the medicaid reimbursement rate for primary care visits to doctors who get paid more. basically they will be brought up to the medicare level from what had been the lower medicaid level. as far as medicare goes, there are some doctors who are no longer accepting medicare patients but it's been somewhat overstated as a problem. it is with medicaid it is more of an an issue. as far as the doughnut hole, you may have misunderstood what i said earlier. it phases in the closing of the doughnut hole phases in over the coming decade but it's ramped up quickly. you will get a $250 check in the coming weeks to help with that if you're in the doughnut hole and then it starts closing. the window starts closing right away, in the next few years, so i have to double-check, but i'm

pretty sure that within four years or so, it's going to be down to, you know, much, much smaller window. >> alec mcgillis, co-author of "america's new healthcare law and what it means for us all. " it is in bookstores and you can buy it on-line as well. as we told you all morning on this program, c-span's new book on the supreme court is also on bookshelves starting today, featuring the justices in their own words, coming from the recent documentary that we did. for more information, go to c-span.org/books as well as c-span, org/supreme court. you can buy it on-line and in bookstores as well today. thanks for watching. we will bring you now to the heritage foundation which is kicking off its protect america month, and the featured speaker there will be howbs republican whip eric cantor.

eerdz . >> from rogue or failing states that have acquired or are acquiring nuclear weapons, and

from the threat of terrorists, and especially the threat that they would gain and deploy weapons of mass destruction. for that reason, the heritage foundation inaugurated last year protect america month, a month in which we sponsor a series of speeches and panels which examine the condition of american security. last year we opened protect america month with a preach by former governor mitt romney. our opening speech this year will be given by another prominent national figure whose work is well-known and appreciated by our movement and indeed by the whole nation. congressman eric cantor is another in a long line of statesmen hailing from the state of virginia. [applause] he was born and raised in the richmond, virginia, area. if i'm not incorrect, he began his involvement in politics as a driver and an advance man for his predecessor in his current seat, a good friend of mine with whom i served in the house in the 1990's, congressman tom

bliley. he got his law degree from william and mary law school and then went to columbia university in new york, where he picked up a masters degree in law, but most importantly, gained a great wife. his wife diana, he met her in new york. she consented to come back here to virginia with him. they have three children. then mr. cantor entered politics. he was elected to the united states house of representatives in the year 2000 and began service in 2001. he quickly established a reputation as a leader in the fight for individual opportunity and family opportunity. he was the chief sponsor of legislation to make permanent reductions in the capital gains and dividend taxes. he authored increasing the availability of health savings accounts, and we're very grateful for that at heritage because we have a very flexible health care plan including health savings accounts, so i can tell you your legislation is

working. more important, for our purposes today, mr. cantor is a leader on national security issues. he's chairman of the congressional task force on terrorism and unconventional work fare, where he's finding ways to secure the united states against the terrorist threat. for his efforts, "the weekly standard" recently listed mr. cantor as a leader of young guns in the house g.o.p. i don't know if after 10 years in congress mr. cantor still feels young, but i -- getting older all the time, aren't you? i imagine it was satisfying to be referred to that way. i should also note that mr. cantor is currently the house republican whip, the second-ranking republican in the house, which means that should the republicans regain control of the house this fall, he will be in line to become the majority leader. ladies and gentlemen, it's our pleasure to present to you congressman eric cantor of virginia. [applause]

>> thank you, senator. it is just an honor to be here to join you in kicking off protect america month. i want to salute ed heritage and the whole family here for what is an extraordinary effort. i commend you on that. it is an honor for me to be here. i want to start by acknowledging the tremendous job by civilians as well as law enforcement in their vigilance surrounding the failed terrorist attack in times square this past weekend. we all owe them a debt of gratitude. [applause] we're gathered here today to make a sober assessment of the condition of our national security. it's time to remove the blinders of political correctness from our eyes. it is time to cast aside wishful

thinking. we must see the world and our enemies, not for what we hope they are, but for who they truly are. as we ponder defense policy for our nation, it is instructive to peer through the lens of former soviet disdent sharanski. authorities jailed him on bogus charges of treason and shipped him to siberia. he and his compatriots faced years of mental and physical torture. their captors did everything to break them down to illicit false confession, only it failed. no matter how dark and desperate their everyday existence, he and his fellow prisoners found a ray of light in the form of america. a bold u.s. president named ronald reagan came to power with the intention to expose the soviet union. unlike his predecessor jimmy

carter, reagan dared to stand up to the soviets from a position of both military strength and moral clarity. he eventually would be freed in a 1986 u.s. soviet u.s. prisoner swap, but in an interview a few years ago, he recalled that his brightest, most glorious day came in 1983 when reagan proclaimed before the entire world that the soviet union was an evil empire. for us, he said, that was a moment that really marked the end for them and the beginning for us. the lie had been exposed and could never, ever be untold now. this was the end of lenen's revolution and the beginning of a new revolution, a freedom revolution. the reagan revolution.

what should we take from this proud chapter in american history? america is at its best when its national security strategy features two vital and mutual rally reinforcing pillars. first, the notion that we should achieve peace only from a position of strength. second, we apply firm moral clarity to our foreign policy. there should be no question about where america stands. we honor our commitment to democracies and other allies who share our desire for freedom, peace, and human progress. [applause] >> in the year since world war ii, this strategy has ushered in an unprecedented era of american prosperity. it has given us the most fearsome military in human

history. it has brought us a range of economic benefits, including making the dollar the world's de facto world currency. and it has submitted america as a force for good throughout the world. the fear of american military might has long detered ill intentioned nations from attacking us. at the same time, peaceful nations have restrained their own massive arms buildup because aligning with america gave them protection under the u.s. defense umbrella. make no mistake, american deterrence has been the single most important impediment to war, global instability, and the spread of nuclear weapons. [applause] but today, we live in an increasingly dangerous world. america faces the twin threats of nuclear proliferation, and terrorism.

warning signs abound, whether they be the failed attacks on an airplane on christmas day, or a parked car in times square this past weekend. the goal in both instances was to take many innocent american lives. yet with each close encounter, my fear is that the country goes on heightened alert only as long as the media tend to cover it. all too often, that means hours and days rather than permanently. equally concerning is that the administration and other elected officials tend to give these warnings due attention only in limited spurts. many of the same critics who groused about how he failed to connect the dots prior to 9/11 are today repeating the same pattern. as a result, america is at risk of slipping into the type of

false sense of security, which prevailed before that september morning. meanwhile, we see volatility in pakistan, afghanistan, and iraq. iran's aggression and thirst for nuclear weapons poses a mortal threat to all our allies in the middle east. neerk's belidge rans -- north korea's blidgerans has them feeling uneasy. they are expanding their influence and rising up to challenge american supremacy. the sands are shifting. the global balance of power is under fire from a range of actors who hold values unethet call to our own. for all our allies around the world, it is decision time. can they rely on america to keep them safe?

or should they develop their own nuclear weapons? or should they start to cozy up to iran, china, and russia out of fear they'll be attacked? undoubtedly, we have reached a critical cross roads, with america's long-term security interests hanging in the balance. my message to you today is this. now should be the time for america to rededicate itself to the strategy of, one, peace through strength, and two, recommitting ourselves to standing up for democratic and peaceful allies. [applause] yet, at the very moment, this

proven u.s. national security strategy appears to be in a rapid state of retreat. after 16 months, many of the obama administration's policies reflect a fundamentally different ideological approach to foreign policy and national security. to be clear, the president deserves credit for not caving to those on the left who called for an immediate withdrawal from iraq and afghanistan. and behind the scenes, we have made progress, eliminating al qaeda through drone attacks in the region. but these efforts unfortunately have been the exception rather than the rule. last year, president obama traveled to cairo to address the arab world to apologize on behalf of america. he vowed to reinstate "the same respect and partnership that

america had with the muslim world as recently as 20 or 30 years ago." but what does america have to be sorry for? we're the nation that has always represented the highest aspirations of the human spirit. we gave the world the gift of the freedom of speech and government of the people, by the people, and for the people. it is america. where millions line up in search of a life of freedom and opportunity. [applause] since snuns, american troops have deployed on at least five different occasions to liberate muslim people in kuwait, in bosnia, in kosovo, in afghanistan, and in iraq. and let's not forget our humanitarian mission in somalia. america cannot win the battle

for hearts and minds in the muslim world by apologizing. and by banning terms like war or terror -- [applause] >> by banning words like war on terror or -- it blurs the moral lines and undermines us in the struggle of ideas. al qaeda knows very well that it has a soft underbelly. our job is to exploit it. in 2005, al qaeda's number two wrote an internal memo warning that killing fellow muslims risks losing the hearts and minds of muslims everywhere. it was pathetic. al qaeda's brutality drove the iraqi people to rise up against al qaeda shortly after.

instead of apologizing to the arab world, president obama should launch an international campaign to expose islammist terror attacks on fellow muslims. every time the taliban blows up innocent muslim women and children in pakistan or al qaeda strikes in iraq or in any other arab country, we must broadcast to the world the faces of the victims and point out their killers. [applause] in the battle of ideas, we win when the people of the middle east see that the real threat to muslims is neither america nor israel nor britain, but the ruthless islammist terrorists. [applause]

the problem with the obama defense and foreign policy philosophy is that it seems to abandon the proven strategy of peace through strength. its policies bespeak a relativism and with the united states bears much of responsibility for the problems we face around the world. in this view, our most vexing issues can be resolved by adjusting our own behavior in order to compromise with our enemies. accordingly, the only way to stop rogue states from pursuing nuclear weapons is for us to rein in our own nuclear arsenal. similarly, the way to prevent islamic radicals from hating us is to pick fights with a democratic ally like israeli. if iran wants to threaten the world with nuclear weapons, so

it goes, it must be because president bush refused to engage with it. and if syria endangers our troops in iraq and funds midwest terrorism -- middle east terrorism, convince it in order to change. the problem is this kind of accommodating attitude toward our enemies does not work. hundreds of years of world history prove that pursuing peace at any cost, even the cost of our own freedom, is an exercise in futility, and it is the mark of desperation. [applause] what has engagement with iran brought us? after 16 months, deadlines have come and gone, and the ruling

clerics in that country have gleefully bought themselves more time to spin their nuclear centrifuges. as a revolutionary guards clamp down on the budding opposition movement in the streets, our administration fell silent. as if it wanted peace and calm with iran at any cost, the white house did not offer iran's green movement the moral support it so desperately needed. indeed, u.s. calls for dialogue only strengthened teheran's hand. it's no wonder iran blindly continues to export terrorism and oppress its people with impunity. in a similar vein, playing nice has failed to peel syria away from iran, without any assurances, the white house lifted sanctions on damascus and reinstated an american diplomat in that country.

syria returned the favor by transfering scud missiles to hezbollah, and if that wasn't enough, they disparaged the u.s. overture at a recent sol dare conference with ahmadinejad. while the administration takes extra precaution with our enemies, it has shown far less restraint with our democratic allies. free nations who need our support now more than ever. it has escalated a bogus fight with israeli in a very transparent manner to curry favor with some in the middle east. it has rebuked honduras for holding the rule of law and broken agreements with poland, the czech republic, south korea, and colombia. and during a highly publicized trip to asia at a time when we need india to counter the growing influence of communist

china, the president passed india by on his way to china. most troubling is that this is happening as america's military defenses are being downgraded. nowhere is the erosion of peace through strength more evident than in nuclear and missile defense policy. missile defense is modern technology's most game-changing deterrent to a potentially devastating attack. by abandoning the third site in europe to placate russia, all we've done is push back the date when we can credibly deter iran. meanwhile, our nuclear weapons arsenal is aging and desperately needs to be repalestinianished, but the administration and congressional democrats have cut off funds to do it. the administration hails the renewal of the star treaty as a major accomplishment.

