commonsense americans. >> host: michele bachmann has been our guest for the last 25 minutes. of thank you for being here. >> guest: thank you. ..

it's not that difficult to put your biases to the side. >> how has social media changer line of work terms of reporting your binder for aquatic >> twitter is a primary news source for anybody who covers politics and annuity pays attention to politics. twitter didn't exist four years ago for all practical purposes. >> social security trustees told members of congress today that they need to shore up the program over the next five years. the trustees latest fiscal report says current revenues are

enough to send the program through 2033 when benefits would need to be kind if revenues are not in greece. this is less than an hour and a half. [inaudible conversations] >> is hearing will come to order. good morning to both of you. thank you for being half. according to this year's report from the social security board of trustees, social security will be unable to keep its promises to the hard-working americans who pay into the system. we would hear today that not only do finance and the cameras, but will also be increasingly difficult to protect benefits for those who rely on them most if we delay action much longer. as commissioner aster said, dancers trustee report contains troubling but not unexpected social security is, once again emphasizes congress needs to act

to ensure long-term solvency of this important program. according to the trustees for survivor program will be unable to pay full benefits beginning in 2035, three years earlier than project to an monster's report. that means workers who are 44 years old today will reach their full retirement age in 2035 at which point everyone else will they benefit cuts of 25% unless congress acts. and in less than four years, social security's disability insurance program will be unable to pay full benefits. the average monthly benefit for disabled worker today is only $1111.2016. revenues will cover 79% of benefits. so that is a potential cut of about $233. that is real money for those getting by on fixed income.

social security's last major form was in 1993 and then social security faced an imminent disaster and in their 82 annual report, the social security trustees said without corrective legislation in the very new feature can be old-age and survivors insurance trust fund will be unable to make benefit payments on time beginning no later than july 83. members of congress and the president were able to develop and ultimately pass on a bipartisan basis the social security amendments of 1983. come on in, we just started. despite the near failure of the greenspan commission and despite the opposition of senior advocacy groups, including aarp, as this year's report makes clear, social security is in trouble.

but just as in 1993, i believe our nation has the will to again they social security. we should not follow the path europe is taken by waiting for a financial disaster to force changes that ultimately can end up hurting the most vulnerable. today we'll hear from social security's public trustees, that we in congress or trustees, too. the public knows the longer we wait the more difficult choices will become in the last time americans will have to prepare. i thought the financial anxiety americans face we should not increase the burden on them by failing to fulfill her duty in protecting our nation most important safety net program. we need to act now before it is too late. do you have an opening statement? you do. you've arrived.

did they say it from the grave you a rose? okay, thank you again for listening and i had a statement here. i understand you are on your way. but i will recognize, mr. becerra now for any opening statements you have. >> thank you, mr. chairman. i also want to thank mr. stark for being here in the event was not able to make it. i got my daughter to her program on time and i'm able to be here. thank you two or trustees who are here. i would just like to say what i've been saying for quite some time. social security, even through the worst recessions since the great depression, it is a program that people have grown to rely upon and contrast. between 2007 and 2010, a typical middle-class family life somewhere between $26,287,000 in their network. that's four out of every $10 of their assets in dating.

between 2007 and 2010, social security added $439 to its trust fund surplus while paying americans earn benefits on time and in full. here we thought the americans saving and retirement pensions, watching it go down at the same time during this great recession missile social security continue to increase the money it had to pay up front for to its recipients. over 77 years now, 313 recessions come as social security has added not 1 penny to her deficit or to our dad. in 2011, social security provided benefits to 55 million seniors, but has but has come disabled workers and children. while saving on preserving trust fund to pay future benefits. six out of 10 seniors who get social security relies social security for a majority in town. there are 1,300,000 children who

are lifted out of poverty because they receive social security. and long-term social security faces a managing problem. not now and never will be broke. this entry disable trustees wanted that action social security will be in all that by 2030. let's be clear about what that means. in 2030, worker contributions are projected to cover about 76% of social security costs. the remaining balance of social security trust fund will pay another 5% of cost. the shortfall is stable. after 2033, the income will be enough to pay three forswearing benefits until at least 2087 and likely longer after that. social security's long-term shortfall is a problem, one would need to address. even reserves are building up right now, social security will not be out of money. we'll have a shortfall of about

.9% of gdp, slightly more than the cost of extending the bush tax cuts for people or more than a quarter of a million dollars a year. social security does face a crisis in the short term. one manufactured by a series of budget cuts forced by house republicans who if they continue cuts could delay benefit and tina social security well-earned public image. in 2011 and the republican-led resolution cut the social security administration's budget by $600 million despite rising numbers of americans applying for social security. in 2012 the budget was frozen below the 20 timolol. i strongly oppose these budget cuts, which are kind of like the cable companies starting to believe for a service while you're at home waiting for them to show up and connected. the trust funds -- social security's trust funds the entire cost of paying social security benefits.

in 20 other workers contribute over $600 billion to social security trust fund could because of the budget cuts in 2011, all field offices start opposing half an hour early each day. social security permit closed over 300 contact stations in field offices in waiting times for initial disability decisions rose and are likely to be over 130 days by the end of 2012. now to save face an even bigger cuts to the sequestration process, the cut by the budget control act of those social security benefits are protected if congress doesn't act soon on january 2nd, social security's operating budget will be cut by over a billion dollars. a billion dollars translates into 40 days in which social security shut down your offices are closed on what. no one answers the phone. no one is processed and no one

make sure benefit checks are sent to the right place. mr. chairman, social security has been there for americans for 77 years. i hope we can make a strong for another 77 years and start by addressing preventable the shortsighted budget cuts. and with that, i got the balance of my time. >> thank you. >> we have one witness panel today. see the table or two public trustees. charles blahous who is a phd and robert reischauer, a phd. and robert reischauer, i think i would like to congratulate you on your award last night on the national academy of social insurance. we're lucky to have someone with your breadth of experience working as a public trustee. thank you and congratulations. dr. blahous, you're recognized.

>> thank you, mr. chairman. mr. ranking member, all the members of the subcommittee, it's a great honor to appear you attribute for each day for the latest trustees are porous. and the time constraints we are under, i would like to gloss over most of the background information and proceed to primary points about social security financing. the first simple plan is social security costs are rising. most of the cost increase will play out from it. starting in 20,832,035. the primary driver of the cost increases is demographic. if you think about social security costs, very two main pieces. one is growth in per capita benefit level commensurate by the benefit formula supply, but also the number of beneficiaries. on the revenue side, the primary drivers growth in the number of workers and wages subject to tax. the ratio of workers is very important for social security being. that ratio is in the process of dropping. we had 3.3 workers in 2007.

now we're down to 2.8 and under the current projections down to 2.0 by 2035. part of that is longevity increases, but the bigger and more immediate factor is fertility patterns. the big baby boom generation going on retirement rolls prior to 2035. under current projections of combined social security trust funds depleted in 2033. that is three years earlier than we projected in last year's report and each year they estimate the program's actuarial deficit, he usually expressed as a percentage of the tax base programs taxpayers and this year our projection is 2.67% worker wages over the next 75 years. that sounds arcane, but basically that is the other 12.4% tax rate now if you immediately add 2.67 points to that committee of the program

add-ons for 75 years or if you immediately have an equal subtraction of benefit obligations. that is an average figure. the shortfalls are following the near-term, bigger. a substantial increase from last year's projection. last year were 2.22%. may not sound like a big difference, but the social security and wants a substantial deterioration. we've only had one of the report over 30 years the show to smash a teary ovation as this year's report does and my colleague, dr. reischauer reviews the reasons the outlook is growing worse. also important, the figures to the combined trust fund, social security is to trust on senator lott may have to be canceled and to maintain and if it payments. the social security disability is in the more condition of the two project need to be depleted in 2016. what is happening over time is the program opposed under current law a greater financial strain on the larger budget.

some of the strain however is the result of policy choices of course made along the way. one of them, for example they feared the tax rate has been cut from 12.4 points to 10.4 points. social security has been held harmless. the law transfers general revenues over social security so that its ability to finance benefits is not affect it. basically what happens is that part of the financing responsibility has moved from social security payroll tax to the general revenue side of the ledger. there are significant cost to delay and advancing the shortfalls. it is often cited in 2033 we will have only enough funds to pay 75% of scheduled benefits. it is important to bear in mind that this means 75%. that includes everybody. people already on the rolls and 2033, including many people try and benefit today. if you were to say we don't want to have benefits to cut benefits

for people on the rolls in 2033, what if the benefit reductions were confined to new claimants. we wouldn't be all to balance the system without a substantial unprecedentedly large tax increase, even if we cut up the entirety of an offense to new claimants. so by 2033, it's really too late, far too late to protect previous beneficiaries from substantial dislocations. but the work to the problem backwards, house and we have to actively want to prevent reductions for people in retirement, near retirement, low-income beneficiaries and prevent a tax increase that the size before. we have to do that pretty soon. in closing, i would say the legislative achievement in the social security program remains a remarkable one is provided critical insurance protection for hundreds of millions of americans. it's a myth that low

administrative costs. some of the financing that is not without critics, but never the less generally accepted by both american. that's a hard thing to do in legislation. with responsible bipartisan action, social security will continue to fulfill desirable that such action may be prompt and decisive that the program is going to serve future generations as well as previous ones. the next thank you treaties that pretty soon. what do you name? >> you'll get different answers if you ask different experts. my own view is the window of opportunity is closing relatively rapidly. we were defaced a shortfall that is significantly larger than one prepared in 1883, probably the high water mark politically but what can be accomplished in terms of a short-term resolution. obviously each year we wait the problem grows larger. >> i understand that. but will we follow the cliff? you can answer later.

dr. reischauer, you're recognized. >> thank you, chairman johnson, ranking member of the chair, members of the committee, i appreciate the opportunity to appear before you to discuss how the social security program's financial outlook has changed since the last trustees report, to judge whether the financial health of social security is improving or deteriorating, the media and public tend to focus on whether the years in which the two trust funds are projected to be exhausted has receded toward dance. by this measure there's been a significant deterioration in its out that the social security program since the 2011 report. the clashing date as the chairman has mentioned for the oas i program the now project it could be 2035, three years sooner than projected last year. the di trust fund exhaustion date has advanced two years, from 2018 to 2016 and exhaustion

date for the two trust funds combined has now been moved to 2033, three years sooner than was projected last year. a more comprehensive measure of trust fund, financial condition is his actuarial balance every 755 year valuation period. this measure is essentially the difference between annual income and cost of the program summarized over the 75 year period. and expressed as a percentage of taxable payroll over that. a negative actuarial balance coming in actuarial deficit can be interpreted as percentage points that have to be either added to the current line income rate or subtracted from a cost rated each of the next 75 years to bring the fun into actuarial balance. the actuarial deficits of the social security trust funds have deteriorated since last year's

report. the di trust funds after a deficit has worsened by 7100 of a percent of the taxable payroll. that's where the trust fund has deteriorated 5.38 through 3130% of taxable payroll and combined trust funds have weakened by 441 hundredths of a percentage point. this deterioration in the combined trust fund is the largest decline since the measure was first calculated in 1982, save for the shame occurred in 1994. there are lots of reasons why the actuarial balance can go up or down from one year to the next. one of them of course is the evaluation. change it. we have 2086 to the evaluation. and subtract 2011 and that accounts for about 9% of the deterioration the actuarial balance. clearly there was no legislation that affect the in a

significantly over the past year, so that is not a fact here. demographic assumptions in this year's report are identical to those that were assumed in previous report, but we have dated starting values and the transition from the starting values to the ultimate values do affect the actuarial balance, specifically more recent data has shown that birth rates for 2009 and 2010 were lower than was assumed in the last report. immigration in 2010 was a bit lower than assumed in the previous report and there was a slightly smaller initial population than we assume before. about half, a little less than half of the increase in the actuarial deficit between 2011 and 2012 was accounted for by changed economic assumptions and more recent information about

