we will chat with tom fahey on the balanced budget of new hampshire. "washington journal" is next. . .

>> if you have called in the last 30 days, if you would hold off, we would appreciate it. but as far as the 2010 elections and looking at mid-terms and this current president and thoughts on if this will be a referendum we wanted to get your thoughts. two other ways, if you want to send us an e-mail, and we are on twitter as well. here's the article we are talking about, g.o.p. strategy focuses on president obama. this is charles babbington.

so when it comes to the 2010, your thoughts on if it's going to be a referendum on this current white house. the numples are on the bottom of -- numbers are on the bottom of your screen.

while you are doing that, a couple ofertse stories. this one from the "new york times" off their national section. talks about teachers unions. there's a new tension, to read the headlines in obama's ties to teachers. crityims from allies. he goes on to write.

that is coming on the pages of the "new york times" this morning. so to your calls, the reference to president obama. marcus, you are up first. go ahead. caller: yes. i would just like to share, as far as the democrats go and the republicans go, the democrats need to stick behind barack obama. the republicans have had their chance, their opportunity to prove to the american people that they can do things for the american people. not just the government, you know, but we want something for the american people. and as far as education goes, i

believe that he is doing a good job. but -- host: when you say stick with president obama, how do they do that? caller: basically, sticking with him mainly as far as the policies go. because the republicans had their opportunity to make polls cri -- policy to take care of the american people and bush messed it up, the republicans messed it up. so basically that's what i mean. they need to stick together and do policies for the american people. host: florida, next, john on the independent line. caller: it's the first time and i was glad to get through. very important. i'm glad obama is doing what he is doing. but unfole, to some degree, he is being held up by people in his own party as well as

republicans. and these republicans seem to be out of their mind to oppose him on some of the issues. but the important thing is that what he is trying to do and especially in the economic situation and to solve the problems not only in the economies of the world and the united states and also to solve the peace problem in the near east. what has to be done is the united states government has to take over the federal reserve and put the bank of england out of business because they're the one that controls the exchange rate. host: off of twitter this morning. st. petersberg, florida. tonny, go ahead. caller: yes.

i think the election won't be a true reference dumb because i think it doesn't matter. money, as your program indicated earlier, has overtaken both parties. the banks took over the whole financial system in the last couple years, the government bailed the big banks out, nothing has been done for average people. certainly president obama, despite a lot of promises, has done very little for the people here in florida. florida is in a semi-depression, that should be the real issue. i don't see either party talking to that. host: so the economic and the banking industry are going to be the fact that decides how to pull levers? caller: more like 60 or 80% are

under water. the depopularization of the american middle class over the last 20, 25 years should be the real issue. i don't think it will be discussed. host: washington is next. reed, good morning. caller: good morning. i would like to first thank c-span like i always do because you guys are really the last bassion of hope for telling us the truth. thank the people for doing such a good job. the question is this going to be a referendum on the president? it should be? the political system is based ond checks and balances. and if you let any party grab it and hold it and let it stop swinging back, we have a revolution next. so there always has to be a referendum on the president. that's the natural order of things. the last thing i would like to say is when this referendum takes place in november, i think the press isn't showing

us what is probably going to happen and that is impeachment simply because the president stood in front of bond holeders last year and said step aside. i am the boing king. i am deciding the unions. all you bond holders, go away. that's completely against the constitution. the president cannot step in and adjudicate contract law. my -- i totally believe when the conservatives take power the first thing they need to do is show the american people what what happens. host: do you think that both the house and the senate will come under republican control? caller: i don't know. i don't want to bb joe prophet. not the gym e people, not the segment of the 40% that isn't paying federal taxes, that is only concerned with making the

people behind the tree pay the bills. i think the american people are enough of a patriot to wash this situation out. so yes, i believe that the conservatives will take power probably slightly because there's enough patriots in the american people to understand that we cannot go down the road of electing democrats because they will push amnesty, because those votes will never allow a conservative to be elected again. host: on our independent line. katie, hello. caller: sir. host: go ahead. caller: this is betty of leland. i am speaking, i don't know whether you can hear me or not. host: go ahead and keep talking. you're hearing the feedback off the television. caller: i just wanted to say

that people are blaming the president for a lot of things that really the congress and the senate is blamed for. they always set there, they're always setting -- what they do is they throw their blame on the president. he is like a coat rack hanging there. that's the way the democrats and republicans is blaming the president when really the congress and the senate carries the blame. i know the president does some wrong things, but the congress and the senate do not have to go along with him on every little things. they should have brains to know when to go with the president and when not to go with the president. host: some more from charles babbington.

arizona, mike, go ahead. caller: good morning. a couple of things. i remember approximately four years ago when the republicans lost their majority in the house, and the only rhetoric i remember coming for the next couple weeks was republicans talking as much loud as they could that it was necessary to get power back for the republicans. they didn't mention any detail

of what they were going to do, only that power was necessary. now, i did support mr. obama, but the first thing that i remember his, as an official act was he appointed one of president clinton's chief of staff for his chief of staff. that kind of disappointed me a little bit as far as questioning his creativity and originality. second, he had indicated he was against the war in iraq, the wars, when they had a vote in the senate. yet, when he did the little 20,000 troop surge in afghanistan or, i'm not sure which country it was, it was necessary to -- also necessary to keep the troops in iraq so so the iraqi people would have a chance for freedom. i see him going in a way that i

didn't expect, except now having lost some of my neeve thai, i understand that he had more money in his campaign chest before the election, more than any politician in the history of politics on the planet, which the number -- which is a statement which george bush junior had when he first ran. host: we'll leave it there. c-span junkee says queen elizabeth is going to vizzyoit ground zero and will lay a wreath.

sleeveport, louisiana is next. go ahead. caller: i'm calling in reference to what is going on. the sad part is that everything that seems to happen, president obama is being blamed. we need to understand that it was the republicans that had the rule over the white house and also the senate, and that it was not president obama. president obama inherited all these things. so we need to understand that. it is not his fault. everything that goes wrong, the oil spill here in louisiana, president obama, everything is president obama. this president inherited a record deficit. he inherited all the things that's going on right now. they want obama to come in with a magic wand and fix the

economy. america, wake up. he cannot do it. host: the denver post this morning, a story that was in the los angeles times that general petraeus is going to review the deadly force rule. maryland is next on our independent line talking about the elections of 2010, and with

it will be a remped dumb on the current president. but before we do that, in light of the story we just read, here is general petraeus yesterday among ceremonies of him taking control in afghanistan. >> the confidence of the afghan people. in so doing they're killing and maming innocent civilians on a daily basis. no tactic is beneath the insurgents. indeed, they even use unwitting children and they frequently seek to create situations that will result in injury to afghan citizens. in answer, we must demonstrate to the people and to the taliban that afghan and isaf forces are here to safe guard the afghan people and that we are in this to win. that is our clear objective. host: jim, thanks for waiting. go ahead. caller: i thought that his

chances being elected are definitely affected by what he has been able to accomplish thus far, as far as pulling troops out, protecting us from wire tapping. and those hard core issues, which actually he doubled the number of troops over there. our ok pansy number doubled. so i think, and with that, and the fact that he is -- elets. i think the issue is, are the people gullible enough to reelect him? that's all i have to say. host: what do you mean by that? caller: well, perception. when your perception is so screwed up that you don't perceive them as an enemy and you snowplow him with the information you want them to

know, you don't come out with a good cal can clated response. and justice isn't served. and the powers and the corruptive authorities stays in power. and the global schemes is perp twutted. does that answer your question? and i hope, i want to sound simple while i talk. host: let me ask you this. what you see as far as 2010 is concerned, do you think it's going to change the balance of power as far as the house and the senate are concerned? caller: i'm very nervous because a lot of that just seems like it's just format. so to speak, it's just another bureaucratcal body that's consumed by -- it's just ok pansy. i mean, it's kind of like derivatives, it's a nontangible

trade. and i see these as being nontangible occurrence that is just purptwut the occurrencey. host: here's off of twitter. michigan, good morning to henry on our democratic line. caller: good morning. you know, you are a very brave person, because that last caller sounds just like a typical republican. he is totally confused. but you know, the first thing is the american people when they go to the voting booth in november should remember exactly what condition the republicans left us in. but if this is a referendum on the president, then i want to list a few accomplishments. littley led better, equal pay for equal work for women. so women you have a stake in

this. health care reform, which was huge, it was a huge problem looming on the horizon. and instead of kicking the can down the road, the president chose to take that up. and he did and he passed it. the president won the noble peace prize and the media made it seem like the noble prize was somehow diminished by his doing son. the president is now trying to pass economic reform, financial reform but the republicans as usual are holding it up. he is trying to pass -- the democrats are trying to pass unemployment compensation but the republicans are holding it up. the republicans have a vested i want rest in seeing to it that this president fails. big business seems to have a vested int -- interest. they want to see the president fail. does that make sense?

host: we'll leave it there. this is the "washington post," the front page. the lead story by jeffrey smith that bp is still doing big federal business according to them. philadelphia is next. howie. we're talking about the 2010 elections and if it's going to be a referendum on the current president. caller: i believe it will be. i appreciate obama for -- president obama for the freedom of information act and i am a coast guard veteran in the 80s. and i've got news for the democrats who keep calling,

they are very confused. there's been like 2 million bankruptcies filed. and as far as bill clinton goes, because he is running around all over the place, his national information is that it failed. and when that was approved by the senate, president clinton failed to address our domestic small businesses. it was president hoover who maintained antiunion contracts. host: before we go back too far let's bring it back to the current-day situation as far as the 2010 elections. is it going to be a referendum on the president or not? >> it is going to be a referendum. host: why is that? caller: because you see bill clinton running around. and on november 29, 1993, he put his hands up kathleen's skirt. host: we'll leave it there. albany is next.

caller: good morning, pedro. i just don't some recent traveling over the last few weeks in pennsylvania and south carolina, and i think this election coming up will be on a referendum on the obama administration. but i don't think it's going to be a negative one in the sense that we are going to punish him. but i think people want to bring back some balance to the all one party rule. and people are, my sense is that they are upset about this 13, $14 billion debt that we've run up and we don't see jobs coming back or being created. so i think in that sense we're going to say -- $14 trillion, not billion. but i think the american people are going to say where is our agenda? this was obama's agenda when he

came in, this health care thing and that's all he stuck with. and we were not really ready for it yet because you're putting the cart before the horse. you have to have the money for this health care thing, and i think in closing one other remark. i remember back in the late 7 o's, i was working my way through college as a janitor and one good thing that carter did was he created a program called seda, i believe it was, where the federal government paid municipalities to hire people to work for 18 to 24 months on a set salary with benefits to get them, instead of having them just collect unemployment, at least it got them out working again and got the money back into the economy. and with unemployment, unfortunately, it is sort of like you are paying people, giving them time off with money por years and we're not benefiting from it at all.

