they have a discussion about and it is something that is an absolutely appropriate for public policy discussion in this country. i think it is a perfectly follow us. point of discussion.

"washington journal" continues. host: josh bivens is an economist with the economic public policy in tier -- institute and kevin hassett from the economic policy -- from the american enterprise institute. how do you think this would help or not help the economy? josh, what part of the president's plan to you think would do the most to help the economy? guest: i think a lot of it is very well that spend money, actually. i am happy with the composition. we have a mammoth unemployment

crisis in this country right now. i think the second most effective thing in terms of bang for buck, how many jobs it will create, is the infrastructure spending that is part of it. and then i think the less effective bids will still do something, the payroll tax cuts. we have had a payroll tax cut for the past year, 2%. this extends it on the employee side, and it also adds cuts to the employer side, and benefits to hiring. it will not do nothing. whether that is the maximum bang for the but you can get, i am not sure. host: the items you just mentioned, the you think those of the least effective elements of the plan? guest: least effective big- ticket items.

that i think it's probably the least effective. it does not take a lot of money. it pays for itself in 10 years. it is fine, in my book. it is not crowding out the shelf. the least effective big-ticket item in there is the employer side payroll tax. host: the president is calling for two and $45 billion in tax cuts, $140 billion in infrastructure and aid to states. $62 billion in unemployment insurance in the hiring -- and hiring. kevin hassett, what is the biggest thing about this plan for you? guest: we are close to going into recession again, and starting with an unemployment rate that is much higher than the last time we started going downward. it is a question of how we should act. some of the president's ideas are good, some of them are not.

we're but disagree about the details come up but -- host: what was your initial reaction to the president's speech? he did mention some items that had some republican support. guest: it was actually a big disappointment. i was so disappointed about his speech, i could not blog. it is not that he is not trying. i am stan that his heart is in the right place, but the fact is we are ignoring the big problems and kicking the can down the road. there are big problems that we need to fix in order to restore certainty and a climate of optimism in our country. having athat we're weak recovery because we have got all these big problems we are not addressing, and the idea that we can ignore the big problems and take a shot of

caffeine and get through this year is something we have tried. the problem is the hangover when the caffeine wears off keeps coming back, and that is happening in part because we are ignoring our big problems. the thing that really upset me is that they really did things that need to be addressed. i got so annoyed i could soblog. ready ideas that we have all thrown away -- our infrastructure is terrible. remember the bridge in minneapolis that collapsed. the fact is that i think the average bridge in the united states is about the same age. there is an enormous amount of investment that we have to make not necessarily to stimulate the economy but to keep our economy running because our infrastructure is falling apart.

that is a part that i think -- that is a waste of money. that is the one part that is consistent with the theme of going after a long term problems because we have a long-term problem that our infrastructure is inadequate, old, indicating. host: josh bivens with the economic policy institute, what do you think about the president saying -- what you think about what kevin is say about missing the mark on big problems? guest: to me what is driving new the hut and a plumber rate is -- is simply a shortfall demand. we know why that shortfall in demand is happening. we had it $8 trillion housing bubble that burst. all the construction of new homes that went on during the bubble has collapsed. what we really need is something to step up and provide the spending until households burden

by all their debt that they took on in 2000 have worked that off, feel comfortable, businesses feel comfortable spending up again. it is not a shot of caffeine that will lead to an inevitable hangover, it is spending until the private sector has their balance sheets in order. it is not big enough to fill in the shortfall from the housing bubble bursting, but i think it attacking the fundamental problem. host: let's get right to the phones. herman found, minnesota. bob joins us from the democrat'' line. caller: thank you for taking my call. one of the biggest thing is you could not do to stimulate the economy it -- one of the biggest thing is you can do to stimulate the economy is put money back in the hands of the consumer. if you could do something to the great social security, you would take money out of the hands of

the common consumer there. that money has been earned. it is not a give-away program. what it is is an investment program. we invested the money into show security. -- into social security. we deserve to get it back. it is not a bailout for the wealthy taxpayers. the third thing i think that could be done is they need to get a handle on the speculating, as far as fuel. fuel is one of the things that costs money. in everything that you buy, delivered by truck, train, or ship, fuel is a part of it. the speculators are taking money

out of the pockets of the common consumer because if you have to pay that much for fuel, you are not buying that many more items. that's my comment. host: kevin hassett is nodding his head. what do you think? guest: getting money in the pocket of consumers is an idea that is consistent with what josh is saying. we need to stop thinking about money in the pockets of consumers, and again, one of the biggest problems is that if you look at past recoveries, 70% or 80% of fluctuation in the business cycle comes from firms investing in capital and inventories. in this cycle, the recovery of investment has been really, really slow in the u.s. a big reason is that we of the highest taxpayers now, and we

