regulations bill looks at the bill and how it's aimed to prevent double. matt taibbi a representative with "rolling stone". "washington journal" is next! [captions copyright national cable satellite corp. 2010] >> good morning friday august 20th. thank for being with us at "washington journal". fairly quiet day but passions high about issues and a number of them we'll talk about this morning the economy. head of the congressional budget office is our guest in 45 minutes and we'll look at the final day of the series at the consequences of the financial reform legislation. our guest, guess you can call him a skeptic. matt taibbi wrote a play score piece for "rolling stone".

joining us from the studio in new york at 9:15 and in between we'll talk with congressman mario diaz-balart about cuba trade restrictions and the debate all ahead. glad your with us. open up the questions today about the story that seems unest scrapeable this week if you watch cable t.v. the debate over the new york mosque site. our papers are once again filled it. you've probably been hearing about it so we wanted to ask you the question. how important is this debate over the new york mosque site. the cultural center as proposed to you who listen and watch around the country. here's (202) 737-0001 and (202) 737-0002 for democrats and our line for independents. (202) 628-0205. as you call with your opinions, give us your reasons why or why it isn't and if it's not, what

else you think is more important. good friday morning to you. quick run through of the morning newspapers to give you a sense how the story continues as we hear governor patterson was trying work on a compromised propose for the folks wanting to build this islamic center close to ground zero. "washington post" leads with a big colored photograph. clamor at ground zero and below two stories. those nearest to controversy. that would be all of us watching around the country. that's the idea of our question to you this morning and paul right across, what's in a name? far more than mosque planners thought about. this is about whether or not it is islamic cultural center and strictly speaking proposed 13 story is exactly a mosque just as not as term is understood and not going to be a mosque 13

stories tall. the proposed building would contain many things. child care facilities and a muslim house of worship located two blocks in a neighborhood packed with places of worship. that's how describing it's a mosque has been part of the issue in the papers related to this. and washington times says giuliani urges move of mosque and bloomberg still backed site. front page of "new york times". mixed feel's of local muslims and we'll stop there so. our question to you is as you've been seeing this how important it is to you and the things you think about, and if so, tell us why. if not again, why not and what might be more important. georgia. curtis on the independent line. go ahead. caller: good morning.

i think it's very important. i understand the constitution and the first amendment where everyone has religious freedom pus this is something that's totally different than religious freedom. this kind of like, in my opinion mocking the 9/11 victims and i don't understand why they can't move it to a different place. it's just totally uncalled. i understand freedom of religion and press and speech but this is a different scenario. the one thing i've been watching on other stations when the people can't answer the questions why they won't knowledge hezbollah is a be ror organization, or release the funding where its going. it stinks to high heaven and i think that we need to wake up as americans and understand that there's something up with this

one and i just don't know what it is. host: thanks curtis. next let's hear from tim. democrat, or sorry, darryl first in ohio. caller: good morning. i think the building of the mosque is like rubbing salt in the womb. host: has been an important debate for the country? caller: absolutely. it has no business being put there to begin with it. it's ridiculous. not even a matter of religion. host: thanks very much. gainesville, florida. tim has this debate been important to you and why? caller: yes, it has. i'm a first time caller, a little nervous. host: yes? we can hear you. >> i think freedom of religion is important and they have a right to have that mosque there

and, what i agree with the president's position 100 percent and also, what i'd like to say about it is my cousin was in, worked at the world trade center and happen to stay home to vote that day. i was at work watching as towers went down. i am from the bronx. former new yorker now living in florida. i'd like to ask callers don't they get upset when they see president bush holding hands with the president of saudi arabia and don't they get upset when they have a tele than to promote terrorism. doesn't it be bother them the department of antiterrorism was removed before 9/11 happened? host: tim, thanks very much. he brings up the president's position and a side bar of debate has been the president's positioning and leadership skills, communication skills from the white house. let's listen to the original

comments as he began to talk about the mosque at the ceremony. >> let me be clear. as a citizen, and as president, i believe that muslims have right to practice their religion as everyone else in this country. and that includes the right to build a place of worship and a community center on private property in lower manhattan in accordance with local laws and ordinance. this is america and our commitment to religious freedom must be unshakable. the principal that people of all fourths are welcome in this country and they will not be treated differently by their government is essential the who we are. the founders must endure. host: president, speaking out on the position of the mosque.

all you news junkies knows later he had clarification from the white house in talking about principals verses the wisdom on building on the site. there's opinion pieces in this friday mornings newspaper. financial times taking position. president obama should lead on american values and say building mosque is wise, not just legal. they write this. now that mr. obama leads the debate he needs to say what or more than he has. he's capable of providing information and should snake case for the center to go ahead and not on the grounds of lee gral propriety. this would not be to the little the feelings of 2/3 of americans who appose the project. the president must nonetheless argue that america's religious tolerance can't be rhetorical. this dominants the "washington post" opinion papers today.

the opportunity ed papers. headline on the piece. the president's lost promise. the manhattan mosque controversy. the most destructive gap for president barack obama is not job approval that has been disapproval and it's the gap between aspiration and reality. and then below that. eugene robinson, actually a contrary view sites the president waiting into the mosque controversy supporting the mosque didn't score political points but obama saw the duty to uphold values of the constitution. instead of doing what was popular, he did what was right. we're asking about how important this story is to you and why. next is a call from to le toled.

caller: i love your show. i want to say, instead of people frothing at the mouth over this issue. people should be demanding a new investigation of 9/11. and if they take this first amendment away from us, like they've taken several other of our right as way, because of 9/11. what next? caller: next comment from springfield, missouri. craig on the independent line. good morning. caller: well, we still commenting whether the mosque controversy is worthy or not. host: and whether or not it's important to you. caller: it's a smoke screen. congressional election year and rather of talking about anything substantive we have politicians on both sides that profit off this screaming about something

that doesn't make a difference when we still have massive unemployment. oil spill, we're in catastrophe and these people are talking about something that doesn't matter. host: thanks craig. sylvia is calling us from south hampton, new york. caller: susan this is so important to me i can handily breathe. i am a new yorker. real new yorker. i've lived here since 1961, and i will tell you there's so many things that need to be corrected and the small one is this place is not two blocks from ground zero if you go to the furthest northeast corner it's two blocks from where the big memorial of ground zero is. it's five blocks and when you get there, that neighborhood they had a man that lived there and he lived there when the towers came down and he just said, i'm so eeg for it to be

born and be built. he was standing on a street that was deserted and just like in abandoned village it was nobody built there. the building we're talking about a burlington coat factory a retail store and part of the you towers landed on it and they just walked way. the whole place is just a dangerous, not because of danger or anything but abandoned. there were people the same day that man said let them build it here. there were two women, one lost her mother and one lost her son and she was a muslim. they wanted it to be built so badly and this building, 16 stories tall. world trade centers were 107. the apartment buildings are 30 and 40 stories tall. this building can't be moved. the whole point is a cultural center instead of amos success that area needs the services.

they need the gym and the theater space and the library and all the things that were going to go in there and that building is owns by those people. they can't buy a building somewhere else. they got that building for less than $5 million because it had a hole in the roof and the whole neighborhood is abandoned and know bk know bond wants to live there. host: one of his offers is to suggest that new york building, that is further away for this particular site is that's compromise you think is appropriate to pursue? caller: absolutely not. that cultural center needs to be there where it will serve those people. i have another point that really hurts my h heart. in the last eight months one of them only six months ago. we have had two young men killed

iraq and after comban stan and both of them got tremendous honors as they all do and should, but one of them is christian her ford and they named the whole bridge in saint harbor after him by himself. this 19-year-old boy saved 150 american and a lied soldiers that were in the big cafeteria and he was on guard and saw this truck coming and see them aiming at him and they weren't going to stop and he jumped on - host: in the interest of time, what's the point? whys this hurt your heart? caller: victims had such tragedy. we have the highest rate we've had in years of young men being killed. they're fighting for freedom of religion and their parents don't want them to not be able to have. that's what their boy went there to protect our constitution.

host: thanks for the call. doug mart mere via twitter said the u.s. mosque is as important as u.s. economic policy which is of prime importance. no mosque at ground zero. london kentucky. how important is this debate over the mosque site to you. dean, republican line. dean? caller: very, very important. i just wonder how long it's going to take people to realize that islam is out for world control. building this mosque in new york is nothing more than building a memorial to those that flew the planes into the world tr trade center. if obama wants to present free religion what about the greek orthodox that had their building destroyed by the muslims. he hasn'ted those. god bless america.

all i can say. jerome is calling. good morning. caller: first of all, i haven't seen any positive evidence of who was responsible for the 9/11 attacks any way. they have alleged to be muslims. i don't see the recei evidence. they could have been atheist. we believed there were weapon office mass destruction. what's been reported has never been substantiated. those were individuals and how can you diet energy diet an ent religion. i have no problem with a church there but americans need to sit back, take it easy and find out just what is it they really believe in. i thought that most americans believed in the constitution if you believe in the constitution how can you discriminate against

a play score religion of the world. you cannot accuse collisions of what tim mcvay did to the federal building. they need to wake up and take a breath and recognize, if you your calling yourself after collision, how can you discriminate from other people. it's pure and simple discrimination and it shouldn't be discriminateed america. host: asking if the debate is important to you. on twitter the whole moss sack political football. wise politician would shun this tar baby. here's government patterson talking about the mosque and his involvement in the debate. >> what we would like to do is to promote some ethnic and cultural understanding before the first brick is laid and to that end, i've invited them to a dialogue with myself and maybe

others who might have some ideas as to how to bring about a solution favorable to everyone and we'll a wait their determination and respect them regardless of the decision. >> i don't think it's the fault of the developers at all. they have an absolute right to be there but i think we added mitt that area has been through really, in many ways unimaginable pain over the last decade. what we can do to engage in a dialogue to comfort them, i think we owe them to at least try. host: immediate reaction. tweets if governor patterson broker as deal to relocate what a travesty. the tyranny of the majority. next a call from portland, ohio. gene and our question, how important is this debate to you. good morning. gene? >> it's very important to me.

