and when you hear all of these projections about trillions of dollars in red ink, going out as far as the eye can see, almost all of that is because of the increase in medicare and medicaid costs, which are going up much faster than inflation. .

guest: rendell this $313 billion cut -- most of that will be providing less than cost reimbursements for the doctors and hospitals currently operating under those systems. guest: there are more efficient ways. we cannot as a nation -- do you think we can afford as a nation to continue spending 18% of our gdp on health care where the rest of the world -- and many countries they spend half of that and have better outcomes. guest: let's put a price control on what cars selling for. you could say that we're saving money because no one has to spend more than $10,000 on a car. but there are people who want to get a better quality car. if the government intervenes

intervenes it is exactly what will happen. guest: nate. -- no. guest: there's a safety because you can charge more to private patients, but when the private patients disappear you will see doctors driven out of the system and doctors going under. host: michael ettlinger we're speaking with and john lott. i want to expand the conversation a little. this is one of the headlines in "the financial times" this weekend. u.s. financial regulators are drawing of new rules to facilitate private equity acquisitions of troubled banks to unlock tens of billions of dollars to be deployed to recapitalize ailing

lenders. what are your thoughts, michael ettlinger? guest: the banks were poorly regulated and got into very deep waters. the dead themselves into a be pulled in a way that became damaging to the entire economy. -- they dug themselves and t ina hole. they have tried to address this problem comprehensively as opposed to the ad hoc way the previous administration did. there are all these different mechanisms to get the financial sector back on its feet. part of that is getting them recapitalized and attracting capital from a variety of sources. this is a sensible part of that. guest: i think we should let the banks and other financial institutions beside themselves how to recapitalize. i think the government has

forced them to transfer loans into stocks that the government bonds. then we have the government going, telling them to lose money on things like the chrysler or gm bankruptcies. for the government owned a lot of stock we had them lose money and then we have to go back. we wonder why we have to give them more money after we told them to lose billions on the bonds there. the government should have let the financial institutions who had problems go under to begin with. and companies like gm and chrysler. it does not mean thereey would disappear. we make them lose money but then we require -- guest: we do not make them lose

money. caller: good morning, and thank you for c-span. i was frightened by a comment made by mr. michael ettlinger. with all due respect, when you make comments that the government will decide which procedures are the most effective and will make the choices as to which are, that is the comment that frightened me most. there are many well-intentioned people in government, but i would wonder if the government does attract the best of the best. doctors, or whatever. what the governing body will make decisions as to whether a tonsillectomy is more important -- those are the things that frighten me. it is almost taking away freedom. i want to be able and would challenge michael ettlinger,

that if you were diagnosed with a particular problem and the the rule were to say you must do this, wouldn't you want the freedom to get a second opinion? when you say that you will still have that option i wonder if that is true. the second part of my question is when you say that the government is going to be offering health care, then would companies still be challenged or made to offer some sort of health care when they know that their employees can get it from the government? the first part of my question is the party would like to have addressed most. it is frightening to me that the government could prescribe to me the procedure i must have. i want to know their credentials for doing this. guest: there has been a

deliberate campaign to make this seem scary when in fact all it is about is funding research to get a better handle on what works and what does not. i would assume you want to know what the most effective way to address any given condition is. it is not for every given condition that the government will dictate what treatment is available are not. it is a matter of just doing research to find out what works and what does not. there has been a lot of evidence that much money has been on ineffective and unnecessary procedures. i remember when john brought up tonsillectomies. when i was a kid it was a frequent thing. that was what people thought. eventually the figured out that that was it an unnecessary thing. that does not mean it is not warranted in some cases, but the fact is there are many things that have not been studied adequately.

we need better understanding. there's no thought of restricting where you can do and what health care you can get. host: as we continued our discussion regarding spending patterns of barack obama administration we get this e- mail from lynn in princeton, new jersey. -- from len. guest: right, well, the kaiser foundation in connection with a abc and "usa today" did a massive survey before the 2006

election were they asked people if they were happy. and in what areas they were most or least happy with their healthcare. 89% said they were privately happy with their health care, but only 44% were happy generally. one of their questions and abc/ etc. survey was whether they were in shorter not. you find out that the vast majority, 70% of the uninsured were very happy with their health care. the kaiser survey was redone in canada. when you compare the canadians who have a similar system to what obama is proposing in terms of having government insurance with private providers, you find the uninsured in the u.s. are

about as happy as those under the government's system in canada. the notion of changing our health-care system is to bring up the uninsured, but if you look at canada -- if we had something similar, it would lower the level of happiness of the insured rather than doing the reverse. host: john lott, if you recently read a piece "is the stimulus working?" guest: no, it has increased unemployment and decrease the rate of growth in the economy. when you have $1 trillion your moving around, you are moving around jobs associated with it. you have many people would have spent on things they wanted, and now is spent on things the government wants. it takes time to move jobs from those sectors to other sectors. while people are searching --

you give money to alternative companies in california and people lose their jobs in pa. -- it is not like they throw the kids in the back of the car and shot the work the next day. it takes a while to find new jobs. you look at the predictions of the new administration and those of the private economists. the administration expected 8.1% unemployment. we are up to 9.4%. private forecasters say 10%. that is near what the administration said would happen if the stimulus did not pass. private forecasters had predicted that we would have a recovery in the second half of this year. but after the stimulus has gone into effect this has of the growth they have expected during the second half has gone down. they expect a smaller improvement in the economy after the stimulus than beforehand.