the economy's performance. two thirds of this is related to a dated starting values unless optimistic presumptions by near-term growth of the economy. price inflation as you all know was higher than anticipated to the third quarters of 2010 and 2011 rather than seven tenths of a percentage point cola in december of 2011, social security gave out 3.6 percentage point: promise her that makes a huge difference as you can imagine. real interest rates in 2011 and those projected in 2012 report are lower than was assumed to be for. and so, the new investments that the trust funds make get most interest-earning than we thought they would get when the 2007

report was put together. together these economic factors make the gap between on interest income and cost of the next few years significantly larger than projected a masters report. but when the economy has recovered about the end of this decade, 2020 or so, the gap between what was expected last year and was this year will be close to disappearing. however, it is important to recognize that we needed new assumption in the 2012 report that causes the gap between income and costs to grow over the long run. and this had to do with what we expect the changes in the average numbers of work per week to do. masters report said would not change in the future. and mr.'s report we assumed that it will decline at 51 hundredths

of a percentage point a year. we did this to reflect the aging of the workforce and the belief that as productivity goes up, income goes up and people will want to take my leisure and that will translate into work and a few less hours as it has in the past. and this assumption obviously has to reduce taxable income and payroll tax revenues from what was assumed in 2011. we also made a change in our assumptions about the instances of disability compared to laster's report, the age adjustment disability incidence were increased by 2% for males and 5% for women. these are more consistent with what the historical values and trends have been over the last decade. the deterioration in deficit but

i just summarize here today underscore the need for legislative action to the social security in a more sustainable path. the sooner we address this challenge, as chekhov said, the less disruptive the changes will be if the reforms are adopted soon, those of most adversely adept affected, burden can be spread more equally across different generations and political animosity and public anxiety associated with these unavoidable changes can be moderated. the changes in the trust fund well-being as discussed also call attention to the importance of maintaining a strong economy and vibrant long-term growth. to me conclude with a comment about the staff of the social security administration and department of treasury, hhs and labor with her we were to produce the trustees reports. they're incredibly hard-working, talented group of analysts who are dedicated to providing

public and congress with as object to a group of estimates as is possible and i think we are all in to get for the service they provide to us. thank you. >> thank you. he went three minutes over. >> that's a better performance than my share. [laughter] >> thank you. you know, i am going to come as customary when the questions, i limit my time to five minutes and i asked by colleagues to do the same. social security was designed so that workers paying into the system to earn their benefit. franklin roosevelt understood the importance of making social security different from a welfare program. he once said we put those

payroll contributions they are together legal, moral right to employment benefits. but those taxes than they come in third no politician can ever scrap my social security program. dr. blahous injector reischauer, and this annual report viewpoint not payroll taxes represent only 70% of the total security and calm and 27 due in large part due to transfers or lost income and payroll tax holiday. if we continue to replace payroll tax revenues of income tax revenues, how long before social security is no longer perceived as an earned benefit and what is that going to do for public support? go ahead, dr. blahous. >> is an answer to the second part of the question is if you know when that point might be

reached. but the statement is in the report obviously because we want to call on the contention to the fact that social security is historically has had a certain rationale for financing and as you pointed out goes back to franklin roosevelt. you go read his early statements. he plays a very high level of importance on an earned benefit. he didn't want to be merged in with the general lj. possibly a separate separate trust fund and payroll tax and trustees. he was very concerned and multiple statements he said that if you want to have universal participation program to cost a lot of money to do that. if you have it as part of the general budget it is competing with funding for other programs and would be subject to great political risk that the benefits of this program could be cut back. so he was very attentive to the idea of how to structure this program so it has enduring political support on not only fdr calmed the subsequent social

security advisers have repeatedly said that one of the bases of the program's enduring political support is the idea workers have earned benefits and they came out against others advisory councils came out against funding the program from the general fund. so speaking for myself as a trustee, one of the things they want to do is draw lawmakers attention to the fact that the program does continue to get transfers from the fund, and it does potentially greatest situation where we have a departure from fdr's intentions. >> not your personal money anymore. >> about 45 cents out of every dollar held by foreign governments, mostly china, dr. blahous, if we consider the payroll tax holiday in the general revenue transfers, do we risk turning social security from program paid by americans

to one dependent on the whims of foreigners to invest quite >> well, it is certainly the case that the general revenues transferred to social security along with the payroll tax has were financed with debt. there were financed by increased the deficit. we cut payroll taxes are not done enough to deficit. and certainly, while there is an ongoing argument over who really finances the redemption of bonds in the trust fund, clearly in the instance, this would be a case of the financing for social security being provided by the people who invest in u.s. treasury bonds. >> can you tell me why you think tax increases are no answer for fixing social security? because it seems to me to fix social security for good, we need to make sure our reform efforts are aligned tax revenues

it and fed outlays on a sustained basis and that didn't happen during the last major reef or. then come the 75 year solvency built in the near term followed by growing annual deficits in the long term, even though that wasn't intended at the time. is that correct? >> that is correct, though i have to say. bring 10 experts appear, you would have a few that would disagree with me on the point. if you go back and study than a 290 through forms, one of the things striking about them as they did not measure of financial success the way we do it now. when they analyze social security's future balance, they didn't count the carryover balance of the trust fund. they didn't count interest earnings produce a different method that basically preserved that all benefits in the future would be paid by taxing the wages of future earners. if you read the comments of people who develop the reforms

come either jay pickle or senator pat moynihan or bother buyers, executive director of the commission, they said in multiple places that he was their intention to keep the program financed on a pay-as-you-go basis. the fact that they wound up with a solution that have big surpluses and 10 years ended deficits in other years wasn't as intentional as many people now believe. but they were trying to deal with is a short-term emergency, making sure benefit checks didn't stop in 1983 and train to arrive at an 11th over the long-term. as you point out, that resulted in an unsustainable solution because it it is time on come the surplus years stated in the past or more.the figures appeared on the horizon. again, they were trying to do a lot of things under emergency conditions in 1983, said the intention is not to repeat what they did, but simply to point out that as they defined the

long-term balance committee didn't get the same level of attention to what was happening on an annual basis of issue in the trustees reports now. >> i presume you agree with -- actually it probably would disagree with all three of the answers that track days. [laughter] that's why you have to trustees. >> he wanted to disagree or shall i keep my lips sealed? >> mr. bashir i will ask the same questions. >> my time has expired mr. bashir i will ask the same questions. >> my time has expired mr. bashir i will ask the same questions. >> my time has expired, thank you for your testimony and the cutest trustees >> my time has expired, thank you for your testimony the cutest trustees, we appreciate that. both of you mentioned as part of your testimony, the deterioration and the outlook for the program, which is why i think all of that should be trying, as dr. blahous said sooner rather than later. i think your pie chart in your

testimonies, the information you provide as showed a great portion occurred as recession, which is 30 heart. it has become pretty clear that uses jobs in america. uses workers paid their fica contributions, social security contributions. fewer workers, less money of benefits. the job one for congress should be creating jobs, helping the private sector create jobs. it doesn't just help them and their families. it helps the security because there's more money going into the social security system in the trust fund. or reischauer, you you mentioned immigration passing. does the fact week that, unlike other countries, a consistent love immigrants over the last several decades out the social

security system and its trust fund when it comes to being able to pay out benefits? >> that's a very calm okay to question. in fact, certainly the influx of immigrants has increased the labor force has increased the number of individuals paying payroll taxes, which are the short run clearly held the program pay benefits for required disabled workers. >> the other part of that is in the long run if they become recipients of social security benefits, they will draw as well. as one of those things where it's not just an automatic class because at some point will qualify to receive benefits as well. >> is very complicated and depends learning patterns are overtime and groups of immigrants of different pluses and minuses and sort of a narrow fiscal sense. >> some of these folks so moved

that you'd >> many of these and don't end up collecting. >> i have some numbers here to show between two of seven, when the recession was starting and then got really deep through 2010 can nearly 6000 companies in this country terminated pension plan. in 2011, was terminated pension plans were short $9 billion what they needed to pay out benefits to workers who have those pensions under those companies. during that time, 2007 at 2010, social security didn't lose any money, did it? dr. blahous, go ahead. >> social security make payments in full on the nominal balance of trust funds continue to rise. >> will note the examples of

circuit city that went bankrupt. we remember enron would've been bankrupt and how those companies left employees and pensions. the social security and the reason it's so important to mention how we should be a day now to resolve any longer-term issues for social security as we do want to get to the point where you compare social security to add non-or circuit city. force niobe still has some lens that keep guys, even if congress can't get its act together, keep the social security system going smoothly before then next 20 some odd years. even after that pena 75 cometh in a six benefits. no one is paying into social security to get 75% of what the beneficiaries are getting. i hope that she will continue to do is give us the recommendations you fill help us

moved her something. i hope you agree it is pretty sound thing. you can go to the benefits i come the revenue side and find out a way to get yourself an actuarial balance for the next 75 years and hopefully we will sit down at some point soon and congress and try and come up with the top political response. appreciate testimony here today and service on what the trustees and i hope you continue before this committee. thank you. note that. >> thank you, mr. chairman. you know, we hear these days that everything is doing fine and social security on capitol hill. no need to add. but things are not signed the social security. as chairman john and pointed out, you know, last year america borrowed roughly $100 billion,

just to pay your social security benefits. this year will borrow $150 billion in china and other foreign investors chose to pay benefits to seniors. that is not find. if you don't like that, get used to it because he reports that we base deficits forever in social security. we're told maybe this is the economy is doing better, but this has the largest single deterioration since 1994, social security. so it's getting worse, not better. and so, i have three questions then i would hope we can have a no spin zone here and just ask trustees, those responsible for the financial stability of social security just to give us your best advice to congress and the white house. one, should congress and the white house continue to delay

reforms on this important program? or should we act now? dr. blahous. >> i am an back in as soon as possible. >> dr. reischauer. >> i think speedy action is called for. >> how much time, whether the actual changes in policy you make me to be implemented next year as a separate issue. >> it is an area we generally see policy over a long time to get people. >> you both made the point of the dot next to impossible to keep current and retirees. in your advice to us. >> what is the timetable? house and we need to act? this year, next year? your advice to us. >> you know, you should act when the climate is right, when changes are being made --

unmasking as a trustee, looking at the numbers, how much time would you have in your believe? >> i would hope you would act within the next five years. >> dr. blahous. >> yes, with the disclaimer, if you were to line up experts here, i am on the pessimistic end of those 10 with respect to how bad it is going to be for the future for you to lay too long. definitely within five years i hope to do it even faster. >> the payroll tax holiday was important to many families, it was backfilled by general revenue, but we know that continues. again, no politics in this. your advice as trustees. should we continue the payroll tax holiday, or should be

restored to full revenue to social security? >> here i am speaking very much for myself, but i would urge that full security to go back to its 12.4% rate. >> we have to do with how we do that, but your advice would be restore the full amount of money? >> is meant as a personal view. >> dr. reischauer, i would phase it out with all deliberate speed geared >> thank you, mr. chairman. >> thank you. your recognize. >> thank you, mr. chairman. it doesn't seem like this is getting much better. i want to get a little parochial here. you said we need to act soon.

i am just curious what the younger generation americans have in store for themselves if we don't act sand. >> i would say a two-point answer. the mathematical part of the answer is a net income loss. it says that if he just called all current participants formulas, people and assist them with these 4% of the wage income. that is after the benefits. and come to be higher and higher income side, but also present on the low-income site. generations would lose money not through the program. that is the mathematical answer. getting back to the questions asked earlier, they would also face the risk that we may not appeal to generate the political will to keep the program operating on a self financing

basis. and then, if we could keep the programming to self financing basis and merge into the general fund, i think they would do something else, which is sort of the legacy of social security as a separate stand-alone self financing system that has a search degree of protection that their programs don't have. >> dr. reischauer. >> u.s. public young generations , what should they expect? the answer is less than conmen retirement years. future generations will run more risk with respect to disability as well, payments they would get in disability and survivors. they need to divert more of their income into private pension plans, which are

401(k)s or other retirement vehicles. >> you say they would need to do that why? >> they want to maintain adequate incomes in retirement. >> the security payments would be less for them. >> how much less? >> well, as chuck explained and the chairman and others have mentioned, social security would be able to pay about three quarters of the benefits now promised. >> is that based on what age category? to >> well, this would be an across the board for all existing beneficiaries and future beneficiaries starting after 2033. >> for the next hundred years click >> well, we don't go out that fire. we go through 2086 and it stays roughly in that area. >> assuming the same number of people the same number of years

in children. >> now can we do very this over the time and are projections according to the best information we have available. >> what happens to be bold to ernest young, our 50 and their 15 year survey from requirement, what happens if widow to anything? smacked the literal no action scenario is that it would be a 25% benefit reduction in 2033. and so, those people presumably would project a full benefits for some years and experienced a reduction in 2033. obviously it is unlikely that he so it yet in case. congress would not permit a benefit reduction, so there'd probably be be some alternative mixes pain allocated between beneficiaries and taxpayers. the scenarios that 25% benefit

reduction. >> you are assuming we would be responsible? >> i am not sure if being responsible -- let's just say there's no historical precedent for congress allowing a sudden benefit cut of that magnitude. >> is their historical precedent for congress allowing social security to become this broke? >> now, that is actually a very important question. >> we've never had a natural deficit is large it is now. in 1983, we were a few months away from not be able to send out the benefit checks. the balance is now larger than it's ever been. since before the 2083 reforms. after with an indexing mistake and 1970s or each huge long-term and then amendments. but since that.

