"the wall street journal." and we will talk to jonathan karp, the editor of the late senator edward kennedy's memoir. "washington journal" is next. . host: let's take a look at some of the president's comments from yesterday's speech. >> while full recovery of the financial system will take a great deal more time and work, the growing stability resulting

from these interventions means we are beginning to return to normalcy. but here is what i want to emphasize today. normalcy cannot lead to complacency. unfortunately, there are some in the financial industry who are misreading this moment. instead of learning the lessons of lehman and the crisis from which we are still recovering, they are choosing to ignore those lessons. i am convinced they do so not just at their own peril, but at our nation's. so i want everyone here to hear my words. we will not go back to the days of reckless behavior and unchecked access that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bonuses. those on wall street cannot resume taking risks without regard for consequences, and expect that next time american taxpayers will be there to break

their fall. host: our question for you for our first segment this morning is, how should wall street deregulated? we have this story in "the washington post" today. that is are asked iranian excesses', support new rules. -- bankers are asked to rein in the excess is, support new rules. the democrats' line is 202-737- 0002. republicans, 202-737-0001. and independents, 202-628-0205. our e-mail address is journal@c- span.org, and we are on twitter,twitter.com/cspanwj. "obama offered a reminder that financial firms survive the meltdown because of expenses efforts by the government, which

can potentially huge cost to taxpayers. among the dramatic actions were bailing out an american in a national group, federal the pungent -- federal deposit insurance gcorp., and creating a $700 billion financial rescue fund." what do you think should be done right now as far as regulation on wall street? do you think the president made the case yesterday for the effectiveness of what has happened so far? do you also take that as a sign that more should be done? looking at "the washington times" in a piece from today, we will have that for you in a moment. the president again looking at his speech. it says "mr. obama is proposing a range of regulatory measures, including greater authority to the federal reserve, to police investment firms, a new oversight board to monitor the largest finance companies and the creation of the consumer

financial protection agency to crack down on abuses by credit card and mortgage lenders. with health-care reform already overloaded legislative se circuits, republicans are in no hurry to advance the white house plans for wall street. let's go to our first caller. paul is on the democrats' line from oklahoma. caller: we do need regulation up there. if we do not, it will be just like any other business up there. if you do not regulate them, they are going to continue to do the same thing that got us into this mess in the first place. the republicans are not in no hurry. all the cronies that bush build out \ t out -- one of these dayr whole financial system is going to crush. we have to regulate these people and make sure that what they do,

they are not taking risks with the public's money. anybody that is against regulation is against our government. that is about all i have to say. host: let's go to jeff on the republicans line, calling from greensboro, north carolina. what is your comment? caller: we are at the point now where we nationalize the health- care industry, we are going to nationalize 50% of private industry, and we see how that is run. we saw steve king last night on running the insurance industry, so we are on the road to nationalizing everything when it comes to industry. host: does that mean you do not think wall street should be regulated at an increased watchdog status? caller: well, look at what happened with the bernie madoff thing. the sec was given plenty of

heads up about that, but we still had that. i think unfortunately your previous caller was correct. we are headed for a financial bridge wall, regardless of -- a financial brick wall. you cannot have bankruptcy and then say, wow, that last credit- card i did not cut up, i'm just going to spend myself back into fiscal prosperity. host: this is what the president's proposals are for the regulation of wall street. of " barney frank has vowed to move mr. obama's regulatory agenda through the house but not without changes. mr. frank was with mr. obama for monday's wall street speech and said in an interview that he does not back the proposal by mr. obama to give the federal reserve sweeping oversight of the nation's largest financial firms. mr. frank says congress will

authorize a council of regulators to monitor players considered too big to fail." are those words that ring true for you? let's go to lawrence on the independent line right here in washington, d.c. caller: it is a tragedy these days to be an american. the federal government was also complicit in the financial crisis that this nation is facing. it was not just wall street. we see the revolving door cycle of wall street boys and girls going to the federal government , and the federal government going to wall street. the government is not only complicit, but their hypocrisy to do this when they are trillions of dollars in debt? thank you. host: let's go to alexandria, virginia, robert, on the democrats' line. caller: can you hear me ok? host: loud and clear.

go ahead. caller: let the republicans go back to deal with what banks use to do. then they can be regulated more easily than they are right now. there is so many derivatives and foolishness that it is hard to keep up with. putting extra fees on their credit cards and on their -- if they'd bounce a check or something, they want to charge them three times with the check was for and all that kind of foolishness. led the banks go back to doing what they used to do. thank you. host: it is interesting to read how people on wall street reacted to the president's remarks yesterday "the washington times" reports that behind the scenes in number of financial industry groups are lobbying against the president

house reforms. the u.s. chamber of commerce also launched a multimillion- dollar advertising campaign against the consumer financial petition agency -- protection agency, calling it a massive new bureaucracy with sweeping powers that will deprive consumers of affordability and choice. but how are consumers, customers, and americans viewing the financial situation now? a newly released associated press poll found that seven out of 10 americans think the federal government has not instituted safeguards needed to prevent another financial meltdown. 80% rate the condition of the economy as poor. financial institutions bore the brunt of the criticism in the poll, with 79% of those surveyed saying banks and lenders that made risky loans deserve much of the blame. let's go to debbie on the republicans line, calling from california. caller: hi. host: hi, debbie, go right

ahead. caller: i have been doing accounting for 39 years, and i think there are way too many restrictive laws and patch worked laws. i think the laws should be more general guidelines. i think the government has got way too much reach into too much business. businesses with a general restrictions will survive if they do the right thing and they will fall if they do not do the right thing. i think the government is way too into our stuff. in the health-care industry, there it was a response that was an exemption in the health-care industry back in the 1940's. it allowed bluecross to give all of its insurance to employers, but once we were 70% injured, it

opened up the market and i think -- once we were 770% insured, it opened up the market. we should get outside of our -- we should get our insurance outside our employers. hmo's were popular and they got popular in the 1980's, but it gave us this mentality of insuring for the small stuff, and that is not what insurance is all about. host: that could compete on the independent line, -- let's go to pete on the independent line, from florida. caller: no matter what regulation scheme has been devised and developed, the brokers, the wall street has always found a way to work around it. i would suggest that possibly by repealing the restrictive gun laws, it might give some

incentive to the brokers to self-regulate when they have to deal with messing up with their customers. thank you. host: let's get to some of the other financial news from the papers today. this from "the new york times" business section. "stock markets be entered on monday afternoon and the security and public company mr. obama's visit to lower manhattan were dismantled. stocks were slightly higher after mr. obama urged bank executives to accept regulations and change the way they do business." also taking a look at how americans are feeling the economy, issues like job loss from "the washington post" today. "lots of fear remains over the economy, job losses." "despite fresh signs that the worst may be over, there has been no let up in public fears about possible financial hardship and there is broad

concern that not enough is being done to prevent another meltdown. according to a washington post- abc news poll." let's go to decatur, where jenny is on the democrats like. caller: hi. my comment is, apparently we do need regulation. of course, what we actually need is honest people. but the last eight years, based on that to all of these banks, ceo's, corporations, mortgage companies, all of that, if they had gone back to these big corporations who had been giving out all of these big payouts and bonuses, why didn't they collect the money back from the people who seemingly owned the business anyway, with all these payouts, before they went to the government to ask for money? host: let's go to ralph on the republicans line, calling from

washington, d.c. caller: i trade for a living, that is what i do. i am in the market, and i can tell you with the level of corruption within the market, it is stunning there is a thing called-shorting, where the fake shares and dump them into the market. half the shares in the market are fraudulent shares. if you look at the portfolio, half of what you have in your portfolio is fake. the capture, by the ceo of overstock -- you might want to go there and do some reading. federal exchange commission is a capture agency. the mafia is deeply involved. the securities and exchange commission is a lack dog for hedge funds, they go out, rape, bern, and pillage. they collect dividends, pick them up, and knock them back

down. it is like these predatory sharks in the market who have -- how can i say? -- they have programs that can manipulate the stock up, down and sideways. unless we get down on these guys and we start implementing huge funds instead of slaps on the wrist, we start putting these guys in jail, our financial system is in terrible jeopardy. we will stop being the financial mecca of the world and people will move in the markets. host: "investors should not be punished if bank lied about merrill bonuses." "in a sharp rebuke, both bank of america and the securities exchange commission, a new york federal judge on monday rejected a proposal, saying that the settlement was not fair,

reasonable, nor adequate and said if bankamerica is innocent of lying to its shareholders, why is it prepared to pay $33 million as a penalty for lying to them?" r. question to you is, how should wall street be regulated? chris is on the independent line, calling from elkridge, maryland. caller: thank you for taking my call. i am just speaking from personal experience, with respect to the banking industry, and they are connected to wall street. i will not mention the bank's name, but my wife and i, due to no fault of our own, we had to shorts se sell our home. i can get a guaranteed b.a.- backed loan. what we're finding is is that banks view us as lending risks.

all our credit score is almost 700. they view us as risks because they view the short sale just like a foreclosure when in fact it is very, very different. we actually invested $20,000 into our house to sell it, to lessen the loss on the bank's behalf. where if we are staying in our house for over a year, not pay one penny, and going through the foreclosure process. but the way the bank's view the foresail as the for closure process -- but the way the banks view the four cr-- the sht sale as the foreclosure process -- in-line ho

host: how do you think wall street should be regulated? we have russ calling in from the democrats' line. caller: good morning. i just want to start out by saying i am a veteran and also a public safety officer. i am disabled and the line of duty, permanently disabled. i have been watching this go on forever. it started out in california, and look at what shape california is with the deregulation. now look at what shape they are in. everybody is looking to make a buck. of course, is capitalism at its finest. you get these people coming up with all these kind of conspiracy theories. it is all about the money. why doesn't anybody just put it on the table and say, look, it is all about the money. it is right there in front of you.

stop. $25 million bonus and the company is going under? it just does not make sense to me. host: mississippi, kathy, calling on the republicans line. hi, cathy. caller: i have called a few people, and i am on the wrong thing about it. i watched the other night on c- span, and they were saying that they were trying to redo the loans. they sent me -- i got two contracts. one of them had my name misspelled. i am with country ride -- i am with countrywide.

the guys told me that i had to have it re-evaluated. i did that. i had it appraised, and they wanted to charge $5,000. i got a call a week later, they send me another contract, saying, no, you do not need an appraisal, it is worth $175,000. i do not know what to do. host: let's go to robert on the democrats' line, calling from davenport, iowa. caller: good morning. number one, i would take an example of what is going on, we are continuing to do with gurus on wall street. we need to take this back down to a local level where we allow the local banks to start getting this money, and credit unions. by doing that, the people and the local banks and credit

unions know the clients, they know the market of the area. all they are doing in new york is doing things like the wizard of oz behind the curtain, coming up with crazy schemes and so forth. the other thing that is crazy to me is, they're saying how much more money do we need to spend on health care. in france, they spend 10% of their gdp. they are number one in the nation. we spent 2% of the gdp, and we are 37th hundred what we could do with that, we could add 512 dozen more police officers. we could have one more million more nurses in schools. we could have summer youth jobs for our kids. we could take $80 billion a year and give rebates, which

would provide them for 20 million new cars, and that would put wall street back on the top. we should also tell them they have to be american cars if they're selling cars and getting rebates. host: our question now is how should wall street be regulated. "with the markets slowly healing, mr. obama's plan faces a diminishing political imperative. disenchantment wby many americans with big government, along with growing obstacles from financing -- from the financial industry lobbyists. instead of learning the lessons of lehman and the crisis from which we are still recovering, they're choosing to ignore them, mr. obama said. they do so not just at their own peril, but at our nation's."

