her back in some sort of ambassador role would be a good thing? guest: i definitely think it would be a good thing. i do think that she is certainly capable of holding a job on a national level. she had been so good on television in the last few days. you can see her going around the country and talking about these things. host: for our viewers, if you do not have time to go to that site, we will air shirley sherrod's comments on c-span on sunday. jerry hagstrom, thank you for being with us this morning. that

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> a number of live events are coming up today. about half an hour, admiral thad alan will brief efforts on the gulf. more is available on-line. you could watch live coverage of the coast guard field hearing into the deep water rise an accident from kenner, louisiana. that is on our website all day at c-span.org. steny hoyer will be at the center for american progress today and will talk about the economy and jobs for live coverage on cspan starts at

11:15 this morning. later, more economic analysis from the american enterprise institute as the host a discussion on the economic stimulus package and private spending live at 12:30 eastern. to get as to the bottom of the hour, a discussion on the refining industry here in the u.s. >> "washington journal" continues. host: let's begin with talking about the difference between what refineries do and what bp was doing in the gulf of mexico so people understand the difference. guest: absolutely. first of all, thanks for having me this morning. it is a pleasure to be here. what we as domestics do, we don't produce the crude oil. we make it better.

we make gasoline, deisel and other products that surround us in our daily lives. host: how many refineries are there in the united states right now? guest: probably 147, 148, depending on bho who is counting. those are owned by interest crated companies, independent companies, large, small, and meedyum sized. we go through the whole gamut, the biggest of the big to the smallest of the small. host: how many are we talking about? >> we're talking a low of two to 2.5 million direct jobs. ans larry to that, what we do p provide, d -- do, you're talking over nine and 10 millionectobs

that we were directly responsible for. host: what's the impact on our economy? >> hundreds of millions of dollars. just in 200148ectust from the o and gas and refining sector of the business,r n -- $ 10 billio in federal tax were paid. host: refineries have to pay taxes? guest: sure. whether you are signing it out on the pipelinvide there are corporate taxes you have to pay. at the end of twathvideectust i the federal -s,rend ofrs.008. it doesn't count the taxes the

employees bay. we consider ourselves -- and i think rightfully so -- we are the economicening -- economic engine that drives the economy of the united states. host: did the refining industry receive tax subs divides that the oil companies were getting for a while. >> i think it is important for people to understand, there is a major dpdiference between taxes that are in the toed that were intended to do two or twe geeti things. one, very well oil and domestic resources, two provide employment, and three, keep the economy moving forward. they have been dp ng that, and they keep us competitive with s oreiare s competition.

and gin, compare and contrast wh a subsidy, which is a direct government subsieed that you don't pay taxes on. so again, if they mortgage the did he deduction for your taxes, is that a subsidy or a provision. >> what le.pact is the moritorim having on the refinery? guest: we are the first customer of crude oil. we have to buy crude and get crude from a varied number of sources, and naturally the gulf of mexico is a prime source. if you are not getting that froi the gulf, you will find it in other places. it is' misconception from many

that we are so dependent on all foreign sources of fuel, of crude oil. we are relying on crude from all over the world, but you h, ke t remebuyer, crude is a global commodity. the other thing you h, ke to remebuyer, we get most of our crude from foreign yude, ò upplied right here in the westewith hems fear. whether it is in the united ò tates, canada, or mexico, that's the lion's share that we use are either home groin oral sie and our nkeepghbors. host: here's what ken salazar had to say about the moritorhat. du> i think it was important to put in place until we can monitor capeabilild, as well as oil well sponls capeability. hoast: why not keep a moritorham

in place until you can assure safety? guest: you have to remember, my association represents the refining industry and not the crude production. but to answer your question is, we don't stop air traffic after an accident. we don't stop bugs traffic ae pr an accident. we investigate and we find out what went wrong. by anyone's calculation this is a trageeed that hsay apened in gulf. a tragedy for the whole nation, bhu many -- but for the ones who lost thkeepr lives, their -- yo hearts and prayers go out. what will happen with the moritorium? there these rigs move. will we be more dependent on other southe ges of crude oil f

perhaps unstable regions of the wowe are ds? i want to emphasize, we are the first customer. before that gasoline or diesel gets to the pump or before those petrochemicals get turned into liast lien, those are the -- ths is sent to us fpble -- it costs us to refine the crude oil. we pay. host: i see. guest we're the first customer. we pay. the market price is what the refining industry pays. the mao uet sets the price. when there is volatility or high crude prices, we're the first e pestomer. it impacts us before it impacts the consumer at the pump or elsewhere.

host: let's go to calls. arizona, republican linvide you are firsnsw caller: i would like to make a statement first. the statement is, i believe the president of the united states is a socialist, even thoweh he dbetwesn't want to say so. he wants to change america s undamentally. s tost: edwarim wysre g move on, because that's more of a commennsw lialler: years ago they said we were out of oil and today they have more oil than we have ever had. you guys just keep coming off of that -- they closed some of the refineries down, and that's why the price of gasoline is $3 a nd gllon, and you guys just kee coming off of this. the american petryle are so

egrainwashed it is pathetic host: can you plane that -- explain that a little more. caller: in the 1950's they produced a newspaper, cmonl, al they had wasrs.0 years lefnsw now they come up with this oil thing. they take more cmonl out of wes virginia now than they have at any time. that's what i'm talking aare tu. the crude oil, they are out of oil, they have people believing that, and that's why gas is what it is today. s tolvet:. s tost: ok. guest: we are, again, just as much impacted by the crude oil s luctuations as consumers are. it is not any market which sets the plice for crude whiaso will dictate the price for fuel, but

the is more or less state-o haed p l companies. independent private companies only control less than 6% of the total resouthe ges of the world crude. whereas the companies o ha the rest. when you talk about refineries being shut down, the problem is supply and demand. the problem is supply and demand. first of all, the industry has hit every industry very, very hard. so gasoline demanim diesel demand has come way, way down. secondly, the ad vent of p egio-fuels whiaso we are n opposed to, but thredoo cut into the amount of gasoline that needs to be produced.

every individual has to be looked at as an individt isl profit or loss center. there has been a consolidation. a consolist,tion in the railrmo and steel industries simply because of scommick considerations and the fact that we're a global economy. when you spoke years ago aare t what we could do in this country, we more or less didn't have the international liompetition coming from china and india. those days are gone. we live in a glo ral economy, ad unfortunately we're in a dog s ight tomondeep our american economy moving forward. >> smath senate halts effordom o lisay a. cap and trade fails to lure broad political support. where was your few to implement a cap and trade type situation?

guest: i think it is the position of most americans. our position is no energy bill should be approved unless it improves the lives of the american people and strengthens the demi and the -- econo mor a the person people. if it fails to pass those twe g tests on any l to mel, that wou imposeing -- the self-imposed economic sanctions here in the united states to the shear delight, in oir opinion of s orkeepare s competition, whia mentioned earlier. their economy is going to grow. we are putting sel?

constraints on fuels, on fructs -- pro, thcts, on everything americans need in their daily lives, but we need to get , eericans out of this economic doldrums. >> that leaves the door open for liongress to regulate carare tn emissions. some in the industry aid they would rather h, ke congress do something concrete that they know about rather than leaving ãwat ll, to e.p.a. to regulate. guest: i totally agree. any greenhouse gas rfruulating s terriblutt terrible policy. i believe the e.p.a. has taken a sll,reme couht decision with a very narrow ruling and have tried to expanned it to -- expand it to encompass the whole clean air act.

. lulu host: are you raising money for this legal fund? guest: we are not sending any special hot line set out for a defense fund. this is being paid for by the people who bought the suits. host: your group?

guest: yes, we believe it is not the right thing to do for our industry. it is the right thing to do for the american economy. i still find it extremely frustrating that the epa and the administration believe this is the right avenue to take. they say so themselves. they say it is better to do it legislatively. let's go back to what we should be doing. energy bills need to improve the lives of americans, not force billions of dollars of taxes on them and make us less competitive in the global economy. host: can you quantify how much time you have spent on capitol hill talking to members of congress pushing against the cap and trade proposal? guest: it is frequent.

i think we have done a better job of talking to the american people and getting them to understand and getting them to see -- peel away the sound bite on this thing. you can actually see what is in the legislation. it is not the oil industry or any other industry that prevented the senate from passing what we think would be harmful cap and trade legislation. it was the american people saying we don't want this. host: let's go back to phone calls. philip, san francisco, go ahead. caller: i keep hearing this argument that we did not crowned all the airplanes -- we did not ground all the airlines after a crash.

i looked it up on the internet but american airlines grounded 200 flights in march of 2008 and 900 more in april of 2008 for wiring problems. the midwest brown the other planes for wiring problems. they do it. the problem with the dot on the deep water horizon thing is that it is 5,000 feet of water. what would happen if the second well set up just like this one started leaking? you have to be prudent. we need the energy. we need -- we used to much of it. people have to relax a little bit and let the government and industry work things out together and get it done legislatively. we can hopefully look back on this in a month or eight year or five years and think it was rough but we got over it. guest: first of all, i could not

agree more. we have to take a deep breath and work together. to take a deep breath and where cooperatively instead of conflict and get to the root cause. but when you mention the fact that one airline shut down so many planes but the whole industry was not shut down. that was my point. i did not want to overstate that. the point is that you should not shut the whole industry down there it but you have to remember, my organization, we are manufacturers. we gathered the crude from all over the world. and we would like to gather it mostly from our sources and the united states because we think it is the path of energy security. going forward -- yes, you are absolutely right. i could not agree more. let's take a deep breath and set back and figure out what went wrong and let us make sure it does not happen again. but unilateral moratorium we

don't believe is the right way to go. host: a tweet from one of the viewers -- this person seems to think this has an impact on local gas costs, that gascon cost more in some reason -- regions than in the city. guest: first of all, the refineries and, we don't set the prices. the market sets the prices. no more that the farmer sets the price for potatoes and tomatoes, we don't set the price for fuel. now perhaps the answer for some regional disparity in the price of gasoline and other fuels is the regulations of what kind of particular gasoline that has to be. in some regions -- like here on the east coast, we have to use a

reformulated gasoline. it has to be for environmental regions -- reasons. it may be somewhere in the midwest or elsewhere you could continue to use conventional gasoline because their air quality status is not as severe, so congress has said, no, you only have to use certain types of gasoline. then again, it is all based on the market, it is supply and demand, where the supply is and demand is. as an industry, as a refining industry, i think we've done a tremendous job providing the american people with the fuels', these gasoline, diesel, aviation fuel, that are needed. we provide it reliably and effectively that are needed to, again, keep this economic engine running. host: st. augustine, florida. mary on the republican line. caller: i think he is going a good job taken to court and i think they should just change

awards around every time it is run out of it can go back, like what obama did the last time when they told them the moratorium stood. it is also funny that a lot of people that are for the environment -- and i know this because i have friends -- they did not stop driving their cars, they did not turn their air conditioner down. they like it cool. they like to drive around instead of riding bikes. i get tired of hearing all of these people saying we should do this but they don't do it themselves. host: ok. shville, tennessee. caller: good morning, america. i would like to rebut some of the things that mr. drevna has been saying. first off, there was a total shutdown of the airlines, it was called 9/11, the skies were not very friendly. and bp has not been very

friendly in the gulf, you could say that. the second thing is, it is more than just supply and demand. it is also speculation in the market. people that cannot receive the crude oil that this man receives can speculate in the market. the people that should only be bidding on all i should be the persons that can refine it -- bidding on oil of the persons that can refine it. we should look forward several generations out, like the native americans. oil is a very useful commodity. it helps us to make plastics and other manufactured goods. and if we burn it all up in our automobiles we will not have it for our future generations to use. guest: i will agree that we don't -- as refiners, we don't have anything to do with the speculation in the market.