9/11 happened to our country. physically in new york and we all cried for new york and for those people but we were all ladled with fear that day as to when the next thing would happen. and i truly, truly am a collision and believe in freedom of religion. but the people who put the spin on it that's the only thing is about, are wrong. there should be tolerance on the both sides and i see only we have the right to do it and we're going to do it. i have heard that muslim is peaceful and do not want to offend people when you go in their country and you live in their country and make it yours. i hope the muslims that are really feeling that way will stand up and say that, just don't be in our faces about this. that was a terrible day. people have forgotten and i hope that we will never forget.

we'll just continue to be in people's hearts and continue to love our country. thank you. host: usa today suggests the emotions extend pe beyond a reasonable doubt the mosque debate. here's the cover story today the at ground zero. moss success one point of contention in this, he suggests there's equally heated debate on a 9/11 museum slated to open in two years. although most inclined to give the museum photos or recorded memories of a loved one. some are boy catting the appeal. now built in the trade centers foundation pith. they complain it'll be unsafe in case of attack and devote too much attention to the al qaida terrorists and that victims

unidentified are remaining behind a memorial wall. some of the equally heated debate over 9/11 museums built on the site of the 9/11 attacks. next is the call from anderson and this is doug, independent line. how important is the mosque debate for you? good morning. caller: hello. i think it's very important. more so important, it's just - [up ueda[ [inaudible] these are the same people that wondered why the reverend wright a collision minister. people are actually [inaudible] host: doug, apologies. everyone can hear your call is

not very clear. he did reference the debate which seems to be heating up about the president's religion. here is headline story in the philadelphia enquirerer about the obama rumored press piece. president obama is a muslim. not an american citizen wasn't each born here. none of this is true but to surprising levels this is believed. one in five people 18 percent thought he was a muslim up from the 11 percent that said so in march of 2009. story related to this is in the "washington post" today. when it comes to praying obama prefers privacy. this is a piece written by michael sheer and here's how it leaves. flew aboard air force one earlier this month, president barack obama dialed three collision pastors to pray with

him. his wife and daughters were away and as he celebrated he was in area flecktive mood. he wanted to pray about what's important in life and the challenge as head. angel call pastor is part of a small circle of spiritual advisors that talk to him by phone. the prayer session was not publicized and neither thought to bring to life the decision to keep the public profession office faith to a minimum. connecticut? harry. we're talking about the mosque debate and whether or not it's important to you? caller: yes, i have a different view. they never had an intention to build there. they planned this a long time ago and they knew it would be a big controversy and they're laughing all the way down the road. host: phyllis, republican line.

caller: this issue is a totally phoney issue brought up by the republican regime that's wanting to win the election in 200 and that's why "washington journal" is carrying the phoney story. host: okay. republican, is on this program yesterday was asked about this. let's listen to his taken to event. guest: but for the political side anybody that chasing off on shining things and gets distracted from the central issue facing the country. we're being bankrupted and our economy is being damaged by all of this spending and massive collection in washington d.c. away from citizens. that's what this election is about. host: suggesting it's one of the shining issues distracting from the main issue, jobs in the economy. california, independent line.

good morning. caller: thank you. i have a comment about this mosque right here. i think it's very important it gets built. because those people have freedoms just like everyone else in this country. i'm a veteran of iraq and i went over there to preserve people's freedoms. it's my understanding it's going to have facilities for the entire community and if we deny that it'll send a message to all muslims they're not welcome in america and we don't support them and we should. not building it, i believe that endangers the lives of my fellow comrades there in those two countries. host: viewer answers the question this way. why aren't we talking about jobs? the military coming home from afghanistan and small business loan? next a call from valley forge, pennsylvania. paul, republican line.

good morning. caller: good morning. americans are very tolerant and i don't think most americans question the right of building this mosque. americans are still waiting for the top leaders, and the muslim movement to really come out against violence. we waited really after 911. where was the out rage? where was the peaceful protest in the streets from peaceful muslims saying this is wrong? to take two planes and kill over three thousand american? we're still waiting for the anger of daniel fair a reporter being decapitated while his muslim terrorists made a video tape of it. we're still waiting for the out rage there. it's not a meater matter of rig

wrong. we're waiting for contrition of those that come against the violence. there's so many that should say this violence and terrorism is wrong. host: thei man in a piece filed from cairo, they said, despite the organizer of the planned muslim community center arrived in bayrain to begin a tour of the if gulf. the united states government has refused to die vul of his schedule. local journalists have been invited to meet with him but the state department wanted to keep the international news media at bay. quote, i think they're worried whatever he says will be taken

out of context that has an i interview scheduled. iranian television will broadcast lectures and he'll speak at mosques and meetings held in private homes known as assemblies. american organizers said all meeting where is private and the news media would not be invited in the local hosts. the organizer where is trying respect sensibilities and there's no double standard and siting the intense media interest and because of this debate over the new york mosque. that's our question for you this morning. how important is the debate to you. next a call from us tin texas. barbara? caller: good morning. analogy for people to consider and i'm sorry i can't remember whether i first heard this. it's not my first original thought. but it's a comparison to

oklahoma city, there were many innocent victims and i don't know for sure, but i believe the bomber there was a catholic and there was no up rise together say there could be no catholic church buildings. i do believe in freedom of religion though i'm not religious myself and you believe we have a constitution that provides freedom of religion. that's it. host: by offering all the viewpoints, how important is the tenor and level of intensity of the debate to you. you're telling us it is important to talk about. caller: nonreligious person on the constitution we have freedom of religion. other people have freedom to be whatever religion they choose. i may not like them but that's what our constitution provides and i believe in the constitution.

host: thanks for your call. vincent is on the democrat line. call all good morning. i'd like to weigh in on this mosque i am the - very surprised and disappointed and the gop and these people - the issue i have with them is that, they say that they believe in the constitution and everybody should have constitutionle rights, but these are muslim americans and they should be able to build in that private property. i agree with the president. when they talk about the issue of having - the religion part of this. it's not a ground zero thing. these people - i mean 9/11 happened 7, 9, 8 years ago.

these people have a right to build anywhere they want to. i have no problem with them building this mosque or center. people need to wake up and realize it's not all that serious. it's a smokes screen by the gop to try and sway voters. host: let's listen to newt gingrich talking about the subject this week. >> i have no opposition to it being built 20 block as way. it's a political act to create this facility close to ground zero and the only purse for having a mosque there is a political act. host: view of discussion about the mosque question on cable television and our topic with you this friday morning is how important is this? it's dominated the airwaves on cable talk shows and many newspaper stories. is this story important to you.

why not what else would you like to be talking about? ken, republican line, good morning. caller: i'm ken ankerson. this is a zoning issue not a freedom of religion. the zoning had to be changed in order for this to be accommodated. they're not an american right. this is not, there's no one saying muslims or anyone else cannot practice their re-ly gone. this has been demagogued by the president on down. we don't have to rechange the zoning to accommodate people. there are zoning laws that apply. you can't build anything you want on private property we have to deal with zoning issues and i'm hoping people will see through this smoke screen. host: you host a ratio. caller: i do. i'm on saturday mornings from 9

am to 12, noon. host: what were the callers reactions to this? guest: most callers disagreed with me and i am republican and i make no bones about it. i think they're right and this issue is the same way as i brought up on my ratio. this is is a zoning issue and not a freedom of religious issue. lot of people blindly go with what the democrats and president says, but that's par for the course. i just have to deal with it. lot of my callers disagree. host: what are you talking about tomorrow morning? caller: we'll probably bring some of this up again, but i usually go by what's doing on in 24-hour news cycle. host: thanks for watching. nice to hear from you. ken hosted a radio in cincinnati. joseph. independent line? is this mosque important to you?

caller: in some ways sit and some ways, it isn't. i think that new yorkers that have an issue with it, they they just want to feel safe and they need to make it feel safe. i think it was time square like maybe a year ago. people want to feel safe. it keeps happening. before 9/11 it was bombed before then. the people want to feel safe. you have to make the people feel safe if you don't, the people are going to take the laws in their own hands and you don't want that to happen and that's my opinion. thank you. we just shows you the story in the center of this making trip which has been sponsored by the u.s. state department. religious tolerance. it's filed from this one and

here's what the story says. the islamic center of the september 11th attacks. says extremism is a security threat in both the west and the muslim world. he says he hopes to draw attention to the common challenges to battle radical religious reliefs funded guy department. he made the comments after leading prayers at a neighborhood moss income the capital. he refeesed refused to discuss mosque and he arrived on the thursday and by ran and plans to enter. how important is the debate to you. next up, los angeles a call from john on the democrats line? >> good morning. a very important debate to have and i would like to point out falsehoods. number one, the people who are

against this as far as i can see, they're not saying that they do not have a right to build the center. everyone knows they have a right to build it ch. . a couple of callsing a they said this was a ploy by the gop. howard dean. former head of the democratic party and the comme current sen majority leader should assign to those two gentlemen. the final thing i wanted to ask you about is have you seen the? there's a two minute web add voiced by several members of 9/11 families who are against the - against the center being built. wondering you can run that? host: we do run them sometimes

and if we have it appropriate to the topic we'll look to include that. new york city. is happy with our date line on the question. asking why follow the new guidelines and now called the ground zero, new york mosque. there may be thousands and it's not as descriptive as former name. more politically correct and it is at ground zero. human ash and landing gear burlington coat factory. well, we're calling it a new york mosque because in a short amount of space there we thought everyone would understand it. expediency is the answer. paul writes amazing how people relate the bombing of islam and the ignorance of the american people and their own constitution. this is something the media want to keep alive. the attack on the bill of rights

and the first amendment is a threat to all of us. a few more minutes as we discuss whether or not the debate meet heated this week. how important this debate is to you. bridge important, connecticut next. mario, republican line? caller: good morning. i have a comment. i don't think it's as important to me. we want to cut through the chase why don't we have a cia recruit center and an oil tanker collisions can idolized. another story dominating the papers the oil spill and the continued attempts to finalize that, and also the potential for understanding the damage in the gulf. yesterday there was a hearing bringing both the knoa and othes

tasked with the assessment and the the fisherman that talked about the change to lives and the safety of the fishing there. but let me show you the headlines. baltimore sun. bp's labor won't end until after labor day. on the debate between them and the u.s. government over the final capping. one of this is a suggestion it won't happen until september and that's because they want to make sure they can recapture the blow out contender. bp told to retrail device. administration on thursday ordered bp to order the blow out preventer and use it's a possible civil and criminal investigations. philadelphia energy guyer. 22 mile an hour gulf plummet. s oil in 40 degree waters is found where it may last for y

years. steve, independent line? good morning. steve, you have to turn down the volume really quickly, please? sorry we're going to move along. dallas, texas. kathy, democrat line. your on the air. caller: good morning. how are you? this is a non pp issue to me as a democrat. the thing is, you know, people call in and they talk about sensitivity and they talk about other people being safe. you know, this is just because it's a muslim building or whatever the case may be, but they already go around saying bo rack obama is a muslim. they have a right to be whatever they want. when you go back in history and you think about the collisions and what they say this country was founded on.

if that's the type of collision religion they have that hang back people and roll out the jews and run out the japanese, what's the difference? we, if it's being sensitive to us for a race to treat us the way they did and call themselves collisions so i think it's just a non pp issue and something just to - and there's people that did it from saudi arabia. i think america is just so built up on destroying this president, they don't have anything else to do instead of doing something destructive. i think it's a non pp issue. host: thanks for your call. tweeting, today, what happened to the tolerance george bush encouraged. patrick on the republican line and how important is this debate to you? caller: very important. good morning. to start with.

very, very important. the reason we went to iraq is to protect iraqis and guess what? they're muslims. if we can sacrifice 4,000 soldiers to protect muslims, why they so hard to protect the fourth amendment here in america? it's just annoying they're doing all these things. - and the gop - because end of muslims and the end of 2010. thank you. host: patrick from virginia. another story dominated the news are indictments of roger clemmens. coverage on the sports page of the "washington post" and also sports page of usa today. daily news, dope.

