thanks for joining us on this sunday morning. enjoy the rest of your week and and we hope you have a great week ahead. captioning institute ---www.ncicap.org--- [captions copyright national cable satellite corp. 2010] >> next, news makes with new hampshire t senator jud greg an erik holder. after that,vp executives discuss the oil spill and clean up efforts with senate and house energy committees. . . .

>> several months ago the democrats met a political calculation that the wind was at their backs on this issue, and decided to press ahead, thinking a republican would not thinking a republican would not be able to stand in the way. do you agree with that analysis? do the republicans mishandle this bill? >> we are trying to offer amendments to improve it, not stop. there is no one on this side who

does not expect a bill to move forward. we have a serious of amendments addressing some of the very serious problems the bill has. the bill in its present form is getting worse, rather than better. we will end up contracting credit on main street, undermining our nation's ability to compete internationally, and it will probably make us less stable and the regulatory regime concerning the financial houses'management. i'm concerned about the direction of the bill. no one is trying to stop it. yesterday there were a series of amendments offered. unfortunately, most of the amendments which would have moved this down the road towards creating a bill, the purpose of which would have been to make our system safer, sounder, and eliminate systemic risk, and keep america as the best place

in the world to create credit and capital so that entrepreneurs have access, which in turn creates jobs -- those two goals are the ones i want to pursue. they have been undermined. i think that the bill will do i think that the bill will do harm to capacity to create jobs. >> you believe will pass next week? >> yes, either next week or the following week. >> how is this play for november? >> i do not think most americans have really studied the intricacies of derivatives, or the complexities of how the fed regulates the bank or held the occ relates to the otf.

my feeling is most americans are upset with wall street, concerned about the economy and jobs, the recession that has cost them significant problems. and they would like to see congress do something substantial and all these areas. as for the actual nuts and bolts of the bill, i don't think most americans have been able to focus on it. their worry too much about getting or keeping a job they have. >> senator, how are you doing? this is the tory green. one of the areas i know that you and other republicans are concerned about is the derivatives portion of the bill -- this is victoria. will there be for their attempts to address this? if not by republicans, the thinks some democrats will return after the primary and try to fix it? >> yes, it's not about the

substantive it derivatives because most people recognize the language is destructive to creating credit. many clusters may not understand what a derivative dish. it is basically insurance. if you are manufacturing a widget on main street, and selling it internationally, you want to make sure when you enter an agreement to sell it, the price can be -- the integrity of the price can be maintained. maintained in the face of many things you do not have control over, such as the changing price of currency, of the parts in the widget, of the people you're dealing with, whether or not the company you sell to survives. all those things are insured, and that is called a derivative.

and has a direct impact on main street america to first make goods, and second to sell them, and to bar money -- to borrow money. it is a critical part of the oil that makes the machine of our country go. the language of this bill will significantly contract the derivatives activity of the nation, and undermine the stability of the management and oversight. the head of the fdic sheila bair also says this, the federal reserve staff has also said it will be counterproductive to consumers and the stability for the banking industry. chairman paul volcker has also said this. that the bill is fundamentally flawed in the way it tries to regulate derivatives and will literally do harm to main street to get credit.

we have offered an alternative that was voted down on a party- line vote. as you walked on the floor of the senate, numerous democratic senators would say -- oh, we know we have a problem here, but cannot address it cannot-- after next tuesday when blanche lincoln's breakers. that is not the way to legislate. it is extremely frustrating. it does not lead to confidence that the bill is going in the right direction. >> senator, have you heard that after tuesday's primary that democrats are open, willing to bring up an amendment to address the issue you're talking about the? >> >> we do not intend to offer

one. >> but have you heard the democrats will the? >> neck, but if they do, wouldn't that be ironic -- no, wouldn't that be ironic though the? >> i was going to ask about fannie and freddie. one of the main criticisms is that it does not address the question of what to do about fannie mae and freddie mac. john mccain moved an amendment yesterday to force the issue here. it was defeated. you said you thought the bill would pass next week, presumably without any solution to fannie and freddie. what is that mean for financial reform? >> the old phrase, the elephant in the room -- this is the entire herd. fannie and freddie are at the essence of the problem we had,

basically realistic problem. the real estate loans that could not be supportive because there were not properly and not-- the value of the assets lend against the nicest, or was not strong enough to support the loan, and the people who got the loan did not have the income to pay it. then fannie and freddie securitized the london put the american taxpayer on the line -- securitized the loan and put the tax peril when it failed. so, fannie and freddie have created close to a $500 billion obligation for the taxpayers to pick up. yet, this bill and acts as if the problem does not exist. that is foolish. if the problem was not a meltdown in the real estate markets and was driven largely by securitization done by fannie and freddie, then clearly you should address and get taxpayers

