on c-span2 for 48 hours. thanks for war is tomorrow night in their discussion will be on the afghanistan war from 8:00 to 9:00 eastern time and now here is tim carney. ..

regulations when that has the opposite effect. let me tell you one quick reading from "obamanomics." it says nike makes good shoes but its leadership in the market as a result of the company's image. michael jordan, tiger woods the

trademark swoosh, image may not be everything but it's the biggest thing so when nike gets up its seat on the u.s. chamber of commerce in protest of the chamber's opposition to waxman-markey it would be easy to conclude the company was brash and its image. after all the firm had already invested a small fortune to replace the sulfur hexafluoride, which is a potent greenhouse gas, and its nike air shoes with nitrogen. but some inconvenient facts belie nike's green image, mainly that emissions from the manufacturing and logistics according to an annual report went up 62% from 1998 to 2005. that's because nike is making a vast majority of apparel overseas primarily in asia and shipping it and their plants don't have the sort of environmental controls that american plans do. conveniently of these factories will be on tv, did with legislation currently before

congress, the waxman-markey bill is one of them in the name of global warming. contrast, nike's competitor, new balance, makes the best running shoes in new england so waxman-markey would regulate new balance emissions but not nike's. in other words, waxman-markey, the global warming bill before congress would drive up a new balance's cost but not nike's. nike may want to save the planet but its support for climate change looks like what i call regulatory robbery. this is where you see a company that lobbies for an environmental bill in a way that it won't affect its cost at all but affect its competitors' cost, hurting its competitors, helping its own profits and getting good press for standing up for the environment. and all the environmental types say why would i care if it's good for the planet and nike is making a profit how does that affect me? i will bring another example though, alcoa, it used to be called the aluminum company of

america largest aluminum in the world. it's also lobbying for these environmental restrictions on greenhouse gas emissions in the name of global warming alcoa happens to make aluminum car frames, aluminum car frames just as strong but much lighter in the sealed car frames. high-quality performance the pay of four will have aluminum trays as opposed as steel, aluminum costs more to mix of the effect on u.s. consumer or auto makers of the environmental regulations whether it is fuel efficiency standards for global warming regulations it is to drive up the cost of buying a skill card which makes you likely to buy an aluminum frame car if you are in all the maker so it makes your life more expensive and helps alcoa but it makes most of its aluminum and manufacturing most of car from down in australia where it has successfully lobbied to kill the global warming build on their and the making of follow my mom is a much more energy intensive process than the manufacturer of

steel or a steel frame car and the chemical processes that go into it necessarily produce greenhouse gases so if you took the whole process of making a car from out of aluminum and then see how much energy it saves by being a lighter it might be worse for the environment and worse for the co2 emissions than the steel frame once the way the government measures it it helps alcoa, it benefits all, so the profits come in your costs go up and the environment isn't necessarily benefit. this is what i call regulatory robbery. where you use big government regulations to hurt consumers and hurt small competitors and what i argue in "obamanomics" is that this is something that has gone on for years. business is always using government to its advantage but because obama has embraced a big government control in so many corners of the economy he ends up providing more opportunities for regulatory robbery and

subsidizing big business and the nature of washington where i work i covered the street, the lobbying quarter, and the lobbying editor of the washington examiner, and i see that when government is getting bigger that provides more opportunity for the big guys using their lobbying to gain on their advantages over smaller business. so, and i will get to what i a labeth leader what i call the four laws of the obamanomics. i call them before laws not because obama invented it. let me be clear. george bush by giving the bailouts of wall street sort of transformed our government and economy, the relationship between them to say the government is going to prop up businesses that we think are important and who does the end up being? in a sense of being the business who have access to the law makers who have the best lobbyists. so my book is about obama, he is the current president but as far as the tight relationship

between corporations and big government george bush's bailouts was the biggest blow in that direction we've ever seen. but i want to tell you some facts about the 2000 election, the 2008 election so you can start to think about obama in a different light than he's presented himself in the mainstream media. goldman sachs, exxonmobil, microsoft, boeing, pfizer and general electric. these companies are the poster children for special-interest. they are huge, well-connected corporations. they have something else in common. employees and executives also gave more, much more, to barack obama and john mccain in 2008. now a caveat. obama three's overall which more than mccain. he raised about twice more for a variety of reasons. his primary was longer, he didn't go ahead and do the matching funds where you limit your fund raising to get government money. so he produced a lot more but for the biggest companies, the

overall margin was 2-1 in fund-raising over john mccain. that should tell you something about the accuracy of his anticorporate rhetoric. but among the biggest corporations, his ratio was much bigger than 2-1. goldman sachs perhaps most notorious special-interest, it gave obama $997,095. now no company since mccain-feingold, that was campaign finance that made it illegal to give big gifts, no company has donated $1 million to any one candidate ever. goldman sachs came close at 997,000, so that's the most -- i should be careful. these are the employees and executives and action committees. the companies themselves don't but that's the most any candidate ever released from any single company in the history -- since i came-feingold. john mccain raised to under 30,000 so from goldman sachs he

also praised obama four through kuhl one. look down the line at the wall street industry, obama raised more than any other candidate in history from microsoft and was 10-1 come google something like 10-1 so why did they give this much money to barack obama? were the body him off? that would be the accusation if a republican president every time george bush out least somebody they said he was being bought off and maybe later in the question period we can debate whether that happened to some degree maybe it did by reporter. i have clear opinions. the mailings, a libertarian same conservative. i put from paul on the cover. i'd very clear i don't believe in government intervention and the economy and almost any situation but i also don't report on things i can't substantiate. i don't know what barack obama's motives were. i'm not going to spend a lot of time guessing. i will assume for the sake of the book for the sake of this

talk he is trying to help the country but the net effect of his policies is to end up helping the business this, the lobbies, the most entrenched special interest and most importantly the policies and that hurting consumers, taxpayers from small businesses and consumers. and@'saa&h"d)p$s's)h"dapgu,h"p) industry. number three, bigger companies are often settled by inertia meaning robust competition is a threat.

regulations are like raising the basketball hoop to 20 feet at half time protecting the lead of whichever team is ahead. and number 4i called -- number 3a call to gunning up the works. member for clich the confidence game. i write government regulation grants an air of legitimacy to businesses, boosting consumer confidence often beyond what is warranted. so i've got examples of the lot of these. but we talk about the inside game. again he was the best lobbyist wins. if you don't bring something into the realm of washington, a lobbyist doesn't help. if washington is debating and all of a sudden your ability to afford a better lobbyist helps you saw a great extent was the current health care debate on capitol hill. you have right now the democrats are trying to piece together 60 votes and different lawmakers are asking for this or that. i promise you that at this moment there are hundreds of lobbyists on capitol hill representing mostly industries

directly affected by this including employee years, drugmakers and hmos. if you listen to barack obama's rhetoric, what's happening is all the big businesses are saying no, please pass nothing that's not at all what is going on to read and drugmakers have cut a deal and the la times report today and i talk about it in the book that drugmakers cut a deal where drug lobbyists believe toes and sat down with rahm emanuel, the white house chief of staff and said we promised to support your reform effort on health care if he will make sure the bill doesn't hurt and you won't pursue these policies that will hurt us and sure enough the bill ends up subsidizing that. watch what happens in the last couple days. the one thing the insurance companies fear from the policy is something called the public option. a government insurer to compete with private hmos. that's going to get stripped from the bill. i put 3-1 odds on that and you're going to have to have the

other subsidies for insurers such as the individual mandate. so, when the students graduate and go out there if you want to buy a health care plan that is a $5,000 deductible, i will pay for all of life insurance and if i get hit by a car than the insurance will take my big expenses. something like that will become in effect e legal because the mandate that you buy insurance at a certain level and if you want to buy insurance only for catastrophe, that is the sort of thing that could end up by deleting the individual mandate and he will have to pay a fine for it. they might allow young people to buy catastrophic plans. it would be good for all of you but they are basically -- think about this, requiring everybody to buy the product of the hmos are selling and while they are doing this they are claiming they are leading some crusade against the hmo. the rhetoric doesn't match the facts at all but that is the inside game whenever the initial proposal was from barack obama,

whenever he wanted to do and initially proposed what ends of coming out the other end and he's going to sign the deal losses or the rose garden, that bill will benefit whoever has the best lobbyist. that's the way that works on capitol hill. you'll see this with global warming. my favorite example was monsanto to read a company famous for making genetically modified organisms and also -- that's genetic frankenfood. if you use roundup they make that, they make industrial roundup for farmers where they can spray and kill the weeds that way. they also make genetically modified roundup seeds so you plant the seed and sprayed with chemicals. what this allows you to do is to kill the weeds you don't have to go and tell the feeds as much. it turns out tilling the fields, hoping it, doing whatever releases carbon monoxide into the air and that causes global warming and the sea level rise

etc., etc.. so, under the global warming bill that passed the house, waxman-markey, a farmer can earn special greenhouse gas credits for not telling his fields which insured amounts to a few plant the seeds and by the chemicals and use that to control the weeds the government is going to basically pay you for the carvin offsets. carvin offsets themselves are a bit of a farce in themselves. basically the idea you get paid to plant a tree or do something that sucks carbon dioxide out of the air. there's no way they found to actually got it. sometimes you pay for a carbon offset you are paying for somebody to plant a tree. the idea is it takes the co2 out of here to read my question is what of that tree happens to burn down? how are they going to come back and say your tree burned down and now you have to pay us back for that? that's probably not going to happen. this is another scam. these guys are what you used to

call snake oil dealers, people dealing in carbon dioxide of sets. i am all for conservation, but, you know, offsetting the carbon emissions has nothing to do if carbon dioxide it's the fleeing a little a.q. feel good game but you're going to get the carvin offsets under the health care bills because the people who stand to profit them have the best lobbyists and best connection. the second i called the overhead smash. regulation makes it harder, and makes it costly to do business. who suffers more from the regulations? mom and pop for the big guy? it's obviously mom and pop suffered more. my favorite is wal-mart. wal-mart comes out in the spring or the summer saying we are joining the center for american progress. that is a liberal activist group in washington and the service

employees international union labor union that's been close to obama. the three of us are joining together and we are supporting the employer mandate in health care. every employer above a certain small size has to buy insurance of a certain level for their employer. so why is wal-mart the biggest private sector employes here doing this? the do something called self injuring which means the act as the insurance company. when you pay your premiums if you are a wal-mart employees instead of going to blue cross it goes to wal-mart and when you go and use your health insurance to fix your broken leg is wal-mart not eckert, or whoever pays about. they are so big so venturing makes sense. many big employees, employers find it a good to soften share in that way. and what does wal-mart to do best? the was economy of scale to get good deals so they are getting

very good health insurance deals. nobody else can do that to the degree wal-mart cancer if you have competitors such as target providing a lower level of insurance, well you get the right regulation passed but raise target's cost, you don't raise your own. wal-mart also lobbied the minimum wage. everyone complains about their wages, the p.o. for $10 an hour everywhere and $12 in a high cost nothing. who pays the minimum wage? i works of the movie theater, a single screen 100 year old movie theater owned by some guy that lift donner and ploch when i was a kid. iran $4.50 per hour. minimum wages earned by a high school kid after basketball, practiced, goes to the store and stocks the shelf. home depot, i don't know but wal-mart minimum wage goes from $5.15 to $7.15 it helps wal-mart and it gives wal-mart good press

and gets to the unions to back off of them a little bit more. mattel did another one of these overhead smash things where i don't know if you remember back in 2007 there were unprecedented numbers of toys recalled because mattel was making shlaes in china some of them had lied. other manufacturers might have had recalls, too but these players can make your kid sick etc. so, they were all recall the and of course, this did with the congress always does. we have to act, passed the law to fix it. barack obama got behind the law called the consumer product safety improvement act, and what this did was in addition to changing the allowable levels of lead and other chemicals it said every toy that's going to be sold in america needs to get tested at a separate third-party testing facility. not every single play but every line of toys. what is a line of toys? if you produce 1 million barbie's you have to get one

tested if they are identical and produced by identical methods but what if you are a grandfather who works in your garage and carved out children's toys for them to sit on? that are you using identical methods to make all of your children's plays? no, one of them and making for an 8-year-old and one of them for a 3-year-old. you have to get third-party testing support for each of those and get each component tested. depending on how complex the product is the testing could range from a couple hundred dollars to a couple thousand dollars. mattel paying $2,000 to test one darbee for one line of a million isn't a big deal. the smaller hand maker -- there's something called the and made to police allowance and this is in the sort of group that on a normally run with, it's like a free-market conservative suburban dad by model of the analysts now because i have written columns and i wrote this book that

