undercover russian agents and would it could many for u.s.- russia relateses. later john hall discusses how florida is dealing with a $6 billion budget shortfall. wurenl is next. dd >> on this fourth of july weekend there is a 9.5% unemployment rate members of congress are returning home to. one headline says this will be big electoral implications for members of congress. and as far as budgets go, lots of towns around the country not doing fireworks this weekend. antioch, california, louisville, jersey city. they say they just don't have

enough money to celebrate with fireworks this independence day. general david petraeus takes over in afghanistan officially tomorrow at a ceremony and the head of the republican national committee michael steele back here in the u.s. is backtracking after some remarks he made about afghanistan. both parties are after him this morning and we want to ask you this question -- should michael steele of the r.n.c. resign? some are suggesting that openly. here are the numbers. this michael steele story is all over the place this morning. "washington post" headlines, steele is backtracking after afghan war remarks, perry bacon writes he is trying to quell criticism his war was of obama's choosing and his suggestion it may not be winnable.

it puts steele at odds with much of his own party. all of this sort of broke yesterday after a video surfaced of his remarks the night before. some conservatives fumed and democrats pounced. we have a little bit of this piece of video. apparently a hidden camera up at a closed event in connecticut. a little bit rough, about 10 seconds, a little bit hard to hear but here it 0 goes. >> this was a war of obama's choosing. this was -- is not the united states -- the speaker pro tempore: you can hear him use the words winnable, the war of obama's choosing. that was in connecticut on thursday night. a little bit more what michael steele had to say, a "l.a. times" story quotes if he's such a student of history steele says of president obama he has not understood that you know that's the one thing you don't do is engage in a land war in afghanistan. everyone who has tried over a

thousand years of history has failed. and they point out in the piece two prominent conservatives have called for steele's immediate resignation, william crystal calling the sentiments an affront to the honor of the republican pearlt and the commitment to the soldiers and eric erickson wrote steele has lost all moral authority to lead the g.o.p. there's more in the papers here, so michael steele comes back through a spokesman and quickly issued a statement clarifying the chairman supports the troops and steele himself soon followed. saying that, quote for the sake of the security of the free world our country must give our troops the support necessary to win this war. and it's been pointed out the democrats are upset with him as well today but we're asking you this question based on some of the write-ups over the last 24 hours should michael steele of the r.n.c. rezinche these particular remarks on afghanistan?

first of all baltimore, mark, a democrat. good morning. good morning, mark. let's try -- caller: hello? host: is this mark? caller: this is mark. host: glad you made it on. go ahead. caller: sorry about that. i was listening to chairman steele's comments yesterday, and my question is, you know, we have been in afghanistan for eight years, president george -pbush went in there. he did not perceive that war, did not fund it, didn't really give the troops what they needed to succeed there. president obama comes in and you know, he has the first strategy that they say the first strategy we've had in eight years and he still is being criticized by the republicans. my question is, where were these guys prior like the prior eight years and i mean what can he do

to you know, gain their support in this? host: what about michael steele himself, caller? caller: that's what i mean. what can we do -- i really don't understand where michael steele is coming from. host: understood. thank you for the point from baltimore. steve from atlanta, georgia. should michael steele resign as some have suggested here? caller: truthfully to be speaking it doesn't matter whether he resigns or not. more to the fact that he basically is telling the truth on both the democrats and republicans, he's being man enough and speak the point. it's time for to us get out. it's an unwinnable war. i realize obama could campaign i'm a democrat to end the war but somehow got caught up in it and sending these additional troops, bottom line is we need to bring everybody home. but naturally in congress it's all about money and the deals that are made so they got to

figure out how to end this thing and still not lose their money. the bottom line is he shouldn't resign. he spoke the truth but it doesn't matter whether he resigns or not. host: thank you for calling. let's go to the g.o.p. line. the republican line. diane is in tallahassee, florrda. what do you think, diane? are you there? hello, diane in tallahassee. caller: hello. host: hi there. caller: hi. yes, i think michael steele should resign not just because of those comments but because he's been a poor leader for the republican party and he has failed to clear up the corruption in our rpof in the state of florida. host: okay. here's a headline in "the baltimore sun." steele war comment criticized, g.o.p. head faces new calls from the left and the right to resign, a quote from the democratic national committee spokesman in one of the pieces today quoted simply unconscionable that michael steele would undermine the morale of our troops when what they need is our support and encouragement.

this comes from brad woodhouse. michael steele would do well to remember we are not in afghanistan by our own choosing. that we were attacked. frankie on the democrats line from jacksonville, florida. hi there. caller: hi. this is frankie from jacksonville. i'm just wondering how long are the republicans going to let michael steele run his loose lips when he doesn't even have the facts straight? yes, he should definitely resign. he should have resigned a long time ago. i'm just appalled how they let him stand up and represent them and he doesn't have factual information, hh runs his mouth when he shouldn't, he should definitely step down for the sake of the republican party. i'm a democrat but even for the republicans, he really needs to do justice and step down. you know sometimes you get what you ask for. the only reason i think they wanted michael steele as their chairman to begin is because of his ethnicity. he's a black man and i think

they wanted to come across as being you know, for all people, this, that and the other when they're really not. he's just a little token for them and he really needs to abide by most of their wishes and step down. host: "the washington post" piece reminds us steele's tenure at the helm has been marked by controversies including his criticism of and subsequent apologies to rush limbaugh and the committee spending money at a bondage themed nightclub to entertain donors. but his war remarks were a rare instance in which he articulated views that differed from the party line. most republican men's started the decision to start the war in afghanistan in 2001 and have backed troop increases there even as many democrats have cast doubts. mariposa, california, nancy, independent. good morning.

caller: good morning. thank you for taking my call. host: what would you like to say today? caller: well, i want people to understand, i think you have to understand what's going on in afghanistan and the best way to do that is to get the two volume books of "far pavilions." the author of that book understood that country so thoroughly and the language and explained exactly where afghanistan stands. they don't want any foreigners in their country and they never have and they never will and their whole history is that way. they wouldn't let the brits in, wouldn't let the russians in. won't let anyone in. they run their own country. you have to understand that in those two books, "the far pavilions" will give you an insight to that which will tell you all aboutth it. thank you for taking my call. host: nelson on the democrats line, woodbridge, virginia. should michael steele resign? what do you think? caller: yes, he should resign. if you put together a litany of

his gaffes, and he's in the position as the chairman of the republican party, i don't think he's fit to hold that position. host: okay. john, republican, l.a. what do you think? caller: yeah, i was listening to that lady who called two or three calls ago and she said the only reason he was hired is because he's black and that he is a token. you know, that's just racist. it goes to show that there are an awful lot of racists on the democratic side and they just constantly getting a pass for that. host: let me ask you what do you make of what the chairman said? caller: i don't like it. i agree with a lot of people on both sides he should probably resign. i just think it was stupid. i don't think his being hired or -- had anything to do with him being black. host: "the new york times" piece says when mr. steele made the remarks he was speaking to

republican contributors attending a fundraising event for a candidate in connecticut. the video appears to have been taken by a hidden camera at an event closed to the press. republican officials did not dispute the authenticity of the video but disputed its characterization. here's another look at this short 10-second piece. >> a war of obama's choosing, this is not something the united states can, unwinnable -- the speaker pro tempore: the times says in his statement mr. steele did not respond to the call for his resignation but he sought to make the case that afghanistan is now mr. obama's war. for the sake of the security of the free world our country must give the troops the support necessary to win the war as we have learned throughout history winning a war in afghanistan is a difficult task. we must remember after the tragedy of noirn it is a necessary one. he added with a reference to

general petraeus quote that is why i supported the decision to increase our troop force and like the entire u.s. senate i support general petraeus' confirmation. the stakes are too high for to us accept anything but success in afghanistan. new york city, independent caller. hi there. caller: how are you, sir? host: what should michael steele do? should he quit? caller: it's long overdue. he has apologized one too many times. i think he should go. host: scranton, pennsylvania, bill, republican. what do you think? caller: death to -- the speaker pro tempore: host: linda, what are your thoughts on michael steele? caller: i'm shocked i'm calling in support of michael steele. i'm a big obama supporter, but i know he had to go into the war in 2001 because al-qaeda was there, but it sounds like from

all reports they're not there anymore. and this is basically a civil war between the taliban and the people and i feel really bad for the people. i'm torn about this. but of all things, this should not be why michael steele resflines. he's made other mistakes that he perhaps should have resigned for, but i don't know, it seems like they're picking on him. and i think it's ridiculous to fire him for telling the truth. host: got the point, caller. aberdeen, maryland, jason on the republican line. what do you think of what the chairman said? caller: i think it's wonderfully consistent with the republican party with michael steele at the helm. continued conflicting message between their own party. this party is in disarray. they need to get it together. michael steele has an array of things he should have been fired

for and the reason he's not been fired, the only reason is because they're afraid to fire the black man they hired. that's plain and simple. host: here is bill kristol's letter, i think we have time, dear michael you are i know a patriot so i ask you to consider over this july fourth weekend doing an act of service for the country you love. resign as chairman of the republican party. your tenure has been marked by gaffes and embarmentse, but i for one have never made much attention to them and never thought they would matter much to the success of the causes and principles we share. but now you have said about the war in afghanistan speaking as r.n.c. chair, quote, keep in mind federal candidates that this is a war of obama's choosing. this was not something that the u.s. had actively prosecuted or wanted to engage in and if obama is such a student of history has he not understood that there is one thing you don't do is engage in a land war in afghanistan.

bill kristol writes needless to say the war in afghanistan was not a war of obama choosing, it has been prosecuted by the u.s. under presidents bush and obama, republicans have consistently supported the effort, indeed as the dnc communications director has said your statement puts you at odds with about 100% of the republican party. and not in a trivial matter, at a time general petraeus has taken over command, when republicans in congress are pushing for a clean war funding resolution, when republicans around the country are doing their best to rally their fellow citizens behind the mission your comment is more than an embarrassment, it's an affront both to the honor of the republican party and to the commitment of the soldiers fighting to accomplish the mission they've been asked to take on by our elected leaders. there are of course those who think we should pull out of afghanistan and they're certainly entitled to make their case. one of them shouldn't be the chairman of the republican party. sincerely yours, william

kristol. you can read that at weeklystandard.com. brian, independent. should he resign? caller: no. host: tell us why. caller: the main reason why, what happened to freedom of speech in this country? if i'm not mistaken we have the right to say whatever we want whenever we want to say it. he said it's obama's war. he's right. it is obama's war. the second obama took office, it became his war. the problems with economic and housing, that became obama's problem. so stop saying that it's something else because what it is that we are losing our freedom of speech. this guy should not resign over something that he said and the same thing that happened with general christie, he spoke out about obama and what happened? they get rid of him and put in another general in there. i either way, he should not resign. we have the right to say what we want, when we want to say it and

god i love "washington journal." thank you kindly. host: brenda is on the democrats line. should michael steele resign over the afghanistan comments? caller: hello? is this philadelphia? host: it is. caller: good morning. host: good morning. caller: this is brenda. give me a few minutes. to the guy that just hung up who said that you know, mccrifle shouldn't have been fired, that's protocol, he didn't quit, obama fired hip. as far as michael steele, now, michael steele, i don't care whether he resigns or not. i'm loving it. they put michael steele there because they had a black man in the white house. that's not a racist statement. that's the truth. the man that won that election for the r.n.c. chairman belonged to a white-only country club. they said we can't have him. the second runner-up was the man who wrote the little ditty barack the magic negro.

