power and then to seize total power. i'm not going to comment on those shah. it is a different history. yes, the u.s. did. have a did but so did other powers. that is not going to help to dig up who did what 40, 50 years ago. we are now dealing with daily issues, with the lives of 30 million people, with long- suffering and how to alleviate that, to reduce the threat for iraqis and also to the u.s. in this we have a common purpose and on this we will work for years to come. we want to be close to the u.s. and have common interests. it is the future we have to focus on. . .

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>> up next, it's "newsmakers" with presidential economic advisor austan goolsbee. and then results of a survey on people's attitudes in pakistan. after that, a conversation with the secretary of the smithsonian. >> joining us from the north lawn at the white house on c-span's "newsmakers" program is austan goolsbee, the chief economists for the president's advisory board. thanks very much for being with us. >> my pleasure. >> here for the questioning is laura meckler from the "wall street journal" and ceci connolly of the washington worst. >> hello, there. we saw some news come out last

week about unemployment rising up to 9.5%. can you give us a sense of how high you think it will go? >> unfortunately, i don't think we're done. obviously, we aren't out of the woods. we've had some pretty tough job market reports over december, 2007, when the recession began. the rate of job loss has slowed considerably, fortunately, since the president has been in office. but i imagine that unemployment may be pushing in the double digits by the time we get to the peak of this. >> and when potentially would that level off? >> you know, i try to stay out of the forecasting business, but i don't have any reason to dispute what the private or the government forecasters are saying, which is the g.d.p. turnaround in the third quarter, fourth quarter of this year, an then usually the unemployment and job market come with a bit of a lag after the economy turns around.

so, you know, sometime next year. >> laura meckler? >> thank you. so what kind of impact on the deficit do you think that these high and growing unemployment numbers are going to have? >> in the short run, clearly not a good impact on the deficit because you don't have the tax revenue coming in from periods that you would have with high income growth and because we've got other things that we're going to have to cover, unemployment insurance and what have you. now, i think it's important to emphasize that's obviously a short-run phenomenon, that in the middle of the stiffest recession since 1929, i think you've got to be very careful about saying now is the moment to tighten the belt. the fiscal responsibility. we will need to put a focus on getting the deficit down once we are out of this crisis. but to start tightening before we're out of that crisis is actually quite drank rust. >> so we said not a good impact.

obviously, i think that's clear. there's no way unemployment would have a positive impact on the deficit. but what kind of magnitude are we talking about, even if it's not a short-run issue? the deficit is an enormous concern to the president and to many, many americans. >> i don't know the exact numbers. we'd have to sit down with the models. as i say, i try to stay out of the forecasting business, because there are people much more expert than i am at that. i know in the private sector they've been making a lot of forecasts of what do they think the deficit will be, and most of those forecasts are embodying the unemployment rate that we're facing now. the main changes that happened were from last fall. clearly the economy deteriorated substantially from when they were making the forecast in the fall to when the president was taking office in that first quarter and was quite substantially worse than even the private guys were

forecasting. >> that leads into another thing i wanted to ask you about, is even the council of economic advisors' forecast were back in january, i believe, that a substantial stimulus bill, maybe an $800 billion stimulus bill would keep unemployment to about 7%, i think is what was being forecast at the time. obviously, that turned out to not be the case. can you talk a little bit -- there's a lot of projects that come out. and obviously circumstances change. but i bond -- what are people supposed to make of this? >> i would be a little careful. yes, what you're saying is true as a technical matter. but i think the think that's important to realize is in that formulation, which was per fktly in keeping with what private forecasters were forecasting at the same time, it would reduce the unemployment rate something like two full percentage points below what it would be without stimulus. so without any intervention,

the most the unemployment rate anyone thought was going to get to was 8.5%. private forecasters looked at the stimulus and they believed that the impact of the stimulus what was what was predicted, that the unemployment rate would have been a full two percentage point higher if we had not passed the stimulus. but it's just that the level of everything was much higher than what anybody forecast late last year, because the bottom really fell out on the economy. >> at what point does this become the obama economy and not the bush economy? >> well, you know, i think that's a little bit of a semantic question. i think the recession began in december of 2007 and we lost more than six million jobs since that started. i think if you ask the american people, they see quite reasonably that these problems