criticized consumer product safety commission act because mattel into benefitting but as the icing on the cake bill law included a provision i hadn't noticed at first that said if you can prove to the government that you have set up within your own factory a testing facility which is accurate and independent from the parent company then you want to send it out to a third party place you contested within your own factory and exactly one of weaver has been given on this and that is one company has gotten weavers, that is matell who helped write the bill in the first place to react to a scare they caused by putting laid in their 20s over in china and this is a pattern of obama's policies. he backs the government policies that have the intention of trying to help consumers were the small guy or curb the access of the big business. the end of having the opposite

effect. like all the effort law off obamanomics, gumming up the works. we know that -- why is america the wealthiest country in the world? well i'm sure lots of people have answers for that. my answer is because we had the free economy in the world. a free economy is a more vibrant economy. now, and more regulated economy is a less vibrant economy, slower economy. if you are the top business, you look around at how much you can go from rags to riches or from the top of the mountain down to the bottom in a free market in the second. it's a scary place. it's exciting if you are an entrepreneur but scary if you are the guy on the top. anything that slows down the way the economy works is good for you if you are the guy on the top. that might be why goldman sachs is backing obama's proposed wall street regulations. they will all end up as obama is initially proposing. they will be tweaked the the id is a fix to get caps on pay or

other wall street regulations, goldman sachs, the number one investment bank has publicly expressed support for it and they are close in working with obama on this. they also have great access to obama's west wing the way they had access to bush's west wing and clinton's west wing and push's west wing and probably reagan going back. these are the quintessential special interests and again this is a company barack obama raised more money from them come from goldman sachs the and anybody has raised from any corporation since the campaign finance laws were changed. and the of course with a number one beneficiary of the wall street bailout. the final law of speed is the confidence scheme and the idea government can give people a false confidence in what somebody else is selling. wall street is another great example of this. why are we regulating financial sector? while we need to restore investor confidence. you hear every republican who supports regulation talk about

the story the confidence and have the democrats talk about restoring investor confidence. i happen to believe it should be the job of the company or the broker to restore confidence. the government shouldn't be using your money to convince you that it's okay to invest in the stock market. that is a huge part of the government does. that's a huge part of -- torch push's ownership society was saying it is much better to own stocks them not to. it's better to own a home with him not to so they set up policies that drive people to own more stock than they would have any free-market or buy a house when they wouldn't have. we saw with that created. it was a bubble. bush did it come obama is continuing the policy. mattel, the story the witold was another story of the confidence scheme. now what ways are safe. they actually said that on the floor of the house when they passed the bill. you can rest assured you're 20s are safe because the federal

government is making sure that your toys are safe. but my favorite story on the confidence game comes from the world of food. i'm told that here there is in the dining hall for the cafeteria food places whatever you call them, lots of talk about sustainable local all that. i think that's great. if i had more time, more money i would do it. if i may be a hippie girl we would be eating all of the organic fair trade stuff. [laughter] i support during that perfectlyh issy who

is a top lobbyist for the agrichemical lobbying group in washington and the pattern goes on about that and so obama has backed these new food safety laws. they're like the consumer product wall for the toys. basically these are being proposed on the food safety to require more testing. they create one of the bills create something called it regulates food production facilities which sounds like some kellogg's factory where the turnout courtships, corn flakes from who knows what.

but food production facility also included farms and mulken johnny and big farms but if you had a farm and grew something that you sold under one of these bills you were a food production facility and had some of the same regulations as a joint factory. 13 article i read about this from the san francisco chronicle said testifying to congress, the largest solid producer explained that he supported uniform government and forced to safety standards. this he argued would eliminate the hassle of different customers insisting on their own safety audits which was you had the organic food co-op over here that said we want you to certify that this food was organic and over there you had the local food co-op. we are making sali where is the lead is coming from etc.

then maybe there is don't kill any of rabbits to grow our carrots -- terse lots of people who put in or maybe those parents stiffly afraid of any bacteria getting in their food and they have their own regulations. there were groups and stores setting up john and might want something god that is a d.c. grocery chain. one chain might want something one local store might want another. this was what i call private sector regulation. admittedly they don't have the clout of government regulation but also the preserve more diversity. barack obama said i don't think government can solve every problem there are some things government can't do such as ensuring our food is safe. so she was spitting in the face of the private sector regulators. all the organic food co-ops called the grocery stores that take pride in the quality of their food, she was spitting in their face but also backing legislation that could help preempt those and make it illegal.

it would save the federal government opposes x standard no buyer is allowed to -- you know, big industrial -- i shouldn't say industrial camano group is about to impose its own standards. that is with the salad king of san francisco or whatever was lobbying for. so you have private sector buyers obama said private-sector regulations didn't exist and he is wiping them out. but he said only government can ensure your food is safe so that again is a confidence game. nobody can assure that your food is safe. and take a step back in time. who might you have bought durham meat from back in the day? maybe it was a butcher. how would you trust that butcher was getting seafood? probably because he sold to your father and his son wants to sell meat to your son so they are not going to please a new but when you have more regulations that make it harder for independent businessmen to succeed you drive

business towards more centralized industries and in up in the food situation especially you had won a government report say or centralization of food-processing leads to foodborne illness is spreading rapidly. you can imagine everything is thrown in one bucket before it is sent around so this is a pattern of obama's policies. they are big government which is what he promised but while he promised to battle the special-interest and while maybe he wanted to it hasn't worked out that way because in washington the lobbyists from big businesses, they have the most say. they get the seats at the table both in congress and even in obama's white house and he has hired many of these lobbyists in his own white house and so this is what you have gotten from obama as a gorman policy, but the vindictive benefitting big

business. this is bad for the american economy but i don't really like talking to much in terms of what is good for the american economy because that is an abstract idea. this is bad for consumers. it's bad for taxpayers and for small businesses and for taxpayers obviously and we have to start with bush over spending in a bailout. we all especially younger people we will be paying the bill on the bailouts that have just gone to help wall street mostly. and the stimulus bill again all borrowed money, an article a couple of months into the bill said 80% of the money has gone to the top 2% of the firms. why? not because the obama administration loves being out big companies but when the government is giving out money who has the apparatus to go to the government and get the money? random small joe with his corner store the guy selling fruit cakes doesn't have the ability to get the government money but

the bigger corporations that already have the lobbying establishment set up they can go and get it and cash for clunkers. if you benefit from the deal benefited but everybody else this was a program if you remember over the summer if required the automaker, the car dealer who took the trade in to destroy the trade in and had to be a trade in that could run so the idea is take fuelled cars off the road, good for the environment. lots of reasons to question whether it's good for the environment but this is true. dr. said the price of driving a car if you are destroying perfectly usable used cars. used cars go up and then there's a smaller effect of the new cars go up so if you didn't -- if you are a car dealer you might have done okay. if you trade it in and got the subsidy you did okay. if you make new cars or already had a big stock of used cars to profited. everybody else loses because it spent $3 billion in the tax dollars since you already paid

for this taxpayer and cause your car goes up. but the most upsetting thing might be the way in which it hurts small business and it sounds hokey and everybody says but it's true small business is part of the economy and it's an accurate when people say small-business is the number one creator of new jobs just because there's a more precise way to break down. as of 2007 the last year for which we have these numbers, the two-thirds of new jobs were created by the companies that for 5-years-old or younger meaning of new business is the most important thing to create the jobs that will eventually donner you guys when you get up here. you need their to be new business is being made. "obamanomics" gets in the we've new business is being made for a few reasons. for one, the regulations and to overhead and keep you out. about to come increasingly becomes obvious you need a lobbyist to get by if you can't

afford lobbyists sitting of the business you're going to be crushed. number three, bailouts. belts and handles what they do the prop up failinges they dee dee to cut its bid if you work for the failing company. your work hasn't been producing things consumers want to buy and that's good. i feel good for those people who get the jobs saved but their job is probably being saved or created is a term used. the job is probably saved or created a georgia law expense because when a failing company is propped up the pretense another company from entering the economy and those new companies are exactly what's creating the new jobs so this has sort of been a depressing talk if you share any of my concerns about ceding small business or seeking a limited government and it has been an upsetting talk if you are a big

obama fan but for the first group of people who care about small business or limited government i have some hopeful ideas looking forward. the first one is the fact there is clearly anchor. but bush's the lots it was focus people's attention on the fact that there is a situation where the people with political power and people with money are getting together and taking their money. it's not an exaggeration to say that they are taking your money. its tax dollars. sure they are taking your next neighbors money that they are taking your money more than they are taking a 50-year-old's mauney if you were a student here because it is all borrowed money so your taxes are going to end up paying for this and where did the money go from the wall street bailout? at went goldman sachs. it went to bank of america. the idea is that it trickles down at this is an idea the was blocked when the first george bush talked about it but obama

full force signed on to the bailout's so people are angry people with economic power and people with political power are clearly on the same side and a regular taxpayers and small businesses are getting left out to be on the right to see this manifesting itself in a tea party movement which has a lot of good elements of the media like a lot of the battlements in there. one of the things i would like to see more from the tea party types is not just railing against one party because both parties are spending too much and not just to real against big government but big business which is lobbying for and pushing this big government. but another thing i think is hopeful and again i am not a partisan republican, i voted for republican presidential candidates i think zero times. yet. no way the vote for bob dole in

'96 because i was a college freshman and didn't know any better and i regret that vote. sorry, mr. dole if you're watching. [laughter] actually dole is one of those in my book to obama has got to support health care but anyway, moving on. [laughter] the idea is that the republicans are so far in the wilderness they have even lost the corporate supporters. this is a party where no matter how bad the bill was if there was corporate support like the medicaid prescription drug act or wall street bailout the limited government party pushes both of these through? why? mike ury is partly with the democrats say is true. republicans have listened to much to big business. now the big business isn't giving them money anymore now that you're a minority party so maybe that is an opportunity for the republicans to start standing up for regular people and to actually start standing at against big government. and on the democratic side i have got lots of little -- well they don't like being called a liberal, progressive as the term so i will use that.

lots of progress of friends increasingly getting upset with obama and the art of ready to explode if what i predict is going to happen happens and the health care bill ends up without a government auction and but these subsidies and mandates and making you give money to insurers they are ready to blow up and get angry about that and i think the global warming bill, too will be passed and will be clear it has no effect on reducing greenhouse gas emissions so people who care about that would say why did we do that? then they will see the nike and alcoa smiling when the bill gets passed so on the left i think if you are not a partisan republican or partisan democrat if you were actually dedicated to ideas and causes such as sticking up for the little guy on the left or the limited the government on the right, then i think the anger will be so clear that it will be focused and in the last chapter of "obamanomics" wiley of an agenda that includes things like stopping the bailout in the

money that hasn't gone out the door, don't send it out the door, you know, put it straight into retiring debt or cutting taxes and any money out the door colin back and have some items of left and right synergy. one of the things the left as wanted to on drugs is that canada has price controls so if you go to canada and by the same name-brand drug it will be half the price as it is here. why do the drugmakers let them get away with it? because they make it held that costs a penny. it is the are in the end of it and the testing that costs $1 billion so basically to sell to canada they have to make up the cost of producing it and shipping it to sell to us they are making up the cost of the research and development so right now it is illegal if i were a random drug store for me to go up to canada and by yet at the price control price and come down here and sell it the sort of conservative sending argument is that you are importing price

control. the drug lobby spends more than any other industry on lobbying washington. they clearly do very well no matter who is in power. why can't they lobby canada? or the lawmakers that much more intimidating and stronger than the direct and lawmakers? no, we are giving a free ride. that is the sort of thing. but then free import drugs and silver to cut five years to figure out what is it to happen but it's your job to to make sure you can still turn a profit on your drugs. it's not the federal government's job. we are already giving your patent exclusivity where no one else can make a generic. we are giving you that and after that you are on your own. there are a handful of other items and be about constitutional amendment is one of my dreamy ideas. meek illegal for the right to own a share, on a portion of the company. try to ban corporate welfare if anything is a direct transfer oe

corporate welfare agencies boeing might make $10 billion a year off this corporate welfare. i can see the export import bank but if you divide them among every taxpayer is what, $3. so where is the constituency to kill the corporate welfare and smashed the government big business collusion. that is a problem and a question. i do think sea anchor and fact we are a democracy can help channel that. if you are a republican party and want to raise money and are running an anticorporate campaign it might be difficult for you to raise money but that is where what ron paul did she wrote the forward on my book and ran for president in 2008 and whatever you think of his ideas and i like most of his ideas but what if you think of his ideas

you have to be impressed he raised $6 million in one day with or i should say the donors gave him $6 million in one day. he didn't organize the donation. his enthusiastic supporters set up what they call money bomb and they rose two -- raised money. the average donation was less than $100 even barack obama did this even though she's raising record money from goldman sachs that was under reported. but it was the perception that he wasn't hillary clinton and i will say that for all of the coziness with common ground with big business here hillary clinton would have been ten times more of that. but he wasn't hillary clinton some people thought i disenfranchised because i don't have the sort of access so i will give him money and you've got people parting with the ten, 25, $50 to give to him. so, in a second i will open up for questions and i'm happy to take any questions.