let's go to jim on the independent line. caller: i would like to say god bless you for c-span, where americans can actually sit and talk with each other. our country is going to do better, and that is the problem. it is money, money and the bible describes it as the love of money as the root of all evil. we need to follow the money and figure out where it is going and who is paying off. the lobbyists in washington are destroying us because we have allowed corporations to take over our country. it is simple, america. we do not hate each other. we hate what is going on, and we need to calm down a little bit and talk to each other and find out who the real cruooks in the room are. my wife works for a local bank. they do not have any problems.

the finance homes and cars and they do a great job. that is what we need in america. we need good, secure jobs. we cannot give everything away. corporations have taken over in the last 30 years. it is because we have been distracted. we are distracted with all the garbage on tv that means nothing. we talk about whether anna nicole's breasts might still be alive. my god, wake up, america. thank you very much, c-span. host: let's go to florence on the independent line, calling from new york. caller: hi, how're you? i would like to say i am in total agreement with our president, obama, having to regulate, because people just will not be honest. integrity seems to be out of the window someplace. i also would like for u.s. well as the newspapers to start

addressing our president as president obama, not mr. obama, because you do for our retired presidents. everyone should use the president title. i believe you should follow the current president and give him that respect. host: thanks, florence. i think what you're seeing is in newspapers. "the president's remarks yesterday intends to brief life into the administration plus regulatory reform proposals on capitol hill. do you believe it is time for the big government bailouts to finish up? are we ready to move beyond that? let's go to the democrats line

in manhattan. caller: good morning. i wanted to call to remind the people of this country that we are the government, and we do have the right to see what is going on with everybody's business. the stock market has taken us to a big drastic haul in the past years, and we need to regulate them and watch what they are doing. that is it. host: continuing on with this "financial times" peace, it is interesting to note how other governments are dealing with their financial situations. "other governments are also keen to press ahead with international regulatory reform, which will be discussed by the leaders of the g-20 countries when they meet in pittsburgh later this month. in an interview, alistair darling, britain postulate, said he would introduce legislation within the next two months to force british banks to draw up living wills so they could be

dismantled in the event of another financial crisis. the proposal will be included in a new financial-services built in november. that is what is happening in the united kingdom. we got this e-mail from p.j., the rights, "i think banking and the markets should be completely deregulated. this will force many to pull out of the market until brokerages start inculcating their own standards from within instead of spending all their time working around regulations in the market showing a false security blanket." let's go to maria on the independent line from bedford, new jersey. caller: i think it might be good to concentrate their attention by making it a capital offense to defraud the american public. actually, since there is so much goalless orientation, they should look to china -- so much

globalist orientation, they should look to china. i think we have to get serious about the enormous amount of damage they do to people's lives. thank you very much. host: another e-mail. "there is only one way to really wall street. obama needs to declare an economic state of emergency. eliot spitzer should be appointed a federal marshal and do what needs to be done. congress and the courts cannot deal with this problem." let's go to norman on the democrats' line from elmhurst, massachusetts. go ahead, norman. caller: i have to say your last caller had it right. the regulations proposed are voluntary and the banks cannot regulate themselves any more than anyone else can. it is a state of emergency and to just leave it to go status quo, which is basically what is happening, it is unconscionable. what really needs to happen obviously is to nationalize the banks, and then we stop this

crap from happening. otherwise we just interested to happen again. host: thanks for your calls during this segment. we have coming up yet on the program, next up, nicholas lardy from the peterson institute for international economics. also this morning, the merger -- zero wall street journal" editorial board member john fund, and jonathan karp, the editor of "true compass," on senator kennedy.

>> federal reserve chairman ben bernanke this morning talks about the state of the financial markets, when year after the collapse of lehman brothers. live coverage this morning at 10:00 a.m. eastern on c-span, right after "washington journal ." in the afternoon, house republican committee leaders talk about lessons learned in the past year. that is on c-span2 at 1:00 eastern. and on c-span3, kathleen sebelius testifying on the upcoming preparations for flu season, live at 1:00 p.m. >> next month, a unique look at the nation's highest court, its role, traditions, and history. >> i do not think it is an understatement to say this bill that would not be here if it were not for the persistence of chief justice taft. >> he had in mind that the court needed rebuilding of its own.

he believed that when he was president, and when he became chief justice, it was almost an obsession. >> starting october 4 on c-span3 go online now for a virtual tour of the court. >> "washington journal" continues. host: our guest is nicholas lardy, senior fellow at the peterson in this to us at the peterson institute for international economics. first of all, refresh our memory about what happened last friday, when president obama decided to do. guest: president obama acted in response to a recommendation from the international trade commission, an independent government body that looked into the case brought by the steelworkers union, complaining about the substantial increase of import of chinese tires in

the last three years. he put tariffs on for three years, a slightly lower level and the commission recommended. host: he was able to do so because of a specific ability countries have to do with china and that way. this is the law that allowed that specifically to deal with china. guest: that is right. china agreed to a provision that no other country agreed to, which allows the united states and all other members of the wto to put restrictions on chinese goods if there is a surge of sales of chinese goods into a country like the united states. the key thing is, this is called a safeguard. the standard safeguard case, the petitioner has to prove injury to the domestic industry as a result of the surge. for this particular provision, you do not have to prove any injury. all you have to do is show market disruption, which is shown by a big increase in imports.

host: what was then imposed on china, and why did china agreed to it? guest: a few other countries and united states insisted we have this extra tool to deal with china. in part, the worry was that china is not completely a market economy yet. the government might have the ability to promote exports of certain products and need an extra tool to respond. the chinese agreed because they did not have much choice. the chinese premier at the time very much wanted china to become a member of the world trade organization and was trying to use membership as a lever for promoting domestic economic reform in china, so he agreed to this provision and a number of others that are unique to china. host: this is a first time an american president enacted this? guest: this is the first time this provision has ever been used. it has been available since late 2001 in china became a member, and china was hoping that it had never been invoked. it has not been invoked up until

now. one of the reasons the chinese have acted fairly shrilly was disappointed that this was being used, and also the fear that it could be applied to a lot of other products. host: how much trade do we do with china, and how strong are our tariffs purses their tariffs? guest: we're the largest single export market for china, so the bilateral trade volumes are in the hundreds and hundreds of billions of dollars. both countries have relatively low tariffs. china's were brought down as a consequence of this negotiation to come into the world trade organization. the united states has had relatively low tariffs for a number of years, so we're talking average tariff levels of under 10%. for example, tires were subject to a 4% tariff before this action was taken. now they are adding another 35% in the first year, so the tariff will be close to 40%.

it will be a prohibitive tariffs. no tires will be coming in from china once this takes effect, which will be almost immediately. host: you can take part in the conversation. democrats line is 202-737-0002. republicans, 202-737-0001. independents, 202-628-0205. we are also on twitter, twitter.com/cspanwj. and our e-mail, journal@c- span.org. al as on the line from delaware. caller: it has to do with the 1938 act where in the government of the united states levy these penalties against imports that is detrimental to the united states market. they are not doing that, so what is happening is that most

shipments or in pmports are being brought into this country at a rate assisted by the government. the 1930 act was to bring it back on the basis that was equal or beneficial to the united states. they are not doing that. there is a flood of foreign goods coming in that prompted the outside investors, manufacturers are making. coming back to this country as revenue. it moves elsewhere. guest: it is true that this action has been taken under a different provision called a safeguard provision, section 421. it is directed against, so far, the single product of tires,

rather than across the board at all manufactured exports coming from china. so this is a narrow lead focus trade action that was taken by the president friday night. host: let's look at this piece in "the washington post close " today. "traders fretted that the 35% tariffs might prompt china to send a sign of disapproval by paring purchases of u.s. government bonds. and a chorus of economists and climate activists fretted that the president's action might undercut u.s.-china climate talks and poison relations in a few weeks before the g20 in pittsburgh. when might the fallout be from this decision? guest: the chinese are upset

that this provision has been used for the first time, and they are taking a lot of domestic criticism for this, asking the question, why did our government signed up for what they see as a discriminatory provision? no other country has agreed to this, and what are you going to do about it? so the pressure domestically, politically, is to take some strong countervailing retaliatory action. they have talked about investigating the possibility of putting some restrictions on chicken and auto parts, but they have not actually done anything yet. the other good piece of evidence is of course they have filed a complaint with the wto about the u.s. actions, so it will be subject to review within the wto, a process that will take some time and hopefully allow the pressure to diffuse within china so it becomes a more manageable issue. if that does not happen, yes, it could be harder for the chinese to compromise. they might be less willing to work with us on some of the key

international economic issues. they might be less willing to work with us on iran, north korea, and so forth. the costs could be high. the other thing to keep in mind is that u.s.-china relations are relatively in a good state leading up to this in this case, so i think we have a reservoir of goodwill to draw on. the relationship is in a very strong position, and hopefully that will provide enough ballast to get us through this without a trade war and without high costs in the non-economic areas, in the strategic areas, including climate change. host: you mentioned chicken and the auto industry. why are those potential targets? guest: they know they are sensitive industries in the united states, and if they actually moved in these areas, it would be costly to the u.s.. host: let's go to lanonnie on te

independent line from jacksonville, florida. caller: the thing that really upsets me about our government, all the vietnam and korean soldiers that died, they died in vain because our government told us at that time we were fighting communism. now, as countries hold most of our debt. -- now, communist countries hold most of our debt. thank you. guest: it is true that we borrow a lot of money from china, and china is the biggest creditor to our country, so we have this debtor-creditor relationship. the chinese, however, did not force us to borrow all this money. we bought this on by the result of our own spending habits, and as long as a country we are not saving very much and we want to invest in order to grow the economy, we have to borrow to finance that. we borrowed to finance a lot of excess consumption. so with households saving little

or nothing in the run-up to the crisis and the government running a deficit, is the savings were not enough to finance everything they needed to do, so we had to borrow. so we may not like the position that we are in, but we brought it on ourselves. host: is there much conversation in washington right now about trying to reduce that? is that even in the scope, given all the other financial issues and play? guest: it has not been widely noticed, but our need to borrow abroad has been falling over the last couple of years. the peak need to borrow was in 2006 when our external deficit hit a peak and we needed to finance by borrowing. it has come down in 2007 and 2008, and it will come down further this year. we are still borrowing, going deeper in debt, but not as fast a pace as we were two or three years ago. host: but to go to cathy, calling on the republicans line from new york state.

caller: good morning. we have had a trade imbalance for a long time. first with japan, now with china. my biggest concern is china now has been borrowing a lot of our u.s. treasuries, securities, and this is to shore up our economy. the federal government has not done much for this trade imbalance. what is going to be the long- term effect? and i think of it as loansharking. with political leveraging in congress? are we going to be able to do what we need to do if we owe them so much money? guest: well, this is a complicated question, and i am not sure i agree that it is loansharking. china is not earning very much on most of these treasury obligations they have purchased. they're getting 1% to 2% at the

most. there are holding a lot of our debt, but they are not earning very much. as to whether or not they gain leverage over us, it is a complicated picture. they potentially have leverage over us, but to exercise it they would have to start selling those securities. that would bring down the price and they would take a large loss. they have such a huge stock of these assets, they could not sell them overnight. once they began to sell, prices would fall and they would suffer very substantial losses. so it is very unlikely that they will sell those assets, and even diet -- they have never threatened to sell them. some domestic critics of the chinese government has said they should sell them, but that has not happened. i think it is unlikely to happen because it is a shooting yourself in the foot type of situation to impose costs on the united states. that would have to incur very substantial costs themselves.