are not a place where you want to start a new plan. what we need to on social security, i think bob raises a good point. he raises an excellent point. people like us who are a few decades off from retiring, we probably do not expect to get our full benefit as promised. host: josh bivens? guest: i think money in the pockets of consumers is about -- i think there's some truth to that. i would like to see that money even more targeted. part of the original recovery

act, there is a weekly bonus and the think that would be a good thing to replicate. people are cash-strapped. i think he has a good point in terms of -- the spike in gas prices we saw earlier was a drag on the economy. i do not think there is too much you can do in the short term. i do not know how much speculation it is driving up the prices. if you look at investment in equipment and software, it is quite good. the idea that they're not willing to invest -- it has gone from about 6.9% of gdp to almost

8.5%. i think that is doing ok. it is performing pretty well. thatot sold on businesses are to riveted on the argument. listen tos take a president obama in his speech the other night talking about his desire to see the 2% payroll tax reduction extended. >> pass the jobs bill and the typical working family will get -- $1500 willut go into your pocket. this expands on the tax-cut democrats and republicans already passed this year. if we refuse to act, middle class families will get hit with a tax increase at the worst possible time. we cannot let that happen.

host: president obama speaking before a joint session of congress, laying out his plan for the economy. we're speaking this morning about that plan and talking to two economist about that plan. kevin hassett is with the american enterprise institute. let's talk about the tax cut proposals. $175 billion. guest: i think that the payroll tax cut is something -- in part you can say lookout it is working. the fact is that milton friedman talks about why these are bad policies. there is a great review of this argument in the journal of economic literature.

if we give you more money this year and take about next year, there are two problems. if it affects you, we'll have more growth this year, but next year we'll have an equal and opposite the fact. the net has to be negative. if it does not affect you, it's just kind of a waste. you should anticipate that. josh is right. there are people in this economy that are living hand to mouth. if you target tax cuts to people who most need them, the proposal like the president -- i do not think this is a wise policy. host: looking at the numbers.

host: what is your reaction, josh bivens? guest: of all of those tax cuts, i think the payroll tax cut is the one i would take. i think it would probably be all of those things together. if elected the tax cut on the employer side, -- if you look at the tax cut on the employer side, you boost wages for workers. that takes awhile and probably doesn't happen too quickly when unemployment is over 9%. you're giving a windfall to businesses in the short-term. their problem is they do not want to invest because there are

not too many customers coming in the door. this will not solve the real issue. cutting one side is worth trying. there is a crowded for additions to payroll as part of it but that may have some bang for the buck. host: explain that to us. guest: if you add new bodies, there is a credit and it is capped at a relatively high amount. so most firms will get the full amount of the credits. a lot of this stuff is tempered and has to be paid for it down the road. we are hopefully in a temporary slump. host: phoenix, arizona.

laura. caller: i agree with both of the economists. it seems to me that it is a bigger picture -- the economy is so complex. i do not see enough research from one administration to the next to allow the incoming administration to make wise decisions on the current events. they changed every day and they change quickly. i and stan it is complex -- i understand it is complex. our leaders have other agendas. it gets depressing. if we're going to make jobs, we

need to provide incentives were those jobs that are created are going to then produce as good or create an export that will in the end pay for the payroll tax cut or to the employer and to the employee. i hope that was understandable. i do not see enough leadership or research or enough of the things being done with real fought in them. guest: i think that laura is right and of both parties are guilty of this. the thought that is not happening in the white house right now and the thought that needs to happen is the recognition that it is common after a big financial crisis, for to take a long time to dig

your way out. a colleague gave a paper at the jacksonville fed conference where they looked at the history of other countries who have had serious crises and found it is typical within a decade of a financial crisis the unemployment rate is about double the start of the crisis. i will blog always. for me, we need to recognize that have a long-term problem and to address it, we have to go after the big things. even if we do gin up the will comethe handovgover anytime of slow-growth. look at japan. the amount of government

spending that they tried it was historic. but it never really dug their way out because they were ignoring the big problems. what is missing is some sort of historical perspective because we are in something that we are not experienced in a long time. host: the ability to look back and to put it in perspective -- are the conversations happening at a level that takes into account what is happened previously in other countries? guest: probably not. but i think that history is pretty mixed. countries that have seen a financial crisis take a long time to recover. the reason why they take so long to recover is because they do not take aggressive enough

measures. a failure of the political system. in this country, we have outsourced fighting to the fed. we thought they will adjust short-term interest rates. the rest of the government does not have to do anything. the fed's ability to fight the recession has been overwhelmed. now we need other things. a large package like the recovery act. the fact that countries that have seemed a financial crisis take a long time to recover is more of a political crisis. we're still not doing the big enough stuff.