but there is a major difference between market speculation and manipulation totally illegal. -- of course, the latter is totally illegal. it helps balance, it helps keep him volatility down to a point. if it gets out of hand like it did two summers ago. but the point about -- he made several points, but the point of about needing the oil -- we have to save the day oil for the future and for petrochemicals. unfortunately you will not have a refinery just to provide one fuel or one product. refineries take a barrel of crude oil, which is a complex mixture of compounds, and separate them out into useful products. this is what makes the refinery and petrochemical facilities so

unique. today are the building blocks of the nation's energy and the building blocks of the nation's chemicals and all the products we use. so again, i agree with a lot of things the gentleman was saying but i think it is a little bit off to suggest that a terrible terrorist event could be equated to an accident, too, i wanted to mention that. accidents happen -- my goodness, we tried to prevent them. we have to get to the root cause. we would do would by working what words of late and not in conflict. that is in everyone's best interest. host: in response to the news that senate majority leader harry reid, the democrats will not afford a comprehensive climate and energy legislation. "the new york times" editorial. they criticized harry reid as well as president obama and a dozen senate democrats mainly from the south, at a later, in

the midwest, who share the blame for not putting forth a comprehensive bill -- the south, appalachia and the midwest. jim, independent line. good morning. caller: thank you very much. i am naturally calling because i don't believe the moratorium has gone far enough or will go far enough. a very important point to bring up, it was lower from bp brought forward high level e-mails from email executives about a platform called bp atlanta that drill deeper than horizon and pumps more oil. we know there are systemic problems going on with the oil industry right now this -- right now. this is another disaster waiting cabin. this moratorium is not going to shut down this platform, which is a tremendous problem waiting

to happen and we need to get these platforms shutdown so we know that they are safe and we know they will move forward. and workers who lose their jobs during that period of time needed compensated by the industry before their lack of responsibility in this as well. host: has the refinery industry asked bp to support them at all? first, let me ask you, what is this a tuition in the gulf for the refineries down there? -- t: again, we don't have not responsible for anything that happens upstream. what has happened? the whole industry is being painted with the brush. again, i don't think people understand it. the refining industry and petrochemical industry, we are many factors. we do not produce the crew. what is the impact? the impact has been devastating to the population -- not only to the refining industry and the

work down there but the fishermen -- the refining industry in all areas. host: can you quantify? guest: which are still refining crude down in the gulf, just getting it from other places. but the question is, longer- term. but i can't emphasize enough that the whole nation is impacted by this. not just the refining industry. and whether we agree or disagree on the moratorium, that is not the part of the industry i represent. i think, to go back to what you were saying about "the new york times" if i may, for a second, if you look at those areas where "the new york times" criticizes the senators for listening to their constituents -- basically what "the new york times" is saying, don't listen to your constituents, listen to us.

if you look of the areas of the high unemployment, to those are the areas in the midwest where unemployment is very, very high. i come from -- my background may be here in this industry but my background is steel industry, i used to work in still -- steel mills, but nothing compared to what my dad did 44 years in that same bill and i watched steel mills and pittsburgh and other areas of the country just go away and not to come back. and those were some devastating times. what "the new york times" is suggesting is that we repeat that and other people are suggesting we repeat that with the refining and petrochemical industry and the oil industry. we just believe that without a strong domestic american-made refining and petrochemical industry, that supports all of these jobs throughout the

country, we are going to be in for some very, very difficult economic times. while the rest of the world continues to use carbon-based fuels at our expense. host: let us listen to what senate majority leader harry reid had to say about not pushing a comprehensive bill. >> we have a responsibility, not only to our constituents and our children and grandchildren, to take on the energy challenge that we have in america -- not once, not twice, but very often. many of us want to do a thorough, comprehensive bill that create jobs, breaks our addiction to foreign oil and curbs on pollution. unfortunately at this time we don't have a single republican to work with in achieving this goal. host: do you want to respond to that?

guest: well, i will repeat what i said earlier that any energy bill that can be approved has to improve the lives of the american people and strengthen our economic and national security. what "the new york times" is calling for, what majority leader harry reid is suggesting is complete anathema to that, and the opinion of the american people. the american people do not want to be taxed, hidden or otherwise, in the midst of an economic recession that we really find ourselves in a difficulty getting out of. i would suggest that even in good times -- i mean, you could pinpoint -- you can try to pinpoint on the calendar when those words -- this would evade a terrible piece of legislation. it was just -- would be unbelievably bad if we tried to enact a given the current economic situation.

i believe we are trying to do -- it may be a noble cause, trying to get us into a new era of energy, something different from our traditional supplies, which we are going to need. the reality is we are going to need those supplies today, tomorrow, and the foreseeable future. i think what we are trying to do it -- they are trying to do is a noble but misguided -- driving up the price of today's energy so high with the hopes that something will come around a corner the next week that will be a substitute. what they are doing is attempting to drive us to the jetsons but they will end up pushing us back to the flintstones. the american people think it is a terrible policy. i sort of find it if not frustrating, somewhat comical, don't listen to your constituents, listen to me.

host: are you concerned at all about a lame duck session where democrats would then take up a cap -- cap-and-trade proposal? . hear rumblings? charles crunk hammer -- kra uthammer writes in his piece this morning, passing the legislation even of the electorate voted against the democratic agenda in november but going ahead in that lame- duck session after the new congress comes in, passing their agenda. guest: i never try to handicap what congress may or may not do any week, let alone, months away out in a lame-duck session. but, yes, we have to keep an eye on it. we would be concerned. but the reality is that there will be open >> you can see the rest of this interview on our website, c- span.org.

we go live to louisiana with a briefing by admiral that allen. hurricane bonnie is threatening the area. we will find out more during this briefing. >> i would like to give you a quick status on what is going on at the sky. i flew over it yesterday after visiting with the vice-president and saw the oil rigs out there making preparations. we need to deal with the weather. last night, development driller two and three were directed to detach from the drill sites. this means that they are disconnected from the lower marine riser package. they are in the process right now of pulling the riser pipe. that is a huge section of pipe which comes in anywhere from 40 feet-60 feet sections. it has to be put on the deck of

the drilling rigs after being disassembled. the second thing is the q4000 is the one that has the connection to the yellow pot and the blowout prevent reported that has to be raised as well the q4000 is in the process of raising the yellow pod. the goal is that once all the recovery operations are completed, it will be up to the masters to figure out the best location for storm avoidance to ride out the storm. the attention now is to put the vessels in a safe place so they can return as quickly as possible to resume operations. this is not a hurricane, it is a tropical storm so the winds are 75-85 miles per hour. the forecast right now is 40 miles per hour.

they will figure out where to put the vessels so there will be no harm to the vessels. we would like to restart activities as soon as possible. this would be subject to the conditions out there. the people operating the vessels. the seismic survey vessels, the acoustic vessels, and the vessels operating the rov's will remain as long as possible. if they cannot stay, we are prepared to leave the well site upon the advice of secretary in chu and our conversations with bp, we will leave hydro-phones to monitor any anomalies that may develop. we also cordoned with the local area commander by aircraft to make sure there is any leakage or c. but at the service, we will see it. we are also coordinating with

the national geo-spatial agency to coordinate this by satellite. the general consensus now is that it depends on conditions as we get closer that we have to evacuate the scene, we're probably looking at 48 hours. our priorities after the passage of the storm is to reestablish the operations of development driller three. we need to finish the final casing run which is the last that of going into the bottom killed process. this is so weakened to the static kill from the top. the reason we are running the casing birth is we don't want to put the mud into the top of the hydrostatic killed because there is the question of integrity affecting the relief

well. the hydrostatic mud from the top and bottom kill, we could commence within 48 hours to commence with the ecstatic kill. in the meantime, our priorities are safety of personnel. that dictates the movement of the vessels and preservation of the equipment and their ability to come back in and complete their operations. i flew over the site last night. there is not a loyal -- there is not a lot of oil out there. we have major skimming capacity. we are approaching 800 skimming vessels and we have to put them someplace so they can be safe to return. there is a question about the fate of the oil. there's a good and bad parts to that. sometimes the increased activity on the surface with a wind can

help with the multiplication of the oil and the distribution and the by a degradation of the oil. you also have a steep surge that could drive it onto the beaches. we are mindful that those are two two opposite consequences. preservation of life and equipment are our highest priorities in the meantime. >i would be happy to take your questions. >> they're concerned about the equipment being pulled out and pulled back. there is concern they might not come back. [inaudible] >> first of all, we share the same goals and that is minimize the impact on life and property and the ability to protect not only people but the environment.

it makes sense to take equipment and make it protected. we are working with local leaders for the best way to do that. it is of hard to find high ground and some of these parishes. we need to put its list of where it can be protected. in long run, we are in agreement that we need to put this equipment where it can be best maintained and be safe for following use. i am still haunted by the spectre of flying into new at lookas an official at a parking lot of buses that were flooded and not used for evacuation during hurricane katrina because they were not moved in time. >> i am from the associated press.

there was a seep that was identified within 3 kilometers. the ap has developed a map that shows the two wells within the radius you described. can i show you this and can you tell us -- >> i believe it might be attributed to the rigl well. we can follow up with that. >> about the complaints from the parish presidents -- is there any sort of protection that you can leave in place with this storm coming? will they be completely unprotected? >> it depends on how you determine protection. >> booms and barges specifically. >> poems and barges do not stop

storm surge. we're talking about moving equipment to high ground so it is not harmed. where is that high ground and where -- and how can we get the equipment back as soon as possible? it makes sense to evacuate certain personnel when you are at a certain threshold. you don't want that equipment to be there and damaged. there are numerous examples of rolling stock that was not moved before katrina that became completely useless. >> you said developmental in terms of the other equipment, have those been pulled off already? >> they are still there.

they detached last night but isn't -- it is an 8-12 our revolution. it has to be disconnected and store and the drill rigs because they cannot be moved with 5,000 feet of riser pipe stemming down. once that is removed, we allowed for storm evasion where the vessel can put it in the safest place. that is going on right now. they have not physically left the scene. they are raising the riser pipe and the q 4000 is disconnected from the yellow pod. >> is this a response to a tropical storm threat or hurricane threat or are they the same? >> there is no prediction of a hurricane now. tropical storm by has exceeded the threshold of mons it from a depression to a tropical storm which is 39 miles per hour. it would have to be 75 miles per hour to be a hurricane and we do not think it will develop to that.