host: a piece in the "financial times" to their references what you mentioned, beijing has launched an investigation into whether poultry and car parts were being dumped unfairly in the chinese market. with the financial it -- what "the financial times" notes is that trade experts and lawyers say the episode does show the increasingly sophisticated legal strategies used by beijing, and it tries to limit the economic damage. is that something you have observed as well? guest: that is a fair assessment. china does want to play by the rules for the most part. but their basic goal is to play by the rules, so they are filing a complaint to see what recourse they have in the legal process. they are not doing a unilateral

retaliation immediately imposing some restrictions on u.s. exports to china. they could not do that legally. they would be in violation of their wto obligations. so they could determine the possibility of whether they have the ability to legally do this. it is very unlikely we will have a rapidly escalating trade war because china is refraining from taking unilateral action that would be inconsistent with its obligations. host: natasha is on the democrats' line from michigan. caller: good morning. not too long ago on the david hartman show, i heard a gentleman speaking about tariffs and how -- i cannot remember whether it was in the 1930's or earlier -- that the united states' tariffs on things really were a substantial part of our budget, so therefore we did not have to go into debt as much.

now, my contention is buy and make in america. the comptroller, david walker, who retired a year ago or so -- are you involved with him? guest: he is running what is called the peterson foundation, and i am working at an organization called the peterson institute for international economics, and they are separate organizations. caller: i always enjoyed seeing him on c-span. one thing that struck me is that he said our pentagon folks were unauditable. our defense budget was so huge, it is much more than 10 times all the countries the money that we're spending on defense here. i personally am not afraid of

anybody coming in and hurting america. i say that as a mother of a 9/11 person, and i think we have to get our house in order. i remember one time not too long ago, bill clinton said, how do you treat china? he said in the morning you go and you say, would you buy some of our debt or our bonds? in the afternoon you are expected to go there and behave. and to say we do not like what you are doing. you cannot do business that way. guest: i very much agree with the premise of your question, which is we would be in a much stronger position if our own house was in order, and certainly there is the fiscal dimension of that that is quite important. we are running massive deficits, our government debt is skyrocketing. it is a major burden on future generations, and it is very risky given the levels that we're headed toward. i certainly agree with you that

a top priority of our government should be to bring our debt down, either by reducing government expenditures or raising taxes. those two alternatives are very unpopular frequently, so people in general agree that you do not want to have the big gatt, but -- to have a big debt, but when you raise taxes to have a smaller debt, it loses support rapidly. host: our guest, nicholas lardy, is a senior fellow at the peterson institute for international economics, and he has two books. let's go to jackie on the independent line in east lake, ohio. caller: good morning. we have a very huge trade deficit with china over the past 10 years. it is pushing toward $2 trillion. the trade deficit with mexico

and japan, canada, and some of the european countries, has cost the downgrading of our jobs and the loss of revenue, revenue that we have, and therefore causing large deficits here in our country. everyone keeps talking about we have got to treat china with kid gloves, however, china has taken intellectual properties from us. they spy on us, and they have been caught several times. and we sit on our hands and do nothing because our corporate structure in this country has so eroded our ability to manufacture, our ability to do for our own country because of their constant coupling with

china over manufacturing. guest: well, we do face competition from china and other countries in manufacturing, but i think it is also useful to keep in mind that if you look at the united states manufacturing position overall, we are still a very strong manufacturing country. our share of global manufacturing output is about 25%. it is far and away the largest of any country in the world, and most importantly, that share has not declined significantly over the last decade or so. in other words, we're holding our own in manufacturing. most people do not appreciate that because the headlines go to industries that are shrinking or facing difficulty or suffering competition. in the new industries that are emerging that are keeping our overall manufacturing position so strong get much less coverage. the average american does not understand that the u.s. share

of global manufacturing output has been relatively stable over the last decade or so, and we are in a very strong position. the nature of the jobs is changing, the jobs that existed 10 years ago that do not necessarily exist today -- we're still number 1 in global manufacturing by a very wide margin. host: who is helped by president obama's decision on friday? guest: i think this is one of the least understood aspects of this case. i do not think anyone will be helped by his decision. consumers will not be helped because in the short run they will pay more for tires that we get from china. it will not create many jobs because, remember, this unique safeguard provision applies only to china, so there will be no restrictions on tire imports coming from mexico, brazil, india, and another of other potential suppliers. they may not be able to ramp up production overnight, but in a

short period of time i would expect to see tire imports from those countries increasing, and they will be subject to the 4% tariff that exists for all suppliers except for china. so i think it is very unlikely that the steelworkers' union is going to gain a lot of jobs. from the economic point of view, the president's decision is completely irrational. there are going to be very little gains, and consumers will pay more. so across the economy at a whole -- so across the economy as a whole, it is a big loss. host: and "usa today," david lynch writes "15000 workers in u.s. tire plants have lost jobs since 2004. about 31,000 production jobs remain. last year china shipped to the u.s. auto tires and trends worth $2 billion, more than triple 2004's $593 million.

the president is addressing the afl-cio today. do you think the timing of this was tied into that, or was the timing more geared because of the timeline of events? guest: i think the timing is a coincidence, but the unions are supporting his decision because they hope it sets a precedent, so that when other cases come before the president, he will react in a similar fashion. host: let's go to fred on the republicans line, calling from toledo, ohio. caller: good morning. my name is fred. i was calling about the tariff on tires. i think what a lot of people are neglecting to see, the chinese do not even make a quality screwdriver.

about approximately a year ago, there was a problem with chinese dry wall that was produced with all kinds of contamination. those people that rebuild down in florida and down south, when the hurricane hit, they had to redo everything because all the contaminated drive all that they bought from china. my concern is that they cannot even make a screwdriver, and we are going to be risking our lives on chinese tires? i think that is the biggest problem. everybody wants something cheap. host: well, the chinese are supplying what we have to call the low end of the tire market. the u.s. is still a strong -- the u.s. is still in a strong position over quality products manufactured in the united states. the chinese are going opeafter a certain segment of the market.

there is a demand for tires of that type, and you or i or other people might decry that, but not everyone is going to go out and buy the most expensive tire available because they think it is safer. i think the reality is we support consumer choice. the tires of course are regulated by u.s. safety agencies, so they have to meet minimal standards. the only way to address this would be to change the standards at which tires are sold in this country. it is not a question of the country of origin, but the quality and characteristics of the product itself. that could be changed and could be raised to address the concern that you have. i think the concern that some people have on the seaside that you did not mention is that -- on the side that you did not mention, is that a lot of people may not be in a position to replace tires when they should come and they might be driving on worn out tires, which

presents a safety hazard whether they're driving on high or low quality tires. there is a potentially a-safety aspect from this action. host: how do human-rights and free speech aissues play into the situation? guest: they have been an important part of the relationship overall, but for the most part we have dealt with the human rights free- speech issues on a parallel track, not linking them closely to economic issues. that is particularly true since china came into the wto. one of the things that we had to give the chinese was permanent -- what is called most favored nation status, when we now call normal trade status. we used to review that on an annual basis, and some

congressmen would vote against that because they did not like other things the chinese were doing -- how they operate in tibet or in minority areas, or human rights issues more generally. but that tool, if you will, that approach, does not apply any more because we have given china in normal trading status on a permanent basis. so congress does not get a chance to vote on this every year. host: terry is calling from california on the democrats' line. caller: please do not cut me off. i just wanted to say that nafta has been very harmful to the united states. the american citizen, individual workers. i'd also want to say that the jobs, the trade deficit with china, even though we might be one of their larger importers or what have you, it does not touch

the amount of the deficit that we have with them, so it is still unbalanced. i want to say that with all of our corporations going overseas, with the trade and nafta, they get paid to go overseas, to send the product back to us. it is a lose-lose situation, and our corporations from wall street to health care to the trades is making the united states a third-class world country. guest: well, again, yes, some jobs are going overseas, but our share of global manufacturing remains very high, and one of the reasons is the high growth of productivity. so we are doing very well in the high-end of manufacturing with highly skilled jobs. those are the jobs that will pay the high wages that we need in this country to support our standard of living, and i do not think in the long run we will be served by protecting low-wage jobs that do not provide the

standard of living at the u.s. level. we have to continue to move up the technology ladder, the skill latter, we have to improve our educational system so we can be at or near the top of the food chain and not protect low-wage, unskilled jobs. we should not really be striving to compete with china, which has a huge pool of unskilled workers who work for much, much lower wages than we have. we have to compete at the high end of the market with more skill, more education, and so forth. that is the way we maintain our standard of living. host: "the washington post" has a list of top items exported to china, and that china's exports to the united states. the top u.s. expert to china is electrical machinery at $11.4 million. machinery, miscellaneous grain,

seed, freuit. aircraft, then plastics. the lecture, machinery, a $11 billion going to china. china to the u.s., $80 billion there. guest: that really reflects the fact that china has become the producer or the assembler at the last stage of the production process. china, for example, today makes about 90% of all the whorl's notebook computers. they are made entirely by t taiwanese companies, responding to american tummies like dell and so forth. those products are being produced in china by taiwanese companies. we used to buy them from taiwan, now we are buying from

china. this true for a very broad range of electronics, all the ipods and iphones and things like that, which are being made under contract in china. most of the high-value at a content originates in china, but it is taken from china and assembled into the final product that we buy in large quantities because of our in satiable are seemingly insatiable demand for various kind of electronic toys. .

