not just an economic one. that is tonight on "q&a." >> tonight, new british prime minister david cameron and deputy prime minister nick clegg at their first news conference since forming their coalition government. also, remarks by outgoing prime minister gordon brown. that is tonight at 9:00 here on c-span. >> this week on "newsmakers," senator judd gregg is joining us from the rotunda building. good morning. .

>> well, we have actually tried to offer amendments which we thought would improve it but we are not trying to stop it. there is no one on our side that does not expect this bill to move forward. we have offered a whole series of amendments that have been addressing some of the very significant problems that this bill has. my opinion is that this bill in it's present form is getting worse rather than better right now with some of the amendments that are being adopted. we will end up contracting credit on main street. it will end up undermining our ability as a nation to be competitive internationally. it will probably make us less stable in the regulatory regime relative to managing our financial house. i am very concerned about the

direction of the bill, but no one is trying to stop it. we are just trying to improve it. yesterday there were a series of amendments offered to improve it. i have been co-sponsor of an amendment that has gone forward to try and improve it. unfortunately, most of the amendments that would have, i think, moved this down the road towards creating a bill which the purpose of which should be to make our system more safe, more sound, and eliminate as much as possible systemic risk while at the same time keep america as the best place in the world to create credit and capital so that people in this country have access to credit and capital. that is the key to creating jobs. those two goals, which are the goals that i want to see us pursue, have unfortunately been undermined by the bill as it has moved forward and developed on the floor of the senate. it is really a bill that i think will do some harm to our capacity to create jobs on main street. >> but do you think it is going to pass next week? >> yes. it's going to pass next week or the following week. i am not sure when. >> how does this issue play poltically in november going into elections? i know you do not face a

reelection challenge yourself, but how does it play out in november? >> i do not think most americans have really studied the intricacies of derivitaves, or the complexities of how the fed regulates a bank, or how the occ relates to the ots. my sense is that most americans look at this from 40,000 feet. they are upset with wall street. they are concerned about the economy. they are concerned about jobs. they are concerned about the recession that they have been through and that has caused them significant problems financially and a lot of trauma. they would like to see congress do something substantive in all of these areas. as to the actual nuts and bolts of this bill, i do not think most americans have been able to focus on it because they worry too much about either getting or keeping the job they have. >> senator, how are you doing? >> pretty good, victoria.

>> one of the areas i know that i know republicans are very concerned about is the derivatives portion of the bill, and the alternative section that was offered yesterday failed. will there be further attempts to address this? do you think -- if not by republicans, do you think some democrats will come back after senator lincoln's primary and try to fix it? >> i think you hit the nail on the head there. this is not about the substance of derivatives because i think most people recognize that the language in the bill is really destructive to our ability as a country to create credit. many of your listeners may not understand what a derivative is. it is a pretty complex issue. basically it is an insurance. if you are manufacturing something on main street and you sell that internationally, you want to make sure when you enter and leave an agreement that the price you sell that at, the

integrity of the price can be maintained in the face of a lot of things you do not have control over like the changing price of currency, the materials you put into your which it -- widget. all that is ensured and use something called a derivative. it has a direct impact on main street america to make the goods and sell the goods. basically creates economic activity. and is a critical part of the oil that makes the economic machine of our country move. unfortunately, the language in this bill will submit that in contract the derivatives activity in -- will significantly contract the

derivatives activity in this nation. that is not me speaking. the head of the fdic, sheila bair, has said this. they say this to be counterproductive to consumers and the stability of the banking industry. chairman volcker has said this. this bill is fundamentally flawed on the issue of how it tries to regulate derivatives and will literally do harm to our ability on main street to be able to get credit. we did offer an alternative. it was voted down. as you walked around the floor of the senate, numerous democratic senators would come at -- come up and say, "we know we have a problem but we cannot address this until after blanche lincoln's primary is over." that is not the way you should legislate. if that law will go do harm to