but i just want to restate my thesis. every time the government gets bigger somebody is getting rich. but i've done here is "obamanomics" i tried to name the names and leah out in a pattern to show that it's not an anomaly but it's actually the pattern and the affect obama is having of america is and what many people think it is. thank you very much for your time. [applause] i'm happy to take questions. again for to be going supposed to remind you to stand up if i call on you and then wait for the microphone to get to before you ask your question. so please. yes? >> you talk about what is called the revolving door in politics and big business, the idea that when people lose an election or

retire from politics they tend to go into lobbying and the idea that once they come back they are going to come back to a government position i know and bernanke and hank paulson are well known for the street to talk about that and any idea on how that could be stopped through laws or volker action? >> i'm glad you're reminded me about the revolving door. i see this happening and i see my friends to this. a dangerous kind of like me when they are working on capitol hill and then i see them two years later and the of nice suits with french cuffs and they are offering to buy me lunch where they want because they left the job working for congress and a lobbying firm hired them because they knew when the friend calls his capitol hill to say just want to talk to you about the farm bill that his old boss is going to take the call and that is the revolving door. barack obama said i'm going to stop the revolving door to greet

his white house chief of staff is rahm emanuel let's see it's almost not the right word for rahm emanuel regarding the revolving door because while he's working for bill clinton's 1992 campaign as a chief fund-raiser he was getting paid by goldman sachs has a consultant at the same time for nondescript work so he might have been getting paid by goldman sachs to work for bill clinton for all we know. then he worked in bill clinton's the five white house to read a couple of years before clinton leaves he works for a private equity firm so you know investments, mergers. if you look at the list and i laid out in the book the list of all of his clients they were people who had business before the clinton administration so what was his skill? first he's smart, hard-working and effective. about $1.62 million and a half years is what he made. i've got to imagine the real skill was knowing who to call in the clinton white house and getting done what he wanted to get done. he makes the 1.6 million by

milking the former administration confecting uses the money to run for congress and now he's in the obama white house. so the revolving door is spinning. there's actually a lobbyist now who is an ex obama administration official. yes already less than one year in somebody has gone into the obama administration, left and become a lobbyist. so this is damaging because anything that strengthens, that gives more power to the guys who can afford lobbyists in effect takes political power away from us. it also gives perverse incentives for the people in government and it is particularly hurts republicans because they can say we are going to kill the government program or i'm going to tinker with this program that way when it gets past somebody needs to hire me to help them figure it out. that happens quite a bit. so that is very problematic. obama's some of his actions have helped where you can't become if you are at a certain senior

level you can't -- use we're not to become a lobbyist for a little while after you leave or not lobby the administration at least. i honestly would say that anybody who is an elected official or makes over $100,000 in government at any point should be prohibited from becoming a lobbyist. now i don't think that would actually pass because the people would be affected by that are the people who get to write the bills. on the other hand, that is the only lobbying regulation i would propose and in the and i probably went back because i think that is an expression of the first amendment rights so the real problem is not the lobbyists where is it, the real problem is with the government. the way to get rid of corruption in high places is to get rid of the high places. tim wheeler was a man who came up with that and i think that is the lesson of "obamanomics" you

can't simultaneously increase the government to control for the economy and decrease the role of lobbyists. so that is one place where my only reform and this is obviously it might buy yes but my own reform is have the government have less control over the economy. happy to take another question. >> how do you think obama plans to pay for the new regulation programs that he's trying to do? is the creation of money, the taxes or debt issues? >> to start with the spending, the stimulus bill we issued the debt on that and so what are you going to do when it comes through? a lot of that is not obama's problems lie can predict what would happen and it's like rotating credit cards probably borrow again to pay off the debt and then who knows what's going to happen. but on the other hand, the

health care stuff and global warming, the health care reform has much more price tag and the history of predicting expenditures in the new government programs like medicare, social security has been very bad and it's far outpaced so whatever taxes he introduced in the new bill and there are some of those, i don't think they are going to be adequate. i think we are -- i'm not an economist. i wouldn't be surprised if we see inflation because we print more money and the government creates money out of thin air. the federal reserve creates money so which would be a mixture of all of that. i don't think that we are going to see spending cuts or at least not significant especially because right now what is the republicans' number one object into the health care bill? the democrats are trying to cut medicare. why are republicans arguing against democrats spending money? well part of it is the insurance companies don't like the medicare. i think the most important is

republicans know it is a good issues of there is no issue for spending cuts so the answer is all of the above, new money, more borrowing and more taxes. >> yes? >> hold on for this guy. [laughter] >> mr. carney, i know that you expressed your opinion on domestic legislation that's been passed to look at environmental problems in the u.s.. but there is the g8 summit coming that in december and others proposed talk there will be legislation that would have international fact we're like you said nike example might cut down on carbon emissions and other parts of asia where they

have all these manufacturing plants and i wonder if you can express your opinion with that legislation might change -- >> you're talking about the copenhagen -- is started today. the copenhagen summit and this is a sort of global get together on what to do. talking to people who go to the sort of even even know proposed regulation is going to come out of this and no even proposed global coordination for the national regulation is going to come after what to answer the specific question of the policy on global emissions to? it would break apart the u.s. business coalition for the greenhouse gas cuts because some businesses like caterpillar which manufactures in the u.s., we already have environmental regulations to be difficult carbon regulations on top and also carbon regulations on china than all the sudden you could

make the field more level between the u.s. manufacturers and foreign manufacturers but then the other is nike and alcoa, the just one domestic so you see some of the domestic manufacturers to support the cap-and-trade say that we supported and then assume we're going to have china restrain their a mission. but these growing countries come imagine this. you were dirt-poor for years while the four rest of europe is burning coal, getting rich, building skyscrapers, you didn't get the rest of it just starting to trickle to you and all of a sudden the u.n. says that coal and oil, you can't do that anymore. you're not going to stand for that if you are most of china or india or the third world. so i don't think the prospect -- atingua we will get if there's anything of a global agreement, the rich countries will go ahead and constrain their emissions and then they will pay for

subsidizing a clean energy in the third world. that is the most you were going to get as far as the cooperation. more questions. there's one in the middle. i may have answered that. i'm going to follow-up on the global warming stuff with you right now. one of my favorite stories, general electric joined a group called greenhouse gas service and this is a company that deals and carbon offsets and greenhouse gas credits. what they've done for the simplest steps on how they are on a trash heap in north carolina sucking all the methane that is a powerful house, 23 times as powerful as dioxide so they are sucking the methane and turning it into co2 which is good for the learning carbon dioxide levels. and google is paying them to do it because they get out of this

offsets, greenhouse gas credits because they are destroying the myth and that would otherwise be created. now right now what does google do with the greenhouse gas credits? degette si br carvin neutral in this way or that way. but if the government mandates to have a credit to run a factory or power plant in all of a sudden what google has and general electric is making the comes with a lot more. so maybe that is capitalism and the environment. though. the partner in general electric greenhouse gas venture is a company called aes that is building cool -- coal-fired power plants. the cleaner planter that benefit from the tax on the cold but what else happens if you taught school effectively, you make fewer american companies by coal, for, it is cheaper for the

third world so they are winning on both ends of the nuclear power plants are getting subsidized and the coal-fired power plants down there are getting cheaper coal but she and aes didn't invent this, this is the same scheme the company tried in 1990 to 2000. that was in rahm. they are not around anymore. she picked up windmills and lobbying practice and i have a chapter called general electric the for-profit arm of the obama administration. h obama de.

not even just because they still own msnbc where keith olberman and rachel mad now say there holley lu de obama songs commit [laughter] i don't think he's trying to enrich them. i think that the they see the way in the world of obamanomics is to line up with government and what does that do? it really saps' entrepreneurship and defies the economy and means you guys won't have jobs when you get out of college unless one of these chosen few, google, microsoft, general electric, boeing that have the best lobbyists, they're going to increasingly control more of the economy. but that has a net effect of

being bad on the whole economy. if there are no other questions -- sorry. i don't know if the microphone can reach that far. >> you mentioned earlier -- he mentioned earlier you felt the american people were being left out in times in favor of big government and big business. however i believe he were speaking specifically in terms of the bailout and stimulus package which if i remember correctly work policies that the time were supported by the majority of american public according to the polls. my question to you is how do you feel the government should address those issues with the people, majority of the people are supporting the initiative that you feel in the end of will

ultimately damage and give them a short end of the stick? >> i know that there were holes in the majority that had a support of the bailout, i was in washington and i know these guys got 900 antibailout phone calls for every one bailout will call and i don't pay enough attention to the polls to answer that affirmatively but i'm pretty sure most people oppose the bailout to read every vulnerable member of the u.s. house voted against the wall street bailout. on dietrich maybe people supported that. i don't know. but i also think they should not drive policy. that i think principal should drive policy and the constitution should constrain what you do. i don't think the bailout was constitutional and i don't think by and general motors was constitutional regardless whether the people supported that. and i mean, i'm very happy to take the antibailout side against any politician who thinks that getting all that money to goldman sachs and bankamerica was popular at the

time those guys just created the collapse. they voted of frequently for opposing of these measures and i want to put tolls on every highway and that wouldn't be very popular because right now our highway system and all transportation since sliced trucks make them pay for the road. that probably won't go over very well. i'm not a politician because i don't sit with is the best policy by what is most popular. i said it by what i think will do the best and also by some moral principles. and it's wrong to take money from regular people and give it to the big corporations. that should be enough to settle the fact not to do the bailouts. >> thank you very much for your time. i appreciate. [applause] our special primetime book tv continues

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he talks with former white house counsel greg craig who oversaw the legal team that defended president clinton against impeachment.

>> host: my name is greg craig. i am here with ken gormley and we are talking about his new book, which is "the death of american virtue," clinton versus starr. before we get into this book that may find out about yourself. where did you grow up? >> guest: lika rabin pitch. and went to the university of pittsburgh but somehow went astray and went to harvard law school, so after i got out of law school went back home and i keets currently in dems the interim dean at the school of loan as per. >> host: how long have you been teaching law and what kind of luck to you teach? >> guest: i've been teaching for 20 years. i did practice lutt too but during all that time i kept writing. i have done riding throughout my career. i find it keeps me kind it energize sell these book projects, they take a little bit of time and different from writing for newspapers and magazines and things like that

but i enjoyed a lot. >> host: have you done that as well a lot? >> guest: i have done that throughout my career and early on in my career i would do feature stories for newspapers and pittsburgh, character studies and i found it helped a lot in tackling these big non-fiction because you learn dialogue, you learn to study people so it was very helpful. >> host: this is not your first big book. this is a big book but it is not your first one. you wrote a biography of archibald cox, did you not? >> guest: archibald cox was of course the principle than famous watergate special prosecutor who was fired rather then backed down from president nixon and led to the unraveling as you know of the nixon presidency. cox lisman law professor at harvard and i wrote that book fairly early on out of law school. it was another big project that took seven years. it was a lot of fun. that one i have to say was

easier in the sense of one life, you kind of know where you are going from start to finish. this had so many moveable parts. this list. first because it was such a big project. >> host: that raises the question about why do you did it. obviously this was a topic that was front and center in the newspapers and on television for many months if not years. you wanted to go back and revisit all of this exciting days? >> guest: i never stopped revisiting it in many ways. my book on archibald cox came out right is the lewinski scandal was blowing up in the national media and so i became one of the many talking heads on the subject at the time and i was the it is an expert on special prosecutors because i had done a lot of writing on that, so i followed this thing. i rode up beds for newspapers all over the country. i attended the first day of the impeachment trial in the senate so it was almost as if i was destined to do this greg is the

wide began work on this in january of 2000 and it startled me, i was thinking my daughter madaleine was born two months after that. she is about to turn tens of this is the new long project. >> host: at a lot of people who covered it on a regular basis and wrote books, peter baker and a couple of others that you were not really covering it at the time. you were watching it and talking about it but you were writing a newspaper column. guess fill-in fact that was one of the things i wanted to accomplish. i knew from working on other projects, that the impeachment of andrew johnson, people are still writing about it 100 years later in some of the best account for written by people who lived through it. i wanted to write the book. most of the people you referred to, peter baker wrote primarily about the impeachment in jim stuart for instance road about whitewater.