that is my first question. what do think about that? my second question, what do they intend to do, as far as china keeping their yen so low? this whole thing about the global market, the u.s. is sending money abroad. net me put it like this, their monetary base is a closed system. there are a lot of gaps with u.s. money going to mexico, through canada, okay? to me, that is devaluing the dollar of the u.s. printing money is not the problem. printing $10 million, $20

million, you are knocking your head against the wall. guest: china has signed up for some provisions under international law. this has been a problem with us dealing with china and they have not lived at up to their commitments in the past the same is true for many emerging market economies. they are either not willing or not able to fully enforce the provisions of the intellectual property that exist in the world trade system. however, their record is improving. some companies are having success in prosecuting cases where property is stolen. compensation is still too low, but we are moving in the right direction. the most important thing is that business people in china are building their own intellectual

property and are serving as an indigenous source of demand for a credible enforcement of these types of laws. when you have a domestic demand for that sort of thing, it helps the situation move forward rapidly. on currency, you are right. they have been intervening in the market to appreciate their currency. that is why they have built up over $2 trillion in foreign currency reserves. if they had not been intervening, their currency would have appreciated more, and it would have made their products more expensive abroad. i have written extensively about this in the last five years, criticizing the chinese for their currency and exchange rate policies. they have made some small reforms, but so far, they are inadequate, and their currency

remained significantly undervalued. host: we have todaa twitter. guest: i do not think that is the constitutional requirement. i think it is required that you treat every country the same, so every country would have to bear the same tariff, no matter where it came from, but the special provision under which china came into the wto, basically, allows us to discriminate against china. i think, that one level, they are right, but the administration is also right when they say what they did was fully consistent with trade laws, and china's commitment to the wto. it may be discriminatory the way that the chinese see it, but it

is legal, given the commitment that they have made. host: next phone call. caller: i want to ask a guest a question. do you love america? are you patriotic? guest: yes, i think so. caller: what are you telling all of these lies? you have taken so many jobs from this country in the manufacturing industry. it is said that people like you have a job. -- sad that people like you have a job. guest: this is a trend that has been clearly under way for five decades, and perhaps even

longer, since the 1950's. we have been producing goods that are smaller and smaller, wages are going up, living standards are going up as a result, and that is a trend that benefit our country and the people that work in the manufacturing sector. host: chicago, illinois. on the independent line. caller: i heard the other day on one of the major news stations that we pay 60 $500 million -- $65 million a day in interest, and i wonder what portion of that goes to china? guest: i do not recall exactly. remember, most government bonds are held by citizens. maybe you do not, but there

could be some in your pension, ira, perhaps another investment account. but the share of our government debt shared by foreign-born is has been steadily growing, and i do not remember the exact amount, but it is something around 40%. china is the single-biggest holder of u.s. debt, but there are many investors that are also holding at around the world. this would be a guess, but if you took the total amount of interest we are paying on our debt, which is significant and will be growing, it will, or a larger share of our government budget every year. certainly, the amount china is getting would be well under 10% of the total. host: we have a question on

twitter. is that a possibility? guest: this is the unfinished civil morwar. china would like to reunite the island with the mainland. so this is an issue that has been an outstanding for about six decades. people that follow this closely say that the situation has improved. a new government has been elected fairly recently. they are now having direct trade flows, direct shipping, direct aircraft movement, and so forth, so the tension has been reduced. the chinese, at the moment, seem prepared to wait.

eventually, there will be reunification. the part in that supported independence for the island is now of of power, so i think the situation has stabilized with a bit. that does not mean that they will try to take back the island. host: phyllis from illinois. caller: i could care less about the global economy. the american economy is where i want you to direct your thought. our country has gone to the bottom of the pit dealing with china, sending us poisonous goods, a poisonous foods, a 100- year lease from bill clinton, getting his daughters had to fund rich. our wealthy corporations are taking from the middle class,

the american people. we do not need to be shipping anything in here except for maybe bananas, coffee beans, and oil. yes, they are manufacturing foreign cars here with all of the parts coming from overseas. you should be fired. guest: the option that you began to sketch out is certainly a possibility. we could revert to self- sufficiency and not depend on any other imports. you did mention bananas and oil. if we did not, our living standard would shrink dramatically, gdp would shrink. we would be dramatically worse off if we did not have any significant foreign trade. host: robert in orlando. republican line. caller: when you talk about

manufacturing between china and america, democrats always talk about the labor and republicans always talk about taxes. isn't the biggest factor in american manufacturing raw materials, environmental laws, and not being able to get raw materials here? our local newspaper has to get their resources from canada. we are cutting down forests here but we have to import our paper. what will happen when cap and trade comes in? guest: raw materials are a factor, but perhaps not as much as you suggest. if we could sort pulp more cheaply in the u.s. demand in canada, i am sure that we would do that. i know there are required a bit of timber for pulp in the southern part of the united states.

maybe they can buy it cheaper from a canadian source, but we are not dependent on them for newspapers. when cat and trade comes in, there will have to be some adjustments to the system so we do not have what we refer to as leakage. if we make it more expensive to produce goods that commit the greenhouse gases, production may simply go overseas unless we have cooperation with other countries so that whenever regime is put in to limit greenhouse gas emissions is applied a relatively equally. if we do not have that, there will be a massive migration of industries and jobs, seeking out the least-regulated location. that would not serve any good purpose, in reducing greenhouse gas emissions, and it would not be economically efficient in

there. so we need some coordination in the regimes that we have, and that is certainly one of the things we are trying to accomplish at the end of the year in our negotiations in copenhagen. host: and david in that and rouge, louisiana -- baton rouge, louisiana. caller: thank you for c-span. talk about the motivation for this tariff at this time. earlier, you mentioned that we have a fairly good political relationship with china. what is motivating the government to make this move, at this time? is it the industry itself, is it a strategic move by the government? guest: the organization that picked tires was the

steelworkers union, who represents the workers in the tire industry. some believe that these terrorists could be detrimental to the tire industry in the u.s. have said this was strictly brought by the labor union representing the workers. the government had to respond and look at the merits of the case. as i mentioned, the international body recommended terrace be put in place, said this was not a government reaction directly, it was a response to the petition from the union. as i indicated, the strategy will be to bring similar cases covering other products and hope to get a comparable results. why did president obama go along with the itc recommendation, at least most of it?

you certainly can read what he said. he believes it will build support. we have to enforce our trade laws if we are going to we live in a globalized world, and he is right, that you would be naive if you did not realize that this was a political payback for the union that supported him in the campaign. host: nicholas lardy is a senior fellow at the peterson institute. he is also an author. thank you for being with us. coming up, john fund will be with us, and editorial board member of the "wall street journal." we will also be speaking to the editor of ted kennedy's book. now for a news update. >> tim geithner spoke earlier on

"good morning america" and said the president is committed to the no middle-class tax increase pledge, adding that things are better but no recovery will be under way until jobs become more plentiful. as for military operations, the administration is holding off on deciding if more troops need to be deployed to afghanistan. this and several congressional members are expressing doubts about whether they can win there. meanwhile, admiral mullen will tell the u.s. why they should stay the course in afghanistan and commit to what he calls a properly-resource commitment. in iraq, the journalist to through his shoes at former president bush said he was tortured during his first few days in custody. the man was freed today after nine months in prison. after a 60-day review of the

nation's terror alert system, a task force will recommend that the administration keep color coded alerts, but reduce the number of callers to to read. currently, there are five. -- to three. host: a question for you, what happened to civility? two newspapers have that as their headlines. looking at a series of incidents that have happened in the past week. this in "usa today" -- a spotlight on bad behavior. they write --

they also discuss serena will iams and rapper kanye west. what do you think about this idea of stability? next phone call. caller: civility died this year. you can tell from the tea parties. i'm going to talk about knaye and serena, too, but i want to

make this quick. i watch three hours on those two parties. what is so ironic is you did not hardly see one sign that pertain to george bush. not one sign that pertain to the republicans. it was all anti-obama, anti- democrat. all i have to say to these tea bagging t partyers, where was enrage would george bush? now to the other things. as far as kanye goes, i am not a big country music fan, but taylor swift right to all of her songs and i appreciate her tell them. he was a hell of line -- out of

line. however, he is an egomaniac. as far as serena, she was simply vexed. now i hear the lines woman saying that she was trying to kill her. i am not advocating her behavior, but let's talk about john mcenroe. i love him. he made the game exciting. they are coming down on her 20 times harder than they ardid wih john mcenroe. host: next phone call. caller: good morning. on the stability issue -- stability issue -- civility issue. it is definitely a problem.

the root cause of this lack of civility is people's lack of respect. i do not know what has happened to self discipline, but we have not been teaching it. host: as a republican, what do you feel about joe wilson's comments last week? caller: i am proud of him for not apologizing twice. he was out of line. i guess he was overwhelmed with anxiety and spoke out of turn. he has apologized and that should be the end of it. apparently, that is not the end of it, but like i said, this stabilitcivility thing, people t have it anymore. host: next phone call.

caller: i love your show and i appreciate you putting out both sides. my issue is, i see children all the time -- i am in the restaurant business -- and i see children all the time with no man is what ever. then you see a nice family with kids to will ask you properly for certain things. it just thrills me to hear it because i hear it so seldom leave. first of all, civility is taught at home between siblings. if not, it will not be out there in the public forum. another issue is the media. whenever anything happens, the media and jobs all over it and exploded into the biggest issue of the day when we have so many other problems. if they could just let some of

the bad behavior go after reporting at once or twice, it would not be pounded down as something to be looked up to buy young kids who have no ability to know right from wrong, or we get over it. host: frank on the democratic line. dalton, ga. caller: civility, it is funny -- you look at the situation with kanye -- host: let's keep the subject on congress and perhaps washington. do you have any thoughts about congressman wilson? caller: hello? host: any comments about those

remarks or the demonstrations in washington? we are going to move on to lewis from baltimore, maryland. caller: i think the reason people are less civil, they are under more stress. you consider the unemployment rate, the foreclosure of homes, loss of health care, problems in the city with increased homicide rates, like in the area that we live. kids not performing in school, the loss of money, pension plans that are broke. we receive letters every day saying that they may not be able to fulfil the pensions in the city. it is odd that we expect anyone to be civil. i heard someone arguing because

someone was driving too slow and another person wanted to hit him. i do not think you can expect people to be civil when you had the last speaker on they're talking about the gdp. we should not be talking about the gdp, but our gross national product is all our factories all over the country. that is trillions of dollars more, but they do not amount to express it that way because of taxes. when people who are supposed to know better do not explain things correct to us, we want to say, yes, everyone is lying because we are being treated like kids. thank you for listening to this old man rant and rave.

host: let's move on to madison, virginia. house democrats will be voting on whether or not congressman wilson should be censured. what do you think about that? caller: i think it is a lack of honesty that is breeding a lack of civility. children are indoctrinated by commercials that teach them suddenly how to lie, just to sell a product. i believe that he lied, about getting us out of iraq, cutting the military budget. sullivan problems by military force. -- solving problems by military force. where is the stability in that? -- civility in that?

caller: congressman wilson's comments, that came from his heart. if the president is going to address them, he should do it, and that is it. this grandstanding every two minutes -- and they applaud -- just the whole thing is ridiculous. host: keith on a democrat line in austin, texas. caller: and joe wilson has violated house rules by his failure to apologize to the house. it is not just apologizing to the president. he has to fulfil those rules and apologize to the house. if he wants to act like a civilian, he has that option, and i understand he is a colonel in the army reserve and is

subject to court martial for the way he treated our commander in chief. i believe that he should have the book thrown at him and have them court-martialed. we cannot have these people acting like a bunch of brown shirts. civility is exactly what we need, but he is refusing to apologize to the house on the house floor. that is where he is violating the rules of conduct. host: we will be back in a moment with john fund, and editorial board member of the "wall street journal. we will also be talking about ted kennedy's labook. >> ben bernanke talks about the state of the financial markets one year after the collapse of lehman brothers. live coverage starting at 10:00

eastern. in the afternoon, house republican committee leaders talk about lessons learned in the past year in the wake of government intervention in the markets. that is at 1:00 eastern. at the same time, 1:00, on c- span 3, kathleen sebelius testifies about the flu season. >> next month, a unique look at the nation's highest court. >> i do not think it is an understatement to say that this building would not be here if it was not for chief justice taft. >> he believed they needed a voting body. he believed that when he became president as well as chief justice. >> starting october 4 on c-span. go on line now for a virtual

tour of the court. host: "wall street journal" columnist john fund joins us from new york city this morning. guest: thank you. host: talk about some of the things that you have been looking at recently. we are on the one-year anniversary of the collapse of lehman brothers. what is your take on how president obama addressed wall street, and what he is calling for? guest: the president has a lot of good will on wall street because everyone wants the economy to recover. the problem is, despite his good will, there is more uncertainty in our economy today than we did a year ago. we do not know where government policy is going. we have created this t.a.r.p. fund. the bush administration started

it and the obama administration continued it. rather than reducing the money, because originally congress said that the companies that received the money could pay it down and that would go to deficit reduction, but instead is going into a revolving fund that may do more bailouts. and then have the nationalization of certain industries. general motors became government motors. we have a ballooning deficit. 46 cents on every dollar the government spends this year will be borrowed. on the plus side, the president has done a great job inspiring people to say that we should be looking to the future with confidence, but his policies are driving more uncertainty. investors look at his policies and say, are these the policy that are going to convince me to put my money into the game, hire people and create jobs? i'm skeptical of that.