host: michael ettlinger, it is the stimulus working? guest: a little bit now and a lot in the future. i think john is really abusing those numbers. the fact is that from the beginning of this recession economists have failed to predict how bad it would be. the projections have gotten worse and worse. yes, the projections have gotten worse at the beginning of this year before the stimulus even had an effect, but whether or not you had a stimulus that would have happened. we got more information about how bad things were already. we work on a steep downward slope. we came into this year with the economy having tremendous downward momentum and it will take a lot to put brakes on it. we have a situation in a downward spiral that was

threatening to go completely out of control. where businesses were not investing in hiring and employees are not spending or involved in the economy which causes more layoffs, less investment by business, and it keeps going. we absolutely needed an intense government intervention of the stimulus, recovery package to start restoring confidence in joined businesses where their next sale would come from to turn this downward spiral into an upward spiral. it has now not started to take effect in a big way yet. it will take a few more months. guest: a quick comment? you look at the statements from the administration and their forecasts were from the end of february. larry summers was saying that within a few weeks after the stimulus was passed we would see the benefits. the president made similar

statements. guest: your taking it out of context. guest: now they have put it back to a few months from now when everyone predicted the economy would go up. if you go to "the wall street journal" date survey 53 economists every month and a look at the projections. it is right after the stimulus that you see these big drops in with the forecasted for growth. you see the big increases and what they forecasted for unemployment. guest: that is worldwide, by the way. i do not see why you think that because of the stimulus -- there is a lot more data available. host: list take this next call from sylvia in brooklyn. caller: good morning, i like to

address this to mr. michael ettlinger. i like to tell or suggest we do we do not need a commission to study the problem. we need to go back to the history of medicare. the original intent was for medicare to be for 65 and over. that was congress' original intent. only people 65 and over, separate from everything else -- now when medicate came and i did not know how it got involved with everybody else from everywhere in the world. but medicare was the people who had worked all their lives to put money into the system. so that when they got to be 65 -- i am 71, by the way. but before i became 71 i was

under 65 -- when i went to the clinic i had to pay the doctor -- get this -- the doctor before i could see him. i think the fee was $40. i am not sure. anyway, but when i got to beat 65, then i came into the medicare system and that took care of that, ok? guest: yes, and medicare still provides care for the elderly. you are in directly touching on an importance point which is that in fact people have been paying into medicare their whole working lives and expecting it to be there when they retire. but what has happened is because health-care costs have risen so dramatically, so much more than expected, the money is

not there in the medicare trust fund to provide health care for the elderly. that is why we need comprehensive health care reform. the president spoke yesterday about savings within the government program, but it this is in the context of a more comprehensive proposal to stop, lower the rate of increase in health-care costs. that will work for the benefit of medicare and medicaid and the entire health-care system. host: next up is thomas, from wayne, new jersey. caller: my big thing is i like to see all the people in congress who have taken money from insurance companies that was put into their campaign funds to disqualify themselves from voting on this. if that would happen i would guarantee we would get our single-payer system. i like to ask mr. john lott --

has he ever taken money for backing his research from people like insurance? he quoted the kaiser foundation in canada and i believe that kaiser runs a big insurance company. taking their word for canada -- would you take michael moore's word for canada, or should we look at the thing objectively? guest: i have never taken money from insurance companies, but kaiser foundation has been a big advocate of the single-payer plan in connection with "usa today" and abc. they argued that while most people were probably satisfied that 44% were only satisfied with the system as a whole and evidence for the type of change michael and others had been advocating.

you know, i think it is so easy to claim nirvana for these types of things. if we had the experts go in there and tell everyone how to run things -- it is easy to say things will be better. the problem is, we have a certain system for we can make people competitively do things. they are more imaginative and figure out how to do things better. there is the reason why you do not see this cost inflation for dentistry or other types of services like plastic surgery for the government does not get involved as much. this not provide the type of coverage. i think government involvement has a lot to do with higher prices.