there are books about paula jones and the monica pisa things. no one had the whole story and showed no it was all interconnected and no one really got access to both sides. that is what i wanted to do. when to be able to talk to both sides. this was something that really as you know because you live through it can send the country like nothing other than in our lifetime perhaps watergate and nixon's cults resignation in disgrace, and the assassination of john f. kennedy. everyone was fixated on this. everyone had a strong opinion in the country. the country was divided and i want to read the definitive neutral historical account that people would look at 100 years from now and say this person got it right. >> host: it is interesting to me you mentioned the various stories in vertus. i need this as a complement. the book seems to be structured very much and it is really easy to read, very much like an international spy thriller. we start off with the

impeachment and then we go back to the beginning of watergate, and then we start-- >> guest: why water. >> host: that's right, white water and if i say that incorrectly i mean whitewater but the narratives are a woven together so they are never a completed until the very final days of your book. was that intentional? was there every debility quality to this? >> guest: sure. i will tell you this story and i haven't told anybody else. i actually had sitting on my desk when i started and this was before this had become the popularized, a copy of truman capote's in cold blood and that wanted to take this story you could not have made up, greg. this was so crazy all the pieces of it, with your wildest imagination if you are writing fiction you could not give me the story of so i wanted to capture it in a way that was readable for a completely broad

audience but i wanted to get it right, and so early on in the process i remember having a little talk with george stephanopoulos as i was getting started, just an informal chat indie said that anyone can get all of these pieces in show how they are connected, which no one had done before. everyone had treated them separate. you will have something. that is what i tried to do. >> host: some of those characters particularly in arkansas, that predate clinton's arrival in washington d.c. are absolutely fascinating and he spent a great deal of time explaining these contexts that sets the stage for what is happening in washington later on in the story of jim mcdougal is really extraordinary. why did he plays such an important role in this? >> guest: without jim mcdougal you didn't have any of the rest of the scandals getting any traction, and it was also,

arkansas and juneau was always in the background of all this stuff. i spend a lot of time in arkansas to try to get this story right. my dad was from kentucky so i loved being in arkansas. it was like seeing all of my aunts and uncles and spending time with those but it is very much a small town sort of a place and until you wrap yourself around that you don't understand where it all goes. what ultimately was the problem in my view wasn't that the clintons were involved in criminal wrongdoing with respect to whitewater. i mean if there were lots of issues. was this person telling the truth about reconstructing this fact? but they were tied up with this guy who ended up having extraordinary problems in terms of the unorthodox business practices to ended up a pauper, ended up a convicted felon and this was bill clinton's business

partner. that was a problem. you can't understand the story in some people who i trust very much on both sides said you cannot understand this story unless you understand where it starts with whitewater and they were right. >> host: there is the magnetism strangely about jim mcdougal that mean he explains why president clinton became a partner. clearly a smart man, clearly well read.bp,hdsdsgu's)p&hxpguz discuss with me

but he had serious problems. he started having financial difficulties, and so it started spiraling downward, and it turned out he was a con artist. there is no question that jim mcdougal could spin a story in this james stuart explained to me that big of the lie the greater the thrill for jim mcdougal's so he could lie it in a moment. this was a very complicated thing the clintons and that being tingled with up with. >> host: briefly tell us the nature of the partnership in the early days. >> guest: the whitewater project vezina came to symbolize a real estate investment and i went fishing with one of clinton's childhood friends on the white river to see it. that the fish fry in peanut oil and that was one of the purpose

of this project but it was a hairbrained plan actually at the time. it turned out it was on the wrong side of the river. it turned out it was not a good location. it really wasn't whitewater that was the problem. it was the madison guaranty savings and loan that was part of the s&l failures all of the country and jim mcdougal was just playing games in cooking the books in all sorts of directions. i did not believe the clintons had anything to do with that but they were entangled in that it came to be. >> host: you spoke about the psychologist from the prison, richard clarke with whom you talked about jim mcdougal. mr. clark got to know him during the last years, or months of jim mcdougal's life. that story is very unsettling and brand new i think. no one has told the story about jim mcdougal's death. >> guest: i got access to mcdougall's psychiatric records and his history in the prison

with the permission of his estate, and dr. clark, a wonderful person, really cared about him and spent a lot of time with him in prison. there is no question that he came to believe that there was some grand conspiracy by the clintons and others to get him in this prison. but his death was just tragic and it was, there were a lot of unexplained circumstances. i do not believe the clintons had anything to do with this in incidently this is during march of 1998 and you know because you were involved in the clinton white house, they were focus completely on the monica lewinsky matter and not worry about jim mcdougal in prison in fort worth, texas. however did people in the prison play games with this guy and give him a hard time? he ended up in solitary confinement, dying under unusual circumstances, separated from his medications. there were bodies littered

across the road and the story from start to finish and it is a tragic story. this story should not be allowed to repeat itself because jim mcdougal was kind of symbolic of all of the tragedies that littered the landscape in the story. >> host: he died on the verge of being considered for parole. i thank you report that he went to his death believing that within a matter of days he would be released. tell that side of the story. was there tristan is the lead for do you think he was misled? >> guest: a lot of people in prison believe that he was going to be paroled. that was what the psychologists were led to believe. susan mcdougal, when i told our and showed her the notes from dr. clark, that he was told after mcdougall's death by a prison official that mcdougal was never going to be paroled,

she just you know almost lost her composure and said, that explains it. this is-- jim died because he lost the hope. that was the only thing keeping him alive but there were other factors coming into it. i believe that, until that final months everyone expected that jim mcdougal would be paroled. >> host: let's talk a little bit about susan mcdougal, completely different story related obviously tour husband, jim mcdougal. she played an interesting role come again as a backdrop to the impeachment and the washington dc story. tell us the little bit about susan mcdougal and her relationship with president clinton. >> guest: very colorful character, very likable an interesting person. in the book, as you know and as "politico" reported first, i report categorically that there was an affair between susan

mcdougal and the president at some point during his governing years. i believe it was brief. i am not saying i believe this to be the case. i am saying it is the case however i cannot disclose my courses and i will not disclose my "-- sources but i also conclude that although the starr operations spent time and money trying to figure out that piece of things that it was not the missing link that explained everything or really much of anything. would it have been uncomfortable for her to testify about that in the grand jury? yes. who is she looking forward to that? no. was that the reason she did not testify and went to prison instead? i do not believe so at all. at that point she had seen jim mcdougal turn into which she described as a lawyer, turned into a cooperating witness of starr and was making up the story to try to save himself

from going to prison are to get out of prison in she believed, because she didn't have any incriminating evidence against the clintons that she would end up going to jail the matter what she said. whether that was rational or not is another question but did she go to jail because she was hiding the fact of this affair with clinton? i don't believe so at all. i think she went there because she hated ken starr and his prosecutors more than anything in the world for the weather that was justified enough or not is a different question but it is a very interesting piece of the story, because susan mcdougal in greg years in prison as a result of this, and-- >> host: the reason she spent the two years in prison was because? >> guest: in contempt for failing to testify in front of the starr grand jury. >> host: that race is one of the first what that's because as

you know that period was very bollon till-- also. you go back and i was struck reading your book and how many times the development or the outcome could have been changed it's something different had happened and that is one of the what it's. what it susan mcdougal had cooperated with the office of independent counsel? >> guest: i don't know that that would it change anything at all really, because she would not have testified tested and the knowledge of the clintons being involved in anything, so at that point i mean maybe she would not have gone-- ilc the starr team is being vindictive and we should talk about can start at some point. i have great respect for ken starr and that something he was about to put someone in prison because ecodoor wanted to. but with that hisself that changed anything? no, i think that probably they would it turn toward some other

pressure point. ultimately, what the office of independent counsel was trying to do was to figure out who was telling the truth here, was clinton involved with these madison guaranty scams with mcdougal and david hale and if she wasn't going to talk to think more pressure would have been put on webster hubbell for instance to try to get him to talk. >> host: that is another arkansas the figure that came to washington d.c. that it's a good deal of attention. it strikes me that, as these developments occurred in real time, those of us who were watching them or eager to know what was really going on and i think this is something you achieve. you talked about mr. hubble and number of times obviously. your report fully-- he was prosecuted only three times, correct? indicted three times and served time in jail as well. what you think about the double-clinton relationship?

>> guest: hillary clinton worked in the www.rose law firm. there was bill kennedy, hillary clinton. it was a shock to the clintons when it turned out that he was building the law firm and don't forget hillary herself was the victim of that so that was a total shock. to his credit, www.hubble is one of these people-- a spended bit of time with him. he has really come to grips with his mistakes i think in just technologist them. one of the fascinating things about webb hubble though it is i believe the most compelling proof, because he kept saying i don't know what the starr people thought i was hiding. whatever it was there were looking for i don't know but i didn't have it, but proof of that, stop and think greg because webb if he was hiding something could bill clinton have afforded not to pardon him? that he was hiding something, that would be the surest way that he was going to blab so

there were no bodies buried there because as what coast said he but it certainly told the story then when he didn't get pardon. >> host: the other arkansas person was a vince foster. that tragedy, that suicide occurred within the first months of the administration and had a devastating impact on the white house, did it not? >> guest: it did. it was tragic and i first started working on that because on the way back from visiting the white water site in fishing up there, joe purvis it was very close because they had grown up with bill clinton, told me about the months leading up to that. he had lots of conversations and he was clearly depressed. one of the things i tried to show, i was finally able to get bill kennedy. people did not want to talk about this. bill kennedy came to washington to work alongside vince in the white house counsel's office

right next door and he was the person who went and identified his body at the morgue. he told me of that story and that put it in their only to show that to the extent people tried to create conspiracy theories, the clintons were somehow involved, they killed tents in bold him up in a rug or whatever, that was just so over the top and so inappropriate because they had all lost one of their closest friends. bin bill clinton's friend since he was four years old. this was a horrible time for all of them so that whole piece of things i think is just a very sad piece of the story. >> host: and then the final arkansas personality we talked about is paula jones and the paula jones story, the whitewater story, they got intermingled. did you talk to paula jones? >> guest: yes i did. >> host: did you learn anything new from pollitt jones

other than what had been in the newspapers over and over again? >> guest: i think i got a feel for what made pollitt jones tick and she is a likable person. it is in fact the last piece of it because you see what happens is we have whitewater bubbling back up. whitewater had been dead in knock xo for years and now bubbles back up and get connected somehow with pence foster's suicide in some onset people are connecting the dots that don't connect and suddenly comes the story of the american spectator talking about troopergate and this woman named paula and everything comes together and creates this kind of hysteria that propels for the appointment of the special prosecutor. we don't have ten hours to talk about all of that. but, let me just say this with respect to paula jones. i spend a lot of time on this piece of the story. there is a lot of material in there. i have access to raw footage of the film that was shot as part

of the clennon-- clinton chronicles. in the very early stages when paula was still trying to get the story to go national, which would have been used by earlier as exhibit a at charlton would not have been flattering and would not have painted her in a sympathetic position. i believe that 95% of for story of what happened in the hotel room is true. it is the 5% to have a problem with and that is, what was her role? one of the key facts that was emphasized by president clinton's lawyer but others was, at the time she went to the hotel room, at the excelsior hotel she was engaged to be married to steve jones. they got married seven months later. when this came out that was a big problem for paula because steve jones was a fairly hotheaded fellow as described by others and they did bill clinton said there was definitely a motive to cover-- color this story in her favor and that was in fact what trooper danny

ferguson testified to. >> host: a willing volunteer. >> guest: again. there are so many pieces to this that the and if thing that is incredible is her own lawyers, the virginia lawyers that that of this case and quit because she would settle for the full amount they ask for in the complaint. >> guest: that is to run for that part i think president clinton deserves, that wasn't the best decision on his part that i have to tell you president clinton's lawyers and