host: let's take a look at some of what president obama said. >> while full recovery will take a great more deal of time and work, we are beginning to see signs that we are returning to normalcy. here is what i want to emphasize today. normalcy cannot lead to complacency. unfortunately, there are some in the financial industry who are misreading this moment. instead of learning the lessons of lehman brothers and the crisis from which we are still recovering, they are choosing to ignore those lessons. i am committed to say that they do so not only at their own peril, but at the nation's. so i won everyone here to hear my words. we will not go back to the days of reckless behavior and the unchecked access that was at the heart of this crisis. we're too many were motivated only by the appetite of quick kills and a bloated bonuses.

those on wall street cannot resume taking risk without regard for consequences and expect next time american taxpayers will be there to break their fall. host: john fund, how is this message being received on wall street? guest: very good words and rhetoric, but his action does not seem to link up with that. we have this t.a.r.p. money. people expect companies in the future, if they are too big to fail -- whatever that means -- unable have access to that money. the secretary of the treasury was asked by jeb hensarling, what company is too big to fail? can you draw the line for when the government could step in? he did not have a real answer. my problem is, in washington, you always want what they do,

not when they say. in the case of president obama, he is setting up conditions by which we have enormous amounts of money available for bailout, no guidelines on who gets it, and i think a company engaging in risky behavior should be excused from banking that if we got in trouble, everyone else has gotten a bailout. host: what is your stance on executive compensation, the large payoffs that have been called into question? callerguest: certainly, if you e enormous subsidies from the taxpayers, they should be concerned, but the real concern is not issuing these bailouts. they need to do with the consequences of their actions. i think shareholders need to be

much more attuned to compensation and should crack down on abuse, but the federal government is not competent to make those decisions. we have seen, just in cash for clunkers, how bad the government can make targets. host: let go to our first caller. albert on the independence line. -- independent line. calling from louisiana. caller: i have to agree with what you have said. you have to watch what obama does, not what he says. what he does it is the opposite of what he is saying he is going to do. he says he wants accountability

but he has given more power to the same people that put us in this problem to begin with. how is that accountability? how is that holding anyone to the task? if anything, we should be putting these people in jail. we want to get our financial problems in line. we should be listening to ron paul. we need a sound monetary system. host: any comments? guest: it is true the federal reserve did not distinguish itself with monetary policy. it had too easy a policy that flooded the market with cheap credit. we were encouraging people to take home loans that they could not carry, if interest rates went up, and if the market became soft. i think the federal reserve, rather than getting new powers,

frankly, powers that are probably not find unconstitutional limits, should instead go back to square one and focus on monetary policy and get out of the business of investing in american bailout what we have right now is a system in which the federal reserve is becoming the largest investor in many american companies. host: in july, he wrote a piece talking about who you see as being the victim, including young people and seniors, under health care legislation. talk more about that. at this point, as much recession develops, do you see any potential winners? guest: i think lobbyists and bureaucrats will be big winners because they will exercise a lot of power over how of the economy is spent. i believe we need comprehensive health care reform. the system clearly cannot

function in the future. 47 cents of every $1 right now fed by the government is on health care. medicare is basically insolvent. if we start cracking down too much on medicare, we will have problems where people are charged $50 for a cotton ball. having said that, i think this obama's health care plan, regardless of which version you look at, will have a lot of victims, and they have not been informed of the cost they will be asked to bear. young people, how many people know that they will be paying much higher premiums than the risk-adjusted age factors would to just? young people are healthy, they should pay lower premiums.

but in the plans being discussed in congress, they are going to get sticker shock because they are going to get health care premiums closer to what seniors pay. then there is medicare advantage. a quarter of seniors on medicare belongs to a program that provides benefits but is provided by private companies. often, they provide better care. those programs are going to be cut dramatically because the democratic congress does not like the private sector involved in medicare advantage. in florida, seniors are pushed back on traditional medicare in order to get the same level of benefits but they will have to spend about $3,700 a year more. and then there are health savings accounts. these are high deductible policies that you can buy where you pay for your own cost in

your coverage for catastrophic illnesses. 8 million americans are covered by that, but obama's plan would reduce the amount of land available to people and i think the market will eventually dry up. there are millions of americans who will not be able to keep the coverage that they have now. they might be able to for a couple of years, but as the government sector expand, private choice will shrink, and people will end up with coverage that they may not like. host: washington, and jim on the republican line. caller: i don't understand why they can take our social security. they can cap it but they allow our premiums to go up.

in just upsets me terribly. -- it just upsets me terribly. and they say no times as are going to go up, and things like that. anyway, i wish someone would jump up and down about them capping our wages. callerguest: even though social security was set up, not as the retirement plan that was going to pay for the cost of seniors in their golden years, but basically a supplement to the private provision that people could make. the message basically was that social security would take care of your needs. clearly, it is not. it is on the way to insolvency.

seniors cannot live on social security alone. i blame people, in part, for not making their own provisions, but the government was telling people that they could count on social security. now we have a situation where the government will renig on their negotiations. i think we are going to see continuing cuts in social security benefits and i think the people in the future should have to look to themselves, their own pension plan, their own retirement plans. i want social security continued, but it is not a program that seniors can depend upon. host: jack from lynchburg, va. caller: i have been watching obama and the things that he

promised in the first 100 days. he did not deliver. i have been a democrat for longtime but i do not really care about parties anymore. this does not affect just republicans or democrats, the poor or the rich. it is affecting everyone. this social security thing, i paid from age 14 to age 38. that has come from my money and social security is not going to be there, so they should give us that money back. guest: senator jim demint of south carolina had a proposal a few years ago to take the money that was ostensibly there in the

trust fund, and give it to people as individual accounts to supplement their social security. they would own that account. if you die, you cannot give your social to security benefits to anybody. so you would have this social security, your own individual account, and you could draw on that, but it would be your ownership. unfortunately, the senate turned that down under president bush. in the end, we have to look at different plants. 30 nations around the world have gone to private plan to supplement their accounts. the stock market has had its ups and downs, but over time it grows 5%, 7% a year almost without fail. we may have to look at something like that to supplement social

security because otherwise people will continue to be squeezed and seniors cannot live on the benefits that government provides them. host: you have written about the community organization group acorn. the senate move to block giving grants to acorn. tell us about your take about whether they are representing public opinion, and what they should be -- what should be done next. guest: acorn is a tough case because they are there to help tough -- people who are having problems, minorities and disadvantaged people. eight board members were fired last week. what was their problem? they wanted a top to bottom audit of the organization's books. the chief financial officer recently embezzled $1 million but still kept his job for eight

years. rather than having an up and down audit, they fired the dissident board members. this is astonishing. acorn gets enormous amounts of federal funds acorn housing was a major contributor to the subprime were due to mass. how? they would say that they would lobby commerce -- congress unless they reduced lending standards. we had ridiculous standards like no downpayment mortgages. the investment act than they used was not the only reason that we have the financial meltdown, but certainly in was a contributing factor. for this group, which has now been caught on hidden camera, aiding a sex slave operation in baltimore, washington, and the new york, finally spoke to the senate. they voted to keep acorn funded

by the government just last march 54-33. now with these hidden videos, the senate reversed itself, 83- 7. only seven senators voted to fund acorn. now it is incumbent on the house to vote on this. nancy pelosi has six times prevented a vote blocking acorn from federal funding from reaching the house floor. now let's see what the house does and if speaker policy allows a vote on acorn funding -- pelosi allows a vote on acorn funding. host: in response, the group is saying that it is not a widespread problem and has even filed a lawsuit against fox news. guest: apparently there are more videotapes. i do not know how many more you need to have to create a pattern. in addition, they claim the

video tapes are fabricated and to not properly represent what happened, but they are at the same time firing employees. host: herbie on the independent line. long island, new york. caller: what do you think is going to happen with all of the bailout's, cash for clunkers, all of that stuff. what is going to happen in the near future? how come no one is talking about our currency? guest: i think concern over the value of the dollar, and policies are continuing to decrease the value of the dollar

right now, and that is why you see the flight to gold. gold it is around $1,000 an ounce right now. that is a lack of confidence in the government. more and more people are hedging their bets against the dollar. i think what we need to do is return to stable policy that increases the value of the dollar, it increases our competitiveness, in increases confidence in our financial future. it is very sad that the communist chinese are lecturing us on fiscal probity. the balance that you asked about are probably going to happen in the future. when have we said no to bailout in the past year? we have nationalized companies like the car industry. president obama is now proposing a financial board of five members that can dictate what kind of financial products are available.

melodramatically drum up investment opportunities. -- that will dramatically dry up investment opportunities. i think we need to step back and thing, do we want to step back and go in the direction of europe? i love them, but they have high unemployment, low productivity, and low job growth. i have to say, america's economy has prospered, in large part, because its policies have been distinct from interventionist policies in europe. host: next phone call. linda on the republican line. caller: i have more of a comment. you stated that you did not understand what "too big to fail m meant. -- too big to fail" meant.

when a company is a large part of an economy, and it fails, it takes that part of the economy with it. bailing out the company, it saves the economy. therefore, i do not see every company come forth, saying they need to be bailed out -- that will not happen. the economy has to be large enough to affect the whole economy. guest: how large is that? the problem is we cannot seem to find a company that we say no to. when congress passed t.a.r.p. bailout, it specified money would only go to financial institutions. suddenly, the bush administration decided that general motors and chrysler, which makes cars, our financial institutions. i think we have crossed the line. we might say that we should only

bail out companies that are intertwined in the economy and will keep the financial system flowing, but in the end, everyone will be looking for a bailout. if you say yes to often, you will eventually say yes to everyone, and that will start risky behavior. risky behavior is what got us into this mess, so we are drafting policies that will get us further into the problems because people will be counting on the government to bail them out. host: john fund is a columnist for the "wall street journal." he has also served on the editorial board. what do you think the political effect will be of the tea party movement? will we see it continue, have we seen in make a difference so far? guest: i think it is an expression of the tremendous frustration americans have. clearly, they were dissatisfied with the bush administration,

they wanted change, but this is strange that they did not expect or want. they are seeing their country turn into a giant debt producing machine. we are adding trillions of dollars to the debt. that was a concept that did not even begin when i started writing in washington. we have moved from millions in the 1930's, to billions, and now we are talking about trillions. president obama has very good intentions but i think he is pursuing a policy that are very reckless. look at the student loan program. the government is taking over the program. that decision is going to add $1 trillion to our debt. it is the intervention last position that he has that is fueling the tea party movement.