you and your big mouth to blame for indictment and look at this in the "new york post". stripe three indicted roger faces 30-years for steroid lies. est main as the debate over the islamic center. kathy, republican line, your on the air. caller: hi. i have a lot of experience with muslim people. after high school i moved to southern california and met several members from the royal family and other countries and it took me about 30-years to figure out these people and where they were coming from. now they have a right to worship in their holy place. i understand that and agree with that. but i'm apposed to where they're putting it. it's very true. it is an area that way want to conquer. i think the most devastating and shocking thing i ever learned

about these people after about 30-years of being around them and kuwait is how much they truly do hate us. you may think, please, come on, that's not true or possible. i'm telling you, it stunned me. they want to in doctrineate us into their religion. they're in - what fright energies me and i never thought i would be frightened of them. in london they were protesting and screaming, death to the english soldiers when they were coming back from the war recently. i mean, i don't understand what's wrong with these people? this is a collision ju christiad i don't care what they say about the president. he's not a christian. he's cool as muslim it's frightening.

host: 18 percent of poles say they believe president obama is a muslim. last word on this topic. hypocritical to build basis in muslim land like iraq. interesting conversation. thanks for joining us for it. we'll take a break and go to the economy. big story for a lot of people around the country. new numbers and projections were put out yesterday with sobering news for all of us. we'll be back with him. >> one of the things i regret about political and rhetorical life in washington is that, every major figure from the president on down is merely reading what somebody else and some committee has produced. >> any lip and rode speeches

wrote about presidents in architect office power and in his literary editor of the weekly standard. he'll share insights on washington on c-span's q & a. >> after nixon lost the 1962 california governor's race the owners offered the former vice president the job as commissioner of baseball. nixon was flattered but declined, telling the owners, don't tell pat. she'd kill me for turning you down. >> where baseball in the presidency or the cia and korean war. find all of c-span's american history on-line any time at the c-span video library. it's washington, your way. watch what you want, when you want. >> book t.v. and primetime concludes president's week tonight with a look at presidential writings.

historian on editing ronald reagan's height house diary. carolyn oweder on the diaries and letters and fred caplan on abraham lincolns writing and how they define him as president. book t.v. on c-span two. "washington journal" continues. >> director of the congressional budget office. c-span watches and knows this is important for members debate on policy. yesterday, spb o here in washington gave us new estimates for the federal budget deficit and trends for the u.s. economy. what's your major story from what you said yesterday? guest: central message is projections o of the budget have not changed since the previous projections in march and or forecast of economic conditions have not changed since january. the bad news is things haven't

changed because the economy faces very serious economic problems and very serious budget problems. host: specific data point you projected the unemployment rate that's so important many people stay steady to nine and nine and a half percent rate, which many people say is not a real snap shot of the unemployed americans that the numbers are larger. i was interesting that you projected several years it returns to a 5% rate. what did you see to get the country to the 5% rate? guest: we think it'll take some years to get there. about 5% by the end of 2014. that's long-time from now and i think there will be a lot of suffering between now and then because of the elevated unemployment rate. eventually, we think it'll come back down because our economy has shown for many decade as great underlying resill yans.

a lot of entrepreneurial activity and we'll be investing and hiring again. the path between here and there is very uncertain and we also discuss in the report, the risk that the recession will have lasting effects on the labor market and we built some of those into the expectations because when people lose jobs and stay out of work for a long time and the rate of long-term unemployment is elevated in the recession. all unemployment rates are risen but the rate of people unemployed for more than half a year is at a level we've not seen before and there's a risk and those people will have particular difficulty getting back into jobs again. host: why is that? guest: different things happen. part of it is people were working in certain industries that are now faltering and a lot of people were building house there's years ago, and are not now and probably not six years from now. the composition of the economy

shift as way from people's six expertise perhaps. people are not learning the thing this would in new jobs so it's harder for them. host: phone numbers to invite your participation. if you would like to make comments or ask questions about the state of the u.s. economy and projections over the next several years we welcome it. (202) 737-0001 for republicans. (202) 737-0002 for democrats and (202) 628-0205 for independence dependents. send an e-mail or message by twitter. we'll take all of those in our conversation with the head of the congressional budget office. we as a nation received bad news about the continuing rate of foreclosure since housing was at the heart of this, how does this rate effect the projections for the economy?

guest: a variety of ways. part of it is there's less demand for housing. people that like to be in-houses can't afford to be in-houses so that is pulling down construction. we're building far fewer houses we need in a regular economy to house the expanding population. another way it effects the forecast is people losing their homes are reluctant to spend money or anything else so it holds down consumer spending in away that's drag on the economy. another way it effects the forecast is relating to the issue we discussed on people trying to find new jobs. sometimes they're available in some other part of the state or the country where somebody lives to day. if they owe more in mortgage thanl their house is worth it's hard to sell that house and move. tradition this country has a fairly mobile population.

that's harder with people trying hang on to their houses. host: financial times wrote they're story with warning on bush tax cuts extension. the lead on this from james is permanent extension of the tax cuts enacted under george w. bush would boost growth in the short-term but as 3 point 3 billion in the next decade according to the cb o. conclusions is a blow to republican and some members of the business community that extend the tax cut would bring in extra revenues to a cycle of economic growth. would you like to additional thoughts to that? guest: our projections for the budget and the economy both assume current law is unchange and we view that and have done that for 35 years so the projections are neutral benchmark that policy makers can

use in judging the effect of the actions they're considering. under current circumstances that means we assume the 2001 and 2003 tax cuts expire, at the end of this years they're scheduled under current law. we assume minimal tax effects many more people than congress making a fix to the problem as they have in the last several years. we assume mamen payments under medicare fall. that's appropriate for the baseline projections but makes it difficult for people to compare our forecast with the other people. most other people making forecasts are building in assumed change in the policies. we try to show how if one picked an alternative fiscal path or policy, we would then get a different budget outcome and economic outcomes and forecast and the projections of the economy are much closer to what

many private forecasters are saying. that's the context. yes, what we find is if those tax cuts were extended and we - the analysis didn't extend tul of the cuts except for people with the higher incomes. if the other where is extended and a t.p. experts were of inflation there would be a boost relative to the baseline forecast, but overtime as decade goes on. the higher government deficits and the extra accumulation of government debt you get would ultimately weigh on the economy and output would be lower by the end of the decade than under the baseline projection. host: we'll start here. on twitter. mr. douglas elmendorf are there particular sectors growing or types that should produce unemployment? guest: at the moment, there's very little net gain in jobs in

the economy. there's people being hired all the time but there's almost as many people losing jobs so at the moment, there's very little growth. particular sectors have been hurt are construction. to some extent manufacturing. for many years now. employment in the services is growing more strongly as part of the shift of the economy. right at this time, there aren't a lot of sectors doing very well. host: headline in the washington times suggests, your projections are based on a 2% growth in the next couple of years. what happens if the nation doesn't meet that? guest: to be careful we're projected 2.8 percent and 2% in 2011 conditioned on the current fiscal policy law. if the economy falls short, there will be higher unemployment and larger budget deficits because the budget responds automatically. if incomes are lower, payment of

unemployment compensation is higher. worst economic outcome and becoming a bad budget outcome. we talk about alternatives. this economic forecasting is very challenging business. there are important risks as economic growth could be a good deal stronger or weaker than we expect. also risks in inflation could be significantly higher or lower than we expect. that report talks about the risks. host: little later on after we take calls, you mentioned economic forecasting being a challenging business. arguing in the financial times there's a new model, as needed for economic forecasting and i want to get to the inside for economists. let's get viewers involved. start with a call from spring, texas. barbara, democrats line. good morning. would you turn down your t.v. volume, please?

caller: yes. i was wondering if the most of the outsourcing was - for our corporation share. in the - if i understand the corporate tax rate - as the most recent that they do this because basing the tax is too high. so that they can - what if we, you know, got together with the corporations and lowered the tax rate - substantially, with the situation they would bring back jobs to the u.s.. not talking about all the jobs, but bring back, you know a portion of the jobs back to the united states. you think they could do that? guest: well, i think there are a number of factors that effect where businesses choose to do goods and services to employ people. taxes are one of those factors and i think there's a widespread view among analyst as cross the

political spectrum that we probably don't have the most effective corporate taxes in this country that we could have. in particular, an official tax rate higher than other countries but also special loopholes and provisions that distort the behave of companies in ways that aren't very useful for the country. there's been proposals overtime and on-going work suggests we're doing it in ways that the tax code might be adjusted and may have some of the effects your suggesting in terms of where employment is located in this country or others. host: c.b.o.'s august report and easily available on the internet but we've linked it at c-span dot or f if you would like to read yesterdays comments. yesterday a comment from wisconsin. tom on the independent line.

you're on for mr. douglas elmendorf. caller: thank you for taking my call. one comment. this was a private sector meltdown. it was - like the public sector played a part, i think because the private sector bought it. it's a private sector meltdown. b business people. i have two questions. on msnbc, former cbs. jobs increased by companies going to china from the u.s.. they pay them 20 cents an hour and they work 18 hour days and take ten per room and basically, we're looking at you know, 19th century um... you know 19th century conditions they work under and i'm wondering does the cb o have a way to factor in job

projection. how many companies are going overseas for cheap labor? this is slave labor, actually. guest: forecasts do try to take into account the flows of goods and is services from this country to others. it's a difficult part, of course. to anticipate all of that. but we do try to take that into account in what we're doing. host: related to that. melissa says could mr. douglas elmendorf summarize the taxes here in the united states verses u.s. companies that produce overseas? guest: i don't think i can do that offhand. especially the tax rules as they effect international transactions are complicated and i'm not an expert, to be honest and i don't want to lay out the amateur perspective on that. host: mans field, ohio. ken, republican line.

your talking to the head of the congressional budget office this morning, ken. caller: yes. i have the good fortune of living quite a while and my - i'm a history buff. at the great depression, i know we had certain factors in place there. and i know that it's a lot different than today, of course, after 70 something years, but we had a lower debt which meant that we would have less interest to pay that didn't have it around our neck. and we had - we had people that took care of themselves more individually than we do today. they didn't have to have all of the federal money and state money going to take care of them. we didn't have to have that load dragging on us and the people

were - honest. - in a way that - at least i saw. the people who were unemployed i never heard of anything happening that was, in our area where anything was ever taken. had hard any nothing in the newspapers about it - so i see that what happens if the interest rate - sir, i wonder what happened if the interest rate were to double or remember when 1980, it was up to 20%. what do we do when that happens? nearly 800 billion now in interest payment?.