but what does it really accomplish? as we rein in our nukes, iran and others will try to increase theirs. then the white house promises that the u.s. won't respond to any biological or conventional attack with nuclear weapons. how does taking the threat of massive retaliation off the table make us safer? it's akin to responding to a crime wave on the streets by announcing that you are going to be pulling police officers off those streets. we know that this administration will be around for at least another 2 1/2 years. with the stakes so high, this will be a pivotal time for america to restore its credibility by pursuing peace through strength. that's why conservatives must win in november. [applause]

and when we retake congress, we will stand with defense-minded folks on the other side of the aisle to stop the hemorrhaging of america's defenses. [applause] let us not forget, as ed just pulled out the pocket constitution, under it, our constitution, the president is the commander in chief. but congress is charged with the responsibility to raise and support armies, to provide and maintain a navy. and, of course, no treaty may enter into force without the consent of 2/3 of the senate. it is time for conservatives who believe in peace through strength and the righteousness

of our cause to stand up, to serve as a check and balance on this administration's policies. [applause] as a republican congress, we'll turn back harmful treaties, like starks. we will not just meet the threats of today, but those of tomorrow. we will fight for missile defense and we will update our nuclear warheads. peace is what we all want. but history has shown that the blind pursuit of peace at any cost only makes war more likely. humbled by the lessons of 9/11 and reminded of their value, just this last weekend in times square.

today we reaffirm that our nation never again be caught off guard. [applause] as winston churchill once said, the price of greatness is responsibility. and let it be said of us one day, as churchill said of his contemporaries, that there was a generation that terror could not conquer and brutal violence could not enslave. with your help and the good sense of the american people and the hand of providence, we will prevail. thank you, and god bless. [applause]

>> thank you. thank you. we have not had better in protect america month. thank you, mr. cantor. what a great set of remarks. mr. cantor has consented to take a few questions. yes, sir, right there. >> you mentioned before about the media. the rodney king example, the batings. the media showed it over and over again and it got people inflamed. i don't know why our side didn't show those people jumping off the world trade centers to escape a fiery death for a quicker one, or why today they don't show pictures of people being mutilated in other

countries where the jihad does what they do. we should show those. i was in honduras recently, the newspapers there, they'll show corpses with bullet holes in their heads and their arms are cut off they show the stuff. we should do the same. >> i couldn't agree more. no question the power of the visual, especially in today's world. it's an essential goal for us in the conservative movement. i know speaking with ed that heritage has just embarked upon a tremendous outreach effort to engage, not only folks in this room and the resources that you provide, and i want to thank you for that, but also young people in this country who are concerned about america. it is about realtime delivery of information, videos front and center. thanks. >> appreciate that question. remember, we're all communicators. this is a broad based type effort and we all have that capability.

yes, sir? -- yes, ma'am? >> hi, congress cantor, thank you for being here. my perception is that congress doesn't realize they're in an ideological war. the president's leftist peacemaker approach, which i kindly categorize as irresponsible socialism, is a huge issue. but people today do not know the meaning of the word socialism. much less do they realize that it is the shortcut to communism, and consequently, to totalitarian regimes. so my question to you, and actually also to heritage foundation, is how do we effectively educate congress, all of its members, because, you know, there are also conservatives out there that scoff at the idea of having president obama be called a socialist. and how do we effectively

educate also the 40% of the public at large who actually think that socialism is harmless? because this is what's behind some of the dangerous policies that are exposing the national security of america. >> i think your question really encapsulates the mission for all of us. and in listening to your question, i feel that we are behind the curve here. and it is only because of groups like heritage that we've got a shot to regain the offensive. and you are so right. and it starts so early. my teenage children attend public schools down in central virginia, and i can assure you that the bias coming through textbooks is something we must contend with. but it is about being concerted and deliberate in our effort to connect. i want to insist, to connect with the future generation as well as those engaged in the business of debate right now. it is a long-term process.

we've got to have a plan, not only for this year, but five years, 10 years, 20 years. that's how we go and regain momentum, because at the end of the day, the good thing and the silver lining is this country believes in what we stand for. we've only got to get out and tell the story. [applause] >> great comments. we have a question from a webcast viewer. let me just say, however, i'm going to comment on that last answer. mr. cantor is known as a consensus builder in washington, and you can see it's not because he doesn't stand strongly and forthrightly for his views and for driving important distinctions. it's because he understands issues on a deep level. he knows when you talk in terms of issues, you can avoid personalities or partisanship. here's a question from a webcast viewer. how will we achieve peace through strength if president obama is cutting spending?

>> we have all, i think, learned -- cutting defense spending. >> right. i was somehow going to connect between our economic well-being being an essential pillar in our defense leadership. but we've all seen the priority or lack thereof that this administration has placed on rededicating ourselves to making sure our defense systems, the hardware, the troops are given due -- adequate due. and in fact, if you run through the rough numbers, we are now looking at possibly 3.1% of our g.d.p. degree spent on defense, on the core mission of the defense department. that's not necessarily the afghan war, the iraq war, etc., but the core mission. i know many of you in here have

gotten behind a campaign that is well worth our investment and our attention, which is fore% for freedom. [applause] -- 4% for freedom. i think that the web participant makes an excellent point. our economic prosperity is reliant upon our military leadership and it's got to start there with setting our priorities. >> the $900 billion stimulus plan, and we've seen how well it's stimulated, didn't spend a dime on military modernization. next question. >> my question could be very evolved, so i'm going to shorten it as much as i can. if we're going to be serious about protecting america, we need to adjust the fact that suddenly -- shari'a law is

incompatible with our constitution. >> shari'a law. how many of you have read or know about shari'a law? i only wish the citizenry at large was as informed. because it truly is an under the radar force at work in many, many different aspects of our society. as all of us have read and learned about, shari'a law, when it comes to the investment world on wall street, when it comes to way of life, there are some very strict rules by which that investors that practice that require their funds and activities to be constrained. a very dangerous notion from my limited knowledge of what it means for the future of our country. it is in direct conflict. as a virginian, we were raised

learning about thomas jefferson's statute of religious freedom, that essentially turned into the bill of rights, that essentially says in this country we all have the right and the freedom to practice our own faith and there will be no faith imposed on anyone. and as you indicate, shari'a law imposes so much, dictates which will disallow the freedoms that thomas jefferson authored in that statute. a very, very concerning point. and it goes back to the america that we know, the america that stands for freedom, the america that has led the world is something not only essential for world and global peace, for us to be strong, but i think for all of us going back to the education process, rededicating ourselves to that notion of what america and who she truly is, is

something we must, must be attendant to every day. >> ok. we're going to have aly change of plan. we're going to take one more question from the audience because mr. cantor has to leave earlier than we thought. one more question from the audience, and then from the press, which was going to have a separate opportunity for questions. so one more. all right. back there. >> i want to thank you for coming today. i realize you come at a great cost. and i thank you for your enthusiasm and passion for this country. my question is -- and this is something i personally don't understand. if it's a naive question, then i apologize. in light of what obama has done to leave us vulnerable, to cut defense spending, to make us vulnerable to our outside enemies and to sleight our allies, how -- what would he

have to do differently to be defined as a domestic enemy? [laughter] [applause] >> let me respond very forthright to that. no one thinks that the president is a domestic enemy. it is important -- it is important -- it is important for us to remember we have the freedom of discourse in this country. and the president's policies, the administration's priorities, in my opinion, do not reflect the majority of this country, do not reflect the common sense conservative traditions upon which the greatness of this

country was built. because of that, the president and his administration has demonstrated giving -- given the fact that his administration and the majority in congress are now given unfettered power, they've given us a chance to deposit coherent policies that are vastly different and stark in contrast. what i believe this has done is that this has demonstrated to the people of america that we are at a critical cross roads. we are at a crossroads domesticly, given the outlook for our economy and the continuation of spending and incurns of debt, and as you pount out, we are at a critical crossroads as far as our national security, and the shifting sands of global politics so far as our allies

and their outlook is concerned. so i believe it is much more of -- and constructive for us, and in fact, our duty as americans to point out the stark contrast, as we head into the election in november in the public arena of debate making every effort we possibly can every day to summon people to engage this this debate so we can take this country back and put it on the direction that we all want. thank you. [applause] >> well said again. all right. we'll take some questions from the press in the time available, mr. cantor. >> good morning. i am from from south america.

thank you so much for giving me the opportunity. you just mentioned north korea as terrorists, as well as the north korea leader is believed to be in china right now. in your estimation, in your view, what kind of rule should china play in nonproliferation and sanctions against iran. thank you. -- and north korea. thank you. >> two weeks ago, the house voted to go to conference on the bill for calling for mandatory sanctions against iran. specifically, the sanction calling for a moratorium, if you will, or boycott of allowing any refined patrol yum products to go into teheran. we had, for about over a year now been trying to deal with the white house insisting that they come along with us in allowing for this bill to move forward.

as late as two weeks ago, the word was the president and the white house did not want to see this bill move forward, because the word given was that he and the white house felt that china and russia were in the right place so far as our negotiations at the united nations security council and a possible resolution there. this is the same story that we have been hearing for months on end, and it is time for us to act. it is obviously something that we believe very strongly, china should join with the rest of the world in us a tra size -- us a tri sizing the regime in teheran to give note to the opposition movement there, because it is they we must count on for the future of hopefully stability of the region. so it is, i think, very important that this country and

this congress lead in terms of passing that resolution, calling for iran -- sanctions against iran, in the sense that we must do everything we can to make sure china and russia join us and send a signal again that america will stand for democratic allies, for freedom, and will not -- and will not stand up for anything less. [applause] >> i'm a reporter with the hill newspaper. my question for you is, you were talking about the republicans reengaging in a robust defense, helping to build up our defenses again. my question is, how do the republicans pay for that? >> molly, as you know, we have been long engaged in this process of paid fors, pay as you go, and other budgetary concerns

to little avail. it's time for this country to begin to set priorities. last december, we were able to send to the president a list of spending cuts that would amount to $350 billion. we've not heard back from the white house as to its intentions on responding to those items. since then, we've also lauded the president in his mention of potential areas for spending cuts. leader john boehner and i have sent communication, letters to the white house following up on that, asking the president to submit his rescission requests or his spending cuts for us to take up singularly in the house after the president has proposed his budget, to no avail. we are committed to trying to get this country back on an even fiscal playing field. and to provide some responsible

leadership through making tough decisions. unfortunately, it seems that that spirit of cooperation and intent is not shared by the majority in the house, nor at the white house. >> fox news channel. with respect to the new york city failed attack, wasn't that a case where the system worked? i mean local and federal agencies worked together, and by monday night they had a suspect in custody. isn't that a case where everyone worked together and it all worked out? >> there's no question that law enforcement, civilians involved in that incident deserve a lot of credit, a lot of gratitude. and i think i'll begin my remarks by thanking the individuals involved. no question. i do think, though, the incident reminds us that the threats that we face out there are very real, as real as they were in 9/11,

and we must never forget that. and my sense is, there are many in this town who will focus on the issues of the threats so long as you and the -- you in the media are willing to cover it and then go back to regular order of business. we are in extraordinary times. we must remain focused on the real threats to our very existence as america. [applause] >> i think that's it. we want to thank -- before i thank mr. cantor again, dr. kim holmes is going to wrap up the hour and the conference, so please stay around after mr. cantor leaves. but he has to go. thank you. it was remarkable and great. . [applause]

