expire, the sequestration measures go in to effect particularly in the department of defense in a big way. what's your guess, is there a grand bargain to be had late in 2012 or early 2013 that -- >> i think there's a bargain to be had in the lame duck. there are pieces of obviously the bush tax cuts and sequestration and the unknown effect all of those expiring could have on the economy. i think it's going to matter a lot what happens in the election, which side gets the leverage, which side can go in to the room and say, guess, what we just won and now you're in charge. take your medicine now or later. so it will matter -- there is no appetite for progress before the elections. it's very clear. i've asked lots of leaders a and they've said sorry, blame the

other guys. there will be a bargain because each side has so much to lose. somehow in waupg the only time people are focussing is during a lame duck session. there's the end of the year, the day these things expire. there are how ratings agencies watching very carefully. the stakes are 00 high to do nothing. and then i think after the election, there will be a time for a grand bargain. it will be incumbent upon either the new president or the current president to solve this problem. i think this is the task of the generation. we have kids coming out of college, you're scared for them, you're scared for the amount of debt they've taken on, you're care scared for the economy they're in-hair rating. there's a horl component. and you said how do you know when people care about it.

goal will you please asked about a month ago what is most important to you in this election. the debt was the number one issue. and jobs were just a little bit behind that. the debt. people are focused on, it's never been this way before. and i used to be a hill staffer and zero in the budget used to be a road sign on to the place you were going. oh, we busted the budget, sorry. that's the way it was. people literally didn't care about the budget. and now they do. and i think it has a lot to do with the tea party giving an earful to the republicans, the tea party kicking people out, who people always thought would be safe, they're good people, but they weren't responding to their constituentses in a lot of cases. and i hear democrats talking about spending cuts in a way that you've never heard before. so i think there is change. failure isn't going to be fatal on this, but i do think kind of the six month to the year after the election is going to be the only time that the next president or the current president has to change it and

then right back into election mode. >> what's your sense of timing, when do we have an appetite to take another swing? >> we should take it right now because as patricia indicates, it's difficult before the election year. we absolutely have to before year end. and i would say patricia made a comment we're not sur what the sxhik impact will be. i think we know it will be devastating to the economy. some says that means kicking the can down the road for the new congress and new president potentially, but it certainly ought to be under a strict deadline and i hone expedited procedures in the senate when we have issues with getting 60 votes. if we don't do that the federal reserve has told us we're looking at maybe a 3 point drop in our gd. . most people don't expect it to be at three points at that stage. we were 2.2 in the first quarter this year. so we're talking about another recession. cbo said the same thing. it would be devastating. so it's a combination of the

huge tax increases and a combination of sequestering and how it would work. this is across the board cuts. we also have a debt limit coming up which for many of us in the republican side will require some more focus on the spending as many of us who voted for the spending restraint. so it's a time when we do have an opportunity as a country to make some of these tough decisions. i would say, though, we have no choice but to do it. and i hope that patricia is right, that both parties see it in hair interests to move forward. we simply have to. javier talked about some of the differences. i would disagree with some of his analysis. certainly the impact of the analysis. but, look, we can have those debates, we need to stick to the facts. i think the fact is 24% gdp in spending is historically high. we're headed to 30% by 2030.

this is unsustainable. we have to deal with the spending side. that is a fact. on the revenue side, it's relatively low. cbo also says once the economy picks up, we'll be back to the historic average, but my view is we shouldn't be arguing about bush tax cuts, we should be arguing about tax reform and this is an opportunity for us not to keep the current code and add more taxes on top of it, but to reform the code in a way that economists across the board pretty much agree would result in a better economic climate. >> governor romney in iowa today will give a big speech on this issue. deficits. he's released part of the tax already and one thing he says in there, this is like a prairie wildfire, it doesn't care if it's a republican house or a democratic house, it will burn. and he says both parties are to blame for the mess we got into. so in the spirit of doing

painful things, i'm going to ask each of you you to say how is your party to blame for the current predicament. you first. >> i think he meant to questigou first. >> on the degree that democrats have had the long standing concern that our colleagues on the republican side were intent on eliminating or privatizing important programs that have helped, whether seniors to arrive in dignity or children to move up in to a productive life, maybe democrats have worked too hard to try to protect those programs from the devastating cuts, and in doing so, perhaps that has kept us from trying to come up with a small budget. so i think patricia said

democrats are talking about making spending reductions and having agreed to the sequester process, indeed did so. all hose are cuts those are mos discretionary side programs that we find near and dear to american family, education and so forth. so i think do you find democrats are willing to come halfway. the difficulty is hch-by the way, i'm using cbo numbers when it come the to iz so the size o cuts. i believe many of us believe it has to be a balanced approach. you can't look at one side of the table. it has to be a balanced approach to try to deal with it.