were not created in some short time frame and they're not going to be solved in a one month or one week or even one quarter basis. it's going to take some time to turn this around. you've got to turn around the economy and then the jobs numbers tend to come after you've turned around the economy with a bit of a lag. now, the president does not find 9.5% unemployment rate to be acceptable. he's pushing in the recovery package and across the board. how do we accelerate the job creation from the recovery package? how do we get the private sector credit restarted so small business can grow? awful the things to get jobs started. he's pressing as hard as he can to get those going. but, you know, we've got to be realistic in the face of what the conditions are. >> ceci connolly. >> aust ann, given those conditions and -- austan, given those conditions and what the stimulus package has the potential to do, do you now believe that there is a need

for a second stimulus package? >> ceci, this was the biggest stimulus package in american history. bigger than "the new deal." and the large majority of that money is not yet out into the system. so it was set up to go in waves, as it will. and we've had this first wave of 10% or so of the money. there's still a major, major injection of stimulus that's coming down the pipe, so i really think it's too early to be saying we need a second stimulus until we've put the first one into the system. >> maybe we can pivot to the subject of health care. the president, of course, talks a lot about how reforming the healthcare system is, in his view, an important part of economic recovery in this country. late last thursday we saw some new estimates coming out of the congressional budget office on one piece of legislation up there, the senate health, education, labor and pension committee has got most of its

legislation now drafted. c.b.o. said that they figured that bill cost about $611 billion over the next decade. but interestingly, they said that would only cover about 21 million uninsured. it would work out to about 39% of the total number of uninsured estimated in 2019. it seems to me that still falls short of the goals articulated by president obama. >> look, i don't -- i saw the report that you are describing. i know that there are a lot of discussions by analysts on a lot of different sides of this issue about what the impacts would be of health care reform. and you've got to remember, this is a process. the health care reform, coming up with a comprehensive health care reform package is a process that we're just at the beginning of that process. so the president has outlined goals -- and i agree with you. the president's goals are getting everyone covered,

getting the costs down for people that are insured or not insured, so that they can afford health care and making sure that we still maintain choice of doctor, choice and quality in the coverage. with those goals, you know, you've got to look into the details of each of the proposals. in this one the $600 billion figure was a smaller cost figure than a lot of people had anticipated and a smaller coverage figure than people had anticipated. but that's just one of many possible plans. i think the important thing to note is that in the past, where health care reform has faltered, a lot of times it came about because one party tried to jam a solution through on everyone else and they were opposed by the private sector, the business community, the business groups, the doctors, what have you. right now we have kind of a unique moment in -- at least in

recent decades, where you've seen the private sector come down literally to the white house and say we want to be part of the solution. and we think we can cut $2 trillion of costs out of the system to help make health reform go. >> you saw also this past week wal-mart saying that they were open to considering policies that would get employers providing more coverage directly. i think all of those are good signs for the possibilities of health care reform, but i think it's way too early to be debating the details of any one package. >> when can the average american expect to see and experience some change in their health care and what might those changes be that they should expect to experience? >> well, i think that's a great -- you know, the premise of that question is it's a great premise.

the president has been aggressive in saying that he wants to put this together by the end of the summer. that would be putting these packages together. i think what you would expect to see and you would see it really right away, is setting up a system where we're putting ourselves on a path of long-run cost reduction for health care that we can -- that we can improve quality and reduce costs for everybody. that we set up systems in place where you would start seeing more competition, so you could have choices of insurers, you could have choices of doctor, and that you would be getting better coverage for less money. now, the president has identified that the era of competition in health care, where, rather than competing by providing more for less money, insurers are competing by figuring out better ways to

exclude the sick and drop them from coverage. we've got to get past that. so this world where pre-existing conditions mean that nobody can get insurance and they're essentially on their own, i think that would be a very notable change that you'd see very quickly. >> when you talk about the c.b.o. estimates, you said we're near the beginning, but we're kind of in the middle at some level, the details are being workt out on the hill. what the c.b.o. told us is that this is very expensive to do. $600 billion essentially getting you less than half of the uninsured. in fact, the other half, a lot of whom would ends up being covered by medicaid, might in

fact be more expensive than the people who are on a sliding scale subs detype of program. i'm bond -- subsidy type of program. the president has vowed to make this a deficit-neutral package, have it not add to the deficit. if you can just comment on the dynamic going on here. >> i think you raised the dynamic. there are many different experts in the health care arena, as you well know, that -- there are widely differing estimates on what share of the uninsured would be covered at different levels of costs. so in this estimate of this particular plan, we had a cost figure that was relatively lower than what some of the other cost figures were and a coverage number that was relatively lower. but as i say, this plan that they were describing -- and this is -- call it the middle, call it the beginning, it's certainly not the end of the process. you've got both houses of congress and the president and a whole lot of experts, as well