we can't have him. they chose michael steele who wasn't the third runner-up. anyway michael steele will never resign. they'll have to drag him from that appointment. and michael steele will chew the republican party up and spit them out. he will turn them into the klan that they really are. good day, america. host: let's hear from the republican line. keith, orlando. what do you make of all this? caller: michael steele should have been fired a long time ago. he doesn't represent the republican party. i'm a republican. he doesn't represent my views. personally i think he's an idiot. and the way i feel about it, general mccrifle -- mcchrystal in reference to the last caller, he didn't lose his stars. good for general mcchrystal. good luck to him. there again i think michael steele was a complete mistake.

thank you. host: our twitter address is cspanwj. a lot of messages. here is one of them. i will think more of mr. steele if he stays than if he quotes wilts down. speak your feelings, mr. steele. boynton beach, florida, independent line. david. good morning to you. caller: how are you? host: fine. caller: i think michael steele -- i don't know what he said, i don't know all the reasons, but i know the president is commander in chief. it is his war. he fired mcchrystal. he shouldn't have done that. he's got our soldiers' hands tied politically. they can't do anything without first checking this and checking that and when they can shoot they end up getting shot first. i think the war has been -- wars have been politicized since vietnam. i just don't know where we're going and if we're fighting wars

with our hands tied our guys are getting killed for nothing. i feel bad for the military. they can't do what they have to do to protect our country and they're going into political wars which is sad. we cannot waste our soldiers' lives. host: here is a twitter message about bill kristol himself. he is 100% with the neocon war machine writes one viewer. the ron paul faction of the g.o.p. is very much our invasion and occupation. here is the front page of the "new york times" this saturday morning. front page photo from the associated press following this attack on a u.s. aide compound, a soldier escorting a wounded worker in afghanistan on friday. they point out six suicide bombers killed four security officers and wounded at least 2323 people in the attack. this according to afghan officials and an aid contractor. dumfries, virginia, juana,

democrat. good morning. hello there. caller: hello. host: you're on the air, dumfries. go ahead. caller: i don't think michael steele should resign. first of all, he's the same person he was when they elected him. he's not changed. he's always made goofy comments and things like that. secondly of all, in one way i do agree with him this is obama's war even though the war was already there when he took office but he campaigned on going to afghanistan. so that's not a shot. and i think we are fighting an unwinnable war but no, i don't think michael steele should resign over those comments alone. he's done things and said things way before they elected him chairman of the r.n.c. so they knew what they were getting when they elected him. he is who he is and let's move on. host: let's here from val now who is in alabama on the republican line. good morning, val. caller: good morning.

i don't think michael steele should be a casualty over this because in a way, he is right, it is obama's war because obama is not bringing in the results i campaigned on. obama's strategy is failing and as the last caller said the troops are encountering a lot of restrictions and even the chaplains are restricted from praying you know, to jesus or their god for the troops or the god of the troops or however you want to put it. there's a lot of hindrance in this situation and it is his war because it's his strategy. he's taken it over and hasn't brought in the results. host: here's a new york post story, petraeus lands amid afghan terror strikes. the general pictured here confirmed by the senate this past week unanimously, takes over officially tomorrow and "the washington post" reports that he arrived in kabul on friday evening to take over from general mcchrystal beginning a

new phase of the war at a time when thriving insurgency and ineffective afghan governance is in place. he landed two days after his confirmation and is set to officially take command at a ceremony tomorrow. one of his early tasks will be to formulate his team, deciding who key subordinates, sho some who were responsible for the quotes that led to the downfall would stay in place. a civilian press advisory has already resigned and a colonel has not returned to kabul. the fate of other figures to be decided later. dawn, austin, texas. you're on the line. should michael steele resign? hello, don. caller: we should consider the republican policy and we should consider the context in which michael steele made that statement. first of all, the context.

he was speaking to some republicans and republican supporters, a small group of republican supporters and he introduced an idea, an idea that in his poor judgment made sense and that is to attack obama with a lie. now, what is the republican party policy? the republican party policy is to attack obama and to attack democrats and liberals with lies. they do it routinely, they do it regularly, you know, they've gone to extremes. but why was bill clinton impeached? he was impeached on the basis of lies. why do conservative republicans, 24%, believe that mr. -- president obama is or could be the anti-christ? because republican leaders have

told them how terrible mr. -- president obama is, he wants to destroy the u.s., he wants to change it into a socialist country. the republican party policy is lies. host: let's hear from the republican line now. leomia, somerville, south carolina. should michael steele resign over these comments? caller: yes, he should. host: why? caller: he should because that's why a lot of bad people don't vote for republicans. they are so negative. so he should resign. and i'm a republican and i am getting sick and fed up with the whole shebang. so yes, he should resign. host: back to twitter. mr. steele's mistake was that he told the truth. the soviets slash russians executed a 10-year war in afghanistan and left without a victory. here's the front page of the "l.a. times" this morning, a photo of a u.s. military police officer heading for a patrol with afghan police troops have

been told to help civilian officials in improving governance, most energy is spent trying to stay alive. the headline says can kandahar turn around? troops and aid poor into the stubborn taliban stronghold. we're also reading about an act by the defense secretary, robert gates, tightens rules nout for military's contacts with the news media following the "rolling stone" piece nine days after a four-star general rause was relieved for comments. secretary gates issued orders tightening the reins on officials dealing with the news media. it requires top-level pentagon and military leaders to notify the office of the department of defense's assistant secretary for public affairs quote prior to interviews or any other means of media with possible national or international implications. they're making the point they want a fairly small office to give the yeses and noes to all

of this and the secretary thinks this has gotten out of hand and the standards aren't quite there. jacksonville, florida, fran, a democrat. good morning. caller: i feel michael steele only repeats a lot of things he hears. i thought about his comment and he may have gotten that from the bush administration because they didn't prosecute or pursue the afghan war and it could be for the reasons that he gave. but as far as to whether he should resign or not i'm conflicted about that. as a democrat i'm thinking like no, let him stay there and keep on doing this. but as a patriot i'm thinking that no, this is bad for the country and for the troops. so the patriotism overrules and i think he should resign. host: caller there is a story that says steele's criticism is

highlighting the democrats' war problems, the piece is making the point they're being critical of michael steele yet a majority of democrats in the house have voted to draw down the troops and move on out. do you think there's a mixed message from the democrats on this as the article points out? caller: well, i think that the democrats really would like -- as a democrat, we'd like our funds to be used for the people, and i think that's where the line draws between the republicans and the democrats. the republicans don't mind funding what they call the war machine, and with funds being what they are, democrats would prefer that our funds be used for the people at home. host: got the point. here's the headline of the hill story, steele's afghanistan criticism highlights dems' war problems. it's shining a spotlight on the

mixed message on the war. that's the way they describe it. they say just hours before mr. steele made his remarks a majority of house democrats in the caucus voted to require a timeline for withdrawal of troops from afghanistan and restrict funding if president obama deviates from his drawdown plan. just under a minute from the house floor on this part of the debate from democrat barbara lee of california. >> it's critical to understand that this amendment would provide for the safety of our troops, civilian personnel and contractors while troop withdrawal takes place. it does not allow funding for ongoing combat operations or for this escalation. it's not a cut and run amendment. it would not leave our troops stranded in harm's way. simply put, this amendment provides for the safe and orderly withdrawal of our troops from afghanistan. and we need it because the reality is that there is no military solution to afghanistan. host: so the house went on to a series of votes on this

amendment and others and the vote came on one of three anti-war amendments to an appropriations bill, $33 billion in funding for the war, liberal democrats demanded an opportunity to register their opposition and the least restrictive measure offered by representatives mcgovern and obey got 153 votes. 98 democrats voted against it. a stricter proposal that would provide funding only for a withdrawal of troops got 93 votes while 22 democrats supported a third measure that would have stripped the war funding entirely. part of the action from the house there on the hill says while the house ultimately voted to approve the war funding without conditions, all the amendments failed, the amendments underscored the deep divisions within the democratic party over afghanistan policy. you can read that at thehill.com. hazelville, north carolina. richard, you're on the line. caller: good morning. host: the independent line. should michael steele quit?

caller: real quick, happy fourth of july to "washington journal" and all the true great americans out there. happy independence day. we have to remember that president obama did make the comment in the past that good war, bad war, the war in afghanistan was a good war and the war in iraq was the bad war. and i think that's what michael steele was referring to. it was kind of -- i don't know way off-base comment but we have to remember also about harry reed when he stood in the well of the senate and declared and waved the white flag of surrender that we lost the war in iraq. now, since then we've been very successful in iraq and however, i think what president obama needs to do is to establish clear objectives on winning and losing. he wanted to redefine winning.

he's basically said we have to find out what our objectives are there and if we can achieve those objectives. and he needs to clarify that with the people. thank you. host: charlestop, south carolina. jim, republican. what do you think? caller: first off, i want to tell you that i'm a vietnam veteran. and the reason that i think in this particular case michael steele should not resign but continue to express as a leader the sentiments of the republican party, not just his own is that there is one commander in chief. that commander in chief when he puts our troops in harm's way has an obligation to give the

generals the complete and total support of being able to do what it takes to win. as we saw in vietnam, as we're still seeing in korea, as we're -- can you imagine, by the way, general eisenhower being told he wasn't allowed to speak his opinion about execution of the war? he became president because he spoke his mind and he was a gentle giant, and he had the right, responsibility, and duty to defend the constitution. not to defend the president, to defend the constitution of the united states with every weapon he had at his disposal. the reason that we i was spat on in several airports and had to

change into civilian clothes was because we weren't allowed, we weren't given the tools or the permission to use the tools to defeat the enemy in vietnam. the reason that this comment has been made is that this president is going to handcuff a bunch of young men and women who honorably serve the constitution of the united states -- not the president. they swear an oath to the constitution. and they swear allegiance to follow the orders of their generals. host: comments from jim in charleston, south carolina. linda from white house, texas. what do you say about all this? caller: first of all i want to say that i don't -- it really don't matter whether he resigns or not because this is going to go on, john mccain, where does

he stand on this? i noticed 2 other day when this other guy, knocking down bill kristol, he got sick all of a sudden, i think john mccain was asking him that question. the first person in the background was john mccain. where is john mccain in this? he did not win and you cannot tell me because he lost to president obama. where is he in all this with the war? he loves war. where is he in this? president obama cannot do anything if john mccain is behind pulling the republicans, nobody is coming out where john mccain is in all of this. what they going to do is forget us, us working people in the united states and have a war right here when they're dealing with everything else and the people here, it's not working. they could end it with a war right here in the united states. host: thank you. back to the republican line. it's albert from hartford, connecticut. albert, your thoughts. should michael steele resign? caller: i don't think so.

because he's reflecting the views of the republican party. if he resigns for saying what he should they should have asked him to resign when he kowtowed to rush limburger cheese. when he calls the president a liar, in the state of the union message and other indignities against the president, it's gotten to to be in my personal opinion a racist thing. they're not respecting the president in that caucus. this is not his war. this is a war that was conceived way before he got there. yes, he is the commander in chief, but to show this much disrespect to obama, i'd like to reflect on one of the callers when he started to say mr., he said president.