paul jones's lawyers made it clear to me they believe they have the case settled so this was not something president clinton didn't agree to. he did agree to it and at the last minute paula jones, heard pfizer and her husband steve jones wanted more than what they had asked four, wanted an apology, more money or whatever it was then the whole thing was scuttled. judge susan webber right was none too happy with that i learned from others as well. >> host: let's get back to the lawyer's a little bit into washington d.c.. the office of independent counsel had been created. the special counsel had been appointed, bob fisk. the statute then passed congress, and the question was whether there was going to be a replacement for robert fisk. you go into the details of this quite carefully and to me it is extraordinary to see the world that the department justice

played in it as well as the handling-- panel of judges with judge sentelle involved in that. can you tell us about the events of substituting ken starr for bob fisk as independent counsel? >> guest: west, clearly president clinton believes now it was the biggest mistake of his presidency to sign the reauthorization of that independent counsel but once that was done and that had been part of his plans during the election during the campaign that he would sign that. what was viewed as good government law. everyone expected that robert fisk would be reappointed. that is what attorney-general janet reno asked four, as the three-judge panel and so it was just a jolting, jarring event when he was replaced because this was viewed as straight down the middle. he was a republican but it was viewed that his investigation was really balance at that point. he was moving it along quickly and then to have can start

interjected into this rocked the washington side of things especially in terms of democrats. what i was able to show here, which hadn't been known before, was publicly it has always been said that the three-judge panel unanimously wanted can start. and that that was able to get papers, internal court papers and talk to the lone democrat on the panel, judge john oxner from virginia, from richmond, and he adamantly was opposed to the appointment of ken starr for the very reasons that in the previous panelists they had steered away from anyone linked to the washington beltway. they didn't want anyone who could have any connections to the political establishment on either side in can star seemed very much connected to the republican elite, you know, the establishment in this town. and so, he was adamantly opposed

to the appointment of ken starr and throughout the whole time there and in fact it found a memo in this file indicating he wanted to pull the plug on the independent counsel law operation during the impeachment proceedings, or shortly thereafter, under the theory that his work was now complete. >> host: head the panel known about ken star's peripheral involvement in the republican activities in the past and even the paula jones case? >> guest: well, the latter probably know but certainly at some think ken starr was hiding anything and it was well-known that he was involved in considered a run for the senate in virginia. he was actively involved, he was close friends with robert bork who was kind of an icon of the conservative republican elites in washington. the paula jones stuff was the source bought because later,

oxner said he was not apprised of the fact that ken starr had appeared on television and taken the position that the president could be sued civilly, a very strong position and it turns out was prepared to write briefs for the supreme court case that the got to that or in the appellate courts. again. i don't think ken starr was hiding that and this was public and anyone could have done it but it wasn't brought up and don't forget the whole point of an independent counsel greg was to have someone who was beyond reproach, the on suspicion of having any dog in the fight, and that was troublesome to the judge and he had notes scribbled on his that of paper indicating he was extremely upset about that. >> host: that was generally unknown, his reservations. should that have been disclosed to the public at the time? >> guest: well, he himself chose not to disclose it.

he ended up signing on to the court's decision to make it a unanimous decision, acting as a judge it in the sense that he wanted to make this about politics. he did not want to create the impression, here is the democrat who is against this and here the republicans were in favor of it so we tried to do to protect the court. i can understand that, you can understand that. >> host: we have to go to a break now. we will be right back. >> guest: excellent, i appreciate it. >> sometimes i think history is a series of accidents. it is like a pileup of cars in a snowstorm. >> how did the u.s. and that in vietnam? sunday pulitzer prize-winning author ted markon on the valley of death and the battle ended french colonial rule in indochina. q&a sunday night on c-span.

>> host: welcome back. used and a good deal of time with ken starr according to this book in one of the things you did in the early part of the book was to compare the family life and the origins of bill clinton and ken starr. talking little bit about how these men were such adversaries have many similarities. >> guest: they did and in fact i think there was more similar about them then dissembler then i'm not sure either of them like two of knowledge that. it is just so coincidental in many ways, but they were born within a month of each other and

born within a couple hundred miles of each other. bill clinton was from the lower part, the southern part of arkansas and ken starr was from texas nearby. they grew up in many ways-- the obviously grew up at the same time but in many ways with similar upbringing, a very religious but slightly different and so they took these past, each of them coming to the peaks of their careers at this moment. ken starr having been solicitor general of the jana, a federal judge in bill clinton becoming president of the united states. i like them both they have to tell you and i do have to say this. both of them deserve a lot of credit here because when i went to ken starr and he was a spur spurs i went to when i decided to write this book because i had written some things that could have been viewed as pro-clinton during the impeachment because i didn't think it was an impeachable offense and i

concluded it ken starr was interested in talking i didn't want to write the book because i want to have both sides and i wanted to the balance. ken starr knew what i had written, new about my background but he cooperated fully. he gave me access to personal papers which i tried to weave in their, letters to his kids that i think shows the human side very much. he is a wonderful person, a very thoughtful person. bill clinton knew that i had spent time, a lot of time with ken starr and then made it clear in talking to him and his lawyer, your former partner, david kindle whom i have great respect for that this was not going to be a can start bashing book, that i was not going to be portraying him as a person with horns coming out of his head because that was not what i believe. both of them came into this project knowing i was going to tackle them both of them understood there was of value in

having someone right to an objective, historical account of all this but they were very similar in many ways and they were both-- bill clinton, again his public persona does not all these capture this, very thoughtful and considerate person. i saw that over and over again in talking to people who grew up with him. i went to the nursing home, his mother's, one of her best friend's marge michelletti visited her and a nursing home. she told me about, she would get a call from bill clinton on her birthday every year and he would say look, do you see i am wearing the coat he gave me? he would be in egypt or wherever he was. i can barely been a member of my own kids birthday. this was a common theme. there was nothing fake about that at all. and extremely considerate, thoughtful person who you almost, he is so convincing because he is speaking from the soul in many ways.

can starr is also a gentleman. udall get to the solicitor general of the united states by being some rabid sell it of some kind and he wasn't i don't believe and they kind person. i brought him to the university when i for started working on this book and all of my democratic friends were saying what are you doing bringing ken starr and what is wrong with you. then they came and saw him and said he is an impressive fellow. this is what i try to do is judge people on my own. i tried to talk to revi bun myself not using these one-dimensional characters that the media often creates. >> host: why do you think he took on the tests? >> guest: i don't know. that is a great question. in his mind kim said that he was called the service and i believe that. he was implored to do this just as he was employer to the solicitor general and give up his seat in the u.s. court of

appeals and he told me he went back into his chambers and wept like a baby. he did not want to do this so i believe that on one hand, but i still have a problem with the fact that ken, like many of the republican intelligentsia at the time, thought that the independent counsel was a disaster, was a monstrosity and i still don't understand why he took the job and floated all of his talents and energy to this when he didn't believe in it in the first place. i think that was a recipe for not a good result. >> host: let the time there wasn't a consensus that this was doing a bad job. fisk was a widely respected person so the question remains, why do you think ken starr took on that task? >> guest: well, at the time you have to remember hugo that there was a portion of the republican party that was insensitive to robert fisk, that thought he was doing a whitewash

job. he had already written a report that fins foster had been committed suicide. not been murdered, that was what was being portrayed in some books and media accounts, so there was a lot of pressure on the three-judge panel and others to switch at that time. >> host: from that part of the republican party. from looking at the outside what might be forgiven if the perception were given that not only the three-judge panel but judge starr back were responding to the pressures from an extreme element of the republican party? >> guest: don't forget ken starr had done the investigation of the packwood diaries. i think he saw it as, there was a moment of crisis here. people wanted to change. >> host: this was all pre-monica? >> guest: wave before monica

and he decided this was the right thing to do. i interviewed his wife alice who is a lovely person. her view was, why would you do this ken? i felt he really felt called to do this. i think it was one of his most significant mistakes he made in his career to take this on. >> host: the interesting thing because you follow his life during this period of the independent counsel in great detail. the interesting thing is this was not fun for him. this was not something he did enjoy. obviously neither did the president does ken starr was in agony for much of that time as well. did you ask him if he regretted taking this job? >> guest: i did in a number of different ways and of course ten-- ken being ken, he still would have done it because he was called to do this and he doesn't look back over his shoulder.

he did, i had a number of conversations with him where i told him my view that i thought it was the biggest mistake was expanding into the monica lewinsky matter. i think he was the last person in the world who should have handled that because rightly or wrongly in large segment of the . >> host: a final question. does he, looking back at his career as independent counsel, recognize where he made mistakes

or his office made mistakes. put aside the question of taking on the monica lewinsky matter. whether he was too slow in coming up of the results of the whitewater investigation, where he should not that testified. to what extent has ken starr looked back and said, these for some mistakes and i could have done better or the office should have gone another way? >> guest: well, i would have to go back there and see if there are specific examples. i think in general, ken's do you is his office did the best it could with an impossible situation. i think that is the fairest way to sum it up so i think he would not agree that his office made terrible mistakes. i think even with the starr report which is something you were familiar with because you worked with the clinton white house when that a private on the scene, and i think ken felt there was really no way to avoid putting all the details into

this thing and as you know, that may have been the single event that galvanized the clinton forces to defend the president at that point because it was so over the top. >> host: let's talk a little bit about monica lewinsky and the cast of characters monica lewinsky introduced and to the story that you write. you had a chance to talk to her. what did she think about this experience in her life? does she regret anything that she did? then she looked at this as a positive experience? how does she look back at this moment in her life? >> guest: i don't see how anyone could look at this as a positive experience greg and i have come to have a great deal of sympathy for monica lewinsky intra-family. i have to say i've been into this not knowing what of the think about her, not knowing what i would think about paula jones. monica is a very, very smart person, one of the most

difficult interviews in many ways because she knows exactly what she will talk about and what she won't talk about. i spent a good bit of time with your. i sat on folding chairs in a storage room in greenwich village going to documents with her when i finally convinced her that i should seize some of the documents from this thing to help me tell the story. it was clearly a very painful day for her. this was not a joke in any way for monica lewinsky's family. it was the worst experience in their lives. there is no way to undulate but i will tell you this. what beverly came to respect, she is one of the few people in this whole saga the just openly acknowledged that she made mistakes about things. did not try to justify or rationalize that in any way, but nonetheless, when you stop and think about it, often people will say well it you were having

an affair with the married man who you know also happens to be the president of the united states you have to assume this sort of thing is going to happen and she just wanted the attention or whatever. well, my answer to that is if you have this kind of a relationship you certainly know that if things go wrong your picture may appear on the cover of the tabloid magazine in the supermarket. what you do not expect you are going to be cornered by fbi agents and federal prosecutors and told you might go to jail intra-family is in jeopardy. you would never imagine that in a million years. this was a nightmare for this family. it is a very sad part of the story and i think she gets a lot of credit for behaving admirably because it was just a terrible experience. >> host: one of the moments in the investigation that you focus on is that moment that the fbi

and of lawyers from the office of independent counsel confront her with the possibility that she has filed a false as the-- affidavit, that she is misrepresented the truth about the president in connection with the public jones case in the details of that and the story of that particular incident, i think you told the story. you got there and obviously the independent counsel, people spent time with you on this as did ms. lipinski and her parents. what was the significance of that event, that moment in the ritz carlton hotel? nicolette the bracing of monica lewinsky. tell us what the significance of that event was. >> guest: it turns out to be very significant because this is the part for the whole thing kind of comes together. one of the great ironies in the story, greg, is that on one hand monica lewinsky was the office

of independent counsel's starr witness. they needed her. they had to take the position that everything she said was the truth except for one thing and that was their treatment of her when they first confronted her in the ritz carlton. on that front they are rustically had to argue she was not telling the truth and in fact she was not allowed to talk about that during this whole time. in the end, as you know from later on in the book i disclose that there was an internal investigation by the justice department, jill wind here is a who was appointed by ken starr's success robert grey to conduct in the investigation against ken starr's office about a holes the things and the one piece of it jo-ellen here is concluded there were problems with their handling of this brace of monica lewinsky, brace being confronting. that was first of all, there was no real planning.

