america. if you look back at 9/11, it was uaw that went to new york. general motors, ford, and chrysler donated vehicles and millions of dollars to those people in new york city. we went up there. we help them out. we went to louisiana and helped the katrina people out. don't tell me that we do not care about america as a whole. we do. that is what we fight for, a better living for these people. host: we will get a response from lawrence richards. guest: they do, but is that the impression? it is too widespread impression that they do just look out for themselves. although there would like to have a better world, walter reuther was a champion of a

better world. yet he was the guy who tried to get health insurance, national health insurance, through congress. it failed. he said we would get it for our workers only. hopefully, that would push -- it would turn gm into a supporter of national health insurance because they would like to unload the cost. it happened, but it happened 50 years after the fact. he pushed for pensions. he wanted higher social security payments. he could not get that through congress. then he said that we would get pensions for our workers from gm, ford, and chrysler. they will not want to pay that so they will lobby for higher social security so they will not have to pay as much in pensions. that did not happen. the view is then created that

asks what the uaw is doing. they're just benefiting themselves and not the larger working class. but that was the intent in the beginning of trying to get things like health care plans, pension plans, and things like that. host: we're going to get the final word from princeton, new jersey. susan is on the independent line. caller: i was wondering why the unions never tried to unionize white-collar workers. i have a ph.d. in chemistry. i would have loved to join a union. for the privilege of not being in the union, i had to work 50 or 60 hours a week because i was a "professional." i lost my job because companies combined.

in new jersey, we have out will employment. that means i could walk in to work in the morning and be told that afternoon i had no job. i have never seen anybody make any attempt from the unions to unionize professionals. host: you have a complete chapter donated to that issue. guest: unions have tried somewhat. in the chapter i wrote on teachers, teachers are thoroughly unionize. those are definitely white collar workers. in general, the aflcio was content. they did not really go after white-collar workers. i am not sure if they could have succeeded in getting those workers. despite the that callers interest in joining a union, for

the most part you find white collar workers and not want to join unions because it is the status issue. in the 1990's, i was a programmer. i was just a general run-of-the- mill programmer. i thought i could do it on my own. i had skills. i did not need solidarity and support what you do for working- class people. then i found out that they could start firing us and replacing us with cheaper stuff. this was happening where i was living in austin, texas. other people saw this happening. they started talking about getting together. i went to a meeting independently of what i was doing. they were talking about doing something to fix this. but they would not talk about the word "union." they used the word "guild."

they cannot wrap their heads around the idea of a union. in their mind, unions were for guys in detroit and the guys in the minds. they were not for the white- collar workers. we were too good for that. it harkened back to something from the middle ages, this guild idea of master artisans because that seemed better to them. that is even though what they talking about was not really different from any kind of craft union but the carpenters, plumbers, or something like that. there was this real mental block of a lot of white-collar workers saying they did not want to join a union because it would make them look less prestigious. host: lawrence richards has been joining us from cincinnati to discuss his book. thank you for being part of our

labor day show. that will do it for this morning's program. we will be back tomorrow morning at 7:00 a.m. eastern. congress returns tomorrow. we will discuss the congressional and white house agenda. we will hear from senator chuck grassley of iowa. finally, a look at president obama this speech tomorrow before school children. we hope that you are here for that. we will see you then. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] . .

>> today on c-span, president obama is in cincinatti to talk about jobs and the economy in a speech to union workers at the a.f.l.-c.i.o.'s annual labor day picnic. he's expected to address a healthcare legislation. coming up live at 1:15 p.m. eastern time here on c-span. >> the supreme court has a rare special session wednesday, hearing oral argument on compain finance case. it marks the first appearance on the bench for justice sotomayor and tomorrow her formal ceremony takes place in the afternoon. here is chief justice roberts on

what it's like for a new justice. >> to some extent it's unsettling. you quickly get to view the court as the court as composed of these members and it it becomes hard to think of it as involving anyone else. i suspect it is the way people look at their families. this is the family. how could it it be different? you get new arrivals in both situations. it's a tremendous sense of loss. justice white used to say when the court gets a new member it changes everything, changes everybody. simple changes. we move the seats around in the courtroom. their seats are by order of senority. there is a shift there. same in the conference room. for fundamentally, i think it can cause you to take a fresh look at how things are decided. the new member will have a particular view about how issues should be addressed that may be different from what we've been following for sometime.

so it's an exciting part of life at the court. >> hear from other justices during supreme court week as c-span looks at the home to america's highest court. starting october 4th. >> john fund writes for the "wall street journal" speaks about healthcare reform. his remarks at a conference organized by the steamboat institute. this is about 40 minutes.

i was in europe in july and the northern ireland human rights commission has a new style book. it has banned the use of the word black day. you must use the term miserable day because of course using the word "black" day carries a valuation of skin color. i'm not making this up. you cannot use the term "ethnic minority" because it it can imply something smaller and less important. of course there is also the issue of the patriarchy. gentlemen's agreement is out. potentially offensive to women. it has been replaced with unwritten agreement. the term "right-hand man," gone. now replaced by "second in command." also, we have to get rid of the term "master bedroom," for obvious reasons, it it imply there is is a "master."

i thought it could be gender neutral, either a man or woman could master these things. anyway, political correctness is with us everywhere and perhaps no more so than in colorado. i've had lots of time and energy taking to university of colorado at boulder. i wrote a lot of the literature stuff. i suspect you probably have more stories to tell me than i for you. my mission here today is to build on what bob woodson told you. it is a tough act to follow because i'm speaking about the temporary things. bob was speaking about the enduring values and also the transcendant importance of what we are about on earth. coming down to earth i think i can give you perspective about politics and economics. i can understand if you are pessimistic and shell shocked by the events of the last year.

it was a year ago this week that the republican and democratic conventions were held. the democratic convention in denver, a year ago only that barack obama gave that stirring acceptance speech. only a year ago that john mccain picked sarah palin as his running mate. a lot has happened to our economy, to our nation. who would have thought g.m. would be basically government motors and nationalizing everything in sight. who would think that the federal government would be borrowing $.46 of every dollar spent this year? who would think we would have a stimulus package that frankly wasn't stimulus, it was pure pork to the tune of almost a trillion dollars? so may be of you have a right to be concerned and even depressed. i'm here to tell you the rest of the story, as paul harvey used to say. first of all, how many of you are from colorado? okay. this had will definitely

resonate with you. how many are readers or subscribers of the "wall street journal"? thank you for helping pay my salary. colorado. you were the victim of the four horsemen of the apocalypse in colorado. basically ran candidates for the legislature, swamped opponents with money. it is only a bad thing if somebody else is spending their money. when they are spending it, it seems just fine. the colorado model as fred barnes and i referred to it last year in articles that appeared the same day in the weekly standard and the "wall street journal," the colorado model was a spectacular success. liberals took over the legislature and is won the governorship and won the u.s. senate seat. they watered down the tabor

amendment. so clearly, they were on the march. but michael barone, the premiere political model, he knows the boundary of every congressional district in the country. i refer to him and all other matters. michael barone wrote an interesting piece "democrats colorado gold rush turns into a bust." he points out that while as we are reminded frequently by reagan and others campaigning is poetry, governing is pros. it is harder and more mundane. and the mundane business, the mundane pros of governing colorado has not been kind to the new liberal majority. as you know, the governor has historic negative approval ratings. right now he's trailing his potential opponents. senator bennett, the appointed