the historyaware of that kevin is talking about but i have a different take on it. caller: i hear a lot of the blame game going on this morning. in the last 10 years, we have had 54,000 -- go overseas. then we turn around and give them tax breaks. then we talk about should the rich be taxed? they have too much money to play with. they are thinking about their pocketbooks. host: what do you think? guest: we have not mentioned globalization in here and we probably should not talk about the economic without talking

about that. i think there's a real problem in the united states. we have chronic trade deficits. basically people cutting back on spending on everything. imports are part of that. it is growing again and a think that is a drag on growth. make exports be an engine of growth. look at those countries -- tell them to revalue their currency. china is the biggest example. we have a policy lever that could create some jobs. make u.s. exports more competitive.

that should be addressed. guest: i think the caller is correct. if you think about our tax code, we have companies that face the following deal from us. if you separate subsidiary in a foreign country as a low tax rates, you can transfer your profits through that subsidiary and not have a lot of profits here in the u.s. it encourages people to move things offshore to avoid u.s. tax. it's a stupid policy. we need to address the whole thing, not just lower the rate. we should not be surprised if that is the deal we are offering people, that they are doing it overseas.

we're subsidizing these guys so look at all the jobs overseas. let's ignore that and try to stimulate consumption right now. we have to lose that attitude if we want to turn this country around. host: we have some numbers from "congressional quarterly." host: how do you change those numbers, or how do you react to those specific numbers? are we talking about a massive stimulus? guest: i would have a fiscal consolidation where we get the deficit in order but we do

things like change the indexing formula for social security so that we get a smaller benefit when we retire. tried to have long-term fixes for medicare and medicaid to pull in some money. and use that money. fix the individual side, which is a total mess. i think that a professor at berkeley and i wrote a book and said if we had a big fundamental reform that was revenue neutral and at the same -- as the current code, you could buy between half a% and 1% over a decade growth. that is about the scale of the shortfall because of the financial crisis. that's the kind of big thinking

we need to have to turn things around. host: what do you make of those numbers? guest: construction is very large. the housing bubble. how broadbased it is. people often focus on construction and occasioned you hear that the real sector is getting all the jobs and jobs are being lost everywhere -- the rail sector. manufacturing is a very cyclical sector. if we have enough spending to support a recovery, manufacturing will disproportionately affected. allon't have the policy

pointing in the same direction. if you do nothing about exchange rates -- it will be nice to see all policy levers pulled am pointing in the same direction. host: steve on the democrats line. caller: i think the jobs package should have been about $2 trillion or more. get the infrastructure fix, all the roads and bridges. if you take and hire people and get a green jobs going, because we need to get off of oil and stuff like that, because it is not doing the environment and the good. these people that holler about people making money, i think that's so silly, saying you need

to get their wages down to what we're making down in the real world. you need to be making more money and you need to start taxing these rich a lot more so they will start spending their money here instead of overseas. host: $2 trillion compared to the president's plan. what would that do, $2 trillion into the economy? guest: it would be hard to spend that much in a year. i am on the high end of what the economy should be getting in terms of fiscal spending. host: what is the number? guest: there is about it $1 trillion output gap.

that is if all the people were back to work. a well-designed stimulus package, probably about $700 billion. so $2 trillion is even higher than i wanted. $2 trillion spread over 10 years to give the economy a boost, that would be great. look at the infrastructure gap. how much money which should be spending and paying for it in the long run, then i think $2 trillion would be a reasonable number. but $2 trillion in one year is more than what i think the economy needs. guest: steve has a strong

argument. we have that a debt downgrade. we have a massive deficit. the debt on by foreigners is about 20% higher than a was historically for the typical latin american countries that default on its debt. even if you think the $2 trillion would buy you at gdp, the stimulus will go away and we will be stuck with the big problems. that is why i would not do it. host: james asks on twitter. at whitehouse.gove

a detailed sketch. host: we are hearing from the a.p. that the president will speak in the rose garden and ask for rate swift passage of his jobs bill. he may be in the rose garden to send that jobs plan to congress. rick from michigan, republican. caller: your guests represent two different points of view. i do not want one guy to speak to me at all. the one problem in the government is the federal

reserve. we have been under the thumb of the reserve from 1913. these people are running the economy. obama cannot do anything. the congress has given up their constitutional responsibility. we need to redo this whole thing. the system is broke. we pay a gasoline tax. that is supposed to pay all the road costs. we're paying too much tax as it is. we need to eliminate the federal income tax. the others need to be looked at.