the prosecutors told me they thought naïve leap-- this happened very quickly. they went in there thinking they would be there for 15 minutes talking to monica and she would agree to cooperate or whatever. they did not have a plan of what happened when this young woman did not want to cooperate in not only that asked to talk to her lawyer who had written the of the david and is joanne harris told me she would have gone nowhere near this once monica started asking for her lawyer. this was not one of the high points of the ken starr operation and it has been. all of this time. deland harris' feeling about this is look everything else has come out about this story. it doesn't seem appropriate to hide the one piece of evidence and facts that do not necessarily paint the starr operation in the favorable light. >> host: before she wrote that report sheed offered-- has that

report been published? >> guest: it is still under seal. i just got joanne harris' as the author told me essentially what was in the report. but, that has been hidden for all this time and was placed under seal by the court, but under these circumstances my judgment was that was important for the public to know because lord knows that everything else, grand jury testimony and virtually every detail about people's lives was made public here and they did agree with her that that was something the public deserve to know. >> host: we have to tell our viewers who joe wind harris is silly get a sense of who she is. >> guest: joanne harris had been head of the criminal division in the clinton administration under janet reno and was picked because she was

the u.s. as neutral, the unbiased and dave theory thoreau person. >> host: let me just say as a lawyer looking in, it is a little surprising that the prosecutors, when they were organizing in thinking through what they were going to try to achieve with miss lewinski in the ritz carlton hotel had not developed a strategy sufficient to deal with the question of immunity, to really think through the various scenarios that might come out of that. were you surprised at that? >> guest: don't forget greg this was happening so rapidly, it goes to the question of should they have got involved in this in the first place? should they have acquired linda tripp and in 24 hours wiring her without first getting permission from the attorney general for the three-judge panel so it all goes to the fact that at this point this is where i feel that the office of the independent counsel kind of lost its

composure as prosecutors, and wanted to as jackie bennett told me get the head of the curve for once because they thought they were getting stonewalled by the clinton white house. it is not your job to get ahead of the curve when it comes to something like this and it led to problems i believe because it had not been thought through correctly. >> host: one of the fact that was in dispute about what occurred in the ritz carlton was whether not the office of independent counsel asked monica lewinsky to wear a wire into the oval office. did you bring clarity to that question in what you think happened on that issue? >> guest: they clearly talked about her wearing a wire to record conversations. as to who i am not sure. i don't know they were talking about going into the white house to talk the bill clinton necessarily. maybe two vernon jordan, but it is very clear.

wet one point jackie bennett called over to make sure that they had the equipment ready in the office if she was going to wear a wire so they were talking about that and both she and her mother ran at met about this. as to the specifics, did they really think she was going to go into the oval office and talk to bill clinton, i am not sure that is what they had in mind. >> host: then the request came to the cento panel to expand the assignment, the mandate of the office of independent counsel and before they went to the panel that went to that department of justice as to whether or not they would support it and the doj supported it. you talk to the attorney general and eric holder who is now the attorney general. did they regret supporting giving the office of independent counsel this additional assignment? >> guest: i interviewed janet reno at her home in florida and

as you know she is a very, she thinks carefully before she enters entered enters are very short. but, she said i would have done things differently, but i think they felt hemmed in and as you know we had the presence of mike isikoff from this week here who that called the office of independent counsel and said that he was going to have to contact vernon jordan and monica lewinsky to confirm the stories of ecat information. they felt pressured that they had to act quickly so there were a lot of the tense and incidently i do think this is what journalist do. there wasn't anything wrong with putting pressure. the question was should the justice department have dictated its behavior by what the journalist was or was not going to publish. i think that was a mistake that eric holder and janet reno clearly felt troubled. they clearly felt that they had more facts, particularly about some of the involvement with the

paula jones' lawyers they may have easily appointed someone else but what they have appointed a special prosecutor? yes which is an interesting part of this story because just because you get rid of ken starr doesn't mean the locomotives to listen coming down the track at president clinton and that locomotive was the public jones the position. >> host: this bill with which this tuckered was also a component in what happened. for example and you talk about this with the media. there is a constant theme of your bucket how to import and the media's role was in the development of the history of this in the decision-making was influenced by the media. and of course mike isikoff played a central role at that particular moment because he was threatening to publish at any moment. corsi geldof publishing a little bit and when the questions i got is what it is a cop had just gone ahead and publish what he knew according to the timeline that he had laid out for himself?

would that have made a difference? >> guest: that is one of the questions i asked tarek the justice department had just said we don't care what mike isikoff says. we are quinn to take her time into this. that is the really interesting question in that two bases in the book because i talked to a lot of judges. the prosecutor's job is not to encourage people to live and if that happened it is quite possible that president clinton would have gone in for the deposition and figure out how to tell the truth because he knew what was about to hit him over the head so that could that change things considerably. >> host: you do described in great detail the parsons deposition in the paula jones case which by the way was played at the impeachment trial with the description of the definition of sexual relations. another key moment in addition to the paula jones deposition was the president's appearance before the grand jury and his

testimony there and that was where some great lawyer ring from david kindle kurd. can you describe what happened there and how david kindle's presence on the scene in this preparation made such an important difference? >> guest: first of all the whole grand jury, the event was set up in a way@bp&h "d haubbgud the whole thing. i've watched it many times. there are some things that are false and then you can debate about whether it was intentional and whether it was shady and moniker himself as you know from

some of these stories concluded there was no way of ground some of these things being falls but for the most part president clinton did a masterful job. starr office of new of. they totally-- like trying to nail jell-o to the wall and president clinton clearly dominated. his big mistake was going on television that night and showing how it can start. >> host: you do remember what the vote was in the united states senate in the artery alleging perjury in the grand jury for acquittal. >> guest: yes, that is correct. >> host: two things quickly we can talk about. one was how close hillary clinton came to being indicted in the discussion of the indictment and secondly briefly the secret service versus the fbi. these are two themes you described in great detail. i don't think it is ever been discussed the way you discuss it

in your book. let's talk about it, the suggested in duckman of the first lady. >> guest: no one has ever seen this indictment to my knowledge except myself and i got my hands on it somewhere where it shouldn't have been. that is one of the great things about doing products like this so i know president clinton and mrs. clinton have never seen that yet. it was going to be an indictment of the first lady anne webster hubbell and it was going to relate to whalop that early whitewater stuff. it was being mainly sponsored by ewing who was in charge of the arkansas phase in things you believe mrs. clinton had lied in her answers to some of these things. that is what most of it had to do, not with the conduct itself was less significant. >> host: he got talked out of that by members of the office of the independent counsel. >> guest: he told me monica sade hillary because the office

of independent counsel was so focused and thought they had the president in their sights they thought this would be a distraction into be fair about it their assessment was at this point the chances of actually convicting even at the indicted were very low, so they chose not to do it but that was going on right at the time that they were pursuing the prison on the monica lewinsky charges. >> host: to testify against the president and the secret service presented then resisted that. and you tell that story. it devolved into were fbi agents were accusing the director of the secret service of participating to cover up. that is shocking. >> guest: i spent a lot of time on this in the book is you know and it is just a remarkable piece of the story. the head of the secret service who also happens to be from pittsburgh originally, decided to break his silence into talk to me and it was remarkable.

he did believe, and really most of this story i checked out as carefully as i could. it was just remarkable that he believed the fbi was pretty much try to set them up to get him to agree that he was somehow facilitating liaisons' with the president and young women in the white house. >> host: feeding him false information hoping he could find out that false information. >> guest: having to do with the blue dress and telling them there was no dna on the dress. >> host: finally a lot of people after the president was acquitted in the impeachment case said well live least the system works. if you look at the entire story in the world that the institutions of government play, to think the system worked at the end of the day? >> guest: the system worked in this case? the system worked in the sense that the american public put a stop to this finally. it was the pressure of the american public this said enough, we have had enough in this trial has to come to an end

but they think both sides in this and here i'm not thinking about ken starr and president clinton personally but both sides got to the point that they really lost their heads and were ready to win at all costs. there was not restrained in this i think is what produced the just collision that occurred here that was not good for the country and my hope in writing this in one of the reasons i spent so much time trying to get this right greg is really had to think we have to learn from this that we can never ever let this get to let ourselves get to this point again in the country. it was a devastating event when so many other things were neglected, so many of the things were happening which we now know terrorist starting to think about it tax on the u.s. and this is what we were focused on. >> host: one last question. henry hyde was the chairman of the gigi shahri committee, probably as responsible as any single individual for the

impeachment of william j. clinton was defeated in the trial in the senate, but when you talk to him, he took pride in one fact and let me ask you my last question in this interview. ..

thank you for being with us this evening. president obama today spoke and the first anniversary of the 787 billion-dollar stimulus package that passed the congress and he signed last february. here is a little bit of what he had to say and that we will get our authors reactions. >> we acted because we had a larger responsibility than simply winning the next election. we have a responsibility to do what was right for the economy and the american people. one year later, it is largely thanks to the recovery act that a second oppression is no longer a possibility. one of the main reasons the economy has gone from shrinking by 6% to growing at about 6%.

this morning we learned that manufacturing production posted a strong gain. so far the recovery act is responsible for the jobs of about 2 million americans who would otherwise be out of work. >> host: amity shlaes what is your take, the president had to say about the stimulus package? >> guest: well peter i'm glad it is the stimulus anniversary because now we can say we are done with stimuli in 2010 will be a non-stimulus word and maybe barry that wording get it out of our public vocabulary, because stimuli don't work all that well regardless of what the president claimed. >> host: now, the president said the stimulus package presented a second depression. >> guest: well, i regard that as hyperbole. the analogy here for our economy is not the u.s. in the 1930's but rather japan, where there

were i believe ten stimuli over a series so of the anniversary of the stimulus to get another stimulus and in the end japan's debt was up there with zimbabwe's in jamaica's and unemployment went in the wrong direction during that period so we want to compare where we are now to the '90s, what became the lost decade in japan and that demonstrated the weakness of stimuli as a care. plus could dean baker, same question to you. >> guest: wiley think president obama exaggerated the impact certainly but for example i don't think we did before the great depression. it requires not just one bad year but basically prolongs ten years of stupid economic policy and that something that was really in the cards but i think it did lead to growth, did lead to employment. there is a number of independent

estimates in the congressional budget office, moody's, global so they are pretty much the same range somewhere in the order of 1.2 to 2 million might be a little high. 1.8 million jobs, probably closer to a percentage point added to and-a-half 3% of gdp or. that is a big deal. is not nearly enough and we are still looking at an unemployment rate that is almost 10% in projections are we are still even two years of looking at an unemployment rate averaging 03% and are now projected to get back to normal levels of unemployment until five years out which is why i would like to see much more stimulus but it is important to put this in context that we should've seen much more class february, but it did have a big impact and a positive impact. we would be much worse shape without a. host: you would like to see another stimulus just as big or bigger maybe? >> guest: to put this into some context of the look of our

lost demand why are we in the situation? we have this housing bubble. we are building houses like crazy. we had a bubble and nonresidential real estate. that purse. the bubble wealth around $8 trillion in bubble well, most of that has disappeared. that bubble wealth was feeling so you to add up how much lost we have because of the collapse of residential and nonresidential construction it is somewhere in the order of $1.2 trillion a year. the stimulus package president obama has drawn on the table people talk about 787 billion. 87 billion of that was technical tax issues from the stimulus, around 100 billion or so will be spent in later years so if you say what are we spending 2009/2010 it comes to roughly $300 billion a year so we are trying to replace $1.2 trillion in lost man with $300 billion in

stimulus. that is not going to be enough. i think it was a step in the right direction and i'm glad we did it but is nowhere near enough stimulus. >> host: ms. shlaes, any reaction to that? >> guest: i have the supply orientation so i would ask and a lot of us would ask, what would make someone want to supply something to supply a job, to supply a new-product? keene is arguing more from a keynesian perspective. i would argue from a classical perspective then when you have spending like that what happens if there are all kinds of distortions in the economy? to put it in common sense terms you don't know what the next emulous is coming if you are a little firm. you don't know where it will be. you know tax increases are coming to pay for the stimuli. you are worried about the health care situation. maybe that will help their business to have help from the government but it might put a mandate on you so you don't, you

to not contribute to the economy and that very much is what is impeding our recovery. stimulus there gets in the way as opposed to helps. you can see purchases advanced over time. the government gives you get big enough offer you will buy a car this summer where the then@@@@ sounds 202-73-7002.