senator, is best dead even favorite for election. the legislature is under siege. i understand it's popularity ratings are below that of the california legislature, which is a tough act to follow. then of course you have the democratic congressional delegati delegation. mr. mackey announced he won't be holding town hall meetings. let me predict this will be a campai campaign. about those town hall meetings, it is interesting. i mean, by the way, i apologize, i am wearing a suit because i had to do a television debate before driving up here, i'll be shedding this and dressing more appropriately very shortly, i can assure you. one of the things i've always encountered in debating town hall system howagetated liberals

get when people actually show up to protest what they're doing and to argue with them. now i admit some rhetoric has been excessive on both sides and i deplore that. but it it is the height frankly of either irony or hippock rase for liberals to cam plain about people coming to the town hall meeting. the president was a community organizer as his first job. that is what they do, organize people to come to meetings and raise heck. i'm astonished that they somehow have decided to organize that it is unpatriotic, "unamerican," as pelosi says. by the way, if you don't believe in the common sense of of the american people, i can give you some good news about the common sense of the people of nevada. harry reid, right now, the senate majority leader, is

trailing two unknown challenges by double digits. [ applause ] >> now it is not over. he's going to raise $25 million, almost all from out of state, so i wouldn't count him out. he remembers what happened to tom daschle and remember what is happens to him when tom daschle became too tied to the interest of the beltway and started ignoring the home folks. i think harry reid has a major decision to make and it will determine his fate in the next election and the fate of several other democrats in the senate and the obama administration. as you know, the healthcare bill got into rough sledding. it is in trouble. the latest polls show 43% of the population supporting it in whole or in part and independents are turning against it by 70%. the elderly, 20 points down.

it is in trouble. now they have a problem. they have to pass something. they remember the lesson of 1993 and 1994. remember hillary healthcare crashd and burned and they didn't have a vote in the house and senate. they ended up with snake eyes at the end legislatively. tony blankley was there and i will sure he will give you tales of of the lesson that era has for us today. the lesson the dem krass took away from that was you have to pass something because their abject failure at governing weighed heavily upon them and frankly i think it cost them even support among case lobbyist crowds. one thing worst than washington being viewed as wrong and that is ineffectual. they will try to pass something. here is their problem. the bill they can pass with genuine bipartisan support is probably a bill that will enrage their left wing.

i was just at the net routes nation convention, this is the 3000 liberal bloggers that assemble every year. they were in pittsburgh this year. i showed up. i wandered the place for 2-1/2 days. most people were very nice to me. a few people had two words for me and they were not "happy birthday," but that is all right. i told them i hung out with roman manual long enough i have heard everything. i learned two things, one is what the basis of the opposition to healthcare is. i heard this at five different panels. this is not just an isolated instance. it is all racial. you think your opposing healthcare because you are worry body your health or believe in smaller government or you are against the higher taxes that it it would bring. no, these are code words for race. after all chris matthews just the other day said, "i think the

people are upset because we have a black president." now i think this is cognitive dissidence, but it shows the extent to which they don't understand the rest of the country. look, we as conservatives, we engage in tribal activities, hang together here, we're of like minds, kindred spirits. i can assure you, we are aware of what the other side says. sometimes we even agree when they have a good point. they have the commanding heights of the traditional media. we know what they are thinking and saying. we have to turn on the television or pick up the local newspaper. all we have to do is talk to our friends and neighbors. they live -- well, some exception, a more sheltered existence. their mental radio receiver dos not pick up certain stations. how many times have you had a discussion with someone about what rush limbaugh is like or says with people who are absolutely convinced he's some

is kind of evil monger to quote harry reid and they have never listened to rush. they hate him, but have never listened to him. the people at the net roots conference have no understanding of where you are coming from, so it must be coming from base motives. here is the problem. they don't understand the opposition, which is why they sound frustrated and petullent. you know what projection is? projecting to others what you are thinking. an example of projection. this is abc news anchor charles gibson. i'm sorry, cbs's chip reed. he was substituting for katie couric, in terms of gender, but not in terms of perspective. democrats say activists are orchestrating protests, they have the evidence, websites of conservative groups list

democratic town halls and urge to be heard. that is the evidence of orchestration. press secretary robert gibbs, "one can only hope the efforted organized intimidation doesn't escalate. we can discuss issues about being uncivilized. the same thing i tell my six year old." they are the ones acting petullently and lashing out in frustration. because they have to pass something, they realize that they have probably lost enough moderate democrats up for election or are worried about their future elections and other years they can't pass what they want, the public option, which is another word for nationalized healthcare. the co-op is a word for public option and nationalized healthcare. so they're going to have to retreat. whatever they pass, they

probably can't get 60 votes in the senate. they're not enough democrats. they say the republicans are being obstructionist. republicans have many sins. i've often said that i've known republicans and democrats all my life within office and in washington and both often want to take as much money from wour pocketbook as possible, just that republicans will feel more guilty about it. but republicans cannot be accused of of the sin of being obstructionists right now. they don't have any power. how can you be obstructionist if you can't stop a filly buster and you don't have the white house. that is called passing the buck. now their healthcare plan they will ram through can only pass unless it it is truly bipartisan through something called reconciliation, the 35-year-old process in order to get some tax and budget changes through the budget process you get to have 51 votes pass and you don't have

fi only for the budget. the bush tash cuts got through that way. they were timed out. they expire next year and i assure you they will expire in the middle class and those earning over $250,000 in a year. this budget reconciliation process is not meant for reordering one-seventh of the economy. there will be civil war in the senate if they try this. frankly, i don't think they can procedurally because it will be like swiss cheese, holding up a piece of legislation like a slice of swiss cheese. everywhere you don't have a number, you have a policy change, you will have to do it some other way, with 60 votes. some things have to pass with 60 votes some with 51 votes f. they do this, you think the american people are enraged now, i think they will really, really hit the red button if they try to pass

reconciliation. harry reid will have to make that decision f. he makes that decision to try for reconciliation, he is toast. i'll make that prediction. [ applause ] >> now where they go from here regardless of what happens with healthcare? we've heard from senator feingold and chair monster -- sorry, chair -- we've heard there will be no healthcare vote until december, christmas. they've lost control of of the calendar. there is something that happens between now and christmas. it's called off-year elections. off-year elections are the bell weathers that tell a party in power how they are doing and how much danger they are in, if they will do badly in the elections. we have had bell weather

elections. when republicans won in 1993 after that date the liberal democratic congress and the liberal white house did not pass anything of significance wasoever and lost crime bills on the floor of the house. remember midnight basketball? these november elections coming up and there was a special election in my old bay area, california home district. these elections are going to be very important. right now the republican candidates in new jersey and virginia are up between 7 and 11 points. believe me, the democratic moderates are watching those. even though they have enormous majority in the house and senate, 49 house democrats in districts john mccain carried in 2008. 49. that is larger than the majority. by the way, 82 democrats sit in districts that george w. bush carried in 2004. 21 democratic senators sit in states george w. bush carried in