the anticipated kale force winds in the areas plus the state of the city of-plausible for safety reasons for the personnel and equipment out there to go ahead and move. this is based on survivability in a certain sea state and we will work very closely with our science team down in houston. we want to continue to get seismic data if we can. that is important for the well monitoring. we also know that deborah companies are out there -- we also know that different companies out there have responsibility for the safety of those oil rigs. they have a threshold where they need to move out as well. we have complete visibility of the situation. >> what is the timeline for moving out the development of driller 2 and 3 and the q 4000 and when would you make the decision to pull back the vessels controlling the rov's

and what is the criteria for that decision? >> development dollar to an 3 and the q 4000 are detaching right now. when they are done with that, they will position themselves in an optimal location regarding the storm track to minimize the effect on them. the lower left quadrant is where you have the minimal impact. they will position the vessels where they minimize the impact best curren. that equipment i mentioned will be finished with pulling out their equipment and the people in charge of the vessels will position them in the safest place. we are hopeful and as the bands on conditions out there that we can make a couple of seismic runs and continued to gather information that will help us better inform the well integrity that has been going on.

because of the success we have had, we have agreed to leave the cap on which we hope will reduce the chance we will have oil being put in the environment while the storm passes. as far as the conditions there, we will remain on scene with the seismic vessels and rov vessels. they need time to be they disarm and my guess is that that would be sometime later today. i cannot give you an exact time because it is based on conditions. >> in the worst case, you would lose vision on the cap for it. 48 hours? >> that is the information right now. >> then when the vessels return, it would be another 48 hours until you can resume work on a relief well? >> correct. >> how will the media know if

and when you lose all eyes on the cap? >> if they have to leave the scene, we will make an announcement. we will only lose the rov and a surface vessels. we have hydro-bonds that are listening in the well for things like vibrations that would indicate we have proper well integrity. the coast guard has scheduled overflights and we will be doing area surveillance and use natural assets of satellite surveillance. >> we will take questions from the telephone. >> can you tell me which vessels might stay and at what sea state

could they stay? >> the last bustles to leave will be the seismic survey vessels -- the last of vessels to able to the seismic survey vessels pe. the noa vessel will probably hold off and there are three .essels operate rov's >> i was hoping you could clarify more of functionality of the hydro-phones were speaking of. are they remotely controlled? who is monitoring that?

how were those signals being transmitted back to assure or wherever? >> that is a good question and i neglected to explain that fully. we will not have the wherewithal to send those signals in real time. there'll be a recorder attached to it. if something happened, we could do analysis after the fact thank you for correcting that. if the vessels have to depart the scene, our only real time feedback will be aerial surveillance and the satellite imagery. thank you for raising the question. >> looking ahead a bit, it seems the static kill would go forward and the cap will stay. will you be able to get a better flow estimate eventually? is that something you are still looking to do? >> that is a great question.

if we don't open the cap again, will we be able to measure the flow rate? there are many sources of data that we have already including the pressure readings that have been taken as we transition from the former top hat to the firmer capping stack. we believe there is adequate data to establish a flow rate. to remove that capping stack to establish a flow rate may not be the best thing to do. >> i was wondering if you can explain exactly the time line during the 48 hours where we can expect as the storm gets closer and whether you are intending to keep all of their valves on the

cap close to? >> because of the winds that are predicted an seas that are protected and when they start to come down, we are roughly estimate that it could be 48 hours before we are back on grid it could not -- it might not be an absolute. the events will remain closed and the capping stack is on. we have confidence over the last few days of testing that we are convinced there is enough will integrity that would allow us with a good basis for, but is that we can leave the well capped over the passage of this form and return as quickly as possible. >> now that you know the drill ships will have to be redeployed, rather than talk about 48 hours to get started

again, can you give your best guess now on any new target dates for both the static kill and the ultimate bottom kill with the relief well? >> given that they are on scene and ready to go, it will take about 48 hours to lay the casing. at 48 hours after that, and we could proceed with the hydrostatics kill mud going in. after that, we could begin the bottomkill. i can't give you a time when that happens before that because it will be based on conditions and how fast they can get back and reestablish the riser pipe. the drill string has been withdrawn to about 10,000 feet of locked in place. they would have to reconnect the drill string and remove the sub- sea containment device and that

would be ready to put the casing in. that would be dependent on when they get back on scene. that would be based on conditions. >> i have three questions about the timing. when do you think the storm will reach the site of the oil spill? when can you start returning to the site? when did you think you could have a new estimate of the oil flow? >> we think we will first feel the effects of this very early tomorrow morning, saturday morning. we think the passage of the front will occur sometime over the 48 hours period from early saturday morning - back early

sunday morning. that will be revised based on the forecast and reconnaissance aircraft. assuming that the storm passes within 48 hours, after that we can look to return the vessels back onstage. this is highly dependent on the weather and the wind and the assessment of on scene vessels. regarding the flow rate, we have information from the pressure sensors and other sensors that are there. we continue to develop more information about the well itself and we will continue to gather more information once we get to the point where we can do the hydrostatics kill, that will tell us if we have a precipitous drop in pressure that will tell us if there is a league that has not producing the hydrocarbons we anticipated. we may or may not take the cap off in the future, there is empirical information to

establish the flow rate. it is between 30,000-60,000 barrels per day as far as we know. >> this will be our last question >. >> can you talk more about the aerial information you can get during the storm? as i understand it, you will not be able to establish anything about the condition of the well or whether oil will be flowing or not? >> that is correct. if we have an integrity problem, we could see it with aerial surveillance. we have assessed what we feel is the integrity of the well per -- to date. we have done extensive seismic and acoustic testing around the world itself and have run down all the anomalies' we have

found we have the their ruled out the anomalies and identified the source. we have no anomalies that have not been run down and investigative and discussed between bp and the science team. the main issue on well integrity have to do with the low pressure we encountered when we started and that involve the discussion of whether the what reservoir had been depleted which would account for the low pressure when we capped the welfare l. those discussions will remain and the seismic testing will continue. we are trying to create a virtual 3-d mri. at the geological situation around the well itself or there could be hydrocarbons that we have not found yet that

could account for low pressure or in the absence of those, it would support the assertion that the reservoir was depleted. again, we were all confident enough based on the resolution of the anomalies we encountered it was in the best interest of the operation and minimizing the impact of the environment to keep the well capped as we move through the storm passage. thank you. >> thank you all for joining us. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> watching incident command we have more about

the oil spill. could watch k more ofe fromnner louisiana which is alive all day a c-span.org. we have dozens of hearings, speeches, rallies, and protests involving the oil spill in our archives. we also have live footage from the bp cameras 1 mile below the surface. later today, house majority leader steny hoyer is at the center for american progress and will be taking questions than talking about the economy and jobs. that is live on c-span starting at 11:15, in about 50 minutes. later, more economic analysis from the american enterprise institute. we will talk about the stimulus package and spending. >> as the senate prepares to debate the energy bill, find out about previous bills with the cspan video library. look up a bill with our new bill search feature and what

congressional features and debates on the senate floor. e, c-is all on one and freigh span.org. >> this weekend, the eagle forum collegiate summit. that begins at 1:00 p.m. eastern part o. we'll talk about the new book about coming to the united states and a life that was left behind. on sunday, the roosevelt reading festival and their books on fdr and his legacy. it is a week and filled with nonfiction books. go to book to. tvorg for the fall schedule. >> our public affairs content is available on television, radio, and online and you can connect with us on twitter, facebook,

and youtube and sign up for our scheduled of our e-mail c- span.org >> quick programming note. president obama is making remarks on the economy this afternoon, speaking at 12:05 eastern. we will have live for you when it happens. coming up at 11:15, house majority leader steny hoyer. he will have live comments on the economy from the center of american progress. -- to four american part desperate to get us there, comments from today's washington journal.

the national captioning institute] [captions copyright national cable satellite corp 2010] host: the front page of the sto headline, calls for worldwide tightening. public speing cuts and tax cuts should be imposed as evidence mounts of a healthy recovery. that comes from the european bank.

mr. trichet argues that policymakers that want to prolong the stimulus are mistaken and cutting borrowing would have lbed effects on growth. the view from the europe's senior economic policymaker con trafts with continued u.s. demand for fiscal tightening to be delayed at least until 2011 and suggests there is still a little agreement over the best way t foster a strong global professor from the financial and economic crisis of the past two years. " we want to know from all of you should this government continue with tax cuts. martha, on the democratic line, you are our first phone call. go ahead. caller: no, they should not. because what the republicans are doing, they have list -- they

want corporate and america and special interests and the wealthy. nothing goes to the middle class. that's the problem with the republicans. the middle class is getting choked out. they don't even really give unemployment. they can't even find a job. >> speaking of unemployment benefits, the president signs those into law. unemployment benefits will be expendedn the long term. they will expire in november. new york, independent line. good morning. >> good morning. have a great show. i want to bring out -- i think as far as the tax cuts, i can go either way on that. i really want to bring out -- i think the key is, the spending. let me give you an example.

president obama has his party to bail out general motors. now certainly the germans would bail out volks wagen. so he saved about maybe aouple hundred thousand jobs and an industry. now at the same time the republicans vote for 14 billion dollars for an attack submarine. they vote $14 billion for an attack submarine while the russians are melting down their submarines. if you have a problem with the republicans, and i'm an independent, if it were up to the republicans, general motors would be served. sobama deserves at least the savings of a couple hundred thousand jobs. donald trump said nothing is

going to change in iraq and afghanistan. trillions trillions of dollars have been wasted. i think what bming should do is have -- i think what obama should do is have donald trump come to washington and give a speech to republicans. no one is more of a free market than he is. host: joe lieberman is indicating these concerned about the impact of having tax cuts to he can pire during our fragile economy. "the wall street journal" has a chart here by the numbers of what would happen if the bush tax cuts would expire, which would be at the end of this year. it shows here the current marginal rate and the percentage of filers that it would impact, and then the income range if you are filing jointly. if you are married and filing

intly. this is how much your tax rate would increase if all the tax cuts were allowed to expire at the end of this year. we could take a look on that a little more. frederick, maryland, luann on the republican line, thank you for calling. caller: thank you for c-span. i just want to say i hope they do not cut those tax cuts. i am so disgusted with the obama administration and the amount of money that my grandchildren right now and their children will have to pay. there is no way we're going to get out of this. we need to keep those tax cuts. i just want to say one other thing before you let me go. i notice that whenever a democrat is on talking that they get to speak longer than any other republican. but i just want to say that what is happening to our country money wise with the war, with

everything we see going on around us, we are not going to be in america much longe and i don't understand why people can't wake up and see that this country is going down the tubes because of all the spending. it is not republicans. don't blame the republicans. they are trying to save money not to put our children in debt, and that is exactly what is happening and it is so sad. >> listen to house speaker nancy posi for the rationale for letting the tax cuts expire. >> it is my understand sg that bush era tax cuts did not create jobs and they should be repealed. we should reveal middle income tax cuts. because of the middle income tax cuts that we had in a recovery act, american people paid taxes at the lowest level since the 1950's. by the way, this gives me a chance to remind people that

around $300 billion of the recovery act was tax cuts for the middle class. so i believe that the high-end tack cuts have not created jobs, they have increased the deficit and they should be repealed. >> that's house speaker nancy pelosi talking about whether or not the tax cuts put in place under president bush should expire for the wealthy. we are talking to all of you about that this morning. gilbert, democratic line, good morning. gilbert, are you with us. caller: thank you for taking my call. i just want to say that i agree with nancy plosecombri and the emocrats. they should allow the tax cuts to expire, because it is the corporate people and the upper class people, they show no patriotism toward the status of

this consumer and what we're going through. it is time for them tpay their share. i have seen our country has existed since jack kennedy. i have never seen how cold the republicans and how hard they are and selfish they are. i have never seen this in my lifetime. i don't know. if we don't try to pull together as a nation and the upper echelon pay their share like the lower people are paying. i mean, i have to pay $7,000 for the government right now in taxes that i owe and stuff. i'm just a low-middle-class person. i don't understand why other people don't want to pay their share. i don't think they should be entitled to have all this money while the rest of us suffer.