a lot of people call president obama mr. obama, obama so and so. showing no respect. michael steele reflected what the republican party -- what the republican party of which i am a member have in their hearts and very racist all told. thank you for taking my call. host: here's another twitter message. steele wants to step down, that should be his stigs. the media should shut up. an a.p. story out of kabul in afghanistan, general david petraeus, the new commander, he called for unity in the civilian and military effort to turn back the taliban saying quote in this important endeavor cooperation is not optional. these were his first public comments since he arrived friday night to assume the command. official ceremony happens tomorrow. in case you're wondering about general mcchrystal, "the new york times" points out his mentor says he is crushed by the change in his circumstances. the white house sent a powerful signal by sending general

mcchrystal to retire with all four stars but the general's most important mentor admiral mike mcmillan described him as crushed of commanding nearly 14507b9 troops to living in exile in or on the potomac. here's a quote by the general jack keen, in time he will put this in perspective because of his contribution he has made to the country. i think he will at some point make peace with himself. he's the retired vice chief of staff in the army in touch by email with general mcchrystal. i suspect he's trying to let everybody, shall he's thinking he left everybody down, let his troops down, let his team down, let down the chain of command. that's what he might be thinking according to the general. "the new york times" piece there. lloyd is on the line now, independent caller. angleton, texas. welcome. caller: how you doing? host: fine. how are you doing, sir? calling.

i'm excited. i think michael steele should resign because he's bad for the -- i'm an independent but he's bad for the republicans and i think they should select him on account of president obama and i think he's doing a fine job. thank you. host: let's hear from dennis in alabama, a republican. good morning to you. caller: good morning. host: what do you think, sir? should the chairman of the r.n.c. quit over these comments? caller: please let me express my humble opinion that he has no credibility whatsoever as far as i'm concerned. and the statement that was purported in the paper comparing our military to those of the british and the russians who were unsuccessful many times, that's -- if you're nation building, we're going to be unsuccessful. but i'll remind the listeners that before the iraq war, special operators subjugated the taliban in a month and now we

have embarked on nation building. for michael steele to make that statement just typifies his continuing issue wants of statements which are not believable and for the republicans to continue with this go along to get along strategy using michael steele as their spokesman further diminishes them in the eyes of the populace. that's why they are not believable and -- but that's just my opinion. host: let's hear from keith from plainfield, new jersey. should michael steele resign? caller: sir, i was just down in washington, d.c. at the vietnam wall, and i spoke with a lot of vietnam -- vietnam veterans, and we discussed the conversation that you had. you know what they said? when you join the military, you are on a code.

you're rewarding a general with another star? for what? going against the commander? he can say red and it's blue but you go red. we go by code. and you promote him? well, forgive me, because i done seen a lot of soldiers die, i'm the first black army diver and i dove in the potomac river. didn't want to, but i did it because i put my -- i swore allegiance to this country. for there to our commander, come on now. and you give him a star, make an

extra $100,000? you tell me, is it right or not? host: that was keith from plainfield, new jersey. time for a couple more calls. a couple more news stories as well to the oil spill. the front page of the houston chronicle. executive says b.p. could plug well by the end of july ahead of a projected target of august if weather conditions permit and drilling of relief wells goes smoothly. from the newly appointed executive in charge of the company's response. that's a houston chronicle story. the financial times today, the lead story says that b.p. has been braced for a shake-up at the top and they show on a tightrope b.p. chairman carl henic svanberg leading -- and dudley to their recent white house meeting, investors are braced for a clearout of leadership once the leaking oil well is capped, perhaps in the next few weeks. mr. svanberg the swedish

chairman isening singled out for shareholder criticism for his perceived lack of decisive leadership during this and his failure to support tony heyward, the embattled chief executive. to the oil drilling story specifically, our news maker program runs every sunday at 10:00 a.m. eastern time and 6:00 p.m. eastern. our guest tomorrow will be senator jeff bingaman, democrat from new mexico, talks a little bit about the future of off-shore drilling. >> the truth is there is no statutory prohibition except in the eastern gulf of mexico today. so it's essentially up to the department of interior and the administration as to which areas they make available for leasing. and i think their decision making in that regard is obviously somewhat suspended until we figure out what went wrong in this spill and disaster

that we're currently still experiencing. so the big issue is not what's congress going to do about off-shore drilling, it's what the administration is going to do about off-shore drilling and that's still a few months down the road. host: senator jeff bingaman is chairman of the energy and natural resources committee. he'll be our guest on "newsmakers" tomorrow on c-span. steve, you're up first. prior, oklahoma. should mr. steele resign? caller: no, because i don't see nothing he's done wrong. i was wondering is democrats running the show today? sounds like 10-1 they wwnt him to resign. the way this country is going, and the problem in the white house, the staff of president obama seems to be lying to the whole country, and i don't know president obama thinks he has any help because he's letting

the whole country go down the tubes and all the people that's democrats has to be delusional if they think this is any better than george bush because -- they can't blame him no more. this is under president obama and under the leadership of nancy pelosi and the democrat controlled congress has let this country go -- fall apart like california, illinois, the state of new york, the whole northeast has let this country fall apart. can anybody see it host: our last call from dunn, north carolina. john. independent caller. what do you say? caller: first of all, the last name is john tart. i don't think michael steele should resign. the whole problem is the republicans and the democrats. the whole problem. till we run them out of washington, clean the whole house, the, till president obama has something to work with and the war in afghanistan, regular

soldiers, up to the line, and we -- supposed to be that the people know over there, you can present bin laden to us because we're going to nuke you. that's the way we got to be. as far as george bush, i voted for bush, i wish i never did. we are supposed to be in afghanistan, not iraq. host: we will take a short time-out and switch gears to talk about the u.s. economy. the jobless figures you are out, 9.5% nationally now. our guest will be correspondent emily kaiser from reuters, plus your calls. we'll be right back.

>> one of the best quotes i heard about money and politics, it's like water that finds a whole. >> he writes about political action committees and won the pulitzer prize for his reporting on tom delay and jack abram off. sunday we talk with jeff smith from "the washington post" on c-span's "q & a."

"washington journal" continues. host: at the table now emily kaiser, economics correspondent for reuters, lots of folks looking for bright spots in the economy. a couple of headlines out there this morning that aren't too bright.

"the wall street journal," u.s. job picture darkens, payrolls are shringing, camera moves to the right, derth of jobs threatens recovery, that's "the washington post." explain what's happening right now? guest: we have a situation where the private sector is creating jobs, but not at a fast enough 35eus to meet up with the proper police station growth. private companies don't have the confidence to hire a lot of people. there's a couple of reasons. the biggest one is probably they don't know if demand is going to be there. if i don't know if i'm going to have business, i'm not going to hire. host: what does it mean? guest: the economy is still recovering, growing, but not the pace it did at the 2009 or even the beginning of 2010. i don't see anything we're headed for a double dip but we're not going to grow at the pace of the fourth quarter of 2009 for example. host: what would show a double dip recession? guest: the fact would that we

came out of a recession it makes it hard tiering back in. you need a lot of companies saying i don't need this much employees or this much inventory. they've already done that. we would need some other kind of shock, a deteriorating situation in europe over their debt problems, a sharper slowdown in china, something else going on here that would tell companies this is worse than i thought, i need to take traffic action here. host: emily kieser is economic corporate for reuters. she'll take your calls in a couple of minutes. the phone number is on the bottom of the screen. unemployment rate at 9.5% at this point. what can you tell us about these numbers and how they work, folks who have stopped looking for employment. how does this get fact toward into this number? guest: you brought up why the rate came down this past month. we had hundreds of thousands of people who literally stopped looking for work. so the way the labor department calculates the numbers you have

to be actively looking for a job in order to be counted in the unemployment rate. if you give up looking, you're no longer counted. if yoo have fewer people looking the job force shrippings and the unemployment rate goes down. it doesn't mean the economy is getting better. it's a misleading number at this point. host: president obama came out yesterday to talk for a couple of minutes about these employment figures. here's a short piece from that. >> it reflected the planned phaseout of 225,000 temporary census jobs, but it also showed the six straight months of job growth in the private sector. all told, our economy has created nearly 600,000 private sector jobs this year. as we saw a turnaround from the first six months from last year when we lost 3.7 million jobs at the height of the recession. host: president putting his own positive 13i7b on the numbers. what else can you tell us? guest: there are a couple of

things in this report that are worth mentioning and the president didn't bring it up in that clip. when the may numbers came out a month ago, there was shock and awe on wall street, the market went down and a lot of concern things looked really bad but in fact underneath that headline number things didn't look so bad. two things going on that we look for. one is that people were working more hours in a given week and the other they were getting paid more for those hours. in this june report both those numbers went down and that's a worrisome sign for things going forward because it's telling you companies don't need as much labor and if they don't need as much labor they're not hiring more workers. host: how much can presidents really do about this? guest: that's the problem the white house is having, it faces 24 tough choice between do i put more money into the economy to encourage hiring or worry about the fact people are starting to get concerned about the deficit? when we talk about the deficit, we're still seeing in financial markets that the world is willing to lend money to the u.s. at an extraordinarily cheap

rate. the yield on 10-year notes to the government is now below 3% and that's a remarkably low level. so there really isn't any evidence that the world is cutting off the u.s. when it comes to financing. but the u.s. has tried to put money into the economy and it's really not getting traction. we've seen it with housing and cash or clunkers, cash for appliances. it works in the short term but the following month when the deals are off the table demand goes right back down. host: before we get to calls makes me think of congress. where exactly is congress right now on enacting -- on acting on all this? they've left town but what's the current action on the hill? guest: they're looking at extending unemployment benefits. so far they've been disinclined to do that. there are two sides to that story of course. you're talking about people who are out of work and need support. there is also some evidence that suggests that as long as those benefits are there, people who might otherwise have moved on to something else will stay looking for a job and will not maybe take a lower paying job because from the benefits are better %-

than what they might get working a minimum wage job. there are differences of opinion on how long we ought to be extending those jobless benefits. host: lots of calls coming in for emily, kaiser. chico, california. john, democrat. you're up first. caller: thank you for taking my call. i'm an active ttitter person and i've been noticing a lot of anger out here amongst both liberal and conservative regarding the level of war spending that that is never hardly mentioned as far as the deficit neutrality issues and all that, people seem to ignore the fact there is a huge hidden tax from the war that's taking money out of our economy. i'm wondering why isn't that discussed more that the cost of the war is really a drag on our economy and really i don't see what it's really accomplishing. so a lot of us democrats are actually angry with our president about it, we think he's on the wrong track. what would your opinion be about

that? guest: on the deficit you bring up a good point. for all this discussion about how much we should be stimulating the economy to get it growing, those aren't the longest term drags. you mentioned the war, it's been going on for a few years but the biggest drags are struccural, medicare and social security. those have nothing to do about with the debate about whether we should stimulate the company comme more or spend more. those affect the long run course of the u.s. economy. host: what's being done about those two? guest: so far not a whole lot. we have a commission looking at these longer term and there has been some discussion about raising the retirement age for social security. but again, this commission that was put together is advisory. it doesn't have any power to set legislation. host: when will they report? guest: we have a long time. they're still in the talking phase and we have to see after the election what sort of mood congress is in. the feeling in the global community is that the u.s. doesn't really need to cut back right now but longer term needs

to show that it has at least a plan for addressing these problems that we've known about for decades. host: so is the debate over the retirement age, is it real? c50 it happen? guest: it seems like it c50. it's been discussed many, many years. it seems to economists as a it's not something that's going to slow down growth right away which is a concern. but it is something that can affect the long-term trajectory of u.s. finances. we know that needs to be happen. host: let's hear from linda, rome, georgia, independent. caller: i wanted to ask ms. kaiser on the unemployment it's posted it's 9.5% but are the people that have drawn out, they are not counted. is this correct? guest: you're absolutely correct. there is another measure the labor department puts out and a lot of journalists and commirses, they call it the u-6. we call it a measure that includes exactly what you mentioned, people who dropped out of the labor force. it also includes people who

accepted a part-time job when they'd like to be working full-time and anybody who is underemployed. that number went down but it's 16.5% which is an extraordinary number of people who are not working to their full ability. host: linda, what do you think? caller: then what we're getting is an an imaginary figure when it's told to the american public that it's 9.5%. guest: you're absolutely right it understates the full nature of unemployment. host: when will the higher figure and the reports you're looking at make it into the headlines as opposed to this 9.5 figure? guest: the focus has been on on 9.5, that's considered the core of the work force that's a clear indication whether the economy is getting better or worse. i'm seeing that higher number that u-6 get more traction in this recession. host: steve in tomahawk, wisconsin. you're a republican. what do you say? caller: good morning. ms. kaiser, why don't you believe that we're going to have

a double dip unemployment starting possibly next year when the bush tax cuts expire and also when all the higher taxes start to hit from the health insurance bill? i'll listen to your comment. host: thank you. guest: you bring up the point of the fiscal cliff as we call it. this is a valid point. we are looking at a situation next year where the stimulus is starting to wear off, some of the bush tax cuts are expiring, i'm pretty sure the obama administration will keep many of them, those making less than $250,000 would get their tax cuts. the economists i talk to are less concerned about the expiration of the tax cuts. they are concerned longer term what with what they call the handover when the government pulls back on its support, is the private sector going to be strong enough to carry the baton? what we've seen the last couple of months is worrisome, every time a government spending program has expired, private demand has not picked back up.