2004. 13 sit in states john mccain carried. that is bigger than their majority in the senate. you can see why they are not, you have a majority, if you have enough nervous people on your side, you will be constrained in what you do. and this kind of process with liberals govern, they govern badly, they overreach and they are slopped back by the electorate is a process we've had many times before in history. ronald reagan was many great things. you know of him as great commander in chief, someone who set in motion the events that ended the cold war, unspired and uplifted the country, brought the longest run of economic prosperity in the country. i will tell you a story about reagan i don't think you have heard before, about how great a political strategist you heard before. the lessons have direct relevance for our time today. in 1976, the republican party

was even more disgrace than today. watergate was two years in the past. mistakes were made. the republicans discovered historic losses, lost the white house in '76, 143 seats in the house, today 178. they have 38 senators and now they have 40. they had 12 governors and now they have 18 or 19. they were in worse shape than today. it was in the spring of 1977, just a few months after ronald reagan lost the republican nomination by a hair's breath that reagan met with his staff and advisors, a reunion. they were depressed. reagan came before them and said, i'm here to tell you where we're going to go and i'm not just saying it it because i believe it it, i'm saying it because i know it. we are conservatives. we are people who believe in free enterprise. we believe our principles properly applied will lead to

prosperous, peaceful, better country. liberals, no matter how sincero patriotic, they may be. we as conservatives tend to lose elections when two things happen. the people representing us are claiming to represent us, make mistakes. richard nixon being an obvious example. and liberals temporarily run as moderates to get elected and convince enough people they have changed their stripes. reagan said, what has jimmy carter done? he campaigned moderate, i he will govern from the left? why people who pay the bills to the democratic party won't have it any other way, special interests and their party. if he governs from the left, he will fail because that is what liberalism does, it fails. if it it fails, people will notice f. they notice, they will become concerned and get angry. you, despite the mistakes you have made, despite the retreat

from principle you had in the past, if you rededicate yourself and reenergize your grass-roots, you will have a chance to have a conversation with the american people and convince them there is another way. sure enough, boy, was ronald reagan right. carter brought us 15% inflation, 10% unemployment, 21% interest rates. remember gas lines, some of you. on the march, the iranian hostage crisis, it was so bad in 1980 that ronald reagan could go around the country with one of the best lines i've ever heard in politics. he said, "a recession is when your neighbor loses his job, a depression is when you lose your job, recovery is when jimmy carter loses his job." [ cheers and applause ] >> i think we're going to hear that line again next year. so reagan was right. government was beaten back in

1977 and 1978 by the american people. well, flash forward 16 years. 1993, 16 years later, once again, a republican president made a mistake or mistakes. george h.w. bush said, read my lips, no new taxes. that cost him dearly, convinced ross perot to run against him. i know ross perot did well in colorado, 26% of the vote. ross perot was preaching fiscal conservatism, many bought into it before they found out his trade table was not in full upright and locked position. even so, he did well. he coast president bush the election and elected bill clinton. bill clinton, the ultimate salesman campaigned as moderate. remember, end welfare as we know it. people who live by the rules

shourules -- ronald reagan met one last time with his former advisors, the alwa alzheimer's disease had not scrapped him and he reminded his staff that he had given in '77. he quoted the scottish, "ofor i am beaten, about the not slain. i shall rise to fight again." he said, what did i tell you in '77? we lose and we abandon principle and we lose when the liberals temporarily convince people they will govern as moderates. that just happened. let me tell you what i said to you then. bill clinton campaigned as moderate and must govern from the left. his congressional leadership and special interest and the democratic party won't have it any other way. people will notice and they will get mad and you will have another chance to have a conversation with them. sure enough this happened. the btu tax was proposed, largest tax increase in american

history. stand and travel gate, white water, days in the military, you name it, rubbing salt in the eyes of group after group of americans. of course the hillary healthcare meltdown and of course you know what happened in 1994, the contract with america, the 1994 election. reagan was right again. here we go again. it's 16 years later, 16 years from '77 to '93, 16 years from '93 to today. once again we have a democratic president who campaigned as relative moderate. i'm not going to raise your taxes one cent if you make less than $250,000 a year. absolutely a true statement, not one cent dime, thousands of cent dimes. and liberal democratic congress was elected. here we go again. while the same thing is happening now, isn't it?

faster than you predicted. reagan is the oldest and the wisest. he predicted this would happen again. any time we elect a liberal president and a liberal congressman at the same time. so what does this leave us with? unfinished job. you and your predecessors beat back the government in '77 under jimmy carter. you and your predecessors beat back big government in '93 under bill clinton. you have won the first two, it's time to go three for three. [ applause ] your family, your church, your

home, your hobbies, your jobs, you don't naturally want to spend all the time in politics. but this summer and this fall of 2009, you have to make an investment in america. you have to make an investment in defending america. you know, we always hear and we always speak kindly and admiringly of the greatest generation. you all know what the greatest generation was, the generation that survived the great depression. you know the greatest generation is only the greatest generation until the next generation that has a challenge that threatens america's core values. every 75 years it it seems we have a generation summoned to do great thingos behalf of america and in defense of america. the american revolution was such a time. the civil war generation, 75 years later, we had to end slavery and unite the country, bind up the nation's wounds. 75 years after that, the

greatest generation. the depression, world war ii, the cold war. i'm not here to tell you the challenges before us are quite of that magnitude, but they could be. especially if we lose. here we are 75 years after world war ii in the great depression with another challenge to america's freedom and independence. big government. i'm here to tell you if you win this fight, as you won it in '77 and '93, if you win it again, your children and your grandchildren will one day be able to say to you, i know what you did in the spring, summer and fall of 2009. you became the next greatest generation. you beat back big government and stopped it it in its tracks. [ applause ] >> let me tell you, i not only

think you can win, i think you are winning. let's go finish the job. [ applause ] >> thank you. >> i'm told we have the podium until 2:00 so there is time for some questions. i'll be happy to take them. >> john, thanks, i love it every time i hear you speak. i can't believe you write for a major newspaper. i don't know quite how to take that. in the best way. two short questions. do you think if the democrats failed to pass a healthcare bill that it means we can assume they will be unable to pass cap and trade or card check? >> look, i think the recession

killed cap and trade. how much have you heard about cap and trade lately? how is that working for you lately? look, cap and trade was never about global warming. cap and trade was about political control. they failed to convince until general motors became government motors, failed to nationalize motor or political control over the u.s. economy using the excuse of global warming was burglar who goes through a neighborhood trying every door until he finds one unlocked, that is what that was. the first meeting of the former communist nations their environmental community that were dealing with communism, the midwest virginia look like a scenic wonder, and the western environmentalists who had never met them because of the iron curtain. i remember the check environmental leader standing up in frustration after two days of

meetings with the western environmentalist, standing up on the table and yelling at the spanish president saying, i have heard enough from you, we have nothing in common, you are not environmentalist, i know what you are, i've lived with you all of my life. you are not environmentalist, you are a watermelon, green on the outside and red on the inside. [ cheers and applause ] >> we have learned through the cap and trade debate because they tried this in europe and we have learned what is motivating the cap traand i had debate is the desire for control of the economy, not for improving the environment. i think it is dead for now, but once again, it will rise up again from the grave after the economy has recovered. >> question: one quick speculative question. do you think hillary would like to see obama care fail? >> oh, that is above my pay

grade. let me just say this, i think after six months of being put in isolation booth as secretary of state, i think hillary clinton is -- let me put it this way, "i am woman, hear me roar." have you noticed joe biden has disappeared? i think he's in the witness protection program. i think one gap too many. there are some in team hillary that realize how much of a disaster biden is proving to be and sharpening the long knifes to perhaps -- say barack obama has a bad rating and his approval rating drops, i can imagine visiting barack obama and saying, you need to spice up the ticket next time. you can't have this gas machine. you need a proven political vert ran to join you on the ticket next time. i would not be surprised if that happens. couple more questions. yes. >> question: sorry to hog the

microphone. as we all know, the media is pretty much bought and paid for, at least at the white house level. not yourself, of course. but there appears to be a huge slant. >> just to interrupt briefly, the media can never be bought, they can only be leased or rented. >> question: thank you. we need to cancel that lease. if you know of someone who actually has proof that the election was rigged, who would you speak with? i know that you in fact wrote a book on this. >> i did, but the election was not rigged, but i'm happy to hear you out after the meeting. i think that is probably not going to renew. i'm the media, all of you have perhaps legitimate ax to grind about the media. let me remind you of something. ronald reagan in 1980, won two

landslide elections with the entire media against him and the economic and technological constraints of the time meant three major networks. cnn didn't exist. three national news magazines and basically one daily national paper and we were the "wall street journal" was only a business paper, not a general interest paper. we had basically 40 talk radio shows around the country. how things have changed. you think things are bad now, you won elections over and over again in the 1980s with that media. now you have the internet, which brings every newspaper and magazine available and every blogger available free, until they go out of business. you have 1400 talk radio shows. you have news networks 24 hours a day. you c c-span, you have incredible choice of information. you can get your message out. i think this is a classic case.