we have to look at the monetary system. if you print another $447 billion -- we are broke. host: does get reaction. what did you think about his comments? -- let's get reaction. guest: he doesn't want me to talk because i do not agree with this point of view. one of the big problems of the federal reserve is that it is not doing as much as it could be doing to fight the recession. you have ben bernanke doing a lot of pretty aggressive moves.

he has not done big quantitative easing before. the measure should be, are they effective enough? i would like to see the federal reserve even more aggressive. it. pretty happy we have t host: green bay, wisconsin. caller: i have no confidence at all in this jobs plan. we tried this and it did not take. they are temporary positions. will we need to do is cut the tax rate, the federal income tax rate on manufacturing companies to zero. you just think about this. you go to a carl lot that cost $21,000 that will be selling for $15,000, $16,000.

if we do not do this now, we will be in trouble. guest: i agree that some kind of big tax measure combined with other things is what we need right now. the example sound like ronald address old radio where this goes into the price of bread and if you cut the price of bread, you lower the cost. that was onetime tax policy was explained that appealed to voters. i think we're in deep trouble and we have to take deep action. i want to talk about the fed. josh is fun to talk to.

the thing about the threat of wanted to say -- the thing about the fed i wanted to say, we do understand what the criticism is. they have expose us to inflationary risk. it has pumped all the reserves into the banks. this is like pushing on a string. the reserves become money. if it becomes out of hand, you get inflation. in amountey've taken of inflation risk. you cannot attribute that to the fed. the fed has stimulated but they

have not done anything that would create a constitutional crisis, in my mind. host: we have some information about what congress has done over the past four years to stimulate job growth. there was an economic stimulus plan. president obama came into office and there was the stimulus program that we covered here that cost over $787 billion . host: evarts the congress has taken -- efforts that congress has taken. guest: the most effective things

they have done, infrastructure spending works. there has been one criticism -- and itt shovel-ready takes too long to spend. we were pushing for infrastructure spending to be part of the stimulus package but we were told it was not timely enough. have extended unemployment for a long time. i think that is very effective. aid to distress people is very effective. it helps people get through a tough time. aid to state and local companies is effective.

those workers then have money to spend. those are the most effective things you can do in this type of environment. guest: we take it and we feel bad and we take it again. we have to stop and recognize our addiction and move on. host: jerry asks a philosophical question. host: how you respond to that? -- how do you respond to that? on a different were

network, i would say we disagree because josh is an idiot. it is the construction of the show that creates the appearance of mass and disagreements. if we were to list 20 topics, 16 of them would be close an four or 5 we would not. it is the four we're talking about right now. there's a lot of agreement that might be missed because we're saying lots of things all at once. i agree we should invest more in infrastructure. i agree that if we're going to in a money right now "ista "stimulus" -- those people are needy. the unemployment rate is humongous.

the big disagreement i sense -- that we can continue to ignore that and i don't think so. we can go in to the depths of why we have a disagreement. host: josh bivens? guest: i think he is right. we're disagreeing because we read the literature differently. i think the big disagreement is the diagnosis of what unemployment is so high today. a simple short fall in demand. other things are at work. i think you are in favor of work sharing. guest: there is one footnote in the president's presentation.

guest: kevin can explain it work sharing better. using unemployment funds to subsidize it shorter hours. you should collect a portion of unemployment when some of your hours get cut back. there is money in the plan for that. guest: jerry talked about the politics of it. if your attic think tank then what you're trying to do is -- if you are at the think tank, you try to make the world better. you'll take it from any politician who will do that. . nepeople think a.i. is more

right-leaning. obama embraced the policies that i have been pushing which caused the celebration. we want to change policy. we want to to help enact laws with our research. host: kevin hassett is with the american enterprise institute. he served as an advisor to the john mccain campaign. he worked as an economist for the board of governors back in the 1990's. he was a policy consultant during the administrations of george h. w. bush and president clinton. josh bivens is an economist economic policy institute with

the economic policy institute, epi.com. he is been an economist since 2002. we are talking about the president's jobs plan. there is details on the website. we will be seeing the bill today, according to news reports. daniel rights on twitter -- let's go to daytona beach, florida, to hear from louise. caller: i wanted to talk about president obama's jobs plan. jeb bush eliminated the tangible tax on stocks and bonds which

benefited only the wealthy people. it cost $1.8 billion a year in revenue. those lost dollars were made up of cutting programs for the elderly, the poor, infrastructure. we got 81 ser school tax break for school supplies. it saved us $18 a year. we have a multimillionaire turned governor, wrecks scott, who rates government and he wants no federal money from the jobs program. we're hurting so bad for jobs here in florida. wages are low. everything is geared to please rich retirees. balance the budget and the deficit.