the recent example was in housing when that tax credit for first-time and existing homebuyers expired april 30. we saw a 30% drop in may home sales. so clearly that pulled demand forward from later months and there is not demand behind it to take up that slack. host: you mentioned home sales, there is an extension of the homebuyer tax credit. where is that in congress? guest: that looks like i believe that was signed yesterday by obama. what that does is give you a little bit extra time to close the deal. it doesn't mean that new deals can get done and qualify for that credit. so in terms of spurring more demand for housing, i don't see it having much of an effect. my understanding, it was designed for those who made a deal but couldn't close it fast enough to qualify for that credit. they're giving them an extra 90 days to get those deals closed. host: a twitter question, ask your guest to comment on bailouts. aren't they a drain on the economy? guest: there's a couple of ways to look at it. we don't know what would have happened without them.

clearly there is money going into bailing out companies, bailing out businesses that can't survive but at the same time, it's hard to prove the alternative, what would have happened had we not bailed out general motors or any of the banks? we don't know how bad the hit to the economy would have been. you can argue there's a drain on the front but on the back would would it have been? host: plymouth, massachusetts, anthony. democratic caller. hi there. go ahead. caller: i'd like to ask ms. kaiser what the economists have -- why is she still talking? i don't hear you at all. .

caller: how did the unemployment figure stay at 8.3? guest: we had a point where unemployment came down, a recession hit, unploilt went up.

so after the resession, we had a rise in unemployment. it came down helped by the housing boon. it employed a lot of construction workers and everything else that goes along with that. the unemployment rate went down and then spiked up. there was a point at which was in the four's, but it wasn't in the four's every month he was in office. host: let's here from importantsmouth, virginia. caller: are they counting the people that have been dropped off the rolls of unemployment because their benefits have ended? host: we touched on that already. guest: that's the question i was asking myself yesterday. there is economic research that

suggests what you are saying is precisely what's been happening. that people may have stayed in the work force and accepted unemployment benefits because it gave them more resources than they might have will working a low-paying job and having had to pay for child care and transport and all the other things that go with that. host: back to the idea of a double-dip recession. what would that look like? guest: that would tell businesses they need to sfop spending -- stop spending. we need a cutback like that to say the economy is no longer growing. well the economy is growing, and we done have the numbers yet. it looks like we will have growth similar to what we saw in the first quarter. what is worrisome is april looked ok, may looked questionable, and june does not look good at all. what that says is we're going into the second half of the year without a lot of strength.

in order to get a double-dip, again, we would need some kind of signal to businesses and consumers that this is worse than what we know about right now. host: a lot of worry in this conversation, but are there bright spots out there? >> there are bright spots. one of the things i noticed is that in the services sector, and that's a broad category which includes anything from barbers to restaurant owners, there were more than 90,000 jobs added in that sector. so we did see a little of a pick-up there. that to me was one reason to be optimistic. host: let's here from dover on our republican line. caller: i have a question on the economy. is there a reason why the

government hasn't had a mass production of ethanol or something like that to help boost the economy? i think that would be an excellent bill on that. guest: i have not heard anything about use the ethanol. we did have a time when food was up high and there was concern that our food of ethanol was leading to starvation in africa. that's a tough choice for a government to make. you're right, any new technology that requires manpower is going to increase employment. i have not heard any talk in

washington about ethanol being that product. host: here's a question, what are the plans for adding jobs villa new transportation, new grid, new energy jobs to help with the unemployment problem? guest: the question is, do we have enough jobs and do we have enough people to fill -- people with the skills to fill those jobs. so far i have not seen enough to fill the 15 million people out of work. that's a lot of people. host: how about the oil spill, is that affecting the national data? guest: we have not seen that yet. every week we get a state-by-state breakdown, so we're watching carefully to see if we are seeing spikes in mississippi, louisiana, alabama. we haven't seen that. job losses in the last week were

california, places not associated with the spill. we are watching to see if we will see a spike in unemployment in those states. host: our guest is emily kaiser, also studied american history at cairo and london. she is an economic correspondent for reuters talking about the unemployment rate. there are a lot of telling numbers. orange county, california, you're up now. it is marrianne, independent. caller: i'm appalled this president is considering amnesty. most people i know feel the same way. further more, you were talking about social security. i think there has to be some stort -- sort of a law that has a mim time period. in orange county i see a lot of ads that run about bringing new

people into the social security system. there is no minimum time period people have to pay in, like say 10 years, of minute consistent work before they take from the system. i was amazed people could get right in the system and draw from it. it is wrong. host: any thoughts? guest: i actually look at immigration and social security in a different way. that is when you have an aging population, the first of the baby boomers hitting 65 next year, you need younger workers in the system in order to pay into the system. you mention those that may be older and drawing quickly. in fact, the average immigrant tends to be younger. we will need younger workers to pay for older retirees. this is affecting many countries. japan has an aging population and doesn't allow much immigration and they have had an issue about what they are going to do to have a labor force to

support their retirees. host: from the weekly address on the republican side, here's a piece from saxby-chandler. >> one of the most dangerous sides -- threats doesn't come from without but within. wisely thomas jefferson warned of this danger early on. he once said, "there does not exist an engine so corruptive of the government and so demoralizing of the nation as public debt. it will bring us more ruin at home than all the enemies from abroad against whom this army and naferi -- navy are to protect us." host: staying with that theme, big debt. guest: in the short run, it is

clear, when deficits hit, it will be difficult. you have more people on the system. these are short-run things. they don't last. when looking at a deaf -- deficit, really anything we do, the unemployment benefits are going to come down. that's going to help. the structural problems with the deficit like we mentioned before, social security, medicare, and you can also include what's going to happen with fan fan -- fanny mae and freddie mac, those are the importaat things that have to be addressed in the coming years. >> earnings and hours ticked downward last month and the stakes grow larger, it says in "the new york times."

" incumbents feel particularly precarious and make economic decisions are financial reform, unemployment benefits, and aid to states still sit on their desks." guest: this is the short-term question, which will do more harm to the economy -- doing more or doing less? we had this same group -- same discussion at last week's group in toronto. some countries were cupping in saying, if you pull back now, the economy weakens, and if the economy weakens, you have fewer people paying taxes. the european opinion was if you want to show confidence, you need to show commitment to deficit reduction.

host: "resession still a looming menace. government must not assume recovery is here." barbara, democrat, good morning. caller: what i would like to ask miss ayeser -- kaiser, do you really think if it was any other person elected president they could do better than obama? do you think the republicans can do better? let's get down to it. he's doing the best that he can. he's got a lot of problems. i'd like to hear your answer. host: i think you bring up a valid point. here's the situation, the white house can offer incentives, congress can offer incentives, but when it comes down to it, individuals are making the decisions about what they are going to do with their money. am i going to buy something? am i going to open a factory?

policies can create the environment where those decisions will go one way or the other, but nobody is going to force people to make that decision if they don't want to do it. host: from atlanta, bill. caller: i know this is the last year that when bad economic news is reported in the media, especially the press media, it seems to be preceded by the phrase "in a big surprise." for instance, "in a big surprise, the jobless rate skyrocketed." why is there always a big spry? secondly, do you think what president obama said the other day and other economists, and all economists agree, that he had saved jobs by his china debt bill? thank you very much. guest: i think that first question is a big one. i'll show you how these indicators sort of play out in the news media. we poll 70 or 08 economists

around the world for their guesses on what the coming week's or month's numbers are going to look like. so when the actual number comes in, we compare it to the consensus. if it is higher than the consensus, it is better than expected, or vice versia -- vice-versa, depending on the numbers. there will be plenty of times that the consensus gets it wrong. in the last 20 years, the consensus gets it wrong a lot. which raises the question, are we looking at it wrong? it is a good question. the second question, does the stimulus create jobs, i think that is the case. i think government spending helped the recession from being deeper than it was. again, it is always difficult to prove what would have happened if you had done nothing. >> "new york times" headlines says that china raises its estimate of economic growth to 1.9%. a pretty significant number.

what's the connection between what happens over there and what happens here. >> if we learned nothing in the last few years, the biggest thing we learned is that every economy is linked right now and what happens everywhere affects the world. the perfect example is that we never would have thought a mortgage going in effect in nevada would hurt to a bank in germany that wouldn't lend to a factory that was going to be built in china. it is one of the big reasons that the global economy is holding up as well as it is. bun of the reasons -- one of the reasons people are upset in the last week or so is that china's inflation seems to be cooling. beijing would tell you, that's not too bad. now, a cooling china may not be what the global economy wants right now. host: what are your take-aways

from the g8 and g20 last week? guest: what we're seeing is a group that came together with a united problem, a synchronized recession, and a solution that was common across the board. what we're seeing now is economies behaving differently and the response from governments being different. that's upsetting investors who are saying, we're not on the same page anymore. will we adopt policies that may help at home and hurt abroad? and that's not good for the global economy. >> massachusetts, jim, you are on with emily kaiser of reuters. go ahead. caller: i have a suggestion that might help our economy. we have present rily -- presently military in 173 countries around the world. they have closed a lot of bases in the united states us --

united states. what if we reduce the number of military bases other than securing our embassies, and bring our militaries home? bring the -- bring our people home. we have an air force that is the largest in the world. we can deploy our troops anywhere in the world in a matter of hours. immediate support for these bases would stimulate our local economies, and as we know, there are a great deal of people required to maintain a base and to provide services for a base. this would help immediately. host: defense spending, restructuring? guest: not an idea i have heard discussed before. it is not an idea i've heard discussed actively in this administration.

host: the president announced his plan to bring new industries to the u.s. he's awarding billions to new solar plants plants that he says will create thousands of jobs and increase the country's use of renewable energy sources. there is also a plan to expand broadband? what do these announcements mean ? plug them into the equation. guest: we need millions of jobs. we lost about eight million jobs during the resession. the total work force looking for work is about 15 million. if we are adding 200,000 a month, we are falling short. you are looking at three to four years just to replace the jobs we lost during the recession, and that doesn't account for new people joining the labor force.