>> well, we have gotten protect america month off with resonance, and we're grateful to mr. cantor. i want to introduce to you the man who runs our foreign policy and defense department at the heritage foundation. dr. holmes is going to deliver a few remarks, and then close the conference. kim holmes has served since 1992 as vice president for foreign and defense policy studies and director of the davis institute for international studies at the heritage foundation, except for his tenure as assistant secretary of state for international organization affairs during the george w.

bush's first term. dr. holmes can tell you a lot of interesting and not too encouraging stories about the u.n. and his encounter with them when he exercised the powers of that office. we don't have time for that, but i'm sure there will be a panel on that in the future. dr. holmes directs heritage's team of foreign and defense policy experts on the frontlines of international affairs at the foundation. many of his recommendations -- >> we're going to leave this event at the heritage foundation. house republican whip eric cantor speaking today. the topic of his speech on national defense. he also talked about republicans in the upcoming mid term elections. there are several primaries today. the associated press says that open senate seats in indiana and ohio, and the democratic race for charger to north carolina richard burr topped tuesday's primaries. they could signal voters' frustration with the washington establishment. again, that from the a.p. today. coming up in just a bit, about

20 minutes from now, the president delivers remarks to the business council on jobs and the economy. we also expect to hear him with remarks on the oil spill in the gulf of mexico. until then, a discussion on the oil spill in the gulf from today's "washington journal." host: mark farkas, thank you for your time. guest: thank you. host: joining us this morning is energy correspondent stephen power of the "wall street journal." he is here to talk about the latest on the oil spill. can you give us the latest on the clean-up? guest: sure. first, to minimize the damage. there's a twisted pipes leaking in three different places. they are trying to contain it and fix the leaks. on the containment site, they're trying to inject the water with

chemicals that can reduce the brilliancy of the petroleum that is leaking and make it less likely to rise toward the surface. they are also trying to create the containment domes that can be lowered on to the leaks. on fixing it, they're trying to install a new shot off valve -- shut-off valve. the time period on doing this is extensive. the process of fixing the leak may take much longer. it may take as many as 90 days to drill a new relief well. host: how many more days, weeks, more months are we talking about that oil keeps coming out of this leak? guest: the interior secretary said it could be as long as 90 days. host: and what about the impact

of the oil spill? what are they finding out as of right now on the coast line, the fisheries, and the wildlife there? guest: in some ways, they have caught a bit of a break on that point because the winds have kept a lot of the oil from reaching the shore. the concern is that it will hit the islands off of louisiana, and the alabama coast, and the florida coast. so far, most of the oil has yet to hit the shoreline. in that sense, they have caught a bit of a break. host: what is the effort like on the government side? what is the effort like on bp's side? guest: the white housthe obama n keeps saying that bp is the responsible party, but the obama administration has put many resources in place to try to

help bp. they have put -- the navy and the air force have deployed some of their resources. the epa is at the scene. they're monitoring the impact on air quality. the governor of louisiana has declared a state of emergency secretary. gates has mobilized the national guard to also assist in the efforts as well. there are a number of efforts going on. the federal government is a lead body. in the end, it is bp's responsibility. host: what happens to the oil that they are able to capture? what happens to that oil?

guest: they hope to bring it slowly to the surface and dispose of it safely on shore. it is not clear how successful they will be. the waters have been very choppy. that has complicated some of the efforts. host: front page of "the wall street journal" as your story -- has your story. what is a story about? guest: they're starting to be more scrutiny about some of the regulations that were in place at the time of this action, and specifically, the agency in charge of regulating the nation's offshore oil and gas operators. that agency is called the minerals management service. they're part of the interior department. they said the regulations for safety. they're also in charge of collecting royalties from the

oil and gas industry for drawing oil off of federal lands. the story discusses the concern or criticism of rep issa of california, who is one of the law makers starting to question whether or not the mms have the adequate safety regulations in place. he is asking the secretary of interior to look into that. that is something that the interior secretary has already pledged to do. host: there was some back-and- forth yesterday between reporters and bp about where they were drilling, how deep they were drilling, and whether or not they were doing it within the law. guest: there seems to be a disputed point on whether or not they were operating within the law. there has been litigation filed by some claim that worked on the oil rig that claimed at the time of the accident it was really at a level that was beyond what the

regulations said it could do. the company has disputed that so far and said they were operating within the law. host: there's also some dispute about whether or not bp actually had a blowout. what is a blowout? guest: an unexpected surge in pressure that can lead to a rupture. one of the issues here is -- one of the mysteries it in this case is why the blowout preventer did not work. this is a control system that is supposed to activate automatically in the event of one of these surges. for some reason, this piece of equipment did not work automatically and it did not respond to manuel attempts to activate it. that's one of the mysteries of this calamity. host: does it have to do with how deep they were? some have said that technology

only works if you are 1,000 feet below, and bp was around 5,000 feet below. guest: there were questions about whether or not some of these control systems werorked t these depths. although this was the bill, it was not as deep as others. host: i'm sure our viewers have a lot of questions. dennis, you are first. caller: in the course of the people you have talked with in the investigations you have done so far, what is your sense about how confident people are that they're actually going to really and truly be able to determine a cause? are they just going to come up

with what they think it is, or are they going to nail down the exact cause? guest: there's a high degree of confidence that they will be able to find out what happened. the frustrating thing for a lot of people in the oil and gas industry right now, and certainly for the obama administration is trying to figure out how to deal with this problem when you do not know what caused it in the first place. i was talking to someone who participated in a meeting last week with secretary salazar. they were trying to figure out solutions that the industry could offer to help bp. the meeting had eight problem of fumbling in the dark -- had a feeling of fumbling in the dark. the general statements that have been made by the oil and gas industry officials that i've spoken to is that, in all

likelihood, this is probably the result of a cascade of failures. possibly some that were human errors and probably some that were mechanical. host: loretta on the line from cleveland, ohio. caller: good morning. host: good morning. caller: stephen, this is not a good situation. it looks again like a mothanothr company is too big to fail. by that i mean that the taxpayers have to come behind them to make sure they do what ever is supposed to be done initially. president obama said he would spare no avenues of help in order to contain all of this, but that is our money. that is taxpayer money. we can see that this could certainly bank drorupt bp.

the death of 11 employees, the cost of cleanup first three states, and the costs to multiple industries -- the people whose lives depend on the fisheries. and then i heard they were supposed to have deep sea drilling safety caps, which they did not have. host: did you read that is an insurance issue then? caller: what does that mean? how much is that policy, and how come they did not have the safety precautions in place? host: stephen power. caller: there are a lot of questions there. the mineral management service does require various control

systems, various back the plans in place in case of the equipment does not work. they do tend to give the industry a certain degree of discretion as to the precise types of control systems that they need to have. with regard to how much this will cost, the estimates vary. it depends on a lot of unknowns, including what the weather will be like, and whether it pushes the oil out to sea. it ranges from $2.5 billion to $8 billion. it's not clear what the cost will be at this point. host: the loss following the oil spill -- this company has to repay for a loss -- economic loss for the fishermen at a cap of $75 million. there are three senators who

want to raise that. guest: a group of senator are now pushing that legislation. there's a cap on certain types of damages. the law also stipulates that can be exceeded if it is found that the responsible party violated a lot in a willful way or was really negligent in its handling of safety. there is a possibility . host: there's another story here in "the financial times." .

host: there were going to be hearings on this issue next week. those were canceled. the what is the latest about who will become into those hearings. guest: later there were going to be hearings on offshore drilling generally speaking, and then there was this? then. the senate is going to have a hearing next week with the interior secretary. the next day, the house energy

and commerce committee, chaired by henry waxman of california will have its own hearing. that hearing is -- has called on the ceo's of vp to be at that -- of bp to be at that transaction. the house energy committee is also asking the companies to turn over lot of documents about their safety records, their performance audits, inspections, that sort of thing, as well as complaints from employees about safety. they are still trying to gather a lot of this material, but the hearings are coming. lester -- host: winston salem, north carolina. lester, you are on the air. caller: if they do not do that, it will not happen. guest: that is true.

the obama administration has pointed out that the gulf of mexico accounts for one-third of domestic petroleum production. it is not realistic that this accident is as a tragic will lead to a halt in domestic drilling in the gulf of mexico. more likely, would you are likely to see is a renewed debate over the wisdom of the standing -- expanded offshore drilling. in has been energized by this accident. they are calling to reinstate one program that had existed for many years on certain places of the continental shelf. the debate may not be so much about whether, but whether to expand. >> on the issue of expanding drilling, the financial times

says the oil industry expects to spend billions of dollars on the well development. up 37% from the previous five- year timeframe. where are they when it comes to deep water drilling? five guest: because of federal policies -- guest: the oil and gas industry has to go deeper and deeper into the water to find the gas. this industry -- weston oral companies are finding it difficult to get oil that is under water and underground. you have nationalized oil companies and foreign governments that want to keep strict control over their oil and gas resources. there is a lot of interest which

leads to death among the countries trying to get more of their own gas from the united states. >> one of our twitter followers rights this. guest: i do not know where the device was made. it is a u.s. company -- company. >> whahost: what about getting engineer approval? guest: it would have to have achieved some sort of certification. host: new orleans, what is your perspective down there? caller: i used to work offshore. my first question is do you know if that rick had a black box on

it? they had black boxes like airplanes when i was working on one. maybe if they could retrieve that, we would know what their last conversation was. host: what was your job? caller: an electrician on a platform. they had a black boxes on them. host: i have read the residence in vienna are hesitant to criticize bp because those are good jobs they have from the oil industry down there. what is your perspective? caller:

>> we will leave this record portion of "washington journal" to take you live to president obama speaking at a business conference in washington. we expect remarks on the investigation of the attempted bombing in new york. >> please, have a seat. thank you so much. ron, thank you for your introduction and your leadership. before i begin, i hope you do not mind, i indicated to jim: i wanted to give the american people a brief -- jim ... owenoi wanted to give the american people a brief update to this investigation of the attempted car bombing. we intend to do a thorough investigation and it includes collecting critical intelligence as we work to disrupt any future attacks. justice will be done and we will

continue to do everything in our power to protect the american people. attorney general eric holder and other members of my national security team will be providing more details. but let me say this, this incident is another sobering reminder of the times in which we live from the world and here of home. there are those who would attack our citizens and slaughter innocent men, women, and children in pursuit of their murderous agenda. they will stop at nothing to disrupt our way of life. but once again, their attempt at attack has been failed. it has failed because ordinary citizens have been vigilant and report suspicious activity to the authorities. the authorities at the local, state and federal level acted quickly. i have had the opportunity to personally thank some of the citizens and law enforcement officers whose quick thinking may have saved hundreds of lives. this suspect has been

apprehended because of coordination at every level. finally, new yorkers have reminded us once again how to live with our heads held high. we know that those who would carry out these attacks try to force us to live in fear, and thereby amplifying the effect of their attacks, even those that fail. but as americans and as a nation, we will not be terrorized. we will not cower in fear. we will not be intimidated. we will be vigilant and work together to protect the country to be prosperous and safer for our people. that is what i intend to do as president and for our nation. of course, expanding prosperity is what you work for at the business council, so i am pleased to have this opportunity to meet with you. it has been a little more than a year since i last spoke to the members of this organization and

over the past year i have appreciated the advice offered by many leaders in this room as we grapple with economic challenges. i am here today to reiterate the importance of this partnership and the importance of seeking common ground. i recognize we will not agree on every single item, but as i indicated to a group of your members last night, my door is always open. ultimately, i believe the success of the american economy that depends not on the efforts of government, but on the innovation and enterprise of america's businesses. and it will be america's businesses that help us to emerge from this time of economic crisis and turmoil. the fact is, these have been a tough two years for our country. i do not need to tell you that. at the height of the recession, countless businesses had to shut their doors, trillion stuff savings were lost, forcing seniors to postpone retirement -- trillions of savings were