off the hook for these trillions, billions rather of dollars of obligations. so, the john mccain offered such an amendment. i was a primary co-sponsoring a my part was that we disclose to the american people how much they owed here by bringing fannie and freddie on budget. it was rejected. to me it shows that the bill is probably less about substantially improving the financial system than about making a populist political statement attacking wall street. >> but senator dodd's point on the floor was that the mccain and and did not include any alternative as to what to do for fannie and freddie. if it were passed, it would cause the economy to a tank searcy's that is hard to say when the bill says nothing about

fannie and freddie. at least senator mccain was putting out ideas about how to in mind. it would take a few years, producing abilities to make the loans and selling of the ones that exist. that is a legitimate approach. if senator dodd had a better idea, he should have offered. it should have at least been in the bill. this is the biggest issue that is unresolved. we have of $500 billion liability to american taxpayers will have to pick up because the loans which should not have been made in the first place, securitized by an entity that clinton had taxpayers standing behind it -- and now they do because the government took them over, how can you take that on to the floor? how can you ignore that issue? it is an entire herd of elephants in the room. i do not think that senator

dodd, as much as i respect him, has much credibility to attack senator mccain's amendment when he offered nothing. >> when you look back and have a bill played out, many months of negotiations went on -- do think that the republicans have made any strategic error and how they were negotiating with senator dodd? or should they have accepted what senator bob corker was working now the? >> at that is monday morning quarterbacking and i want get into it. is the way it is. we are where we are. i think the bill started going south when the white house

decided to pull people back from negotiations on the democratic side. because they decided they one of the populist issue. then you saw the president go out and like the wild fires of populism which are still burning. >> one of the most ambitious parts of the bill put together was to reorganize how banks are supervised. he backed away from that proposal and a series of steps, the last yesterday when the senate voted to keep small banks under the federal reserve's supervision. what did you think of that proposal to begin with, and what has become of it the? >> i never thought we should take away the responsibility from the fed for the bank holding companies.

the federal reserve is as good a regulator as any others. you're moving deck chairs around by doing that. the fed has the resources and expertise to be and has been, a very effective regulator. anyone who looks at it closely will admit that the fed, occ, sec, and to some degree that fdic were all lax in the area of over said. no question. coming out of this crisis, you not see that type of event happen again in the foreseeable future. the regulators understanding made big mistakes. moving the banks around for the sake of moving, i never saw that as constructive. it would only have disrupted

things. most of your financial institutions are affected. we're talking about small, main street, regional banks. most would rather have the fed doing their audits and being there oversight then moving to a brand new agency. having to bring the agency up to speed on their activities. most of those billings were not the cause, were not affected, and were not the engine behind that economic crisis. that economic crisis. they do not deserve to have to go through this huge relocation simply because we're trying to make a public statement. online, i think the idea of taking all this authority from the fed was not good. i did not support from the beginning. >> we have about 10 minutes left. for viewers watching us, we are talking on thursday at the end of the week -- were talking, about financial regulation, and

as this moves forward this week it will continue. >> another issue in the headlines has been the sovereign debt crisis in europe. the deficit and the national debt has been an issue you have been involved with in this country. to what extent should this be a warning sign for the u.s.? are there any lessons you draw from what is happening in europe as to what might happen here the? >> they should be more than a warning sign, but some sort of huge, flashing las vegas-type neon sign that says to stop your doing, america. all stop running up the debt in passing it on to the next generation. if not, you will end up the way that greece has. obviously, greece is a small country. the cannot monetize their debt, but they're still reflecting the exact same template of problems

which almost all of the western european countries have, and we do, and so does japan. the problem is simple. we have promised too much to too many, and do not have the capacity to meet all those promises in the future. we're running up debt at a rate that is -- where we cannot afford to pay it back. american dead has traditionally run at about 35% of gdp. the debt the wheel to american citizens and to china, muscle. we will pass the 60% level this year, and are headed towards 100% debt to gdp level. when you have a debt that is at 1 under%, you are headed towards the junk status.

you cannot catch up with your interest payments. -- when you are at 100%. the debt will triple in the next 10 years. that is a fact. it is not sustainable. it means that one of two things will happen if it continues, if we do not get spending under control. it is a spending, not revenue should. one of two things happen -- you either include the economy to pay for it, and if so, that is the worst tax of all, because a reduces people's savings and the value of the dollar you earn, or you raise taxes so high that you reduce productivity. that reduces the number of jobs created. that is the scenario we're passing on to kids. for the first time in the history of this country, one generation will pass on to the next a country where there will

be a lower standard of living. >> where should budget-cutting began? should it be the defense department, social security? where should congress make the first big cuts? >> we should cut everywhere. where the money is is in entitlements. as a practical matter, the major ones are medicare and social security and medicaid. the problem we have is the last healthcare bill, this massive bill which will fundamentally aggravate the problem because it grows those government buy $2.50 trillion. taking the spending from 20% up to 26% of gdp. the bill had fairly cigna vicki