>> dr. reischauer. >> you agree? >> i've got a republican and democrat to agree click >> maybe we should go to capitol hill now. >> thank you, mr. chairman. mr. starcher recognized. >> thank you, mr. chairman. thank you fold in the searing it ain't the witnesses for their service. i have cheap dimension, dr. blahous.before you choose to criticize my testimony we both have the same background. i noticed you have a doctorate in chemistry. i also have a great deal of experience. i think they took 10 semesters of it at m.i.t.

however, the sole second semester chemistry that i had to repeat over and over, but it's a great background. the republicans want to kill social security. i think that's quite obvious and turn it into a voucher program. >> mr. chairman. >> at the gentleman would yield on that. >> mr. stark, as you know, republicans have very strong with a ported to social security. our moms come our dads. >> i think for us. >> we have to be much more bipartisan. >> -- medicare and turn them into voucher systems. doc or reischauer, actually you are one of systems. doc or reischauer, actually you are one of the -- stealing your thunder, you're one of the original founders a nearer better of course those two have

medicare, premium support. though fortunately you gave me an umbrella from that storm, which was a guaranteed and if it. but would she support the idea of premium support without a guaranteed asset? >> as you know, mr. stark, the term premium support came out of an article that henry aaron and i wrote in 1995, just team that there'd be private or nonprofit options for medicare beneficiaries along with fee-for-service that the benefit be defined guaranteed benefit

and payment the one that was indexed to the growth of health care costs over time and i believe was the list might generate more efficient delivery systems and better care for america's seniors along with some cost savings. but the emphasis is on quality of care and offering a more diverse set of delivery systems. >> thank you. the affordable care which the republicans would like to defeat, according to actuaries would shorten, would extend solvency eight years longer than if the republicans had their

plan to kill health reform. would you suggest that is projection that hiv causes he reduced in the trust fund? >> ics consent that the press release that the trustees report would stay but that affordable care at, the health insurance trust fund would expire two years earlier in 2016. >> dr. reischauer, can you put a dollar number -- i mean come i keep hearing social security is going to go broke in, i know now, 20 years, said the link. what will the total negative amount be? how many billions for cheap gas if you project that? is it going to be sure to visit total. >> over the next 75 years?

>> is it going to take 75 years ago broke? >> now, it will exhaust in 2033 of the combined trust funds. >> basically the projections have a trust fund through 2033. so the shortfall would be 2033 through the end of the 75 year period and with the present value of 8.6 trillion. >> 8.6 trillion. okay, choose any idea what the two wars cost of the same period of time? >> i do not peer >> which he surprised to note how they cost a lot more and i'm not hearing anybody on the other side acidly pay taxes, particularly those of us who have high incomes, like members of congress. we are not being asked to pay for the war. lower income abr. thank you, mr. chairman. >> thank you good without

objection, did not know that you referred to will be entered into the record. mr. marchant, you're recognized for five minutes. >> thank you, mr. chairman. my question is about the actual mechanics of how when you approach, let's say 2016 and the disability shortfall begins to appear in the disability program, what is the number that congress would need to appropriate out of general funds in those threshold years, just to maintain -- to maintain the benefit? >> just is a very crude estimate comments about $30 billion a year, the shortfalls that appear from 2016 through the rest of the decade. >> so about $300 billion.

we look at things over 10 years usually. >> they would start in 2016, said the $30 billion a year over the last six years of the evaluation. >> and is there already -- is there a trick or put law for the congress immediately is confronted with having to make that legislative decision? or will it be a legislative decision has to go through the complete congress and then be signed by the president? >> well, the way the laundry is that the disability insurance program can only make payments from monies that better in its trust funds. if you assume the congress does nothing, basically you would have -- when the trust fund goes back to zero, you would have delay sunoco in nsa payments until incoming tax revenues and

the effect of that virtually through delaying payments would be to reduce payments by about 21% per year. if you want to maintain full schedule of benefit payments 100%, you would have to find other revenues and put them in the trust fund. >> you basically have an appropriation that would be made into the trust fund on the trust fund would basically then make his payments adequately. based on the current. >> if we reach that threshold and the main social security trust fund and the amount of money, what would be the amount of money needed that congress would have to appropriate in the current year the first year, based on the projections that are making now to keep the benefit at 100% when we reach the 75% threshold. all of us get the warning when

they open up our yearly statement and look at it. >> right now i don't have the precise dollar figure off the top of my head, but to put it in today's terms, it is about 25% of scheduled benefits. not today, the cost of paying benefits as shy at $800 billion. about $790 billion per year. if you think in today's terms, the amount by which you are sure it's a little bit shy of $200 billion a year. >> so, that would be the choice congress would have it that way, to keep anaphase basely at the level of the project of the vote, congress would have the decision of just simply appropriating money to go in. >> yes, that this cuts to this

point i made earlier about the difficulty of the points congress but face. obviously the path of least resistance at that point is turned to the general fund day here is another 200 billion. much higher in nominal terms, that the opposing of 200 billion in social security. obviously, that would add the financing itself. if you want social security to finance itself, you have to raise payroll taxes for enough to tell tell and the gap. >> that by doing that, you are completely in philosophy of a cellophane system and make many of the states have done, they rate it pension plans over the years to raid the pension obligation than many of the states now is just a current appropriation. i mean, they've depleted trust fund or cash them in to wear instead of it being a payment out of the trust fund out of

earnings, they chose simply, if they've fixed liability to them. >> and without god just become law by the fact that we have not fix the system? >> well, you would have to take an affirmative legislative action to support the program as general revenues. under current law, the program can borrow from the general fund. can't proceed without appropriation from the general fund. you would have to change the law and order to have that result. ..

is. mr. smith you are recognized. >> thank you mr. chairman and thank you her witnesses. dr. blahous we prudently hear social security is a separate account and does not contribute to the deficit and my colleague mr. marchant was attesting to some of this. you indicate social security operations are currently adding to the unified federal deficit and will add substantially more in the years to come. could you expand on that? >> perhaps the best way for many answer to this is to say the part of my answer that i think all animals would agree with and i will get to the part that there is disagreement among analysts. i think that all analysts agree that to the extent that social security is supported by its own payroll tax revenue or by the taxation of benefits to that extent is not adding to the federal budget deficit. i think most analysts would also agree that to the extent that social security is receiving a subsidy from the general fund or

the general fund transfers the come from the payroll tax cuts, that portion does add to the deficit. where you get into the murky area where analysts argue with each other have to do with the interest payments that are made to the social security trust fund. right now, to a very large extent from now up through 2033 and certainly into the 2020 social security's going to subsist to a large extent based on interest payments from the general fund. now be asked to different analyst to interpret what's going on there if you're going to get two different answers. from a mechanical standpoint, the payments of interest go from the general fund to social security, so you could say from a mechanical unified budget standpoint, that those interest payments don't represent money coming into the u.s. treasury and therefore represent money going to social security without reducing unified budget deficits and then representing social security adding to the overall deficit. you also have a school of

thought and i don't agree with this but there is also a school of thought that those interest payments represents the extent to which social security is reduce the amount of borrowing in the past that the federal government has had to do and therefore represents a reduction in unified budget interest payments and therefore to the extent social security would receive interest payments would not add to the unified budget deficit. you have competing views on that. i'm on one side of that discussion and other people are on others. there is less ambiguity to the extent the program is receiving transfers as general revenues clearly adding to the deficit to the extent it's relying on the payroll tax income and it's clearly not. >> thank you and i will yield back. >> thank you. >> thank you mr. chairman and thank you to the witnesses. dr. reischauer i appreciate your article in 95 about premium support and where that would go.

my question to you is what happens when i'm sure at the time people called up vouchers and people said that is going to wreck medicare, what was your response back then? >> our response was that you no changes were unavoidable, that this was a promising approach towards providing beneficiaries with more choice, possibly higher-quality coordinated care, and possibly a reduction in government spending from competition on munk plans. >> thank you. jumping back here, i kind of wanted to follow up on the question that represented merchant had on the disability insurance trust fund.

you know we talked about we have one to five years to make some decisions and i'm sitting here looking at 2016 and i'm saying that is not five years, that's four years and if you are going to not fall off the cliff you're probably talking one to three years to do so in. as you explained the reality of how things may happen, and where money would come out of the other fund and subsidize this fund, if you pool those two funds and if you look at what the year that we are not going to cover the benefits. right now we are saying one is 2033 and one is 2016. if the old they'd started subsidizing this other one at one point would it bring us down, dr. blahous? >> basically right right now the old-age survivors fund the so-called retirement fund, that is -- disability 2016. if you could put them together combined funds would be under 2033. >> so it would be the same? >> by 2033 is the figure we often throw around because it

refers to social security as a whole. if you split it into the two funds one of them to 2035 and the other is 2016. >> the 2013, 33 assumes that you reach the allocation of the payroll tax between the two trust funds? to maximize the length? >> the old-age survivors who are saying in this report is still 2035? >> that one is 2035. >> it was 2038 eight last year. >> so it has come down? the other point i just want to be clear is when you present value this unfunded liability we are talking about eight.$6 trillion which is over two years of all federal spending. at that includes the 2.7, using that money within the trust fund? >> right, that is basically the actuarial deficit on top of the trust fund and redeeming the trust fund basically you are saying redeeming the trust fund counting it as an accident --

asset in the shortfall out of the end of the evaluation period is where the eight.63 comes from. >> you didn't value the trust fund amount you are up 10 to 11 trillion the unfunded liability to make a solvent? i think they're different terms that are being used and sometimes it's confusing but if cash flows for a while here but it's not solvent. really from my perspective, i just really think that we have to look at these facts and the facts are the facts and is not fall that long-term and quite frankly if we care about social security i would need to do some things to ensure that it is solvent and so i am obviously personally very open to any ideas from anywhere, and i think the solution needs to be bipartisan and i think that's the only way it can be presented to the american people. i'm just hopeful we will get some of those bipartisan solutions going forward. thank you mr. chair.