it jus don't make sense. host: first we want to focus on this headline this morning. this is the hill newspaper. rangell to go on trial. it is on many of the front pages this morning. joining us is molly hooper. molly, what do you know about the charges? >> well, that's the thing. richte now we don't know exactly what the investigative sub panel that has been looking into various charges rangel, we're not quite sure what fault they found with rangel. he has been under investigation for several charges renting a rent control apartment for political purposes. he used his congressional

letterhead to solicit funds for a school that was named after him. he also adjusted his disclosure filings after the fact, a big no-no, and he failed to pay taxes on a property in the caribbean. so we're not sure exactly which of those charges a four-member investigativsub panel that's been looking into the matter, we're not sure what they found fault with. and now, just when we thought this thing was going to be over, maybe, the eics committee decided to create an adjudacatory committee which will basically review those findings and either a ask the full house to ad militia -- admonish him or reprimand him or

say, you're fine, no problem. >> there is going to be a public hearing next week. what will happen? guest: that's the interesting thing. the ethics committee makes you think there is more there than meets the eye. basically they said it is going to be an organizational meeting. that means we could see several -- you know, we'll see who gets to be empeled on this adjudicatory committee. it doesn't mean they will disclose what the investigative panel found. that just means they are organizing. i have a feeling a lot of those meetings might be held behind closed doors. we're just not sure. >> will charlie rangel be testifying next week? guest: we have no idea, and he doesn't either.

as a congressional reporter we've covered charlie rangel for years. for him, this is driving him -- in fact, he pretty much said yesterday when i ran into him that he's so frustrated about the whole situation because he's not really allowed to talk about it. for those of us that cover charlie rangel, we know that charlie rangel loves to talk. but he can't really talk about this in the press. host: what could happen to mr. rangel? guest: he could be rep handed -- rep ri manneded, he could be admonished. if they consider these rent apartments a gift, they could impose a fine. they could say you have to pay

the difference between the going rate in new york -- whatever it is. after that, they could get the whole house to vote on that. they could kick him out. it just depends. host: has house speaker nancy pelosi said this means he would not be brought on as the chairman of the ways and means committee? host: not yet. this came out last night f wel yesterday at 4:00. reporters tried to ask both of them about assigning the unploim extension bill to which nancy pelosi tried to brush off the question, and rangel of course said, i look forward to answering these charges once i see what they are. host: molly hooper with the hill

congressional reporter, thank you for your time. guest: no problem. thank you! host: democrats seem to be split over whether or not congress should extend the tax cuts for the wealthiest americans. here's the headlines in the wall street journal. gitener -- geithner says taxes rise. should president bush's tax cuts be extended across the board for everybody? paul, you're on the air. caller: i would say no, they should not be extended. there is a big difference between what is good offer of proof wall street and what is good for the american worker.

these tax cuts will not do any good for the american worker. unemployment is going to stay up. all these tax cuts go through. all the investment is going overseas. they are investing in emerging economy -- economies. so that's not gng to create any jobs here. the investment by businesses -- now, i own stock in g.e. they are investing in a big wind general yathe rateor manufacturing plant in vietnam. and i called time-warner or a cable provider the other day, and -- for customer care, and all their custor service center, it was a green bay number, but i got seone in the

philippines. host: better move on to tony. >> my question is, will congressmen and senators be part of the wealthy that the taxes will be raised on? host: it is for any family making more than $250,000 a year. >> well, if a congress is paid $174,000 eye year, is that all he makes or does he gectstra for being on special committees? host: they don't get extra for special committees. for what each lawmaker makes, you would have to go to some web sites that -- "roll call" i know does a story about the wealthiest lawmakers, etc. caller: i also think we should be drilling more oil here and

that way we won't be so dependent on foreign oil. >> who do you think, barbara? should we continue the tax customer? -- tax cuts? >> i think we should not renew the tax cufments i don't think they should have been renud in 2003 with its two wars going on. i don't think the tax cuts help many people in this country. i'm really tired of hearing people say that all of this is about obama, our economy being about obama and the spending was

created by obama. i think, you know, he doesn't have a choice at this int, and i think people need to start thinking about our country. we've got to quit thinking about ourselves and think about the good of the whole country. so no, i don't think that we need to continue the tax cuts. we need to let those go and take care of our economy. >> all right. india's deputy chairman of that government's planning commission writes a piece in the financial times this morning saying that the industrialized countries should not make cuts too soon because it couldave a negative impact on tho very welling countries like india. that's in the financial times, if you are interested in that. >> people who make over $250,000 a year pay probably, what, 60% of the tax burden in this country for federal taxes but yet they are not paying their

fair share? remember when clinton increased taxes on expensive boats in the 19's and wealthy people stopped buying them and the bolt workers lostheir jobs and bill clinton turned that around real quick and repealed the tax. i don't know how nancy pelosi can't understand that if you tax people too much there are ripple effects. there are certain ways that the bush administration did unfavorably give breaks to the country, so repeal a little bit of those. host: what about capital gains and investment income. >> if someone takes a risk and makes an investment that should not be taxed the same >> we will leave "washington journal" for comments from house majority leader steny hoyer. live coverage on c-span. >> to create high-quality jobs

and promote long-term economic growth. a gallup poll recently found that more than half of americans surveyed across all political spectrums, economic issues as the most important problems facing the country today. 31% saying the economy in general, 22% saying unemployment as problem number one. the economy is number 14 speaker pel -- number one for speaker .elosi and steny hoyer the administration's records on jobs, economic growth, wages, poverty, debts, and deficits is one of progress on every single indicator, while the bush administration's was one of regress on all of these factors. job growth under the bush a demonstration was the worst in any positive cycle in more than

six years, even before the onset of the great recession in 2007, which has now cost is over 8 million jobs. let's face it, the boom-bust economics of the prior administration has failed. old win in newe -- old wine in new bottles could leave us with the same hang over. the administration is preparing oversight of the financial markets and beginning to improve on health-care costs, moving us from unsustainable oil dependency to low-carbon the economy, and much more. we must build a new economy for a modern age for a much more stable foundation. we must stem the loss of middle- income jobs that are the backbone of this country. we must step back and develop a national strategy for long-term

job creation that is based on the best of progressive ideals. over our history, progressive leadership has spurred growth in education and technology and smart, practical policies that support our nation's investors, entrepreneurs, and economic leaders as they create quality jobs for american workers. no one understands that objective and strategy better than our guest today. steny hoyer has been a great friend to the cap action fund and he needs little introduction. he started his career at age 27 when he graduated from georgetown university law center and won a seat in the maryland senate at the same time. in 1975, he was elected president of the maryland senate, the youngest in history. in 1981, he was elected to represent maryland's first congressional district, and served as democratic whip.

with the speaker pelosi, he has kept the focus on jobs and opportunities for american struggling workers and their families, driving development and a despot of -- new policies of driving -- driving development and advancement of new policies. we look forward to hearing his thoughts about the right course to take the country and to create jobs in america. please join me in welcoming steny hoyer. [applause] thank you very much. i am always pleased to be here at the center, and particularly pleased to be here facilitated by the action fund. thank you very much. please tell john podesta -- thank him for his leadership on this effort. i had the opportunity to speak before we came in and i appreciate your help. i am pleased to be here with my good and dear friend martin

frost, a former member of congress, did an extraordinary job in the congress of the united states, not only represented our country well, but represented texas is very well. martin, thank you for being here. america has faced its share of trying times. times when not just our economy but our nation seemed in decline. but each time, with ingenuity, hard work, and our distinctly american optimism, we have built our way out and emerge stronger. no one doubts this as one of those testing times. but the question that will be in front of us in this fall's vote is not where we are, it is where we go from here. it is a choice between two dramatically different directions, and our decision really comes down to three questions -- how far we have come, what remains to be done,

and which party will keep moving us forward. first, all four have become -- how far have we come but let's consider an alternate history to america is facing the worst economic crisis and a generation, losing almost 8000 jobs a month. over 1/4 of personal wealth has been wiped out. banks are afraid to lend and businesses are forced to lay off, an innovative start-ups cannot start up. foreclosures are devastating neighborhoods, and the massive deficit left behind by president bush makes responding to the crisis even more difficult. the new president and democratic congress are struggling for solutions. but negotiations break down. congress remains paralyzed. in the end, we do nothing. as a result, at the nonpartisan cbo tells us we would be looking

at 2 million additional unemployed americans. the economy will likely have continued to shrink, instead of growing for three straight quarters. retirement savings would of remained devastated. the global recession would have become catastrophic. it was that bleak picture that led the former reagan economic adviser martin feldstein to endorse substantial deficit spending to public life into the economy, -- to pump life into the economy, saying, "i don't think we have a choice." i know thinking about how much worse off we could have been is not much comfort to anyone who is still struggling to find work. but any honest look at our economy has become a -- has to start with an honest conversation about the disaster that we have to this point

averted as a result of the actions we have taken. amir year and a half ago, economists across the spectrum were talking in all seriousness about the risks of a second great depression. instead, we have stabilized the financial system, injected a man into the economy, and created jobs. -- injected demand into the economy, and create jobs. almost as money in the first six months of this year, as george bush created in the eight years of his presidency net. it took more than two years after the end of the last recession for our economy to return to six consecutive months of job growth in the private sector. that progress started with a vital investments, not just in our immediate recovery, but in the foundations of prosperity for years to come. we are rebuilding roads, railways, bridges, that is our

economies back bone. -- that is our economy's backbone. we're helping counties invest in the infrastructure project they need the most. we have to teachers in the class fro -- in the classroom and have helped more students reach the goal of a college education. we have funded a clean energy technology that will help us save energy and become less dependent on foreign oil. technology like a smart grid that will respond to changing energy needs in real-time. just as the internet was created in america with the support of the federal government, today in partnership with the private sector we are laying the groundwork for transformational technologies that can shape our economy and create jobs for years to come. for 98% of americans, taxes are now lower than they were in any

single year under president bush. efforts topublicans' demonize those policies, they cannot refute the nonpartisan analysis that shows they have been responsible for as many as 3 million jobs. they cannot ignore those investments' benefits in their own communities, not when the house minority whip himself has posted three job fairs -- hosted three job fairs, ironically featuring employers who have benefited from federal funds, the policy he voted against. while all house republicans voted against these investments, more than half the republicans in congress have taken credit for them in their districts. president obama has signed into law a hire act which cuts employers' taxes for every unemployed worker hired back the treasury department is reporting that between february and may,

the act did small businesses $8.5 billion in tax cuts -- gave small businesses $8.5 billion in tax cuts for millions of new workers. we hope to do another $30 billion the would leverage and to 300 -- that would leverage into $300 billion. unfortunately, senate republicans to not see it that way. we have protected americans from abuse of credit card lending practices -. health insurance reform will have an important jobs impact as well. a harvard study found that health reform will create up to 4 million jobs over the next decade. it makes coverage more affordable for businesses and self-employed. it puts american companies on a more even playing field with their foreign competitors.