our country, which it will, we should correct it. the proposal was offered and voted down party lines. that is extremely frustrating. it does not lead to one having confidence that this bill is going in the right direction. >> senator, have you heard that after tuesday's primary that democrats are open and willing to bring output an amendment to address this is you you are talking about? >> we do not intend to offer one. >> have you heard if democrats intend to do so? >> if they did, that would be ironic. they will vote for it after the election? what does that say about the integrity and purpose of their bill? >> kevin, did you have a follow- up? >> i was going to ask about fannie and freddie. one of the 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 that would have forced the issue. it was defeated. you said you thought the bill would pass next week. presumably that will be any sort of fannie mae or freddie mac solution. what does that mean for financial reform? >> there is the old phrase about the "elephant in the room," and this is the entire herd. they are at the essence of the problem that we had which was a real estate problem. real estate loans cannot be supported because they were not properly underwritten. the valley of the assets that were landed against did not exist or were not strong enough -- that were lended against were not strong enough. fannie and freddie came in and securitized that loan and put the american taxpayer on the line to pay for that loan when it failed. we knew the loan was made

correctly in the first place. fannie and freddie have created close to $500 billion obligation that the american taxpayer will have to pick up. this will act as if that's the problem does not exist and we do not need to address it. that is jewish. if the problem was the meltdown of the real-estate market and was driven in large part by the securitization done by fannie and freddie, then clearly we should address that and get the tax pairs off of the hook for the billions of dollars of obligations. senator mccain offered such an amendment. i was a co-sponsor. i suggested that we disclose to the american people how much they sell by bringing in fannie and freddie on. and is an actual obligation of the american taxpayer. -- it is an actual obligation. it was rejected which again shows to me how this is about --

not about improving the financial system than making a populist political statement attacking wall street to get some political points. >> senator dodd's point on the floor was that the mccain amendment did not include alternative -- an alternative about what to do with fannie and freddie. it may have brought the economy back into a recession. >> that is a hard argument when senator dodd's bill said nothing. at least mccain stepped up and put forward an idea which would be that it would be on wound over a few years by reducing its ability -- it would be unwound over a few years. that is a legitimate approach to unwinding fannie and freddie. if senator dodd had a better idea, he should have offered it. it to have been in the bill. this is the biggest issue which we, as a government, have right now that is not solved.

we have a $500 billion liability that the taxpayers have to pick up because these loans, which should not have been made in the first place, or securitized by an entity which claimed it had taxpayers standing behind it. how can you take a bill up on the floor of the senate that deals with financial regulatory reform and ignores that issue? it is not the elephant in the room but an entire herd. it is totally irresponsible. i do not think senator dodd, as much as i respect him, has a whole lot of credibility to attack senator mccain's amendment when in his bill there was no proposal to address this issue. >> senator gregg, looking at at this bill -- looking back at this bill and negotiations, do you feel that republicans made a strategic error the way they were negotiating with senator dodd or wet accepted what

senator corker seemed to be working on -- or then accepted what senator corker seemed to be working on? >> i will not get into hypothetical. we are where we are. i think this bill started going south in the area of being a constructive piece of legislation to improve our financial industry to make it safer, sounder, and less risk prone so that americans can get credit at a reasonable price. it went south when the white house decided to pull people back from negotiations on the democratic side who were negotiating in good faith with many of us on our side of the aisle because they decided they wanted a populist issue. you said the president go out and write -- like the wild fires in the populism. >> center, one of the most ambitious parts of this bill that senator dodd put together -- senator, one of the most ambitious parts is how banks are

supervised. he has backed away from that proposal in a series of steps. yesterday when the senate voted to keep small banks under the federal reserve's supervision, what did you think of the proposal to begin with and what has become of it? >> i never thought we should take the responsibility away from the federal reserve for the bank holding companies. my view is that the federal reserve is as good a regulator as any of the others. you are basically moving chairs around by doing that. the fed has the resources and the expertise to be a very effective regulator. i will admit, and i think anyone who looks closely will admit, the federal reserve was lax as was the sec, the occ, and to some degree the fdic.