he wi elmendo he wi he wi % guest: interest rates could rise more sharply as in other countries at different times in the past when investors became worried about a government's fiscal discipline. we issued a brief last month that talked about the risk of a fiscal crisis, which is that sort of development. we don't think that is likely right now but it is a risk that increases over time as long as the government debt is rising

we work with the people to see if they are developing alternative policy proposals when they are trying to develop

proposals we work with them on a confidential basis. as soon as they release a proposal publicly we will release any analysis we have done of it. as for the fiscal commission. people at c.b.o. have made a number of presentations to the commission on different aspects of the budget which i think are feeding into their deliberations. i can't speak beyond that. host: back to the social security, of the major proposals being debated which include raising the beneficiary age which is now set to reach 67 in 20 2027, other cuts under consideration include means testing and trimming annual cost of living increases perhaps only for wealthier retirees and increase the share of earned income subject to social security taxes which is currently income beyond $106,000 is ex-settle. when you -- exempt. which has the most impact on

solvency. guest: if one raises the retirement age that could matter a great deal if it is a noticeable amount. if one expands the amount of income subject to the tax that can also change the financial outlook but only if one makes a standing -- substantial change in the threshold. the precise numbers of what matters depends on how sharp a change is made. two of the areas, as we know many americans are living much longer than when the social security system was first set up and 65 was first chosen. that is why congress decided in the 1980's to raise the full retirement age in steps from 65 to 67. even at the age of 67 people

will spend a much larger hair of their leaves in retirement collecting benefits than was the case when it was first set up. that is an important reason why the tax rate has gone up a good deal and the system is suffering long-term financial problems. in terminals of how much income is taxed for social security that has moved up to the current level you mentioned. but it hasn't moved up as fast as incomes have moved up. so a somewhat smaller share of income is subject to social security tax than was the case in the past. that is also motivating some to change that part of the program. how much difference you make depends on how large a change. host: the next question is from meridian, mississippi, jan, democrat line. caller: good morning. both me and my husband are age 59. i worked for a business that

went out of business about two years ago and my husband about a year ago. he was let go from a business that appeared to be somewhat thriving but he was let go after six weeks due to the fact he had cancer. how many over the age of 50, if there is any kind of stats particular at all, that are being let go and even those let go due to health problems? guest: i don't know if those -- i don't know the answer to your question, i'm afraid. i'm not sure if those numbers are available or not. but i don't know them myself. i'm sorry. host: a viewer has a question about how your office operates me. this is a local person from arlington, virginia, who wants to know what usually what happens when your draft report doesn't say what your committee chairman wishes that it says?

guest: as your viewer understands we write reports that offer our best professional judgment, the implication of certain proposals without regard to the political consequences. i think that is what congress established us to do and that is what congress is paying us to do and we take that very seriously. inevitably reports that we issue will strike some members of congress as not reflecting their views of the world, their best assessment of what would happen. sometimes they will make that poeupint on the floor of the ho or senate or they will make the point in a committee hearing. sometimes they will call me and make that point directly. we are always interested in hearing people's perspectives because we are trying to learn about different views of what affects policy. but we are not swayed by pressure. host: this is a good time to bring up the economic paradigm

argument that joes stiglitz made. if you are familiar he won the nobel prize in economics in 2001. university professor at columbia and served as bill clinton's chairman of the council of economic advisors. he writes this. the blame game continues over who is responsible for the worst recession since the great depression. the financiers who did such a bad job or regulators. but he says the economics profession bears more than a little culpability. it provided the models that gave comfort to regulators that markets could be sever regulating and they could be ever and self-correcting. any reaction? guest: i think he is right that economic did not work out as well as many economists hoped and expected. those are models of different aspects of the world. there were a number of financial models that gave people in

financial institutions and regulators greater confidence in the robustness of certain strategies that turned out not to be very robust. there are also models of the economy as a whole that thought that if there were some problem to develop in certain parts of the mortgage market for example, that those problems would be fairly limited in their overall scope and wouldn't have as large an effect on the economy as a whole as it turned out. i think there is a lot of introspection and hard thinking going on among financial analysts and among economists about where we were mistaken in our judgments and what we can do better in the future. i think that is an appropriate int introspecti introspection. host: he argues for a new economic paradigm which he says

the intellectual building blocks are there for it. there is an organization he promotes called the institution for new economic thinking providing a framework for bringing a diverse group of scholars together to create the new paradigm. he says what is at stake is more than the credibility of economics profession or policy makers. it is the stability and prosperity of our economy. we will go back to your phone calls for doug elmendorf. syracuse, new york, up next, this is tim on the republican line. caller: good morning. how are you doing? what i would like to know is, i'm disabled. they are not giving us a raise soon for social security. but what is the budget directing, what do they do about taking care of their own like the congress? are they thinking of making any cuts in what they gut -- what

they get? guest: so, to the first point about the lack of cost of living adjustments right now in social security for older americans and in the disability insurance program, that is a function of inflation being extremely low and prices having declined over some period. and we project low inflation the next few years and thus only small or no cost of living adjustments for a few years until the economy strengthens and we think inflation moves up a little bit again. then there will be renewed cost of living adjustments according to our forecast. in terms of what else is being done to save money in terms of what is spent right here to run the government, right now congress is in the process of setting appropriations for running the government over the

coming fiscal year. i know from what our own agency went through we were asked a lot of hard questions about what we were doing with money we were getting and whether we could get by with less. i don't have any way now to speak to the overall impact of th that. a lot of money is spent by the government in a lot of different ways and all aspects presumably need scrutiny but by far the largest part of it goes to a handful of very significant progra programs. for social security, medicines care, medicaid and other health purposes and for defense. those programs alone represent the lion's share of all federal outlays. and when one thinks about budget deficits and trying to reduce th them, particularly reducing them

by trimming outlays, then one needs to recognize both the potential in smaller programs to save money but one needs to look at the larger programs where the large majority of federal outlays goes. >> this viewer treats the greatest threat is hyper inflation but the economy needs and market wants deflation. guest: from our perspective, the risk of hyper inflation is extremely low. it is true that the federal reserve has greatly increased the money supply, the supply of bank reserves, in the past few years. but that is not likely to lead to higher inflation until the economy strengthens and banks use the money to make more loans and when that occurs then the federal reserve can take a different policy tack. so, there is some rick of higher

in-- some risk of higher inflation and it is not great and we don't see of risk of hyper inflation. there is a risk of lower inflation and deflation. that is not good news for the economy. we talk in our report about this. we say this is a serious possibility of deflation in the next few years. it is not our basic forecast. it is not likely but it is possible. we talk in the report about the dangers of deflation. a falling price level encourages consumers to wait to spend money on the hope that prices will be lower and that waiting means a reduction in demand for goods and services. then it would mean less production and less employment. in addition, debts that you will have outstanding are often fixed in dollar terms like mortgages. it is hard tore meet the payments -- hard tore meet the level because wages would fall along with it. so deflation is a dangerous

condition for an economy and it becomes harder for the federal reserve to take the right actions to spur economic activity. so that is not something that the economy or anybody in the economy is hoping for or should be hoping for. host: since the depression has the united states ever experienced a period of deflation? guest: we have not experienced any sustained periods of deflation. there were short periods of time say oil falls sharply but not broad based declines in prices. host: is japan the largest model to look to about what a country experiences experiences during longer spaoerdz? guest: japan is a recent example. to the extent it is a model is debating. there are economists that are worried we are heading down that same path which has been a prolonged of very slow growth.

some economists see substantial differences between the two economies. in particular the fact that our policy makers in terms of monetary policy from the federal reserve and government budget there have been much more aggressive reactions to the financial crisis and the recession than seen in the early stages of the japanese experience and that puts us on a different path for many. host: for douglas elmendorf next a caller from columbus, ohio. independent line. caller: yes, my question is and i don't agree with him on deflation when he quoted the other guy with his comment about social security. my thing is we've got indicators of inflation with commodities, especially oil and energy, anded if. then on the other side of the coin we have deflation of jobs,

wages and housing. so, basically we have both at the same time. so i see mixed signals. now you have china who is unpinning themselves from the u.s. dollar and the euro overtaking the dollar. china selling off u.s. debt. it looks like we have indicators of a possible collapse in the dollar. what do we have to protect us from that? guest: well, in the past few months, as worries have grown particularly in the spring about the condition of european financial institutions and about the budget situation of some european countries, money came into this country to strengthen the value of the dollar at the expense of the euro. so there tend to be ebbs and flows as investor sentiments change. it is possible that investors would become a much more worried

group about the state of the u.s. economy and financial system and would pull money out of this country,s thereby push down the value of the dollar. that is one of the risks of fiscal crisis. but it is worth remembering during the recent financial crisis money came into this country for all of the problems in our own financial system, many invest worried about other systems more. and u.s. markets and treasury securities in particular were viewed as a safe haven from those risks. so, we don't think it is likely the dollar will suffer a large drop. we think over the next decade there will be some gradual decline in the value of the dollar because of the large trade deficits we are running now. but we don't think it is very likely there would be a substantial drop soon. host: i want to show one illustration that came with your august report. for folks at home, the light blue line here are average

outlace by the federal -- outlays and dark navy line is average revenues and you see 2010 they really reached their farthest dance from one another. what -- farthest distance from one another. what does this graph tell us? guest: last year, just the left of that dashed line, was the largest deficit as a share of g.d.p. since the end of the second world war at 9.9% of total u.s. output. we think this year it will be a little smaller, 9.1%. but beyond that to the right what you see in terms of of light blue line, the line which shows federal outlays, you see a drop. that occurs because improvement in economic conditions that reduce payments for unemployment related insurance and effects of the american recovery and reinvestment act. that spending wanes.

so we see total spending fall a little but rise as the decade goes on as social security and medicare and other health paralysis continue to increase. dish other health programs continue to increase. the more striking line is revenue. they fell very much mostly because of the automatic features of the economy. we incomes fall tax revenues fall and fall more than proportionately. that provides a little buffer against the decline in the economy. economists call this the automatic stabilizers because you have less income and pay less to the government, that leaves you with relatively more to spend on the things you want yourself. in terms of your private consumption. the next few years we see a very sharp increase in revenues relative to output. that occurs partly because the economy will strengthen slowly but will strengthen in our view. and, importantly, because of the expiration of the 2001 and 2003 tax cuts scheduled for the end

of this year. and because alternative minimum tax will effect many more peel. so, revenues rise and by the end of the decade in 2020 we expect revenue about 21% of g.d.p. well above the historical average showed by the lower dashed line, the horizon line. on average the past 40 years federal revenues have been 318% of g.d.p. and they will rise well above that. host: mary in montana democrats line. caller: god bless you for taking the call. this is an unique opportunity. my name is infielder -- gerald greenstein. have you been presented any option of using g.s.e.'s inventory at reduced price to

get growing home sales and a small required construction equity upgrade to create building trade jobs and thereby income taxes both creating jobs and reducing the fiscal deficit? the letter was sent to a lot of congress and originally to the secretary of treasury. i got a letter from bernanke's office of statistics and research and a letter from the federal housing finance agency which he told me to connect with as well as a letter back from the department of interior both of which encourage me. this is a god blessed opportunity to tell you to take a look at your office staff is have them present it to you. it is something that will work and it has gotten a lot of traction. host: can you translate that for others listening? guest: let me first state to the caller i will look at that. i can't speak as to what options we may have been presented with by members of the congress.

we work with people on a confidential basis as long as their thinking is confidential. we are doing work ourselves analyzing different ways of addressing the ongoing mortgage foreclosure problem and different ways of addressing what to do about fannie mae and freddie mac. i think the underlying issue that the caller is raising, as you mentioned earlier, a lot of people are still losing their homes and can't afford to buy homes. and that is painful for them but also affects other people in the economy because there isn't demand for new houses and we are not building many new houses. analysts and policy makers have been wrestling now for the last few years with different ways of trying to address the mortgage foreclosure problem and different ways of trying to spur demand for housing. some things have worked to some degree. nothing has worked to the extent of eliminating those problems.