knees are all great. we're still looking at years of high unemployment. host: "weak jobs data." what is the story there? >> wall street is realizing perhaps what they forecast six weeks ago is not coming true. i think after the fourth quarter, the end of the year is really strong. peel are -- people are talking about a v-shaped recovery with a sharp down and a sharp up. they are realizing that the sharp up isn't happening. the market is starting to price in a worst-case scenario. they are projecting the possibility of a double-dip. it is remote, but they are starting to think of that. host: good morning. caller: i would do three things.

first, start putting money into entrepreneurships. there are too many regulations for anyone to start a business nowadays. it is too hard to start a business. i would put money into the bureau of entrepreneurship or something like that. the second thing i would do is a tax holiday. we got a $600 million stimulus last fime, and everyone said it didn't help. well, it helped me. i think they should double it or triple it. a tax holiday. and the third thing is the drug test kits. it's a gam scam. i worked for 30 years and had no problem. now i can't get a job because everyone wants to test my urine. thank you. host: go ahead. guest: the obama administration has been talking about small business lending.

the issue we're having there, though, is is -- is the confidence to open a business. when we look at small business surveys, it is not, am i going to get a loan? it is, i don't know if i'm going to have business tomorrow. i don't know if i'm going to make any money. host: the "times" has a story out of chicago, "illinois sopsspops paying its bills, but can't stop digging a hole." guest: we're seeing a decline in government spending overall because of this situation. we haven't seen government jobs coming back because state and local governments have to cut. they have rules. they have to balance their budget. which means if the money is not coming in, the money can't go out. something has to fill that gap.

host: patty, you are on the republican line. go ahead. caller: thank you for having me. i'm a contractor. a woman female contractor down here, and i can tell you the economy has impacted us tremendously. we are having trouble getting materials. we're having to wait two to three times longer because our wholesalers are not stocking. the materials we are getting from overseas, which we do have a plant here in florida, but the plant has shut down, and the materials from china are taking longer to get here. it is taking us longer to complete jobs and to get paid. i am also getting five to six phone calls a day, people just looking for work. they are desperate out here. so i would say your idea of a double-dip resession is pretty

correct from what i'm seeing after 25 years in business. >> you bring up a great point about the supplier network. people cut their ininventories as far as they could because they were afraid if this resession gets deeper, i don't want to be stuck with ininventory i can't sell. the problem is, when you get demand coming back, the inventory isn't there. we did see some stocking in the fourth quarter, but perhaps not fast enough meet your business needs. >> how is the auto industry doing? >> there were not great numbers for june. there is concern about that. it is better than it was a year ago, but we are not seeing the level of production and demand there. in the boon days we were looking at an annual rate of 11 million cars being built. we are back to the 11 or 12

range. not as bad as we were but not as good. host: we're reading about 60- year activity on mortgage rates. guest: you have a glut of homes, and you also have tougher requirements to buy a home. some people that want to buy a home may not be able to qualify. we have very few rules to qualify for a mortgage three or four years ago. some of that needed to come back and be tightened up. right now conditions are very tightened if you don't have a significant amount for a downpayment, if you don't have the credit score, if you don't have the resources, you will not qualify for that mortgage. host: what about the mortgage rates? guest: largely consumers had borrowed extensively to keep up their spending. they might have borrowed off their mortgage equity. so the consumer debt position was dreadful coming into the

recession. so there needed to be some pullback there. we did see it start to build back up. people see see that as a long-term profit. although now we could use that spending. we have started to see people cut their spending more. the savings rate is popping up, but not where it was in the 1970's, for example. host: the 4th of july fireworks being canceled in a lot of towns in the country. they include antioch, california, akron, louisville, kentucky. mayor james davis says he had to cut fireworks in antioch,

california. he has had to lay off people there. it is a sign of the times now. caller: i would like to state, you were talking about the housing market and real estate. as far as people being surprised about the real estate market, in 2004 everyone was reported that the economy was being propped up because of the housing mark. because of that, i sold my house and bought a smaller house. i don't see how anyone could be surprised it was going to go down. manufacturing has been in decline for 30 years. can you tell me where you think this 15 million jobs will be coming from? guest: i wish i had an answer for that. i think that's why people think this recovery is not going to be very strong. we do have a lot of people out of work. we are not creating the types of jobs that match the skill set.

it is going to be a long call. i applaud you for having the foresight to downsize in 2005 when a lot of people were up sizing. i think euphoria sets in and everyone thinks, this is great a, i'm going to get rich on housing. that is the stuff that bubbles are made of. host: caller. caller: three things. because of the trade policies of a few corporate democrats and most of the republicans, we lost millions of high-paid jobs overseas and trillions trillions in lost revenues. that combined with tax breaks for the rich like the oil companies and huge military spending shows that they haven't cared a bit about the debt. yet now they suddenly care and one democratic and all the republicans have been trying to save a buck by blocking a vote on the extension of unemployment

benefits for months that is totally corrupt and immoral. secondly, most economists agree two-thirds of our economy depends upon people spending money and buying things. if we don't have the millions of unemployed, the economy is only going to get worst. lastly, you know, we had discussion here on our talk radio about roosevelt. you know, after all his policies, things were a little bit better, but we were still in a big depression. it took the huge spending of world war ii combined with their new regulations on the banking industry and a pro-american trade policy to end it. after seven years of constant wars, decades of deregulating the banks and anti-american trade policies, things are not getting much better. so war does not necessarily end it. have you to have a trade policy that is pro-american and you

need to regulate the banks, because the republicans worked for years to deregulate them. host: emily kaiser. guest: obama has talked about a goal of regulation in the next five years. the problem is we live in a globalized economy, and a lot of countries are hoping to export their way back to health. if everyone is trying to export at the same time, we have a problem. i have one economist mention to me that mars is not open for business, so where are all these exports going to go? host: chris, republican caller. you are on the air. caller: one of the things you mentioned was the time it was going to take to recover from all this unemployment. my question is, what portion of this unemployment is due to things like us exporting jobs overseas, firstly, and then the second one is just the fact that

, you know, the industries and the things that we've lost. not just the financial crisis of a year or two ago, and then the second part, which is not related, what is the definition of a depression? are we really in a depression and not a recession? >> the definition of a depression is there is no depression. the definition i heard is when -- a resession is -- the definition i heard is a resession is when your neighbor loses his job and a depression is when you lose yours. it is going to take us perhaps five to seven years to recoup these job losses. many of them look like they are permanent when we are not selling 17 million cars a year,

we don't need as many car builders. when we are not building as many homes, we don't need as many home builders. this is going to impact the economy for a long time. host: emily kaiser, thank you for your time. coming up we will have a discussion about the arrest of suspected russian spies. we'll be right back.

>> "washington journal" continues. host: here is david kramer to discuss the washington spy arrests. what does it mean to you? guest: it is still confusing, what happened. last weekend u.s. officials arrested 10 people in the united states in arlington, virginia, new york, virginia, and massachusetts, and charged them with representing a foreign government without officially rem registering with u.s. authorities. a number of them were charged with money laundering. none of them were charged with espionage, but they are alleged to have been working for the russian intelligence service and were trying to get influence into u.s. policy circles and to figure out what u.s. thinking

was on a whole range of issues. there are still many details which have not yet come forward, but we'll see what happens over the next few weeks. host: were you surprised? guest: the fact that spying continues does not surprise me. in fact, spying has increased since the cold war. now what russian people spies are in-- now what russian spies are interested in is corporate information. host: "in spy case, arrests vs. knowledge. f.b.i. pursued suspects for nearly a decade to bid to gain intelligence information."

guest: they were known as quote, unquote illegal. they were under deep cover, not using diplomatic immunity, not using declared status as foreign agents. they were under cover acting as comes, working in travel agencies in all different kinds of compafts where they would -- capacities where they would not raise much suspicion as to what they were up to. host: what is the bottom line for u.s.-russian relations. guest: there was reaction in moscow that reflected embarrassment. announce that the u.s. went public with these arrests. announce that it happened days after the president of russia was here. including going to raise -- and i think there was annoyance in the obama administration about

that. at the end of the day it seems that both sites want to -- sides want to downplay this and make sure it doesn't blow up. there is still concern that the russians will retaliate. they haven't yet, but we'll see what happens over the next days and weeks. host: david cramer will be here to take your calls on this. phone numbers are on the bottom of the screen for democrats, republicans, and independentents. our guest is a former assistant secretary of state. also a deputy of state in euro-asian affairs. he's also a senior transatlantic fellow for the german marshall fund. educated at tufts universities and harvard. the headline says "russian spying at cold war level," says expert. "the widespread mockery has skerd well played british

intelligence experts who say it would be foolish to underestimate the espionage efforts of the heirs of the k.g. b. guest: again, it is a combination of looking for state secrets what governments are thinking and what they may be writing about, but also getting corporate information because russians are interest in to what their competitors in europe and the united states are thinking. so there is a lot of activity, more activity than there was. the fact that they are able to travel freely gives them more opportunity to hide in britain or germany or anywhere else. host: is it safe to aassume the u.s. does its own spying in

russia and how much? guest: i would say one should not be shocked that the u.s. does its own looking in on other countries. look, friends spy on friends, and countries who are not friends, also we spy on each other. this is the way of the world. not just as of today, but the world as it existed in the past, too. caller: doesn't this country spend more on spying on other countries than all the countries in the world? hasn't our country, our government as well as ours -- as well as our corporations become and more and more secret? isn't it easy for our government to classify information?

and they have made it so difficult for the american public to obtain critical information from our government? so i know spying -- they didn't get charged with spying. they about charged with money laundering. it is so easy to be charged with money laundering now. it is so easy. i -- you know, c-span, you really need to do a better job and get us better information than what you have today. this man is not -- doesn't really have all his facts. thank you. host: he hasn't been on for more than a few minutes. guest: the caller is certainly right. the united states spends a lot

of money on activities of trying to get information on foreign governments. the united states is very active, but so are other governments. we are trying to keep eyes on other governments. wre do it through diplomatic means. we do it through stay stay and others. there are questions about the levels of spending. i don't have details on that. the reality is, as the caller indicated, these people have not been charged with spying. they have been charged with not registering as foreign agents and they have been chargeded with money laundering. thopes do -- those charges are not as severe as spying. host katerina, go ahead.

caller: i came frr college and then grad school. i work at a prominent university in the area. so i do have contacts with all these very interesting -- as an immigrant, should i be concerned that anything will happen to me or that the government will strt pointing financing -- will start pointing fingers at me? i have become a naturalized citizen. that is now in the back of my mind, that i'm out del, and my russian eye -- identity is there. foo -- thank you very much. guest: listening to you, i would never know you are not born in the united states. your english is flawless. no, you and people in your

situation should not be worried that there is going to be a sweep by federal authorities against immigrants in this country or people that aren't even citizens or residents here yet. its problem is for people who engage in illegal activity, as those who have been arrested have been alleged to have been. if you work at the university, you should be fine. host: how is the story playing in russia? >> sthr annoyance that president -- annoyance that this was done some days after the president of russia met with president obama. there was concern that the people seem to be bungling in their operations. there is anger at the united states in terms that there might be some payback. there is concern in washington

that there may be retaliation in russia. usually there is some tit-for-tat in these kinds of things. host: what kind of people are we talking about? journalists? teachers? guest: hard to say. there may be a little nervousness in the american community. i hope this boils over quickly. there may be reasons to be critical of the u.s.-russian relationship. i tend to be on the critical side. it is important to have good relations between our two countries. as a reminder of the -- the tone of the two governments is much

better. the relationship between president medved -- medjedev and president obama is good. the administration would considering there is a new russian support against sanctions against iran, americans can fly over russia for missions to afghanistan. a bilateral commission is wup of the things cited as an accomplishment. i think there are argue lts that the government could be guilty of over-selling of the success. no question that in 2008 after russia's invasion of georgia, now the relationship is better in tone. host: you are on for david drame kramer.