no question about it. i believe coming out of this crisis you will not see that type of event occur again, at least in the foreseeable future in the memory of the people who participated in it, because they understand they made big mistakes. moving these banks around for the sake of moving them around, i never saw that as being constructive. i did it would have disrupted things for a while. -- i think it would have disrupted things. we are talking about small banks, regional banks. most of them would rather have the fed doing their audits and being there oversight than moving to a brand new agency and having to bring the agency up to speed on the activities they are involved in. most of those were not affected or were the engine behind the economic crisis we had. they do not deserve to have to

go through this huge relocation simpson because we are trying to make a statement to the public for reorganization. the bottom line is i think the idea of taking the three away from the fed was not a good idea. i did not support it from the beginning. >> we have 10 minutes left. for our viewers, we are talking on thursday at the end of the week about financial regulation as it moves forward. the debate will continue. victoria, did you have another question? >> another issue in the headlines was the sovereign debt crisis in europe. the deficit and the national debt is an issue you have been involved with in this country. to what extent should this be a warning for the united states? are there any lessons to draw from what is happening in europe to what might happen here? >> this should be more than a

warning sign. this should be a huge flashing loss vegas-type neon sign that says, "stop when you are doing, america." -- in a huge las vegas-type neon sign. we will end up like greece if we did not stop. greece is a small country. they cannot monetize their debt. they still reflected the exact same a template of problems which almost all of the western european countries have a, which we have, and which japan has. the problem is simple. we promised to much to too many and we do not have the capacity to meet them. they're basically running up debt and a rate that is essentially an affordable. to try and quantify that, american that is traditionally about 35% of gdp.

we are going to pass the 60% of g.d.p. level this year and we are headed toward the 100% of its debt to gdp level. when you have a debt that is running over 60% of g.d.p. you are in trouble. when you have a deficit of 100%, you are at a junk-bond status. you cannot catch up with your interest payments to say nothing of paying down your debt. that is where we are headed. the american debt will double in the next five years under obama's budget. it will triple in the next 10 years. that is a fact. it is unsustainable. one of two things will happen if this continues. if we did not get spending under control, it is a spending issue, either you have to in-

flight the economy to pay for the debt which is the worst tax of all because it reduces people's savings and the purchasing power of the dollar. alternatively, you raise taxes so high which reduces productivity. that is the scenario we are passing on to our children. we are putting ourselves in a position where, for the first time in the history of this country, one generational passage to the next generation where there will be a lower standard of living and less opportunities than -- that we had because of the debt we are putting on them. >> where should but it -- budget cutting begin? defense department, social security? where should congress made the first big cuts? >> my view is we should cut every where. where the money is entitlements. it is a very practical matter.

the big ones are medicare, medicaid, and social security. the last health care bill, this massive health care bill which will fundamentally aggravate the problem which rose the government by $2.50 trillion in the new government spending, it will take that to 26% of gdp. it had reductions in medicare spending, fairly significant reductions, $500 billion over the first 10 years and $1 trillion which is fully implemented. it will be $3 trillion over the first 20 years. and said of using them to make medicare more solvent, which is our most significant problem, those reductions were taken and spent on creating a new entitlement program for uninsured people who are not medicare recipients who probably

have not paid into the medicare trust fund and certainly are not senior citizens. we doubled down on the problem. we took money out of medicare that should have been used to make it more solvent and used it to create a new entitlement which we know will be insolvent as it moves forward. we always underestimate the cost. we have increased the problem rather than reduce it. we should still take a hard look at how we will continue the rate of growth in entitlements. we need to go back and look at the health care entitlements and again. we need to control health-care costs. we need to look at social security. we cannot afford the current structure. we need to look at medicaid. we need to look at discretionary spending. everything should be on the table. >> senator gregg, obama has created a debt commission. are you pessimistic or optimistic about this commission being able to come up with a solution?

>> the commission has been dealt some hard cards because of the health care bill. it was taken off the table which is a huge part of the problem. if you look at the liability of the federal government which is about $70 trillion, the vast majority is the head health-care accounts. -- is the health care accounts. i'm not sure how much progress we can get with health care. there are things we can do which were left on the cutting room floor such as the tort reform and other things that would significantly improve the health care costs. they are not the big items. the big ones were addressed and unfortunately money was taken and put into a new entitlement program. that makes it problematic for the financial commission to basically report something. there are areas where the financial condition should be able to make progress, fertile