>> i am going to ask one more question. dr. blahous in order to fix a security we need to make sure our reform efforts ultimately align revenues with benefit outlays on a sustained basis and that didn't happen during the last major reform and 83. then pay 75 year solvency was achieved by building annual surpluses in the near term followed by growing annual deficits in the long termlong-term, even though that wasn't intended at that time. is that correct? could you talk about that? >> well again, my colleague dr. reischauer might want to disagree but my read of the 83 amendment is that what they intended to do and what they actually did were somewhat different. i think they, they aimed at a boarding an immediate insolvency problem. the benefit checks were not to

go out and they wanted to prevent that from happening. they also deemed it a long-term actuarial balance. if you actually go back and read the documents of the deliberations and the memos of the greenspan commission exchanged and how they measured fiscal success, it is very clear that they didn't look at it the way that we do it now. when we make a measure of the condition of trust funds, we count the carryover balance of the trust fund, we count the interest payments of the trust fund. we basically traced the -- treat the trust fund as an intra-security and therefore within that mindset you would certainly do something that builds up a trust fund and draws it down over her period of time. that is not actually how they went about it. what they did is they use a different method for calculating the programs financial condition. it was called the average cost and it assumed that in any given year you are going to fund the program by incoming wages from workers. the balance of the trust fund,

that accounts interest payments in the trust fund and if he read the commissary of the greenspan commission members and staff director they say it's our intent in the program going on a pay-as-you-go basis not to have bigger balances from year to the next. "the new york times" and "the wall street journal" saying the public would never stand for the trust fund build up because they wouldn't trust the government to control trillions of dollars of investments and save them money. so we want to keep this program going on a pay-as-you-go basis. what happened instead is they got big surpluses some years and big deficits in other years but that result wasn't fully apparent until solely in the legislative process so they couldn't really go back and revisit it, and obviously what they were dealing with was a big emergency. they didn't want to disrupt the political deal that had been reached and so they got the result where the program's actuarial balance on paper was a little bit more apparent than real which is why it has flipped since then.

>> if we get a solution this time there's going to be political consequences as well. do you care to comment? >> yes, do you care to comment. there is a real dilemma here. if you operate a program like this on a strictly pay-as-you-go basis, then you are saying as demography changes and changes may be in unexpected ways, or trend economic growth changes, you are going to have to raise taxes or lower taxes, or raise benefits or lower benefits, and for a program that is designed to provide the american population with some kind of assurance that it's going to be able to plan its retirement for how much insurance it needs for potential disability, now that is not really a satisfactory way to go.

the other option is that you can build up reserves and deplete reserves over time. and i agree with dr. blahous that you know, the intent was not to build up these reserves. the future course of demography was not fully appreciated by those responsible, or anybody at that time. was the baby bust a permanent phenomena? we have heads huge social changes going on in the last 30 or 40 years. small family size, more immigration, more women in the work horse etc., etc., the make these things very hard to put in place and then stick with your decision over the next 75 years. so, i don't think there is a right answer to this question.

>> thank you sir. mr. becerra you have one more question. >> to sort of feed off of this because i think oftentimes we have this conversation and i think we don't explain it in terms of the post-american boom. so essentially what we are seeing is back in 1983 when social security was tearing a point where it wouldn't be able to pay all the benefits, congress working with president reagan, works to deal with that and the result was a system where americans paid a little bit more to it and those who are retired got a little less in benefits and the result was this reserve is being built up because americans work into getting more into the system than they needed to pay recipients, the beneficiaries. now, i think most americans -- whether you are at bangor in the other place where i can store my

money, and you tell me you are going to pay me interest on that cash but you are expecting at some point to get to collect on that cash so essentially by law that is what we did. he told americans that when they deposited their contributions, social security contributions from their paycheck to the government for social security, that was not used -- actually all that when it comes and goes into treasury bonds. then from there, this social security uses what it means from those treasury bonds to pay for benefits that caches in and those treasury bonds because it hasn't needed to cash in all those treasury bonds to pay for current retirees and building up a surplus and that surplus has been earning interest, small because interest bonds are smaller than those on wall street. that is a 1.6 billion in interest it's been earning. dr. blahous you are saying some people would question whether that is real money because its interest and it was essentially transaction between one armor

the government, social security to the other arm of the government which is the general operating budget of the federal government. but, those treasury bonds are real, and as the chairman pointed out earlier 45% of our public debt is owned by foreigners. they have on that debt and they get to collect on it because they own the treasury bonds. so those who say that it's not real money that social security holds, guess what? we are in pretty good shape because 45% of our debt isn't real money either so we don't owe the foreigners. if you don't owe social security, americans who paid into it, then we don't go owe the foreigners either. that is why i don't understand the logic of those who say it isn't real money. americans paid real money into the system. it was secured by the most secure form of currency there is which is the treasury bond. and to say it's not real money simply because it was done by

law, social security giving the money to the government and a treasury bond to hold onto that money, i think is a real either a mistake to say or a real injustice to the american people who continue to pay into the system today. and it's the fact that reserve is going to continue to grow for several more years before we have to start using it to pay for benefits. so i think the public will want to understand. i did the quick math on this and in the 77 year social security has been around, you and i and everybody who works and has worked, we have contribute it $14 trillion into social security with their paychecks. fica contributions. in that 77 years the calculation was that we have used up $13 trillion in paying out benefits. hard cash left over, simple math, 14 minus 13, there is $1 trillion that americans have

contributed in cold hard cash. that help reduce part of that reserve but he goes for decades that reserve has been gaining interest in the treasury bonds, it has added another $1.6 trillion. most americans would tell you if you only want to give back the $1 trillion not the 1.6 they earned in interest, if we were a bank we would have a big run on that bank and will probably burn that bank down. and so i think we want to be very careful when we talk about funny money for social security. in either we tell china and the rest of the world that were not going to pay them because they have got the same funny money or we should keep our obligations to the americans who contributed money. the final point i want to make is this. my colleague mr. brady stated that social security faces a permanent deficit forever. i want to make it clear and dr. blahous and dr. reischauer would concur with me that under the law social security cannot -- is that correct?

>> that is correct or ghostly social security will never face a deficit. what we do face and i think dr. blahous use the right word, the actuarial deficit because the actuaries see the difference in what we are collecting and what we hope to pay out and there is a deficit there and that is what we have to tackle sooner than later. if the social security ever runs deficit by what it can never run deficit. the cold hard fact is and i think dr. blahous said we have to tell americans and 2033, guess what? what? all of a sudden your benefit went from 100% of what you have been getting to 75% which would be cruel and that is why we have to deal with this. whenever social security runs a deficit, until we in congress changed the law and with that i would yield back. >> do you want to make a final comment on that? >> well, i certainly don't want to be construed as implying that the trust fund is not real

assets of social security and is my testimony indicates i think the trust to report makes clear those bonds are in the full faith and credit of the u.s. government. where you get into these controversies about the trust fund, it's not really so much about whether they are real assets in social security but usually do with the argument between analysts as to who is paying for the trust fund bonds so example -- for example the interest payment we did in 200 plus billion dollars in general revenue transfers this year, to social security from the general fund without collecting any taxes. based on that $200 billion, now those bonds are going to earn $400 billion or so interest of 32033 so you have this analytical question, who is paying for that interest? the taxpayer who finances the general fund of the u.s. government or the person in the treasury bonds who is obviously, the interest payments, it's not necessarily the case that they were paid for by workers in social security and there is a

fierce analytical argument as to whether that portion of social security is financing comes from contributions made by workers but i certainly do want to be construed as saying they are not real money for social security. >> mr. chairman this is the dialogue, this is anything but the public would love to hear. rather than just doing our five minutes of asking questions and you only getting your five minutes to respond or giving her testimony, and i think actually chairman campus done a great job of this on taxes raised. a lot of informal off the record conversations with experts on tax reform and i think we could do more of those about social security. for example dr. blahous you pointed out something very important. when we did the payroll tax to help working families with this recession you're right, we told them they had to contribute less to their fica tax to social security. but congress intentionally said we are not going to damage social security. we are going to take money from the general fund and replace the money that otherwise would have

gone in, so i would respond to your point, which i think is a valid point, is that real money that assured earn interest through the treasury bonds because it really came from the general fund? i would say absolutely should earn interest because we in congress said we don't want to undermine social security. we want to help the economy and working families who pay fica tax give them a bit of a break but we don't want to do that at the expense of social security when these folks retire. i would say the decision was consciously made by congress that they knew that money would be used to buy treasury bonds that would then earn interest and therefore, we knew that would become money that the federal operating budget would go to social security when the time came to collect almost treasury bonds. your point is absolutely well taken and that is the kind of thing we have to discuss because otherwise everyone gets confused about is it real money or is it not real money so i appreciate the point you are may keen. >> i want to thank you both of you for being here today and i

think we have had a positive discussion. we do need to fix social security and i want to thank all the members for being here today as well. mr. reischauer thank you for showing up and with that, the meeting stands adjourned. [inaudible conversations]

>> this was something that was swept under the rug and kept not only from the american people but the mexican people as well. there are hundreds of faceless innocent mexican citizens have been murdered as a result of this but the only thing that we

nailed outside of the government program was american gun dealers were going into mexico and causing all these problems with the cartel would really, the government was sanctioning and sending them into mexico. nexa 2012 election preview hosted by the "national journal." the discussion is moderated by the editor and publisher of "the cook political report," charles cook. he is joined by former members of congress, tom davis of virginia and martin frost of texas. >> good morning everybody. thank you for joining us this morning.

it's my pleasure to welcome me this morning. i think there are going going to have to really interesting and stimulating discussion on what we can expect for the remainder of 2012 and the upcoming elections. thank you those of you for joining us here for a live video stream on "national journal".com and our viewers their viewers on c-span this morning. we are very grateful to charlie cook for breathing us this morning on the elections transcend the honorable martin frost and tom davis for joining us this morning. they are all willing to take questions, so please think about what you would like to ask them. we will have staff in the audience with microphones. if you raise your hand this apple, or with a microphone. please ask your questions to sink the. it also helps to state your name and organization. if you would like to share your thoughts with us you can do so via hashtag pound m. j. charlie cook. and finally if you wouldn't mind silencing your cell phones this morning so we can have an uninterrupted discussion. we are able to gather here this

morning thanks to the thoughtful leadership in support of the united technologies corporation. you gc is a diversified company comprised of several well-known brands like hamilton sundstrand, otis, pratt whitney, sikorsky, you gc climate control security and you gc power. udc has been a great partner of "national journal" and underwriting congressional connection polls. you may have seen it as every week congress is in session and the poll takes the pulse opinions from americans and brings the message back to washington. the leadership recognizes the importance of highlighting these issues before lawmakers and but for the national influentials like all of you. thank you to his team at ugc for partnering with us on do you gc poll but also for bringing us together with charlie cook several times during this critical election period. trade to joining utc in 2008 greg with the washington office as siemens and currently leads

the federal government and state affairs for utc. his portfolio is even broader and that includes directing government relations for china, russia and the e. eeo. please wlcome greg warden. [applause] >> thank you victorian good morning everybody. it's good to be back and good that charlie has arrived for his program. we are happy to see mr. cook this morning. it's our pleasure on behalf of the united technologies to be here as victoria told you. we are pretty substantial company of about 210,000 employees around the world give or take about $60 billion in revenue and she listed and i think you can see on the podium the number of companies that are part of her family. we are hopefully about ready to add one more that is the goodrich corp. and we hope to have that within the family within the next six weeks or so and anticipating approval for that from the department of justice here in the e.u..