>> thank you, sir, for this opportunity. i would like to know about these people not being charged as spies, but they have been spying for close to 10 years. that means the f.b.i. has been after their tail for that time. i also understand the lady happens to be a journal ifflet in a -- journalist in a spanish nape -- newspaper in new york. i don't understand how these people cannot be charged as spies. guest: it is a good question. it is one of the reasons why we need to find out more details. it would suggest to me that the f.b.i. did not have enough evidence to charge them as spying or they did not engage in

actual espionage yet but were in contact with the attorney intelligence service in moscow and had nch registered as foreign agents in russia, and were passing money back and forgets to each other from the russian government. that's what the case seems to be built on. there doesn't seem to be enough evidence to charge them with epsflauge. i think that's the problem. holvet: host: there's a headline, "raise 'em in russia!" spies want their kids sent home. what rules apply to this? guest: ns one of the sad parts of this whole situation.

there are children of these couples who seem to have had no idea what their parents, if in fact they are their parents, were up to, so they are certainly innocent victims in this, and i hope their welfare is looked after. caller: thanks for c-span. i wonder if we shouldn't start looking under the bed. it really is amazing. i had some russians down the street that were burning their own houses down into in order to get into newer better houses doing the old insurance scam. thank you. host: do you suspect there are more groups like this in the country?

guest: i would imagine there are. i don't know how much of a hands l we have on the situation. there is some light being made of all of this and the bungling efforts in this. but there is some -- a problem that the united states faces not just from russia but from other states, too. it is important that the united states government stay vigil and against efforts in the united states who try to secure statements from the u.s. quorpt world. that could be damaging to u.s. interests. host: speak more to the corporate parts. guest: there are companies involved in innovation and come up with new patents and new designs and new polings. it is important that they protect the means by which they

came up with these new products. so it is in their interest to protect their corporate interests. and they want to guard against any efforts by foreign companies or foreign agents working on behalf of the government that would try to secure or steal or find out what those corpts secrets are. host: could you say that about the chinese, too? guest: china and russia pose a challenge for the u.s. government and the u.s. corporate community. host: good morning. caller: my question is, why didn't the obama administration do anything to russia, like puts sanctions on them after they attacked georgia for no parent reason? host: in 2008, the situation you

are referring to, russian troops invaded georgia after, the russians would argue, shalkashvili moved into a neighboring area. they wound up occupying significant parts of georgia and thren subsequently recognized the two separatist regions. the united states didn't have much they could do. there weren't major sanctions we could impose. the bush administration withdrew from congress consideration of a nuclear cooperation agreement with russia, and nato also suspended military contacts with russia. but there wasn't much more for the united states to do. i think that's why there is a sense out there that russia got

away without paying too heavy a price. host: take us back to russia, the president, mr. mededev, mr. putin. what is their focus inside the consumer -- country? guest: putin stays a little more popular than mede tefment v. but both of them are focused on the economic situation in their country. medvedev is usually 20 points lower than putin. medvedev is 3 toward the end of

his term. the question is whether putin will come back. he's been prime minister since leaving the presidentsy in 20008 or whether medvedev will run for re-election. the question is whether after this break as prime minister he will come back as president. the presidential term has been extended. it is now six years. in a situation where putin did come back, he would be president for 12 more years in russia. host: how is russia getting on? guest: they don't have the most productive relationship with the european union. instead they focus on bilateral relationships with european countries. in many respects, those relationships are working fairly

well. with germany there is a major pipeline being built under the baltic sea for delivery of oil. they signed a greent recent greem with nore way that had not been wobble for years. the relationship with poland is improved. the relationship with still a number of other states is strained. particularly with countries closest to russia. the relationship with georgia, for example, remains very strained. host: adam, democrat, you are on with david kramer. caller: i have more of a comment than a question.

ededed -- unfortunately, i smell a reality show from ms. chapman, the spy that invaded manhattan. caller: taw, you obviously gave up a lot. please explain a little about fair. i think your audience can go on line and read a lot about t the other thing they ought to know is, you can't work up there at the local russian embassy, but yet our embassy in moscow, we let anybody and everybody work there. it is a little awkward, if you will. guest: any american, foreign or national, has to register with the u.s. authorities, has to

register with the justice department. that is one of the major charges against these individuals, that they were working on behalf of a foreign cost and simply did not register. it involves americans, too, who may be lobbying on behalf of foreign governments. if they work on behalf of governments in a lobbying capacity, they, too, have to register with the u.s. justice department. in terms of employment, as the caller was suggesting, yes, i think the russian embassy is more restrictive than we are. the u.s. embassy in moscow, we do employ foreign service nationals who do fantastic work. whether it is translating or providing administrative assistance or other things, they are obviously not involved or work at the industry that provides classified information, but from being drivers to other things they perform some invaluable performance to the

u.s. guest: what you -- what would you like to add? caller: this looks like a benny hill show, this operation. it looks like people trying to justify their relationship as an agency. sell them out. i was impressed with the f.b.i. how they did this. did they notify our allies they were taking these guys down? guest: there is always interest in trying to turn people. that may explain why in part the previous caller had mentioned the initial period of this investigation seems to have gone back almost a decade and why now all of a sudden dep it break? the f.b.i. explained because they feared it would unraff he will with the departure of one

departing from the us united states. so there is an atem to get as much information from these individuals as soon as possible, scompk that is, i thri, is -- i think is underway while we speak. there are firm walls between criminal investigates and when the fill -- investigations and what the f.b.i. is doing. the agents want to avoid politicization, including the time of arrest. the f.b.i. has made aware of when there were presidential meet togs avoid some of what we just saw happen last week. but sometimes arrests just have to be made when they are made, and that seems to have been the case here. host: philip, democrat. good morning to you. caller: my opinion is that i think the president is doing a good job running his country,

but it is the republicans that are giving him a tough way to go. host: are you still there? caller: yes, i'm still here. i just wanted to say shall the republicans are tearing this country apart. host: speak more to the structure of counter intelligence. guest: it is a murky world out there. i admire the people in t it is an important world where we keep an eye on those keeping an eye on us.

it is a complicated game. actually, to use the word "game" is a mistake. i take that back. it is a complicated operation that the u.s. government has. it involves some dangerous activity, too. certainly to this day. it certainly was in the cold war days, but even now. let's remember we have had spies in our country, aldridg ames, whose work led toward attacking the united states. it is whied results of this episode, it should be taken seriously. host: a question on twitter, how many americans have traveled to russia? china? guest: i know there are far more chinese who come to the united states than americans to china.

university students, graduate students to the united states. i'm a huge believer in exchange programs. i think in the long run that's the best way to promote relations between russia, china, and other countries because people get an opportunity to live with american families in many cases and see what we're really like as america. it is important for americans to have similar poblepobbilts, whether it is in china, russia, or any where else. host: you are on the independent line with david cramer. caller: i think russia has every right to be paranoid. if you look back at the time when yeltsin was in power and russia was exchanging -- changing from a communist to a capitalist system, 6-8 of the billionaire oligophs were

pro-western. so what western did, was an ex-kgb officer became premiere. he said the first thing we have to do is take back our resources that the american-friendly were robbing. .

guest: there's tremendous corruption in the 1990's and continues today in russia. and is one of the biggest threats russia faces. president medvedev has talked of routing of corruption that he has not made much progress that. they have been focusing too much on economic reform. many russians as a state. the 1990's as one of weakness. they view the americans as an advantage.

putin, as the caller points out, commander the ranks of the kgb. he was a colonel in the kgb. he was stationed in germany. eventually after spending time in st. petersburg working for the mayor, he came in and headed the foreign intelligence service in moscow. he brings a background to russian leadership that they have not seen since the previous head of the kgb when he was a soviet president previously. in the case of their neighbors, the u.s. did push for construction of a pipeline going from georgia and to turkey. the purpose and goals of them were to try and diversify spies and sources of energy. that is an important is to the united states. russia is doing the same thing, trying to build other pipelines. from russia to germany down to

southeastern europe. there are efforts by russia and others to try and produce multiple pipe lines. i think that, frankly, is in the interest of everyone. with a loss of up to see with the drilling of shale gas means for russian energy and the reliance on exports. host: what does russia do with the money from energy sales tax guest: -- from energy sales of? guest: they have huge energy reserves. they have hard currency reserves. then set up a stabilization fund to deal with the rainy day like the one they experienced last year and a little this year. it has accumulated, this money. they saw some of it back in to protect against economic dislocation as an effective the

economic crisis. they're sitting on a lot of money. they have not adequately and sufficiently reinvested it in the energy sector. a lot of fields will be depleted. the have not invested in infrastructure and there are questions over the money is really going. it gets into the issue of corruption. host: who is corrupting who and what to expect is going on? we read of things about how the russian leaders are so strong. guest: this is that it goes up to the highest levels. sometimes it takes a mirror to look in and see where the root of the problem is. there are problems of corruption at the bork -- at the very lowest levels including police stopping motorists. what we have seen over the past couple of months and the last year, there have been some sporadic protests and demonstrations including, for example, against abuse against

sirens and flashing lights with officials who should not be using them, crashing into other vehicles, causing death. there have been groups of russians responding to that. there were protests against tariffs ever being imposed on imports. there have been some pockets of opposition and criticism on the government. and has not really picked up momentum to the point that it would pose a threat to the russian leadership. the leadership, i think, is particularly hypersensitive. host: alexander is on the line for republicans. good morning to you. caller: mr. kramer, thank you very much. i am a native russian. thank you for your explanation and transparent answers on some comments.

i have a question. what is necessary to put in those countries for the publicity aspect on the media channels and would can be done without it? thank you very much and thank you for your great support. guest: excellent question. this has come up. why did this get into the press? it is a very fair question. when you arrest 10 people like this is probably better to get out in front of the story than to let the word of the count. this gets to an earlier question about secrecy. this is a case for the federal puthorities decided to be transparent but -- transferred about what they were doing.

certainly, i think alexander is reflecting concerns in moscow wondering why the federal government here have to make such a big deal out of this particularly after what seemed to have been a positive meeting between presidents obama and medvedev? host: the line for democrats. caller: thinking for your service. this is perfect timing for the media. i was curious about that also. they have been after these guys for 10 years. i do not think this guy just all of a sudden escaped and took off running. i think he was let go. the reason i say that is the russians would have plausible deniability about these people being spies at all. they can just chalk this up to america's trying to embarrass them.