it will free the next generation of american entrepreneurs to innovate and make business decisions on the grounds of opportunity, not on the grounds of keeping their health care coverage. finally, president obama has just signed important legislation to put the referee's back on the field. and told wall street accountable for the reckless conduct -- to put the referees back on the field and to hold paul st. accountable for the reckless conduct. we will have borrowers and lenders live up to the common- sense standards of honesty and responsibility. any future financial crisis will be borne by the financial industry, keeping taxpayers off the hook for future bailouts, which, by the way, you were requested by president bush, secretary paulson, and ben bernanke. wall street reform will remove

an important source of economic uncertainty, helping to free up $1.30 trillion in cash sitting on the sidelines in corporate america as we speak. that is private sector attached list to be redeployed into job- creating investments, -- private sector cash poised to be redeployed in job-creating investments. the more our financial system gets back towards its core purpose -- helping to allocate capital to families in boston and in the future and entrepreneur -- investing in their future and entrepreneurs investing in the businesses. middle-class americans have the congress and administration that is helping it make up lost ground and build for future prosperity. all that work has helped to

move our economy back towards strength. although far too many people -- for four to many people, that is still not their reality. no one claims we have reached success, and neither the congress nor the administration can rest. the second question becomes what remains to be done? democrats are fighting for middle-class republicans -- democrats are fighting for the middle class. republicans, as much as they want to use the economy as a political weapon, want to go back to the very same policies that created the problems the middle-class face today. the chairman of the republican congressional campaign committee, whose job is to recruit members to come to congress to make policy, said, "we need to go back to the exact same agenda," meaning, of

course, the bush agenda of the 2000's which left us in the deepest economic recession we have seen in 3/4 of the century. but almost all indications -- by almost all indications, it was an agenda that failed. that is the agenda to which the chairman of the campaign committee says the republicans want to return. democrats are putting forth new ideas to drive our recovery, particularly when it comes to our vital manufacturing sector. that is why house democrats are launching the "make it in america" agenda, a strategy to boost american manufacturing. for generations, americans have looked at the manufacturing sector as a source of economic vitality, a source of good paying jobs, and a source of pride. america has been proud to be a

country that makes things. something to th -- some think that right is a thing of the past, but democrats did not believe that -- do not believe that if the agenda will include chills to improve investment in industry -- includes bills to improve investment in industry and create a level playing field for many factors that compete worldwide in this flat -- a level playing field for many factors that compete worldwide in this flat world of which thomas friedman spoke in the coming weeks, the u.s. manufacturing enhancement act, which passed the house on wednesday, makes it easier for american companies to get materials they need to manufacture goods here, the sectors act, which also passed the house this week, it forms partnerships between businesses

and unions and educators to train workers for the most needed 21st century jobs, the national manufacturing strategy act, which will direct the president to develop a manufacturing strategy for the nation every four years. the end the trade deficit now act, which will lead to policies to reduce the trade deficit. and the clean energy, technology manufacturing, and exports assistance act, which make sure that firms have the information and assistance to compete at home and abroad. the ways and means committee will also be holding hearings next month -- actually come in september -- on the issue of china's currency policy, legislation introduced by tim ryan. these bills are just a start, and this is not an agenda just for the balance of this year.

this is an agenda for the long term. there is more to come, and many house democrats are coming forward with ideas that can contra boot to and manufacturing revival. -- can contribute to a manufacturing revival. we watch some ideas from republican colleagues at the american -- welcome ideas from our republican colleagues and the american public did all this will bolster president obama's plan or 2 million more jobs but exports overng the next few years. our private sector has created 136,000 new manufacturing jobs. i hope the republicans, as i have said, will join us in working towards strengthening, expanding, and growing our manufacturing sector.

i am glad that many of them supported manufacturing enhancement act and sectors act in the house. there seemed to be some reluctance, but ultimately, they reconsidered those notes and turned to yes -- reconsidered and turned to yes. but the fact remains that the republicans have an 18-month pattern of standing with near- unanimity against every measure to create jobs for working americans. a wide range of job-creating ideas are waiting to be enacted, but they continue to face a partisan obstruction. even though many of those ideas have won strong bipartisan support in the past. for instance, we would help business develop and market new technologies to increase productivity. we would further in best in science, technology, engineering -- further invest in science, technology, engineering, and

math education. we would exempt small business capital gains from taxation. we would establish a new fund without increasing the deficit to help community banks lend to small businesses. 45% of small businesses are seeking loans -- 45% of the small businesses seeking loans were turned down last year. we would end a tax breaks that encourage corporations to outsource american jobs overseas. republicans, unfortunately, are fighting to keep at the polls opened. democrats want to close it and keep more jobs here. republican obstruction has extended to unemployment insurance, as is so well known by the american public. at time when there is still five applicants for each new job opening, unemployment insurance is one of the most effective ways of stimulating demand, because it is quickly spread,

because it is essentially needed. says iteconomy.com crete's $1.63 of a stimulus for every dollar we spend it. republicans claim we cannot afford it, but in the same breath they demand $76 billion in debt-financed tax cuts for the most privileged among us. i am pleased that president obama was able to sign the unemployment bill we passed yesterday. that money will be coming into the economy. but also, from a moral standpoint, it will provide sustenance for families in distress in this economy. take this msnbc analysis of congressman pete sessions and senator john cornyn on "meet the press" last weekend. "both were unable or unwilling

to discuss what republicans would specifically to on the deficit. when nbc's david gregory demanded specific and details, republicans were willing to make nione. sessions did not offer a single one at." that is the same thinking that condoned record foreign borrowing under president bush ended severe harm to our long- term prosperity. democrats understand that short- term deficits have been necessary for our recovery, and in my view, continue to be necessary if we are going to bring this economy back. we are never, as i said in a speech just a few weeks ago, solving the deficit problem if we don't solve building and growing the economy challenge. the house will extend middle- class tax cuts for the next year, but we expect the senate to act first, as speaker pelosi said yesterday.

all the job creation measures i discussed, along with the middle-class tax cuts, represent only a small fraction of our real long-term deficit problem. we do have hard choices, hard forces to make about our fiscal future, and i had spoken about them, as i said a few weeks ago, in detail. in making those choices, we have to steer between two great mistakes. what would be calling republicans who want to use the structural deficit as an excuse to put brakes on the recovery while millions are still unemployed. that would put even more americans out of work and increased the deficit that we are trying to reduce. another mistake would be putting ourselves even deeper into debt by making tax cuts for the wealthy permanent. republicans seem to be able to hold both of these positions at the same time. a combination of reckless

borrowing and middle-class neglect that frankly characterized the previous administration. that brings this to the last question. we pulled our country off the edge of disaster and we know what needs to be done for the americans who are still struggling, and finally, therefore, the question becomes which party can you trust to do that? we know what the republican economic philosophy looks like in practice -- cut taxes for the wealthiest, gut regulations of everything from wall street access to oil co. negligence -- and we know what happens when the republicans had unchecked chance to implement it just a few years ago. they drove our economy into the ditch, the biggest ditch in the quarter-century, a decade of stagnant income, and during the decade of the bush administration got the worst job

record since herbert hoover. a stark contrast with the clinton administration, that created 21 million private sector jobs in 96 months, as opposed to the net 1 million jobs of the 96 months of the bush administration. over eight years of president bush, out economy added just 1 million private-sector jobs. it was president bush to grant a $2.13 trillion in deficit and wipe out the biggest surpluses in american history, an inheritance $5.60 trillion, a national debt of some five-plus dollars trillion -- $5 trilli on-plus has turned into $10 to clean-plus. democrats have performed better

on the economy that republicans . an economist studied the administration's from john kennedy to george bush, and jobs grew more slowly for each of the republicans than any of the democrats. a princeton political scientist studied income growth from the administrations from harry truman to george w. bush, and he found that "when a republican president is in power, people at the top income distribution experience much larger real income gains than those at the bottom. by contrast, democratic presidents generate higher income gains for all income groups." and 2008, "the new york times" asked this question, i think this is such a compelling comparison -- imagine that

starting in 1929, you had to invest exclusively under either democratic or republican administrations. how would you have a fair? -- have fared? you make the choice in your head right now. you are probably not surprised by what the conclusion was. under republican administrations, your $10,000 invested exclusively in republican administrations, include a herbert hoover administration, would have netted year to date set -- $11,733 -- would have netted you today $11,733. let's take out the herbert hoover administration. that was the worst. if you are charitable and take that out, to $10,000 investment exclusively under republican and

assertions would have resulted in $51,211. i don't know how good you think that is of return over seven years. under democratic administrations, if you had taken that same $10,000 and invested exclusively under democratic administrations, that would now be worth $300,671. 600% more than if you had exclusively had the money grow under republican administrations p. when we talk about republican economic failure, we are not talking about passing trend. notwithstanding the fact that i can tell you that during the course of the clinton administration, the dow jones group to what a 26%, the s&p route to 20 -- the assateague

route 220% -- is sen -- dow grew 226%, s&p grew 229%. republican policies have objectively benefit the privileged and left working americans behind. we might be able to write that off if republicans gave any indication that there would reconsider the policies they have created. but again, as they put themselves, "we need to go back to the exact same agenda." i don't think americans have that in mind in 2006, 2008, and i don't think they have that in mind in 2010. when you remember that the republican behavior over the past months, going back to the agenda makes perfect sense.

apologizing to bp when democrats held accountable for the disaster in the gulf. comparing the economic crisis to the size of an ant, as john boehner did. putting a debt-financed tax cuts for millionaires the head of the unemployed -- ahead of the unemployed. i am proud to put our party's middle-class record against there's any day, but our work is not done. we have reinstated pay-as-you-go ahead and fiscal discipline, and gone for job creation in the face of ideological opposition again and again and again over the last 18 months. democrats can tell working americans with confidence and pride that we have stood for your interests, and we have met the crises with the optimism that defines our country. at its best, -- that defines our

country at its best, and can make a great nation even greater. so often our greatest leaders have come out of the darkest moments. as president obama said, "in the midst of civil war, we laid railroad tracks from one coast to another, had a twilight struggle for freedom and led to a nation of highways, an american on the moon, an explosion of technology that shapes the world to this day caucus today, if we choose shared growth over -- that shapes the world to this date." if we choose shared growth over growth for a few, this can be one of those remarkable moments where we build our way out, we will make it in america once again. thank you very much. [applause]