it's our pleasure to be here again this morning. it's always fun to work in collaboration and partnership with the "national journal" and the "national journal" family of products and people are going to know how david bradley does it but he seems to recruit absolute of those people to run his program in his division and it's been a great affiliation for united technologies and over the substantial number of years. it's also fun to be here again wi charlie and with two premiere and astute lyrical observers, tom and arden. this morning is going to be a great panel. i'm kind of reminded i have a friend, a guy named don coughlan and he and i go back a long ways unfortunately which simply means i'm old but that one time he had a number of children in his 4-year-old was coming down one time for christmas looking through the banister at all the christmas presents that weren't beneath a tree and he said, daddy, it's just unbelievable. i think that is just the image and attitude that charlie must

have in this election year, all the gifts he is being presented. it's just unbelievable, unbelievable. charlie thank you for being here and congressman thank you for participating as well. i will hand it back to victoria. thank you all for participating this morning. it's good to see you. [applause] >> you charlie do you want to come up up and i will continue the introductions. i know all of you know charlie cook. i think that is why you're all here and for over 13 years now, charlie has been providing his insights and analysis to all of our subscribers and members of "national journal." i think you'd agree that charlie and his team put together some of the best political reports and analysis in town. they do it in the cook report and they also write for the "national journal" daily and also the "national journal." charlie remains a political analyst for nbc news. at a time when news and information on the local campaigns are so polarized and divided, think charlie remains one of the most respected. i know he remains one of the most respected political

analysts in the country providing a balance, fair and usually very humorous take on what is now the ultimate sport of politics so please join me in welcoming charlie cook. [applause] >> thank you. i am just going to talk through briefly because i want to get martin appeared in kind of get this going. part of it is i'm afraid that what i might say, i don't want to sort of pledge this will kind of curious what these guys are going to say about the same subject, and i don't want to lead them into it. but you know, campaigns, you will look around this room and see people that are watching this stuff for as long or in a couple of cases longer than i have that maybe know the nature of presidential campaigns, that some campaigns have ups and downs like otis elevators. sometimes they get, they can just power through their

problems like pratt whitney. sometimes things are kind of chilled, or can really take off vertically like course gorski, and last time -- hamilton used to make propellers, right? they still do. they just kind of pummeled her a theory problem. so anyway, for 8:30 in the morning. but anyway, i tried to find, yeah, anyway. that was torture. but thank you all for coming out and i have chairs this relationship is "national journal" and we are working on re-upping a new contract so if you know anybody that works for brand x. don't bother. it's nice to see all of you here. it is going through a lot of faces, and you know, i think one of the questions just to kind of tip these guys off, i think the

first question i'm going to ask is, are we at a different place than 50 or 90 days ago? and inflection point, or is this getting exaggerated, or is this the conventional wisdom kind of catching up with reality? why don't i go ahead and introduce them and let's get going. you know when you see panels in washington and you see former members, and if you have ever noticed that there is sort of a handful of people you see a whole lot of. the reason is that out of the thousands and thousands of former members of congress there are, there is a very very small number that you can count on your hand, better known as being really really sharp, able to dissect political situations that aren't just rubberstamping party issues and they really have an expertise in analytical

ability that really helps people -- okay, i get it now. the thing is, if you were going to put together five of them, martin frost and tom davis would be on the five. actually i can only think of for four total, but anyway, i mean they are the golden standard. they really are, and tom davis was in congress for eight years and chairman of the republican national republican senatorial committee, and martin was in congress for 12 years and went on to chair the democratic conference. so both of them have been in no on the inside, the innermost strategy sessions. they know what that's all about, and they know where all the bodies are buried. sometimes they are tempted that never really tell us exactly where all those bodies are buried. it's just two members that you have enormous admiration for.

although i've been thinking that for one of these things we have to invite three members up, and then one have one is sort of a control group, say, this is somebody else. and maybe not tom davis or martin frost. just somebody that is not so good so you kind of appreciate these two guys, they really are good. anyway, that appeals to my sort of more perverse nature. but anywayanyway, why do you guys come on up? let's just have a conversation. i'd rather do that than hear myself pontificate. martin is in charge of leadership. martin tells me where to sit. >> i will only tell you one thing. it's obviously early in the morning because charlie is -- he

meant to say terms and he said years. i was in 26 and tom and 16, but that's her right. it's early in the morning. [laughter] anyway, what i want to do is cover this morning, cover presidential, cover a little bit of congressional and then what in the hell is going to happen. so i will just throw it open for either one of you to jump out and just say, is the presidential race fundamentally any different from where it was the day april 11, the day romney sort of nail down the nomination? >> let me start if i may charlie. tom and i have been doing these kinds of programs for the last year, and we have both been in agreement for a year now, but this was going to be a very very

close race. other people at some point were saying oh obama is going to win. as a democrat i thinks obama has a regional chance of winning. i never thought this thing was going to be other than clothes. i've always thought this would be comparable to what happened in 2004 when you had an incumbent president who barely won re-election. i have looks charlie at all the material that you have done on this and charlie generates more stuff than anybody else. and it's very interesting. >> charlie has people who generate more stuff than anybody. >> charlie did a summary of the states and is dated may 31. you are probably updated since then bush is the electoral vote almost exactly even among the states where you have a solid d and republicans, solid republicans and likely

republicans. interesting, it looks to me and i know tom may have a slightly different view on this come but it looks like if everything breaks the way it looks right now, that is, if with constant and -- wisconsin and michigan and pennsylvania staying democratic, and that is still yet to be resolved by the summing up breaks that way the election will come down to three states, and for romney to win, and he could win, he will have to carry ohio, virginia, and florida. i don't know that he can carry all three of the those states but if he does, he can be the next president. that is where you will see an awful lot of action and i think that what obama did on the d.r.e.a.m. act was very important and i think helps him a lot. ciardi was way ahead among hispanics and hispanics are important, at least of those three states and important in some of the states out in the west of this is going to be

close race and i think it will go right down to the wire. >> how is a changing sense the unemployment numbers have gone up? we had an area for several months running where unemployment kept dropping at least in terms of the employment rate and last month, job creation was well under estimates, corrections show the economy wasn't improving as everybody thought and all of a sudden the conventional wisdom in town is that obama was headed for a second turn has been head -- turned on its head. i can tell you those metrics will determine who the next president is because they created what i call the atmosphere for this election in terms of the public news. what martin just described is basically the old bush and kerry coalition. that's almost a rerun of 2004. a few states on the bubble but there were some close states in 2,002,004. this three state switch between

2,002,004. obama wrote new ground in indiana, the virginia north carolina. this is kind of a throwback and if you look at where the is going in terms of the campaign is becoming more of a mobilization going after independents and there's a risk of doing that. it would be a turnout model and i think they'd have a very difficult time replicating their turnout model this time around because instead of running against bush, against the wars, bush wasn't on the ballot. that's certainly her mccain and the economic fallout in september on the republicans watch and a 2-1 spending. governing is a tough business. no president has been reelected with unemployment higher than 7.2% since roosevelt and it was a .2% last month. that is not a hard and fast rope of the metrics of the race made it much more difficult for the president and i think anybody envisioned three or four months ago. >> there's an interesting piece today.

i think it was in the post, talking about how the electorate has changed in the last 20 years. and it was the percentage of the white vote and it continues to decline and the percentage of the minority vote continues to increase. and the republicans are in real trouble because of that. they might scrape by this time, but if the hispanic vote locks into the democratic column in the republicans have done nothing to really attract hispanics, this is the underlying dynamics of the election are not on the republican side. now they may win because of the economy. tonka be right about that and we have to watch very closely, what happens in the next four months, but obviously the turnout model from 2008 can't be replicated. obama's not going to win by that kind of margin. he's not going to carry indiana and is probably not going to carry north carolina. the states he carried last time we'll be off the table but they don't have to replicate the

exact model when they won by a big margin. what they have to do is when by just enough to be reelected and again that is possible given where the two parties are. i think, i write for politico from time to time and i did a piece -- >> anyway. [laughter] >> anyway i was going to say. >> i refer to them as brand x earlier. [laughter] >> i wrote an article and we won't elaborate where it appeared. about a month ago, in which i pointed out a real problem as i see for the obama campaign is seniors. and particularly white seniors and the democratic share among white seniors has been declining and it's very interesting because while interest rates have stayed low, that is good for a lot of people but that's not good for seniors. i remember town hall meetings

when i was a congressman and seniors would show up at my town hall meetings and i would say is not wonderful that interest rates are down? you can buy a house now and buy a car and they would say congress may don't understand. low interest rates are not good for everybody because they had their money in cds and savings accounts. so obama has to figure out how to reach seniors because they are trending in the wrong direction just as hispanics are trending in the wrong direction for republicans. >> i think just to follow up on martin's point, there is no question, little question, that republicans or some elements of the republican party have done everything human possible to eliminate the latino vote, but i get the sense that while there is an anger towards republican party among many latinos, on the other hand, there is a disappointment with democrats that yeah you were on our side but did you fight for us? did you break a sweat for the

d.r.e.a.m. act? did you shed any blood for the d.r.e.a.m. act? and so they are angry at one side and disappointed in another and that is one reason why when you look at numbers and whether it's the gallup definitely vote or "the wall street journal" and how likely are you eight, nine or 10 to vote. latino vote -- but voters are very -- in the gallup poll he is matching what he did against mccain last time in terms of support if they show up. >> what i said initially goes to, they are turning to a mobilization election because i think they are recognizing at this point they're having a hard time expanding their electoral base. they have a very difficult time replicating it because it's easy to put a coalition together for near running against something but when you have had to make tough decisions and disappointed

people and haven't managed expectations is a different set of issue so let's go through the present coalition. african-americans. i think he will come close to -- winning the playoffs the second time is not quite the impetus but i think they will be able to drive the turnout in the african-american heavily investing in the presidency. let's get to the young students in college towns. these were huge gains for obama last time. just in virginia harrisonburg hadn't voted for democrat since 1940. just a straight ticket vote coming out of these college towns. where the young people? they're looking for jobs. there have been two -- to other places. the enthusiasm gap is way down in the turnout model is way down and iowa and colorado, republicans are out doing young voters under 21 so to try to do

the student loan thing in stirring things up if you look at the strategy, it's not a strategy geared towards swing voters. to strategy geared toward hispanics and voters here, young people here and the like. and then finally the hispanics which you just can't lump together. puerto ricans, they don't have the same interest. there are cubans, behave differently than mexican-americans and salvadoran's, but there is this enthusiasm gap. it's tough to get out anyway so i think you are right, i don't think they will be able to replicate that. how romney handled this and pictured his running mate will determine where the ghost. long term that is a huge problem for republicans, not just hispanics but asian voters who behave in their lifestyles are very much like republicans that don't necessarily vote that way. with the economy at the front and ethnic and cultural coalition that we have come

together on and i think it hurts them. >> charlie it's interesting because if you look at what is going on in the hispanic community and i had a large constituency in my district the republicans have had opportunities but they give the hispanic community to back other hand every time there's an opportunity. when you have the presidential debate -- [inaudible] >> what the did, look at the presidential debate. my governor who had lots of problems but was for the d.r.e.a.m. act and for reasonable decision on immigration and romney moved to his right and perry had other problems too but certainly more progressive views on immigration heard him inside the republican party. now some of the republicans are threatening to sue the president about his decision on the d.r.e.a.m. act. my attitude is spring it on, let them sue. i think that's wonderful. it will drive the point home that the republicans are on the

wrong side on an issue that is widely popular inside the hispanic mini. it was filibustered by republicans in the senate, but i think all the body language sent to the hispanic community. ..

and there's a choice of how much effort you make chasing after swing voters to let the end of the day probably aren't going to go your way, versus any case the bush versus president depalma, how do you get as close as you can to that extraordinary turnout thing, knowing you can't completely replicated. >> when they toss out some day in and these guys react. nbc in "the wall street journal" combined five-month -- the first five months of this year there pauline. and with peter hart. so it was paul's in each month, january, february, march, month, april, may. throughout the non-month voters.

and then they pulled out for comparison looking at just the undecided to the 3000 were undecided, which works out to 260. so among all registered voters on the right direction run track, 32 red direction connected demand wrong track. 30 to 59, just the undecided. 15 right direction, 71 wrong track. i mean, profoundly pessimistic. i'm the president's approval rating, overall, all registered voters, 40 approved, 46 disapproved among just the undecided, 24 approved. obama job rating over all registered voters, 44 approved. among undecided 22 approved come

to and on the generic ballot test, democrats had way too points. republicans ahead by 10. 3626. looking at this group, they are older, hard independence. they're a little bit more republican than democrat, but mostly independents and they are older. looking at that group and saying, wow, you're not getting half of this. you're not getting a third. a quarter probably realistic. if this is the case, doesn't that foresee back to bush over for model? >> of course it does. and bush won the race by an enormous turnout effort in the state of ohio.

you have to ask where the voters are geographically. i do not add any information on that, but of course these undecided, nominally undecided voters in certain parts of the country, particularly in the south in certain areas will break struggle against democrats. what you have to look at is what is going on in ohio. what is going on in wisconsin? was going on in michigan? and you have the auto bailout, the fact that obama acted forcefully to keep general motors in business, chrysler in business and all their suppliers and all the small businesses that rely on people who have jobs in the automobile industry. i think you'll hear a lot about that in those key states and that will have an impact and particularly since romney was supposed to the auto bailout. you have to go on to the state by state and say what makes a difference to undecided voters in this particular swing states?