lost, forcing seniors to postpone retirement, students to delay college education. many businesses who remain standing had to let people go. more than 8 million men and women lost their jobs during the course of the downturn. and just about every day, i hear from some of these people, people who are out of work. i hear from them through letters i receive each night or in town halls i have held across america. every once in awhile i hear from children seeking to make sense of what is happening in their families, the sadness and uncertainty they do not fully understand. and it is a reminder that what has happened is not just an economic problem, but a human tragedy. it is for this reason that my administration has maintained a relentless focus on reviving the economy and job growth. in order to deal with this crisis we have had to make a number of difficult decisions,

some of which are very unpopular. but as many of you have reported, today, we are starting to see some hopeful signs. when i last spoke to the members of the business council soon after taking office, the economy was losing an average of 750,000 jobs each month. today, america is adding jobs again. last year, the economy was in free fall. today, the economy is growing again. we have seen the fastest growth -- turnaround in growth in nearly three decades. while we have been seeing a steady decline in manufacturing, we learned yesterday that manufacturing expanded in april for the ninth consecutive month and at the fastest pace in nearly six years. by no stretch of the imagination can we declare victory, not until those millions of our neighbors who are looking for work can find work, not until eight incomes and economic

security are actually -- not until incomes and economic security are actually increasing. the we have seen -- we have seen some just flat line over the last decade after the 1990's. and not until we face the weaknesses in our economy that preceded this recession, problems that were allowed to fester for decades. we have been reminded of late that we can also face at any time a sudden and cross the crisis that can harm our economy. one of the recession' -- one of these examples is what happened with the bp oil spill. it will affect everything from the fishing industry to the tourism industry. we are committed to preventing the economic damage as much as possible by working to contain this spill. in addition, wherever possible, i would like to see the people most affected be involved in the

cleanup. we will continue to explore every possible way to create jobs, but obviously there will be a significant challenge. we are going to be working overtime to make sure we mitigate its impact. more broadly, spurring job creation and economic expansion continues to be our number one priority. that is why, as i have said from the very beginning of my administration, we cannot just rebuild the economy to where it was. we will have to rebuild its stronger than before on a new foundation of lasting growth. we have to tackle structural problems from education to energy, from our financial system to our health care system, from our trade imbalance to our fiscal imbalance. it did not just lead to two gears of recession, but a decade

of economic insecure -- two years of recession, but indicative income -- economic and security for families -- a decade of economic insecurity for families. if you turn on cable news, you might run into folks with strong feelings, and also some misleading claims about the view of my administration on the subject. what has guided me throughout the last year and half of, what has informed the decisions i have made is a fundamental belief in markets that are free and open to all who are willing to work hard and pursue their talents. i believe businesses like yours are what drives growth and create the conditions in which families and small businesses can thrive. i believe america's greatest strength has always been the society that values and rewards to the ingenuity people. that does not relieve government

of its responsibility to help foster sustained economic growth and to ensure our markets are functioning freely. government cannot light a spark in the mind of an engineer, but it can help an engineering student get loans to help pay for tuition. government will seldom be the source for innovative products, but it can invest in a search that is not necessarily profitable in the near term, but holds vast potential and the long term. government can build the infrastructure that allows products and services to reach customers. government can create incentives and clean energy, for example, that promote innovation and exports. these things are public goods that no business, no individual is going to provide on their own, but they create a favorable environment in which everybody, companies across the country can open and expand. that is why this new foundation

we seek to build, part of it is investing in education. our economic success depends on making sure people have the skills to match their talents. we launched a competition last year based on a simple idea. instead of funding the status quo, we will only invest in reform. we have recently announced the first winners in what we are calling the race to the top. states are implementing reforms to raise the student achievement, to improve education in math and science and to turn around schools that steal the future of too many young americans. as part of this effort, i have promised to speak at a commencement at the high-school every year to help prepare students for their college and career. today, in fact, we have voted to narrow down the finalists. i will be speaking to folks in kalamazoo, michigan. those of you based in michigan, you should be pleased.

daud giants. -- go giant. we're looking forward to talking to those people. america will once again have the highest proportion of college graduates in the world by 2020. we are making progress towards meeting that. we will end unnecessary taxpayer subsidies that go to financial intermediaries for student loans. the bill also includes one of the most significant investments in community colleges in history because community colleges are a career path way for the children of so many working families. and last night during our discussion, a theme that continually came up was the fact that there are a lot of skilled jobs out there that do not necessarily require fourth-year college degrees -- four-year college degrees, but they are not being filled because we do not have basic math skills, for example. we see our investment in the

community colleges as a potential way to bridge that, even as we are working on improving k-12 outcomes. we are seeing rising enrollment in both two-year and four-year schools across america. and we want to be sure that folks that are enrolling are getting the best education possible so they can serve effectively as part of the work force. next, we tackle what has been an undeniable drag on our economy, and that is, the cost of health care. i appreciate the willingness of many of the leaders in this room, including iran and angela and some people i spoke to yesterday. -- including ron and angela and some people i spoke yesterday. i believe the passage of this legislation is good for america's businesses. two weeks ago, 4 million small businesses found a postcard from the irs in their mailboxes and it was actually one of those moments where something from the irs was a welcome discovery. because of the reforms that were

passed, millions of small- business owners are eligible for a health-care tax cut this year worth perhaps tens of thousands of dollars to welcome afford the coverage to their employes. businesses will also be eligible for additional relief to provide insurance for employees who are owed to vote for medicare. a lot of the businesses in this room can start applying for that this june. it used to be that if you work for a company, you could count on health care insurance until you were ready to retire with medicare. but those companies that have been providing insurance to its employees has been cut in half in the last two decades. this is going to be a welcome reform for many businesses that are trying to do the right thing by the retirees and for the retirees themselves. it will provide a bridge for when health exchanges come on line in a few years.

we are only at the beginning. many of the provisions in the health care bill have yet to be implemented. i am pleased to say, though, that already the insurance companies -- many insurance companies are accelerating the implementation of this law. many insurance companies have decided to allow parents, 47, to add their young adult children to their policies now -- for example, to add their young adult children to their policies now instead of next fall. others have stopped the practice of recision, where people are dropped from their coverage after they get sick. these steps are all greatly appreciated. they are the right thing to do. we will hold these the companies accountable to the word -- to their word and to the law, not to be vindictive, but to fulfil our responsibility to the american people. i think we have seen that spirit of cooperation over the last several weeks that i am very happy about. even as we seek to improve the skills of our workforce and

reduce the crushing burden of health care costs on businesses and families, this alone will not be enough to drive the 21st century global economy. but we need to be sure that our economy is fostering and rewarding innovation. that is why we are building the infrastructure of tomorrow, investing in an expanding broadbent taxes, health care technology, clean energy, the first high-speed rail network in america. that is why we have devoted more than 3% of our gdp to research and development, in an amount that exceeds the level achieved even at the height of the space race. we have also made strides toward making the tax credit permanent, a tax credit that helps companies like yours afford the high cost of developing new products and technologies. ultimately, the key to our long- term prosperity will be sparking even greater innovation than we have already seen. that is why in my state of the

union address, i set a goal of doubling our exports over the next five years to an increase that would support 2 million jobs. to help meet its goal, we launched a program that will help significantly ramp up the effort for u.s. exporters. while always keeping our security needs in mind, we're going to forward export controls to eliminate unnecessary barriers. we will be able to send more products to markets overseas. and we're going to pursue a more strategic and aggressive effort to open up new markets for our goods. we also have to recognize that the long-term economic health of our country depends on addressing the fiscal health of our government. i know that will be a significant topic of discussion

today. we continue to face the on the the crop -- the consequences of the economic and fiscal crisis, we also face a structural deficit that is unsustainable. the day i walked in the door, the deficit stood at -- stood at $1.3 trillion with projections of $8.3 trillion over the next 10 years. even though we have made massive investments to rebuild the economy in the short term, we will do what is necessary to spur job creation and economic growth. but we also have to rein in that these deficits in the long run. that is why i insisted that health reform not add to that -- to the national debt. in fact, it is expected to bring down the deficit by $1 trillion in the next decade. and the government cannot stand on either tax cuts or new spending and thus it goes

through this program. the we have also proposed -- we have also proposed a freeze in government spending for three years. it eliminates loopholes for oil and gas companies, as well as tax breaks for the wealthiest 2% of america, just because we cannot afford it. and finally, i have appointed a bipartisan commission to look at the growing gap between what the government spends and what the government raises in revenue. i understand some of you got a briefing on this in preparation for today's meeting. i think you understand the choices will be tough. but we are determined to make these tough choices. we are determined to put our nation on a stronger fiscal footing because in the end, we need to be a country that is more consumed with what we build and create then what we borrow

and consumed. that is where we need to get to, that is where we need to be. none of these steps will matter if our financial system remains vulnerable like the crisis we have just been through. as we have learned so painfully in recent years, government has an obligation to set basic common sense rules in the marketplace. this is not a hindrance. it is essential to the functioning of the market. in the absence of these roles, it becomes more attractive to compete with the system than with in it. at worst, it can put the entire financial system in jeopardy, which serves no one. that is why i am working to pass a set of reforms to will wall street account all and protect consumers. the reforms we have proposed are in no way designed to hamstring businesses.

these are changes to make sure our markets are working in a way that is open and transparent and inoculated against the kind of massive, dangerous risks that nearly brought the entire financial system down. -- the entire financial sector down. that is in the interest of the businesses here, and the economy has a whole. you'll be hearing from my treasury secretary tim geithner will speak to these issues in greater detail. first, they create " we did not have before, and that is a way to protect the financial system and the american taxpayers in the event that a financial firm collapses. we call this resolution authority and had fallen short -- and it will ensure that no taxpayer is ever get on the hook because a firm is deemed too big to fail. second, these will bring transparency to our financial markets. part of what led to this crisis is that firms like aig made huge

and risky bets using complicated derivatives and other financial and support -- instruments that defied accountability and even common sense. we believe there is a role for these products and our economy. they can help allay risks, spur investment, and they can be used for legitimate managing exposure to court -- to fluctuating prices and currency. but my position since beginning has been simple. we cannot have a $600 trillion market operating in the dark. we want to make sure that the bulk of them take place in an open exchange and the rest take place in the full light of day, in full view of those charged with oversight. the third thing is to enact the strongest consumer financial productions ever. this financial crisis was not just the result of decisions made on wall street. it was the result of decisions

made around kitchen tables all across america by folks who took on mortgages and credit cards and auto loans and to many to got obligations that they knew they could not afford. millions of others were frankly, duped. they were misled by deceptive terms and conditions buried in the fine print. that is why we need to give consumers more protection in our financial system. with a dedicated agencies setting ground rules and looking out for ordinary people in our financial system, we will be able to empower consumers with clear information when they are making financial decisions. that way, instead of offering consumers a confusing products, consumers will benefit from companies that are competing the old fashioned way, by offering better products. and i believe that unless your business model depends on helping people, there is little to fear from building these

roles. it is just for empowering consumers to know what they are getting into. finally, we give investors more say and more sway in the financial system. these wall street reforms will give shareholders a voice with respect to salaries and bonuses awarded to top executives. that is one -- what reform will look like. i am pleased that the filibuster was dropped in the senate and members on the other side of the aisle agreed to allow a debate. we expect a vigorous debate with amendments on both side. make no mistake, we cannot allow these reforms to be watered down. for those of you in the financial industry, for those companies that may be seeking to weaken this bill, i want to urge you to join us rather than to fight us. but it does not mean that there will not be legitimate differences on the details of what is a complicated piece of