i think work on that is continuing at the c.b.o. and other places. host: the next call is from jacksonville, florida, robert, republican line. caller: good morning. i would like to find out your opinion on the fair tax amendment, h.r. 25. it is an elimination of basically the income tax and corporate tax. and i would like to find out what your opinion is on the effect of this house bill on the future of the budget. guest: unfortunately i'm not familiar with that specific bill enough to want to talk about it on tv. in fact, c.b.o. doesn't do the revenue estimates for particular tax legislation. we do estimates of cost of changes in government outlays. we have a group that we work with for different projects but it is their responsibility to do the actual revenue estimates so

they are more familiar with the specifics of revenue proposals. if one eliminates the income and corporate tax, then one needs to raise that revenue in some other means or make larger cutbacks in government spending. as you know the income and corporate tax together represent the bulk of total federal revenues so they need to revenue elsewhere and it would be substantial. but i can't speak as to how that would do that or what the budgetary effect would be. host: cleveland, good morning to walter, democrat line. caller: good morning. my pleasure to be on c-span. i want to preface by saying thanks to all the small business owners and small company owners who employ so many, yet it is still my fear, you hear reports on the news now and then that there are companies that are making more of a profit with less employees and my fear is there are millions who are unemployed where their

stockholders, c.e.o.'s and owners could have made the profit, say, from last year or two years ago if want to make more and are not while the little guy is out on the street. is there any way that you have statistics that follow that? guest: yes rb, there is anothe part of the government that publishes national income accounts. that tracks the flow of spending and income in the economy. in the past year the share of total income that has gone to profits has increased. it has rebounded from a very sharp decline at the beginning of the financial crisis and recession. we do talk in our report about implications of that going forward. another way to see that same effect is to look at the productivity statistics. productivi productivity, output per worker in the economy, surged at the end of last year and beginning

of this year. that is not un commcommon at ths of recessions or early stages of recoveries. it tends not to persist and hasn't persisted it appears in had case. productivity didn't grow very rapidly the second quarter of this year, perhaps even declined. so that is a sort of hopeful sign we think for employment growth going forward is we have had the surge of productivity, it looks like firms have perhaps now gotten as much output of their existing labor forces as they can. that means if demand for goods and services picks up firms will be more likely to hire workers, additional workers to meet the demand. we don't think demand for goods and services will grow very rapidly so we don't expect employment to grow very rapidly. but we think they will grow more in tandem going forward because it looks like the surge of higher productivity and higher profits that go with it seem to

have been an event that occurred but is now over. host: minneapolis, steve, independent line. you are on. caller: hi, doug. first i would like to thank you for coming on and sharing your knowledge and expertise with the american people. just wondering if you could elaborate on a couple of points you made earlier. first with respect to interest rates and the assumptions in the projections that we have been talking about this morning for increases in interest rates. could you talk about when those are scheduled to go up and how much those rates are projected to go up? secondly, if you could elaborate a little bit on the political pressure that you got with respect to the score on the obama healthcare program. i personally feel this will go down in history as the worst score that your agency has ever done. but notwithstanding that, could

you give us some sense for how many calls you got from the senators' office and their staffers and pressure that was brought upon you even though i know that you try to avoid all of that stuff and ignore it. thank you. guest: on the first question, we think while the economy is moving ahead so slowly while unemployment is high and inflation low we expect the federal reserve will not act to tighten monetary policy and will not try to raise interest rates for a little while. we think that beginning in 2012 they will start to raise interest rates and will continue to do that as the economy strengthens after that in our forecast. that means that they would be moving up short-term interest rates and long-term rates would probably be rising as well. i don't remember the precise numbers. you can look them in the

website. as for the other question, the truth is i didn't feel a great deal of political pressure as we analyzed the health legislation. we felt a lot of time pressure and we were very careful to resist that in the sense that we didn't rush out numbers that we were not satisfied with and we were often being pushed to move more rapidly. we worked very hard but we insisted that we would do the analysis in a way we thought was right and we could stand behind and we did. there are many who were hoping for different outcomes of our analysis. there were people who thought that our analysis wasn't right. we received criticisms of that, the cost of the insurance expansions in the legislation would with be more expensive than we expected. we received criticism that the savings through reforms in

medicare would be much larger than we expected. we think on both those issues andle others that our estimates were in the middle of the distribution of possible outcomes. that is a very uncertain business and we said over and over again that people should not put too much stock in the point estimate, the precise number we wrote down, because we could never be that sure given the nature of the changes that were being considered. but we think we were in the middle of the distribution of possibilities. and i think that one important point to emphasize is that what we produced an estimate of was the legislation as written. there are another set of concerns that the legislation won't be implemented over time in the way it is written down. people who think congress will make changes in the policies and we said ourselves in the cost estimates that we produced that a number of the changes in the legislation would be very

difficult to sustain over a long period of time and we were not sure it was possible to sustain them. that is a different issue because it is our responsibility to estimate the effect of the legislation as written down and we can and should and did raise concerns about whether the legislation was sustainable in all of those ways. it is your job to estimate the legislation and people who think it will be changed later those proposal will be estimated by the congressional budget office in terms of their effect and effect on health insurance. host: thank you for being here the day after your report came out on the state of the economy and your projections the next decade and answering viewers' questions. guest: happy to be here. host: well take a look at the campaign 2010, our next session looking at how races in ohio 13 and 16 and then when we come back we will talk with a member of congress from florida about

some indication that there might be a change in the cuba travel restrictions. >> matthew murray is travelling in ohio covering the competitive house races in the 13th and 16th district. you are joining us on the phone. start with the 13th district. betty sutton democrat represents the district. she won in 2008 with 65% of the vote. why is this competitive? >> it is having a lot to do with the economy. there is a fairly high unemployment rate in this part of the state. i think it is upwards of 10% or so. there is not a lot of confidence right now that even in a district like that that a lot of democrats will turn out in november. >> who is challenging her in the race and how is it shaping up? >> the individual who is challenging her is a man tom ganley who his name is sort of

everywhere in ohio. he is the largest car salesman in the state. he has dumped a significant amount of money in the race that otherwise probably wouldn't be competitive. i couldn't even find any polling that republicans have done in this district going months back which is sort of the typical threshold at which they might decide to challenge an incumbent. but it is really just the economy and fact that he is willing to spend so much. >> what kind of voters are in this district and what are they telling you about the two candidates? >> it once was a heavily manufacturing based economy and there still is quite a bit of that. i think that folks like in a lot of places are concerned right now about pocketbook issues. that is what they are talking to the candidates about. >> will these two candidates get help from their party leaders, president obama and in this case john boehner who represents an

ohio district and leader of the republican party in the house? >> i think that remains to be seen. i think what you will see a lot of is betty sutton is kind of one of the champions of the labor movement in the house of representatives and you are undoubtedly going to see, because of the cash days parity you will see a lot of ads bought by union groups. >> what kind of district is the 16th and who is running? >> i'm in it right now. there is a freshman representative john bocherry and one-time automobile dealer jim rennaci. it a little more difficult district for democrats because mccain won by a few thousand votes here. so, you did see some bad polling for democrats here late in the spring that really provided an opportunity for the republican

to devote a certain at of money. the nrcc has bought up ads. >> what about national leaders campaigning for them >> you can almost say for certain you won't see a lot of house democratic leaders coming here. i went to an event the other night and jim rennaci event and his whole line is that if you want to vote in november to re-elect your representative, that representative is nancy pelosi. >> rennaci is upset with an ad being run against him by the of a semi. >> he was forced to pay $1.4 million in back tax. >> that is ridiculous. he should not be running for office. >> that is outrageous. you want to raise more taxes.

>> it is hypocriticahypocritica. >> it is ludicrous. >> it is a crime. >> there should be no reason he couldn't pay his taxes. >> he is a deadbeat citizen. >> what has been the response from jim rennaci? >> he filed a defamation lawsuit yesterday in canton. i haven't seen a copy of it. essentially that they are defaming his character and his family. what is interesting about that ad, however, is i think if there was any question after the citizens united decision last winter about how much money unions or corporations or nonprofit groups are going to spend and how hard-hitting the ads would be it is my understanding these ads came out of general treasury funds for the union so i think there is no question it has provided an opening for at hrfr groups. >> -- a lot of these groups. matthew murray, thank you.

for more information about campaign 2010 go to c-span.org. host: as "washington journal" continues on the screen is the republican of florida from the 25th district areas of miami and naples. thanks for being with us. we invited you today because we have been seeing a number of headlines suggesting that the obama administration is preparing to ease travel restrictions to cuba. what is behind those headlines, please? guest: again, the obama administration has not spoken to any of us, any members of congress who deal with this issue. as far as i know. now, we keep reading that he is now looking at ways to get rid of some of the sanctions to ease sanctions and prosecution on that state sponsor of terrorism. one thing he did originally when he swore in was to ease some of

the prosecution and sanctions unilaterally expecting to get something back from the castro regime as far as better human rights conditions, et cetera. and that has not happened. all the reports have that the regime is cracking down now as much as they ever have, arresting people, throwing people in prison just for speaking out. the state department did a report in march where they claim there are about 5,000 cubans who have been arrested and convicted for the charge of dangerousness. this is according to president obama's own state department. so it would show great weakness to the enemies if the president were to lift pressure, to give concessions to a state sponsor of terrorism when they are cracking down, when the oppression is as bad as it has ever been.

it would send a very dangerous signal to both our enemies and allies. host: as the descriptions are in a number of florida newspapers the proposed -- the concept is leave intact the nearly 50-year-old embargo but expand opportunities for students, educators and research stores visit cuba. can you talk a little about why that modification would be harmful? guest: first you need to understand what the law says. there are a number of categories right now where americans can travel to cuba, including what you just mentioned, for educational purposes, religious purposes, for humanitarian purposes. so that is already permitted. however, it is regulated because we don't want to fund that state sponsor of terrorism. think about the countries that we might all think should be on that list of states that sponsor

terrorism. i guarantee you that we can come up with another half dozen not on the list. those that are on the list of states sponsors of terrorism are the worst of the worst. among them is cuba because they harbor terrorists, they have killed americans, because they harbor fugitives of american law, because they help terrorist groups around the world. so, that is why they are on that list. having said so, americans can travel under specific conditi s conditions. you mentioned some of them. to broaden the conditions and allow more americans to travel which would help funds that regime at a time as i said before when the oppression is as bad as it has ever been -- and by the way, when the regime is, right now, currently holding an american hostage, an american contractor who is there helping the way in a humanitarian way

the jewish community in cuba and for that he has been held almost a year. the family has no access to him. the u.s. government can barely speak to him. he has been incarcerated for almost a year for helping the jewish community in cuba. it makes no sense to further expand the categories already permissible where americans can travel at this time. host: congressman, i want to make sure, the phone numbers are on the screen for the audience to join and we can take questions and comments by e-mail and twitter. a question for you, overnight i received as a lot of people did in the media one of those policy statements you get from advocacy groups. this organization suggested they saw linkage between a movement on the cuba travel policy and the administration's policy and thinking toward guantanamo bay. would you like to venture into that area at all?