that is not an argument that will help penn virginia, but the turnout model and tom stacy can talk about that more than i can come up with the turnout model of maximizing his support for months and could make a difference in virginia. florida is very hard for me to call, very hard for me to predict. i'm not sure any fact tourists will be a plan up on this site in florida. but i think in virginia, he is one thing going for him. ohio has another thing. you have to look state-by-state and i will come down to a handful. >> the undecided voters will decide this thing. they are undecided, meaning they've had three years plus a look at president depalma and they're not there. traditionally in my direction, what you see is what you get. i've been that they are picnics and parades and kissing babies. and if they didn't like me, at

the beginning it would be a hard sell unless they could really damage my opponent. the president is in a similar position. reagan has seen it didn't come up until the very end. he had to make the sale. they are looking around and it's a dangerous place for a president to be. the more he caters and becomes immobilization, the more alien to make sorry to immobilization election and go after independence at the same time. let me just agree with martin. it is state-by-state in every state has different kinds of components to put together to muster a majority in the obama team is very savvy at doing this, looking at it very carefully and they won't make -- this is not a cakewalk. one other thing, registrations over the last decade. both parties have less market share. independents are declined statesman throw. there's a huge huge dissatisfaction, which the

political class relocate to field was an economic meltdown, stagnant wages. people are looking around and the president has fallen short of the promises and hopes that people had in them. but look, only to go. a small malleable group in the population will be catering that forces the income to try to get the base together. i don't think they can mobilize the base like last time within that 52.9%. they're going to need these independents in the end. >> what i play devil's advocate on the state-by-state. you know, 95% chance that whoever wins the popular vote. you know, 2000 was a pretty fluky situation. and you know, if it is not, if the popular vote goes one way, you know, the assumption has always been well a democrat

might be more likely to win the popular vote, lose electoral college than the other way around just because democrats work many votes by winning california by huge margins. one vote is wasted all those other votes and in the republican boasts more efficiently allocated around the country so it's more likely to go one way or the other. i guess right pushback state-by-state, besides the fact that it goes the same that direction, that looking at is state-by-state and the new world order means paying a lot of attention to some polls that i will use the technical political science term,. we won't use these posters, but this is why at best dimestore status if not total garbage. we talk about 80% of the bubble in this country.

you know, i sort of decided come you know, i am urging the timebomb instead because the obama campaign is spending billions of dollars in research with the romney campaign is spending millions of dollars. it's one of the top five or six states, my guess -- and they are both in their coming into work, it's probably pretty close. and if only one side is then in the other is not, less so. and it's not so much, it is not. i am just not getting pork taboo for whatever is the latest step to or quinnipiac poll. i mean, the largest newspaper in the state and the leading tv station in each market getting together and commissioning a fabulous statewide survey is pretty rare now.

>> one thing i would note is right now the polls tell you one thing. it's a competitive race. this race doesn't engage into laughter conventions. i would wait until a week until i would put much more in any of these polls in terms of the direction. at that point they start focusing. the candidates start focusing the neck itch and getting debates. this is a 10 for five points going into that. it's anybody's race. international, national defense determined at that point. i think the metrics on the economy are going to set the voter mood and are probably the most important indicator. >> charlie, going to your point, we of course, tom and i live in the washington d.c. area now and we see local television here. i have noticed that the obama campaign has a very clean and i believe effective campaign -- add right now in this market, which i believe are focusing on

virginia. they advertise virginia has a swing state. they show obama at the beginning. he says i authorized this at. that is kind of a counter message that i am not hiding anything. you have other cd groups attacking me. i'm right up front at the beginning of the additive focuses on romney's record in massachusetts as governor of massachusetts, how the state is 47 and job creation. that is a clean, effective that, obviously running because virginia is up for grabs. i'm curious as to where is the room yet. >> let's make the segue and talk about that just a couple minutes. i'm actually not going to say anything. >> i have some things to say. democrats need 20 five seats to get a majority in the house back. i am kind of script to call.

a martin, if you want to make the case for someone who wants to make a case, what would they say a quick >> charlie, i'm trying to get independent review essay can. [laughter] it is early in the morning. i think it is not impossible for democrats to take back the house, but it's a pretty heavy lift. it's not just 25 seats. there's other seats for democrats are retiring in the south though the hurtled onto. it is not impossible. if there really is an anti-incumbent mood out there by myself for some time that there is more of an anti-incumbent move but this election we've seen and are more republicans in office under a democrat, i think democrats can make significant

genes on train games. the important thing is there's a lot of new republicans who haven't established themselves in their districts. they haven't been on long enough and have it done what tom did to go around to little league games and go to all of the pta meetings. they've only been in for easier now -- a year in a house. it takes a while to be calm a figure in your district. there's a lot of new republicans who are vulnerable, some of whom were swept in by the tide last time who will lose. when you have a landslide election, just as he did in 1994, we knew who the accidental congressmen were. we do the people got swept in. we knew the guy who beat rob zukowski wasn't quite make it more than one term. the guy who beat jet perks wasn't going to make it more than one term. redistricting has been kind of a wash. republicans originally thought they would benefit. it's been pretty much a wash and democrats will pick up seats in california and illinois because of redistricting.

republicans in north carolina. but i think it's not impossible for democrats because of the unrest in the country to take the house back. the most likely outcome is republicans will lose some seats and will be much closer than it does turn out to be a mutual election, it not inconceivable that democrats could take the house but. >> i will bet you $10,000. [laughter] >> and standing up for martin. >> i wouldn't take it. >> we both went on that. >> the republican problem is they over performed at the highest midterm turnover since 1938 that they have seats at risk in the user redistricting processcan already control more seats at the table than any time since 1922 strength and a lot of the seats and on top of that, there were at least a half-dozen

democratic seats that have gone because of retirements by republicans pick up on top of that. historically when you look at presidential relax, there are coattails. you look at eisenhower, nixon swept 49 states. there's virtually no coattails. reagan in 84, >> and 92. >> 96 was his relax. >> 92 is not a real lack. >> 92 is not a real lack. >> not enough to take back the house. [laughter] real lack traditionally -- because a republican of her performance in 94. the real lack tradition, people aren't that upset and they tend to reelect congress along with that. just look at history of this. it is very difficult for people to oust obama on one hand or be close and you have a divided congress. it takes away from the president

when you have a democratic senate this time. it's a much more difficult, not impossible, but much more difficult narrative. republicans are likely to lose a handful of seat because they over performed last time. i think 25 seats is a way that i think is unlikely to occur within the context. >> can we talk about the senate for a minute? >> the statistic that makes tom's point is that the postwar era, the party in the white house gaining 15 seats once and i was in 64 with the lbj landslide. other than not, it has been under 15 or lost a few. but that is why it's not that 25 is an enormous number, but in the context of a presidential reelection for that party, 25 is a very heavy lift.

>> i don't disagree with that. this is jft. >> i don't disagree with that. this is just such an extraordinary year, strange things can happen. >> i have some thoughts about the senate. not charlie, but some other people in the press haven't quite figured out what is going on in the senate because while democrats have a three vote majority, the hill or the republicans are significantly more than not. they need to pick up more than a net of three seed because they are going to lose. there's an independent elected in maine who caucuses democrats. that is for. if obama is reelected, the vice president biden presides over the senate. that is why they have to pay cut to gain control. if we win either nevada or massachusetts, two states held by republicans said we could win one of those, that is six. the republicans probably have to pick up that east 60s in the

senate to gain control and i don't think they can do that. there's a lot of closely contested races in some of those will break democratics and some will break republicans for a couple of wild cards floating around out there, but when this is said and done, democrats have a reasonable shot of retaining control of the senate maybe by one vote, maybe by two. >> let me make this observation. elections have become very parliamentary over the last few cycles. and although the last time the republicans over performed in a one a handful of red senators and blue states, illinois, pennsylvania, wisconsin, that is the exception to the rule. you are just seeing very few blue senators and red state and as you look at the lineup this time, you have 23 democrats for reelection, republicans and by their own volition, when defeated primary again. i'll let an seats.

it can go either way. sometimes this mix of brains to think we are going to take it because of the lineup. nothing is automatic. you have some democrats, which is a huge democratic wave that have to protect themselves this time. folks like castor, mccaskill, they are tuples for the democrats. they have a number of other seats. i feel very good about republican prospects in wisconsin, montana, north dakota, missouri. that gets us over the hump ratepayer. >> akc five of the data in and take a look around. virginia is a possibility. then you get into the second tier, which is ohio. he did mention indiana. indiana isn't clear for us at this point. >> the polygon that is so close i think by the time it straightened out in the

parliamentary patterns is likely to stay republican. it is not there yet after what i would call the republican primary they are. >> very interesting. >> the senate is very up for grabs. my gut is if romney wins, it will probably pretend a republican senate. he doesn't when it becomes much were difficult because of those other things about the makeup of the electorate. >> is interesting. i had from taxpayers. i went to school in missouri. i worked as a reporter for a while appeared the missouri senate race is one of the most interesting in the country. claire mccaskill is running for. they have three candidates and it is possible the republicans will nominate the weakest candidate out of the three. it is possible claire mccaskill could be reelected in a state that under normal

circumstances. there's a lot of things going on and some other races are very close. >> the race in montana protester is a very interesting race. he fits that state. it's a republican state, did he fits the personality estate. >> will see. don't forget no one including charlie thinks has a chance. my friend, bob kerrey. last night rob kerry was chairman the senate campaign chairman the same time i was. he is a very interesting candidate. he's an unusual candidate. it's not going to be easy for him to win in nebraska, but not impossible. >> he's lived in new york. >> the thing is i've watched some very needed -- a badly flawed republican. other three republicans -- that the republicans are running,, one of them was politically

speaking, horrifically disfigured. one of them -- i won't say what it is, but his last name is dan burke. the second one had some issues that i smartest caring might be able to say. the other thing -- i'm not saying this in a derogatory way, but it i think it's probably okay. i think it was the worst outcome for kerry, but the only game i think that john thought of what it time and martin have said is i am not rushing to judgment on what angus king is going to do. first of all, i think this is a guy that desperately wants to stay independent. now, it depends what happens in

the other -- i jokingly say we don't have 33 senate races. with 32 senate races than once silent auction. that is not fair. but the thing is that historically they don't like she said the aisle, in the center aisle. they don't let you sit there, number one. number two, you have to get your assignments from somewhere. at the other thing is depending on what happens to the other 32 states, what has happened in the presidential comedy either this guy would love, apparently part of his tenure as governor, the state senate in maine was evenly divided and that they hide -- there is a force power-sharing agreement they are. and i don't know whether the is what allowed this or whether this make things happen. and lord knows it would be over harry reid and mitch mcconnell's dead bodies, but

you know, i am just not sure. i think in his heart of hearts, he is closer to being a democrat than a republican. but i think he really is an independent. and if he can figure out a way to do that. he said i will do it as long as i can still be effective for maine. in other words, if it means siding with the minority party no matter what -- you know he's not going to do that. i'm kind of watching that very carefully. to me on a bad night, republicans picked up two seats, which would take them for 472 that 49 come a bad night for them. a good night for them would get up to 52. the days have been getting potentially doing better than that work on and effectively olympia snowe retired. martin has a good point and i don't want to get too specific because i don't want to get a bunch of nasty phone calls. there are a number of places

this year and two years ago where republicans have not been able to get the optimal people to run. i know history and that happened, or for the best candidate is not likely to win is prevented from landing virginia. or let's say florida. you know, this is not likely to be an optimal situation for republicans. missouri, i think martin is dead on. >> earning the steelman and she wins she's got a chance. >> week ago. lamy make a comment to the angus king. uva law school for those of you. >> they've got an angle and

everybody. >> i love a daughter in maine. >> is and is past the taste or the mayor of andrea. but i would say if your angus king and susan collins could be chairman of the government committee come your college republican state control, there's an angle to that, too. i don't dismiss these automatically democrat and he desperately wants to be independent, which can represent the group of people with both parties. >> charlie, named colette didn't independent governor who was a republican, ran as independent. very unpopular in the state of maine. so, i am not sure an independent aligning himself with the republican party makes a lot of sense in the state of maine right now. >> i learned something recently that angus king's first political involvement was that the driver for senator bill happily. it was like, really quiet