reinstate the intangible tax on the wealthy. it is a nuisance tax. miss it.l not even now s guest: i am not aware of the nuisance tax. there is a problem with the debate in the short run. we have unemployment which is too high. we need someone to step up and do the spending needed to get unemployed people back to work. we have a deficit that is projected to be too large for most economist's comfort and how best to close that gap. some people think we'll have the long run deficit problem. if the discussion is how best to

close those projected gaps, i agree a lot with the caller. we need to think about who was benefit from economic growth and take into account. in the short term, we should be trying to make the deficit bigger over the next year or two, because that means more spending power in the economy. deficits are supposed to hurt you by driving up interest rates. the government is still borrowing at historically cheap interest rates. the private sector is starved for more spending. bigger deficits in the next year or two. let's take into account who can afford to pay and who cannot. host: do you think we're fighting a pr war?

there is talk in the congress about deficit and spending and about fighting debt. guest: people who say, "i want the deficit bigger" -- that is the ticket out of respectable debate. there are plenty of people to blame for that. it is a problem that when the economy was still very soft, to o many calls to members shifted to the problem of long run deficits. i think that was a premature shift. the economy suffered because of that. it is a big pr to get people to realize that a smaller deficit

is not always what the country needs. in fact, it needs the direct opposite. guest: i will give some pr advicet to josh. if we look at the expense is the government will have, we have to pay for those. do we pay for them now or later? maybe you have some room for growth. in the end, we have to pay for what we spend. give us a big deficit now combined with things that happen in the future so we can get back to it sustainable level of debt to gdp. if you do that, in and the

end, it will all work out, then people will not throw you out of the conversation. guest: our organization, epi, has such a plan. we stabilize debt to gdp ratios. there have been competing voices out there that talked about lowering the deficit no matter what. people sit check it out if interested. host: alexandria, virginia. caller: i will be brief. we pay all the deficits the day after the sun explodes, right?

if we were to spend any money, it would need to be spent on the money who are unemployed because they are the most likely to spend. a previous caller said that it is complicated. politicians have made it much more complicated. if we were going to try to reform the tax code, what will prevent the politicians trying to tweak it and tweak it and so we'll have a 7000-page tax code again? guest: there was a piece in "the wall street journal" 15 years ago where he talked about tax

code dynamic. the cynical view would be politicians finance their campaign by selling favors. then we have a messy code and it is hard to sell anything to anybody. happens, we have a tax reform. i would have to say that that looks like -- they did sweep out the stables i. we might be ready for tax reform politically, not because we need want economically. we have reached that point again were the code is so complicated that people who want to sell favors will of a hard

time doing that. host: a breakdown of the president's plan. host: let's listen to the president speaking in his jobs speech on thursday about school, transportation, and infrastructure projects. >> will modernize at least 35,000 schools. we will put people to work right now in classrooms all across this country. we will rehabilitate homes and businesses hit hardest by foreclosures. it will jump-start thousands of transportation projects all across the country. host: do you think it will be effective? guest: it will put people back

to work. the big criticism is if it does not happen next month, it's not worth doing. when these projects come on line, it will be a big help to the job market. you get the short run benefit of more people working in the long run benefit of a better economy. guest: i have not seen enough of the proposals. but this is a solid one. and infrastructure bank could find public-private partnerships, help municipalities raise money. in canada, they have invested all lot in public as private partnerships to things like infrastructure, lending. i think it is a solid idea.

it leads a path to restoring some solemn say. -- solvency. raising an enormous amount of money. moving towards be more rational about the way we run transportation is a defensible thing. i've advocated a federal reserve of infrastructure. why is with highways to no worker in west virginia but the bridges are collapsing along the mississippi river? politicians have to much of a say. -- too much of a say. host: let's go to georgia. perry, welcome.