host: in about 20 minutes from now we are going to our first guest, professor at jornlt university, wrote a piece for the new republic talking about the economy and his thoughts on how it will roar back to life. if you want to go to the new republic web site and read his piece, you can find it and read it in time for that segment. again, he is the author of why america will emerge stronger from the american crisis. later on we're going to talk about the chinese currency, its relation to not only china's economics but how it plays into the u.s. and then we're going to conclude our series, we've been looking at what we call states in the red, talking about various states and their economic condition. today, focusing on new hampshire. through a series of measures, has balanced its budget and we're going to take a look at that economy and what they did

to do it. tom lay hi will be our guest for that discussion. that's a rundown on what we are going to do on the program today. for the remainder of our time we're going to talk about the 2010 election. clearwater, florida, laura on our republican line. caller: hi. thank you for your time. i just wanted to remind everybody that the democrats have controlled the senate and the house the last two years that bush was in the white house, and when obama took over everybody blaming the republicans. it's all their fault. they need to get back to the constitution. obama has quadrupled our deficit and he is trying to take over everything with national government. host: cleveland is next. texas, i should say. charlie go ahead. caller: cleveland, texas.

host: go ahead. caller: i would like to clear up something that last lady said first off. when president obama came in, the last budget that he was handed was by president bush. that's the way it always works with a in the. you get the budget set by the previous president. that budget was $1.6 trillion. that was the deficit, $1.6 trillion and that's what he operated off of. so he did not triple the deficit and in fact as far as the money guess this country has never run a structural debt until the republicans came in with ronald reagan. ronald reagan set the first -- he ran the first structural debt and when clinton came in we were actually paying it down. then with bush, he ran it up to

$11 trillion. now, this president has the worst recession since the great depression. you're going to run higher deficits and higher debt going forward until your economy is actually paying for itself again. host: so what do you think about the elections coming up? caller: i really think that will be an up-in-the-air sort of thing at this point because the republicans ever since 2006 when the democrats took over control of the house and the senate, they have been setting records every year with their no policy, saying no to anything and everything that democrats try to get passed. they carried it through on the obama administration. so this could end up being a referendum on the republican congress should enough democrats and liberals and

progressives turn out for this election. it could just backfire on the republicans who were trying to make this all about the president who has gotten absolutely zero cooperation from the party out of power. host: this is the op ed piece.

you can read the rest this morning in the "washington post." we have about 15 more minutes on this topic. virginia, floyd, republican line. caller: good morning. i think definitely there will be a referendum on obama especially for born-again christian people. that was the first thing he had done was letting money pay for foreign abortions and that's pre-meditated murder and he has not supported christian people. the first thing he said was this country is not a christian nation. so christian people should step up and come out against him. look at his supreme court

justices dominating against the laws of this country going to support the u.n. laws, supporting abortion, supporting gay marriage. so definitely christian people that knows the lord should step up. host: off of twitter. up next, lakeland, florida. good morning. caller: good morning. i really appreciate c-span. i think you guys are our guard. listen, one of the things that i think this election is going to be a referendum on obama and the democrats because i'm an independent and we have been thrown back and forth on elections just depending on the candidate. and one of the things that bothers me about what is going on right now. not with obama personally, i think he is a great guy and

trying to do his best but i think the democrats have gone too far left and it concerns me. one of the things i like to see is balance and i think what's happening right now is the democrats are -- we're hispanics here in florida, we're latance, and i think they have taken us for granted. and i just feel that we are going to be swinging to the other side just to get balance to this situation where the deficit and -- and one of the things that really bothers me personally is the fact that on the health care they didn't really listen to the american people. i think that they just had an agenda from the get-go. i've been unemployed for almost a year. i was self-employed, i was a contractor here in florida and one of the things we never received any kind of unemployment benefits because we're self-employed. and i have a problem with the government giving people free

money. i've had to switch jobs, start a new business. and i've never received a single check of unemployment. and i've seen these guys on unemployment for a year. it makes people want to sit down and not want to do anything. host: flint, michigan. david on our democrats line. go ahead. caller: yeah. i think the president has done a good job, myself. i think he is the best president we've ever had. i think the conditions he took over this country with all these wars, the republicans and the far right, they still support war, war, war. i have never seen a group of people that just love to fight. and i think it is because big business wants to make money off of the poor. big business are not working with the president. they want him out because they want another republican that will fool the american people, raise their credit cards numbers up and make them pay a

lot of money, make everything good for big business, finish shipping all the rest of the jobs that we've got left over to foreign countries and bringing the products in. and they want everything like it's always been for the big business. host: how does that shake out in the election this is fall? caller: i don't think they're going to win. i think we democrats are going to get out there and fight. i'm ready to start giving, i'm ready to campaign to keep the democratic rule in the house and senate, because i think they are doing a great job. host: this is from the philadelphia inyirer that the federal government is expected to take over control of the information web site from the gulf of mexico oil spill response that has been run jointly by various agencies and bp.

jacksonville, florida, next. caller: good morning. i don't think this is about 2010, i can this is really about 2012. let's do everything we can, is what i'm hearing, to get president obama out of the white house. let's say no to everything. this is a strategy. and i think michael steele slipped up by saying what he said at that convention or whatever they were having there and was telling the truth, and this is why they tried to run him out of office. but i want to say something to the republicans. you had power, you gave up power. based on what you were doing at

the time. let's think about everything that was going on at the time and why did we put the democrats in office? they were put in the office to clean up the mess. you have got to think about this also. republicans voted for barack obama, too. so do we want to put you back in office so you can run the country back over the cliff again? let's see, let's give this man a chance. i don't think a year and a half or two years is enough time for any one person to fix everything that was going wrong in the country. host: here's the washington times story, if you want to read it on line. actually, this is an associated press story. dallas, texas. go ahead. caller: good morning c-span and good morning to everybody that's listening this morning. i would just like to say i have

never heard so many republicans cry in my life. i didn't realize that they cry the way they do. the minorities in this country have always had to piece together things and live substandard. and now, the giant bush is there, he is giving you a taste of your own medicine. and when i hear them talk about obama saying the harsh things, don't give him respect, think about how the minorities feel in this country. they know the republicans would not take back anything because i'm a truck driver and i get -- and i stay in texas. this is a red state but i heard lot of people saying that i talk to that they don't want to see republicans running anything because republicans -- one guy told me, look, the republicans don't have any good ideas. they are going to run us back

off the cliff again. and it shocked me because it's kind of hard to be a redneck when you can't feed your family. host: when you look at 2010, as far as the elections this fall -- he's left us. phoenix city, alabama. brad on our republican line. caller: just like you remember the o.j.s days, blacks never should wrap their arms around simpson and they won't around obama. the glove fits and they know it. just listen to yourselves on this program. socialism is un-american and it won't work. most of my ancestors started with nothing and they survived with no aid from the government. it was an embarrassment from them to have others take care of them. today, there is a sense of entitlement that is being created by this democratic

socialist machine. host: what does it mean for the elections in 2010? caller: i think it probably means that people are going to realize that they've had enough of this program and they want to change. they want to change back to the way things where, where people could take pride in this country, lift themselves up by the boop boot strap and quit depending on people to take care of them. host: how this morning? caller: i'm calling in support of our fantastic president. i love barack obama. i'm a white man and some people might think of me as a racist because i'm white, and i've been from the south. but that's not the case. i believe that we need to push forward with the democratic

agenda. and i'm not a democrat. i'm unaffiliated voter. but we've been -- host: keep the house and the senate as is then? caller: that's right. because if we don't, we are going to go right back to the last 30 years we've been messed with by the republicans. the republicans have been going around crying in their soup for years and years saying the democrats have had control for 40 years. well, that's a bunch of bull. look, the republicans have been in control for 30 years this time it's time to keep them out, keep them where they are because they have no good ideas for this country. look at our budget. how did we get there? george bush more than doubled our debt. and i'm mad at him. i'm mad at the republicans for messing our country up. how are we going to get out of debt? how are we going to get out of this hole we're in? host: one more call, new york,

david on our democrats line. caller: good morning. first, god bless america. everybody has opinions. it's nothing wrong with that. the only thing i suggest, i will make it brief, is that people, whether you're republican or democrat. when it comes to politics or anything, we should all be color blind. but the basic thing is that do your homework. there's case laws, very simple ways of doing your own investigation before you make your decisions whether you're republican or democrat. do fact-finding first. everybody have a good day. host: the new republic has a piece by our next guest. it is, morning is coming and he talks about the way he sees the economy and suggests that and tells that at least he writes about that he sees a rebound coming of the economy we'll get

his thoughts when he joins us in a couple of minutes. >> this week on the communicators, using technology to promote open government. with conference founder tim oh riley, australian senator kate lundy, and carolyn lawsen. tonight on c-span 2. the c-span video library has every c spab program since