it is a mistake to think it will be different now. rather than prices going up you will see it take another form. that is the rationing we see in other countries. host: with regard to government involvement here is a recent article from this magazine called "turning japanese" for they're talking about the japanese government's respond to the post-bubble policies. the wreck the national government responded by encouraging more lending in spending previously unfathomable. that was on public works projects to stimulate consumer spending and restore growth. michael ettlinger, do you think the u.s. is heading into the japanese model and that we might be going towards what they call a lost decade? guest: i think the japanese situation was a lot different. in particular they had these so- called that is on the banks -- zombie banks.

we're not letting that happen. our banks are in a very different situation. theirs were not very profitable to start with. it was very hard for them to earn their way back to solvency. whereas our banks -- there's a profitable base there. they need to be gotten through this tough spot. there is no intention to keep propping them up. there is the intention to get them off government support asap. a, the japanese situation to begin with was very different. b, policymakers in the u.s. are cognizant of what happened in japan and careful not to follow that path. host: your thoughts? guest: i agree with michael there are some differences in the banking system. but there are also many similarities. when we have this massive government spending it will not

be stimulative just like it was not in japan. you're taking money from one place and moving it someplace else. unfortunately, we're taking it from places where people think they're going to get a benefit to where the government wants to spend. and whether it has been snl for these alternative energy programs, these will make as much more pour than we are today. there's a reason why private investors were not putting their money into those programs to begin with. one of the costs of japan has had is having this massive increase in many government programs. they are siphoning money from places that would have been more productive. host: bradford, pa.. caller: good morning, we have not had a reality show on health care.

it is killing industry. gm will build a plant in canada and mexico. we cannot afford the insurance. it applies to all industries. we are ruining american industry with burdening them with health care they cannot control. it has to be out of their hands. we have a bunch of zombie companies building cars which 90% of the labor is done in korea. they do not pay into social security, health care and become more competitive. naturally, if they do not have the burdens we have on air industry. host: michael ettlinger, what you think of what frank has to say? guest: absolutely rising health- care costs have hurt u.s. competitiveness. john claims it is because of

government involvement -- that is bizarre. it is a classic case of market failure. market can produce tremendous benefits, but they do fail. they do produce distortions also. that is what we have seen in health care. to quickly come back to the recovery package and a stimulus in the principles underlying that -- the point of that package is that it is very temporary. to pull money off the sidelines, waiting for better economic times -- getting into the economy and giving it to produce growth in the short-term, stimulative way, to turn around the economy and get as bad going again -- it is a targeted thing. it is a widely reputed way to deal with an economic downturn. host: tampa, fla. on airline for

independents -- our line for independents. guestcaller: if there were a si- payer system and would eliminate liability for businesses related to health care and eliminate fiscal liability for those negotiating contracts. why in the world of business not be lobbying for something that benefits them? unless the insurance companies have them by the testicles? guest: this notion that somehow you pay private insurance get it for free just as not work. look at the discussions they are having with $1.50 trillion or more that might have to be paid under president obama's change. someone will have to pay for it

in terms of higher taxes. some companies will pay less because there will force the cost on to private taxpayers to make up the difference. another companies will not be made better off. you had those companies who think they can make someone else pay for the costs. the costs do not disappear. the question is whether the government can provide these things and make decisions. can the government do a better job than patients in hospitals where hospitals compete to give patients what they want? host: next from kansas on airline for democrat -- our line from democrats. caller: i am a democrat but have voted independently. have either one of you ever

gone without insurance? i have been a type 1 diabetics for the last 25 years in the last 17 years i have been without insurance. three weeks ago i was diagnosed with a cancerous condition in my lungs. i have had to make these decisions myself. as to how to get insurance -- how to get coverage, how to get my health situations covered. that is just so that i can live. this is real life. this is not some kind of a theoretical thing for you. to people who are uninsured are happy with their insurance -- hell, i am not happy with many things that go on in my life except that over one-third of my income has gone to pay for just maintenance of my diabetes. now i will need to cover the need to stay alive. i am 61 years old. i do not fall under medicare or

medicaid. the gentleman that i work for, honest, good man, a republican, cannot afford insurance for those i work with because of a guy like me. get real. this is easy. host: will the spending policies of the obama policy to help a guy like this in kansas? guest: yes, the health care policies will. to make it possible for those who need health care coverage to get it. that is essentially the long term plan. john is right when he says that things have to be paid for. costs do not disappear. you will not get health care for free. on the other hand, there are many savings to be had. we keep talking -- i have been talking about getting the most effective treatments and being efficient. there is a huge amount of

administrative waste. some keep government investments can begin to rectify that. there are problems because doctors do not have access to the comprehensive medical history of those they're treating which ends up with costly problems. the caller -- it is people like the caller who would be helped by this president's proposals. host: next up on our line for independents, from indiana. guestcaller: mr. john lott keeps talking about capitalism and free enterprise and we look at what it did " to our financial system and how was corrupted by no regulation, and then you look to these private insurance companies that people pay premiums to four years and years and then when they have a claim their claim gets the nod on some