legislation. but in its broad parameters, this is reasonable and non- ideological. and i believe there in the interest of not just the broader economy, but the financial sector as well. this will also make our system stronger and more competitive, instilling confidence here and, and across the globe. i want america's financial sector to be the -- to continue to be the most trusted and respected in the world. that requires reform. this brings me to a final statement. we face some big challenges right now. the only way we will get through them, the only way we ever have is if we align the interests of workers and businesses around a common purpose. at a time of such economic

anxiety, it is tempting and frankly, sometimes easier to turn against one another. politicians can rail against wall street or against each other, businesses can fault capitol hill. all of this makes for easy talking points and political theater, but does not solve our problems. it just drops and the same debates that have held us back for a long time. -- traps us in the same debates that have held us back for a long time. i do not believe we can afford that kind of politics anymore, not now. i believe we are in this together. i believe we will succeed or falter as one people, but i am confident that if we can rise above these failures of the past we will not only recover, but emerged stronger than before. that is represented by the caliber of the businesses in this room and the skill and talent of our people. i believe, and i know you

believe, that our best days are still ahead of us. yes, these have been a very difficult two years. but the storm is receding. and this guy's are brightening. and america is poised -- the skies are frightening. and america as boys went into -- these guys are brightening. and america's boys once again -- america is poised once again to lead the world. thank you. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> the president they're speaking to the business council at a conference in washington d.c. he did make some remarks about education. one of the president's goals this year is an education overall and as part of that, house lawmakers holding a hearing today with testimony on the importance of high quality teachers, principals, and community leaders. testimony from school superintendents and the american federation of teachers, live coverage coming up at 2:00 p.m. eastern time on a companion network c-span3. >> c-span, are content is available on television, radio, and online. and you can also connect with us on twitter, facebook, and u2, and son of for our scheduled

alert e-mails @ -- and youtube of.com and sign up for our scheduled alert e-mails atoll c- span.org. >> from today's "washington journal," a discussion of the role of credit rating agencies in the financial crisis. gged considerably in fundraising. host: we have our next guest here to talk about credit rating agencies. it is something that people have heard a lot about over the last year. these agencies and the role they play in the financial meltdown that we saw. what is a credit rating agency? guest: it is an agency that is licensed by the sec and makes

valuations of the quality of investments, corporate bonds, municipal bonds, sovereign debt. they raided them like a teacher would rate a student with grades. the highest grade, aaa. that is considered a solid investment. the ratings go down the letters. three major agencies use slightly different lettering. the investment is starting respective when you get to the los b's. -- low b's. if you want to demonstrate your a financial institution that has adequate capital to keep functioning in a bad financial situation, you are required to

hold triple a rating bonds. there is a required portfolio on certain triple-a-rated bonds. they play an important role in the financial system. they are graders of the quality of investors -- investments. the credit bridgett -- the credit rating agencies evaluate the quality of sub-prime investments. that was a problem in the sub- prime crisis. you are making a loan to someone whose creditworthiness is questionable. these loans got repackaged into mortgage-backed securities. host: those were a bunch of these sub-prime mortgages into one package. guest: exactly. then they got collateralized debt obligations.

they're rated at different levels. the problem is the credit rating agencies were brought in by the bank we're trying to sell these prime investments. they use the exact same rating system for these investments that they use for highly state bonds. they made a decision that the state this of these investments would get a triple a rating. as it moved from the loan to the mortgage-backed security, people lost track of the real financial transaction here, which was the loan was made it to somebody who did not have the credits that was normally available when you make a loan. many of these were fraudulently induce. either the people or the mortgage broker -- a bus driver was written down to have a $5,000 income.

the credit rating agencies said -- $400,000 income. the credit rating agencies were responsible for some that got approved for loans that did not have the credit. they're looking at it credit 8 ratings that were supposed to be safe. host: did they give a rating just on the loan? guest: the agency is supposed to go back to the original transaction, analyze it. what angered a lot of people is that they should not have used aaa ratings, which of the listeners know indicates a very

safe investment. the agency said, you do not understand. this was triple a for its sub- prime mortgage or a mortgage may to somebody who may not be able to pay it back. there was a lot of confusion in the industry. it is complicated that the people who created these collateralized debt obligations were paying the credit rating agencies for their evaluation. that is how it has been done for many years. the agencies are paid by people to issue bonds. in this scenario, there was a hearing last week. the chairman made it clear that there were all sorts of conflicts. the banks were in negotiations over the payment for the ratings at the same time the ratings

were done. there were conflicts of interest. people did not know the algorithms that for used were way out of date and too simplistic for determining the likelihood of these investments would pay off. less week, senator levin demonstrated that sometime in 2005, the three major credit ratings did not do this in a way that showed the investment public what these investments were worth. it gave the impression that they were much safer than they were. there were working at better signals. it took them until 2006 to get them in place. they only apply to them going forward and left the old investments under the prior standard. sometime in 2007, the credit rating agencies are madly

readjusting and saying what we told u.s. triple a, is not investment rating. investors found out that what was gold-plated was junk status. it is sent a shot into the system that caused the crisis itself host: you were referring to the goldman executives -- guest: it was before goldman. they brought in moody's and the three major ones. there were others that are more prominently known. he cross-examined the credit rating agency executives and said, what is going on? recent terrible signals into the economy. many bought these thinking they were buying gold plated investments. it was nothing more than junk.

in 2007, 91% of these sub-prime investments dropped to junk status. almost overnight. host: on the goldman hearing that followed this, people heard about the credit rating agencies and the role they played with goldman and now this suit been filed against the firm. what is happening there? guest: there were a couple of competing theories that led to the meltdown. one is, it does not matter how much a person who gets a mortgage gets paid. the appreciating value of the house will skyrocket. that will form something where these mortgages will be paid off. there was no risk. the credit rating agencies were initially part of that. there was no risk.

even if you cannot afford your home, it would appreciate before you knew what would happen and you could extract that appreciating value to pay the mortgages. there was a competing be represented by this investor john paulson who plays an active role in the sec against coleman where he made the rational decision, this is -- against goldman for he made to the rational decision saying this is a guess people who do not have good credit and pay their mortgages. i bet they will not pay their mortgages. he went through these collateralized debt obligations and picked out the weakest by virtue of the credit rating agencies. he looked for the junk bond status. he assembled a bunch of them. he said, even though we did not own them, and that these investments will fail. it is like trying to find insurance on somebody else's house that is about to be lit on

fire. you cannot do that in the insurance industry. in is how highly -- he was able to say, i want to ensure we can invest in this. they had to find somebody to do the insurance. the claim is goldman defrauded a very small insurance company into taking the opposite side of that bet. we will insure these houses about to go up in smoke. it pasted of its obligation to the royal bank of scotland. when paulson won his bet and these sub-prime mortgages defaulted, the ones he picked up that were read -- week, there is no capital to pay off paulson. that explains the meltdown. the american taxpayer has been the lender of last resort to

people who were betting that things would fail even though they did not own them. the people that took the bet and the most prominent, aig did not have the capital to pay them off so we the taxpayer did. host: mark democratic line, philadelphia, pennsylvania. caller: i was watching cnbc regarding the financial muscle bump. they had an interview with someone from the rating services. he was coming up with a bond rating. he said i cannot come up with this unable to do it. he had been in the business for ages. some say he cannot generate revenue for the ratings on.

the credit agencies committed fraud. i am not an attorney but an accountant. if it was not criminal fraud, it was civil fraud. either they get hit with criminal fraud and wire these credit agencies not going to jail? guest: you ask some very good questions. first, senator ben cardin has introduced legislation trying to be added to the senate financial reform package that will allow whistle-blowers within these companies to call out the credit agencies -- rating agencies and not be in a position to be fired. there were tons of emails within the company's employees said,

this is not working. we are not doing the right thing. many people got fired and quit because they understood this was where people who were selling the city knows -- ceos were paying for their grades like a student paying their professor for their grades. some have been very aggressive with the way these agencies were done. the pending senate legislation has a provision that allows people who have been defrauded to rosalyn negligence of these companies to sue these companies for damages. that is one measure that will be a controlling factor to present a common sense evaluations on these transactions.

host: will these proposals be part of the financial regulation bills and the senate? guest: one part is in the legislation right now. it is considered by the senate. many think a standard could have been mapped in this environment. the house has a similar provision. senator carden is going to offer an amendment that will protect people so they do not get fired that the this is something very dangerous to the economy. we talk about the great recession, the milk down, the bailout, the credit rating agencies must take the blame for this. host: voting starts today on amendments. they expect this to go a couple of weeks.

what else in this bill is related to the credit rating agencies? guest: coleman dealt with some of these. there were various evaluations the agencies made. paulson did his own investigation and bet against them. finding someone to take the opposite end of the debt. those transactions have to be conducted on a formal transparent exchange with all of this information going to regulators. they have the ability to say, what is this all about? this has nothing to do with the real economy. paulson has not been accused of doing anything wrong. amos betting that people would get kicked out of their houses. he wanted to find people to say their mortgages would be fine. there is a provision that says

if this is a gaming transaction, go to las vegas where it is regulated. the regulators have a right to say this has no real bind to the economy. it is a threat, because the taxpayers are the bank of -- banker of last resort to the casinos that did not have enough money to pay off their bets. caller: this is going to boil down to regulatory positions. right off the top of my head, i will throw out some people who were driven out of government. why did you leave your government position? another is elliott spitzer. we need people like this at the top who will watch out for

public interest. guest: back in 1997 and 1999, we attempted to regulate what are called synthetic cbo's which were completely unregulated -- cdo's, which were completely unregulated. the $600 trillion value worldwide, 10 times the world in gdp and there is no meaningful regulation. these derivatives. these are the things raided by the credit agencies. the senate legislation will control this if it passes by bringing them into the light, having regulators look at them. one woman -- alan greenspan,

larry summers, many of the congressman were unsympathetic to what she was doing. her views have seen the light of day. there are others like sheila bear in the treasury department' and mary schapiro ad gary gensler and -- back in the clinton administration was dubious about regulating these instruments. he has come back and has been one of the most particulates advocates within the administration for the kind of legislation working its way through congress. host: there is talk about one approaching chairman greenspan and been rejected. there is a piece yes today that i read talking about that she

came up with concepts for regulating the derivatives. but she never put forth proposals for this. even that was not received well. guest: there is a pbs frontline documented in -- documentary the details this entire experience. i am sure it is on the website. in early 1998, we saw the market was developing. at that time it was $27 trillion. we saw this market had no transparency. it did not have capital been brought to the table. people were making billions of dollars with commitment and nothing in the bank to back it up. that is like selling a stock to a bond or insurance.

everybody has to have capital, but not here. we could see that this was pointed be a problem down the road. orange county had gone bankrupt in 1984. there was a scandal on wall street. one report was issued to regulate this stuff. we came along to a concept release like a white paper. it is used by french regulators. we had a chinese menu of proposals to regulate these markets. they were just proposals. even though they were proposals, when they were issued, bob rubin and alan greenspan and arthur who had said he was wrong

issued a statement saying congress should stop this woman. she is going to destroy the economy. six months later, congress stopped us. six months after that, they completely deregulated these instruments from all federal oversight and most state oversight. i told you this is nothing more than gaining. to get the market going, the statute's pre-emptive certain things. a state cannot say, this is nothing more than gambling. it is not license. it is outlawed in our state. without the provision, this market and this meltdown would have died and early death. .