you can also ascendancy tweet at twitter.com/booktv or an e-mail at booktv at c-span.org. let me tell you a little bit more about our guests before we get to your calls. for speier going to start with dean baker, the co-director of the center for economic policy research. he is the author of numerous books including "plunder and blunder" and his most recent is "false profits" recovering from the bubble economy. appeared in several publications including "the atlantic monthly," "the financial times" and "the washington post" in currently writes columns for the american prospect, the guardian newspaper and trista or. if you want to follow his blog you can go to american prospect bought borgen click on the top of the tehjan blogs and you will find him there. his blood is called "meet the press." amity shlaes as a senior fellow at the council of foreign

relations, syndicated columnist from bloomberg news service and a former columnist for the editorial board for "the wall street journal." she is written several books including "the greedy hand" how taxes drive americans crazy and what to do about it and the one we mentioned "the forgotten man," a new history of the great depression. she has a web site, amity shlaes.com. we want to show our viewers the federal budget proposed for 2011 along with the deficit then what is left for discretionary spending. the obama administration has proposed this. about $3.8 trillion in federal spending. that $3.81.4 trillion is in discretionary funds and the projected deficit is about $1.3 trillion, about 8.3% of the gdp. now, dean baker and amity

shlaes, today on the american enterprise institute web site, norm ornstein growth ts abt government spending. government has been transformed from said the program sets indigested year-to-year by politicians responding to short-term and long-term problems to one of an automatic pilot. the old phrase that mr. ornstein learned in college was to budget is to choose. we no longer choose and that makes the over focus on the tiny share of the budget allocated to discretionary domestic spending so discouraging. amity shlaes, first of all is the deficit too big and do we not have enough discretionary spending funds? >> guest: sure the deficit is too big but what is different now safe from the 1980's or the '70s is exactly that tuition norm ornstein is the looting. were trapped by our entitlements, those created first of all and the new deal

period such as social security. that is not the discretionary part and then you add to that the great society entitlements and also this is a bipartisan thing, medicare part d for example under president bush. they hog the budget and they hogget wider and wider in the discretionary spending is squeezed to decide. you want to mention also i believe defences discretionary people don't want to mess with that so you have discretionary spending that they are-- very narrow thing. the economic theory that fits here is called public choice theory which says government is aggressive and what you see when you see a budget like that this government winning. >> host: so, what is the solution in your view? is it cutting spending? is that raising taxes? >> guest: we used to save the cut taxes it will be alright.

this time you can't do that. you have to have to rearrange the budget and rethink the entitlements and start with the idea that young people don't expect social security to be there for them in any case and we also were rained some of these things. i was interested to see congressman paul brian has a new proposal that is rather thorough. he changes social security, he changes health care, he changes the tax code radically. including for many high earners probably increasing their tax with the flat tax rate anyway of 25%, to rates ten and 25 and stop taxing capital gains and that is a big change. it is a completely-- that is the kind of discussion we need to have been there is more common ground i think in the two parties then one would imagine there. both parties have to talk about this, democrats and republicans about how the reform those

nondiscretionary? >> host: dean baker. >> guest: first thought in terms of the budget deficit, we have big budget-- deficits. people like alan greenspan and ben bernanke gave us the largest downturn since the great depression. that is why we have a huge budget deficit. we didn't have a huge tax cuts. we had stimulus and response to the downturn. we have higher unemployment if we have not had that but let's be clear if we are upset about the deficit greenspan and bernanke, i don't know why we reappointed bernanke. in terms of the entitlement programs, yeah we have a public pension program, which is hugely popular. you look at polling day that-- i was at a conference this morning in social security is over 90%. they ask people would you be willing to pay higher taxes to sustain sosa security benefits and 70 to 80% said yes. i don't see any problem with running a pension program through the public sector.

what is the problem with the? it is usually popular. health care costs, medicare again. we are providing medicare health care benefits for seniors. that is also hugely popular. you have these tea party people out there yelling don't let the government touch medicare. they are anti-government but they want medicare. medicare is a government program. these are success stories. our health care costs are out of line in such as security has not been rising in its share of the budget and it will in the near future is baby boomers are retiring and getting benefits. in fact it actually fell a few years back but in any case that is not the big share of the budget. medicare because we have they broken health care system and president obama was trying to address that, but that is the direction you have to go, so we want to talk about getting our budget in line really this is a health care story and one point

to understand here, we pay more than twice as much per person as people do in any other country we think is comparable, germany, canada, whatever country you want to point to. with we have the same for person health care costs we would have enormous surpluses as far as the eye can see. so we have an enormous health care problem and that is dealing with special interests, the pharmaceutical companies, the medical supply companies, the doctors, the insurance companies. congress is not anxious to tackle those but if we are worried about the long-term budget situation it is the health care story. >> host: it is time for your calls. carlynn indianapolis, your efforts. >> caller: hi, my question is for dean baker and it involves the viability of the campaign stimulus. let me first-aid i'm a lifelong democrat but i have major questions on how any keynesian stimulus will work when the

conditions that allowed the keynesian stimulus to work under fdr namely, that we had very limited in flow of workers the immigration. not what we have today. we have massive inflows of new workers, i think 1.5 million issued new visas every year according to the census department and i don't know how many illegal entries for workers. it seems to me the keynesian stimulus worked precisely because under the 1924 immigration act there was relatively little in flow. >> host: mr. baker? >> guest: i don't think immigration changes the story. i think your numbers are a little high. mini emigrants, accounting undocumented workers and illegal immigrants but many of those are not workers. some of those are families, kids and parents of people who work here but in any case that has some medpac that would say on

wages that there is a lot of research showing wages of less educated people tend, there is downward pressure but in terms of that total employment picture that is a relative drop in the bucket in the scheme of things so i think we should be talking about immigration policy because they think the current policy is a complete disaster, having millions of people work off the books is that for them in bad for workers and i would like to see those people in a situation where they can work on the books. they actually did not break the law. the people that hired them for of the lahsa we could throw people in jail for hiring undocumented workers and we could talk about that but i think we should be performing immigration law but that is not what is preventing the economy from growing and that is not why we have 70% unemployment. >> host: thomasville, pennsylvania. thomasian on the line with amity shlaes and dean baker.

>> caller: how are you doing? great programming c-span. i have a couple of quick questions. one is the regulation of derivatives, there is none as of yet and i think that was one of the reasons what has happened with this debacle, and also, it is one of the things where the pendulum sometimes swings too far and you can't regulate too much, where you fort growth but you have to regulate somewhat because of the things we just saw like thomas jefferson said if men were angels there would be no need for government. also come on the one gentleman, mr. baker mentioned about another stimulus package. where are we getting this money? is that just seems to be building and building and building. >> host: amity shlaes would you like to address those concerns? >> guest: thank you for that question. the regulation of derivatives is

important because there was a big what we would kindly call disingenuousness on the part of the market and regulators since derivatives fell between regulators they didn't have to be regulated and we have lived with the consequences of that but i would also save one reason we need to regulate derivatives is the too big to fail doctrine, and a better way to go about this is to let those who invest poorly in derivatives failed. then they want next time make the wrong that. if you overregulated and overregulated and then press ewind westy you have a postal system, very team, not susceptible to strong growth, makes the u.s. less competitive so the standard for derivatives regulation should be transparency, markets and clarity not arbitrary prosecution and beating up cases where the agency goes after this person or that person but if you have lots of clarity about how

derivative should be traded and were, that is fine. it is time to cooperate internationally. what is not find this to make prosecutions out of it and again the problem behind it is the too big to fail doctrine because then too big to fail banks will trade in derivatives. host: the gentleman referred to our programming last night. we had discussion of the wealth of nations by adam smith. amity shlaes one of your books is called "the greedy hand." is that any reference to adam smith's invisible hand? >> guest: not really, although it is related. it is from tom paine who spoke of "the greedy hand" of government, thomas paine, making our prosperity its prey. when i wrote this book we had prosperity. it was the '90s but it seemed that taxes for some of getting in the way so i was trying to capture that. thomas paine was a great pamphleteer from around the time of america's founding.

>> host: very quickly what is your opinion of adam smith and alimport missy today? >> guest: he is very important and he is worth bringing in. i am just trying to think of something pithy to say about him, including his concept of the comparative advantage. because it does matter for example what we do about labor prices. now we are in a competition. globally we should make what we make baston and you have you know for example stimulus money we often make what we don't make best because there is a stimulus subsidy for it so i say read adam smith and don't right stemi why. us cabeen baker, are you a fan of adam smith? >> guest: we have all learned from adam smith just as we have from keynes. in terms of this idea of the division of labor comparative advantage, you know, one of the points i often make is that we

often read this so selectively so we have this idea somehow we are going to be the smart people and get the labor from the developing world. that is nonsense because they are plenty of people in india and china who are every bit as smart as the player and the reason we tend to get the smart jobs is because they are smart people get congress to give them protection so it is easy for someone from mexico or developing countries come to the united states and work as azvzvd

with all of this stuff that we hear on television. i would just like to know-- >> host: koehler can you give an example of the kind of stuff you were referring to? >> caller: i mean, you know, i mean it means the unemployment rate, people are suffering and did most other countries there would be demonstrations in washington. the american people are just not cut out for that. they just stand by and wait for their politicians to do something. we know how bad congress is.

we know so many of the things that are not being taken care of for the american people. >> host: let's leave it there. let me add something to that for both of you to respond to. here is an article from this morning's "washington post." leaders henline for budget panel, president obama will name allen simpson and erskine bowles and the clinton white house to chair a commission to solve the nation's budget problems and he will be announcing that tomorrow. to build on what the caller said about the american people, not protesting as much as he thinks they should and appointing this new budget commission, what do you think about both of them? why don't we start with amity shlaes? >> guest: well, a commission is not a solution and there we hear what the caller richard from brooklyn is complaining about. there is sometimes yap yet been commissions don't usually have strong outcomes. i can think of the social

security commission that came out after september 11th and no one remembers what it said even though was interesting. we have had plenty of commissions that went nowhere so here we share the callers restoration and also his measure of unemployment which includes workers, so-called discouraged workers and if it is real. so how do we solve that? the answer is still true growth, mostly in the private sector. i would disagree with the caller. i can think of countries alas such as latin pheaa which is suffering i believe 20% unemployment right now because the people have decided they want to be in the currency of the euro. they are sacrificing something. with people's something to believe in, if future hope for growth, they will do a lot and that is important to know. i think if we had a more coherent vision about our own reform the country would pull together and do that. >> host: mr. baker?

>> guest: lotfi it is an interesting example and i think people are putting up with it because they realize there aren't any other alternatives. their debt-to-gdp ratio would be too high. but that aside, we care about the united states first at four mustin i am actually amazed, we are not the country designed to have high unemployment so if you compare the united states to europe we as a matter of design have got rid of essentially non-work supports. we had welfare reform in '96 and we said you know, we expect people to work so if you don't work you don't get health care, you don't get normal income. you really can't get by in nonetheless we are looking at a situation where we are looking at again the official unemployment rate projected to be over 9% next year or 8% the year after investing get back to normal levels until the 2015. we are talking about an extended period of their high

unemployment. when it candon people working part-time and voluntarily, discourage workers you are up 17% so we really are talking about a disastrous situation and i am surprised there is and more anger. there is a lot of things but it does not manifesting itself in any sort of organized political effort. itis take that as many people are very frustrated but clearly there is anchor and people looking at wall street, the banks getting record bonuses and people basically brought us this mess. they got their bailout and now they are happy and tossing around millions of dollars and crediting themselves on the back for being so smart. maybe they are because they ripped us off. but no, we don't see the political movements. i wish they were there but they are not. >> host: mr. baker you reference congress in an earlier statement. do you think the political leaders are abdicating their budget responsibilities? >> guest: no, i mean i don't

think there is a budget responsibility. i see this as a huge distraction. we have accused-- we are talking about the deficit. it is really kind of silly. it is sort of like our house is on fire and we are using a lot of water to try and put it out in we get these guys to run over and say you are using a lot of water. it is close to crazy. the media concern should be getting people back to work in the longer term issue, somewhere down the but we have to fix our health care system, better sooner than later and i can give the 20 ideas on how to fix the health care. we know how to do it but no one, the politicians still want to tackle those powerful and as groups and would rather go blah, blah, blah about the deficit. >> host: our next call comes from westcliff come colorado. dennis, go ahead. >> caller: hi, how are you folks doing? i would like to note there could be a systematic financial

collapse worldwide and the reason i say that is there has been talk of the world global bank and if the bank, the banking system right now was talking about a global tax for a central bank, and my concern is that there is no involvement of the world bank or the imf can any of these individual countries' problems with financial issues, and my concern was if there is a global bank that is there going to be possibly a world currency, and the financial collapse of each individual country so that we have a one world order? >> host: amity shlaes? >> guest: one of the things we have been talking about at the council on foreign relations is what is the next currency going to be? you get the argument will it is going to be a global currency, a dollar plus zero instead of the

dollar but we have also talked about the possibility a global currency might come from the private sector because technology makes that possible. you see and ads of the credit-card companies they like to treat themselves as money, gold credit card, the currency credit card. you will see those phrases in ad campaigns of the big names. i think the threat to the dollar will come not just from the chinese currency or from the euro but also from the private sector somehow or other. if you entered qa 20-year-old in india and say which the trust mark yourself phone company or the u.s. dollar, he might hear the cell phone company name. that is interesting and finally that is not necessarily horrible, to have a private money or a free money. it is good to have competition among monies so the more virtuous money has an opportunity to show its virtue and free fail. >> another call from colorado, this one from erin in denver.