i am not saying that everything that they do is in good taste, but at the same time, i have seen union members beating up tea party yeargores. i think they are an authentic expression of american democracy. we saw protesters against iraq in 2006. we should be doing this the same host: brooklyn -- same. host: brooklyn, new york. brandon is on the phone. caller: i really believe barack obama is doing everything he said he was going to do. one thing i have learned is when there is a system, a place of employment being run into the ground, new management takes over, in any institution, and

you have someone making change, the status quo generally fights against it. when you see everyone up in a tizzy because the status quo likes the way that things are going, and you see the media -- i cannot remember a time in our country -- i remember once we really got information from news. now we have shrill people like this guy, and others that come on with propaganda and why to the american people -- lie to the american people. guest: well, i guess the less ability -- the civility that we called for does not really

exist. i think 24-hour news is a great thing. we used to have three national magazines, 40 talk radio shows, but now we have a plethora of information. the internet provides us with pretty much everything. we have c-span. 24-hour news channel. you can choose your preference. i think everyone still has an obligation to report the news accurately, but the content and depth of coverage -- you have a choice. you are watching c-span because i think it is one of the best unbiased sources of news. host: dianne from the independent line. fresno, calif. caller: good morning. that last statement, i disagree with that.

you basically center and other guy. guest: i didn't finish -- i did not cut him off. host: and i only cut them off when we are ready to hear a response. caller: ok, i watch c-span ala. i see some changes in your programs. -- a lot. i switched around, look at different stations. you are talking about acorn. i believe that, but i also believe they should investigate 9/11. i believe they should investigate the 2000, 2004 elections there are a lot of things to investigate. there is wrongdoing in every entity. why are you just focusing on

acorn? yes, they are doing something wrong, there should be an investigation, but there are other things that are affecting our country gu. guest: there are lots of social problems that we need to look into. i was one of the first that call to investigate 9/11. the bush administration opposed that. i am glad the commission came out because we got a lot of information from that. congress has had committees to run the range of federal programs. all of them could do a better job of making sure our tax dollars are spent more wisely sadly, i think congress has failed in their oversight functions. this congress, in particular, is not looking at the federal programs that were forced through in the stimulus program. that was about $800 billion of federal spending. everyone can agree that that amount of money cannot be spent

quickly without a lot of fraud and abuse. host: how are republicans facing the midterm elections? what would be considered a success for them? . this year we have democratic governors -- governor in new

jersey and democrats controlling the virginia governor's race. right now the republican challengers are leading. if they end up winning in november and we have not had the final votes on health care before them on november 3, i think that may affect how people vote in congress. before we get to the 2010 midterm elections we have the real bellwethers in virginia and new jersey to look at. host: let's go to georgia where fairland is on the democrats' line. caller: this is what i would say. it is strange that we came back to where we left when jim crow was here. all the signs being carried. all that shows me is that racism is still alive and well in america and every time you all have someone on your show, it is always caucasian people. you never get the black perspective. wake up, black america, they are trying to do the same thing. that is what i say to you all.

guest: well, i am sorry the caller feels that way. i think there is racism in america but h i see lots but hued face is on c-span and i would like to know specific examples of signs she objects to. host: there have been criticisms that the tea party protests in the weekend had racist overtones. you agree? guest: i saw signs that were in bad taste, perhaps, were misspelled. i did not specifically see signs that had racial overtones. i would be happy to learn more about them. host: massachusetts. ronald is on the republican line. caller: i would like to address your comments about the stockholders taking responsibility vis a vis executive compensation. when you consider how diverse the stockholder community is, how would we accomplish this? you have interlocking

directorates, you have major stockholders, principles, in corporations. when you have mutual funds that have a vested interest in the return on their investment, whether or not it is an accurate, reasonable return or whether for agilent -- how would you accomplish this utopian dream of having stockholders gain more control over how a company is regulated? guest: more control is not a utopian dream. i think it can be accomplished by having stockholders recognized that the performance of companies as often determined by the actions of the board of directors -- directors and the often rubber-stamp. i think the board of directors should be given more liability over their decisions. i think if they fall asleep at the switch they should be liable for that. and i think the executive compensation committees that they set up should be far more transparent. i think they should communicate

much more clearly to the stockholders exactly what they are paying people and the justification. knowledge is power. i think if people who own stock recognize the exact -- executive compensation committee is making decisions on an illogical or favoritism basis, there may be changed. do i expect perfection? nope. but i believe we can expect improvement. host: jane on the independent line. caller: i'm always curious why the president is focused on our constitution -- these bailouts are not constitutional. we have a very short list of federal powers in the united states constitution. all other powers are vested in the states. we were founded on states' rights and a very small federal government. health, education, welfare, acorn, bailouts, etcetera,

etcetera, are not constitutional. we need to strictly construed best government document ever written in the history of civilization. get back to our culture, declaration of independence, constitution -- we also need to brush off and dust off washington's farewell address. he predicted all of this and warned us, and so did jefferson. jefferson said when they find the key to the treasury dave will be plundering. let us quit being so civilized and call it what it is, plunder. guest: "the law" was a book that greatly interested meet as a and person and it made several of the points you make. in crisis we often been the constitution beyond recognition. in the 1930's the supreme court held there would be two levels of scrutiny of actions of congress -- one on basic civil

liberties such as free speech, and another standard on economic regulation. well, i think the same standard of constitutional scrutiny should apply. is it something the founding fathers envisioned or sanctions, or isn't it? i think we've bent rod constitution to almost the breaking point. i think one thing we have to hold congress accountable for is this. they often have the excuse, we can pass anything we want and the courts will decide the constitutionality. there is a problem with that. everyone takes an oath to uphold the constitution. if you pass something blatantly unconstitutional or beyond the parameters, your option should be, we amended the constitution. we have amended over 25 times. if there is a crying public need we can go through the process. you don't pass unconstitutional legislation and dump it on the courts often filled with activists who decide the constitution is what everyone did to be, they want to use it as a way of writing social

policy from the bench, and they are not elected. that is not their role. host: reflecting on the economic situation of the past year, if president obama had not have the stimulus package and congress had not agreed to go along, where do you think things will be back? what would we be looking at that is different today? guest: i think we would be looking at a lot less waste in government and not much difference in the unemployment rate. remember, we had a first stimulus. president bush's stem a lush -- president bush's stimulus. basically writing checks to people. it had almost no effect, none. so, instead of revisiting back and thinking maybe we should try something news, like declare a tax holiday -- we could have spent all the money was spent on the stimulus bill and simply told everyone for the next year you don't pay any payroll taxes and you don't pay income taxes. that would have been economic stimulus and people would have made their own decisions on how

to spend on behalf of families. instead, a giant pork barrel bill. not my opinion, but the opinion of respected budget analyst. it was very little stimulus. it was wish list for congress were earmarked and pork barrel projects. much of the money has not been spent. so if you want stimulus, the way we conduct the package meant perhaps 20% of the money has been spent and so far had very little effect. unemployment is 9.7% in probably rising. i don't expect this thing was package to create permanent jobs. it will create temporary jobs. we need government policies that create investment opportunities and an economic climate where people want to get off the sidelines and put their money into productive use and hire people for permanent jobs and not make-work jobs. host: 70 is calling from michigan on the democrats' line -- the city. caller: i used to work in banking. i used to work for a small,

community bank. we did it the right way. guest: community banks are thriving because they did not make the poor decisions. caller: but we had regulators and auditors, inside and out. we did an odd it quite frequently. i know, i had to pull files and work with that. what i would like to know is where were the regulators in the the early 2000's -- 2001 through the early years, 2005? the reason why i'm saying that is the recession started in 2007 but that had to have been indicators prior to that that we were getting into a bubble and then there would be a downturn. another thing, just very quickly, i knew there was a huge problem and i'm not as well educated or as well connected as maybe some people, and while we

were all looking at the convention's last year and we were all looking at the same kind of bad blood between the parties and getting all ginned up into the game of it, i saw a headline, gm had to work out of their cash reserve to pay for their expenses at the end of august of last year and into a september. so, i knew then. i thought, something is going on with the credit market. that doesn't make sense. guest: there were more -- warning signs everywhere and i pick it started very early. remember, fannie mae and freddie mac were caught cooking the books in 2004. basically at least fannie mae was lying on its account sheets, overcompensating its officers and hiding that appeared in 2004 -- 2002 we had the collapse of enron. it should have. it was a ponzi scheme. it went out of business immediately. 17,000 people lost their jobs.

but the bleeding stopped. it went out of business. the bad practices ended. in 2004 we caught the fannie mae cooking the books. what did we do? there were a few people who were let go but otherwise fannie mae, which had taken over 70% of the mortgage market, was allowed to continue. in fact, congress pump more money into fannie mae and freddie mac. this was adding gasoline to the fire. we should have stepped back and said, why are we having these incredibly large quasi- government bodies that operate like private companies that have an implicit guarantee from the taxpayers. we made the situation worse. fannie mae and freddie mac continued to put out home loans that they should not have done and we ended up with a house a bubble that finally collapsed and help -- to the meltdown. we had the lessons in front of us and we chose to ignore them in 2004 and in 2005. everyone did. host: mary on the republicans line from hancock, ky.

caller: good morning, ma'am, good morning, sir. i would like to say i am part of grass roots efforts but i have never been out of my home. if they would like, i would like to send them some grass from my lands. the thing is, i am not a racist and our president is part white, he is half white. i have no problem with black, white, green, purple, whatever. and i think all of america needs to join together -- and also my husband is a union man. he has never given any money to any political association. he believes in working hard and getting what he paid for, and then we pay our taxes just like everybody else does, and he would give his shirt off his back. and i would like to know why we cannot, whenever you go to reelect somebody, they give a

whole bunch of money to reelect this person -- instead of giving a whole bunch of money to reelect this person why can't we buy back america? guest: the caller made the point about racism obviously being raised in politics. look, i think we have had a corruption of our language. i think name-calling has become a substitute for thought. i don't think it is productive to call people communists, i don't it is productive to call people fascists, i now think it is productive to call people racist unless there is clear and compelling evidence that they fit in those categories. i think using terms like this is often a conversation stopper. it means, i am not willing to debate you, i will just impugn your motives and say you are acting out of ill intent, you hate people or you are trying to destroy this country using systems that are foreign to us. and i think we should stop and sit back and say, it is all right to say the policy is wrong. it is all right to say it is misguided. but don't attach associations or motives to people unless you

have clear and compelling evidence that it is there. host: what about signs showing the press and perhaps as a monkey or some of lives as a tribe in africa? guest: those are completely ridiculous and beyond the pale. they should be out of polite society. of course. host: 2 was a much joining us this morning. guest: he is a columnist for "the wall street journal." next we will talk about ted kennedy's book "true compass." >> vice president joe biden landed in a baghdad a short while ago. the white house says the previously unannounced trip, his third this year, will feature meetings with u.s. troops, iraqi leaders, and members of the united nations mission in that country. the commerce promises retail sales rose nearly 3% last month after falling in july, beating analysts' expectations.

also rising, wholesale prices. the labor department says prices rose nearly 2% in august, higher than economists had forecast. wholesale prices fell in july -- both months heavily impacted by energy prices. finally, a group of american indians who find the washington redskins named offensive once the supreme court to take up the matter. the seven native americans have been working through the court system since 1992 to have the redskins trademark declared invalid. a lawyer for the group says he would like to see the court decide once and for all whether the redskins' name defames native americans. those are some of the latest headlines on c-span radio. >> federal reserve chairman ben bernanke this morning talks about the state of the financial markets one year after the collapse of the investment bank lehman brothers. we will have live coverage at 10:00 a.m. eastern on sestak right after "washington journal." in the afternoon, house republican committee leaders talk about lessons learned in

the past year in the wake of government intervention in the financial markets. live at 1:00 p.m. eastern on c- span2. at the same time on c-span3, health and human services secretary testifies on the preparations of flu season. >> next month, a unique look at our nation's highest court. its role, traditions, and history. >> i don't think it is an understatement to say this bill would not be here had it not been the persistence of chief justice taft. >> he had in mind the core needed a building of its own. he believed that when he was president and when he became chief justice it became almost an obsession. >> supreme court week with insights from historians and justices, starting the tempore on c-span. go online now for a virtual tour of the court, historic photos, and more, at c-span.org/supreme court.