reductions in medicare spending, $500 billion of the first 10 years. that is when it is fully implemented. and more over the next 20 years. but instead of using the reductions to make medicare more solvent, those reductions were taken and spent on creating a new entitlement program for uninsured people and for not medicare recipients who have not paid into the trust fund, and are not senior citizens. we took money out of medicare that should have been used to make it more solvent and moved it to create a new entitlement that we know by definition will probably not be solvent. we always underestimate the cost. we have increased rather than reduce the problem. but we should still look hard at how we will control the rate of

growth of entitlements. we have to return to look of the health care entitlements again. we should also look at social security. we can't afford the current structure. we have to look get medicaid. we have to look at discretionary spending. everything should be on the table. >> president obama has created a debt commission to look at this issue. are you pessimistic, are optimistic about the committee coming up with a solution? >> it has been dealt some tough cars because of the healthcare bill taking off the table the spending. if you look of a liability, $7 trillion for government, the vast majority is in health care accounts. i'm not sure how much more aggressive we can get in the area of health care. there are things that we can do.

there are things on the cutting room floor suggests tort reform that would improve the costs in the out years. but the big items were addressed, but the money was taken and put into a new entitlement program. so, that makes a problematic for the financial commission to report something as global. but there are areas where the commission should make progress. for example, social security reform. it does not mean cutting social security benefits and some draconian way. it means bringing them more in line with what we can afford over an extended period of time. we're talking fazing this in over 40 years to make the system more solvent. we can do something.

i think there is a sincere desire on the part of the commission to make progress, at least in some areas. to signal to the american people we're serious about getting something done about this debt. >> in your time in the congress as you're getting ready to leave, do you see the political will to make these changes -- is increasing? or is it still a big hurdle? >> it is a huge hurdle. unfortunately, i not only do not see the will here today in this congress, but just the opposite. this congress is spending money like there is no tomorrow. it is adding massive amounts on the discretionary side. it created this $2.50 trillion expansion of the government in healthcare. instead of an attempt to address the issue, there has been an

explosion. to be honest, this is a government where the president says it for roughly and services leadership, that you create prosperity by growing the government. i do not think so. you create prosperity by keeping the government at a manageable rate of level, less than the economy, and give people the incentive to take risks. there is a philosophical difference. the elections have consequences. the consequence of the last election cycle is that the government is being grown astronomically. spending has averaged 19.8% of gdp. at the end of this year, federal spending will be around 25%. it is going up as the healthcare

bill is phased in. you're taking the size of the federal government and growing exponentially. the revenues have historically been about 18.2% of gdp since the second world war. but under the obama budget is projected that they will go up to 26%. it is not the revenue issue. it is the spending issue creating this huge delta which is causing all this deficit and debt. unless you address the spending side and reduce the rate of growth of federal spending, you cannot get this under control and a way to make it sustainable for the next generation. >> "the washington post" editorial on thursday pointed to you in the work you have done across the aisle with democratic senator on tax reform and other issues.

u.s. someone who is also retiring, and saying there is -- this election cycle coming up who not toe the party line, such as robert bennett and blanche lincoln on tuesday, will suffer the consequences. what are your thoughts and with the paper called partisanship and paralysis? >> i do not know. i think the senate is still filled with people with good will and purpose. you cannot do much unless you're willing to go across the aisle. it is usually 60 votes. on big, complicated issues, the american will not accept partisan proposals. they want bipartisanship. it means there has been some sort of thoughtful input from both.

it seems fair. i believe these really big issues that are very complex like tax reform that center -- that senator widen and i put together -- those issues must be done in a bipartisan way to get the support. things like social security, medicare should have been done this way -- it was not. tax reform. it is one of the reasons why connor and i came up with the idea of a commission we make a totally bipartisan commission and have it report. although it got a majority vote it did not pass, but the president picked it up with his executive order.

i'm not a pessimist about the willingness of members to work together. unfortunately, there is a definite center fugal -- centrifugal force around this place that occurs in the marketplace of hyperbole that makes it difficult. but there is still willing as. >> but the peace talk about the fact that those who do, like yourself, but you are retiring, those who do reach across the aisle suffer consequences in the primaries. >> there is a lot of truth to that. primaries are usually dominated by the ideological face of the party. i have been in many primaries and succeeded.

you just have to make your case effectively. >> another quick question. democrats have enjoyed a lot of success in new hampshire in a recent texas. as the race gets heated up, what is your prediction? the you think that republicans can see that h-- can save the s? >> you'll see a renewal. you got over a wound in 2006 and 2008 by the real antipathy which is deep, regarding the war in iraq. that is what i believe caused the