1987. that includes every author. nonfksautsors from fares and festivals, book tours, and our own afterwards programs. it's book tv your way. c-span is now available in over 100 million homes bringing you a direct link to public affairs, politics, history, and nonfiction books. created by american's cable companies. >> learn more about the nation's highest court from those who have served on the bench. read c-span's latest book, the supreme court. conversations with all the justices, providing unique insight about the court. now available on hard cover. and also as an e-book. >> washington journal continues. >> our next guest joins us. he wrote a book, rebound, why america will emerge stronger

from the financial crisis. also, the reason we have him on is a piece that he has in the new republic, morning is coming. four reasons why the economy will roar back to life. you say that first amongst those reasons is that you see an upturn in investment. >> there's no doubt about that. i think it is starting. the economy works by feedback loops. that is one company relies on someone, the demand from other workers. they get the other companies hire people because they think they can sell their product. and investment has historically been what responds first in the downturn, so the downturn showed that we were down $600 billion, over 30%. and starting two quarters ago, investment starting to rise. in today's newspaper there's a report saying that for tune 500 companies have $1.8 trillion in cash. we're just making the initial

moves, investment is up 15% from its bottom and i do believe that we will see it. it's going to take time. people are nervous. but once it starts going, it kind of feeds on itself. there's a positive interaction of somebody invests, those workers create demand. someone else expands. >> so when you say investment, you're talking about equipment, jobs. what kind of range are we talking? >> everything. investment has three major components. one is structures and equipment. the other is actually computer hardware is considered a form of investment. and then residential investment is also a form of investment. the government has very little investment that it actually is considered expenses. so that's what's really down the most. inventories are also down. so we are right now very lean. and as soon as we get a little positive momentum, it should be able to take off. >> when everybody looks at an economy they'll look strictly

at what we're doing. giezz your way, you're suggesting that there's more to look at when jobs being create. >> the data over the last month or even the last years, there's really about ten bits of information that are released each week. so earlier in the week that had a lot of bad news, it showed that consumer spending was up. so i start the piece in the new republic with do a thought experiment 12 months ago and think where we would have been today. most people were pretty negative. and everything week, somehow or another negative news sticks with you more. but every week i found about 7 to 8 positive and four to five negative. so i think the balance has been positive. it's dicey. it's weak because of the financial crisis undermined things but i do think that it's in place to take off. whether it will in the next few

months or thereafter i think by the end of 2001 there will be 5 million new jobs. jobs are the lagging indicator. in fact, in recession what is we find is that companies use that opportunity to restructure and they often lay off people such that in this recession product tivity is up tremendously because companies are making due with less. but they have low inventories now, they have cash in hand, they haven't invested. we are clearly poised to take off. >> you talked about perception and negative perception, there's an op ed in i think it's the "new york times" today and the bessism bubble. he says a similar mentality can take hold during downturn.

>> i used the same comment when i read it this morning i had a little chuckle. i do think there's one study shown in bad economic times on the front page of the newspapers negative news outnumbers positive news 8-1. and in positive times, negative news outnumbers positive news about the economy 6-1. it's basically gooze news is boring and -- good news is boring. there are people being hurt. the people who have been laid off and the unemployed for those who have been six months, a year, year and a half, that's obviously something you can relate to. and but if you can care about it it leads. and all of these news, the positive events kind of you don't hear them as much. but if we look at history and we predict the future basically by looking at the past, the

mark economic performance of the united states and all of western europe is pretty remarkable in the sense of pretty significant steady growth, interrupted by short and shallow recessions. i mean, once you just remember that after world war ii japan and germany were devasted. their infrastructure didn't exist and now they're number two and number three in the world. the economies in the modern era have really shown themselves to be able to grow such that in the late 1980s there was another debate. remember when everyone was saying that japan was going to be number one and the value of tokyo real estate was more than all of california. and then lester surro, a depeen at mit was going europe was going to be number two and we were going to be number three. and i said no the united states would likely be ahead of the convergence clubs. all of these countries seem to

have high levels of living. that is the norm. we're going to return to the norm. the united states has certain advantages. it's the largest integrated market, the dollar is the international currency, english is the language. our media sets the tone of culture. we have the, in terms of higher ed and especially graduate ed. our schools are by far the best. we have capital infrastructure. we also have what i like to say is the ability to change such that when microsoft came along, ibm hired these two nobes to put their essential -- nobodies to put their essential programming ahead in their pc. that never would have happened in europe. and europe had a conference saying could microsovet, sissco, intel have happened in europe? and they agreed that it wouldn't primarily because people like to keep their relationships. where as in the united states venture cam tallism, try something new.

>> we like to take risks. >> we like to take risks. and that's why we're going to get out of it. we're risk takers afplt and when you want to get out of a recession that's a good thing. >> the numbers will be on your screen. first call for our guest, kansas, robert on our independent line. go ahead. caller: i've got a lot of friends that are out of work right now. i want to know where your economic rebound is at. i mean, we just had this big old disaster in the gulf. there's goes our gdp. where is the big economic rebound. tell me? guest: first of all, in the united states more than other countries, there's always a large number of people unemployed.

now, there's no question in this recession that really caused us a decline dramatically in employment. we didn't go down much in gdp. now, personal consumption is actually at the level before the recession. but employment is a lagging indicator. there's a lot of pain out there. of the unemployed, a lot of them do rely on months and months of unemployment insurance. but over half the unemployed are in a household with someone else working. this is not to undermine the real human tragedy of long-term unemploimtted. but i think we will see job growth. it's going to be slow. in 1982 when we had a recession with 10% unemployment, the economy rebounded faster. and about 400,000 jobs a month.

i'm forecasting 250,000 jobs a months, because finance really is at the key of the economy and they made a series of crazy choices that really undermined the strength of the financial institutions. no one wanted to bail them out. they just felt that the alternative was worse. and i think it's been two years since the start of the recession and i do think that we will see growth in the future, slow at first, but it will gain momentum. and i'm predicting that the unemployment rate will dip below 7% in the summer of 2012. host: is there research to suggest for those unemployed, when they go back to work do they return back to salaries hey were used to? guest: people have different reaction. as people age, they tend to have a positive trajectory. what unemployment does is knocks them down.

a few of them respond but most will then jump to here and then they will catch up. but there can be 5 to 10 years of below their normal earnings. so it's tough to get back to what economists call job specific skills and seniority. so it's a disruptive event. host: south carolina, wess, go ahead. caller: good morning. so you say it's going to go down to 7% unemployment within the next year? guest: summer of 2012. host: summer of 2012. so you're shooting for that. here's the thing that maybe you can comment on this. i think they had a great thing yesterday on c-span talking about american exceptionalism. and the entrepreneurship in this country is one of the strongest things we have going for us and the risk-taking too. but i think what's failing us right now is the political class. it seems like all these

investors have made so much money. you look at the stock market. none of these guys have suffered a bit from this recession. the government is out there to bail them out. but now the political class comes back and you've been talking about jobs. and it seems like there seems to be one political class that is just going to block anything to help working people out. just in order to try to win another election. and maybe you can comment on how the politics affects the economy. i think the reason why there's so much pessism is not because ggp numbers are up or down or anything like that but the sheer fact that so many of the people i know who even want jobs are on wic, food assistance. the jobs they have aren't paying. maybe you can comment on it. guest: everyone likes to blame the politicians and they are certainly a squabbling group. but this crisis, and i really think the depth of this crisis

could only occur in finance, really had little to do with government. that is those in finance across the board made a series of risky bets because they were making a lot of money that were successful for a number of years and then they tushed around and then e-- turned around. it looked like the economy was in free fall and could reach 20% unemployment. one should remember that the response to the crisis began with the bush administration. it was hank paulson who asked for the $700 billion of tarp. it was them who set in motion a thing that was continued by the obama administration. the fed did a remarkable injection of currency. and i really do believe that stopped this from getting worse. so i really support it. i think the major mistake that obama made is when he first came in he said pass my stimulus bill and the unemployment rate will only go to 8.5%.

i think that set the wrong perception and underestimated the negative force of the economy. economies are like big ocean liners. they have a lot of momentum. in general this is a good thing. that's why we have had very moderate recessions. but once it gets disrupted and goes backwards, it's a bad thing because it takes a lot of time to get going. that's why my forecast are for 18 months out and 24 months out i can't predict the next few months because it is still taking time. all the forces now are in place. unemployment is a lagging indicator, and the pain in jobs and the pain of low earnings especially blue collar, less educated male workers is going to be around for a while. host: did the stimulus help? guest: yes. personally, i would like a little more stimulus, but i do think it's the $1.8 trillion that businesses are sitting on

right now in investment that's down $600 billion and inventories that are down over $1 billion that can set off this rebound. that is, we are dependent on the private sector economy. we are a mixed economy as we find out with bp. we need all these government rules to keep it working. we made the mistake with financial deregulation. that is, we thought that no one would risk the whole health of their own companies. we thought no one could be that stupid that they could bring down a.i.g. and lehman brothers and would have brought down more if we didn't intervene. host: there's a piece in the post today. but it talks about worries of regulation, especially in light of an expansion by some c.e.o.s as far as the administration's expansion of authority, it said. is there some relevance there? guest: i think there's a little bit and i would prefer a different balance. but people like to complain, first and foremost.

again, it is the sailions issue of they know what they don't like more than they know what they like. i don't think this administration is anti-business. the whole issue about health care, this is something that we've been trying to do since truman on and even nixon made efforts in this thing. this is like unfinished business and they felt that the politics, which right now, this is -- you know, again, it was an odd thing. they were so commited to it and they so underestimate it had depth of this recession. if they had toyota do it over and the politics were different, they probably would have postponed it. host: steven rose teaches at jornlt and wrote this book, rebound, why america will emerge stronger from the financial crisis. . .

caller: i am a card-carrying economist, a labor economist. i've been studying it for 30 years, and there are five passages in the book on what's been happening to the wages, so all the data are there. i've been really involved in a lot of deabts on this stuff. but let's just look at the last few months. apple introduced the ipad. they sold a million units at $5 hundred apiece. "avatar" came out last year, and it set records at $14 a ticket. if you go into the suburbs, there are waiting lines at

restaurants. the g.d.p. now on a per capita basis is 3% lower than before the recession. it is not down 15% to 20% as some think. that does not discount that there's real pain out there also. but the top 40%, and there was a new survey, gallup, the daily trackly poll of what they call the affluent people and how much they spend, and in the last -- defined as households, and they control something like 45% of total income, and in their last survey, they found that the amount that they were spending was up 20% from a year earlier, and that's going to be the one that creates the demand for businesses that have $1.8 trillion in cash, not lower income people that are going to drive the recession. it's going to be the upper income people to start with, the businesses that are going to invest, and then they're

going to hire for the medium and lower income. host: if those businesses are holding back cash, what do they need to see to put it out there and make it happen? guest: that's an interesting question. i want you to remember, you've been down this road 10 other times in the post-war period, and they knew how to respond. this one was more disrupt timbings it's taking longer to grow back confidence, to start the positive momentum going. there are signs, as i said, seven positives to four negatives. i think it's going to switch. it's not going to be in the next few moss, it's not going to be by the november election. i think this will be much stronger at the end of this year. and then 2011 is when you'll really see the positive momentum going forward 11 and 12 and on. host: florida is next. caller: hi. good morning. host: yes. you're on. kathleen? caller: yes, hi. good morning, pedro.