>> all right, well, thank you. i will start with just one question, and then i will open it up to the audience. i will ask the first round of questions, if i could see hands just from members of the media. if you could wait until a microphone comes to you and your call on, and then identified the organization you are with. let me ask you about the tax cuts issue, because i see this as emerging to the forefront. help me understand the argument of those who would say that we should be, at this point, renewing the upper class tax cuts and contrast, make clear, because people are very fuzzy -- what is it that your party is arguing for tax cuts and contrast with what republicans are saying? >> in 2011 and 2003, -- 2001 and

2003, the republicans put in a policy that cut taxes but reinstated them the next year so that they would go up. we believe that at this point in time, with a recession, we ought to have no increase in taxes on middle income working americans. clearly at time of recession, we want to make sure american people have the ability to support themselves and their families. we're going to complete -- or continue -- the tax cuts for americans,me those making 20,000 or less individual. - those who are doing well will not have their lives adversely affected by contributing at a

rate that provides for bringing down our deficit and continuing to invest in the growth of our country. that is the policy we are going to be pursuing. thank you for that overwhelming applause. [laughter] the middle-class taxpayer in the back of the room. >> it to bring the microphone to the front row. thank you. identify yourself. >> reuters. he said that the house will do the middle-class tax cuts for one year. can you talk about the significance of one year? >> i don't think i said one year. that has not been decided -- did i say it in my speech? >> you said it for the next year. >> certainly for the next year, but not necessarily just -- >> not just for one year -- >> that is in discussion.

the senate will probably move first, and we will see what the senate does in terms of time frame. we want to make it very clear that working americans will not receive a tax increase. >> so you ought not made a decision -- >> no, that is still in discussion. >> will it be before or after the election? >> we are waiting for the senate to act first and we are waiting to see when they acted we have one week to go before the august break. we will see what they did so that we can determine when we get back what product we have from them. >> also, at media -- red strap. >> i just wanted to follow up on the manufacturing and it's you were talking about. -- manufacturing in asia to see you are talking about.

it seems like that the house is poised to act on a number of bills, but there is no action in the senate re. >> you mean simply across the board? >> yes. on manufacturing in particular, how do you explain to someone that these bills of their chance of becoming laws this year? >> we believe that, first of all, we have invested a great deal of money in building our economy. we think we have had progress on doing that. i make the distinction between progress and success. success will be when we have 8 million jobs for the 8 million people who lost their jobs in the previous administration. 3.8 million lost their jobs in the last year of the bush administration. i want to contrast that with the 1.9 million new jobs that were created and the last year

of the clinton administration. we are making progress, but we've not yet had success. this is a long-term agenda for bringing back manufacturing. nobody is going to turn a light switch on and all of a sudden have that happen. but we need to have policies and a strategy -- the bill which says that the administration needs to come up with the manufacturing policy on a quadrennial basis to renew our focus on making it in america. as two meetings, obviously. manufacturing, making things in america, so that people can have good jobs and good benefits and a good future for themselves and their children. this is not a question of what the senate can pass in the weeks remaining of this congress. it is establishing a principle that we intend to pursue both now and in the next congress as

a major focus of making sure that america grows its economy and creates jobs, particularly in the manufacturing sector, which has provided such a good paying, stable jobs over the past. there is no reason why american workers cannot compete with workers anywhere in the world if they have a level playing field. >> one more media question, please. >> "china trade extra." you have anticipated my question. >> he has got a signal. >> i did -- the time the currency bill -- china currency bill is going to have a hearing, but is there any doubt in your mind that this legislation fully fit in this initiative and should get treated in the fall?

>> there is going to be a hearing. clearly, as i said, we need a level playing field. we are prepared to compete with anybody in the world, but we cannot one of the rules are skewed against us. that is what the hearing will address. i am sure the secretary geithner and the administration will be looking at this as well. we, frankly, think there are a number of areas where china is not playing by the rules and competitors do not have a stable playing field and there. it is an area -- we will be looking at a number of areas, and not just at but other trading partners as well. but let's come back up here to the front. please identify yourself.

>> last year, someone asked if this was election politics. last year, representative -- i ran into you on the hill and asked you about and it in america. you send me to the chief of staff. -- sent me to the chief of staff. i know making it in america had been on the agenda. we got senator burris in the senate. i would like to know, as part of that agenda, since it is important to have our technology and our circuits and everything made here -- it starts with defense. are you going to add defense into that measure in order to protect more jobs? >> and number of pieces of

legislation deals specifically with defense -- a number of pieces of legislation dealing specifically with defense pretty insecure question is yes. -- a number of pieces of legislation deal specifically with defense. the answer to your question is yes. [cross-talk] [laughter] >> the single most cynical thing that the republicans did on tax cuts was the handling of the estate tax. the increase the exemption, helping small businesses, family-owned businesses, family farms. then they have the estate tax totally disappeared this year, so that when a billionaire like

george steinbrenner's dies, his family does not pay any estate tax. next year, they would revert back to a low exemption. congress hasn't been able to deal with this issue. is there any realistic expectation that congress can deal with this issue this year, particularly because if they do not, the exemption will go back to a very low level, which will not be helpful to a lot of family-owned businesses? >> congressman, as you know, i believe we should, must come and will act. the congress -- the house acted last year to continue the 2009 rates of 3.4 & and 45%. that was the responsible thing to do so that everybody in america would know they had a $7 million exemption. every individual would know they had a $3.5 million exemption and

that rate of 45%. the cynical, fiscally responsible ploy it affected by their abundance in 2001 and 2003 to phase out their tax cuts -- affected by republicans in 2001 to phase out their tax cuts -- it is all the affect of republican policies adopted back then. they will respond quickly that they had to do that because of cbo scoring issues. that is perhaps correct, but the effect of their policy is what congressman frost has anticipated -- has indicated. the senate did not take up the house bill, which would have given some certainty to families

and individuals. we are in a position where that tax is at zero. because of the republican policies that were adopted, it will go back from 3.5000045% to 1,000,055% -- 355,000 -- the rate is unacceptable. frankly, it is unacceptable to most republicans. it undercuts their major strategy for the last eight months, which is to delay and obstruct. they need to have this past. their policy will result in an objective they now say they do not want. giveopeful that we can families the certainty of the raid. my own view would be that when the house passed 3.5% and 45%, it was a good compromise and should be adopted -- $3.5

million and 45%, it was a good compromise and should be adopted. affected a good value. it gave over 98.5% of the states an exemption from pain. >> this will be our lot brought -- from paying that estate tax. >> this will be our last question. >> thank you for your comments, steny hoyer. i am with the national association of manufacturers. >> thank you for your help with the build this week. >> that was quite a victory. thank you. >> you encouraged a number of republicans to reflect and change their vote. we had a really good vote. that was great. >> thank you for recognizing that. the manufacturers released a manufacturing strategy last month with three simple points. united states ought to be the best simple place -- the best

place for a company to headquarters itself. it ought to be the best place to do research and development. it ought to be the best place for a manufacturer to be. regarding the r&d credit, cameral, bipartisan support has been mired in the senate for some time. it expired at the end of last year for the 14th time. manufacturers claim nearly 70% of those r&d credits. any prognosis whether there will be retroactive extension this year of the r&d credit, which is the jobs credit, because more than 70% of the credit dollars go to earn the jobs in the united states? >> i do not want to and dissipate -- anticipate that. my own view is that we need to make it retroactive. we have adopted statutory pay- go kid when the republicans

jettisoned at statutory pay-go in 2003 -- they actually eliminated the statutory pay-go requirement. that allowed them to incur great debt without consequence in terms of procedure. the consequence was a great debt. these are subject to statutory pay-go requirements. we need to pay for those tax credits. having said that, my view is that those credits are very important to make it in america agenda. encouraging manufacturing in any way we can, not only through r&d tax credits, but through the education component, so let we have the technically and scientifically and mathematically, engineering- trained people to take the jobs that will expand manufacturing

-- we believe with the national association of manufacturers that america is the best place, the best resources in our people, and given the proper environment, we will be able to compete with anybody in the world. i want to say to you that you can take the message back to the national association of manufacturers that i personally and members of the democratic caucus look forward to working with the national association of manufacturers. we do not always agree. no one would expect that, but i think on this objective of creating jobs and making sure that and the rest of the world knows that we can and do make it in america, america will be a greater economy and our people will be better off. thank you all very much. [applause] host[captioning performed by

national captioning institute] [captions copyright national cable satellite corp. 2010] >> does just began. -- this is just began. >> it is a reform that will help us put a stop to the abusive practices of mortgage lenders and credit-card companies and assure that people get a straight, unvarnished information -- the straight, unvarnished information they need before they take out a loan or open a credit card. it will bring financial deals into the light of day and and taxpayer bailout of washington -- the wall street firms and give them a say on executive compensation. there was a report basic -- issued by ken feinberg identifying financial companies that continued to pay out lavish bonuses at the height of the financial crisis, even as they excepted billions of dollars of

taxpayer assistance. -- accepted billions of dollars of taxpayer assistance. i want to crack down on improper payments made by the government. we which tens of billions of dollars -- taxpayer dollars on -- we waste tens of billions of dollars -- taxpayer dollars -- on a number of things. we now have the ability to block these payments. i set the target at $50 billion savings by 2012 -- savings that are more important today than ever, because we simply do not have any money to waste. third, we finally overcame the procedural blockade of a partisan minority in the senate to restore unemployment insurance for about 2.5 million americans who are out of work and looking for a job. taken together, we made enormous progress on wall street reform, and making sure we are

eliminating waste and abuse in government, and in providing immediate assistance to people who are out there looking for work. ultimately, our goal is to make sure people who are looking for a job can find one. that is why it is so important for the senate to pass the additional steps that i have asked for, to cut taxes and expand lending for america's small businesses -- our most important engine for hiring and for growth. a small business jobs bill that contains these measures may come up for a final vote in the senate in the next few days. with this small-business bill, we will set up a new lending fund to help community banks offer small businessmen and small businesswomen the loans that they need to grow and hired. we will help encourage more private-sector loans to small businesses and industries like manufacturing and construction, that have been especially hard hit by this restriction -- recession.

we will double the size of loans our small businesses can take out. we will unlock the growth of zero entrepreneurs -- the growth of entrepreneurs. we will eliminate caviled it -- capital gains taxes for small businesses. after partisan delays, the senate took an important step forward by supporting a lending fund in the overall small business jobs bill. i want to thank senators mary landrieu, towards lemieux -- george lemieux, on behalf of the people who this will make the difference of a war. i was pleased that center plan you crossed party lines -- the senator crossed party lines to help with this.