host: give our viewers are interested, there is a book called "economics of discretio destruction" and the author does not give his or her name. when the book came out, wall street went crazy. and your office was getting calls left and right that this was actually going to happen. guest: there were two famous incident that were going to happen, the first was that he got a call from larry summers and he said, i have 13 bankers in my office and they say, if you do this -- mind you, this was in 1998 -- we will have the work -- worst economic crisis since world war ii. well, we had a the worst depression since the great depression because berkeley was stopped in her tracks. and -- brooksley was stopped in her tracks. the april 21st, 1998 meeting in

the conference room of the secretary of the treasury where rubin, somers, greenspan and levitt, in front of all the government regulators and white house officials, one by one took warren to task and asked her not to do this. she did it anyway and then congress stopped her in her tracks. most people believed that had we had transparency in 1998, 1999, 2000, we would have a thriving economy right now. the only reason our economy is in trouble right now is that we blew a multi-trillion dollar hole in it because the casinos didn't have the capital to pay off their bets, and now the american taxpayers had to do it. we paid. we have gone into huge deficit. one in six americans is unemployed or underemployed and much feels a sense of high economic insecurity and as we sit here today, greece,

portugal, spain and italy are on the threshholds of default. the euro is in crisis. why? currency swaps and unregulated derivatives credit the fault swap. the european commission wants to ban these instruments outright. we're talking with mr. greenberger about credit rating agencies and the debate going on about financial regulation. he now serves on the financial inquiry crisis commission, which is meeting this week, and has hearings a couple times this week. go to c-span.org for that schedule. ron on the independent line, you're next. go ahead. caller: the previous call her a similar question about has anybody been tried for fraud and i'll bring this back to 2005. i i know you're talking about the c.b.o.'s and mortgages but standard & poor's and some of

the other ones gave ford and general motors junk bond status. at the time it didn't seem good but it seemed fair. in hindsight, it's totally not fair because i have a sibling that works for gmac and it was then sold 51% to cerberus and that was one money making entity general motors had. had they not done that, they might have kept it and it might not have gone bankrupt. it goes beyond the housing market as well. while there have been many criticisms of what the credit rating agencies have done are talking about their rating of subprime mortgages which is an esoteric business they shouldn't have gotten in to begin with. senator levin's hearings pointed that out, but even in their main line of work, which is rating bonds of companies, five days before enron failed, they still were rating enron bonds as investment grade quality.

the morning that lehman brothers failed, the rating agencies were still rating lehman bonds as having investment grade quality, so there is a lot of concern about this. the legislation that is pending now tries to deal with it. the s.e.c. has tried to deal with it, and in fairness, the credit rating agencies themselves have adopted reforms, but many people believe there is a funds amountal problem here, and it's the teacher paying the professor for the grade. the people who need high grades for their investments pay the credit rating agency for that investment, and a lot of people believe that the fundamental flaw in the system that is not fully addressed by either the legislation that is pending or the s.e.c. actions. host: why doesn't the government give credit ratings ? >> i must say there are many debates about how to debate with this. one of them is that the government should do it. for some reason, that argument

hasn't taken hold. i think throughout this debate on financial reform, there has sort of been a conservative view of let's keep the system as it is, but tinker with it. there is a very prominent professor at the stern school of business at n.y.u. lawrence wright who has said forget about certifying these people as being somehow knowing all. let's get a lot of competition from investment advisory services and let's get people in here and use good common sense to rate these things, and by the way, the people who need the ratings shouldn't be able to go to credit rating agencies and say give me a letter grade. his view is that they have a burden to explain to the investing public using all these different services why their investments are solid investments. they shouldn't just use the simple thing of a triple a rating. host: battle creek, michigan on the democratic line, go ahead.

caller: i'd like to know, you seem to be saying we have to reregulate -- reform the financial system, and that seems pretty obvious to me, but there is opposition from the conservatives and the traditional free marketers that you don't want to regulate, you know, you don't want to reform, you just want the free market to do whatever it is going to do. what are the chances of real reform and real regulation getting through, say, the senate, where things seem to get bottled up? is there political will behind this? guest: there is political will behind this, but the vested interests, wall street, big fortune 500 companies, the big that goes to the floor of the senate is now written and is quite a good bill. i wouldn't say it's perfect, but it's very, very good. there are efforts as we speak to weaken it, and i think for people who care about this, they should read about it. my own personal view is that

senators should be told the time has come to rein in the casino and start using money to create jobs, medical countermeasures, things that help the american public. this casino atmosphere of betting whether a market is going to go up or a market is going to go down and one of the bettors not having the capital has got to end. we need to go back to old fashioned american ingenuity and build things and create things and not have slips of paper that represents betting obligations. host: our next call comes from vegas, michael on the republican line. go ahead. caller: good morning. first i want to say that i think c-span is probably about the only place you can hear the truth about anything. the news media seem to -- you can listen to 100 reports and you couldn't get 1/10 of the information this guy just gave

people because it's just so stupid, but these gambling -- so many people in the news media go along and say this was all a set price. the truth is if you took all the subprime homes in the united states and bought them and gave them to the people, you would be talking about less than a trillion dollars. we have thrown away ten to 20 times that in this game and the problem is when mr. paulson came along, it wasn't that, you know, he came along and had this great idea. they were all doing this. all the banks were doing. this i think most people don't know that all of this is that all the product on earth is $60 trillion and these derivatives and c.e.o.'s and credit defaults they add it up to $100 trillion. host: we'll leave it there. we're having trouble hearing you. what about the point? guest: the point is well taken. i think up until the last few

weeks, most people thought the meltdown was directly related by people unable to pay their mortgages. that was the problem, but that problem was multiplied by a factor of three or four by the betting on whether people would pay the mortgages. if we didn't have the betting and the american taxpayer having to be the lender of last resort to the casinos like a.i.g.'s and merrill lynches who had to be bought by bank of america, if we didn't have the betting, this crisis would have been a lot smaller. we wouldn't have one in six americans either unemployed or underemployed. >> host: we will go to mike in arkansas. good morning. caller: good morning. thank you for c-span. i wish we could get c-span 3 with directv but that's another story. my question fits into your criteria, i hope. i live on social security. i used to have an extremely high credit score.

through some bad dealings and a loss of a home and a fire, et cetera, my credit score is now in the low 500's. i used to receive credit card offers from every bank on the planet, you know, and just junk after junk after junk. when my credit score dropped, i quit receiving all this stuff, and i got to wondering, well, somebody evidently is getting my information from the credit bureaus and how are they doing that without my authority or if i make a loan at a bank do i sign something that says ok, we can release the information to the credit bureaus and they can just sell it to whoever they want? what is the law here and when does invasion of privacy come in? >> when you apply for a loan, you allow the person you're trying to get money from, whether it be a bank or credit card company to look at your credit card score. credit card scores is another gaming system. you can, by using certain devices, get your credit score way back up, by challenging

certain transactions. that's a subject really for another day, but the point i think that you raise is a good one. we have been talking about subprime mortgages and the gambling that is built around subprime mortgages. the same instruments are built around prime mortgages, commercial real estate mortgages, credit card loans, auto loans, and this could trigger the same house of cards that collapseed in the subprime mortgage and keep your eye on what's happening in southern europe and to the euro. greece, a week ago they needed $30 billion, two days later $60 billion and two days later $120 billion. yesterday the european union agreed to give greece $160 billion. germany is giving greece $30 billion because if greece collapses, the whole european union will collapse, and

obviously, that will cause worldwide ramifications. how did this get started? currency swaps. greece bought, for example, $300 million from goldman sachs, a package that made it appear that they had no debt, so they could gain entry into the european union. greece now has a huge debt. now the investment companies are buying credit default swaps on greece's, whether or not they will survive financially, and those people who are betting that greece will fail have enough economic power to deny greece, portugal, spain loans at commercial rates. that's why the european union has got to flood in taxpayer dollars from those countries to save greece and soon they may have to do it for spain and portugal, too. host: san antonio, mike on the

democratic line. you're on the air. caller: thank you. thanks for c-span. i have a comment and a question. my comment is i think the people making all the money off of these scams knew exactly what was going on, because it doesn't seem that complicated to me, and my question is, when these people count their losses from the defaults on these loans, are they counting out, like, if you borrow 30 grand for a house and you pay it back in 30 years you pay back 150 grand. do these people count when someone defaults on a $30,000 loan, do they count that they have lost $120,000 in equity? guest: all i can tell you is when we gave money to a.i.g. to bail a.i.g. out, that money went in the front door of a.i.g., $160 to $180 billion and out the back door to people who i believe used a.i.g. as the betting thing, that a.i.g. was

betting the market would stabilize. the paulsons, the goldmans of this world were betting it would collapse. they won the bet. the paul sons and goldmans, et cetera. we paid that bet off 100 scents on the dollar. goldman sachs got at least $12.9 billion in taxpayer money that went into a.i.g. and out to them at 100 cents on the dollar, so whatever they insured, whatever trawn muchs they picked out said these things will fail, we don't want to bet on, that but you and i paid goldman to be sure they would be able to collect their bets. by the way, if they didn't collect that bet, their balance sheet would have gone awry and they would have been in significant financial difficulty as well. just think about they had a liability or an asset, rather, of $12.9 billion. if we didn't pay a.i.g. and a.i.g. didn't pay goldman, they would have been minus $12.9

billion. host: my tweets are rated a.a.a. and i started a tweeting agency, sar cam, but there is -- sarcasm, but there is a market for the credit rating agencies. guest: for credit rating agencies there is a market but i think the whole dependence, they won't go away, but people are going to be asking, in fact, the fed even in dealing with its own assets that it has taken in, is looking to other sources of intelligent evaluation, investment advisory services, economists and i think there is a market here for people who can provide >> house lawmakers today holding a hearing on education

with testimony on the importance of high-quality teachers, principals and leaders. witnesses include school superintendents and the president of the american federation of teachers. live coverage at 2:00 p.m. eastern on our companion network, c-span 3. >> i am glad the only person whose ratings fell more than last year is here today. good evening, jay. >> go back and watch past videos. every program since 1987. watch what you want when you want. >> the u.s. house is in at 12:30, in about 15 minutes, for general speeches. but until then, more from today's "washington journal." closing the main door to the supreme court since troubling signals, he says.

it is a grand affront, architecturally, symbolically, and politically. that is this morning in "the washington post" about the

decision to close the front doors of the supreme court because of security concerns. the federal page of "the washington post" this morning says the new interestentrance ws designed based on a security study in 2001 and 2009. it says here that security enhancements have been part of a nearly seven-year renovations at the court. a proposal to blockade second street after the september 11, 2001 attack was rejected. it says that the 44 marble steps leading to the entrance have taken on a romantic and symbolic

importance for the court and the public. justice breyer said -- a new justices first public appearances on the steps. many remember the supreme court special we did. it is something that aired here on c-span. you can go to our web site if you want to see that. c-span is out with a new book based on that documentary. we will talk later on in the program with mark farkas, the executive producer. it is on sale today at your favorite bookseller.

in one of the interviews that we did, we talked to justice kennedy about the front entrance. he had some thoughts on what it means to walk through there. we will show you that and come back. >> it is important for the justices. it is important for the attorneys. it is important for the public to make sure people always want to come up the steps. not a day goes by that we must ask ourselves, "are we doing our jobs the right way?" host: the supreme court announced that it would close the front entrance. we want to hear from you this morning. what do you think about the symbolism of the front doors and security concerns? if you are going to be coming to the court to visit, you'll have to enter through the side entrances. here is "the washington post" picture today.