i'd like to ask your guest a couple of questions. when did he first decide to write this book? and, you know, i want to invite him to do it, could he answer me that? guest: sure. it's a financey story. i was actually writing a book -- as i mentioned to the last caller,y been doing data on the state of the middle class for the past 30 years, and i was going to write about it not being as bad as some said, and the crisis came along. well, you couldn't write middle class is doing wonderfully in the middle of this crisis, so the book kind of marked about talking about first the crisis, and i picked the title for the book in march 2009 when the economy was going down at an annualized rate of 6% a year. i had that much confidence, and i wrote the book a year ago, and i finished it -- i finished

it in the final gale in october 2009, but i came up with the argument in march 2009 because i was so confident that the future really does replay history. from 1945 to 007, it's one in which down turns are followed by rebounds. and i lay out in the book a lot of data on this. i lay out a history of the financial crisis nd how it specifically happened and why it took us down, and i talk about the history from 1980 to 2010, which a lot of people think was a period of stagnation, and i argue that, two things. one is medium did not did not go negative, but it was up 30% from 198 to 2007, and i also argue that this notion of a shrinking middle class is true, that people in the middle of the income distribution are

lower, but it's completely because people moved up. the share of adults in households was over $100,000 in income, and in inflation-adjusted terms, increased from 12% in 1980 to 24% in 2007. >> our producer has made the point that the healthy economy is also related to banks lending. how does that factor into your thoughts on the strength of the economy, a bank's ability to lend money? guest: obviously it's a tough plod. it's tough on two levels. the financial crisis set in motion affecting the real economy, and then we had these negative feedback where somebody lays off, other people lay off. now, banks use other people's money. i mean, banks start with leverage, but they mainly use other people's money. obviously their capital cushion

went away, with all the losses and all the bad investments and these instruments and all. it's a complicated story. they are rebuilding their balance sheet, it's still in process, number one. and number two, they're nervous about not doing -- i mean, lending money and not getting money back. so again, we're waiting for the positive interaction. it's not like it disappeared, it's just down. it's down significantly. but as the interaction of the $1.8 trillion that companies are sitting on now, when they start to invest that, that will cause other companies to want to expand, to want to see banks, the business community better, and then they'll end with them. guest: but the consumer, you're going to probably see tougher credit, tougher loans to be had. how does that factor into the strength of the economy if, down at the consumer level,

it's going to be harder to get that credit, get the loan, get the money in order to make those investments? guest: right. it actually isn't the consumer that's been the one that's dragged this economy down. if you remember, for those of you, one you might have heard, g.d.p. was consumption in investment. that's how we consume things at the end, so consumption, basically what's happened in the economy is investment tanks, government went up, and consumer spending actually changed remarkably little in the middle of this recession, and right now it's at a level that is just slightly higher than it was before the recession, so the american consumer -- you know, our savings is probably more along the discussion about what that means, but the american consumers, when given a chance, are ready to spend. guest: brooklyn park, minnesota, janice on our democrats line. thanks for waiting. caller: thank you.

my question is this -- how do you feel that the outcome of the midterm elections will affect either the improvement in the economy or maintain the stagnation? >> i don't think it's going to affect a whole lot one way or another. i mean, i think they've come to a kind of balance, equilibrium. as i said, i would prefer more stimulus, but there are some republicans and moderate democrats that are not in favor of it. i don't think that's going to change. obama will still be president. i don't think -- personally, i think that the democrats will lose seats, but i think they will stay in control. but it's a close thifpblg it's pretty hard to believe the democrats will lose the senate. so in terms of economics, i really don't see the election -- in terms of economics, i don't see the elections having a big effect on the economy. guest: ted in biloxi, stay on

the line. you're coming up soon. oklahoma city, next, tony on our republican line, go ahead. caller: yes, my name's tony cook. i actually run top dog roofing out of oklahoma city. i'm from mobile, alabama. we was put out of business by the illegal workers in mobile, alabama. folks were firing. i get here to oklahoma, and folks won't hire us because we're out of towners. and then i call around to the local roofing companies, and they actually tell me they don't hire american citizens. what are we going to do about that? i called our government and got nothing but the runaround. guest: obviously immigration is a hot-button issue, being the son of two immigrants, i have certain feelings that immigration has served america very well, that we are a nation of immigrants, and the best studies show that immigrants

have a slightly positive effect on the economy, but that positive effect is not across the board, that clearly there are people that there are certain jobs available, and if companies can hire cheaper people, they'll do it. so the overall effect doesn't negate the fact that a lot of people are losing their jobs in this tight economy, and that creates the hot-button issue with the arizona law, etc. it's actual a relatively small point in the economy as a whole, but if you're the one that's hurt by that, you're going to notice it. and if you have a president or a brother, you're going to notice it. again, it has to do with the negative news, you're going to remember those cases where people have been displaced, and you're not going see the skills and the other things that they do, and as far as i know, overall, the best studies show

that immigrants have a positive effect, not tremendously economy, but a positive effect on the economy. specific until silicon valley is where they have a big positive effect, and about 20% to 25% of startups over the last 20 to 30 years had a person who went there, oftentimes graduate school, who stayed here and formed an intel, formed a google, and led to thousands of jobs being created. guest: biloxi is next. ted, go ahead. you're on the line with stephen rose. caller: good morning, mr. rose. i have two questions. when i was young, our economy used to be based on primarily manufacturing. manufacturing was based on making a small profit on many, many, many items. our economy seems to be based on making a large profit on just a few items.

driving the prices up, which eventually means that our wages no longer will cover, so we raise the minimum wage. that raised the minimum wage, it's been passed down on to the cost of the item until our minimum wage no longer covers on and on and on. when is our economy going to get back to the old-fashioned way, which seemed to work just fine, used to minimize the pepth of the depregs we went through other than the 1929 depression. and my second question is, would it not help our economy if, during a national crises and such, if we turned to companies within the areas of the crisis to help solve the

crisis, such as during the gulf coast crisis california companies, during earthquakes, companies within the flood yareds during floods? guest: ok, made your point, thanks. guest: start the second question first. wr a globally integrated world, and while buying local makes a lot of sense, just remember, if everyone bought local, then you couldn't sell far. and then our exporting firms would be hurt. so buying local, in the middle of the depression we passed a thing called the smoot holee law, in which it was buy local, and a lot of people think that's what made the worldwide crisis worse. so yes, it makes a lot of sense right in front of you, but you forget how many people sell abroad. caterpillars. world that are selling construction equipment to china. so just remember, if you buy

local, other foreign countries can say the same thing, and then it will hurt other companies. so that's usually a short-term strategy that ends up not working. in terms of manufacturing, manufacturing is really greatly affected by productivity increases. and productivity increases by and large are a good thing. even in 1900, 40% of people were farmers. today, only 2% are farmers. so what does that do to productivity advances? in manufacturing, it makes most sense to think that economy is about producing things. well, today it requires one-quarter of workers to produce the same amount of steel that we did in 1965. one-quarter of the workers in coal mining produces twice of amount of coal that we did before. it's just the nature of the beast that we have high

productivity in manufacturing, and it's just not going to go away. that is, we aren't going to grow ourselves by a manufacturing economy. and in a study i'm doing now on what label it takes to produce various things, the thing about giving to the american people, what to buy in the supermarket or what to eat out, of that money that we spend, $1.4 trillion or so that we spend on food, three cents on the dollar goes to the farmer. five cents on the dollar goes to the food manufacturers. just eight cents on the dollar go to the direct producers. another few cents, other manufacturers. and the rest are advertising, consumption, retailers at the grocery stores, the people who work at fast food stands. that is, we're still producing goods, it's just that the value chain is relying less and less on manufacturing workers. in apple, it says on the ipad,

assembled in china. there was a study that came out of the u.c. irvine that said, well, let's look at the value chain of the ipod. it said made in china. three cents on the dollar goes to china. $75 goes to apple, and then there are the sales again. so the whole value chain of producing goods require fewer people to make it. we aren't going to return to a manufacturing economy. host: how does trade factor into the economy? guest: it's something you see. so it looks like it's displacing things. if you look at the data, you try and look at any relationship, does trade go up, let's remember, ross perot ran in 1992 on the great suck sound . they had 22 million new jobs in the years there afterwards. we had the highest what's called employment to population ratio among adults ever. that is, the economy grew. it appears that trade is

contractionary, because once again, you see those that lost their jobs, and you don't see those that gain their jobs. no advanced country has throde increasing unemployment. there are individuals, much like the productivity growth, individual companies with areas that are responsible, they get hurt, you remember those people, you forget. so when i was on a show about two years ago, call-in radio from wisconsin, they said, oh, this is down. and i looked up the numbers in wisconsin from the time of nasa passed in 1993 to 2006, in wisconsin, employment was up 15% overall. the wisconsin state product adjusting for inflation and population was up 17%. people remember those that are close. our trade deficit is something else. they'd can also be neutral. we also run a trade deficit.

it's remarkably complicated issue, and it would take time to really unravel this, but we run a trade deficit because other people benefit, and in return, they buy our bonds. that is, every time we trade goods, one way in which money flows across country, but another way is the capital investment, and the capital investments have to offset it because your balance of payment is leaving the country and the dollar is returning to the countries always each year have to be in balance. we have this money flowing in, and that provides the portion of the economy, and that's why it doesn't affect the overall g.d.p. host: delaware on our republican line. ronnie? caller: the skevb active line. -- the conservative line.

credit is the greek to the capitalists, and in the early 199 's, i remember buying a home and getting a mortgage, and it took me three months to get the mortgage, and the credit they did, they did a credit check behind me and everything, then there was a million mortgage more like jesse jackson who loosened the credit standards. i think that started the loosening of the credit standards where people could get mortgages with no income verification. then i thought people were remortgaging at will, using their home as an a.t.m. machine. so that there, i'm thinking our economy grew so much due to the such ease of credit. then all the sudden the a.t.m. machine or the housing -- the houses reached their limit, people were mortgaged out two times, credit card debt to the max, and all that -- we were

filling the demand. they need credit. guest: a couple of things. one is certainly the history of the subprime disaster has many architects, and some of the architects were those that encouraged the expansion of homeownership in the clinton administration and the bush administration had the homeownership initiative. and that was one of the things that helped. it helped cause the crisis. but the crisis really took off in two steps. the first step was that there was low interest rates to get us out of the recession on 9/11, and all the sudden this new subprime mortgage, which has only been 8% of mortgage originations in 2001 jumped up, and then they were make ago lot of money, and they changed the rules in 2004 and 2005.