as of private sector, all trying to come together and put together a package that will compre hencively change both the cost path of health care and also, get more people covered. the president is concerned and wants to get the coverage numbers up. so far i haven't seen anything coming out of the process that would contradict his goals. we've got to keep working on these programs. but i haven't seen anything that's frustrating in that sense. >> let me follow up on one aspect of this. would part of that package include taxing health care -- employee-provided health care as a benefit? >> as you know, that's not in the president's plan that he put forward. he's open to a lot of ideas from congress. there are people in congress who want that to be considered. so all ideas, be they from private sector, from congress,

from insurers, pharmaceutical companies, consumer groups, we're going to consider all the various ideas. the main thing is coming up with a package that satisfies those three basic goals that the president outlines and does so in a way that makes it affordable for people. >> atlantis anything that is a non-start -- but is there anything that is a non-starter? >> i'm not going to get into speculation about the creation of legislation. it's both out of my area of expertise and i don't think it's appropriate at such an early stage in the process. what i'm saying is the president put forward his basic ideas. this health care exclusion that you're describing was not in the president's plan. but the president is open to considering all different sorts of ideas if, by combining those ideas, we can get a package that everyone supports that satisfies his principles. >> ceci connolly. >> one of the things we've seen by several polls is that while

people have frustrations with the present healthcare system, they have even higher anxiety when it comes to what any sort of reform package might mean in their lives. we see numbers up around 80% of people who are worried about their ability to choose their doctor, which i know the president says they'll still be able to do. but it's a real fear and a concern and anxiety out there. people have real concerns that they might be asked to chip in more to cover other individuals. they're worried about the future of the insurance industry. they're worried about small businesses that might need to chip in for something like this. how does your administration address these anxieties, especially at a time when we started our conversation with probably double-digit unemployment this year? >> well, look, i would say they ought to be concerned that we get the details right on health care reform, and that includes all of the things that you're describing, that we maintain choice in doctors, that we expand coverage, that we get

costs down. those are the principal goals that the president is outlining. so there's nothing wrong with expressing concerns that when we do health care reforms, we do it right. the president has those same health care concerns. but i think if you're reading of polling or you're reading of the climate out in the american people or in business, is that somehow they don't want health reform, i think you're really misguided. i do not believe that that is true at all. i think overwhelmingly, if you talk to ordinary americans, if you talk to business leaders, if you talk to the insurance industry and the private sector itself in the health care sector, there is overwhelming desire for fundamental health care reform that can get costs down and get people covered. so i think the only way to address people's concerns is by putting our focus on getting a package through congress that satisfies the basic goals that the president outlined, and that's what he's going to do. >> laura meckler. >> thank you. you alluded to industry and its

willingness to come to the table and put some savings on the table to pay for this. do you anticipate other announcements or other deals with other parts of the health care sector, like we saw with the pharmaceutical industry? >> well, i think you have seen many parties come down to the white house, some showing that they could reduce the $2 trl of costs -- $2 trillion of costs. it shows they want to be part of the solution. you saw pharmaceutical companies coming to some agreement where they could keep costs down. you have seen some major employers this past week coming forward and saying they're open to various things that in the past they might not have been open to. i wouldn't be surprised if you saw more announcements. but i'm certainly not here trying to preface that there's some secret event that's about to take place. i know of no such --

>> i thought there are always secret events being planned at the white house. no? >> fourth of july. the secret is out. the fireworks are going to be at 9:15. >> you mentioned also that the climate we have now is everybody's working together and we don't -- in the past there's been problems because they tried to jam something through. there is an option that congress left for itself which is to pass health care reform through the process of reconciliation, which allows them to do it with fewer votes and no participation, necessarily, from the republican party. so i'm just wondering how -- what you think the impact would be of, if they ended up having to use that fallback option. >> look, you're asking me to both speculate and speculate about legislative strategy, which is completely -- i'm an economist. that's totally outside my area. >> don't they make you closer

to politics when you work in that building? >> we're going to have a health care plan, people are going to vote for it and it's going to satisfy the president's goals. that's basically -- that's my summary of the legislative process that is going to take place. >> ceci connolly. >> well, let me just ask for viewers that are wondering, when congress returns this week, we're expecting perhaps to see something out of the senate finance committee. do you have a sense of whether or not that committee can indeed meet its target of keeping this bill under $1 trillion? and if it can't, what does that mean? again, from an economist's point of view, when you start talking about this level of government spending. >> well, i think the process that's going on in the senate and is going to need to go on in the house, and then they come together and come up with a package, it's got to satisfy the president's goals. as you said, the president is committed to not making this thing a big deficit increaser