the first phone call on this, lancaster, pa.. john on the line for independents. john, what you think about the supreme court closing their doors? caller: they should let corporate clients come in the front door and let everybody else go in the side doors to reflect that the supreme court. i think it is crazy. we're living in fear and every aspect of our lives. host: when chief justice john roberts was selected for a spot on the court, he said, "i always got a lump in my throat when i walked up those steps." that was chief justice john roberts on entering through the front doors. we want to get your phone calls this morning. we will put the phone numbers on the screen.

democrats, 202-737-0002. republicans, 202-737-0001. independents, 202-628-0205. remember, you can also send us a tweet. a little bit this morning from "the washington post." he writes in the style section of "the washington post" -- "the full impact of the supreme court is concentrated in this entrance. it is the essential first experience of a design that breaks with the highly domestic base of the white house and the balanced deliberative chambers of the capitol."

it gives way to a much austere space as if the court is advertising its majesty on the outside while allowing a surprising amount of democratic proximity on the inside. despite its name, the great hall leads very quickly to the courtroom. in architectual terms, it may be the most immediately accessible branch of government and justice is awe inspiring and available to all swiftly and without distinction. baton rouge, diana on the democratic line. what are your thoughts on the court closing its front door? caller: thank you very much for c-span. i'm horrified just about everything going on these days. caller: we have done such a

great job in the last decade of exporting democracy that we have exported all of it, i think. second of all, from now on, i think we should have all of the senators and representatives, in like nascar drivers with all the patches on them with all the corporations that are telling them what to do. thank you very much. have a good day. host: philadelphia, karen on the line for democrats. good morning, karen. what are your thoughts on the supreme court closing its doors? caller: what is next? visiting the liberty bell in

philadelphia? these things are part of our heritage. taxpayers have a right to know what is going on in washington. i think it is part of transparency to have our heritage available to ourselves. thank you. host: karen, are you still there? some say that you can still exit those doors. caller: well, it is up to the people in that community. they have different laws there. host: "the washington post" says visitors can still leave through the grand front doors is of little comfort. damascus, md., joe on the line for independents.

caller: good morning. if the objective of terrorism is to achieve -- i think the closing of the front doors is a major step forward in regards to that. host: the writer agrees with you. los angeles, trudy on the line for republicademocrats, what dou think? caller: having been to washington, d.c. just one time

in my life, and i remember the feel of locking up those steps -- walking up those steps. and the majestic feeling to our court system, and i have worked in other courts and so on. just walking up and walking into those doors made you feel the respect that the court should command. i'm not sure it commands that respect as much as it did when i was younger. if you take away the symbols while you are not doing the job in the same way, it loses something. it takes something away from the american dialogue.

i think it is a big thing to be missed. host: wesley on the line for independents. good morning. caller: i think perhaps the supreme court -- what they're doing now probably reflects their fear of the people. they are becoming more and more non reflective of the people's wishes. for instance, their decisions ever since bush versus, thank yu very much. guest: thank you. host: we are talking about supreme court's decision to close its front doors because of security concerns. here is "the washington post." that is philip kennicott article in the style section. what do you think about the decision?

caller: i think it is a darn shame. the people have the right to enter and see what is going on in our country, especially now. with our security the way it is, we're in trouble. i think the people need to find out more and to go to the polls and to get a stronger party that will protect us as people. not just for our country, but for our jobs, for our health, and for everything. we're losing our rights and i do not think it is fair. host: memphis, tenn., jasper on the line for democrats. caller: they supreme court --

the supreme court -- for all the right wing's to politicize this about the supreme court, they are the reason the supreme court is closing the doors. there's no way that -- host: what do you do for a living? do you belong to a union? caller: no, i am independent. i run a small truckline. believe me, is tough out here. most of the laws are coming directly from the supreme court -- host: what decisions specifically? about caller: eight years ago, they made a decision to wear all the money we get for fuel, that will come directly to the truck driver.

the court decided that we will just get a piece of it. those are things and really hurt the independent operators out here. host: how closely do you watch the court's? caller: i watch it real close. ever since i was 17. host: have you ever visited? caller: i never had interest in seeing the court's. the court has never been for the working class and the taxpayers of this country. they have always been for the special interest in the big money people. host: pennsylvania, betty on the line for independents. caller: hi. i agree with the former caller. i have great respect for the supreme court until they decided to make corporations people. they decided to interfere.

they decided to throw m&m maemit domain to goebbels. i do not care if they close all the doors. i have no respect for the court at all. host: maine on the line for derepublicans. they have it wrong again. they should close the borders, not the halls of justice. host: we are talking about the supreme court's decisions to close its front doors due to the security concerns. caller: honestly, because they are closing the physical doors, that no way in peeves them from doing their jobs. yes, they need to fix the border

problem, but honestly, this is a different time and a different place. we used to leave our doors open. now each and every one of us takes precautions. it does not impede the work of the court. the court does not make decisions that everybody likes. that is not the issue. i think we should be mindful -- this is a different time and place. they're trying to protect the monuments. this no way impedes the court. host: and lots of articles this morning about the car bomb in new york's on saturday >> we'll leave this recorded portion of "washington journal" as the house is coming into session for general topic speeches including legislative work today on renaming the department of the navy. live house coverage on c-span.

washington, d.c. may 4, 2010. i hereby appoint the honorable jorks a. yarmuth to act as speaker pro tempore on this day. signed, nancy pelosi, speaker of the house of representatives. the speaker pro tempore: pursuant to the order of the house of january 6, 2009, the chair will now recognize members from lists submitted by the majority and minority leaders for morning hour debate. the chair will alternate recognition between the parties with each party limited to 30 minutes and each member other than the majority an minority leaders and the minority whip limited to five minutes. the chair recognizes the gentleman from virginia, mr. connolly, for five minutes. mr. connolly: thank you, mr. speaker. as the economy faced imnent collapse in 2008, the choice between allowing a complete meltdown of the financial sector and initiating taxpayer bailouts was the best choice between the lesser 6 two evils.

it was reflective of the fact that a complete and thorough lack of financial regulation by the previous administration and previous congresses had allowed years of abuse and risky behavior by many financial institutions to subject the entire economy to unparalleled peril. we know the system was broken. consumers weren't protected. they lost trillions of dollars in their retirement funds, housing values, declines of record lows and bank lending dried up. taxpayers weren't protected, they were forced to bail out the very companies that created the economic disaster in the first place. even wall street wasn't protected as thers responsible and reckless actions of some institutions left the entire financial industry and the american economy in near collapse. when no one is protected, everybody endangered. the result the worst recession since world war ii, the highest unemployment since 1983, peaking in january, 2009, with

740,000 jobs lost. a stock market that plummeted to less than half its peak value. housing foreclosures that increasingly kept families out of their homes. millions of americans out of work. and dramatically shrinking gross domestic product. fannie mae and freddie mac holders of more than 2/3 of all the mortgages in this country clearly collapsed and they are now in government receivership. general motors and chrysler are emerging from bankruptcy only with taxpayer help, owning significant amounts of those companies as well. the finance financial sector was the epicenter. recession. between 2,000 and 2007, 27 banks failed. since then 215 have failed. the largest savings and loan failure in american history happened in july of 2008 when indy m.a.c. received. the largest bang failer happened two months later when washington mutual in existence for more than 100 years collapsed, threatening its

customers, $3.7 billion in assets. the largest insurance company failure in history, a.i.g., also occurred in late 2008. only the troubled asset relief program initiated under president bush and it's more than $170 billion taxpayer funded bailout kept a.i.g. from actual collapse. it's important to ensure that taxpayer funds are never again used to bail out private companies. we must have a procedure in place that not only ends the concept of too big to fail but prevents the financial abuses from endangering the economy in the first place. the value of the derivatives market as of october, 2008, stood at $668 trillion. i did not misspeak. the value of all the derivatives bought and sold completely unregulated totaled more than 15 times the entire world's gross domestic product. although this does not

represent $668 trillion in real wealth, it does include hundreds of trillions of dollars worth of speculative investments which remain void of any transparency today. how can we allow the massive derivative market to remain cleatly -- completely unregulated? how can we allow the risky and abusive actions of certain institutions to endanger an entire economy? how can we allow american taxpayers to be faced with the untenable choice of risking further economic collapse or funding financial institutions' misdeeds? big banks and other financial institutions cannot with one hand wave a finger at americans' face, decrying any perceived threat to their autonomy while holding up the other hand to the american taxpayer asking for a bailout. it's unconscionable, mr. speaker, to allow private risk to become public responsibility. that's why the house took action last december passing the wall street reform and consumer protection act. it is long past time that the senate join us to assure

american taxpayers that never again will they be asked to bailout misbehaving financial institutions. we must not allow the mere criminal act of oversight again, we must not continue to turn a blind eye to the abuses of the past on behalf of the american taxpayers and consumers, we must enact financial reform now. i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. the chair recognizes the gentlewoman from california, ms. sanchez, for five minutes. ms. sanchez: mr. speaker, i rise today to discuss the need to create more jobs in the american economy. we had some good news on jobs lately. the nation's unemployment rate has finally dipped below 10% and the economy added 162,000 jobs in march alone. it's a start. the economic stimulus measures in last year's recovery act are starting to pay off. but it's still not enough. over 44% of unemployed

americans have been jobless for six months or longer, the highest rate since world war ii. for the long-term unemployed that light at the end of the tunnel felt more like a freight train bearing down on them. long-term unemployment cut across nearly every industry and happens to workers of all ages. long-term unemployment is bad for families and bad for the country. long-term unemployment can permanently depress a person's future wages. a study published by the federal reserveping bank of chicago followed up on workers who lost their jobs during the recession of 2001 to 2003. it found that those working again by 2004 earned 17% less per week than they would if they cut their old job. long-term unemployment also drains the federal purse. not only increasing costs for unemployment, medicaid, but also severely reducing income tax revenue. i strongly support safety net programs to help families

survive bouts of unemployment. but in the end americans would rather work. we must help get them back to work in jobs that will allow them to care for their families and send their children to college. that's why i have introduced the public lands rehabilitation and job creation act which will create well-paying jobs, fixing roads and buildings in our nation's parks and forests. it's why i introduced the sustainable property grants act to create manufacturing jobs and installing energy efficient equipment for commercial property throughout the nation. it's why i'm working to support the president's export initiative to create well-paying manufacturing jobs by expanding overseas markets for u.s. made products. it's why i work hard to ensure our trade laws and agreements are enforced so that u.s. firms don't get undercut by countries that don't play by the rules. and it's why i spend each day in congress working with my colleagues to fix our economy. i'm working to renew the american dream.

unfortunately, there are many obstacles in the way. some members of the other body have played games with efforts to extend unemployment benefits. others are more concerned about re-- retaining corporate tax give aways than they are working to find solution that is would help us pay for job creation efforts. job creation efforts that would help families while helping to restore federal revenue. regardless of the obstacles we face, no matter how bitter our fight, nothing we experience in congress will ever compare to the challenge of supporting a family without a job. that's why to my neighbors back home in southern california i pledge to redouble my efforts to keep fighting the good fight, to work tirelessly to bring back jobs and get america back on track. and to make sure that the light at the end of the tunnel really is a ray of hope for a better tomorrow. i yield back. the speaker pro tempore: the gentlewoman yields back. pursuant to clause 12-a of rule

1, the chair declares the house in recess until approximately in recess until approximately 2:00 p.m. today.