conservatives have to look at the media glass as half full and stop looking at it as half empty. [ applause ] >> i will take one or two more. >> last question over here. john got one? >> okay. >> john, i agree with you 100% we have a fantastic opportunity to cycle in 2010, but the fat lady has yet to sing and you are absolutely right, we need to finish the job. you pointed out the colorado democracy alliance here that is being exported to other states so that i've got two questions. first question is: how can we convince people that have the resources to support a counter to that, support organizations like the steamboat institute, like the independence institute, like a bunch of other small grass root groups doing great things, other organizations because we all know that campaigns cannot succeed without

at least some resources going to them. >> look, i do many things well in life, but i'm not a fundraiser. it is also not my role to give you that kind of advice. i'll simply say this, in business, you know that nothing succeeds like success. go out and win this battle on healthcare g. out and win this battle on cap and trade g. out and win this battle on car check and its evil twin, binding arbitration, which is almost as bad. go out and win those fights and you will have more allies than you can imagine because when people smell success, they gravitate toward it. and as tom payne reminded us, sunshine shoulders and summer patriots are out there. people who don't ride to the sound of the guns. if you win those battles, you will have more support than you know what to do with. i have to tell you, on the other

side, you will so demoralize the left. they have lived for 75 years with the uncompleted mission of controlling this economy and nationalizing healthcare and every single time something went wrong harry trum an got on the scandal and had the korean war. john f. kennedy was assassinated. jimmy carter was -- jimmy carter was jimmy carter. enough said. and bill clinton, well, bill clinton was usually distracted. there is always an excuse and then if they didn't have a president they could trust, they didn't have 60 votes in the senate. they didn't have a speaker who wanted to ram it through. they had milquetoast. didn't have fire like pelosi. all stars have aligned for them now f. they lose now, they have no excuses. they will come up with some, but no mrizible excuse. if you win, you reinvigerate the

base you want to reinvigerate, you will so put a crimp in their plans and their moral, you will have a good 2010. >> john, the second part -- >> sorry. >> thank you, john. >> thank you very much. [ applause ] >> this morning on c-span, u.s. chamber of commerce officials discuss the nation's economic recovery and later a form umon challenges on a.f.l.-c.i.o. richard trumpka. >> also today, president obama

is in cincinatti to talk about jobs and the economy in a speech to union workers at the a.f.l.-c.i.o.'s annual labor day picnic. he's also expected to address healthcare legislation. it's live at 1:15 p.m. eastern here on c-span. as the debate over healthcare continues go online and follow the latest tweets, video ads and links. watch the latest events, including town hall meetings and share your thoughts with your own citizen video, including video from many town halls you have gone to and there is more. at cspan.org/healthcare. >> now u.s. chamber of commerce xeshls gather for a discussion about the economic recovery, executive compensation and other employment related issues. the officials also talk about legislation before congress regarding healthcare, labor and immigration. it is an hour and 30 minutes. this is an hour and a half.

>> good morning, ladies and gentlemen. i in the executive director of communications for the chamber of commerce. we are here today for our annual labor day briefing. we had the head of our economic team with us today who is going to do a forecast on the economy. and the senior vice president of the chamber randy johnson who is going to talk about workforce issues. welcome and we will start off with dr. martin regalia. >> i am going to take a few minutes and talk about what we are seeing specifically in labor

markets and then turn it over to randy. as with most economic presentations, there is always some good news and some bad news. the economy is growing again and we are coming out of this economic downturn, one that without hyperbole can be described as the worst economic downturn since the depression. it beats the 1974 downturn, the 1982 downturn, both in derision and dissent and rivals some of the rates of unemployment that we have seen in those instances. it was clearly a very severe economic downturn and a very trying economic times. i think we are coming out of date for a number of reasons. we saw price declines which have a tendency to boost real incomes and spending.

we have seen a march price decline over the last year. secondly, we had a stabilization program put in place by the last administration, which has worked very well. it has stabilized the financial system which is what it was intended to do. it got landing back on track. it has kept the banking system from disappearing into oblivion. all that was needed and i think it has worked. now we are starting to see some of the funds being paid back by the banking system, and they are doing so with interest and they're buying back warrants so the cost of government is turning out to be considerably less than what the face value of the tarp program was.

we are also seeing stimulus programs being put in place. congress passed a $787 billion fiscal plan that i don think was necessarily the best plan that could have been put together, but it was one of the better plans that could have been passed. that is what was needed at the time. the stimulus program has helped to get the economy growing. we will feel the benefits for the next year or so and that is probably a good thing because the economic recovery it is going to be a lack luster. we have seen significant changes in policy, a very aggressive monetary policy that open up their balance sheet, expanded them to medically to keep the banking system liquid. just this morning, there were more reports on the consumer

asset-backed lending program and how successful that has been in re-liquefying those markets. they have addressed other asset- backed market in the consumer and auto area and i think high marks are deserved by those at the fed for those policies. they were precedential. i think we were well served to have the fed to throw out the old playbook and bring in the new one. i think they deserved a lot of credit for what has been a very, very trying time in our financial markets and for getting us through the worst of those. i was happy to see that the president agreed with me and reappointed chairman ben bernanke. i said i thought he deserved to

be reappointed sooner rather than later. i think that was a good thing, a good choice, and i hope congress approves the nomination -- approved the nomination in short order. there still are a number of areas that need his attention. finally, the thing that i really turn the corner on this economy was a bottoming in the housing market. i think it is clear that the housing market has bottomed. where we were hoping with what we were seeing earlier this year as a bottom or a foreman of the bottom is clear at this point that it has bottomed out. you will see in the slides, pictures of housing prices, sales, starts, all of which have bottomed and turned up modestly. the affordability members, the

mortgage interest rate members all of which are providing credit for credit-worthy borrowers. we still have some problems in the subprime area, elevated delinquencies, and foreclosures, and those will remain for quite some time. i don't think we will see significant increases in those categories. they are at high levels but i do not think we will see increases in those categories going forward. even in the commercial mortgage market where there are questions to be answered, i think we are seeing some improvement there as well, and the fed is addressing that with their term asset lending program as well. the reasons i think that what we are going to see is a subpar recession, something on the order of a u-shape rather than a v-shape recovery, is that the