there's a very nice book called "confessions of the subprime lender" based in dallas, texas, showing how all of a sudden the ninja loans, the crazy loans are from the 2005-2006 period, and they really were instituted by the banks that really wanted to make money. they were instituted by the banks and the credit agencies that kept a.a.a. and instituted by the people that bought these mortgage securities. and by the way, these weren't little old ladies. they weren't even rich people. the only people that could buy a mortgage security were institutions. so this was an institution, the institution growth. people just got a collective blindness to this, a, looked like it could go on, and b, they underestimated the downside risk. they had been through the stock market crash of 1987, the s&l crisis, the leveraged buyout companies going bankrupt, the long-term capital management, the currency crisis, the bubble, the enrons, they had

seen all of these mini crisis, and they had very little macro economic effect, and they really said to themselves, ok, you look like you're doing stupid things, but ok, we'll take a little hit and then move on again. they really just -- in the book , i was trying push the limit, just trying to see what in the world could they get away with? they dent think the downside risk was going to be there, they actually did have a lot of pain. financial industry lost 10%. somehow they lost $1 billion on them when companies went bankrupt so. they didn't want to do this. they just made crazy mistakes. it was an odd period that finance sometimes does. host: clinton, kentucky. todd, go ahead. caller: i lost my job 18 months ago, and i started going to college to better myself, and my question to him is, what area of jobs would be around

maybe in the next six months or so? guest: obviously i have to look at your specific economy, but healthcare is an industry that's growing. if we look around where the jobs are in downtown and suburbs, it's offices. office work has historically been a strong growth area. people misunderstand the service economy being, you know, hamburger flipper jobs, when, in fact, it's mainly office jobs, information jobs, computers are only going to be more, getting a technical, specific skill. i work for center on the education in workforce, and we have projections in 2018, you can go to our website and look at that, so we project the jobs of the future. host: new jersey, stuart, go ahead. caller: hi. you touched on this earlier about the role of perception of

good news and bad news and this is really encouraging, this book. i'm surprised people have been negative in terms behalf they've been asking. but my question is, what do you see as, if you could quantify it, how much attitude will overcome this dilemma? if you'd comment on that, i'd appreciate it. thank you. guest: in many ways, the psychology, the animal spirit do play a role. what crisises are are turning it around. when people are negative, they're worried, doe make make decisions. when they're optimistic, they make decisions that lead to economic growth. so psychology does play a role. a lot of people -- i mean, there's a long history in the polling of i'm ok, you're not. a lot of people express negative opinion on the economy as a whole. there's a new pugh poll that was released last week that showed 8% of americans think

the crisis was severe and will be permanent. 12% thought it was mild and was going to be permanent. so only 20% of americans think that they're going to have permanent problems from this crisis. so i think americans individually about themselves tend to be more optimistic, and that should bodely are for the future. host: ohio, randy on our independence line. caller: hello. i was actually going to -- well, i was going to ask if there is a way -- like, you look at the short-term economics, the impact of jobs and just production of things, and you said it's kind of insignificant, i don't know if you want to call it insignificant, but you said it was kind of not as relevant. is there a way for the government to look at the current economic situation and

get involved in a way that will stop big companies from just repeating this process of a recession and a bounce back or is that just kind of the way it is going to work regardless? guest: in terms of what you're talking about is a business cycle. the business cycle we've had over the last 30 years has been one of the heinous in the history of capitalism. you know, there just tends to be mistakes made that then compound. this crisis was unique because it was financed. some would say it's the lifeblood of the economy, as someone referred to earlier, so it affected everybody. it's going to take time. we just gave the argument for a stimulus program. as i said earlier, i don't see it's going to happen that much more in the future. i'm optimistic. i don't think that

manufacturing is insignificant. i just think it's probably a small share of the unemployment, somewhere around 15%. and there are weak spots now, and that's why it's taking so long to get started. and checked stall again, but in my mind, there's no question in the intermediate run that we will be rebounding. host: you can read his piece at the new republic, "morning is coming." you can connect through our c-span web sivement our guest is also the author of "rebound: why america will emerge stronger from the final crisis." stephen rose, thanks for your time. + coming up, we are going to talk about china and a trade issue regarding that country. our guest is going to be sam gilston of the washington tariff and trade letter, and we'll have that discussion. but first, we'll hear from news headlines from c-span radio. >> it's 8:28 here in

washington, d.c., and in the head liverpbs -- the clean-up of the b.p. oil spill has cost the oil giant a little more than $3 billion so far. the company releases its latest tally of expenses. meanwhile, bad weather for at least the next few days will keep skimmers from collecting oil along the coast of alabama, mississippi, and florida. clean-up is continuing along the louisiana coast. another recall has begun for toyota. the automaker has started recalling more than 90,000 lexus and crown vehicles because their engines could stall while running. toyota says the worldwide recall will start soon, including 138,000 vehicles in this country. last year the company recalled more than 8.5 million other vehicles for other problems. president felipe calderon's allies are heading towards some surprising victories in mexican state elections. marred by drug gang violence so severe that only a handful of

citizens voted in one state, where the leading gubernatorial candidate was slain. the opposition institutional revolutionary party, the former long-time ruling party, had hoped for significant gains to add mement item to its bid to regain the presidency in 2012. but it looks like that party would not significantly improve on the nine governorships it already held among the dozen seats up for grabs. .

>> this week on "the communicators," using technology to promote the government here and around the world. tonight, on c-span2. for a snapshot of washington and the 111th congress, a c-span congressional directory, and reference guide to every member of the house and senate, the president's cabinet, and the supreme court justices all at your fingertips. order it online at c-span.org /store. >> learn more from the highest court -- about i scored from those who have served on the bench. all the justices, active and retired providing unique insight about the court. it is available online and also as an e-book.

>> "washington journal" continues. host: joining us for the next 45 minutes, sam gilston of the washington trade and tariff. is there anything you want to read about the nature of trade agreements and how it shapes an economy such as ours? guest: one of the points that he made was correct, trade gets a lot of publicity and attention because it is out there, but in terms of the overall economy, it is smaller than people think. it has the appearance of being larger because of the publicity it gets. but in terms of the dollar amount, it is a smaller share. trade news is my life and i would love it to be a bigger part of the economy.

it is actually about 10% of the economy, 12% is based on trade. host: correct me if i'm wrong, but the balance stand at about $40.3 billion. how does that square? guest: in 2009, there was a severe cutback in world trade. every country faced that. u.s. trade exports dropped about 18% to 20% over the year. what we're seeing now is a bounce back in trade. the numbers that are coming in right now reflect that bounced back. a lot of it is inventory rebuilding.

our trade deficit actually went down in 2009 and probably this year it will go back up significantly. host: why did it go down? guest: recession, we just were not buying anything. as a result, the things that count in our trade deficit, the largest element in our trade deficit, which are cars, petroleum, the consumer goods -- when we stopped buying cars and we stopped buying the gasoline to put in the cars, or slowed down, if reflected accordingly. host: does this affect our relationship with china? guest: a gets the most attention on trade because it has -- china gets the most attention on trade because it has grown so fast. if you look at the framework of

our trade deficit, we have trade deficits with europe, japan, canada. and we're running trade deficits with poor, developing countries, but also with large industrialized countries as well. china is a growing part of it. a lot of the imports that we get from china have come at the expense of other asian countries which have not grown as fast. host: are their deficit is there because of the with the trade agreements are set up? guest: i do not think so. we do not have a bilateral trade agreement with china. that has not grown because of a free trade agreement. it has grown because china is a low-cost, major producer. host: our guest will be with us until 9:50 a.m. he is the publisher of the washington, tariff and trade letter.

if you want to ask him any questions, the numbers are on the screen. you can e-mail us at journal@c- span.org. as far as trade agreements, what is pending as far as what this administration is doing trade- wise? guest: there are three or four things right now in the mix. there are three bilateral free trade agreements that the u.s. negotiated during the bush administration and those have not been acted on. congress approved them for colombia, panama and korea. and in addition to that, there is the doha round and that has

been going on for nine years and not getting close to completion. and then there is the trans- pacific partnership with some asian countries which will aim for a u.s.-asia free trade agreement. that has got a couple of years to go before it gets to completion. president obama just a week ago announced that he is prepared now to start working on the caribbean free-trade agreement and get that -- coriakorean free trade agreement and get that going. host: you wrote in your letter about this that is bad news for some and good for others. can you expand on that? guest: in the past, the majority of republicans have voted for

them and the majority of -- the republics -- the majority of democrats have voted for them and the majority of republicans have voted against. there are some who say that the democrats will lose seats in november and republicans are going to gain them. to that extent, many of the republicans,, if they win, will be voting for free trade agreements. host: our last guest talked about perceptions when it comes to the economy and perceptions when it comes to trade, especially in the political realm. guest: sometimes trade is all perception. i do not know how much people

delve into the numbers and the actual out -- reality of trade. a lot of it is perceived in a personal way. people who lose their jobs in manufacturing because a plant has closed down and move overseas. or someone knows somebody who lost their jobs because of trade. that strikes closer to them -- closer to home and people react to it. host: you said trade is 10% of our economy? guest: imports are about 10%. there's about a trillion and a half in and a trillion out. depending on what today's gdp is, $12 trillion, $13 trillion. it is about 10% of the economy

is imports. about 10% exports, so about 20%. host: our first call is from massachusetts. you are on with sam gilston, go ahead. caller: you just have a graphic up about a $40 billion trade deficit each month, correct? host: april 4, 2010. caller: how much oil do we iiport each month? hostguest: i can tell you in 20, we imported $254 billion in petroleum products. divide that by 12 and that's

what you come out to. host: you have a follow-up? caller: the amount of oil import is similar to the trade deficit. if we were not importing the oil, most of that deficit would be raised, correct? guest: not entirely -- would be erasers, correct? guest: not entirely. if you look at the deficit over all, there are probably about five categories of products that makeup the bulk of our trade deficit. you have in petroleum, automobiles and auto parts, textiles and apparel, toys, consumer electronics, cell phones and tv's and such as that, and that makes of the bulk of the trade deficit. host: off of twitter someone has

asked -- guest: i cannot say trade deficits are good. we have had them for a long time and we continue to be a strong superpower. i am not sure it has undermined our ability to be a superpower. a strong economy is obviously, as steve earlier mentioned, an important part of our national security and growth. trade is a two-way street. we are getting a foreign investment coming into the u.s. they are buying our bonds and our stocks and that strengthens the country in one way. a lot of our trade is in products that the united states will never be competitive in again. the future is finding areas of growth that are different from what we had in the past. host: another person off of

twitter -- could you explain what that first part means for those who may not know? guest: chinese policy with u.s. and china bilateral relations for the past 10 years or so, china has had for many years a fixed exchange rate and it was on the dollar about eight something, the yuan, or what they call currency. and then it came down to about 20% against the dollar. and during the economic crisis they stopped that policy and froze it again, so they fixed the exchange rate.