appreciate it. guest: thank you. host: now we turn our attention to the new healthcare bill that was passed into law recently. joining us at the attention to the new health care bill that was passed into law recently and joining us at the table is alec mcgillis of "the washington post" here to talk -- also a new book, "the washington post" put out a book, "the inside story of america's new health care law and what it means for us all." you can see my notes attached there to the book. this healthcare bill. this is one from the "washington post" -- 18 states decline to run high-risk insurance pools. what's going on? guest: this is one of the first provisions in the bill that we're setting up high-risk pools across the country, a temporary thing, sort of a bridge to get us to the main provision of the bill which goes in effect in 2014. people who have pre-existing conditions who are in big trouble because they can't get plans they are going to be able to go into the high risk pools

that are being set up. this will be a a temporary stopgap until 2014. starting in 2014, insurers will have to take these people. the high risk pool will probably be a problem. it's going to be tricky to set up. there may not be enough money for it. some states are already resisting setting them up in their states. host: 18 states are declining right now. guest: yes. host: states are concerned that if funds run out there could be difficult choices, political choices, reducing benefits, raising premiums or limiting enrollment. guest: right. this is really kind of a -- this problem is because they waited until the 2014 to implement the main parts of this law, so they had to find a way to take care of people in the worst off positions until then. this is not an ideal solution. basically what you're doing is taking the sickest people and putting them into a pool which is not the way insurance is supposed to work. on top of that, you have some of

these states that are ropesed to this bill saying we're not going to cooperate. this could get messy. host: alec mcgillis is one of the coauthors of this book "inside story of the america healthcare law" and here to talk about what it means and what does it mean for doctors, hospitals, medicare. start dialing in now. the phone numbers will be on your screen. lots of questions about the impact of this. let's start with doctors, what does it mean for doctors first? guest: doctors -- it's interesting. doctors are going to see this impact but not as much impact as maybe people thought they should have. this law did not do as much as it could have to take on sort of the cost problems on the provider side for the cost problems that we're facing among hospitals, doctors, drugmakers. really the law is more focused on the insurers, and so doctors

are going to see some sort of more peripheral impacts. there is going to be more money for doctors who want to go into primary care, more money to help them with their medical loans and whatnot. they are going to be encouraged over are time to change the way they work to get into networks basically where they're working together instead of small practiced, working more on a salary rate instead of fee for service which is the way most of our healthcare is delivered now. in a lot of ways, doctors partly because they have such a powerful lobby in washington really avoided a more direct impact than they could have had. host: the story today in "the washington post" featuring the book says there is going to be an an emphasis on primary crare. guest: yes. there is a big concern that when you expand coverage as we do in this bill, that you will have a lack of access to primary crare, more people coming into the

system and just not enough doctors to go around, and so the bill does provide a substantial amount of money to encourage doctors to go into primary care to go into served and underserved areas, and again, that's not really the main thrust of the bill. host: for doctors, a big concern was reimbursement, medicare reimbursements. here is a tweet "hhs published medicare broke in 2016. boomers at 65 at 40% to the number of seniors and the health bill cuts $50 billion. what will be cut? " the cuts in medicare, there is a lot of concern about this obviously during the debate. the cuts in medicare are really -- and they were agreed to by the hospitals and doctors. they come to about $150 billion over the first ten years calling them cuts is a bit of a

misnomer. every year doctors will get more from medicare to account for inflation and the rising costs. this he are now agreeing to a smaller increase in the medicare reimbursement than they would have otherwise got they agreed to this because they realize fire department they didn't, they would take a bigger hit. this was their deal to avoid the public option. doctors and hospitals assumed the insureds were opposed to of government run option. in fact, it was the doctors and hospitals who were just as opposed to it because it would lead to lower reimbursements in all likelihood. host: a lot of questions out there, a lot of debate about what the healthcare bill will do. alec mcgillis is co-author of a new book, and mark on the republican line, you're our first phone call, go ahead.

hello, this is sheila. host: go ahead, sheila. caller: our insurance commissioner, osmgen hediner said he sent a letter to kathleen sebelius saying that georgia would not participate. i'm one of those people that needs insurance because of preexisting conditions. is there -- is the federal government going to take that over? guest: yes, sheila. you're right. he was the first commissioner to come out and say he would not go along with the high-risk pool in his state, sort of another aspect of the states' rights opposition we're seeing in a lot of states which has mostly taken, manifested itself in people saying they're going to sue about this mandate that's in the law, the mandate that everyone carry insurance.

when the insurance commissioner came out and said he would not help in setting up the high-risk pooght, kathleen sebelius said the federal government would be able to do that for the state, that there is a provision in the law that high-risk pools, states will not be left without them just because their state is refusing to cooperate. there is going to be everyone more of a problem with states not being cooperative when it comes to the really big part of the law in 2014 when we start setting up the newmarket places called exchanges that the states have to set up where people buy insurance. if states are are brie grudging and opposed to this law, that will be a tremendous problem. they are simply not helping to set up good exchanges in the state. host: mark on the are republican line from boston. go ahead. caller: if the federal government forces the states to violate their religion beliefs by violating the free expression

clauses of the united states constitution by forcing states to fund abortion and federal government is breaking the tenth amendment. host: what about the abortion provision? there is great uncertainty of how this will play out a lot of people think it is quite possible that it is actually going to be libel abortion coverage provided in these plans offered on these new exchanges. the language we ended up with is that companies can offer plans that include abortion coverage on these exchanges, on these marketplaces where we're going to buy insurance, but people who buy into those plans are going to have to write separate checks, make separate payments every month for their premiums, one to go to the bulk of their coverage, and then a very small payment like a dollar a month or something to go towards the abortion coverage a lot of people think this is going to be

so unwieldy for the inshiewrpers to implement and a lot of people will think this is crazy. why do have i i have to write for checks for my insurance plan. everyone buys into these plans will have to write separate checks for abortion coverage. there may not be a market for these plans. the people will think it is wierd and unappealing. it is actually quite possible that you're going to see little abortion coverage in these plans. it is worth noting that most private insurance plans today do include abortion coverage. lots of people don't realize it but chances are from you are getting coverage through your employer, that coverage may very well include abortion coverage. host: another tweet from gun toting dem says where is the list of the rogue 18 states? i want to call their governors." are these states able to opt out of high-risk pools? guest: they can't op ochts out.

the federal government is able to set up the pools. the bigger question is whether they will work. they set aside $5 billion over the next four years until the main parts of the bill go into effect. a lot of people think that's not enough money. right now, some states already have high-risk pools on their own and we're spending about $2 billion a year to cover 250,000 people. $5 billion over four years probably ain't going to cut it. it is not an ideal way to be helping these people in this interim period. there is a reason why this is not the permanent solution. it is not a very good solution. host: buzz on the democratic line. good morning. caller: thanks for c-span. good morning. first of all, i was curious about the tax credit that i see, you know big industry are receiving. for an individual like myself that purchases my own insurance,

i wondered if i would get a tax credit for the premiums that i pay, because my employer doesn't supply insurance or provide it. also, i wondered why the delay was implemented, because it seems like these states are juxtaposing themselves against the bill. also, i wondered if it is an insurance giveaway and how will it affect pharmaceuticals. guest: to start off on the tax credit, you make a good point. people who buy insurance on their own have to pay for their insurance on a post-tax basis. you don't get that benefit that people do when they get insurance through their employers but the idea with this new law is that you are going to -- you're still going to be paying with after-tax dollars but if your income is below a certain level, you're going to get help to buy your insurance. it is a recognition that you're kind of getting -- not getting shafted a little bit in the existing tax structure.

you're going to be gebtsing a subsidy that people who get insurance through their employer are not going to be getting. i'm not sure what your income is, but families up to $88,000 a year of income are going to be getting subsidies to help them purchase insurance on a sliding scale going up to that many as to the question about the delay, one is that implementation will be a hassle to set this system up, set up the newmarket places so they had to give themselves time to implement it. another thing is they had to delay it to make the numbers work. by waiting on the main parts of this bill, they have also reduced the cost of the bill over the first ten years of the bill, and so there is a little bit of funny number stuff going on there. finally on the pharmaceuticals, the drug industry made out pretty well in this bill. they were the industry that

right from the start tried to get in to be at the able and to -- they paid a lot in ads supporting the bill, and they were very key supporters of it. in exchange, they basically got -- avoided some of the things they were most worried about, such as reimporting drugs from canada and also letting medicare buy drugs in bulk for their medicare drug benefits. the one thing drug companies did concede basically which will help people is that there is the doughnut hole in the medicare drug benefit that a lot of seniors have to deal with and don't like is going to shrink. seniors will get a $250 check in the upcoming weeks, seniors who go into that doughnut are getting a check to sort of help them with that problem right off the bat. host: carol, independent line, you're on the air.

caller: good morning. it's nice to see you. i'm curious about all the people who call in about they don't want their taxes going towards abortions. they're so afraid of this, but they take my taxes all the time for a war that i'm morally opposed to, and i'm wondering how they can justify that anything and if they have an argument that would hold up. host: do you have a question about the implementation of this law? are you curious about anything? caller: i'm curious about so much. i'm wondering how these people think they can get out of paying taxes because they think some of it might be going toward abortions. host: yes, we got your point. alec mcgillis is a healthcare reporter and can't answer that question. eddie on the republican line. go ahead. caller: i don't consider it reform at all. i think it is more of the same.

that's all we're going to do is just insure more people. we're nation of litigants. we have twice as many lawyers as we have doctors. we're just going to have three times as many lawyers as doctors. the beauty of europe is that a doctor in a hospital is sacro sanct. you don't bite the hand that feeds you. don't go there and sue them, please. host: what about tort reform? guest: you're right. there is some language raring tort reform. i think about 25 million or $250 million to encourage states to head up some new pilot programs to deal with the problem of malpractice, concerns about malpractice. you know, and just beyond that, you said that you don't see this bill as reform, there are a lot of people that think that's really true in a broader sense,

that this bill did a lot to cover the 40 million americans that don't have coverage but didn't do enough on the side of reducing costs, not just, you know malpractice issues for people who think that is a cost driver, but really beyond that, there is a lot in this bill to try to get us to use healthcare less, to reduce our utilization in healthcare and wasteful use of healthcare, but there is not a lot to reduce the price we pay for healthcare, the price we pay for all the things we get when we go to the hospitals. host: bill on the democratic line. caller: i'm interested in looking at your book and reading it. i would also like to ask all the people that call in all the time and say that the government can't force them to buy insurance, does that mean that if i was in a car accident with their wife and child they can reach in their glove compartment and pull out $50,000 and give it to the hospital when they

arrive? guest: this is one of the big questions of this law, what people are going to make of the mandate that everyone has to have insurance. this is at the heart of the law, this idea that we're basically making insurers to behave better to cover everyone to stop doing some of the things we don't like n exchange for that, they will get all these new customers because we require people to have insurance, the idea being if you don't get insurance then you're shifting the cost to everyone when you do get sick. the argument against the mandate is, well, yes, with car insurance i got to get insurance but i don't have to buy a car. here you're saying if i'm human, i have to get insurance to cover my health and myself, but from a sort of the implementation of this law and from the way it's supposed to function, it is really going to be important that the mandate work, and that people don't find ways to skirt it and just pay the penalty. the penalty is not very big. a lot of people may pay the

penalty to get out of it and if they do that and a lot of people don't get insurance, the law really may not work because you will then have insurers basically having to cover older, sing sicker people without the benefitting of having younger, more healthy people in the pool that. is the only way this can work is if you get everyone into the pool. host: when is the deadline for insurance companies to start accepting young adults on to their parents' insurance? guest: that is in the coming months that. is one of the early provisions you can stay up to 2 6, which is a big deal for families. the biggest provision, the one that says it all, everyone including young people have to have insurance, that doesn't go in effect until 2014. host: some insurance companies have started to accept young adults on their parents'