>> you know the current governor of maryland, you know how he got his start in politics? he was the driver for gary hart in 1984. >> in the drivers a very interesting thing. >> one of my first two jobs. >> exactly. that's an elevator operator. >> elevator operator was a good deal. >> i don't think otis was around. >> do you have any idea of quiet >> okay. there were that many back in 06 or whatever. anyway, had its ups and downs. >> have we beaten us anacortes hard not? >> there's some intriguing race. the massachusetts race is one of the most intriguing because my talk about the public and parliamentary, scott brown is during this campaign towards independent which 52 are

registered independents. i think 13% republicans makes a lot of sense. elizabeth warren is not towards independence at all. she's just running straight democratic coalitions in massachusetts. recent favorite town and gown. he could pull this thing off in terms of reelecting the polls. the other interesting race for republican perspective worry fred on hawaii and the democrats there have a very contentious primary on their side. lingle elected governor twice carried every legislative district in the state than her last relax. obama, one of the home state is doing very commensurate welfare. you get a better democratic primary payer, i'd have been funny things can happen. usually when you see a trend like this, there's always one thing to pop out of those are two races. >> the massachusetts states is

interesting because obama will carry massachusetts by a very wide margin. the question is, does elizabeth warren get swept in on a wide margin? this happened once before other people to talk about it very much. in 1964 when i'll be jay one by a wide margin actually got swept in. lbj's coattails. so these things can have been. i think elizabeth warren has a little problem. they won 32nd cherokee problem and will see how that plays out in the course of this election. but it's such an overly long and stay for president that she could win it. >> in the senate sometimes the premise too many chiefs and not enough indians. last night [laughter] >> clearly massachusetts is the land by four republicans would be 52% or 51%.

so we've got no margin for error. by the choice of being him or her, i would rather be him at this point. >> let's switch because they want to get to questions and everything. but i wanted to go to the cliff at the end of this year. you know, this is a sophisticated washington audience and you guys know all the background and my best friend billy moore has written a really good stuff on what may happen at the end of the year with some of the consequences are. who wants to go first? and think of between now and the election, lame duck or sudden death, meaning after the first of january? >> ipo for sudden death. nothing will happen between now and the election. lame ducks are very good. there will be a lot of lame ducks in both parties.

i think will be very hard to do very much. i think whatever happens happens in january and february. >> in that case, will whatever that have been toppings? will it be preceded by a very, very significant stock market fell out? >> yeah, i think really what these folks need is a market tremor of some kind to get them to act and put this together because most members today, the races are primary election, the witty lines are drawn in the way people live. >> the senate to because you are blue, red states and they're worried about primaries. ask dick lugar. ask robert bennett. so it doesn't allow them to act and compromises that rewarded by primary voters. the other thing i would note is

the gate to the lame duck session. it's done in leadership election. who gets elected the leader? i went to caucus those. you've won a bunch. they are secret ballots and by the way just a hint when i called members they will you support me, they invariably say yes it is the connecticut public and they invariably say no. and this is my wisdom. the only member you can believe is the member who says he's voting to. this is done in the context of bush tax cuts, payroll tax, sequestering pitcher this cbo report back at us over the cliff. two years ago they did reach some records during the lame-duck session, but all they did is add about a hundred billion dollars to the debt. this time they have to go the other direction. it's much harder to take a market tremor for sending this dark these folks to act. and by the way, you have the

appropriation bills hanging out and would be a big mistake to let this continue to hang out there. they ought to get that out of the way. you're not getting get anything else. >> is the dynamic of you have to let -- there's an argument made that you have to let the bush tax cuts expire so that republicans can vote for something that's not a tax increase? in other words, the rays have to jack up to the pre-bush tax cut level for them to be able to come up with anything less than that? >> that's interesting. >> them is a good argument. i could probably get some at that point. i think what they would like to do is lower rates and take care of other special provisions and

between that could be net revenue. >> the thing is a piece on the personal side, you mean on the corporate side on the onset of issues, but on the personal side, is not so much easier said than done? we are talking about, you know, paying taxes on your health insurance premiums. wow, that goes over big. mortgage interest deduction, charitable. wow, you're talking about going straight to mero. >> dislikes and symbols. sounds great until you read the fine print. >> let me just say, this is tough stuff. if history is a good result in long time. none of the stories are popular and together we need to go we need an election. >> you're asking two different questions. one is do your tax refund that everybody says they are forward to more ship for your slack time when rita did in 86. your tax refund that is revenue

positive? that actually raises more money than the current system no matter how you play with the rate and change the deductions, but actually generates revenue that can be used to pay down the deficit? the parties aren't even there at this point. it should be revenue positive. you may have revenue neutral tax reform at the end of the day, which will be a long time in coming. as tom indicated, that's very difficult to figure out. but there is a shorter-term question. are you going to do something anytime soon about the size of the deficit? separate and apart from the issue of overall tax reform? i don't think the parties are capable of doing that between now and the first of the year. there may be an external shock, which will force them to do something early on. this business of playing games, seen while what the bush tax cuts expire. the maximum rate is 39.6 and the republicans can vote for something a little bit less than a and it's really not a tax increase because they're

actually going to bring the dirty 9.6 raytown. it's pretty indirect. maybe the argument would work with some folks sign up to it plays very well as the general public. >> one of the bigger issues is the sequestration because that's a 50% cut understand, a 50% cut on domestic spending that's going to happen automatically and december 31st january 1 if there's no action between now and then. i don't think congress is capable of acting between now and the first of the year to avoid sequestration. the question is, how quickly can the act after the first of the year so they mitigate some of the real problems that will cause? it's going to cause real problems in the defense industry and real problems on domestic programs. and i think congress will do something about that in january, february and march timeframe, separately and apart from others

somewhere economic problem that causes them to focus on deficit reduction. they have to do with these automatic cuts that no one ever going to happen. this is bogus over everybody's head. i went that it would hang there and congress deadlocked, -- >> is a good beat makeup of the new congress, which is what happens to the lame duck. they take the house and senate on the bush tax cuts still waiting in no way to do some pain, reconciliation and airwaves that are trying to compromise their way through it. but if you have continued divided government, they may try to get some of this stuff off the table. and figuring they'll have to live with each other at least another two years, we'll see. >> were skeptic ought to think of do anything else this year. >> we need to open into the audience, the let me clarify. do we have two or three of those four the single most likely

outcome sudden-death come in many post-december 1st? >> i'm a sudden-death guy i m. afraid. >> with three votes for going into sudden-death with the emphasis more on dad. [laughter] >> only more so for her. >> let's open it up. are there roving mics or anything? >> wave your hand in a nonthreatening way and somebody with a microphone while calm. >> mark thomas hewlett-packard to my questions on the sequestration friend. the issue came out this past week that if they do go ducal heavy sequestration, the requirement is they notify employees to 60 days prior to the impetus for the sequestration, which puts early november. it's three days before the election. how much in pop will that have on the election?

been at that the plant closing legislation congress passed a number of years ago, requiring a 60 day notice to close the facility were dramatically decrease the employment. that could have a chilling effect in some places. i don't think congress or the president or anybody is capable of avoiding not. in a few a kind of effect it is. >> will be home campaigning during that time. instead, but each side will get their talking points. all to you this, members who voted for the compromise at that point on the hook for members who didn't vote our author. >> if you have a gas stove, that is called turning up the heat. cranking it out. >> i do know how they are capable of solving the sequestration problem ahead of time. yet the super committee, every indication. this is what they came up with. it is really going to be ugly and crash and burn. i'm telling you we know this is where it's going. i don't see anything in election contacts were they can find the

offset. we will be down their throats and everything else and you got to find the cuts somewhere. we know where a lot of money is in entitlements. no one will touch that. one thing about entitlements people don't look at. i have maps that i used to show counties in this country to get the highest% of population who need medicare and social security and they are counties. these are rural areas the republicans own. you start messing to appellee shia and these benefits and you watch voting patterns change pretty quickly. i think the only way this happens before the election and i talked about the stock market, it has to be the equivalent of attaching electrodes to sensitive body parts and click enough the electricity. i think that's the only way you're going to change behavior sufficiently to do this before the election. if that sounds graceland staff. >> charlie, let me make one

other point and not in quite such a pessimistic note. i am somewhat optimistic that it the president israelite did, and that he show real leadership in a second term, in terms of resolving these problems. without presidential leadership, these things don't assault. >> one of the last president to set a successful second term? >> ronald reagan has a reasonably successful term. >> you've had some presidency did okay in the second term. in both parties. >> it depends how you define success. >> though clinton did or he darn well in his second term. >> defined as 5.5 on a 10 scale. >> who else do we have?

>> jack bagley with the bagley grew. since both of you are creatures the house, let's assume the election in the house gets closer without picking a number, what is your prediction on leadership of the house, both republican and democrat? >> let me jump in a slightly modified this question. just to give it a little twist. on the republican side, how many seats could republicans lose before john boehner gets in some difficulty? and if you would like take the fifth amendment, >> i was fair. that's how i got elected leadership is after rita -- it was no big loss. >> 1998. >> that was enough to balance.

>> and nine peatland in this campaign chairman just over that kind of loss. it's managing to expect tatian. we will see how boehner can manage expectations, this idea would pick up 10 or 15 feeds is probably nonsense. it's probably not within the realm of my probability. i'm going to be a little chat like that. i think we'll take in the range of 15 to 20 feet loss on this to jeopardize. remember this come of it comes out right after the election. they do this on purpose so no one can organize against them. or so one of their organize. they let the leaders and the committee chairman anyway. the leaders always take care of themselves first on these issues and a giddy time to organize. i think that's the ticket the democrats were to take seats at the different issue. >> 15 secret number.

>> i want to go back to something tom taught to bed earlier and that's the secret balance. when i was elected congress chair, i won by seven votes in the secret ballot. when tom daschle was elected democratic leader of the senate, he won by one vote in a secret ballot. so it's kind of unpredictable. you never know how i will turn out. what happened in 98 is gingrich overrules, it's interesting, even though you replace lender, linder did not want to make impeachment and issue in the concluding week of the 1998 election. i was sure that democratic side. two weeks before the election is that we won't make a big issue out of impeachment. gingrich close that election on the impeachment issue. the republicans lost five seats. that was the first time in more than 100 years that the president's party has lost --

had gained seats in the sixth year of an eight-year term with five seats presoaking creatures in disgrace at that point. yet a lot of other problems internally inside the republican caucus. i can't predict how they'll be a john boehner. if the democrats pick up a lot of seeds and get this to be pretty close, boehner certainly could be in trouble. tom would be more -- >> i think you'll be fine. >> first of all, are you convinced both seek reelection? >> i don't know. i have not talked to her about that. i simply don't know. if the democrats close this thing, close this gap pretty substantially, my guess is that she does try to stay around for another run. if in fact democrats don't pick up, then i'll probably would be a lot of a lot of interest and that the democratic caucus and have a different leadership.

but she is turning out to be exactly the right leader interestingly enough in this election. the republicans made her the issue in the 2010 election and i think in seats were running against her. but she's been exactly the right person for the 2012 election because she's a great fundraiser. she's enthusiastic and his cat democrats in the game. it was the right decision for her to stay after the 2010 election. i'll have to make the decision after the 2012 election in terms of how. >> it's a very low profile. >> hello, i'm with at&t. we know each other. i have a question we let you talk about comics as the presidential sweepstakes. to vp picks matters in presidential's? is cemented in 1960. do you think will matter in this election? >> lepton start on that republican issue.