probably at about six something. a couple of weeks ago, the people at the chinese banks said they were born to allow the exchange rate to moderate -- were going to allow the exchange rate to moderate, not devalue, but be more flexible. depending on how it appreciates, the trade balance showed a just a little bit due to that. depending on who you talk to, some people say their currency is about 20% undervalued and some say 40%. if it was 40% and it wanted to reevaluate its 40% higher, you would see a significant trading -- change in the trade deficit. host: what changed the chinese policy?

guest: a lot of it was pressure from the obama administration and european officials who are seeing these trade deficits growing with china. it is not just the u.s., but europe and a lot of other countries as well. there was a feeling and there were on -- under constant pressure that if they did not do something, europe might do something. there is pending legislation in congress that would try to attack the church -- the chinese currency problem. host: huntington, west virginia, you are next. caller: a specific question and a general question. first, why is it that the united states has a trade deficit to begin with? that is trade of 101. what do think obama is

pondering all that he did not know during the election and he did not know ahoy he did not -- and he did not know haake that he did not know? guest: why do we have a trade deficit? trade deficits go back to economics 101, as you say, and adam smith and 18th-century economist. countries produced what they are good at and they import what they are not good at. sometimes it is not a matter of good at, but just economic efficiency. if you can import something cheaper and better than you can make it here, people will buy the products. the classic example is one from france, bananas from latin america. nowadays, people like japanese

cars and german cars and they a import them. that is where the trade deficit comes from. host: indiana, john on the independent line. caller: about a year-and-a-half ago, a multimillion-dollar contract at my company was signed and much work was shipped to china because they could get it done so much cheaper. is there anything that can be done -- there were 18 people in the country -- in the company that immediately lost their jobs. i do not understand how a compancountry this large could not stop jobs being shipped

overseas. it is not productive to -- for our country to send our jobs and our work overseas. i realize the company is getting it done at a cheaper rate, but with the shooting and the tariffs, doesn't that equal out -- with the shipping and the terrace, does not equal ou-- doesn't that equal out? i do not understand how they are getting it done much cheaper. guest: that is certainly a widespread problem for companies and jobs that have been shipped overseas. manufacturers, owners of companies are free to find the best price for the components that go to their products and the labor that goes for their products. the wages -- the wages in china

are way below those in the united states, working conditions are less protective of workers in china. plus, the chinese government provides extensive subsidies to businesses to invest in china and produced in china. it is not just the cost of labor, which is low. but there is a whole additional structure of aid that goes to manufacturers to move their production into china. that has been a serious problem that has not been addressed. host: on to twitter -- is wal-mart a factor in the way we consumed things as well? guest: absolutely and proponents of free trade will tell you that while we import a lot, that is a benefit to consumers.

the fact that a bottle -- a moderate income families in the united states can clothe and feed its family and buy goods, you know, televisions and furniture and apparel i wal- mart and live a comfortable life because of that lower cost of the availability of goods is one of the benefits of free trade. in fact, we are spending less to buy a shirt and more to buy a computer probably then every other society. right now, you do not have a choice because so many products are made in china. host: if you follow such issues, sam gilston is the publisher of the washington care of and trade letter.

who is this design for? guest: mostly international executives of companies, attorneys that work on international trade issues, policy makers in the trade field. host: and on your web site is there information for the general consumer? guest: yes, it is right there. host: there is a link to it on our side. ohio, vanessa on the republican line. caller: i will make a comment and then ask a question. i can recall years ago when the chinese products were considered inferior to american products. i do not know if you remember that, but i remember that clearly. as a consumer of american-made

cars i was very disappointed in the product. it seems to me the american workers, agreed to kick in. . the greed kicks in. and then they probably price of the vehicle, but the quality was not equal to the sally. -- the salary. many years later i was told that you will never buy -- and many years later i went to get a foreign car end i was told you will never buy another american made car and it was true. it is not a myth. it is truth that the foreign- made cars are better made than

an american-made car. the car that i own is a foreign imports and i'm very pleased with it, but my personal preference would not be for a foreign car because of the way it is made. however, i have decided that american-made cars that are making a strong comeback. now they are finding these faults with the foreign imports. host: ok, thank you. guest: you make an excellent point. i think that people perceived

value with the imports. they're not only producing better products, but more sophisticated products. the foreign makers by an inroad into the u.s. because there was the perception that they were producing a better card at a better price than the u.s. manufacturers were. that started many years ago and led to a long decline in the american automobile industry. now the cars that you are buying, they have been made in the united states, actually, because nissan and the interview and hund have moved production to -- nissan and bmw and honda have moved production to the u.s. the airlin

the consumer is looking for quality as well as price. to the extent that a foreign- made car is willing to meet the consumer with the quality that they want, that the pigs the marketplace. -- that dictates the marketplace. i think obama has been toward of restraint in the last two years because of the need to hold together the democratic party and its constituents, a large party union backers. he has been very restrained in the opening and promoting trade talks and agreements. i think his instinct is more toward open trade, but we will see if he follows through with that. host: california on the democrats line, martha. caller: good morning.

thank you so much for c-span. my husband and i are both 86 and i have been watching c-span since its inception. retired for -- from long beach appear in twain harte and we are in the western hills. my question is, if mr. colston would please compare the minimum wage in china -- mr. gilston would please compare the minimum wage in china to the minimum wage in the united states. our governor recently said he was going to start paying minimum wage to state workers to help with the budget deficit and all of that. also, i read a book on c-span called the wal-mart affect that was reviewed or by a guess on

your program some time ago. my husband ordered it because it was not available in the bookstore. host: we will leave it there and of our best to answer your questions. guest: as far as i know, there is no minimum wage in china. depending on the industry's beck -- the industry sector, they can be quite low. there has been a lot of agitation in factories were more advanced products are made to raise wages. but even in good factories there, they are a dollar, the $50 per hour versus $7 here. -- $1.50 per hour versus $7 a year. host: what about trade deficits with canada? guest: one of the trade agreements we have is that

nafta, the north american free trade agreement. and again, depending on who you talk to, that has been very successful or terrible. part of the trade deficit we run with them is petroleum. we run a deficit with canada, mostly on petroleum. we have trade deficits with mexico as well. but it is a symbiotic relationship between the three countries now. host: pat, go ahead on the republican line. caller: you were talking about our trade goes both ways and it seemed like you were saying we import consumer products and export stocks and debt. how does that help american workers who need an income source to maintain this economy? guest: i did not mean that we only export stocks and debt to foreign countries.

the united states does export over $1 trillion in manufactured goods per year. there is a lot of major american competitive industries that are exporting. you have boeing, caterpillar, many of the car companies do exporting, even though not as much as we import. our chemical companies are big exporters a a, a pharmaceutical companies are big exporters. high-tech instrument measurement companies are big exporters. we are not just in -- exporting debt. host: your trade letter marks the effort by charles schumer of new york. what is he up to as far as currency issue? guest: this has been a big issue for senator schumer and several others, senator gramm

and senator stabenow. they have been pushing this for about five or six years. it fluctuates a penny on how -- depending on how the administration in power pushes them or not about trade. . .

it would allow congress to increase the duties on foreign imports. >> our guest is sam gilston. jacksonville, florida. go ahead. caller: i guess it is probably too late. once the hand is out of the henhouse you cannot get him back in. but if we were to assess a duty on a product that came into our country for the wage difference and social security benefits, so that when a company went over there and paid $40,000 each year including social security and they were only paying in thailand, for example $8,000 per year, we will assess a duty of

$38,000 per year because of the difference in wages. that would stop a lot of american companies from going abroad and it would lift all boats. i would like you to comment on that. >> that has been proposed by some people. there are numerous problems with going down that path. first of all, under world trade organization agreements, raising tariffs like that would probably be illegal. we a promise not to do that except in cases where there is an unfair trade. you would have to define wages and benefits as unfair trade practices. secondly, not all trade deficits are with countries that are low wage or do not pay social security. imports from europe, where wages

and benefits are higher than in the united states, canada, and japan, would have their debts produced because they had better pay and better benefits than the united states. as i mentioned earlier, much of the trade deficit is not nearly due to low wages. when you come to a country like china where there are subsidies for operate in the country, those benefits can be greater than a wage difference. you would have to look at a tremendous array of economic policies in order to impose a tariff that would counter all of those different economic situations. >> do most countries have trade deficits? guest of know, if china or korea runs a trade -- guest: no.