economy is still on balance. consumption has seemed to have picked up but it is still relatively weak. we will not see the bounceback in consumption, the pent-up demand coming forth. we are going to see a consumer that is experiencing high rates of unemployment going forward and high rates of job loss that were greater during this downturn than they had been in prior downturns. it will take more time to turn these job losses are round, generate new jobs, and higher income growth. for all of those reasons, i think we will see consumption to be weaker than expected coming out of a downturn. investment is virtually non existent at this point. investment is always the second leg in a recovery. you get consumption, new orders,

spending, people coming back to work, new jobs being created, and more investment in capital, equipment, and structures. we are not likely to see that transpire in the near term because i think investment is probably a year away from any kind of significant improvement. we will probably stop declining over the remainder of this year but it is going to be hard to envision businesses investing when they have excess capacity and still relatively few customers. the normal course of recovery, i don think, will manifest itself this time around. the trade deficits have shrunk, we have sold goods abroad into new markets, that is going to continue but it is not going to

increase in pace. i think the best we can hope for is more of a neutral contribution to our gdp growth. growth abroad is still relatively weak and for the most part is lacking our improvement. it appears it is going to take longer for them to catch up where we are and that is required before we can start selling abroad in the manner that we have over the last couple of years. one of the major components of this recovery, he will see weaker but positive consumption, very soft investment, and kind of neutral on the trade side. all those things conspire to give you an economic recovery. as we look at our forecast, we are seeing growth may be as much as 3% in the third quarter and a continued positive growth in the

2.5% or 3% range for next year. unless the economy has reached some balancing and reacquired its footing, there is quite likely to be some black -- there is quite likely to be some backsliding for next year. the reaction that this economy is showing to the economic downturn, as i said, is just different from what we have come to expect. because of that, we will see a slightly different modification in growth rates from what would normally be the case. i also think that the policies that we are addressing at this time and do raise the uncertainty level and the economy so we are looking at some very fundamental issues that randy will talk about,

energy issues that are going to be important for our long term growth, and we are also on the down side of the productivity surge that began in the mid 1990's and continued into this decade but is now starting to slow a little bit. those are the advances that give an economy some lasting power. with those weaker rather than stronger it is hard to be be optimistic about economic growth over the immediate horizon. the mortgage rates, the financial side, and the fact that the subprime market is still creating a problem, these investment numbers are very, very weak and are likely to continue to be weak because when

you look at what drives investment, industrial production, demand is still fairly weak and is not anticipated to snap back stronger as it has in other recoveries. business confidence is picking up in the purchasing managers' index, finally going above 50 for the first time in 17 months but still relatively weak @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ unemployment rate of 9.4% but

more than likely one that will rise closer to 10% over the next couple of months. couple of months. the initial claims numbers t akly cannot this morning and did not show much improvement. they were down on a weekly average basis from last week's revised # but if you look at the four-week moving average, it is right on. that is an elevated number. one of the things to watch for on a weekly basis is one that number starts improving. a good number is down in the 200's. we would like to see more sustained improvement in that number going forward. we look at what is happening in some of the other areas. one of the reasons why we think the unemployment rate will hang out for a while is that growth is not strong enough. unless you have growth well above potential, you are not

going to drive the unemployment rate down. that is our forecast rate of growth over the next year. it does not generate enough to push the unemployment rate down. we have a significant number of unemployed individuals who are now working part-time. they are counted as working. when the economy picks up a little bit, the first thing that businesses will do is bring those part-time workers back on to full time before they start creating new jobs so you have to reabsorb those marginal workers. we have a category called discouraged workers, workers that are unemployed but have quit looking for a job because they feel there are no jobs available. those individuals are not counted in the work force nor are they counted as unemployed. once the economy starts to pick up a bit and there is

discouraged workers look for work, they will be unemployed but they will no longer be out of the workforce so they will be counted as unemployed. you have to redeploy the marginal worker and then you have to redeploy the discouraged workers, and there are 800,000 of those held there. we have a ways to go before we generate enough growth to get all these people reemployed. the duration of unemployment during this downturn has been significantly longer than what we have seen before. as you can see from the charts, the last couple of peaks in the duration of unemployment, they peaked at the end of the recession so we still have some bad news to go on the duration of unemployment. participation rates, they are holding in there at about 66% and i expect they will stay in

that range. when we look at the issue of this economic downturn versus prior downturns in so far as the labor market is concerned, you see some fairly drastic differences. we have lost significantly more workers so it is deeper than what we have seen in the past. we are a bigger economy but this is proportionally the deeper. those bars -- the blue bars indicate the length of time it took from the beginning of the recession until enough jobs were created to surpass the prior peak in unemployment. how long did it take for not only that we got out of the recession but before we created enough jobs to match the prior peak? the red bars is how long a term

from the end of the recession. the difference between the two is the length of the recessions. the last couple of recessions took significantly longer to reach the prior peak even though those two were eight months in duration of the relatively mild in terms of gdp drop. yet it took two years in the 1991 recession and it took a little over three years in the 2001 recession before we generated enough jobs. we are going to have to deal with a much steeper decline in unemployment this time around. i have seen projections that is going to be at least five years before we generate enough jobs could we add about 1 million people to the labour force each year, a little bit more or less in others. roughly 1 million a year.

over the next five years, you have to make up 5 million new entrants and you have to make up about 7 million lost jobs. in the best of all possible worlds, to get back to where we were, you are going to have to create 12 and in some cases even more. you are going to have to create up to 15 million net new jobs in the next five years just to get back to where we were. this is a daunting task. you are going to need the economy to grow at significantly greater than its long run potential in order to generate that kind of jobs. for instance, when the economy is performing just about at its potential rate, you create about 150 to 180,000 new jobs.

what you need is something a little bit greater than that to reach your prior peaks. we could go growing at our potential rate and create 180,000 new jobs per month and we would not reach the old peak in five years. this is where the labor markets have changed over the last few downturns. we have seen the duration of unemployment creep up and the time it takes to fully recover and get back to prior peaks. i think that is quite likely to happen again. that to go along with some other ships that we have seen in the labour force. i am going to jump through this led to look at what we see in terms of some of the distributional impact on the labour force. if you look at the right hand panel, that is a measure of how

desperate the income distribution is. as that number comes down, the distribution becomes more even. we have seen some improvement in the coefficient, some improvement in the distribution. there is a very significant upward trend, it's very significant trend in the direction of lesser quality in income distribution in this country. if that is going to be addressed, it is going to have to require long-term fundamental policy changes and they are going to have to be in the education and skill- accumulation area because the economy is becoming much more technically complicated and complex, and the workers that can address that are rewarded and the ones that are not are

not. we are seeing a hollowing out of jobs that paid significantly higher wages for doing me deal tasks. if you were running an assembly line in doing the same job again and again, you still made a pretty good living and you still had a pretty good in come from that activity. with the robotics and the fit -- and the deficiencies over the last couple of decades, those jobs really do not exist anymore and they are not going to exist in the future. trying to reconstitute those jobs in a competitive economy is a fool's errand. what we have to do is get our work force prepared to meet the next challenge and that requires greater education and greater scale accumulation. that takes time. you do not do that overnight. a tax policy to try to address the income distribution is a

fool's errand. if you look at that coefficient, you will see that during the clinton administration when we had significant tax increases, we actually saw the rich get richer. we had a big productivity surge and a big technology surge, and the people that had the education to take advantage of that benefited quite nicely. during the bush and initiation where we see them villified often for having given tax cuts to the rich, we see the coefficient come down. because those tax cuts were not just for the rich. they were tax cuts across the board. when we look at some of those income groups, we see that over time, if you look at the bottom to, those are your top of the