and if do you, so you can do it in ways that i think will spur economic growth. i agree with rob, the more we're able to reform the code, we'll be able to spur growth. but you can't talk about reforming the tax code simply to reform the code without dealing with the looming deficits and the fact that we have essentially spent through the tax code more money than we ever spent through the regular appropriations process. we haven't talked about bowles and simpson call the tax loopho loopholes, the 1.1 trillion we spend every year. if we were to get rid of the tax loopholes in the book, we would not only do probably as much as bowles-simpson did, but we would deal with a lot of the in-balance that we have in our tax code. a lot of those tax breaks people have become accustomed to, so we have to figure out a way that we don't disorient the american family, but you can do a number of things without having to do violence to the american family and it ability to do what my

parents did to me, let me become the first to become a college agree. >> many republicans have the view that the lack of spending discipline which we've seen in recent years had its origins in the bush administration in which he served, that there just was insufficient concern to the long term costs of things the med cared prescription drug benefit and the rest. >> that's accurate and if you look back at the time period 2001 off after 9/11, particularly there was a sense in this town that more meeted to be spent on homeland security and defense almost an unwritten agreement that we would allow the spend to go increase after getting to a balance and having a couple years of surpluses. president bush should have

vetoed the bills and spending did start to be restrained and we had growth in the economy and this is prior to the financial crisis. we actually got very close to balance. and we were on track pot just to get to balance, proposed a five year plan and it's all public record.npot just to get to balance, proposed a five year plan and it's all public record.ot just to get to balance, proposed a five year plan and it's all public record. there was a sense we were getting spending under control. there was no increase in domestic spending. some changes includes means testing that were new. so i do think that was the issue, both democrats and republicans are to blame. some is understandable after 9/11, but it doesn't mean that it was the right thing to do. so that's where i would be critical. second of course on the entitlement programs. we have to have them. it needed to be strong and the safety net neats to be there,

but it's frayed and it cannot continue as it is. mandatory spending is 64% and in ten years he takes it to 78%. so this is the fastest growing part of the budget, the biggest part and republicans and democrats alike have been unwilling to touch that third rail. and that has going back to 1983 really is the last time there was a significant change for the entitlement programs. so that's the challenge. and i appreciate javier's words. we worked on it and came closer than folks in the media would acknowledge. but in the end we were rebuffed and it has to be a combination. the growth side will add more revenue. i agree. and we ought to get it in tax reform and include management super committee, some of us put static increases and revenue, as well. and then on the entitlement side, we have got to deal with this issue. otherwise it bankruptcies the country. >> patricia, seems that you've

got a radicalized somewhere, that is they're just as frustrated as the status quo last time we had ross perot running a third party candidacy really putting it front and center and it seems like the conditions are ripe, but where is the ross perot this i'm so? >> i think a lot of independents are wondering where is the person speaking for us, where is the person speaking our language, where is the man or woman who knows what w going through and is willing to take a step outside of politics to try and solve that problem. i think people were thinking it there would be a third party candidate, although if the

candidate was romney, there might be a candidate to the right of romney. so it's difficult to say. i think that the parties are so strong, it's so difficult, you need so much money to run. there aren't the people stepping up. there is this center of raging moderation of flaming independents, but not a lot of good choices for independents to pick from and i think there are fewer and fewer independents in congress. they're getting beaten in their own election, getting a challenge from the right or left or leaving of their own accord because it's so hard to be moderate. there is no reregardward for moderation. >> we have eight minutes left and i want to i hope finish on a note of optimism, but before we get there, i'd like to inject more of a note of pessimism which is at least on a lot of the outward evidence, the