these guys are running. there is no doubt. he is running. he made it all the way to cyprus. guest: thank you. this was going on for a long period of time. what is interesting about the russian reaction has also been the fact that they have admitted that most of these people are russian citizens. that have asked for consular access, lawyers. and in the past, the russians would deny that these people were russian citizens. there has been a little more candor this time in the russian reaction that i think we have seen in the past. some of that reflect concern in moscow by russian authorities that these people might still be spies. it better to get ahead of these things. host: what haddad knowledge so far in court? guest: 7 knowledge they give

aliases. they said the alias ikb is not my real name but he did not give his real name. some of them have admitted to communication with russian authorities in moscow. i think we will see more of what they're saying to the stories as this moves along. and in all but one case the judges have denied bail. bail was granted to one person in new york. in other cases that have been denied because there are concerns these individuals might flee or go to the russian mission in new york or the embassy and try to claim immunity. the caller also mentioned one of the suspects in this case that ran to cyprus. authorities detained him. they released him on bail and he now seems to have disappeared adding to the mysterious element of this entire case. host: washington, d.c., on the

independent line. good morning. caller: i have a comment than a question. the question is for both of you. my comment is the media is the people and the people is the media. you know everything. you decided that mcchrystal should be gone. you decide that bp should shake it up. you decide everything. my question to you now in this situation is, what does the media know that we do not know? we get everything from you guys. the question is, during wartime is this a disaster for both of us or is this a situation that we will blow by and let this go because we are during a wartime? give me something on wartime and the situation. host: i will let you take this

one. guest: the media is doing its job based n the information you get from federal authorities on what is uufolding in this case. you refer to the story on the front page of a "the washington post" giving background on what happened. the media, i think, are doing an incredible job of trying to explain what is going on in this situation. it is reflective of the free press. it is not true in every country. i think the media is simply trying to explain when they're picking up from authorities, independent investigation, sources, and try to explain this. host: what is the condition of the state of the media in russia these days? guest: not great. the internet seems to be growing, although most russians do not look to the internet for

getting political news and information. there is growing pressure on the journalists. some journalists have been killed connected with the work they have been doing. others have been assaulted. there is pressure on newspapers and on television channels. most television is controlled by the state. this is something putin did when he came to power in 2000-2001. the russian state to cover the nationwide channels. television is the main medium by which russians get their news and information. that, i think, was a rather devious and differ on putin's part to control the media. -- a rather devious endeavor on putin's part. i tip my hat to independent journalists who go out on a limb to criticize the government. they do so at considerable risk. host: one last call,

massachusetts on the republican line. good morning. caller: good morning. my question is one of the relationship building that we're doing with the russians and how that relates to the problems we see with corruption in russia and how that relates to corruption in this country. there seems to be a parallel for what our policies are, let's put it that way. and it seemed to me that we can learn from the difficulties that the russian government is facing with corruption internally and the kinds of problems we're facing here. i realize that this is impacting how we do business with the russians, the chinese, and so forth. i am also concerned with how that reflects in this country on our security. could you comment on that?

guest: short. your question gets to a few issues that i think are important to highlight. there is the lack of a rule of law. there is impunity when people, journalists or human rights activists, are murdered and no one is brought to account forr that. there is a lack of accountability. in 2004 after the tragedy, putin decided to eliminate the election of governors. that removed a level of accountability to the voters. there is not even talk of removing the election of mayors. there is a sense of disconnect between the russian leadership and the population. that is why, i think, we have been seeing these protests percolating in various parts of the country. the problem of corruption is it is a serious deterrent for foreign investors. the investment is down considerably last year not just because of the global economic

crisis. trade between the u.s. and russia is pretty paltry. about $18 billion and both president obama and medvedev focus on improving that, but for investors will not do business in russia if they're concerned about the lack of the rule of law about corruption. that is not to say you cannot do good business in russia. a number of companies have done really well there. they are so rich in natural resources and potential that summit companies feel they cannot avoid doing business in russia. it comes with a number of risks. host: our guest has been david kramer, former deputy assistant secretary of state. we have about 45 minutes left in the program. we will round out the program by continuing our look at the economic conditions of some states out there. today it is florida. our guest from tallahassee is john hall from the florida center for fiscal and economic policy. we will be right back.

>> when the best boats -- those i ever heard was that it is water that finds a hole. >> he writes about political action committees and won a pulitzer for his reporting on jack abramoff. we will talk to jeff smith on c- span. >> the video library has every c-span programs since 1987. did you know that includes every author who has appeared on c- span2's booktv? the c-span video library. it is "booktv" your way. sunday,,your questions for bill bennett on a "in depth."

is the author of more than 20 books and join the discussion on american history, education, and politics. three hours with bill bennett on sunday, part of the three day holiday weekend on c-span2. but the whole schedule on booktv.org. c-span is now available in the 100 million homes bringing you a direct link to public affairs, politics, history, and nonfiction books as a public- service greeted by america's cable companies. -- created by american's cable companies. "washington journal" continues. host: we have john hall, executive director of the florida center for fiscal and economic policy. he joins us from tallahassee. what our conditions in the sunshine state these days? guest: conditions are tough. our state is in trouble not only

from the oil spill and my reason and leave for dissipating in your program is to talk about the budget. we have a shortfall in the state general funds of about $6 million. those are needed to meet critical and high priority needs. that is about 20%. host: there's also an employment -- an unemployment rate of 11.6 time -- 11.6%. where did this deficit come from? how is it created? guest: in part, it was treated as a part of the worldwide recession. i think there are some other factors you need to see that affected the large shortfall we have experienced. recognize that over the last three years our legislature has

cut close to $8 billion out of the state budget. those other factors include the nature of our economy, basically florida's economy has been fueled by growth, tourism, and agriculture. last year we actually lost 55,000 people in florida. housing starts are not happening. all the associated economic activity of people moving here has basically ceased. we have the a housing and commercial real-estate surplus. if you look nationally at the other states that are experiencing large shortfalls, and they've also had a large portion of their economy based on growth -- california, arizona. host: to the second figure, 11.7% as of may.

that is perhaps a lot higher when other numbers are plugged into the formula. what does that kind of unemployment rate mean these days? what are people thinking? guest: what we're thinking is, we would hope that congress would pass an additional extension to the unemployment insurance benefits. many people are going without. this is kind of the cruel irony of our saturation. just at a time when revenues are going our way, costa public services have gone up. -- the cost of public services have gone up, specifically health care. when people are unemployed, that means there is less money in the economy which affects businesses which relates to business layoffs and the vicious

cycle of higher unemployment. host: john hall will be with us for 35 minutes. he is in tallahassee, fla., and is the executive director of the florida center for fiscal and economic policy. we're looking at the state of florida. we have looked at several states over the last few days. the numbers are on your screen. we want to hear from residents of florida. your number is -- we will get to your calls in just a few minutes for john hall. the budget shortfall of $6 billion, mr. hall. take this deeper into the day- to-day life. what is a budget shortfall like that mean to the average residents in florida? guest: it means, say for

example, you are a family with a child with a double up -- a developmental disability. because of inadequate funding we have waitlists. these are lines for people to wait in line until someone dies, leaves the states, or additional funds are provided to get critical and vital services they need. essentially, to keep -- to continue, this means that families often times, other the parents have to provide support for their disabled child because they cannot get public services. other examples, there is close to 20,000 seniors who are on the waitlist for help with their home situation, the activities of daily living that can and get public services. there are close to 400,000 children with severe emotional

disturbances and adults with chronic mental illnesses that cannot get the services than they need from our mental health system because it is not find it. lastly, let me point out that there is a wait list of close to 400,000 families that require state assistance with child care so they can maximize their opportunity to work. because they cannot get child- support, the funds are limited, so they stay at home. that is a very, very difficult set of circumstances. host: before go to calls, explain briefly what is the state government trying to do about all of this and what is the connection to the people here in washington, d.c.? guest: the stimulus bonds and

the budget stabilization funds allowed us to plug some of the holes in the last three years, but as you know our governor and our elected leaders alike in many other states facing fiscal challenges are asking congress to extend the higher level of financial participation in medicaid for the final six months of this year. if that does not happen, that generates four florida another $200 million shortfall in the current fiscal year that just started on july 1st. in addition, as i mentioned earlier, some extension of the benefits, in particular the cobra provisions for the unemployed, that would be very helpful and would provide a positive impact on our economy. what has happened though essentially is that they have

cut and have taken a one-sided approach to a very deep, difficult situation. what we would argue for is a balanced approach, one where they cut where necessary but also its net -- also puts revenue on the table. florida has close to $35 billion in tax breaks that they currently offer to businesses and individuals that live here. the legislature, unlike appropriations, does not review those exemptions, exclusions, tax breaks, and so on on an annual basis. whether they actually provide an economic value or whether they are, in fact, fair to florida businesses and so on is not a book that. our organization has looked at them and we have recommended

various tax breaks be repealed that would generate close to $3 billion in additional revenue to meet some of those needs. host: with all of that background, john hall takes calls. we are in tallahassee. our first call is from new york city on the independent line. caller: the morning to you all. i have a simple question. as far as i know, florida does not have a state income tax. host: is that still correct? guest: we are one of nine states that does not have a personal income tax. let me add, if i can, we are only two that does not have a personal income-tax and that does not have certain corporations participate in the income tax which are llc's and others that pass on profits to the individual shareholders because of the fact that we do not have a personal income tax.

their profits are not taxed at all on the state level. if we did that, which is one thing we have recommended, that would generate about $1.1 billion. by the way, i might add that those businesses that are not participating in the corporate income tax have had profits last year of over $20 billion. host: richard, are you still there? keep going. caller: from new york, we now -- we have retirees migrate to florida. you talk about health care and they are not paying taxes on the retirement benefits they are getting from new york. at the same time, you were talking about looking to the federal government to subsidize all of your current deficit. how much of the deficit would be subsidized simply by instituting a state income tax? host: mr. hall? guest: that is a very good

question. recently looked at that as a matter of fact. the florida taxpayers, about 74% paid on average somewhere between $750.800 dollars in federal income tax. if florida decided to -- paid between $750.800 dollars in federal income tax. at 1% of that value, we are talking about most people would not really pay that much in income tax but the contribution revenues could be between 700 million and $800 million. host: on the line from south florida on the independent line. good morning. caller: good morning. i was calling about amendment four which was -- which will be on the election ballot in

november. and has to do with the development, control, limiting construction some of the business and political leaders are getting ready to encourage people to vote against the men and four because they say this will decimate the economy. and in the past five years i have lived in florida, i have been amazed how much of the farmland has been paved over for housing developments. i wonder if you have any comments about the boom and bust development cycle and the effects that this amendment four could have on the state economy? thank you. guest: i can tell you that it is a very important issue that voters need to look at. what the rhetoric is in tallahassee, the legislative leadership is saying one of the ways to create more jobs and help business is to reduce regulation.

this includes many provisions within the existing growth management policy structure. that particular effort would act against that. one reason you are hearing certain interest groups trying to convince people not to pass this amendment is that it will allow development interests to have greater discretion about these developments. i dissent earlier as i was talking that florida already has -- i just said earlier as i was talking that florida has a surplus of homes and office spaces. we need to reduce that surplus or, in our opinion, before we began additional new construction which would be hampered by any kind of additional weakness of the growth management policy. host: david from lagrange, indiana. you are on with john hall and in

tallahassee. caller: how're you doing? are illegal drugs which are pretty rampant between -- within the u.s.. a ot of social security and welfare recipients that i know personally are doing illegal drugs. has the government or the state ever thought about testing for these things? if you do not qualify to drop them from the program -- i am just wondering if there is a possibility to do drug testing. guest: it is always a possibility. it is something politicians could elect to do. however, let me say it is not

the straight forward of a solution. on the face of it it sounds good that the people coming in for public services to get public assistance and so on that we should drug tests done -- drug test of them and if they have drugs in their system become ineligible for public services. the downside is the reason to provide public assistance and services is for the children. to the extent that we would deny people eligibility for health care, other public services, and so on, that would, in my opinion, cause us to experience other costs associated with crime, for example, school failure, and all the negative consequences of doing so. that is not an easy solution, although i understand the issues around it. certainly one thing that i think that occurs that we have

tried to do is to provide drug treatment, out of reach information, and counseling to people -- out reach information, and counseling so that they can live a self- sufficient life. host: finish up, mr. hall. guest: that is all. host: john hall is the executive director at the florida center for fiscal and economic policy joining us from tallahassee in the panhandle. two specific figures we have been talking about is the budget deficit for 2010-2011. $6 billion deficit and unemployment rate of 11.7%. a big, sprawling state, city, and rural areas as well. are there parts of florida that are doing well or better these days?