>> "washington journal" continues. host: our guest, jonathan karp, publisher of "12" and worked on senator ted kennedy's book "true compass: a memoir." thank you for being with us. >> thank you. host: how this will come together? did senator kennedy approach you? how did it all happen? guest: senator kennedy retained one of the best lawyers in washington, bob barnett, that represents most of the washington officials to write major auto there are birds -- biographies. bob contacted several new york publishers about two years ago, at around factly this time we met with senator kennedy at his home in washington. and he was incredibly impressive. he told us he wanted to write a full and i must account of his life. he wanted it to be personal history.

but he also wanted it to the national history. the two were intertwined. he wanted it to be the story of his family, the roles that his brothers and parents have played. his parents with all the people in american history to raise three united states senators. so we were very excited about it and we decided to pursue it and we were fortunate enough to prevail. host: tell us about the process. senator kennedy talked about early on how he and his wife would read it and retreated to a server. share with us your involvement and how the process went. guest: reading it aloud to each other, that is something they picked up from david mccullough and his wife. senator kennedy was a big fan of david mccullough's work. and he wanted this book to have that same kind of historical richness. i think it does, actually. in working on a book he had

quite a lot to draw upon. he has been taking notes for 50 years. axillar longer than that. we actually had no to that it took notes when he was 7 years old, he dictated them to his governess after he received his first communion, which was from the pope at the vatican. in 1960, when he was campaigning for jack to, first president to campaign, -- after every meeting he had with a major leader or unborn trip, he would take notes and he was dubious and diligent about we had over 50 years of notes which i had the privilege of reading. he also participated in an oral history project at the university of virginia. i believe he was the first senator to be part of this very extensive oral history project. so, there were thousands of pages of documents that we were

able to work from. and in addition to that, to collaborate on the project, ron powers and i met with senator kennedy for hours, days on end, at his home in hyannis port and washington and miami over the last year of his life and we interviewed him and we were able to get even more detail. it was an extraordinary experience, probably the most extraordinary experience a lover have. host: jonathan karp is the editor of "true compass." you can join the conversation. the fall lines -- -- full lines. we are also on line, twitter, c- spanwj anbar e-mail address is journal@c-span.org. what in the book stands out to you? is there one image or one moment

in the book that keeps running through your mind? guest: i can't tell you what he wanted his message of the book to be, and that is perseverance. he wanted people to understand that he believed the that the key to life was in never quitting. it was certainly something that i saw firsthand as he was dealing with this illness. he never showed any sign of weakness or despair. he never complained. there was no crying in the kennedy house, that was one of the chapters of the book, actually. and he really held to that. he was a very strong man. what i took away from the project, a firsthand glimpse of somebody. and i had seen him on the floor of the senate making these passionate speeches on behalf of progressive causes, but i did not have a sense of the private man.

i found there was great depth to him but also great humility and subtlety to him. i have the privilege also of working with senator john mccain on his autobiography "faith of my father's the t-shirt and what i found in common between john mccain and -- "faith of my father's." kennedy did not like to speak in the first person but he would say, you, like when you pass this or you have the privilege of serving in the senate. i said, why won't you say i? i think too many people take credit for things. this is my way of saying it is more about you than it is about may. i was really impressed by that.

host: he writes -- guest: he loved to sail. he said selling is where the spirit to meet the physical. it reminded him of the natural order of life, that every voyage as a beginning, middle, and end. there is a lot of sailing imagery. obviously the title refers in part of his love for being at sea. it was also, i think, a reference to the true compasses in his own life, which were his faith and his family. host: a caller on the democrat'' line from chicago. caller: the one question -- how did edward kennedy and all his

other brothers were so popular in african-american community, me as a young man growing up, i always heard about the kennedys always doing things for african- americans, going back to martin luther king. why were they so huge and why were they so relevant in the african-american community during the civil rights movement to where we are right now with barack obama? thank you. it guest: a great question. he believed civil rights was the moral issue of his time. and jack kennedy was a leader in this and was one of the first -- i think he was the first president to put the civil rights issue in a moral terms. and senator kennedy believed this as well and he made it one of the causes of his life. he tells a story on the personal level when he was in the army,

he got into a tussle with an african-american man and they came to blows and it is a funny story -- you should just read it in the book. it doesn't really get to the more serious aspects of race, but it was one of his first encounters with race in a personal way where there was conflict. he said he could feel some of that man's anchor. host: marie on the independent mind calling from new york. caller: i went to mecca, basically that a lot of people hall -- do not -- i just wanted to make a comment that basically a lot of people do not know how much they benefit from the legislation. i don't think any american family actually has given as much from the old as brother dying in the war, and the lot of emphasis is on candidate, one bad chapter which would be

chapter critic and i'm really anxious to get the book to read exactly what he said about that -- chappaquiddick. maybe you can expand a little bit on that for me. guest: i would be happy to. thank you. at what -- one point i sent him an e-mail and said you offered something like over 3000 bills and passed i think 300 major laws. have you ever kept track of it? have you kept a record? the answer that came back was, no, i never dwelled on things like that. one of the best stories in the book that really illustrates his commitment is on health care, i think. he was in the hospital with his son, teddy, jr.. when he was 12 he had bone cancer. and he was receiving experimental treatments from a program instituted by the nih. and the treatments were

successful, but the grant expired. and all of the other kids in a hospital who were taking these drugs could no longer afford them. and senator kennedy saw the families of the kids, the mothers and fathers, trying to figure out what to do. they were saying but what if i'd been only afford to months more? would that be enough? he saw them mortgaging their homes and having to sell their homes. some of them were risking losing their jobs being at the hospital so often. this, i think, was for him, a seminal moment. he had to do something about this. he began scheduled trips to rural hospitals and inner-city hospitals for his senate committee and he would bring his senators to those places because he said he wanted to bring them out of his comfort zone of the

same way he was out of his. he was a remarkably effective legislator and i think the reason why he was so effective was because he really was -- other people said that all politics is personal when it comes to senator kennedy. he would always go over to the other senators office 21 to ask for a favor. he would go to the mountain and never make the mountain come to him. he was incredibly diligent about the details of the work. he had what everybody in the staff called the bag. every night and was filled with documents and he would take it home and read it and respond. he was very assiduous and he kept at it day after day and year after year. there were issues that he worked on over decades like the minimum wage.

republican demonstrations had very little success with that but he never quit working on a paired host: -- quit work and when it. if host: the last caller mentioned chappaquiddick. he writes in his book -- how difficult of a chapter was it for him to write about? guest: he was ready to write about it. he told us he knew he had to, he wanted to. i think he was haunted by chappaquiddick. he says that in the book. what he wanted to do was share his feelings about it and his perspective. there were no new facts. he writes in the book that it this point he had mostly memories of memories. this was almost 40 years ago. i think you need to see it in the context of his whole life and where his own frame of mind

was at that time. it was a terrible tragedy. when i read those pages i believed them. i was moved by them. i felt sad for everybody affected by that tragedy. and i hope that readers will read that chapter and cheryl my reaction and also see it in the context of this whole life. host: he also talked about atonement. is that something he talks about with you? guest: it is a process that never ends, which is as it should be. host: greg on independent line from san diego. caller: i still am looking forward to reading this book. it seems like senator kennedy was a big man but without a big ego. dedication to family, such a huge family.

all the 30 nieces and nephews and all of the siblings, there seems to be a real personal connection. i don't think i ever heard him utter a bad, negative word about anyone in the family. i'm wondering where that came from because the importance of the family can't be overemphasized -- whether it was genuine, as it appeared to me to be geared just curiously -- appeared to be. just curiously, what was his religious of jackie kennedy after the president died? -- what was his relationship to jackie kennedy after the president died? guest: it was a warm and loving friendship. there were notes he quotes from in the book. he eulogized her at her memorial service. going back to family, he writes in the book that it be find him.

remember, he was the ninth of nine children. he was but caboose of the family. there was a funny observation that apparently when any of the other siblings got the trouble with their dead they would send teddy in the room first to soften him up. he was just naturally in love with his family. at the dinner table they would all eat together and they would have these lively, vibrant discussions, and you had to be able to keep up. that was one of the things i found out and working on this book. by being the ninth out of nine he felt he was always catching up. he always had to catch up with these accomplished, intelligent, exuberant and competitive siblings. and their parents set a tone. they never allowed them to fight with each other. joe kennedy would always try to distract them and focus them on him if there was any kind of

arguments going on between the kids. they were loving parents. his mother rose, of course, was a devout catholic. and the religious beliefs which she had i think were inculcated in him. there is a story in the book about how at one time he was offered the opportunity to go sailing over the weekend, and his mother said, teddy, we have a catholic retreat to go on, a religious retreat and you can't go and without any kind of opposition he immediately said, yes, mother. and his father, joseph, salt that and approved. that was the kind of family this was. host: talking about the close relationship the family had, the brothers had in particular. let us look at an excerpt of senator kennedy top about how he heard about president kennedy process assassination --

guest: i think it was a moment that was still very real and raw and painful to him for the rest of his life. this was a man will understood loss, who had to live with the most profound kind of loss. people say that that is what gave him such and the state. he writes a lot about jack. i think what people don't know is that jack kennedy was like a second father to him. he was 15 years older than teddy kennedy. he actually asked to be the godfather's and took -- be the godfather and took ted kennedy on his first tour of washington when he was elected. he was a hero. in fact, an action hero. when ted kennedy was 11 years

old that is when jack kennedy possible roebucks with the rescue of pt 109 occurred and ted kennedy writes about going into time and seeing the brother of a front-page of the newspaper. imagine being and a 11 year old boy and seeing your older brother on the front page being hailed as a war hero. and then later jacket gives kennedy a tour of a military ship. they spit tobacco on him, the other sailors. it is one of the best days of his life. he'd loved jack and he was inspired by him and he said jack kennedy's life proved that one man can make a difference. and i think that example gave him a sense of direction his whole life. host: mary is calling from britain 10, florida. -- bradenton, florida.