i think we lost perry. let's move on to tracy. caller: good morning. three things. i cannot believe that kevin called milton friedman a great thinker. ask the people in south america about that. the jobs plan should be bigger. tax cuts to not create jobs. if they did, we would be in a boom right now. move on with the tax cuts. host: do you think the stimulus the president put ford should have been bigger and more focused on infrastructure? caller: yes, i do. and i think it worked. host: tracy says the stimulus

worked. this is what matt says on twitter. guest: we have a couple of things. the stimulus did not work. i do not think it was the correct medicine. there was no evidence it was harmful. it probably helped some. friedman was a good guy. we have tried tax cuts already. those who want to get their google heated up this morning can go back and checked. i had a piece that opposed the bush tax cuts. my main concern was the kind of things we have been talking about today.

the u.s. has a weird corporate tax system. i thought there was a serious problem with the bush tax cuts. they give up a lot of money but not used the money to fix the problems. when do we avoid the long term problems or try to get away with ignoring things? i would say the bush tax cuts were the moment when things began to get out of hand. right-wing and left-wing economists would listings you would want to change. we have tried tax cuts. president clinton tried to increase the corporate tax rates. that's the last corporate tax increase on earth. the average was about 40%.

now it is about 24%. we have not tried my medicine. the rest of the world has changed and so it is urgent we do so. guest: on the second package that was passed in 2009 -- most people forget the first one. i think the obama one was very effective. it created about 2 million to 4 million jobs. host: which led to a seen a bigger -- would you have liked to us in a bigger? guest: yes, absolutely. we probably will have to do more and more things to provide more support to the economy.

it it it could have been bigger or could have kept coming back to the problem of jobs. look at private sector forecasters. they are unanimous. it is created or saved 3 million jobs. people are skeptical about the stimulus package. they say move the economy. on the point about tax cuts, policy,t tried kevin's but we have cut taxes in a big way. the tax side, cut the amount of revenue the government is collecting.

at some point, i felt like a pervert policies by never going to be implemented -- i feel like perfect policies will never be implemented. host: this is the president on the corporate tax. >> that stance as a monument to special interest. we can't lower one of the highest corporate tax rates in the world. our tax code should not give an advantage to companies that can afford the best connected lobbyists. host: kevin hassett, can you get behind that? guest: the rhetoric is good.

the treasury has been working on a tax reform proposal to go separate this thing we've been talking about. we subsidize firms to locate off shore so they can transfer profits there. there was a story that said we would see a plan in may, but we did not see the plan in may. they are coming out with a plan sometime soon. they are smart, come from people at the treasury, and i'm looking for to see what the plan is. the president's rhetoric is spot on. it changes the tax treatment of international activity and that could help things at home. host: josh bivens with the

economic policy institute, what do you think of that idea? guest: there is tons of room to make the tax code more efficient and more fair. i am not an expert on that. that is not an mike wheelhouse of interest -- that is not in my interest.elhouse of that requires a much more serious discussion. you can't make it revenue neutral and make a much more efficient and fair. host: michael in atlanta, republican call. caller: this request may seem ludicrous, but which to be willing to discuss the outcome if the u.s. placed a boycott on all countries for assembled products? any country could ship parts and

the u.s. could ship parts to be assembled in each country. thank you. guest: the idea out would be that we would let a foreign automaker ship all the parts here but then we would have to assemble them. that would introduce an enormous inefficiency and would cost us a lot of jobs. i can remember the guy at heritage committee proposal -- outlaw taxicabs and make everybody go round in rickshaws. there would be slower, but there would be a lot of rickshaw drivers. require everybody to go around in a rickshaw. i think this assembly idea weeks of that -- reeks of that. we're all better off that we can

import chinese clothing because the alternative is that we can create jobs here home if we made our own clothing. but if i made my own clothing, it would not look as good. host: what do you think? guest: i think it is too sweeping. globalization is making it tough on lots of workers. i think we to think long and hard about who is winning and who's losing. es.re are cleaner fix i would go back to my exchange rate issue. most trade is probably more parts than assembly. i am sure will bring over some fully assembled cars.

i'm not sure how effective it would be. host: youngstown, ohio, kay on our democrats line. caller: i never hear anyone speak of the devastation in this world. you think of katrina, the fires in texas, the floods, hurricanes -- there is so much devastation. there is not enough people collect all these jobs. bridges and roads that have been destroyed, some by nature. host: is there a way to get americans back to work rebuilding america? guest: that is true. we have not mention that.

communities should be made whole. we should make those communities whole. today we can make them all and help the overall economy. we should probably say more but i take it as a given that that's something we should do. guest: the most recent hurricane that went through in washington, d.c. -- we had eight minor hurricane experience. it was astonishing what happened up in new england. the covered bridge where used to go swimming just washed away. there are people that have those things happen to them and very often we forget. in terms of policy, that is no place where josh and i are in

agreement. you never know where disaster will strike. every town -- they hopefully will not get a disaster except for every100 years. week to look at -- we need to look at how the government will respond. host: kevin hassett is th host: we're talking about the president's proposal to boost job than the economy. the president plans to send that the congress. let's take a look at the numbers. since we're talking about jobs and jobless americans come here is what a labor department says about who is unemployed.