problem isn't getting easy. it's getting worse. the problem of political will. they leave because they don't feel there is a workable center. ebl your pac was supporting senator lugar in his primary and he was defeated in part because he was seen as too willing to compromise. isn't it getting harder than easier? >> i think where it gets easier is that the american people as kathleen has said begin to realize that this is at a crisis stage. if we don't deal with it we're likely to be back in a recession and it forces us to deal not just with kicking the can down the road, but fundamental changes in taxes and -- >> what does that say about our

politics? washington? in washington? >> a lot had to do he didn't have a residency in his home state. the media picked up some of the other aspects but missed the fact that there was a legitimate concern when he couldn't. and then obviously in a republican primary, the more conservative candidate who can articulate the issues sometimes has an advantage and that was the case there. it's about willingness to find resolve. and i think we're hired to seek solutions and help our

constituents. and whether you're more on the left or ride sight side, if yout it with that objective, i think it's inescapable what the conclusion is. and if we don't, we won't have the economic growth that we care about and that's one thing that immediates to be made more directly. maybe the ross perot of this generation has to say more about the fact that it's not just with the charts and the numbers. it's about hope and opportunity. if we don't solve the problem, we don't have the robust recovery we all hope for to be able to help those young kids that javier talked about to have an opportunity in life because you have 15% unemployment coming out of college these days. if you look at the labor participation rate the way it was, we're over 11% unemployment now. that will enable us to get a lot

more support. >> do you believe what senator portman just said? because there is an argument i think the highest profile person to advance, paul krugman, says it's the excessive concern about deficits that is retarding what should be the top priority which is growth. >> i don't think it's so much what paul krugman says. i think it's what the public has been saying for the last several years. i don't care if it's in a poll that you take today or poll has have been taken over the last three or four years. more often than not, the public is way ahead of the politicians. >> if you took a real swig of ca caster oil, it would hurt the economy. >> we want to decrease the deficit, but we don't want to do it if it causes us to lose job, that says don't repair the buildings and highways that the transportation authorization bill would provide us. so the public is very much in

tune with what we need to do. i'd say the biggest deficit is the jobs deficit and if you get people back to work, they're paying taxes and the treasury has more money and lower deficits. so i think there are must have folks on both sides of the i'll who want to get something done. folks on both sides of the i'll who want to get something done. i know i can put rob in that category. even though we're losing good folks, senator snowe, she's always been part of the bipartisan solution, to lose her on the republican side i think is very telling. but at the end of the day, we have to take a look at the numbers. my biggest concern is that we will do more harm by acting than by not. because we have a failsafe mechanism. we have something in place that can give us some $7 trillion in deficit reduction without congress having to meddle

politically. so rather than tweak and increase the deficits by doing this or that, recognize that right now in law, we can save over $7 trillion in the deficits if we allow the law to take effect come december 31st, january 1st, and we can take advantage of the fact that we can tweak some of what would take place on january 31st and still have deficit reduction as bigs as if not bigger than bowles-simpson. >> it sounds like you're saying we can take the few months off at the end of the year and get this problem solve. you're better off not working than working. >> i guarantee you most everyone in this room right now is not suffering economically. you but yet there are millions of americans who are. i guarantee you on january 1st when we have this armageddon that we keep talking about, the expiration of all the tax provisions, 9 sequester going into effect, most of those merns won't be hit as hard as if, for

example, we don't do something about the interest rates on student loans in a month. that interest rate hike will cost most students about $1,000. that's more than they get in the bush tax cuts. and so the reality is beer not talking about middle america. and if we were, we'd be willing to do the tough stuff. >> you may have discerned that some of my questions note skepticism or pes civil. but i want to finish on an upbeat note. so answer this question as concisely as possible. i'm optimistic there are problem will be solved and the political will will be found because -- what?