areas, for example social security reform. this does not mean socials -- cutting social security benefits. it means bringing this in line with what we can afford over an extended period of time. this does not need to occur the next day. we want to face this and over 20, 30, 40 years -- we want to phase this in over 20, 30, 40 years. there is a genuine, sincere desire to try and make progress at least in some areas to send a signal to the american people that we are serious about getting something done with this debt. >> i would just ask, in your time in congress as if you are getting ready to leave, do you see the political will to make these kinds of changes increasing at all? is that still a big hurdle that needs to be overcome in terms of

addressing the debt issues? >> i do not see the will here today in this congress. i see the opposite. this congress is spending money like there is no tomorrow. they have added massive amounts to the baselines on the discretionary side and created the $2.50 trillion expansion of the government in the health- care arena. instead of an attempt to address the issue, there has been an explosion of spending. we ought to be a least realistic here. this is a government and its congressional leadership believes that you create prosperity by growing the government. i happen to think that is not the way to create prosperity. i think we do that by keeping government's rate of growth at a manageable level and you give people the incentive to go out and take risks to be

entrepreneurs and create jobs. there is a philosophical difference here. the consequence of the last election cycle is that this agreement is being grown astronomically. -- this government is being grown astronomically. federal spending since the end of world war ii, has averaged about 19.8% of gdp. at the end of the year, it will be about 25% and is going up as this health care bill as -- is phased in. we are taking the federal government and growing exponentially. revenues have a historical event about 18.2% of g.d.p. since the end of world war ii. under the obama budget, it is projected that revenues will go up to 20% of gdp. it is not a revenue issue. is is spending issue that is creating this huge delta which

is causing all of this deficit and debt. unless we reduce the rate of growth of federal spending, this will not be survivable or sustainable for the next generation. >> senator, "the washington post" editorial pointing to you and the working have down across the aisle with democratic senators -- democratic senators. they pointed to you as someone who is retiring and that there is a lack -- this election cycle coming up, people who do not toe the party line like senator robert bennett and blanche lincoln will suffer the consequences. i was wondering your thoughts on what "the washington post" called"partisanship paralysis

-- called "partisanship or paralysis." >> you cannot do much in the senate unless you're willing to go across the aisle. it is usually a 60 vote place to begin with. on big, complicated issues that affect most americans, the american people will not accept partisan proposals. they want bipartisanship because, by definition, it means there has been some thoughtful and point from different philosophical inputs and is seen as fair. i believe that these really big issues that are very complex, like tax reform, really has to be done in a bipartisan way in order to get the momentum and support from the american people necessary to address it.

things like social security, medicare, tax reform needed to be done in a bipartisan fashion. it is one that reason -- one reason why we make a totally bipartisan commission to have a report and congress vote on that. although that got a majority vote, it did not pass. the president picked it up with an executive order. i genuinely believe -- i am not a pessimist about the willingness of the members of the senate to work together to try and solve these problems. unfortunately, there is a definite centrifugal force around this place driven in part by the 24/7 hyperbole which is all one-liners that makes this difficult. i think there is a willingness. >> perhaps there is a

willingness, but the talks about those that do, like yourself, that you are retiring. they suffer the consequences in the primaries like senator bennett. >> there is a lot of truth to that. primaries are usually dominated by the ideological base of the party. that is usually the way it is. i have been able to secede in my primary's in my time. -- i have been able to succeed. you have to make your case effectively. there is no question they are usually more ideologically based than the general election. >> one quick follow-up. one election question. democrats have enjoyed a lot of success in recent cycles in new hampshire. as the race gets heated up to replace your see, what is your prediction? do you think republicans can

keep the seat? >> i think we will see a huge resurgence in new hampshire of the fiscal conservatism, a strong commitment to the environment, and individual liberties. that is the republican agenda in new hampshire. it got overwhelmed in 2006 and 2008 which was deeply felt about the war in iraq. that caused a huge movement which the democratic party took advantage of. i do not think -- i think the opposite will occur this time. people in new hampshire are worried that we are undermining our uniqueness. we have no income tax, no sales tax. now we have a democratic state legislature which is spending money like there is no tomorrow. a 17% increase year-over-year and they are running as into a ditch which will force us into a broad based tax. the newam