china, korea, saudi arabia all run at trade surpluses. the world is not all deficits. some countries that are small benefit from trade. host: mainly because they benefit with us? >> -- guest: primarily with the united states. but also with europe and japan. host: texas, go ahead. caller: there is something much more sinister going on here. we have to revisit all of our active trade agreements. now we are pushing for panama, colombia, and korea. in korea -- columbia they have a very small gdp. drugs are all that they have to export. all it is is another chance to avoid foreign workers for this

worldwide industrial complex. if we do not stop and revisit these trade agreements, we will reach a tipping point where this country can no longer compete. we are modulating down the work force. every day we have millions of illegal, poorly educated workers coming into the country. these trade agreements have to be revisited, one by one. we have the right to opt out of them and we should. we are on a dangerous path and i do not know that america can recover. thank you. guest: that is a very common view of the americans. one reason that the obama administration has been slow to pick up pro-trade policies. the national manufacturers showed that we had a trade surplus in our free trade

agreement partners. it is not strictly a trade deficit with those countries. there is no agreement with china, which is the big deficit. most of them are not free trade agreement countries. it is not strictly free trade that is causing the deficit. >> youngstown, ohio. caller: good morning. thank you for c-span. thank you for taking my call. did you think that trade adequately account for the cost of social disruption as an industry moves offshore? second, i wanted to said companies have patents to protect them from other companies to not have the

development costs so that they can produce. tariffs actually protect countries from the same thing. from generational processes that take generations to develop. other countries are taking those processes away. i wanted to see if i could get an answer. thank you. guest: the 19th century economist that first proposed free trade and the foundation of that policy, as i mentioned earlier it goes back to the idea that countries produce what they are good that an import what they are may be good at. there is an adjustment process that goes along with that. in the 19th century it was likely a slow process because

economic movement was very slow. today economic changes can occur rapidly. as a result there are jobs in industrres that overnight can become competitive that you might not have expected. the downside of that policy is sharper and quicker than it was 200 years ago. i do not knowwthat anyone has developed a way to resolve that problem. worldwide tariffs are only a small part of what projects countries. over the last 60 years through trade agreements, global tariffs have come down considerably. so, they are not as much of a factor. although some of them are still very high. much of this trade is not between countries, it is between companies.

you have companies like the freedom american auto industry that are producing parts in mexico, assembling them in different parts of the world. it can be the same company doing the importing and exporting. host: buffalo, new york. independent line. guest: give me a minute with pedro. pedro, every couple of months i call you about these twitters. you look awfully display -- displeased with your eyes glazing over. may i remind you that this is a call-in show. remind these twitterers, why do they get in every single day and we get in every 30 days? take off the 30 day rule. let me ask you a question.

how do you perceive the economy shaking out over the next year or 18 months? like the previous guest was extremely optimistic, c-span brings these guys on every day. 24 months out. bp says they will demand oil in 30 days. the country is not stupid. how do you think that things will shake out in the next year? your down there in washington. far as i'm concerned, there is no difference between these politicians and the surprises that are coming in november. >> i do not suggest waiting 18 months. as i mentioned earlier, there was a sharp drop in world trade in 2009.

as the economy picks up, trade will take up with it. so much of our industrial components are imported. my guess is that over the next few months, the next year, you will see the trade deficit grow. our exports are growing. no question about that. president obama has created what he is calling a national export initiative, aiming to double u.s. exports over the next five years. the administration is putting a big push on improving u.s. exports. first of all, they start with 2009 as the base year and you alrrady have a good start. you will be getting back equilibrium from 2007. we are up 20% already. we are one quarter of a way towards doubling the base from

2009. between 2002 and 2008 exports grew 70%. you are only talking about 30% extra in exports. if the global economy does as well as expected, it will continue to grow. host: one more call from indiana. john, go ahead. guest: mr. gilston, figures do not lle. but liars figure. someone is benefiting from these figures that they're putting out. when will they realize that we cannot sustain this $40 billion per month trade deficit? if americans do not have jobs, they do not purchase products. not from a manager -- american

manufacturers or anyone else. we cannot go on like this. we have got to have jobs before we can purchase products for our economy to move away that it should. >> i know that the national association of manufacturers, it is not just small manufacturers. they would have been amongst the strongest advocates for taking up against the chinese currency. support -- supply chain has changed over time. u.s. manufacturing has not been the driving force in the economy for years. it is -- it is nostalgia to go back to the days when everyone worked in a factory. those days were probably over in the 1950's.

the service industry has been a growth industry of the united states for the past 50 years and probably will continue to be. host: you can go online to learn about these issues. our guest, sam gilston, thank you for your time. coming up we will conclude our series on states and take a look at new hampshire and the recently passed efforts to pass a balanced budget. joining us for that is the state bureau chief. we will take that up as soon as we hear from c-span radio. >> in the headlines, top west virginia labor and business leaders are calling on joe mentioned to reverse course and appoint himself to the seat held by robert byrd.

a spokesperson reiterated the governor's previous statement, adding that she will not discuss the plan until the middle of next week. if the governor does not appoint himself, labor leaders and the west virginia department of congress will urge the upcoming labor a lot to be taken up this year. secretary of state, hillary clinton, in georgia today saying that the u.s. will stand by the former soviet state. the invasion of 2008 still remains a contention point between the u.s. and moscow. a new law allowing abortion without restrictions in spain in the first 14 weeks of pregnancy has taken effect. despite a challenge claiming it is not constitutional. the court will have to decide whether or not to suspend the law while they study the appeal.

16-year-old in 17-year-old were having abortions without parents' permission. no parents would need to be informed. -- now the parents would have to be informed. on the eve of the israeli prime minister's trip to the white house, the eastern u.s. is bracing for hot weather. a high-pressure system a strengthening over the eastern seaboard, producing daytime highs above the normal levels. the washington d.c. forecast is to be above 100 degrees for the rest of the week. those are some of the latest headlines on c-span radio. >> this week, using the conference founders tonight on

c-span 2. nonfiction authors, book stores, and our own in-depth programming. our c-span video library is booktv, your way. c-span, bring you a direct link to public affairs as a public service, created by america's cable companies. >> learn more about the nation's highest court from those who have served on the bench. read the latest book from c- span and conversations with all the justices, providing unique insight on the court. also as an e-book.

>> for a snapshot of washington and the 111th congress, the c- span congressional directories. a reference guide to every member of the house and senate, all at your fingertips. order it online c-span.org /store. >> "washington journal" continues. host: if you have been with us for the last few days we have been taking a look at states in economic trouble, then talking with experts. this time we are focusing on new hampshire, a state that has done relatively well in the economic turndown. they closed a budget gap and the unemployment rate is 6.4%. joining us to help with this to start of, what has to happen to close the budget gap?

guest: there are a series of discussions in the exchanges back and forth. primarily there was a lot of creative financial accounting. borrowing, cash exchanges within the agency that allowed the state to close this gap. there were not too many new taxes. it was primarily done through cutts, bonding, and borrowing. host: when you talk about cuts, how much? what areas got cut? guest: their work cut out of the same areas as all along. hiring freezes, unnecessary travel, keeping jobs vacant. that is where most of the money

has been found until now. cutting programs has not been much in favor because the state prides itself as running pretty lean in the first place. cutts agencies went across the board. maybe $1 million cut out of environmental services. it was up to the people in the department to decide where that would go. our court system over the last couple of years has gotten to the point where there are 10% to 15% vacancy rates at the court's. they propose to cut some of the court but the legislature would not go for it. the end result is that we close the courthouses four or five days this year, getting close to having one closure each month. lawyers do not like it and clients do not like it either.

hard to get into court on anything that criminals up. host: clarify your statement about the court. guest: it was very creative. the governor is a former businessman. republicans warn us that this will come back to haunt us. there is some borrowing here. the university of new hampshire has a cash reserve that it was going to use the maintain and update the buildings on campus. the deal that was made was that the university would handle $25 million in cash to the state budget. in exchange the state would allow them to borrow $25 million in state bonds. paying all of the debt service to the university to the tune of $25 million per year. $25 million in cash with an i/o you to the university. we did a similar thing by

restructuring about $45 million in state bonds. enabling ourselves to skip a year of interest payments. debt service went down for your. payments will go back up after the debt. the argument is that it is temporary and that when they go back up, they do not go too far out of the norm. host: as far as the political fight, you were talking about the back-and-forth. how much political capital was spent making this happen? >> it was difficult for democrats. senate democrats come out looking fairly responsible. there are many things here that they do not like to do. they pulled money out of

several bamut -- dedicated programs, things that the democrats waited a long time to fund. land and conservation heritage investment programs, where a town hall or special properties are endangered for one reason or another and can be put into a conservation easements. you might have a school building in a town between here and the white mounds that is in danger of being torn down. the town might want to say that building, and there are funds from the state government to help them take care of that. similar the forest land in a particular town that sees encouraging development. money was taken out of the regional greenhouse gas initiative. something the northeast states have joined in none to cut back

on the amount of carbon emissions. carbon emissions allowances must be purchased at auction going towards the renovation of older homes. windows, doors. other programs like that. they needed cash, the money was there. when they do that, democrats have to swallow hard. they see that these cuts have to be made. the republican argument is that they have made cuts, but that they did not make enough. they went to the borrowing program as described earlier. something that children and grandchildren will be paying. the bond that has gone up.

in terms of the range we could be in, we are still failing to be of service. our borrowing amounts 8% of revenue. the debt service itself is not a big institution. host: for republicans, 202-737- 0001. for democrats, 202-737-0002. for independents, 202-628-0205. new hampshire residents, we have set aside a special phone line for you. 202-628-0184. journal@c-span.org is the e- mail, but twitter is twitter.com/c-spanwj. rex, tom fahey. go ahead. caller: good morning.

i wanted to give a common and say that i think it comes down to a question of whether government is playing a proper role. i see it this way. people may get out to be a complicated issue. this is not supranatural law. i think of the government's, turning around and placing an appropriate role inside of how the government is craft and design to be referee. we can regain the right amount of about. just not for new hampshire, but all across the united states.

if you know all the time that you have an inadequate educational system or an inadequate anything in government, it seems that the right thing to do would be to take out what does not work, taking the burden off of the american people. it seems the government has become efficient at but not rendering services. host: response? guest: several points. in new hampshire they talked about nationalizing education, but if you did you would be run out on a rail. the state has a big role to play. it had to step up after a court decision found that the court

was responsible for the cost of adequate education. the end result is that the state continues to operate without any sales tax or income tax. we have a wide series of fees and other charges that we put forward. basically user fees. if you use the service, you pay a fee to cover the expense. the unemployment rate of here is pretty good compared to the national. this state is still an attractive place for business. business people like to locate here when they hear there is no income-tax. real estate here is not unreasonable. when you look at our neighbors like connecticut and massachusetts, it is a low-cost

region with a good supply of skilled workers. host: new hampshire, go ahead. caller: thank you for c-span. tom, i do not live on the lake. i live on a fixed income. my town will become a donor town. new hampshire relies on property taxes. will you explain to viewers what a donor town is? guest: sounds like a test. we have this expression of year, donor town. the school funding issue created a vacuum where the state had to find a way to cover the cost of education. every public school students from high school. they came up with a statewide property tax.