caller: i am disabled. i would like to thank the kennedys because if it was not for him -- guest: yes? caller: i would not be as far as i am with help. i have medicaid and medicare. did they ever marched with martin luther king and what would he think about the tea baggers protesting because you see no blacks and hispanics and latinos in the march and what would he think of that? guest: senator kennedy was in washington during the march on washington. he went outside and he saw the speech and he was an incredibly moved by it. i think in terms of the political environment today, he was obviously a great supporter of a barack obama. he writes in the book that he

believes president obama has the potential for greatness. he also thinks that the senate right now is in peril by a kind of divisiveness which has always been there and may become -- may be exacerbated by the special interests and the impact of money. what he says in the book, and something a lot of people have said and perhaps coming from him now may have more impact -- he argues that washington would be more productive if there was more of an understanding that change is always difficult and the interests will always admit -- resist change. and the only way to really

confront that is to just have the political will to accept change. he said that his brother jack believed that america was essentially a conservative country but that you could convince people that it was in their enlightened self interest to promote progress of policies. so jack's advice was to talk conservatively and a vote liberal. senator kennedy said he always had trouble about talking conservative. host: the, by twitter -- guest: that is a great question. read the chapter "sail against the wind" won its about the 1980 campaign. a lot of what we know about the 1980 campaign, the conventional wisdom is totally wrong. he completely acknowledges that

he was not effective at first been talking about why he wanted to be president but the roger mudd interview is not the best example. the fact of the matter is he was asked on camera to talk about why he wanted to be president before he officially declared and the reason why there was such hesitation in his eyes is they were trying to figure out how to talk about this without declaring candidacy, which is not something he wanted to do. it was supposed to be an interview about his family and the and portents of the sea and suddenly it turned into this political conversation. the other thing is if you listen to his answer, if you read it in print, it is perfectly particulates. he felt we needed to do something about the economy appeared that america was not living up to its productivity. i think it has been taken way out of context.

the reason why carter did so well had more to do with the iran hostage crisis than it did with his own failings as a campaigner although he acknowledges he had a very slow start. that was his take. host: 1 his relationship with president carter, he writes -- guest: he had serious disagreements with president carter. although he points out in the book that he voted with carter most of the time. but carter was slow and inconsistent on health care policy, and is bothered ted kennedy a lot. he wanted to take this and for mental approach and senator kennedy was rigidly opposed to that -- he wanted to take this incremental approach. and the other was the so-called malaise speech. this outraged ted kennedy.

i don't think people realized this. i was surprised to read this. but when president carter made that speech, he was speaking about america in a melancholy tone and it was against the tenor of everything that ted kennedy's brothers had stood for -- the idea that we could do anything. and he took it personally. he felt it was wrong for america. the one positive thing that ted kennedy said to me over and over again about ronald reagan was that president reagan made people feel good about america and made people feel good about the possibility of america. and when ted kennedy heard jimmy carter make about -- make that speech, he decided at that point he had to seek the presidency. that was one aspect of the relationship. let me tell you something else i saw in the notes which, again, i

think other people have not had the opportunity to reckon with. there was, even in the midst of this very contentious campaign, real civility and respect between these two men. i read it senator kennedy posset private notes about his conversations with jimmy carter on the phone after the election was over and even in the heat of the campaign, in june of 1980, before the democratic convention. senator kennedy went into the white house. they sat down in the oval office. there was a vase of flowers and between them and a fireplace. they had a straight, civil, cordial conversation about what to do, whether they could result of things between themselves. -- resolve things between themselves. even though it was a hard-fought campaign, president -- senator kennedy treated president carter with respect and was campaigning because he disagreed with

president carter possibilities. host: james on the republican line calling from booker raton, florida. caller: good morning. colin to correct the record a bit -- i am calling to correct the record of it. young man, you seem arctic to the but you really need to study your history. let us talk about the response to the earlier question regarding civil rights. it is just unbelievable revision is to say kennedys were anywhere near on board with the early civil rights campaign of martin luther king. when dr. king talked about the kennedys were really not his allies. jack and robert. let us talk about history. robert kennedy signed off as attorney general on the wiretapping, illegal wiretapping, if you will, instigated by j. edgar hoover, on martin luther king to get dirt on him.

hoover was famous for getting dirt on politicians. so, the kennedys, robert and jack were no great friend of martin luther king or the civil rights movement. guest: thank you for the question. for whatever it is worth, senator kennedy says in this book that he thought j. edgar hoover went way too far. he was disgusted by the wiretapping and he says that whenever he passes the j. edgar hoover building he feels a sense of despair. senator kennedy in his book was very careful to talk about his own personal experiences. so this is not a book about robert f. kennedy, it is a book about ted kennedy. his own experiences with the civil rights movement -- i believe i ever presented them accurately and i encourage you to read it.

host: victor on the democrats' line from carlsbad. caller: good morning. i wanted to say, first of all, i am 64 years old. i was an okinawa when president kennedy was assassinated. he was my commander in chief. i wish i were in the military now because we now have a wonderful commander in chief also appeared -- also. i was devastated by kennedy's assassination. i was devastated by his brothers assassination. being in office just to help me, being an american citizen engaging in democracy. they were stolen from me.

kennedy was the only one left. of course, i loved teddy, still do. regardless of things that went on in the individual's lives, things went on in my life, things went on in your life and many people lives, things that we are unhappy about, that he was unhappy about chappaquiddick. i had to hear chappaquiddick all of my life from right-wingers and when i was in okinawa, the civil rights movement was being helped by the kennedys. and my -- the sergeant who was over me when i was an okinawa was a very much conservative, from the deep south, whenever a black person would be transferred into our unit he had them transferred right out.

so there has always been this problem with racism. i also find it that the tea baggers are not just simple patriotic american spirit i am also a simple patriotic american. they are the remnants of what this sergeant was. guest: thank you for that. you know, there is a chapter in the book that is a little bit analogous to this, called "backlash in boston." it occurs around 1976 when senator kennedy has to confront the controversy in the boston over busing. and he feels genuine and besempy with these parents so angry have the kids taken out of school and moved but at the same time he wants to promote progressive policies.

and that the majority goes into a crowd and was confronted by screaming and at one point later he is chased by an angry mob and he has to have often to the subway. car tires are slashed. what is remarkable about the chapter is you can see a political leader trying to reconcile his own beliefs with the frustration of his constituents. a very powerful chapter because you can see politics at work. it is not easy stuff. you'll have to maintain the right tone. i think senator kennedy understood that. it is interesting because he was very careful in the riding of this book. it didn't want any overheated rhetoric. he wanted to write about both sides of the political spectrum. he did not agree with president reagan's policies the way he phrases in the book is that he failed the criteria for

greatness. which i thought was subtle. in ted kennedy's estimation, accurate. host: a questioned by e-mail from fort lauderdale -- guest: these are ted kennedy's thoughts and words and experiences, and my job as an editor was to make sure that the story really sung. it was, as i said, one of the most extraordinary experiences i have ever had. we had so much material to work from. we had a terrific collaborator in ron powers who went through the document and helped shape them and i loved working on every moment. i asked a lot of questions. i wanted it to make sure that the stories have the right impact.

i also should say that the greatest ally in this whole process was senator kennedy's wife vicki, who is an extraordinary woman in her own right and was able to draw so much out of senator kennedy. i would ask questions and she would help him in terms of framing the end servers and in terms of offering examples from his life that i may not have known or he only shared with heard. and she was just absolutely essential. host: on the republican line, charles from tyler, texas. caller: 2 points -- should the health care bill be named after ted kennedy and my second point is, chappaquiddick was a sad time, but it is how they covered it up. how they covered it up. for all these years and ted kennedy got away with it. the history channel -- and then

on this. john and bobby having an affair with marilyn monroe, right there, having an affair with her. the old man, in germany as an ambassador, -- on the history channel -- and ambassador, going along with hitler's war. the old man buying the election off with mob money and unions. this is all on the history channel. so, don't tell me how great the damn kennedy family is that we are supposed to bal down to them. guest: i think everybody is entitled to their opinion, and that is one of the wonderful aspects of american democracy. thanks for your call. host: calling from fort hood, texas. >> good morning -- sir, you know, i was sad when kennedy -- mr. kennedy got cancer.

and i am so sorry that he is dead. but i don't and have never approved of mr. kennedy. i think he is a bad man. he kept the poor people down in boston, keeps the very poor people down and other parts of the country. heat is always wanting to give something to somebody and they never have to work for it. guest: senator kennedy writes on his book on page 29 that for him, the motivating force in his life was the great gospel of matthew, that we showed care for the least of these among us, feed a the hungry and clothe the like -- naked and heal the sick. this was his motivated force for entering public life. i think it is the significant

the only passage in scripture that shows a path to salvation is this idea of helping others. that was what he'd learned from his parents, especially from his mother rose, and that was part of his true compass. i am sorry you feel that way about him but i saw this man in person and i can't tell you he was an empathitic and committed public servant. host: he worked toward health care reform for much of his career. he wrote this about the clinton years -- what were his hopes about health care reform at this stage?

were you able to talk to him about this the last couple of months? guest: we did not talk that much about it because it was an outside the frame of the book. what he did say is he hopes that by writing about health care and his work on it in personal terms, perhaps he would give some leaders inspiration to play whatever role they can in taking up the cause. host: seen that up close and personal, when his son had a cancerous tumor removed from his leg and his own medical incident, a plane accident. guest: he was in the hospital for six months on his back. lbj called and said, i can't understand how you can shave on your belly. he understands the health-care system close and personal throughout his life. but he was an optimistic man and he didn't ever want to accept

defeat in anything, including upon receiving this rather grim medical prognosis for himself. so it was just not in his nature. kennedys didn't quit. he writes it is not in the dna. host: alex on the independent line from flint, michigan. caller: i'm an admirer of the kennedys and i remember exactly where i was when kennedy was killed, junior high school. what i would like to know is, i know you are getting ready to wrap the program of, but can you tell us briefly -- i know it is probably a long story -- how they got the money and the power that they have in that family, just briefly? the money and the power? guest: that is a long story. actually i would recommend you

read doris kerns goodwin, "of gerald and the kennedys. but i cannot going to hear but there has been a lot written about it. host: victor on the democrats' line. caller: good morning. you would a really nice book and i am so glad you are able to talk to him about it. but the one thing -- in his biography of when they were talking about it, where his power came from. i believe in the beginning of that program he asked as father when he was little, when he was in london, a bullet confronted him and he asked his father as the son of the ambassador, can i go and fight, is it ok? his father said, yes, go ahead, go get him there'd by go -- go get him. by going back to school and

beating the bully, and that made him -- every conversation in his life. from that time on he never allowed anybody to bully him. that continues all of his life, as a fighter for justice. so when they call him the lion of the senate, that is where he came from. i have the same experience. i confronted a bully at an early age and by -- i have not allow anybody to mess with me. guest: he had a similar experience when he was in boarding school, actually. it got into a fight with another kid and his friend bobby was nearby and he asked him for help and said, you got to fight your own battles. ted kennedy went to attend boarding schools and 13 years and i have a feeling that is another reason why he was a tough guy. he learned how to make friends and as christopher dodd said in his beautiful memorial speech, people like him. i liked him. he was just a wonderful person

to be around. host: finally, as you talk to people about senator kennedy, what do you feel like lasting legacy will be? guest: his lasting legacy? there are so many of them. i hope that it will be this idea of persevering. and of leading a serious light. he tells a story -- he made a final video that people can see on youtube. he talked about how he was a young boy his father said, teddy, you can leave a serious life or a non-serious life. no matter what you did, i will love you. but if you decide you don't want to lead a serious life, i've got other children. that story was so important to senator kennedy that he tells it twice and the book. and i as a reader hope that when people read "true compass" they will remember that story and

maybe they will find a way of their own to tell that story to their kids because it made me want to lead a more serious light. and i think that what senator kennedy's contribution was, beyond all the legislation, and beyond what he stood for, is the idea that you should commit yourself and you should care about other people. that is what i have taken away getting to know him. host: publisher and editor in chief of "12" and publisher and editor of senator ted kennedy's book, "true compass." that is all for "washington journal." thank you for being with us. guest: thank you. host: we will be back tomorrow morning at 7:00 a.m. eastern time. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] .