guest: i don't know really know what the administration is thinking. there is a lot of speculation. there have been a lot of reports. the administration said during -- the president said during his campaign that he would loosen some sanctions. he has already done that. as he said, he was hoping that he would get some positive response from that state sponsor of terrorism. the response has not been very positive. including as i said before, the arrest of an american who was will just helping the jew iish community in cuba. so, it would seem very strange and it would be obviously seen as a sign of great weakness if the president, despite what the regime has been doing, it were to further release pressure or lower the pressure on the regime. as far as motives, is it having something to do with guantanamo or whatever, you would have to

ask the administration. as of now all we are seeing are press reports. both republicans and democrats who deal with this issue -- and i need to add there is strong bipartisan report to keep the treasury on that terrorist regime until serious changes take place and steps toward freedom and democracy happen and all the political prisoners are released and political parties, labor unions, free press is allowed. there is bipartisan support to concept the pressure on. i don't know what the president has been thinking. he hasn't spoken to any of souse it would be speculation if it has something to do with guantanamo. i don't know what he is thinking, and i can tell you again that he gave concessions and was slapped bit anti-america state sponsor of terrorism the castro regime and it would be strange, unfortunate and

dangerous if he were to once again give further help to that regime. host: before we go to schools a snapshot from state department cuba which has a population of 11.2 million, single party state the cuban communist party. average monthly salary $18 a month. the prevailing law in 1976 u.s. citizens were restricted from doing business with cuba. let's take the first call from international falls, minnesota, paul, democrat line. caller: yes. this is paul. democrat. i just am calling to ask you why we always get a republican on there to talk about what the president is doing. maybe there are a few democrats

that might have an opinion on that, too. host: paul, we obviously if you watch we have members of congress from both parties. the congressman just talked about this is a bipartisan policy position on the cuba sanctions. picking up on that i would like to move from members of congress to state politics in florida. with these two big races you have coming up, how do the politics of this debate fall with regard to the candidates for senate and governor races? guest: by the way it is very much fun to an floridian at election time. i feel bad for other people who don't have such an exciting time as we do in florida election season t. is always -- it is always interesting. the issue of cuba is an issue that a very large number of people in this state feel very strongly about. we are a very diverse state so we have the issue of israel is

an issue we care deeply about. the issue of latin america are issues that affect our community, our state and are very important issues to many people in our state. by the way, they impact our economy in a very real sense. so, cuba is one of those issues that is talked about during the election season. you mentioned a while ago -- and i mentioned -- there is strong bipartisan support in congress to keep pressure on the state sponsor of terrorism until freedom comes to the cuban people. and that is the case in the florida delegation of congress, for example. most of us, i think there may be one exception to the 25 members of the house, and both senators believe we have to cope the pressure on. now, during election seasons there are some with other points of view and that does become be a issue. i can tell you in my elections in the past my opponents have

tried to use that as a wedge issue to try to divide around take votes away and what has happened is that it has helped me when my opponents believed that doing business with the castro regime is positive and they try to use it as a campaign issue. it is not a good issue pause a lot -- because a lot of the population here understands the issue and have close ties with the opposition movement within the island and close ties with the population and understand the issue better than most. and there is very strong support to keep the prosecution on to keep -- keep the pressure on until three conditions are met and this is what the law states. this is what congress established. the sanctions go away if three things happen. number one is the freeing of all political prisoners without exception in cuba. number two, a how for -- allow for basic freedom.

freedom of press, political parties, et cetera and start the process ward free elections. then the sanctions absolutely go away. so the question has to be asked which of the three conditions is too much to ask for? which of the three conditions do the cuban people not deserve? do they deserve to be -- do they deserve freedom less than other people around the world? than south africa? th than chile which it was pressured by the international communi community? the answer is no. the cuban people deserve freedom as well and those are the conditions established in law. so, the debate has always been do you support unilaterally giving concessions to the state sponsor of terrorism and asking nothing in return or condition the billions of dollars that normalization would mean on some conditions? those three conditions excessive? i would say they are not. the majority of people in

florida and that would tell but a bipartisan way in congress the majority of members in congress believe those are sparano steps that -- those are important steps that are to be made to eliminate the sanctions that the u.s. has to try to have leverage so that cuba can be free and there can be a democratic transition and that state sponsor terrorism will no longer be a reality. host: cuba has been under sanctions since the ike era. at some point we have to admit it is not working. what is your reaction? guest: it is working. remember that the sanctions there are for two reasons. first, and foremost it is in the national security interest of the united states. let's remember what the castro regime was doing when they used to get about $7 billion from the soviet empire. r.g.i.'s died in grenada liberal ing grenada. they had cuban troops in africa

and latin america. they were exporting terrorism and their regime. they are not doing that because they don't have the money. the reason is because of the u.s. sanctions. number that, is it is also the leverage so that there can be a transition toward democracy when castro is no longer on the scene. i think it is a fair question to say but we have had these sanctions for many, many years and castro is still there. so, they will tell you -- some people will say let's do business and that will solve the issue. let's take that to the logical conclusion. there are almost 200 countries and most of them do business with the castro regime. that hasn't eliminated the castro regime. so we could say people do business with castro, that hasn't eliminated the regime so that hasn't worked. the reality is that castro is a

nasty, bad murderous terrorist dictator. the reason he is in power is because of fear and he murders people because he throws people in prison. and here is the question. is it in our national interest to just give billions of dollars which is what normalization would mean, asking nothing in return hoping that he will become a good guy? or should we have some conditions before that regime gets billions of dollars? i expressed what the three conditions are. the reason this community in south florida, the cuban americans who are the ones who have relatives in cuba and are affected by the regime, the reason congress supports these conditions in a bipartisan way is because we understand it is in our national interests to make sure we do not fund that states sponsor of terrorism. i mentioned what they used to do

when they had the money. and to keep the leverage so when castro is out of the picture there can be a transition in toward free democratic elections. it not much different than with the european union did with spain and portugal. they had conditions before they could be part of europe and many have said there that part of the reasons that they became democracies is because of precisely there was that pressure and once those two dictators were out of the way the pressure helped create the condition for a democratic transition in spain and portugal. it is not unlike the sanctions for south africa that we had. host: we have so many callers that want to talk so i want to get to another call. norm on the democratic line from new york. caller: thank you for taking my call. i really feel that when i'm listening to sounds like we are

back in the soviet era, the descriptions of the terrorism and so on sounds very much like we are 20 years behind and things have changed and things are changing. i actually did travel to cuba when pediatric the people-to-people license -- the peop people-to-people license program and it is a very different cuba than what is described. keeping cuba on the supporting terrorism list sounds kinds of outdated since it was the soviet union using cuba basically to spread their terror or whatever you want to call it at the time, communism. and i feel we are not looking at cuba today. the sanctions that we have were strengthened after the soviets left and still have had no results. people talk about the 50 years of no results and you are talking about, saying there are results. i just don't see it. i think that you are really stuck a past era.

you are remembering the cuba that you left and it is not the same in the 21st century and i feel like if we don't open up we are just -- i don't know what to say. we are opening up by taking north korea off the list of terrorist supporting countries. we are opening up to libya. we are free to travel to all of these countries even though we may not wish to. and cuba is one that we really should be opening up to. host: thank you for the call. congressman? guest: the gentleman says that the world has changed. in europe communism went away but in north korea it is still a reality. by the way he mentioned north korea was taken off the list of states that sponsor terrorism. that is a grave mistake. it is evident they are a state sponsor of terrorism. we know the case of iran. he mentioned liberal why.

i don't think -- he mentioned liberal why. i don't think they are an example of freedom of democracy and human rights. cuba is another one where we have horrible conditions. the gentleman mentioned there is no problem in cuba but the situation has changed dramatically. let's talk about the cuba of today. in march there was a report by this state department saying that there are 5,000 peel in prison -- peel in prison in -- people in cuba for dangerousness. that means that you may be thinking something against a regi regime. 5,000 people they think have been convicted for that. we have seen the images of the ladies in white getting beaten in the streets of havana because they just march toward church and ask for their relatives, husbands, wives, brothers, sisters, to be released as political prisoners from the

gulags. we saw the case of orlando cepata a political prisoner who died in prison on a hunger strike because he was protest being the multiple beatings that he received and others received while being a political prisoner in cuba. on the 10th of this month another five human rights activists were arrested for a peaceful demonstration in front of the university of havana. i can go on and on. so it is interesting the gentleman says things are not -- they have changed and are not that bad. no, things have changed in germany and in the czech republic and eastern europe. they have not changed for the people of north korea and noted for the people of cuba. they have not changed for the people in iran. and i think not recognizing that is frankly not living in this planet. no, i'm very aware of what is

going on in cuba today. there are relatives of the people in cuba who i happen to represent and proud to represent of very aware of the swaeuituat in cuba and precisely because we are aware of the situation in cuba today is why we are strong suppo supporters and the majority in congress of keeping sanctions, keeping the pressure until those three conditions are met. freeing all the political prisoners, allowing for some basic freedoms, freedom of press, freedom of political parties, allowing for labor unions, and start to have the process toward democracy. then we will know that there have been changes in cuba and that is the time when the sanctions should clearly go away. .