it is the basic way that the local government operates out here. we decided that we did not want income taxes or gambling. the statewide property-tax had to be applied on an equal basis across the state so that every town paid the same rate, because of a lot of lake property the callers town tends to be a high real estate property town. those high values mean that the town produces more money than the town needs to educate its kids. that is not the town's money. it is a state tax.

that money is redistributed. the terminology comes up as a donor town. very high value properties that collect more money than they need. they donate it to the state. you get back into the old argument about what taxes due. is it a redistribution of wealth? people in donor towns see it as a redistribution. the famous argument that they make is that if you do not live on the lake, you might not be wealthy but because of the demand they find themselves sitting on valuable assets and they might not be able to afford the tax rate. not only at the state, but the local level.

host: next call, california on the republican line. caller: i am very concerned about our educational system. they said most people do not understand where we got independence from. they think europe is one country. those are small countries. germany is only the size of texas. the people in this country, the educational system is completely terrible. teachers' unions, there should never be teachers' unions. they protect bad teachers. most of the left-wing, these comedians, they make fun of sarah palin and try to make for a laughing stock because she does not agree with them and is an attractive woman. host: do you have a question for our guest specifically?

caller: not really. but it is time the people start to think about the education system. host: i have a question. was the budget dependent on stimulus funds at all? guest: as every state did, stimulus was very important in balancing the budget. we have taken over about $500 million. we have spent about $400 million of that. the same thing is going on across the country. while the focus is on the budget that we have now, we are increasingly aware that in a year or two, when these funds are no longer available, there will be a huge hole fill. the cost of education will go

up. this time around we use $160 million to fund the state part of the education costs. right off the bat that is $160 million that we have to find. the state is looking at a $500 million hole that it has got to fill. work is already going on at the governor's office. they are already doing economic modeling. we hope that some of the recovery we are waiting to see will take hold and we can return to historical growth. they think that 3% growth will get us through a lot of that problem. stimulus money has been used here. a lot of it was used on the highway. as across the country, many of these dollars were translated not into new private-sector jobs, but into preserving public

sector jobs. cutts we did not have to make. host: the next call comes from new hampshire. caller -- caller: actually, new hampshire does have stayed in town tax on dividends and new interests. they do pay a state income tax as well as the property tax. guest: that does comment -- qualify as an income tax on the chart, but it only applies to a small number of people and there is a $5,000 exemption. if you are getting $4,800 in dividends it will be exempt from the tax. after that there is a 5% tax. the caller is right. we do not have a big label, but there are a lot of little taxes on income.

the interest on income tax is a primary example. there are taxes on company payrolls, three-quarters of 1%. as well as the dividends. these are considered measures of a company's size and ability to pay tax. we just got through a huge fight over the one year life of an extension of that interest. the fault was that there are some large companies, especially real estate investment firms that are organized as limited liability. they do not pay those taxes. the question was why. on the last day of budget talks they came up with an extension of the interest and dividends covered at llc.

what happened was the rich folks that were paying this tax hid in the corner and hoped it would go away. smart people, people that owned campgrounds and plumbing businesses wondered if the tax would hit them and why should they pay it when no one else seems to be. it was only going to raise $50 million and the office realized it was not worth the fight. it was repealed. host: democratic line, pennsylvania. good morning. caller: good morning. i am calling because i saw what economists that said that they thought until the states had to do their budgets, there could be 2 million more people laid off. if you factor in half of the state cut stimulus and it disappears, i state of

pennsylvania had $2 billion that they had to cut this year. they would lose another $2 billion next year. all the people that are already laid off, if we wind up -- which my husband had a job of 20 years, $80,000. we are down to him looking at a job at $11 an hour. if the spiro keeps going, i do not see how they think the economy will keep pulling up. once you take out the stimulus, once you take out the money that these states are waiting to get, my state announced they would have to cut another $850 million if they do not get the s-mat

money. if something's do not happen it sounds like it could trigger a downward spiral. we are fortunate. we were lucky enough to do the right thing and have savings. we've paid our bills on time. we just made our last house payment. we do not owe money for the card. but you can only cut your family budget so far. how will the states pick up for people like us? we have been paying close to $1,285. we will have to go to the state medicaid program for insurance. host: anything you can take away from that and apply it to your state? guest: as you mentioned, counted

so less. we are expecting another $48 million. another critical component that i forgot to mention earlier. we are being reassured that this money will, eventually. before the recess took place. you cannot change medicaid delivery, there are so many ways

they state spends money, i think that in every state in the country new hampshire -- every state in the country. host: new hampshire, go ahead. caller: next to the new

racetrack there has been a global every referendum vote i have seen. rejection has gone anywhere why would we know what the fish as a means of if we were to pass the

extended gambling or gaining, it becomes part of the bay channel. people the gas was maybe $500 million.

the park has not been doing quite as well. we are always following the gaming debate. by keeping a close and accurate in gambling operations. that is the main concern. we are also concerned about what happened if we let in two casinos. will there be a constitutional debate? if there had been a budget of an argument, there would be more

racetracks' over the years. basically it is a state franchise in million dollars in licenses and we are ready to get other gamblers. hot we have got a lot of gambling up here already. never mind the lottery, the first national or state lottery in the nation back in 1963.

when you are driving towards one of the dog tracks -- there is one in poker, blackjack it is all of -- it is all available. they are set the only requirement is that the charity have a person at the game that night at the that the seven

women in why go to massachusetts when it can be right here and we can control at on our own? legislature has set up a special commission caller: do you think

that the u.s. ever came out of recession? when this congress come back from recess? for the past week i have been on my knees, praying for a comeback. guest: i was wondering the same thing the other day, honestly. i do not know when it is coming back. there are a lot of people with issues and others hoping that something happens. they were very close last week. there was a compromise on the table. whether or not to use funding benefits for existing money sitting in the box over there.

we cannot get past that and that is the way congress operates or does not operate these days. using stimulus money to fund half of it. i am not sure what will happen there. host: the house and the senate are off this week for business. the next call comes from new hampshire. mike, go ahead. new hampshire, good morning. caller: thank you for coming on to talk to us about the budget. i have concerns about what you said earlier when you describe the budget. my concern is around the bar wing we are doing to fill the gap. how much money are we borrowing to fill this gap? my second question, is there any appetite for the legislature to

fill the gap by increasing taxes? up to pay down any debts that we have? guest: i will answer the second question first, if that is ok. the answer is no. the tax increase was pushed off the table right off the bat. tobacco taxes, 20 cents lower than any of the surrounding states, an incentive for people to come by things at the borderline stores. not just cigarettes, but beer, lottery tickets, who knows what else. they do not want to give up their advantage. in an election year, taxes are not going to go up. that argument ii over for now. there are people that want to

raise the tax on gasoline. that has not increased in close to 20 years. but it is so popular in some circles, the governor himself has never proposed a gasoline tax. he is opposed. one reason being he has won an election more than once saying that there would not be a gas tax increase. when the governor was seeking his second term in office the stance made a lot of political hay out of not favoring gasoline taxes. we have got a $100 million repair jobs on bridges in highways. we have got to find money to fix these things. we cannot keep going to the stimulus bank to solve all of

our problems. we are still well below the 10% that wall street worries about. keeping it in the range of borrowing for state revenue, as long as we stay in that range the thinking among financial experts is that the debt is manageable. you are right. the more that we barrault, the more we have to pay back. this goes back to a caller from florida. everyone is reading tea leaves nationwide, but in new hampshire and in the month of june we thought we would be $120 million short for the year. june provided a real boost of revenue. we were still in the red, but

only $85 million. a small comfort but a good sign. june is a major month for business tax payments. host: someone on twitter asked if the gaming that is supposed to support schools works, why the layoffs and cuts in education? guest: there was no dedication of gambling revenue to education. the money was to go to property- tax relief. a big chunk of it was supposed to restore cuts to health and human services. that is a big chunk of the $80 million. the state has not cut its aid education.

they are constitutionally obligated to pay for education before anything else. as i mentioned a couple of times, it has to pay for an adequate education. we have a whole list of things. a certain amount of children per classroom. reading ability, that sort of thing. before we take one dime out of student revenue, we are to pay a set amount of money to education. including state property taxes. some folks think that that is just funny money. property taxes going to the state. but the total does come to about $1 billion each year. host: carol, republican line. caller: good morning. i would like to know how the state plans on paying back this

money. to me it looks like we have become a welfare nation. every time that we turn around it is more stimulus. the first time they turned out with stimulus, i declined it. i did not want to make a deficit out of my country. anyways, how do they plan on taking it back? somewhere along the line it will have to be paid back. my second question, why do we not have bonds and savings stamps like we used to? so that we can put into the government? guest: the stimulus money is not

a loan to a stand. it is a grant. the states do not have to pay them back. but you are right, somehow the money has to get paid back. eventually general motors will be paying back some of its debt. bailout money that is being paid back. stimulus money will have to be paid back. we are borrowing it from the people that lend us money all the time. the chinese. oil countries. it has to be paid back. how much can we borrow? how much of a debt can we in this country? it has not happened yet, the condition of the world economy is such that there is still a strong demand for u.s. bonds. i stopped buying savings bonds when my children got into college.

i was using them as a savings plan. i am not sure about that. a lot of folks ask why we do not have war bonds to pay for the cost of waging war in iraq and afghanistan. on the basis of borrowing from ourselves rather than pulling money from wherever we can. host: your june unemployment rate is 6.4%. can you put that in context? guest: it means about 43,000, 45,000 people are collecting unemployment. on a workforce of around 650,000 people. the entire state only has 1.3 million people. when i talk about the money it might sound like small change to bigger states, but it is a lot of money in a state where you

have and if the extension does not go through, with people going to their benefits over the next few months the deficit is likely going to be 20,000 people using up their unemployment. after that i am not sure. there are signs that jobs are coming back slowly. keeping it close to 7%. i do not think it we got over that. we have not seen anything in years like we saw at the national level. remember, this is a state that is used to 3%, 4% unemployment. we usually get to the point where the challenge is finding more qualified workers rather than jobs.

and we have a lot of qualified workers looking right now. host: one more call for tom fahey from savannah, georgia. caller: i used to live in california. i have lived in new york state. now i live in georgia. a couple of questions. do you think that the republicans would vote for a bill to fund the unemployment extension? second, what would be the effect if the true unemployment rate and stimulus funds or not there to plug the teachers, firefighters, etc. host: thank you. guest: those two programs that you mentioned, medicaid