income distribution. those are getting a larger share of total income in the united states. the two lower groups are getting a lower share. the tax shares of the same upper groups have gone up more than their income shares. the fact of the matter is, we have had lower effective tax rates on the lower income groups, higher affected tax rates on the higher group, and it has not done a whole lot to affect the income distribution. it is and more fundamental problem. we have seen a capping off of late with the bush tax cuts, but the tax increases that were designed in the mid 1990's to achieve balance and a better

income distribution were woefully unsuccessful. to sum up, when i look at the economy right now, things are definitely looking better. i think we are out of this economic downturn. when we are told when it officially the recession ended, i bet at this point that it is going to be pretty close to the third quarter of this year. the economic recovery is going to be slower than normal where you really feel the recession in the labor markets, and the unemployed, in which growth, those things are likely to be subpar for quite some period of time and that is going to be the political challenges to create economic policies that provide significant economic growth because in turn, that economic growth will provide job growth, wage growth, and it will also

provide revenue growth for the federal government so that we can address the absolutely huge deficits that have been projected over the next 10 years, that this that are clearly unsustainable and that deficits that will wreak havoc if they manifest themselves over the next 10 years we will see our dollar decline in value, inflation come back and we will see a real tug of war between the fed and the administration whether to end like this economy or not. thank you very much. >> thank you. does that mean i am going to get a raise next year or not? marty has pinpointed are challenges ahead. i think one of the questions as we go forward is whether or not the unions will work with business groups to create an agenda for capitol hill that helps create jobs or whether or

not we will go down the usual path of unions demonizing the employer community and saying that nothing has changed since the 1930's. employers do not take care of their employees so we need more regulations and new burdens on those employers. obviously, more costs on employers, much of that will be passed on to workers or consumers and that is not a recipe for job growth. it is a bit ironic for me at least to look back on some of least to look back on some of the party in power was pushing a decade ago, without much creativity or recognition of the environment we're in. i would ask you take a look at

the board in front of you. it is chock full of good information. from sara lee did not have to -- have time to break down into sound bites, but as you write about employer free choice act, the state of the economy, what is pending on capitol hill, think you'll find a lot of that information very valuable. in a recent speech, -- he did use the word demon and was sometime -- and criticized the unions for over-criticizing the employer community. his response was when the employer community stop acting like demons, we will stop calling you demons. that is not with the employer community is. on labor day, we celebrate the contribution of workers. think it is worth noting that what the workplace is is a pact between employers and employees. together, there is an

environment created. hopefully a decent wage is received from that and the employee can create a product in which he or she can make a profit. eventually, things are worked out. there are ups and downs but overall there is a satisfaction between employers and employees. sometimes with unions, i think they argued much to their discredit that is not true but it undermines their credibility generally. it does not mean that there are some bad employers. if you would take a second to look at the benefits sheet in your packet, we point out that employers provide $7.80 trillion worth of compensation

to employees, $1.50 trillion in employee benefits. employers provide in a world where we are talking about health care benefits, still providing close to 180 million americans with health care insurance, about 160 million is to private sector employers. over $500 billion for health care insurance. in a world where employers are still struggling with health care costs, they are not just cutting copays but they are experienced -- they are experimenting things -- with things. despite all of the rhetoric, the level of health care coverage has remained relatively stable although the census bureau will likely come up with new debt

next week. private sector employers, close to $200 billion in retirement income. often paid leave is a benefit provided by employers. even in these dire economic straits, the survey data with regard to american workers is quite compelling in terms of job satisfaction. the american enterprise institute came out in august, american still displayed a high degree of satisfaction with their jobs. 50 percent side of employed people said they were completely satisfied with their jobs and another 30% or somewhat satisfied. for those with jobs, job stress, the amount that they earned, and even health benefits remained remarkably stable 68% were

satisfied with the chances for promotion. 71% in 2009 said they were satisfied with the amount of money they earned. 67% in 2009 were satisfied with their health insurance benefits. the obama administration is running up against one of those figures with the health-care issue. before i get to health care, let's talk a little bit about the general labor agenda. the employer free choice act is back in the press where there could be room for compromise. the three parts of the bill is that they provide if a union rounds of 50% of cards, the

employer must recognize the union. the second part is an arbitration on employers when a union and an employer cannot agree on a contract an arbitrator will be appointed to write the terms for the employer. our objections real quickly have traditionally been that these cards are subject to closure and union organizers, this is not the chamber speaking it is the courts that have said this. in fact, the hell is -- i am going to read one quick paragraph from a union organizer because many things -- here is a former union organizer. i began to realize that the number of signed cards have less to do with support for the union and more to do with how effective and organizer was in doing their job.

the vote count is significantly less than the number of cards actually collected. card check campaigns have little to do with giving workers information. we are trying to avoid topics like dues increases or a strike. many employers have been asked to have their burkhart -- to have their cards returned to them. that is one union organizer but if you take the time to go through the hearings on capitol hill, there is testimony in hear from people and they have had the courage to come forward and talk about how that system is manipulated by union organizers. it is not the chamber that i am talking about. it is actually people who are out there where the rubber meets the road. the second part of the bill is

equally unacceptable to the employer community. the idea that a government arbitrator appointed by the government could step in and write a contract for the employer which would govern every term and condition of the workplace has never been accepted and certainly i think is ludicrous on its face and is unacceptable to our members. . . both of these ideas are bad ideas and should not be accepted

by congress. with regard to compromises, we will see where the talk goes. we're not going to compromise easing the employer free choice act as a base of negotiations. if the unions want to start with some objective, balanced hearings with regard to the national labor relations act which has not been updated since 1947, we can buy into that process. we will go from there. we can identify on the management side and in the employment community -- will not negotiate as a base. recently, the unions went after george mcgovern, which many of you remember, for his opposition to the employment free choice act. i want to read what exactly he did say. i find it is interesting now that the union is a turncoat.

as a longtime friend of labor unions, i must raise my voice against pending legislation about management and labour. that legislation is called the employer free choice act. i am sad to see it runs counter to ideas that were once at the court to the labor movement. they would lose the freedom to express their desire to make a decision without anyone over their shoulder without fear of reprisal. and even on arbitration, he said that it is a government dictating to employees with no opportunity to approve the agreement. why should employees' pay union dues to pick get such a contract? i do not think the employees are there for the employment choice act. i do not believe the votes will be there. it is just a question of time of actually educating policy

decision makers so they know what is in the bill. employee free choice act is out there. it appears that the majority it is not moving until the free choice act is done with. there is an expansion of family medical leave to ocean reform, to plant-closing laws. there is a myriad of other issues such as eliminating binding arbitration. the common theme through all these bills is, again, not really how we should help employers learn how to comply with the law, but let's increase damages -- let's make it easier for the board filed class-action lawsuits. that is why these posters are on the left in case you're

wondering how complex our laws are here. that is one page out of federal regulations, and is a typical book. it is one book of 90. when i see the department of labor talking about more enforcement against employers and you see this trend on capitol hill of new laws, new burdens, and it is worth reminding people that employers don't have millions of dollars to hire lawyers to figure out every page in the code of regulations and every sentence in that page. there was a time under some administrations where we recognize that there was a need to perhaps help employers, particularly small employers, learn how to comply with the law. i am hoping we see some of that in this administration. i am hoping we see that in