we cannot afford any more political games. they did not send us here to waged a never-ending campaign or to do what is best for our political party. we should do what is best for the united states of america and all of its citizens. this and does here to govern. that is hope -- what i hope we will do before congress takes its august recess. thank you very much. >> present obama on the economy and some of the legislation signed this week to support the economy from the roosevelt room this afternoon. look at this $787 billion

economic stimulus. nearly 14 -- $418 billion has been committed. there's a special web site at c- span.org/stimulus, where you can find links to information about the stimulus money. we will have more economic analysis from the american enterprise institute and their discussion on the economic stimulus package and private spending. that starts in about 15 minutes. we're hearing that charter -- charles rangel will be speaking at about 1:00. he will talk to the press. he is under investigation for ethics violations. he is the former chair of house ways and means committee. he says he will not resign. we are looking to see if we can

get coverage of that statement here that will be it 1:00 p.m. eastern in new york. and meantime, from this morning 's "washington journal," a discussion on the history of the department of agriculture with the focus on race relations and civil rights. then i want to make sure everyone understands this was my decision. this was my decision. it was a decision that i regret having made in haste. you ask why. we have been focused on trying to address the longstanding issue of civil rights claims against the department. there are outstanding claims brought by black farmers, hispanic farmers from women farmers, and native american farmers. these are not just a few instances or isolated claims. there are tens of thousands of claims that have been brought against the department. host: jerry hagstrom is a contributing editor with "national journal."

can you give our viewers and over all outline of what has been going on at the agricultural department when it comes to civil rights? guest: it is important to say that the problems go all the way back to the late 19th century. after the civil war, when blacks were freed, they began to acquire land, usually very small farms. they took the money from their wages and their sharecropping income and they were able to buy these small farms. at the same time, the agriculture department had been established in 1862 by president lincoln. in the late-19th century, they began to establish the land grant colleges to help agriculture throughout the country. in the early-20th-century, the engines in service provided service to farmers -- the extension service provided service to farmers to help them. in the south, the blacks were not allowed to go to the land grant colleges, so a separate report established.

some of them have become very fine institutions, but they did not have the same institutions that the big land grant colleges did. the extension service was segregated. the black extension agent opened a black farmers did not have the same resources. -- the black extension agency did not have the same resources. when the roosevelt administration established the modern farm program with the subsidies -- there were controls on production. in order to set up that program, the roosevelt administration needed to know who was actually a former. -- farmer. they had no staff to do this period is set up committees -- the had no staff to do this. they set up committees. those committees established to was a farmer. hired a staff through the local offices -- they hired staff

through the local offices. those committees were invariably composed of white men, often conservative, and sometimes they denied service to black farmers, hispanic farmers, native american farmers, and women farmers. that is why there are lawsuits against the usda. host: we're talking with jerry hagstrom about minorities in the usda. there is that situation with shirley sharrod. you have seen those i discussions going on. agriculture secretary said he was sorry for firing her and has asked her to come back. the discussion is about the history. that is what the secretary talked about when he issued the apology. he said the outcome of this has been these lawsuits. breakdown those lawsuits individually and where do they stand as far as payment?

guest: there have been five lawsuits. there is an initial lawsuit known as pigord 1 -- pigford 1, settled when the clinton administration was in power. it has paid out over $1 billion, usually in amounts of about $55,000. there were black farmers who said they did not get the chance to file suit on time. in congress, in 2008, they allow these people to file again. the payment on that is currently pending, because the farm bill only included $100 billion -- $100 million for it and you need another 1.1 $5 billion to pay that off. -- $1.15 billion to pay that off. as that in the bill.

senate is debating whether to include that. host: the senate rejected additional spending on the war supplemental. guest: i guess it is out again. this is an example of the problem that happens with civil rights issues at usda. it is a drag on and on. they rarely get settled. the other suits are all in different status. the usda is negotiating with native american farmers. as a class-action lawsuit. they're engaged in negotiations, along with the justice department, on the women's suit and the hispanic farmers suit. host: these payments average in the range of billions or millions? guest: we not know yet. most payments were $50,000 for those individuals, but there were some that were considerably

larger. the dependent on what the farmer was willing to except for what they could prove -- it depended on what the farmers were willing to accept or what they could prove. host: we will do this regionally. you can start dialing in depending on where you are in the country. we want to show our viewers the farms and the united states according to 2007 statistics. total forms are about 2.2 million. total farms -- total farms are about 2.2 million. total farms operated by white farmers, 2.1 million. total farms operated by african- american -- 30,000. have these numbers changed since then? guest: i do not think we have any more recent data on that. for perspective, in 1920, there were 925,000 black farmers. a lot of the black farmers

maintain that, because they did not get a proper assistance from the agricultural department, technical assistance and the loans that were sometimes crucial when there had been a bad crop or a terrible weather problem, that they ended up going in and out of farming. of course, blacks, like whites, have left the farm. the number of farms has decreased dramatically. some of that is just the natural progression with mechanization and the movement to the city. still, there is a special issue here with what happened to the black farmers. host: our first call is from jacksonville, florida. good morning. caller: thank you. in 1999, the department of agriculture paid black farmers over $13 million to settle these claims. mrs. sharrod and her husband

collected three and a thousand dollars between them. my parents -- $300,000 between them. my parents -- grandparents were sharecroppers. i had cancer and uncles and cousins who lost their land -- aunts and uncles and cousins had tot tehheir land and move on to other things. they could not get through to california. no one has ever asked them about their bank foreclosure. he also talked about the acres of lands that are owned by white form deep -- white people. brazilians, germans -- most farmland is owned by foreign nations. host: there is a lot there. can you address that? guest: i have to correct the

caller's statement that most farmland is owned by foreigners. that just is not true. almost all the farmland in the united states is owned by americans. a very small percentage is owned by foreigners. there are some agribusiness companies owned by foreigners. that is part of globalization. in terms of her ancestors, i would agree that there are terrible tragedies associated with that period. still, there were and have been proven cases of these farmers not getting the assistance from usda that the white farmers did. in some cases, the record has shown that whites were able to buy the land because the blacks have to go out of business because they could not get loans. host: there have been complaints

filed since the year 2000. guest: with the employment of employees within that department -- there is a separate issue. secretary bills that has tried to address that issue -- vilsack has tried to address that issue. these cases are old. the statute of limitations has run out. there would have to be an act of congress to take them up. there are a range of problems. usda has started a lot of efforts to try to overcome these problems. for example, in recent years, there has been an effort to get minorities and women to run for these county committees, so that

they're not just white men in these positions of power. also, within the agriculture department, there has been a strong attempt to employ people of minorities, women, and to let them rise within the organization, not just be in low-level jobs. >> glad water, texas -- gladewater, texas. sorry. what is your question or comment? caller: you did a really good outline of some of the problems happening back in those days, but you left out the grandfather clause. do you remember that? guest: i do not. please refresh me. i am a reporter, not a historian.

caller: it is stated that if you were not a natural-going citizen or if you were african- american, you could only -- after they got through with the grandfather clause, they hit us with -- i forgot what it was -- but under that clause, people lost their money. under the economic -- the holdout that they had -- you were asking about how many new farmers there were since 2007. 32,500. hella -- host: caller from california. caller: we have discrimination. i do not like the money that the government gives to subsidize farmers. i did not know whether it is going on, but i believe it is. it is very large amounts. they're not turning up the cross. look at what we have coming into stores -- coming from ecuador,

coming from everywhere else. where are the crops coming from? why not from the united states? host: can you talk about subsidies to farmers? guest: the subsidies still go on. the level of subsidies at the present time is much lower than it was 10 years ago, because commodity prices have increased. the payments that are made to farmers have gone down dramatically. in terms of the products coming in from other countries, it is true that we export a lot. we import a lot. productslking about coming in from ecuador. i would say that is probably largely -- first of all, it may be bananas, which we do not grow here, except in very small amounts in hawaii. secondly, americans have developed a taste for fresh vegetables and fruits in the off-season, when they're not

really grown >> you can see the rest of that on our website. we're going now to remarks from a harvard economics professor. we're standing by for an allied statement from to -- all live this statement from charles rangel at 1:00 p.m. eastern. this is live coverage on c-span. >> ever since he received his ph.d. from harvard in 1970, he has had an astonishing prolific career as an economist. he is the second-most cited economist on earth. unlike many others who have received such a claim, he has also been cited as an intellectual, with ridings in numerous financial publications, elevating him to level of public influence achieved by a select few economists in history, putting him in the company of

such great men as samuelson. the broad range of his research agenda was best forecast by his first publication titled, "the crystal structure of a compound containing a chlorobridge." his work with his wife, a visiting scholar, has explored the fascinating macro economic effects of religion. countries in which people have strong religious beliefs, as reflected by a strong belief in heaven and hell, had higher economic growth. he has been a lot of time studying the effect of our economic policy on economic growth. he is also impacted other popular religions -- keynesian and some -- keynesianism.

the supply this goes to the study of investor government policy on government fluctuation qd found that the data refused to sing the same songs of the politicians. he is agreeate that to deliver a lecture today. he will speak for about 30 minutes. then we will open it up for questions. join me in welcoming robert barro. [applause] >> it is a pleasure to be here to discuss this work. he is trying to figure out what to do with his life. we are trying to convince them to go into a ph.d. program in

economics, but we haven't yet been successful. we have been working on this research for a couple of years. i suppose it has become more timely with the recession and the various phases of fiscal stimulus. i will try to talk about the underlying research and relate it to the more current issues. i am going to be talking about the impact on the real gross domestic product from government activity, particularly on the side of expenditures, and also on the side of taxes. these are obviously central questions today. if you look seriously at the empirical evidence, it is very thin in terms of making reliable inferences about what the effects are of these important fiscal variables. the president's -- the present

study uses long term, u.s., macro economic data. there will be a lot of interest in looking at other resources -- other sources of data to try to get more accurate inferences about what we want to know on the fiscal side. one part of this is about spending multipliers. this particular study emphasizes the information that we get by looking at the time series of defense outlays. the biggest drivers of variations are related to war and peace, with world war ii being the most dominant, and the korean war also been quite important. you can also go back far enough to include world war roman one. -- world war i. with the wwii, include the

aftermath, which has dramatic reductions in the levels of government expenditure. valerie has been doing a lot of research related to the topic. she is done some very important word. she constructed a variable about expectations of future levels of expenditure, particularly relating to the defense category, which turns out to be important input in the work we're doing, which recently incorporated. it will allow us to distinguish the impact on the economy from spending due to temporary, usually the focus of fiscal stimulus packages, versus spending that is assessed as being more permanent. we'll think about temporary versus permanent changes in spending. on the tax side, we're focusing on incentive of sex-related to marginal income-tax rates --

invented -- the incentive o effects related to marginal income-tax rates. we'll see how that impacts the economy, particularly the real fast growth gdp. that relates closely to previous research done by the chair of the council of economic advisers. we focus on tax-rate a fax, which have to do with incentives or substitution effects. they live mostly at income effects. there is some interesting interplay. we might have some results related to that. i will go through the major data we're looking at. i will not have time in this window to go into details of a

lot of the analysis. i will try to sketch what we know and where we're at in terms of what we do not know. these are the two components of what used to be called government purchases of goods and services for the u.s. it is now called government consumption and investment. the blue series is the defense outlays. the with the variable is measured is the natural way to measure in terms of thinking about expenditure multipliers. i look at the increment in spending -- decrement -- expressing not relative to the previous year's growth domestic product. -- expressing that relative to the previous year boss gross domestic product. in early roman -- in early world have quite anu incredible impact on the economy.