" >> and the hungarian people have shown great solidarity to the cuban people. they are not surprised by the maneuvers that the dictatorship has made. why people want to travel to a place like cuba where cubans are not allowed to go to the beaches where the tourists go, when there is an apartheid regime that sponsors and promotes pedophilia as a revenue source for the regime, why people would

want to go there, he would have to ask them. the united states says more humanitarian -- sends out more humanitarian aid to the cuban people than the rest of the planet combined. we are helping the cuban people. the policy is to not help the regime. it is to help the cuban people. any steps that would help to fund the regime would be detrimental, particularly at a time when the oppression has been stepping up. we've seen the footage of the ladies in white been beaten in the streets. there thousands of people in the streets. even when an american is being held hostage for trying to help the jewish community in cuba, this is not the time to pretend it is a nice, wonderful place where we can go in our flip- flops and go to the beaches and pretend the people are not

suffering. the money from tourism would be used to for the oppression and to extend and spread terrorism around the world. that is what the regime has done when it has had money. they do not have a lot of money now precisely because of the policy of the united states congress and government. we hope and plead with the president cannot give concessions to the state sponsor of terrorism. host: al from lafayette, louisiana, you are on the air. caller: i am an american citizen. i do not feel you have a right to tell me where i can go, regardless of what reason i might want to go there. maybe we need to look around here at some of the oppression and things that have been going on prior to some of these conventions with the suppression

of information and all that. it seems to me the last time i looked, china was communist , too, and a sponsor of terrorism as well. those are points you might want to address. i think trying to compare any circumstances in the united states with cuba, china, or north korea is stretching it. we have due process. we have the freedom of the press. we have the judiciary. i believe this is the greatest nation that men and women have never created on the face of the earth. i am proud of that. comparing us with nations where there is oppression and dictatorships is not reasonable. i am starting -- i am starting to think it is not worth spending a lot of time on. we do business with china. china is not a state sponsor of terrorism.

many of us believe we have to be more careful with china and we will regret dealing with it as if the regime was our buddy. i do not believe they are. i think we have to be more vigilant. we have to pressure china. i do not think we are doing enough of that. because some of us believe we do not treat china tough enough, does that mean that where we are treating some of our enemies with real teeth, should we eliminate those? no, i think we should look at how we're treating china in doing business with china and ignoring the human rights violations. that does not take away from the reality that 90 miles away from the youngest is come up with a state sponsor of terrorism. -- that does not take away from the reality that 90 miles away from the united states is a state sponsor of terrorism. they continue to imprison their

own people. they continue to espouse anti- american ideas and frederick throughout the world. remember castro said a little while ago that the sinking of the south korean ship, that the united states had sank the ship. his terrorist dictator who says that israel is just as bad as the nazis and claims that they are murderers. to pretend that we should ignore and start doing business with that regime as if it were costa rica, panama, or columbia makes no sense. host: how does it work when the united states currency is the concurrency? guest: that is a big point. the cuban currency is the cuban peso.

it is basically worthless. the cubans can also spend order called convertible pesos. most stores, shops, and hotels do not accept the cuban peso. the only except dollars or euros. the cubans have access to the pesos. they cannot have access to medical care. they cannot go to the hotels because they do not have access to the other currencies. we want to keep the pressure on to make sure that we do not send more hard currency this goes directly to the regime. the cuban people do not have access and cannot use that currency. if they get a dollar or euro, they have to convert that to the convertible peso.

the hard currency goes straight to the regime that they used to do harm to our national interests and the cuban people. caller: as i listen to this and how many times he has used the word "terror," it is like fear dressed up and high idea. it seems to be the policy of the republican party. this talk of fear and terror, this is a form of insanity to keep operating out of this notion of trying to terrorize people for the benefit of political purposes. there are some people getting benefits from keeping these policies and way of thinking aloud. he is one of them. the only way to do that is to keep perpetuating this fear and

terror. if you listen to the high ideas it wrapped up in fear emanating from the republican party, i think this is the clue to the american people that this is the lowest form of motivation to move the people fourth. that is fear. when you operate out of fear, york operating out of a form of insanity. -- you are operating out of a form of insanity. guest: i guess i should not mention that the cuban regime is on the state list of sponsors of terrorism. republicans do not control list. the white house control's list. the policy regarding the cuban regime is bipartisan. that is democrats and republicans. you can try to politicize the

issue, but the reality is that there is bipartisan support to keep pressure on the regime until all the political prisoners are released, and to basic freedoms take place by freedom of the press, legalization of political parties and labor unions. then they will start a process towards democracy. the reason i mentioned is is a state sponsor of terrorism is that it is on the list of state sponsors of terrorism. if he has a beef, it is not with me. it is with the white house. the recently reinstated cuba on the list of states that sponsor terrorism. he also has a beef with the vast majority of the members of congress on a bipartisan basis who continue to believe it is and our national best interests and the best interest of the cuban people to insist on freedom for cuba before we normalize relations. host: there are a number of twitter messages coming in

suggesting you have a family connection to the castro family. can you clarify what that is if there is one? guest: i was born in fort lauderdale, florida. i have close ties to the cuban issues. my parents were born in cuba. we know the castros very well. my father's sister was castro's first wife. not only do we have a lot of contact with the opposition movement in cuba, but we also know those individuals and that regime very well. that is why we're not surprised by any of the things they do. it is not only my family, it is the vast majority of cuban-

americans. to be a cuban-american, that is people who left the regime because of the regime and have relatives in cuba who are suffering. a lot of people like to criticize the cuban-american community and wonder why they're so concerned about it. it is because their relatives are still suffering under the regime. they are very aware of the suffering that the terrorist regime continues to cause. it is just like the woman who called about her hung jury and husband. there are people who suffered under communism and oppression. the tend to be very sensitive to the oppression and suffering. i am proud of the people i represent. it is a very diverse district. they represent a lot of cuban- americans to understand the cuban people also have the right to be free. we're only insisting that cubans have the same rights as people around the world.

that is to let the members of parliament, to fulfil their own destiny. they have the same rights we have here, that the hondurans, the czechs, the colombians, or any other democratic country. host: i am about to lose my satellite connection with you. thank you for taking time out of the congressional. to join us on "washington journal" to talk to us about an issue near and dear to your heart. that is cuban-american relations. we are going to take a break and take you to seize and radio for an update on what else is happening in the world. -- we're going to take a break and take to do see spent radio for an update on what else is happening in the world. this is going to be day five of a look at the financial regulations law and how it might be affect the u.s. markets.

we will be right back after this break. we will pick up that conversation. >> here are some of the headlines. as we get into a discussion about financial issues, tough financial times are forcing many americans to dip into their retirement savings. this is according to a new report by fidelity investments. it says a record number of workers made a hardship withdrawals from the retirement accounts in the second quarter. the number of workers borrowing from their accounts reached a 10-year high. at the summer meeting in st. louis, democrats are expressing optimism at the party's financial power and voter turnout operations will help stem widespread losses. democratic national committee chair told members that there is a lot of doom and gloom about it, but i think we're going to do a lot better than people think. a california congresswoman

charged with violating ethics rules says the committee charging her is known for sloppy work. maxine waters says the congressional office is not a very tight. she says they do sloppy work. "goodpeared on abc's morning america." pakistan has accepted $5 million from india for flood victims. the unusual expression of goodwill comes at a time when pakistan is suffering from the worst flooding in its history. the united nations appeal for $460 million in emergency assistance. starting today, scientists plan to release of non-toxic gases and particles into boston's subway tunnels. they want to study of how the materials could spread through the subway system in case of terrorism attack. federal officials want ways to quickly minimize the effect of

an airborne attack on the country's 15 sublease systems. those are some of the headlines on c-span radio. host: we have 45 more minutes left in today's "washington journal." we will spend about on conversations about the financial regulations wlaw that has just passed and how it will operate. we will wrap it up with a look at it in total through the eyes of journalist matt taibbi. he joins us from the studios in midtown manhattan. we will start with the headline on your piece in this august addition to "rolling stone." is described as "wall street's big win." why do you and your editors see it that way? guest: i have been following the

progress of the bill for about a year now. going back three or four months, the last time we did a piece on the bill before this one, there were still a couple of sections in the bill that a lot of people thought work right radical and had a good chance of passing. when we came back to do the wrap up on what happened with those sections, it turned out they were completely gutted by the time the bill went to passage. these are the big money questions in the bill. this was the whole issue of whether or not there would be a so-called full for rule -- volcker rule or lincoln rule and with the banks would be forced to sell off derivatives. on both of those questions, wall street completely one in the end. -- wall street completely won in the end.

the lincoln rule passed the senate version of the bill. this was a provision that said that the big banks like goldman sachs and j.p. morgan chase would have been forced to spin off their derivative debt. that includes foreign exchange swaps. these are some of the most dangerous toxic, and difficult instruments we have seen traded. they have a profound effect on crises like the jefferson county mess, long-term capital management. this would have been a profound change in the way wall street does business. it would have forced companies like j.p. morgan-chase to give up a to 40% of their profits. this past in the senate. by the time it made it to the final version, the rule was more or less completely gutted. there were exemptions for about

90% of the derivatives listed in the bill. business is almost going to return to completely business as usual when this is passed. host: a would like to give the telephone numbers. his article is detailed on the policy and process. we will have time to dig into that. if your interested and have questions, we will put the telephone numbers on the screen. we welcome your participation through twitter and e-mail as well. you wrote that this was ultimately a cop out, a band-aid on a severed artery.

we're going to dig into more details on the legislative side. i am wondering if you are surprised there have not been more prosecutions coming out of what happened on wall street. guest: i am not surprised, but i am disappointed. for people to work on wall street, the number one problem they have with the government's response to the financial crisis was that nobody of any substance got led away to jail. the bernie madoff case was the only real criminal prosecution we saw after the mess. there's really no disincentive to continue the wildly irresponsible behavior we saw before the crisis. in fact, this bill leaves alone

a lot of problems that led directly to the crisis. it did not begin to address problems like how much capital you have to have on hand as opposed to how much you went out. it did not do anything about the ratings agencies. it kicked that entire question to a future discussion group. many of the real serious problems that led to the crisis were not addressed in the bill. it provides an incentive for people to continue the same risky behavior. host: i want to spend a minute on this. it sounds like there's nothing good in the bill. it sounds like there are some good things and even distort things. what are they? guest: the headline accomplishment of the bill according to most people talk to in congress was the creation of the consumer financial protection bureau. nobody knows exactly what form this will take. it has the potential to be an important new agency public out

with the interests of the consumer and prevent things like predatory lending. the other key piece of legislation or what could be key is the amendment written in by the pennsylvania congressman. he gives the government the power to step in and break up to big to fail companies if they pose a systemic risk to the economy. there was another proposal and the senate that would have mandated the breakup of these companies. that failed. badly in the senate. -- that failed. he badly in the senate. -- that failed pretty badly in the senate. a gives congress enormous power to do something about these two big -- too big to fail cos.

host: how long until the major portions of the bill are implemented? guest: none of them will be implemented right away. the process will begin to take shape over the next 18 months. a great number of questions were left undecided in the bill. there were left to groups of mostly anonymous regulators to decide in private or in conjunction with lobbyists. that has to be concerned for a lot of people. the work was done in public in the conference is one thing. the remaining work will not be done with the participation of a lot of people who have the public's interest in mind. most of europe -- most of the remaining work will be done in congress with lobbyists. that has to be concerned. another portion of this deals with international regulators. congress was originally going to pick up the question of how much capital banks should have opposed -- as opposed to how

much it went out. it decided in the and not to pick that up and to leave it to international banking regulators are going to be meeting in switzerland later this year. the expectation is they will take a very lax approach to the question. there will not be a significant change in how much capital banks have to have. host: in his observations, matt taibbi names names pretty strongly. we hope to get to that and share his observations with you through his reporting. we will begin our conversation with the audience. margaret is our first caller. caller: you must have some good bosses at "rolling stone" for telling us the truth out here or you might get fired. guest: we have been on this. two years.

there is a lot of excitement for this issue. i have no idea why that is, but it is. host: we have john on the line fromblin' jacksonville, florida. caller: i agree with everything he is saying. the reason it went on like that is because america has businesses making a lot of the decisions over powerful policy. the consumer protection part is one big part of the legislation. the people in congress it was elizabeth warren who created the idea for the consumer protection agency. they do not want her because they feel like she will be too tough. do you not want someone in there

who would be too tough? guest: that is a good question. throughout this process when people in congress were debating whether to pass this new consumer financial protection bureau, most of the people in congress thought this was designed specifically for elizabeth warren. people voted for this believing or did not vote for it believing that elizabeth warren was going to be the nominee. as soon as the bill passed, suddenly we had chris dodd making statements suggesting she might not be the best choice or would not pass the confirmation hearing. the word in washington now is that there is a less than 50/50 shocked that she will get the job. it is a surprise for a number of reasons. even though she is not popular with the banks, she has a lot of support on both sides of the aisle. republicans like her because she was very tough about tarp.