capitol hill. the common theme is that we have a lot of laws on the books. we can figure out where we catch them on some violation. this is a matter of great concern for the u.s. chamber. we will be revisiting the theme. the reality is that nobody can really comply with all provisions of the law. it is simply too complicated. how about helping small businesses understand the law through some sort of voluntary compliance programs? i do have to note that where the department of labor has increased exponentially, the one area we do see reductions is in the one program under the labor- management disclosure act which has cut the budget at that enforces the law against union leadership to protect union

members. back in the 50's, -- under bobby kennedy, many hearings going in the union corruption and coercion of union members and the needed to create a lot to protect union members from the union leadership. it is a disclosure act. it is enforced by the department of labour. ironically, that is the one budget being cut by the department of labour. in the department is also engaged in rulemaking which is obviously directed at reducing the reporting requirements of unions in this entire area making it more difficult for union leaders. we have comment on those of course. imagine on health care, and

smallish on capitol hill, there is testimony in your packet where i testified in front of the ways and means committee. the president is going to give a speech next week, and we will see if that reshapes where things are or not. our concerns have been fairly clear. we have not hidden this. one is the employer mandate. the house bill says that you, as an employer, except for the smallest employers, must provide a qualified health-care plan defined by the federal government. you have to do that or pay a fine to the federal government. we have concerns. someone making $40,000 a year is $3,200.

that can add up pretty quickly that can add up pretty quickly for a small why shouldn't all employers have to protest pay? not all players can do that. particularly small, start up businesses. the employment community is kicking in $500 billion worth of health care contributions and we think we're doing our fair share. many studies have come out on this and clear mandate between the cbo. invariably, they and clear -- they include a tax like this will lead to not only lower job growth, but job eliminations. some of this is mentioned in my testimony. with regard to the public option, which has got more attention in the press, we will sue the president goes on that. i think the grassroots has been fairly -- mostly in opposition,

but it depends which poll you read. our concerns have been that the so-called public auction -- option has an unfair advantage over the private sector and will drive out private-sector insurers. we found that millions of workers will move to the public sector option and under studies have documented the cost shift between public sector plans and medicare, and they will always have an unfair advantage. were we going to go and health care? the path is fairly clear. the president should come back in and admit that we were trying to do too much too soon. people are scared about what they're hearing. it is not that they necessarily know what is going on, but they are scared. i was on the hill when hillary

clinton came up and presented her plan to congress. she was criticized for hiding the ball at the time as you recall. i would say that the process back in '94 was a model of transparency as compared to what we saw on capitol hill over the last six months. it is unfortunate the process has been slow down, the unfortunate for those in power that the bill did not go to the floor in august so that the american public could have time to weigh in. hopefully, the president will come in with a proposal of some sort, and we can come together over a package that is slimmer, more understandable, and move on the other issues. maybe we shouldn't resolve health-care if it goes to the employee free choice act. it seems to me the public has pretty much made it clear --

they recognize there is a problem. we're fairly help -- happy, don't mess it up. it's hard to believe that message has not gotten through to the white house. we traditionally do work closely with the unions. we're hopeful about a comprehensive package of immigration reform. we do have some disagreements over the temporary worker programs. if you look at the demographics over the long term, there is a greater need for immigration. there is some solution for the undocumented in this country, and we hope congress will take that up and the next couple of years thank you. >> do have any questions on anything that randy said or

anything that i said? we will start over there and work right across. >> [inaudible] in my own situation, as an administrative contractor, [unintelligible] >> anecdotal information isn't bad, it's just hard organized. the anecdotal information we've got is that as the economy has gone into the severe downturn, it has been harder for people to pay. we have heard stories of loan delinquency, and we have seen the data rise.

other business loan delinquencies are also up. loan-loss reserves are up. the hard data we have on that indicates and support to the anecdotal data that is become harder and harder to make ends meet in an economy where there are fewer and fewer customers, and the customers you do have are spending less and less. we're hopeful that with the economy beginning to improve, those stories kind of peaked and received as we go forward. with the slowness of the economic growth, i am afraid we will continue to hear of problems that ongoing businesses have meeting their commitments because of the weak economy. go over here. >> regarding health care reform, you have said that they will

merely adopt a small conference. it would a government auction -- option provide coverage? >> it depends on how it would be structured. 90% of the chamber is comprised of small businesses. generally speaking, our members would rather the devil they know than the devil they don't. they would rather work with the current market and combine the reforms we are seeing like a guaranteed issuance, no limitation on exclusion for pre- existing conditions. we all agree with a federal website that would help small businesses go one place to shop

for the best deal, a characteristic in all these bills combined with some sort of subsidies for small businesses that can't afford insurance. our membership would rather try to get your point then take a chance on the creation of some unknown and the myths -- with some new, unknown that behemoth -- new, on non behemoth. -- new, unknown behemoth. the other is the employer mandate. we sort of see these as a package. clearly, even with the exception of small businesses -- with the exception, small businesses have been able to

resist the employer mandate. >> the jobs are going to lag. the think the administration and members of congress will become more available to your concerns about all of these labor related issues? [unintelligible] from your perspective, is there an educationable, if that is a word, way to lock in-- >> the employer free choice act was slow down for a couple of months because of the economy. we did, with some studies which were criticized about job loss and -- to your point, people understand this is not a time to create uncertainty with regard to however the new laws are going to impact the bottom line.

it does help our argument on capitol hill with the cluster of conservative democrats. those are key votes. there is a lot of stuff back up. the allies of the democratic party -- the answer is no. there are some real sweeping changes to our nation's unemployment laws. >> in a macro economic sense, if you look at the weak economy into superimpose the budget issue and the debt issue, one thing that i have a slide on that did not cover specifically was the projected debt levels are going from around 40% to 44% in 2008, projected to over 80% in 2019. these are unsustainable debt

increases. to the extent that you have to address the deficit, it has to be done -- there has to be spending restraint and economic growth. you cannot balance the budget by raising rates without making sure that you have a base to apply that rate to. we have seen enormous increases in revenues over the 2001-2008. we had at declining rates and stronger growth. congress is going to have to come to grips with -- on the one hand, if we have a health care policy or an energy policy that does not cut costs, and it has been suggested that the health care system would not, then

you're not addressing the spending restraints. to the extent that you have a weak economy and those types of policies, you have a double win the on the budget. -- double-whammy on the budget. it understates the true cost of health care industry is the true cost of the energy policies. in a macro sense, more and more congressmen and congresswomen are seeing the dynamic where we have to have economic growth. it will have to do things that will control spending. and how much each one focuses on any given idea is virtually impossible to say.

the general conception of these twin problems is out there. as we see a bigger deficit numbers, men and as we see some of the negative impacts from the bigger -- bigger deficit numbers come in, and as we see some of the negative impacts, it will come in as well. >> [inaudible] let me ask you a big picture question. help us think about what a normal was going to be. consumption is going to be depressed. wage growth is going to be suppressed. what is the new normal? those psychological changes, as

overstating saying that it is going to be a significantly new normal? >> there is always a new normal. everybody likes to coin the phrase, so they talk about it. i don't think we're going to see an american consumer that tries to more for themselves into the japanese way that we have seen in the past. i think there is going to be an attempt by the american consumer to be more judicious in terms of its spending, and to try to gradually get its balance sheets in order. the consumer balance sheet can be called in order if they curtail their borrowing, not necessarily if they save out of their current income. i think that we see higher savings rates. we have seen a jump to 5% or 6% from the- negative rates.

the new norm is somewhat more saving and a gradual repairing of the balance sheet. what does that mean in terms of gdp growth? i think we're seeing potential rates of growth and better in the two or 2.5 range. it is what we thought it was -- it is what we thought it was -- it was a movement to a i don't think it is a stark move. i don't think it is an abrupt move. what we have seen during the recession is not the normal. what we saw prior to the recession will not be the norm. it will be somewhere between that.

that is the best you can do in terms of focusing on a question. we will all be watching it to see, but we have seen people begin to spend. look at the cash for clunkers deal. you put a little bit of incentive -- and it is a little incentive because it did not apply to all vehicles. it only applied to vehicles with gas mileage constraints. look what it did. in one month, it kicked up the sales rate to 14.1 million units. that's well above what anybody thought. we will see what goes back to next month, but there were people ready to buy. we have seen the same thing in the housing market. the bottoming in the housing market has given rise to sales in both existing and new homes. those people were not afraid to step back in. where we make the mistake is to look it was actually happening during the depths of the recession and say that is the norm. i don't think that's the case.