you can see that build up over several years where expenditure is high in relation to gdp. there is a sharp reduction in spending concentrated in 1946, associated with the demobilization after world war. this is the korean war, which is also quite substantial, though not as large as world war ii. the u.s. was involved in the war started in 1917. if you look at post-1954, the movement is very modest. even though there are some famous episodes like the reagan defense buildup and the wars in a rack and afghanistan -- iraq and afghanistan, the numbers are quite modest. these are quite modest, even in

relation to the korean war. the main information, if you're getting it from defense, is about the longer-term, especially including world war ii. we do not get much from the recent period. the red series is non- defense government activity, not including transfer payments. it isn't -- expressed as the change relative to the previous gdp. the large customers are during the new deal -- numbers are during the new deal period, particularly 1934 and i1936. there has been a lot of attention to this recently. it goes up in 1936 and down in

1937, then there is the recession. some people argue that it is all about of the wiggles. these are the two biggest contributions from non-defense government purchases relative to gdp. it is about 2% to 3% of gdp, which is significant, but not comparable to the world war ii outlays. the rest of it is pretty modest. that is the red series. it makes it difficult to isolate what has been a key parameter used in the current policy debate about the expenditure multiplier, which is coming not from defense but from the red series. there are two key problems with isolating these expenditure multipliers associated with the red. the movements have relatively -- are relatively small. even more importantly, most of

the movements that occur in this period are responses to the economy, rather than the reverse. if you think about the current situation, the current recession, particularly in 2009, the loss in revenues, especially for state and local governments, somewhat constrained by balanced budget amendments -- they cut back on expenditures. that is the typical pattern. state and local governments are about 80% to 85% of these non- defense purchases. they have to cut back on spending. when they have a lot of money, they tend to increase spending. that produces a pro-cyclical pattern or spending is highly been in good times and low in bad times. there is a real problem of attributing to that a large spending multiplier.

most of the sources of the big spending multipliers currently being used by the administration are exactly this pattern -- exactly the fact that state and local purchases in particular move along with the economy. when that is where the big multiplier numbers come from. it is actually meaningless, i think. i will talk about that more later. there has been a lot of criticism of using wartime defense spending to isolate expenditure multipliers. frankly, if i had better evidence from the non-defense components, i would rely on that more. the reason i am going to rely on defense data for spending of suppliers is really to do things. -- two things. it is quite a clean experiment. secondly, although it is not perfect, to try to extrapolate

these results to non-defense, you do get information about nondefense defects by looking at these reliable defense multipliers. it is not want to talk about defense spending, especially in the current context, which is not very relevant. these are some of the favorable aspects of looking at the wartime information. world war ii is dominant. sadistically, the most important thing is these large changes -- statistically, the most important thing is these large changes. most of the movement, if you think about war war ii, have nothing to do with the economy booming or contracting, but is something independent. it gives you relatively clean data. one reason that the u.s. is special here is that, unlike

most countries, the united states did quite well during the second world war. some people think that is the typical pattern. in fact, it was the worst to macroeconomic disaster of the 20th century. many countries had tremendous decreases in gross domestic product related to the physical destruction during the war and a large mortality rates. -- the large mortality rates. the u.s. did not have massive disruption of physical capital at home and it all -- it had only moderate loss of life compared to many other countries. for the purpose of this study, that is particularly interesting. it's suggest you get the effect on demand for goods and services from the government expenditure change. you would not do this exercise for germany during world war two period -- for war ii. -- for world war ii.

you would associate that with government spending -- it would end up making no sense. the u.s. kind of works. there are other countries where you could use the same approach. canada, australia -- though should work on a similar way they should work in a similar way. paul krugman always brings this up. the standard view of the depression and world war ii -- the standard keynesian view was that it was the war that got us out of the remnants of the great depression. the unemployment rate is still pretty high in 1940 -- 9.5%. not close to as high as it was in 1933, but still very substantial. because of that, you get some information about what is the

effect of government expenditure in the context of high unemployment, particularly the early part of world war ii, as well as when the unemployment is very low. there is information about both things. this is one of the variables i referred to, which has only recently been constructed. the most important part is at the beginning of the second broad war and the korean war. in 1940, -- she looked at business news sources, particularly business week, to assess what people think is coming. in 1940, she has assessments of what you think defense outlays are going to be in the next several years. that is when this becomes really big and people expect the u.s. will enter the war and have a large amount of expenditures.

she adds that up using these kinds of sources and expresses it as a ratio to the gdp. she does this over 3 to 5-your windows. -- five-year windows. if you wanted and about it on an annual basis, you divide these numbers by two. people think there is a big increase in military outlays coming in the next one, two, three, four years -- that is what she estimates. she picks up something similar in 1950 at the beginning of the korean war. this is quite a staggering magnitude. people fought world war iii was coming, according to her numbers. -- people thought world war iii

was coming, according to her members. this is the tax side of the analysis. this begins in 1913, the first year of the u.s. individual income tax. it was constructed out to 2006. this particular concept is each person's marginal income-tax rate -- think about this as applying to labor income and then averaging that across the individuals by their labor income. it is the average of the marginal income-tax rates that people face. people with higher incomes are getting more wages. that is appropriate if you try to think about the affect on the gdp. the red graph is what you get from the u.s. individual income- tax series. green one is from the social security payroll tax. we have added the black one --

state income taxes. these are the three parts we have been able to measure. if you that questions on details, i can talk about this later. if you look at that left series, and you can see some of the famous tax reforms. these are the two reagan tax cuts -- 1986 tax reform is especially interesting. these are the two bush, jr., tax cuts in 2001 and 2003. the 1948 tax cuts were vetoed by truman but passed over that veto -- it is the biggest one-year cut in the sample. this is a series we're want to use of the tax rate side. -- this is the series we are going to use on the tax rate side. i mentioned this study. they are trying to assess the effect on gdp from changes in

tax revenue. in contrast to what she did when she looked at the expenditure side, there analysis on the tax revenue side is quite a serious academic study, which has a reliable parts to it. i have problems with some of the specifics. but it is quite a valuable contribution. the kind of results they get, in terms of tax multipliers, is roughly 1.5. if you cut taxes by $1, you get an expansion of gdp by about $1.50. that is the kind of estimate that comes out of this study. the main thing they are concerned about in this study is this reverse causation issue. they are worried that talks -- tax changes might reflect the economy, rather than just tax changes affecting the economy. there are trying to sort out these two directions of causation, which is a key economic issue almost all the

time. that represents a serious contribution. they have some results along those lines. you might think there are some -- is the reliability in the results in the form of these tax multipliers. on the other hand, the expenditure multipliers that the administration uses do not come from her research at all. i do not think she has done research on that topic. those results come from big macro econometric metrics, but it does not have this kind of reliability. that is this other part. i apologize for having an equation. i was told this was going to be an informal gathering with a few people.

[laughter] i was told it was ok if i had an equation. this is the equation i am going to try to estimate with the long-term u.s. macro time series. the dependent variable here is the growth rate per capita rreal gross domestic -- real growth in gdp. this is the change over year, using annual data. this is the growth rate over one year -- the thing i am trying to explain. this is one of the key variables i want to look at. these government purchases variables. the four in which this enters corresponds to what was in the earlier figure. if this is defense, it would be per capita real defense outlays. if you subtract the previous year, you get the increment over one year.

if you divide by the gdp the previous year, you get the increment relative to the previous year's wrote domestic product. that is the form of the variable i had in the graph i showed you earlier. this is the right functional form if you are trying to back out an expenditure multiplier. i am trying to figure out if g increases by one unit over the year, how much does gdp increase? it aligns naturally. the coefficient is beta one connecting the two -- that is the expenditure multiplier. i am trying to explain the growth rate, dividing by the previous year's gdp. that is why this is here. that is what makes these two variables aligned properly. the coefficient is going to be the expenditure multiplier. that is true whether this is

defense outlays for non-defense or something else -- or non- defense or something else. i sometimes worry that the movement here are going to reflect the movement in the economy, rather than getting to causation in the direction i want. for defense, that is less of a concern, particularly if it is the wartime variations. these moments are then independent of what is going on with respect to the economy, allowing you to estimate its coefficient easily. >> [inaudible] >> i have some results with those transfers, but there is an even more serious problem with reverse causation, which is well-recognized. when the economy does well, certain transfers go down -- unemployment insurance, welfare. when the economy is in a

recession, those things go up automatically. when you relate one thing to another, you pick up that counter-cyclical pattern and get an-coefficient -- a negative coefficient. everybody knows that wrong -- that is wrong. it is the same issue, except the reverse causation has the causation -- the reverse causation has the opposite sine. that would be a paramount issue. this is the variable from ramey, i mentioned before. they think future expenditures will be large, versus actual expenditures being large in the

current timeframe. i can separate those effects because of her laborious work in constructing that series. she has gotten excited with our results, which has motivated to her to do more along the lines of what she constructed. her variable starts in 1939 at the moment. she will now go back and do it to 1914, which will allow us to go back further. she has been convinced that other countries would be interesting, particularly canada. she is trying to estimate and analogous variable for canada. we will talk more about why canada is particularly interesting in this context. this is a tax rate variable. it is measured by these marginal tax rates or, if you do it from the romer perspective, it would be about tax changes relative to gdp.

i expect the coefficient data will be negative, that higher tax rates will depress the economy. there are other variables that we're using, but given the time constraints, i will not go into that. let me try to discuss some basic results. at the moment, i will focus -- this is the starting date for each of these samples. everything here ends in 2006, which is as far as we constructed the data on the marginal tax rates. i have updated these results to 2009, and it really does not make much difference in the results. these are the starting dates, but all the samples and in 2006. the first sample includes the korean war, the second world war ii, the third one at the great depression, the fourth one as the u.s. involvement in world war roman one -- world war i,

and the last column is a more recent sample which most people focus on. this is a sample that starts after the end of the korean war. let's focus on the results that go back to include a world war ii. in 1939, 1930, the results are basically similar. the first result is the coefficient being the expenditure multiplier associated with defense outlays. you want to think about this as applying -- holding fixed news about future stuff -- the g *. if you think about this coefficient, what is the short- run effect of an increase in government spending for defense viewed as temporary and that is largely deficit-financed?

that is basically what this is trying to isolate. you get a number between .4 and .5, the estimated expenditure multiplier from defense. in parenthesis, is some measure of the reliability of the coefficient. this is pretty reliably estimated when you include the world war ii information, but less so if you do not include that. if you start in 1954, you really cannot tell, which is what those numbers are telling us. anyway, focusing again on the lumber samples including or war ii, you get -- on the long dirt samples including world war ii, you get