>> -- we have the equivalent of a ross perot surrogate. we can find a way to center that discussion in the national dialogue of the campaign, i think a reasonable media can do that, responsible candidates and those held accountable with do that, and we'll have a campaign to make it easier to addresses these very serious problems for future generations. >> john, i think the middle

class whether wake up and they'll speak very loudly, whether in this will election or future elections. i think with democracy, the ship turns slowly, but the middle qulas, that the heart of america that's kept us going is going to weak us up and make us do things about we ourselves can't. i think it's simple math and we can do it without having to have the middle class push us into doing the right thing. >> senator sunshine, give us the upbeat -- >> you mentioned that governor romney was giving a speech that i didn't realize on tax reform, but at the risk of being partisan here, i love the fact that he's talking about pro-growth tax reform. not tax cuts by the way, pro-growth tax reform that will generate more revenue. and he's talking about the political sensitive issue of retitlement form.

i think folks are going to hear two different approaches and i think most people are going to say we have to address these issues. we can't continue to allow congress to kick the can down the road it avoid the problems and i think they're directly related to the economy. and that's one reason i'm optimistic. i think they are related to the economy and if more of us make that connection including in the media, more people will be interested. if we don't solve the problem at year end, a recession will hurt every middle income family in america. so we have to deal with the issue. >> 40 minutes, we've got it licked. i think i deserve the nobel prize for bringing clarity and consensus to the issue in less than an hour, we solved our long term problem. thank you all very much.

our panel has offered great insight. maryland's house of delegates has approved today an income tax increase sending it on to the governor. the house voted 77 to 60 to raisin come taxes on single filers who make more than $100,000 and joint filers who make $150,000 in taxable income a year. it's marlayland's attempt to pl a shortfall. california has $16 billion funding gap and this morning washington journal talked with an "l.a. times" reporter to learn how california would pay for it. >> let's look at california situation in particular. we got on the phone with us from the los angeles times reporter

chris megerian. thanks for joining us. so you've been covering the budgeting process in california. you had a story this week talking about governor jerry brown's plan to close rapidly growing deficit and it includes four day workweek, health care for the poor, relying on a variety of short term fixes. what else is he planning to do? >> those are some of the big ones. we're talking about a 5% cut in employee payroll. some of the other big cuts are the health care programs for the poor. reducing reimbursement rates for hospitals and nursing homes, also cutting funding for the court system in california. so he's really spreading the pain around here. >> and you have a story today that says that the governor's time anied by the same budget dysfunction that plagued hisdec.

what was unexpected about this budgeting process? >> well, people were very hopeful this year. they thought the budget deficit would be only around $9 billion. they thought tax revenues would come in at a higher rate and what surprised some people was the deficit was much larger, $16 billion. and for people who are talking about really turning the page on the california budget problem, this was kind of a rude awakening. >> let's take a look at some of these cuts that we're talking about. $8.3 billion in spending cuts. and then as i mentioned, reducing the state workweek. and then cutting the social service programs. he will us about medica lcl and what else might be on the chopping block. >> it's one of the biggest for a cut if governor brown's plan

goes forward. the federal government rejected some cuts to medical and also the fell court system also blocked some of the cuts. but nowed state is trying to find other ways to save money by cutting different programs or retooling their proposal from before and hoping to rack up even more savings than ever with this. our guest ro wrote in the "l.a. times" the proposed cuts -- >> sigh washingtee washington m morning. live now to capitol hill. fcc chair joining commissioners as they're about to testify before the commerce, science and transportation committee answering questions about fcc operations. i support you, mr. chairman, 100%. >> obviously it's a pleasure to welcome all of you today.

having five members is glorious. i was with the fourth circuit yesterday. and for the first time, they had nine members -- 15 members. they had all their members there. which has nothing to do with this. anyway, wonderful additions to the board. and this hearing follows on the heels of a hearing we had a few years ago that explored the fult of video and how it's migrating from one platform to another. such migration is occurring across the communication landscape. we all need to be giving serious thought to how our communications laws are protecting consumers basic rights if light of these changes. but i would be remiss if i did

not start by acknowledging that you have accomplished on the commission comprehensive reform of the high cost universal service fund and you've done a very good job at it. the committee had a hearing on this last year on the need for reform. i know that it was not easy, you had to make hard choices, faced difficult decisions on implementation. as expected, your reform efforts have not pleased everyone. but it was imperative the funds start targeting universal service support to areas of the country without service because they're truly needed. the fcc is also the responsibility of carrying out implementation of spectrum auction and public safety provisions that congress passed earlier this year. i plan to be very aggressive in monitoring implementation of that law for first responders for the obvious reasons that we all care about it specifically the law gives the agency a