-- the new norm. we will not see the french credits that people should not be borrowing. the people that do not have the financial wherewithal to buy a new house getting credit at virtually zero rates of interest. >> the federal reserve has indicated on a number of occasions that it tends to keep the current interest rates over an extended period of time. today, the president of the federal reserve bank said that the interest rate should be [unintelligible] i would like to know how you see that -- >> i was at the board.

they gave a speech that had a policy directive that is considerably different from what is coming out of the board. they did an interview. they talked about how they will maintain the interest rate policy for some indefinite. they felt they can control -- through some controls of payment of interest on reserves. it can keep the banks for lending up the reserve and generating inflationary pressures by increasing the interest rate that had on reserves or by unwinding some of the borrowings they conducted which was done with a repurchase agreement and other short-term borrowing so they had a natural tendency to unwind.

i think there is a modest disagreement among some of the members of the fomc. i would like to see some more retch -- more hawkish regression on the part of the fed. this is what is the dynamic to the fed, and it is a good thing. you don't want to the fed in groupthink. this is the group we have been entrusted to conduct monetary policy. they do it in a relatively independent manner. you want there to be a little bit of discussion at these meetings. what you are seeing in the different, from bill dudley or someone else, that dynamic at work. i see it as a positive. i take the lead from where

chairman bernanke is going. he says he has seen the need for continued monetary accommodation to be relatively important. he is moving in that direction, though he is cognizant of the fact that he is going back to pullback. i see a bigger issue, and it is not between what the president of the philadelphia or the pittsburgh saint louis bank says or what the board thinks. it is with the group as a whole thanks and what the administration thinks. the president says he will reappoint him, and i think the congress will confirm the reappointment. the question is when the fed starts to pull this back. it may be the middle of next year or a little sooner. at that point, the

administration will look at the fed slowing down gdp growth the slowing growth will mean that revenue growth does not return to normal path as quickly as it otherwise would. at that point, you will see the traditional sides form between the administration that generally leans to the side of more growth. that is not a partisan statement. the first bush had a great wars over restrictive monetary policy. we will see that natural antagonism grow a little bit over the course of the next year. it will be much more important than the internal discussions. >> you mentioned earlier the possibility of the economy backsliding in the second half of 2010 as the effects of the stimulus wayne.

will that be more of a slowdown or an actual -- >> it will be more of a slowdown, but the problem is, when you're running gdp growth at or below potential, your only a hair's breadth away from another recession. the closer you get to any kind of extraneous shot -- shock, it can to be back in. do we slide back into recession? that is not my forecast, but the possibility is certainly there. the probability is not inconsequential. we have a potential for a double-dip recession. we could see that occur in two ways. either the fed is overly aggressive in tightening, and about the same time the stimulus is wearing out, we see a high budget deficits and higher

interest rates. a fed that is concerned about inflation and pulls back a little too quickly could take you into recession. on the other hand, if you go into the middle of next year and the economy is doing quite well, you still have the economic stimulus coming on line and you start to see the economy hit its stride. the money supply injected into the system starts to create more transactions. most work on a product base. so you have too much money chasing too few goods. the fed does not pull the money back fast enough and you start to get inflation. when that happens, expectations build. the higher interest rates could trigger an economic decline. your walking a tightrope at this point. as long as the economy is growing at or slightly above its

potential, you have a little bit of leeway. you have some wiggle room. when you start to grow at those lower rates, you pull back and expect the economy to run on its own. it gets very temperamental. in those kind of situations, a little over aggression or under aggression can produce an economic downturn. we are not out of the possible double-dip recession. we will not know until the middle of next year. >> you have not talked about financial-services. >> reform? i did not know if you had a couple hours. it is definitely on the play. our center for capital markets for competitive capital markets -- they are currently working at

some of the reform proposals. the ones that sound of the worst us at this point are things that are providing a new consumer protection agency. there is not one government entity out there that thinks that is necessary. i do not know how that plays with you all, whether it is necessary, but it is something that has come out of the administration. every single one of the administration's regulatory agencies have said they do not like it. there is a lot not to like about that policy. elsewhere in the regulatory framework, we're going to have to learn that companies in that area are going to have the wrong with more rather than less capital. the overall average allowed the situation to get out of hand. others at the treasury will have

to control the leverage and have somewhat more capital. it forces you to take into account the risk that is out there. beyond that, over regulation would be a real problem that would stymie the return of credit availability in this country. we will continue to run on credit. you are not going to get the return of a more normal functioning economy. we have seen an administration outlined in some of the congressional individuals -- we

have not seen a comprehensive plan. the way the administration goes to plan has unfolded is a piece at a time. it is clear we have too many bank regulators from an economist's point of view. when i was working at a bank and i was a bank executive, i thought my regulator was good and everybody else was crazy. i did not want the other guys regulating. there was a very proprietary feeling. my regulator was my regulator. he understood my problems. he did not always agree with me, she did not always agree with me, but i had some reports there. there is a real fear of getting away from that. one of the things that you look at is this hodgepodge of bank regulation. you have that that, the comptroller, the fdic, state regulators, individual regulators at the state level.

these institutions all interact and crossover. it is hard to draw a distinct line from where the part of the bank and is and the underwriting part of the bank begins. we do not have an investment banking system. there are distinctions about commercial and -- the commercial entity is not there anymore. with the labor standards act that has not been amended since 1947, it took 10 years to hammer out. it was a less than perfect compromise. now we're going to sit down and toss that out. it is a little less than 10 years old, i guess. we will toss that out and go down this road again. there is a lot of areas where we saw real problems.

the credit rating issue is a real problem. that has to be addressed. there is a lot of hazard because if you pay for the credit rating to save weight pay for your auditor, we have seen that cause problems. a good deal of the issues that set higher on the congressional totem pole, whether they get handled and how much time we have to do this -- a potential for over regulation while at the same time a clear understanding that the current level of regulation did not cut it. >> i understand that this weekend in london, the g-20 meetings and the pittsburgh summit, regulatory reform is going to come up. there is talk about accepting compensations and regulations. can you elaborate a little more

on why you are opposed to it? >> i have not said we are opposed to anything except the consumer protection agency. >> start with that. >> we do not think it is necessary. we don't think that the consumer -- the lack of consumer protections is what caused this economic downturn. many people that got mortgages they could not afford to pay did not get mortgages because they were duped into it. in many cases, these loans got the term "wires on" because the individual lead to the bank -- "liar's loan." the broker did not do the due diligence. going out and raising a problem and addressing it in a <