guest: yes. the county's that have a large public work force, universities, public hospitals, things of that sort tend to have lower unemployment rates than others. that part of the state where growth is the primary indicator of the economy such as southeast florida, they have a very high unemployment rates. if i could, can i send my back to the point about drugs for a second? i want to make another point about that. host: go right ahead. guest: in needs to be understood that if we look at the state prison system, which by the way we have looked at the state budget over the last three years. the only category in the budget

that has not been reduced is the portion that relates to prisons. it has continued to grow. if you look at the prison population, what you find out is that close to 65% of the inmates in state prisons have a substance-abuse problem. the inmates themselves in state prisons, close to 27% of them are in there for drug offenses. research shows that drug treatment, alternatives to incarceration are much more effective than locking those people up in state prisons that cost on average $20,000 per year when drug treatment can be anywhere from 1000 to $2,000 per year. host: on the independent line, good morning.

caller: i would like to make a few points and i agree with the gentleman who spoke about the young and bust cycle. i came down here in my late 20's went to college here, had a successful real estate career, and then worked for a large bank in tampa. that sent 2500 jobs to india. there is a large bunch of corporations, but your matter is there, citicorp is there as well as united healthcare, i can go on and on. my point is that all of these corporations are getting tax breaks and what are they doing?

and they are outsourcing overseas. this is long overdue for state income tax. would you agree, mr. hall? are you aware that this state is, first of all, in bank deposits? host: more about the state income tax there. anything else you want to add to that issue? guest: yes, i would. one of the large corporate tax breaks that we recommended that the legislature to give the gatt and fix is something the strong german -- that the legislature look at and fix is something that this gentleman just mentioned. the subsidiaries were they did not have a presence of a shift their prices -- and shift their

profits to a state with no income tax. they have tried to see to it that those corporations pay their fair share. i might point out also the fact that the tax break is available actually sets up an uneven playing field as it relates to small florida-only businesses. you may or may not know this, but close to 70% of the people employed in florida are employed by small businesses. these tax breaks on the books, they do not help them. it is usually a situation where large corporate entities and other special interests get the benefit of these breaks. i guess i need to add also there is a real question about whether or not the jobs that are supposed to be created as a result of the tax breaks

actually happened. it is important for the legislature to put policies in place that will help florida grow and reduce our joblessness, but further tax breaks as a mechanism to create jobs is not something we think will work. , at least it will not work in the short run. we could set up certain corporate winners, add to the salaries of corporate executives, increase profits, and this will not necessarily create new jobs. businesses create new jobs because there is a greater demand for their goods and services not because there is a tax break. host: john hall, the stimulus money, how much has come into florida and what impact has it had? guest: about $16 billion or $17 billion i believe.

the amount that went through the central state budget to help fund a state services was about $6 billion or $7 billion. it largely went into the health care and education. the help with cobra coverage, the help with unemployment insurance and so on has been positive for the economy. the point that i am trying to make is that as a result of losing the federal dollars, the legislature takes a balanced approach and looks at revenue and it could lead to us stay in the recession longer. host: what has been the reaction of the governor charlie crist? what effect is he having on the legislature in all of this? guest: he vetoed cluster four

murdered million dollars in what we call "turkey" and what you call "pork" in washington. hopefully that speaks for itself. in the year before that, he exercised his veto powers. on the other hand, i do not believe i have heard him talk about addressing revenue other than he, himself, his budget proposals for the past fiscal year recommended a 1% reduction in the corporate income tax as a way to stimulate business activity and jobs. as you can hopefully tell from my earlier comments. we thought that approach would not be effective. host: kate on the republican line from houston, texas. good morning to you.

caller: good morning. going back to the florida state tax, -- because you have such a high rate of the snowbirds in florida, does that not end up putting a tremendous pressure on your residence? how much of your deficit problem is related to the fact that you are not getting the same number coming down because of their economic situation? thank you. guest: i talked about a scenario about implementing a state income tax earlier. i told you that about 70% of the federal taxpayers in florida pay on average of $700 to the fed's per year. we can actually structure a personal income tax in such a

way so that those in lower income brackets with minimal earnings would not pay anything. the issue is that those who can afford to pay, the fairest type of tax structure is one that economists call progressive. let me say few words about that. national organizations recently did a study of all of the state tax systems. florida's was considered the second worst in the country. low-income, moderate-income people pay a higher proportion of their income in taxes than do the more affluent. as a matter of fact, the low income people pay six times more than the affluent. the men and, pay four times. -- the moderates and become a four times. i mentioned in part that they

are affected by the fact that we revitalized that as a portion of our state revenue. that tends to be a regressive tax. people in lower and middle- income groups cannot save as much as those in upper income groups. they spend most of what they have on necessities. the second part of your question was? host: i think we lost them. let's move on if we can. i wanted to bring up the oil spill. here's a photo from this morning's "miami herald." they're walking on pensacola beach. the headline is, "a line in the sand -- to swim or not"? what are you expecting right now?

guest: from an economic perspective, i think it is it too early to tell. say, for example, one of the great things about capitalism is that those vendors who used to sell beach chairs and beach umbrellas have resorted to selling rubber boots. people who use to shore up oysters are actually now, in many cases, making higher wages as a result of working for bp. there's a trade-off in terms of what really happens. arcturus that used to help -- and i'm talking about state government here, but he used purchases in the panhandle are now going to central florida. these are all things that need

to be looked at. things are still too early to tell. it is clear to me that believe terms of long term, it will have a devastating impact on florida. the impact on our marine life, quality of life, our beaches, and implications to the fishing industry and so on will be monumental. it will not be good. host: let's go back to the south florida the gulf coast. fort myers, chris, an independent college. caller: first off, i love your mustache. my question is -- host: margie is on the democrats' line. i am hoping something substantive. caller: i just want to tell the american people happy fourth of july. that we are even surviving all of this is amazing because we

are rosh every day -- we are barraged every day by have week -- by how we have run this economy into the ground. they use these trillions of dollars for bailouts and they demand we paid to get out of that and if they do not they will downgrade our rating which is the biggest joke in the world. the rest of the world will not even use our rating agencies any more. we're the ones that are being punished by all this. the peterson -- the peterson institute are starting a campaign, they're going on toward a tell us all that we need to get off of social security and medicare. that is the thing that is fixing to be role del. all of our money has to go to research and development which

our government does and then gives that to the corporations. our corporations give them to the country's overseas so that they can live over there and put this this is over there that we've been short. host: let's go to panama city beach. what are the conditions in panama city beach? guest: really good -- caller: really good. we have not been impacted as much. host: what about economically, fiscally? caller: on employment is really high. my question is that we need rick -- we need new revenue in jobs. one thing i see in florida as a resident is that tourism is big here. after everyone goes to disneyland, tampa, miami, the crews in and then they kreuz

out. my proposal, what i am thinking, is why not legalize casino gambling? we already have the jai alia, power ball, state run lotto. if we had state run gambling, that would bring in thousands of jobs. host: are they talking about that? is it part of the equation? guest: yes, there has been a lot of debate last year about gambling. there's a pact that was made with the seminole indians. then make a point about that. i am in no way an expert about gambling. my guess is that it will be more of the same. over 50% of a florida jobs currently pay at or below 150%

of the federal poverty level. that is about $37,000 a year. that is not the kind of job that we need to promote in florida. our emphasis on development, construction jobs, tourism, and so on is the kind of pay that typically associated with those kinds of jobs. i believe the pay structure for the expansion of gambling would be very similar. instead, we would argue that the states and vincent -- incentivize more knowledge jobs. an individual that has a college degree or high school diploma in comparison to those that dropped out of high school may have lifetime earnings that are significantly higher.

those translate into revenue for those individuals. we need to, in our opinion, expand our k-12 education system so more people graduate. we'll have a 58% graduation rate. we need to have the, in our pre- k program take advantage of early heart -- early child and education. host: what does the budget shortfall mentor education overall? can you describe what is happening with teachers, and for structure, and other education programs? guest: yes. there is a lot going on in that area. thanks to the stimulus money, about $1 billion went in to

help paying for k-12 education. it increased, but it only increased about $1.22 per student. as you know, that is not enough to buy box of pencils. basically our education funding in the k-12 area has remained pretty slack. the result that we have are in part affected by our inability to properly on the k-12 education. in the university system, the legislative solution was to raise tuition. both last year and this year college students will have a tuition increase of about 15%. as i said earlier, there is a very strong economic value of having more college graduates in our state. the fact that we are making

college enrollments and participation now more costly to tuition increases might hurt that. i am not sure that will bring about the kind of results that we want. host: time for a couple more calls. baltimore, what would you like to say? caller: hello. i would like to make a comment on entitlement programs. [inaudible] i would like to say that it is fraud on the majority. the majority of it is stored, sir. i do not -- [inaudible] host: anything else?

caller: drugs. everyone says we have 60% of our incarcerated people involved in drugs. drugs are, how can i say, they are from our enemies. look at our marines. their base in afghanistan actually in the middle of opium fields. host: fraud and drugs. what would you say, mr. hall? guest: a couple things. in terms of the fraud, i respect your comment. on the other hand, if we do not help of the children born out of wedlock, i guess that is what he was referring to, but what is the cost to the state over the long term would actually be greater. foster care, for example, costs more money. but the outcomes of people in

foster care that do not have the parental involvement usually very, very poor which results in more crime and therefore more cost on our present system. -- on our prison system. i guess that is it. host: tallahassee, florida. nate is standing by on the independent line. caller: good morning. i am an economics professor not too far from where you are right now. i think that one of the major problems in the state, as someone who grew up in south florida and i have -- and i reside here in tallahassee, is that we do not collect nor do we monitor the sales tax revenues that the state receives. there is probably very poor collection of these to the state. that is what, i believe, is causing most of our problems in the state of florida.

the second point out like to make is in this state since charlie crist became governor, by cutting taxes, it would cause the economy to expand. that may be true, but what we find is that you also cut revenues and the budget is controlled. at the same time you have to cut jobs. you could almost trigger a recession in the state. with the perfect storm of other things happening in the financial markets, i think that we have contributed to the problem here by cutting taxes whether there are part -- prop. taxes or others. what do you have to say? guest: i would take your cost. i agree. i think he made some excellent points with respect to the first one about the extent to which we actually monitor tax collection

to the state of florida, i believe in the last couple of years additional funds have been provided to the department of revenue to expand their capabilities in that regard. but from a cost-benefit perspective, it is the right thing to do. we have also enacted tax amnesty initiatives with the thought that as a result of doing so the entities that are delinquent in taxes would do so and we could generate some revenue for that. yes, your general comments about tax breaks and the impact of tax breaks on reducing the amount of revenue for public services is true. when you cut public services, again we are talking about $6

billion in deficits next year, that mean jobs for teachers, health-care professionals, correctional officers, and so on, all of whom spend that pay in businesses in florida and are a part of the economy. if, in fact, we cut them and do not provide revenues to maintain those jobs, that will keep us in a recession longer. host: one last call on the independent line. you get the final word here. caller: i was curious between the stimulus and all this other money, i have seen my property taxes cut, rightfully so, by probably 50% -- 15% to 18% and my home value has fallen. that revenue has now come away from the school system, the from the school system, the count