8% is the on employment rate for women. 9% for men. frances, independent line. caller: hi, the morning. thank you for having me on -- hi, good morning. thank you for having me on. i just want to say, the infrastructure and the buildings from all the floods and tornadoes -- this is all jobs. i agree with the previous caller. we have the resources and

manpower. we have the labor. everybody needs jobs and stuff. the rest of it, the unemployment -- i am sure there are people that have to have unemployment that cannot participate in the work of art we have available. fine. for the life of me, i cannot understand or even reason why we would allow the tax cuts to have gone on for as long as they have gone on. and they insisted on tax cuts through 2/13, when we had a war that wasn't paid for -- two wars that we did not have paid for. we had a drug prescriptions that

we did not -- the drug prescriptions that we did not pay for. we had storms, we had katrina down here, we had tornadoes, floods, irene, all that stuff. we have a deficit and we are losing jobs. that should have never taken place. let host: get a -- host: let's get a response. josh bivens. guest: absolutely. we should mobilize whatever forces we need. host: she was concerned about the bush tax cuts. she thinks that is the wrong direction. guest: i would agree with that. i never agreed with the bush tax cuts. at the end of 2010, there was the compromise struck between the obama administration and republicans in progress for the

two-year extension -- in congress for the two-year extension. in exchange, there is the extension of unemployment insurance for 2011 and the payroll tax cut. i do not know where i stand on the wisdom of that deal. i have a lot of sympathy for it, coming from someone who thinks that unemployment insurance and apparel tax cut did provide some support for the economy -- and the payroll tax cut did provide some support for the economy. guest: i think the bush tax cuts were extended because there are a lot of democrats, even keynesians, who think that, if the economy is weak, it is a bad time for a tax hike. president obama said of he was running for office. -- said that while he was running for office. you cannot have tax cuts if

you're going to spend like drunken sailor, and that is what president bush did. he spent a crazy and he had tax cuts. that is not consistent. if you want on interest of tax rates, then you need to have not interested government -- non- intrusive tax rate, then you need to have non-intrusive government. we need to look at things like the infrastructure projects that we want to do and figure out what it costs to pay for that and make sure we have the tax code in place to do that. if you want tax cuts come you have to cut government spending. that provides and natural sort of political barrier to going to far. there are things like infrastructure that people value a lot. if you're going to cut that, you will have a hard time getting political momentum for your tax cuts. i think it is absolutely wrong. i also think that the conversation about the bush tax cuts is too emotional.

if i was a relationship counselor for democrats and republicans, i would tell them to stop talking about the bush tax cuts. president bush took the top rate from 39.6% to 35%. if you study economic models and you think about what happens if you go from 39.6% to 35%, it is really hard to get emotional about that. it is not really big chains. it is not like from 70% to 20%. -- really a big change, like what reagan did, from 70% to 28%. when we get involved in the stat -- they happen within the code that is indefensible. we need tax reform. we should never talk about the

bush tax cuts ever again. we should drop them and build a code that can mean the economy grow going forward. we will not put anybody's name going forward. host: let's hear about president obama's plan. money to hire teachers. >> the plan extends unemployment insurance for another year. if the millions of unemployed americans stop giving this insurance and stop using that money for basic necessities, it would be a devastating blow to this economy. democrats and republicans in this chamber have supported unemployment insurance plenty of times in the past. and this time a prolonged hardship, you should pass it right again. host: epi, what do you think -- josh bivens, what do you think that would do? guest: it would be good for people looking for jobs and it would be good for the economy.