>> caller: good evening to you folks in keep up the good work c-span. mr. baker you mentioned earlier economic mismanagement and ms. shlaes mentioned entitlement programs as some of the reasons why we have a negative effect on our economy right now. i am actually a master students studying international security. i have a keen interest, excuse me i am feeling under the weather coming in foreign policy and it particularly the effects of our foreign policy has on us domestically. the dod recently requested a budget in excess of $1 trillion. how is this going to affect our economy and if we slim this down how will this policy-- positively affect us? >> host: amity shlaes let's start with you and then then the maker. guess delicti chartered defense spending in kobach to world war ii you will see we are nowhere near up to that in the pentagon

always ask for lots of money but you want to see what they get and where it fits in the size of the economy and it is a surprisingly small amount. i remember a few years ago writing about the fence. 3%, 4%, 5% like that. you don't see 20, 30 or 40%. in world war to the defense was about a third of the whole economy and we are nowhere near that so this idea that the fence is what has failed us, that is wrong. it is housing, it is banking, it is the too big to fail doctrine and the policy that ails us in the market policy. >> guest: i would say defense spending did not put this into this but it is a drain on our economy and if you go back to 2000 look at the projections for how much we would be spending today. the project we would be spending half as much. they projected our budget in 2010 and went before% of gdp

instead it is five. the difference is 350 billion the year so that is not a chump change. we are curious about this so we contracted with global, one of the alvis forecasting firms in the country who said show us what does your models show the impact would be of prolonged increase in defense spending? weise said 2.5% of gdp. leagis said 1% of gdp in their models showed in the long run that lowered employment by 600,000 jobs, 600,000 jobs. given we are talking to .5 times as much as buckbee asma modeled we are talking about a loss in the order of perhaps 1.5, 1.6 million jobs because we are looking at the higher level of defense spending so it is a big impact and apart from what we might think of the wars in afghanistan and iraq let's just talk about the cost and we haven't had that debate. when we start to say okay you want to fight the war in afghanistan, let's talk about

the cost and be clear to people, are you still willing to fight that and then people runyan scream, we can't talk about that. if there were that we should be willing to pay for it and for rather for reason our politicians in washington are reluctant to have that conversation. >> host: this is booktv well congress is in recess for the week. we will be live from 8:00 to nine mikuak all week and last week we talked about adams smith and the wealth of nations in tonight the current economic situation. tomorrow night we will be discussing the afghanistan war with two authors and friday night we will be discussing silent spring, rachel carson's book from the early '60s. debbie in everett, washington you were on with dean baker and amity shlaes. >> caller: thank you very much for your program i am so appreciative of the people in our country that are addressing the concerns that we all have.

i know your topic here is the current economic situation. i have got kind of to sort of questions/comments. one has to do with tea parties. i think that's when mg is bringing up the fact that we have eight real policy problem in politics in the united states in general, one of the things that upset me so much is the idea that no taxes, that's copping out the citizens in terms of responsibilities not contributing and managing the cost seems to be rising especially with the tea parties and some of the really right wing republicans.

and i think that is pretty shameful. so, i wanted to hear a comment about that because i know relative to other western countries, again heart attacks base per capita tax base is pretty low and i think it is time that we started having leaders that could address the fact that we need to pay for the benefit of the social programs that the people need and want, and that kaupthing out of that responsibility is just not community minded. plus cud debbie we are going to have to leave it there. let's start with dean baker. >> guest: certainly debbie is right that our tax rates are among some of the share of our tax take, what portion of the economy goes to taxes is among the lowest in the wealthy countries.

we are closer to japan but were well below germany, france and england. we are well below those countries and there's this mythology that some of those economies are suffering enormously. if you look of the most important measure of vitality, productitm,'tuu6i"uu6a'uu6lr0x0e

towards that is if you want to place abed in the state lottery and you want to go to the casino we taxi and if you want to place your bets on wall street in derivatives that is fine but we are going to tax you. >> host: amity shlaes? >> guest: i was interested the caller said no tax. you want to remember what the original tea party was about. it wasn't about no tax. it was about no taxation without representation. so there is a feeling now that politics is broken and you are compelled to pay taxes and entitlements taxes for things you are not sure are a good deal or believe need to be fixed so it is not no taxes.

it is a change in the tax relationship with government. we all believe, even those of us to write a lot about how taxes are bad, believe there should be some taxes, some tax relationship with government. indeed one sort of creepy thing about the u.s. now is the bottom half pays almost no income tax at all. the top earners pay a greater share of it then they used to pay so you look to the top 5% paying i don't know, the nasonex gurganus, one-third of the taxes? it is skewed enough already. what i think is interesting about the tea party is is they are saying it is broken. they are saying it is broken and that is what the original people dumping that he in the harbor were saying. our relationship is broken. maybe we would be better doing more local governments. >> host: don in virginia, good evening. >> caller: thank you c-span

fur taking my call. you do a great service. i think the federal government is and has been setting a great example for the american people with this deficit that keeps occurring in for example when bill clinton was in office, they publicized a 200 billion-dollar surplus with his budget, which is not true. the same thing with george bush in his last year in office. he publicized in the proximal 500 billion-dollar deficit, which was not true and it is the same thing with obama now. if you take the surplus from social security and medicare away from the general fund, which in george bush's last year in office was a 500-dollar-- there was-- which made his trip

projection $860 billion i don't know how much it is now under obama but they know it is probably approximately $200 billion plus. >> host: mr. baker? >> guest: there are different measures of the budget surplus or deficit that's the case may be and if you want to blame someone here you really should blame the media because every single budget document i know of includes the deficit, both with and without the social security surplus, so you know if anyone wants to find and you conducted the economic report of the president, you could look at the official budget, every document i know includes the budget both with and without the social security surplus. i am happy to use either, depends on the purpose. i would use one or the other. there's some occasions he would want to use with counting the surplus and others wouldn't but there isn't any great mystery here. if we think the better number to

report is the number that does include the surplus, and that the gross government debt, that is fine. it is all available. anyone who wants to can get it and if we think the media, fox news or whoever might be reporting the budget not counting the social security surplus then complain to them because they are the ones to control what they hear. not president obama. he can't prevent them from hearing the correct budget. >> host: paul, good evening to you. >> caller: thank you for taking my call. i appreciated and i love c-span. up with this stimulus package and i am sort of what obama did that because the banks are okay now and we are becoming healthy as a bank and that is one thing that amity never said in terms of for speech about the stimulus not working. this is not the 1930's were the banks just completely collapsed but i have another thing i want to ask amity.

she worked for bloomberg financial and "the wall street journal." where who is she when all this stuff is getting ready to help and then everything was going down the tubes? we heard things are great and rosie in 2008, 2007 and if you think there's going to be a financial collapse, you are crazy. >> host: amity shlaes? >> guest: thank you. i wrote more than once about fannie and freddie, but they did not write in of about overleveraging, so that is where we are. also in that period i wasn't concentrating hard on "the forgotten man" book, my book which is about the possibility of a downturn, so i am for getting your second question. what was the second question? >> host: i think you address what he was talking about, that you were writing about that at the time. are you working on a book

currently? >> guest: i am working on three books, but to which are proximate. one is the graphic version of "the forgotten man" book. is 140-180 pages. abel be "the forgotten man" graphic like with comics and i am very excited about that. i am working with to artists and an adapter, chuck dixon and an actual illustrator who is in canada come to make forgotten man graphic because though "the forgotten man" has been translated into languages there have been many people who have said i liked the story so much can you spell it out more and the economics gets too boring. why don't you just tell the story and so for homeschoolers, for adults who like graphic this. and especially for places in mexico they don't need explanations about what inflation or deflation are. they have experienced it personally but they do want to

hear the stories. the other is i'm writing a pyett garfield calvin coolidge. i have been working with the calvin coolidge memorial foundation in vermont on this. they have been a great help and we have a blog. we invite you to go to it. i am doing that with joe thorned iq's just about finished with a book about taxes and the roosevelt era. >> host: mr. baker, what about you? what is next? >> guest: i am caught up in the debates today about financial reform, financial transactions but i do have a book coming out, taking economic seriously which is to my mind beating up the conservative set their own game because what i tried to point out in this book is that in fact the conservatives are people really very much wanting government intervention. they just want up to it. to give a couple of examples, bill gates is a wealthy man not because of the free market but because the government will rest

me if i start this jim thing copies of windows without his permission. copyright, government intervention in the economy. drugs, prescription drugs. they are very expensive. we are projected to spend $260 billion a year on prescription drugs this year. if we did not have protection we would go to walmart and buy them for for $5 shot. the government intervenes in the economy and all sorts of ways we don't typically talk about and this book is trying to call attention to that. i think we have to rethink this so there is a conventional stereotypical view you have conservatives that want the free market for every person for themselves and then you have your liberals out there who are saying they want the government to do everything in what i argue in this book is that no actually what goes on its conservatives that the government read the rules to redistribute income upward and the liberals aren't smart enough to recognize that so they make silly arguments

about the market when in fact we both want the government in the market. the question is what we want the government to do? >> host: czar rash in washington d.c. your honor was amity shlaes and dean baker. >> caller: thank you for taking my call. my question was addressed but let me ask anyway. my question is about bank regulations, like for example the bang gann-- most of the banks in india are doing very well during the financial crisis because they are run by governments for a good to you think we need to see more of that in the united states? >> host: mr. baker? >> guest: that is a very good question. the legacy dates back from the progressive era about 80 years now and it is quite a successful role. it makes money for the state and help support the economy.

you have examples in other countries. i was in brazil or i guess i should say let's do they have a number of things that help foster development. china has extensive systems, state banks that help them stimulate their economies of china rather than going into a downturn they have a great% growth last year. lot of that was because they had state run banks where they could tell them make loans, keep things going. i am intrigued by that. what i would like to see is something, we could do more experiments along the north dakota model where you could have state run things that compete. i don't want to hand big wads of money to the state run banks and tell them do whatever you feel like but the north dakota bank, that is not what they do. they compete and do so fairly successfully so i think you can explore those market niche is going on now. we already do that to some extent that the small business administration. so i think there are routes like that that could be pursued. we have to do it cautiously.

but i think it can be more room for state banks that compete with the private sector and in fact give additional competition and keep them on this. if it turns out they can't do it, that is great. the private sector is more efficient, find that ilc-- >> host: amity shlaes. >> guest: the question you want to ask is this the state one bank make capital available to the person who will create the jobs and in india there was a long history of government in the financial sector and the capital was not available. they even have this idea the rate of growth could never be strong in india and it only change when india deregulated, went capital from elsewhere became available to india through capital markets so a state-run bank can put a clamp on an economy and say you can grow in a little bit but not a lot. what you get then is well, the growth rate below where you wanted to be come a larger

unemployment in sorrow. you look at a country like germany and there are a lot of good ideas in germany. a lot of people who would create jobs that they could get the money for their ideas in for a long time they didn't because of the dominance of the whole state structure or japan, the post of things. they want exactly liberating for entrepreneurs who chose to come to the n so the rest of the world was a free rider on our banking system for a long time foreclosured had floods and the policy now was wrong. too big to fail is wrong. we are going to have more trouble because of that doctrine, but i wouldn't say private things are bad. on the contrary, they create growth and i want to mention also that someone like bill gates got something from government but he also created crichton number of jobs. why don't agree with the in that class and that with medicare, yes the government in seniors lamek to themselves about

medicare and medicare is for the government that property is important. it is the number one thing for getting our economy back, for getting past that extremely pessimistic tragic plan that the government is putting forward if unemployment is going to go down slowly until 2015, we don't have to follow that pattern and if property rates are expected you will get those private sector jobs. >> host: ted, sunnyville california he wore on booktv. >> caller: i was said the conference in baltimore in early 2004, and mr. baker gave a presentation and called the housing bubble right on, almost to the percentage. i really wish he would have gone into the obama administration and mary-- maybe head larry summers job but my question has to do with manufacturing. in june of 2000 we started losing 100,000