and to satisfying the coverage expansion, getting costs down and preserving the choice that people have of their doctors. so anything that can satisfy those, the president's open to discussing them. and so, you know, i'm not overly worried about that. >> austan, we would be remiss and i would get emails after this aired if i didn't ask you specifically, president obama, in his town hall meeting in anen dale the other day said, "i strongly believe that one of the options in the exchange should be a public option." can you tell us what that would look like, how that would work? >> what do you mean? yes, it would be a public option. >> what does that mean? >> public option means the government would go to the he can change. you would have a choice of

insurance plans that have different types of coverage, what have you. one of those would be a coverage plan that is provided by the government that satisfies the criteria that he's outlined of what you want from a plan. that it would cover preventative care, chronic disease management, that obviously would be doing so with low overhead expenses the way a lot of public options, like medicare or others, have these low administrative costs. but it would be an option just like any other insurance option. >> so we would be setting up a new government insurance company, in effect. would it have rate so iting ability? >> set -- rate-setting ability? >> do you consider medicare or any other government option a new insurance company? some of this is a bit semantic. >> well, we can probably talk about health care all day, but we'll move to another topic, since there is a lot on the president's agenda.

as you know, the house recently passed a major climate change bill and now moves to the senate, where most people think it's going to have a hard haul to get through. one of the sort of underlying dynamics of the energy debate is the fact that people come from so many different parts of the country, where the energy needs are so different. and california is very different than west virginia in terms of how they get their power in. you end up with a situation where not only do you have sort of partisan differences about the role of government, but you also have regional differences about how energy is produced. and i'm wondering if you can talk a little bit about how we're going to get over those hurdles and bring people together for such an ambitious bill. >> i think that's pretty insightful. the wide variability across the country and where people get electricity, for example, contributes to regional dynamics in this thing that are different than just partisan divides.

i think the fact that there are such differences makes it particularly important that we be considering the ways in which we can ease the adjustment in areas that are hard hit, versus areas that aren't as hard hit. and i think you see that one formulation about to do that is the bill that came out of the house. we're now going to go to the senate. they're likely going to have different ideas of how to do that. my own view is environmental economics can -- in this area can largely be sup rised as where polluting is free, you're going to get way to much -- too much of it. so we have to come up with new technologies to reduce pollution and to give people the incentive to stop emitting greenhouse gas emissions.

to get our emissions down in a way that's not overly costly on the economy. >> we have about a minute left. if you have teaching students at the university of chicago and looking at the situation in states like california, new york, budget deficits have ranged between 10% to 35% of their overall budget. what would you tell the students? what worries you as you look through these states dealing with huge budget deficits, huge cutbacks and the impact it has on the economy? >> well, i'd say two things -- you can either look at this from the state perspective or the national perspective. nationally i do think it's an issue that in 2010, 2011, in these years, a lot of states face balance budget amendments that require them, in a downturn, to either raise taxes or cut spending. and that does provide a drain on the national economy. that's why it's important that we not short circuit the

stimulus and recovery package that's already out there. from the state perspectives, look, you've seen these partisan battles in several of these statements. my own home state of illinois has got a bunch of big budget problems and they simply have to -- they're going to have to sit down and face up to some very difficult choices, because both the rules and their ability to borrow depends on them making these choices that are going to bring their budgets more into balance. >> final question. >> tell us a little bit about how you spend a typical day. what is your day like? i'm sure you get to the white house very early, and then what? >> you get there. there's a lot of -- it depends what happens on any given day. but certainly the first two months were -- they had -- there was a certain intensity that, fortunately, as the economy has improved, that that edge has come off a bit. but, you know, it's a lot of

just content, one gathering to the next. if it's the health care, if it's how the states are doing, if it's what have you, there's policy development, there's monitoring of the situation and there's preparing materials, reaching out and engaging the public, the stakeholders. so it's certainly an adventure. i can't say that it's that much like being a professor at the university of chicago, but -- >> do you ever have any time to think? do you ever have any time to stop and think? >> well, yeah, i think so. fortunately, there are a lot of highly capable people here, so while some of thinking, the others are meeting, you know, and it's kind of passing off the baton. >> austan goolsbee is joining us from the white house, senior economic advisor to the president. thanks for joining us. >> great talking to you. >> we continue the conversation with laura meckler of the "wall street journal" and ceci connolly of "the washington post." let me begin with you. is this