on an. this money to people who, almost by definition -- on unemployment, this is money to people who, almost by definition, need to spend it. guest: when you give statistics of how terrible unemployment statistics are -- the long term unemployment problem causes the most long-term concern. i think we have taken a kind of cyclical problem of unemployment and watched it become a structural problem. as people are out of the work force for a long time, it gets harder to reconnect to them. what we should have done at the onset is switched to the work sharing thing, where employers are encouraged not to lay workers off. government will help compensate when you cut the

hours. if we had spent a lot of money on that, we would not necessarily need to have 99 weeks -- really extended unemployment insurance benefits. when -- it is subsidizing people to stay out of the work force for a long time. it is easy to get frustrated looking for a job. it is sad when you lose a job that pays x and you have to take a job that pays a lot less than x. a person who is over 60 take something like a 30% pay cut when they go back to work. having 99 weeks of unemployment insurance subsidizes the problem. we should have smart, modern unemployment insurance, like they have been the most of europe, that keeps people in the work force to begin with. now that we have this problem of long-term unemployment -- the one fact i would add, looking at seniors, because people over 60,

even 50, who have lost their jobs tend to be rehired more slowly. they are a big share of the unemployed. we have to come up with some ideas to get them back in and be attentive to the fact that a lot of them -- a disproportionate share -- our seniors who are maybe not ready to invest a year or two to invest in the work force. host: these are numbers from the congressional quarterly. let's hear about the obama talking about money to hire teachers. >> passed the jobs bill and thousands of teachers in every state will go back to work -- pass the jobs bill and thousands of teachers in every state will go back to work. while they are adding teachers in places like south korea, we

are laying them off in droves. it is not fair to our kids. it undermines their future and our is. it has to stop. pass this bill and put our teachers back in the classroom where they belong. host: kevin hassett, what do you think about the idea of getting teachers money for hiring them? guest: i support the federal government money going toward routers for -- vouchers so that they can pick out their own schools. a lot of states and municipalities have budget constraints that the federal government does not have. i think those budget constraints have been a good thing. they have kept them from getting into the bizarre shape that we're in, but they have had some negative effects.

they want to have bipartisan agreement for the stimulus. i would support spending money on charter schools. host: josh bivens, what do you think about that? here is something else to ping off of. what is the best way to get people back to work? what is the best technique? question.h biveit's a good i have a friend to look at the trend of state and local education unemployment over the past 10 years and over the past three. we are about 700,000 people below where that trend says we should be. what is going on here is a fiscal crisis and people being laid off in droves. i do not think that is the best way to conduct our reasoned way to figure out how to make

schools better. i think we have our real problem with government employment, especially state and local. anything that helps stop the hemorrhage is a good thing. i think the wpa style could be a very good thing and has been mostly ignored in a lot of the jobs packages so far. there has been some legislation about it. for things that are less capital-intensive, you could hire people to do the labor- intensive and valuable work of cleaning up communities. mowing yards, fixing houses that have been foreclosed on, making sure neighborhoods do not fallen to blight. the summer employment fourteens program in the original stimulus package is very cost -- a sort teenagers -- for teenagers program in the original

stimulus package is very cost- effective. guest: if they have hired people at the median wage, they would have created something like 23 million jobs. direct hiring is a much quicker way to get a job. we have this long term unemployment problem. it is probably a point in u.s. history where smart, direct hiring is probably something everybody should consider. it is a way to connect people back to the work force. host: cape coral, florida. dina, a republican caller. caller: thank you for the opportunity. i want to ask kevin, how are you against unemployment insurance? i find that hard to do. i do know that it does make it worse. it makes the situation worse,

however, there are so many millions of people, families, children just depending on it. it is hard for me to be against it. it is 99 weeks. does like everything else the government does, they do not do it well -- just like everything else the government does, they do not do it well, but it does help. it enables people to stay not working. .ost: let's leave it there we're almost out of time. are you concerned about what happens when people run out of money because they just cannot find a job? guest: sure. everybody is concerned about. work-sharing could help, because it slows job destruction. i am not against unemployment insurance at all. i just want to structure an employment insurance in a way that does not subsidize the

creation of a structural problem. if we need to get ex-thousand dollars to people when they lose their jobs, i am willing to give them their money and let them keep the money if they find a drop early. maybe we can negotiate how much that is. i think that this subsidizes long-term unemployment in a way that i am not comfortable with. i would much rather give people lump-sum on employment insurance so that they can actually shepherd their resources well in these difficult times and not subsidize the creation of a problem. host: the states with the highest unemployment are nevada with nearly 13%, california with 12%, michigan and south carolina with 10%, and rhode island at 10.8%. josh bivens, does this plan do anything to help homeowners? guest: it is my understanding --

i do not know that is part of this or separate initiative -- but they are talking about having fannie mae, freddie mac ease the path to refinance or underwater mortgage holders -- for underwater mortgage holders. it is definitely something we should look for. guest: there is nothing really on the second answer -- housing sector. the typical financial crisis that was studied by my colleague -- he found that 10 years after the crisis, realistic prices were about 85% of what they were right before -- real-stestate prices were about 85% of what they were right before it. host: kevinin