>> yeah, i think it matters. but come you don't want to put too much, but the old rule is first do no harm. you can matter in picking up the state. for romney would be the first window into how he makes decisions at that level in terms of who he picks imprint on things that the identification of the electorate. i think it bounders than most people vote for president. they don't vote for vice president kenichi don't want to do harm. if you can add a state or two for constituency on the way, so be it. >> pics free people that you think would be considered and what percentage chance of each one is getting picked. >> as the outsider, this is the republican issue. i think that romney and cautious politician makes a conscious choice. they think portman, polity and i

don't know there's anybody you thereat put in there. >> if you pay percentages. >> i think portman. he's a safe choice. he's a confident person. romney is a cautious politician and i can't see in making out-of-the-box choice. but who knows. we'll see what happens. thomas in that party and he may have a different view on that. >> i don't know what he'll do. i don't know what he'll do on that. i hesitate to make a choice because i've so many friends. >> everybody has some strong attribute and they all have some negative factors at this point. >> at 45% and polity at 20 or 25. i personally would put mitch

daniels like real hiya. but i don't get a sense that he's getting actively aggressively the data. but i would certainly put him there. but after that, you know -- >> governor of virginia. >> yet to put the governor with virginia. >> for the record, tom did. >> i think you'd be a great pick. they also think ruby would be a great pick. >> is hispanic print if nothing else he generationally can be a turn on and keeps your tea party base solidified without alienating the other side. i think he'd be a very attractive choice. >> when they push back there. 20 reporters pbo, smart guy, smooth, impressive guy.

i think he's got a terrific, terrific future, but i absolutely would take in this time for a couple reasons. one is that sort of the sub types of your candidacy is that we shouldn't have elected a guy last time who would never run anything before it was two years out of the state legislature and then you put on your ticket somebody who has never run anything in two years in two years out of the state legislature, you undercut yourself a little bit number one. i mean, to the republicans -- their argument is that was a mistake. so he really said it should and do something remarkably similar they are. but then there's the latino argument. to me, if republicans need help, we have to she showed the election been down. the idea of going after mexican-americans or dominican,

with a cuban, that's like saying i need to up to the irish. i'll pick an englishman. [laughter] >> you only talked about within a couple points and i think you would hope with all the groups, particularly put forward. >> the key thing is that he suddenly has a gray streak in his hair. >> one last question before we get the hook. >> do we have time to squeeze out a couple more? >> okay, whoever has the night. looks like we have two or three more done. >> hi, government affairs institute at georgetown university. you all have talked about how the republican brand really suffers among his inexperience the one thing no one has mentioned is women, particularly women who are going to go democrat anyway as the damage to

the republican brand healed since primary season? and if it hasn't healed, does it matter that congressional or presidential election? >> i'm going to start a mess because i'm kind of mystified by this issue. my initial reaction when you had all this first, but about the health care bill and contraception, that this is a real blow for republicans among women. but the polling since then has not brought that out. i don't quite understand because republicans should be having problems among female voters right now and they made before the election is over, but the current polling does not show that. >> it's funny. if you look at tracking polls at the time, you can't find where that happened. i mean, you can make a great reason why it should have either

way, but it didn't. and when i started doing is what i do do in italics and i talk about the obama campaign was independence, 18 to 29 euros, latinos, african-americans in three of the four legs are wobbly. i started saying what about the women's vote? and so, the problem is when you're talking about 52% of the lack. , you're talking about kind of a big group. and they're not all like. and so, gallup did this. this is the first ferments of the president's approval rating, first ferments combined. president obama's approval rating was 63%. wow, 63%. among divorced women 62%. among married women that was 44%. so we say, what about married

women? which one? >> that kind of get into various -- let's see, white married women with cad, romney wins by 18. 54 to 36. non-married women -- actually without kids, obama wins white. obama wins by one. >> but you can kind of go through. >> the interesting thing we haven't talked about it all, that the interesting thing to me is the catholic vote. and you may have followed that in the polling is that i think obama has taken a hit among cabinet voters. i am for obama and i still think he wins the election, i'm not catholic -- but this was -- i

don't think this issue was played very well. and i don't know that he could headed out all the opposition from the catholic church, but i think this is potentially harmful to him in a couple of the swing states. >> one last question. >> back to remind her online viewers they can participate in the conversation via twitter that hash tag #njcharliecook. speaking of twitter we have an online question for you. there are two big phenomenon in this years election. social media and the rise of the super pack. which has more of an impact this year and why? >> tom davis denied both spoke out against mccain-feingold winners being considered within

10 years ago. we said at that time as this is going to force money. it's taking money away from the political parties and it's going to force money into the fringes to independent groups. and everybody ignored us. everybody. and that's exactly what happened. it is unfortunate. now were to position we have to amend the u.s. constitution and it's very hard to amend the u.s. constitution. the people he drafted our constitution that they were doing. they're for stable government in a hard to change the constitution. >> this is when they had a huge spending apache didn't have super pac. they can spend super amounts. >> reader when spending in virginia. this time it's going to be maybe advantage republicans. don't underestimate the effects that can have been. >> let me go back to the original question. first back, you know, we need to recognize the obvious that we got three guys here that were not collectively 175 years old

probably getting in that general area. we're not exactly the right people to be asking about social media. >> asked my granddaughters. >> yeah, so for pure entertainment purposes to see with these old white guys say about social media. but you know, i think clearly in 04 -- we talked about go for a laugh. clearly the bush campaign used what was the state of art micro targeting and their assorted paper for social media so much in clearly the obama campaign is doing that. is it able to overcome great the economy is. we'll see. they're honestly going to use

it. the romney campaign will probably do a company job in the obama campaign will be better at it. will it make a difference quiet i am kind of on the edge. i personally not that wild about the idea of super pac, but is obviously a foot from the idea if you're going to high spending as a ferments free speech, that is sort of the slippery slope that led us to this. now, when you democrats get really torqued up about this, i didn't notice a lot of them getting upset when george soros and peter lewis for writing and pretty big checks not that many years ago. and so, i say be consistent here. but my theory has been that there is a lot of dimension returns in politics. and for then senator obama

around 650, 700 billion total last time, half of the roughly way to win the nomination and he spent mccain better in the general election. and in this time he was going to spend 752 billion that whatever number the president is going to spend this time, it will be into the law of diminishing returns point and romney will be an analogous point your jan point, i'm not sure each additional dollar layered in on one side versus the other is going to have that much of an impact. but my hunch for the super pack as the congressional level. >> that's what i was about to say. >> i don't know that you will be at a point where both sides are going to have more money than they will really know what to do

with. it's the extra money on one side. >> i don't think that's always the case in the congressional level. after they have a really big impact. >> certainly on senate races, some of the democratic senate races will be badly outspent. a house race gets a little harder because the candidates are better known in the area they are running in. still a lot of money could come into the house race and make a difference. but i think where the money did come in on the battleground senate races. next question. >> hi, suzanne wise men. i just have a question about the supreme court decision on health care. how does that affect the election? >> well, we know that normally the supreme court handles that,

hands down the hottest case last week that the term i assume that's what they'll do and will do it next week. you can't accurately predict that right now. if the supreme court strikes down the individual mandate, but basically leaves the rest of the law in effect, then if someone becomes a nonissue for the rest of this campaign. clearly congress will have to figure out what to do, how to put humpty dumpty back together again if the law will continue after the election. if on the other hand the supreme court were to invalidate the law and become a real issue in the campaign because a lot of parts of the lot are very popular. and i think it gives democrats an issue to run on. i don't know what the republicans do at the supreme court totally upholds the law.

>> i think we can continue the narrative. it's not me speaking. that's the pool speaking. if they uphold the law cottages to the issue will come in and repeal and put another bill in its place. but if they knock you down, i don't see any legislation coming forward at this point because whatever he put out someone will attack. those guys will place it between now and the election to play this thing out. >> my hunches and october, november we will not be talking about the supreme court decision was pivotal. i mean, let's say the decision comes down next week and for three weeks you're going to have over caffeinated people on cable television say this is the biggest thing in the election going to dominate everything. after the most part counties are going to be the same people that said that contraception was going to be the biggest issue in

the election and that same-sex marriage should be the biggest thing. it's pretty much the same group of people. and then we'll move on to something else. i personally don't think it's going to have a huge impact because to me, is there any, to use a cliché, is there any other issue that's been so thoroughly vindicated in the court of public opinion than health care reform? i think the matter what side you're on, i don't think are likely to switch. i think it's certified or in the stock price for and against president obama. i think it had a huge impact on the numbers among independents is one reason why he is in the. i don't think it's going to change because of what the supreme court is going to do. i am not a lawyer. no expert, but he actually had an interesting theory but a friend of mind was a federal judge, a reagan appointee who ascended to the recording said the first today's oral argument. and you know, thoughtful

throughout the individual mandate. and then he listened to this very day, which centered on severability and can you pull -- a feature at individual mandate, can you take that pardo? he came out that at the very and thinking, you know what? i am not sure they're going to do this after all. and one of the things he says he knows justice roberts reasonably well, robert desperately does not want a five, forbush core political decision. that is what his tenure as chief justice will be remembered by us this decision, more likely than any one else, just as the previous justice was bush court. he think that justice roberts is desperately going to wind a decision one way or the other and the severability -- would you even have only a, who

clearly is going to vote against them throughout the mandate, would you even haskell you asking, are we supposed to go through a 2000 pages and parse out what stays, what goes into them you really do this panel that? disguise gas was that you could see chief justice roberts basically turn to anthony kennedy who is the swing vote and suggested had to ask them to write the majority opinion, a six, three opinions are what turn out to be a 63 opinions in terms of upholding the law. i have no idea. it's not my lane, but i thought that was a very, very interesting theory from somebody who's been a federal judge for a really ahmedabad time and not particularly liberal in any way. >> charlie, i have a wonderful experience of cooking for a federal judge right out of law

school that on the appellate level, but based on experience and would never predict what a federal judge is going to do. i think just leave us alone and we'll see what the decision is. >> i think is factored into those price at both candidates. the most important as you move into october and puts the motor's mind in the direction of the economy. i was a real personal disposable income. >> which the numbers are not good on that. but he can't, i just want to go back. this will be. but his it's important some of those midwestern states, particularly the auto bailout in their employment rate been somewhat better than the rest of the country may turn this election. >> welcome on behalf of national journal and united technology and great word and his terrific team, thank you all for coming.

thank you come you guys. you are awesome. [applause] [inaudible conversations] [inaudible] [laughter]

>> how do you approach the interview differently than news reporting interview? >> i think of book interviews as gathering history. it's a good interview and when i work he for a new site as gathering contemporary information. >> how difficult is it to remain impartial in reporting and not getting caught up in one campaign or another? >> i'm going to try to come as best as i can come and give is full of an understanding of what is happening in this campaign.

it is not that difficult to put your biases to decide. >> how does social media changed her line of work in reporting and getting information? >> twitter and particular is a primary news source for anybody who covers politics and anyone who pays attention to politics. twitter didn't exist for years ago for all practical purposes. >> max, part of a firm on developing new energy sources hosted by the atlantic magazine. in an hour you'll hear from epa administrator carol browner. before that come energy expert says congress should extend a special tax credit for companies that use wind power. >> editor at large and my panel

will come up and join us. we are now going to focus on one portion of the next generation energy discussion on wind and a session called driving the wind energy market. we have just to my right, martin class there. and martin saturday. and michael o'sullivan, who knows more about the dollars and the dollars insensitive than anybody i think i've met who is senior vice president of development nextera resources. maybe you should talk to both sides of it. i know he's out there looking at what works and what doesn't. we will talk just a little bit ourselves and then open to all of you for a broader set of questions. i., this is a layperson, but i do have some images of the wind part of this.

whenever i discuss the subject, i wonder why in discussing it. by discussing it because it's politically correct to do so or is there a viable energy option here? what is the difference between doing something that sounds good and feels good and the real dollars and cents of making a practical diversified energy site? i had a session once a ted turner who told me he was the biggest landowner in the united states and he wanted to but windfarms in buffalo. he was into buffalo and really into windfarms, but the absence of a national grid in various problems made it impractical to do so. but it is an obsession of his. there may be people from the u.n. foundation are tax return since i have, but he was very seen me about it at one time. so let me just open a discussion. i will start with michael and if i it correctly who was invested

heavily across an energy spectrum and nonetheless participate with 20% of the wind energy market in the united states. why do i ask you to start. are we discussing this because it's politically correct to do so or is the real profit somewhere? >> as we know next year or two of purge 20 billion the next 12 years or so. the first and primary reason we got into wind and solar investment which is to constrain the discussion was for shareholders. and then a few years ago, a former vice president gave his speech tonight think was at the oscars and renewable energy became mainstream discussion. ..