she oversaw the bailout. she got a lot of support from americans who are against spending and the bailout. she has a lot of national support among democrats. it is a big surprise if she does not get the job. he would testify directly to the influence of the big banks over this process. host: matt taibbi comes from a journalism family. his father is a long time journalism reporter. matt has been a journalist most of his career since he graduated from college in 1991. he reported from russia for a stint. how much did you follow congress before you took this assignment looking at the legislation? guest: i have done a lot of reporting on congress. a couple of years ago, and spent six weeks following bernie sanders around when he was in the house. eradicable long pieces about how

the house operates. i did not have a lot of experience with the senate. -- i wrote a couple of long pieces about how the house operates. i did not have a lot of experiences with the senate. both the house and senate have their own peculiar ways of subverting the public will and allowing a majority to have undue influence over the rest of the members. i think we saw that in a dramatic way in this bill. the main leaders in the democratic senate were able to puppeteer at the entire process from start to finish. they were able to prevent all lot of meaningful amendments from being voted on or considered. it was very interesting for me. host: your piece is particularly tough on chris dodd. can you add more to that? guest: it is difficult because i

was spending a lot of time during the reporting on this piece with the staffers who were radical ande o meaningful amendments. the was the amendment that would have mandated the breakup of the banks. there were derivative amendments. there was bernie sanders with the audit of the fed. when i kept coming up against over and over again was that either they were being stalled by the majority or they work some help getting ambiguous answers from the majority. people have to remember it is not just introducing an amendment and sending it to a vote. there is a real process involved. if you file an amendment even with 65 votes in the senate, there's no guarantee it will ever get voted on.

you need the consent of the majority, a key committee chairman and the majority leader to even get your amendment to the floor. we saw throughout the process that keep amendments did not make it to the floor and did not give voted on in time. they ended up either being watered down or eliminated entirely in backroom deals. that is all on chris dodd and harry reid and those running the democratic majority. host: marshall, texas, is on the republican line. caller: coming from a conservative perspective, i think it is a big disappointment and a waste of time. it is heavy on dictates. it is a whole new government bureaucracy. there is no transparency. i thought that is what it was about, letting buyers and sellers know the value of the assets they will be buying into.

we have no reform of the breeding industry. there is no transparency. there are dictates and more government bureaucracy. guest: i largely agree with you. there are some things in there but were an attempt to create more transparency. probably the biggest one of those was the new mandate that will require all derivatives to be traded and clears on regulated exchanges. right now in the stock market, and everybody knows how much a share of ibm petraeus 4. it is shared on public exchanges. -- everyone knows how much a share of ibm trades for. other things are traded in the dark. he gives a natural advantage to the bigger players. the more volume huge trade that, the more information you get

about pricing. it is similar to bookies in las vegas. if you are taking 1000 bets, if you have a better idea of the spread for the games than the average better. that situation has been changed. from now on, instead of the bookies in las vegas knowing the spreads only themselves, now those will be published. they will be on exchanges. that is a good thing. there are loopholes in the bill. it is a very good start to a problem that was a very serious issue leading up to the crisis. host: the next call is from illinois on the independent line. good morning, robert. caller: i want to thank c-span and all of the people who work so hard to bring this program to us. it seems we have a situation

where you of extremes with both parties getting in and running things. i think everything you are talking about shows that. i was wondering if the people with the big money and making all these decisions, whether or not in your investigations and what not, whether they feel the american people are catching on to what is going on and whether that is bringing any more pressure on them to do more things that benefits the country and the people as a whole. thank you. i will take the answer offline. guest: pessimistically, my answer to your last question is probably kno. one thing that was unchanged and is disappointing about the

process is that there was not a widespread campaign to educate the public about what was gone on in the bill. most of the stuff in the bill is highly technical. it pertains to an industry whose practices are completely arcane and obscure to the average consumer. it affects each and everyone of us in dozens of boys every day. how does credit swaps work? what is uncollateralized derivative sharing? none of the people involved in the bill made a concerted effort to explain this to of the american people. as a result, a lot of the things that took place continued to fly under the radar. there is not widespread outrage about this bill because the public does not understand it. i think that is the way wall street wants it. that is the way they will keep it because this is naturally complicated. until somebody makes a concerted

effort to explain this to the american people, we will continue to have the problem with an uneducated public relying upon elected officials that take a lot of money from wall street to make their decisions for them. it is not of this situation. host: when it became law, supporters suggested it put into place a framework that could prevent a meltdown like the one in 2008 from happening again. does it accomplish that goal? before i get your analysis of this, reuters posted historic on june 27. it says that life goes on. this is from the "wall street journal." says the system is still at risk. here is what matt taibbi rights at the end of his story. "the bill does not go after them

or make what they are doing even a crime." why do you say that? guest: the thing that really caused the financial crisis was a broad scheme. banks were able to essentially take gigantic pools of subprime mortgages and bad loans and dice them up and turn them into securities. the rebel to go to the ratings agencies and get them to slap aaa ratings on them -- they were able to go to the ratings agencies and get them to slap triple the ratings on them to sell them off to unsuspecting suckers iran pension funds -- who ran pension funds. it was a rocks in the box scam. you say it is valuable and sell it to someone and make them think it is gold.

that situation is completely unchanged. they've not done anything to change the basic fraud scheme. underlying the whole thing was the problem othat you could borrow tons of money to plunge into this scheme knowing that if at all collapsed, your bank was probably too big to fail and the government would probably step in and rescue you no matter what happened. none of this has really changed. hasrating agenciy question not changed. they've not done anything to address the problem inherent in the derivatives instrument used to sell these bad loans. the only thing they really did that might change anything is that they tweaked the mortgage lending process to make sure that people who take out loans actually have money or exist. some of that will change. there will be fewer bad loans because of that. but the process by which you

take bad loans and selling off to some other sucker out there, that process is not been changed at all. some people think there are more incentives now to behave badly than before. host: jack from pennsylvania is on the democrats' line. caller: thank you for coming on the show and speaking the truth. this is another case of why the american people are losing faith in the government. i watch c-span a lot. i watch them vote on bills. sometimes you have to laugh of the way they do things. we hire these people to do a job and make decisions. it seems they cannot decide on anything and cannot solve the problems. this whole bill is another case of them not being able to solve the problem. they let the people with the big money change what they want to

change. in the end, the bill got nothing. this is why the american people have no faith in their congress. it is a sure sign things will not change much. thank you. guest: i completely agree with you. i think people have a lot of reason to feel disheartened about what went on. while i was covering this bill, there were more than 2000 industry lobbyists roaming the halls of congress. they spent hundreds of millions of dollars lobbying during the process. i was waiting to have an interview with one senator. a physically bump into a lobbyist -- i physically bumped into a lobbyist in the foyer. there was no room to sit because there were so many lobbyists in there. there was only really one group that was lobbying for the other

side of the bill. that was americans for financial reform. they only had 60 lobbyists. they were all volunteers. there were lobbying for the good side, in my opinion. you have 2000 lobbyists representing interests that can translate into hundreds of millions in campaign contributions for these politicians. on the other side, you of one mostly volunteer group with a loose coalition of people mostly working in their spare time. they're not offering the same kind of financial power. seen in a lot of bills recently is that when push comes to shove, elected officials will ultimately almost always side with the interests fund their campaigns, even in a crucial emergency situation like this one or something had to be done to prevent another collapse. they could not find it within themselves to do that.

it is very disappointing. host: any idea of how we can get the country back from these financial lobby groups? guest: that is a good question. there has to be some kind of restrictions placed on campaign contributions. that is the first thing. we have seen the enormous influence these groups have. goldman sachs was the no. 1 private campaign to contributor to barack obama's campaign. there in the top five for contributions to members of congress. no matter how much trouble they get into, the cannolis buy their way out of trouble in the end. the versions of this bill that passed in the house and senate were much tougher than the final version. that was because in the conference process when you have the back room moment and the lobbyists were able to talk to the leadership and issue their

demands, that process ended up ruling the day and killing the major provisions of the bill. we have to do something to limit the access of lobbyists and money in the process. otherwise, we will get the same situation over and over again. host: "the denver post" has this statistic in its story. there were 67 studies and 243 rules to be created. let's go to our next call from indiana. gordon is on the independent

line. caller: good morning. your article is excellent. i want to commend you for it. do you really expect there will be a difference between the politicians with a d or r after their name? you are whistling dixie. i am 67 years old. i remember the debacle with the savings and loans associations. there was no real change. there is not going to become less -- there's not going to be unless we demand a change in the process of how elected officials are elected and how they have to give us transparency. mr. dodd and mr. frank did not do anything different than what they have done for decades. they will do what they get paid

for. money talks. the world still revolves around sex and money. it has done it for eons. it will not change now. i appreciate your interest. you are young enough to make some changes. until you understand that changes have to be in the process and not just saying that they screwed up. up? do you change the scripew- thank you very much. i will listen to your answer. guest: thank you for your comment. i agree with you. we were trying very hard to point out how bipartisan an effort to water down this bill is it really was in the end. we were trying as much as possible to highlight the subterranean cooperation between the democrats and republicans that went on in this bill. a great example is what happened with the amendment that turned into the volcker rule.

they had tremendous difficulty in getting the amendment voted on. they could not get senator dodd to agreed to vote on it. in the end, they have to resort to a trick. they attached their amendment to the brownback amendment automobile regulation. that would guarantee that they're eminent got voted on before the senate bill was voted on. in the end, somebody put a word into sam brownback's ear and he withdrew his amendment, killing both of theirs in the process. right after that, the democratic leadership announced a conference instruction that would have instructed the conference committee after the vote to reinstate the brownback language. the republican senators withdrew the amendment to kill both of their amendments. the democrats turned around and

reinstated the republican amendment, leaving only merckley levin out in the cold. we were trying to show how that happens as much as possible. host: your big article looks at the status of wall street and banking reform. here is how he concludes the article so you can get a sense of his world view of washington. he wrote that it is not always easy to except the reality of what we allow them to get away with.

you are a young man. i am wondering about your optimism about the state of the country right now. guest: a couple of years ago, i was covering the presidential election campaign. i did not know anything about the economy. i have never covered wall street at all. it was assigned to do a story about the financial crisis happened. the last few years i have spent covering this have been profoundly shocking to me.

it really underscores the degree of cooperation between the financial services industry. it has been engaged in a broad despotism for over a decade. congress is completely unable to exercise any kind of will to oppose what goes on. it has been really depressing. it is a problem for me. i am theoretically a comic writer and i cannot find anything funny about it. it has been a little bit depressing. in this process, i did talk to a lot of politicians like bernie sanders, carl levin, ted kaufman, sherry brown, were generally fighting as honestly as you can to change things. that does give me some hope that

eventually people will come around on this issue. host: are there any good guys on the republican side of the aisle? guest: i think there are. some of the republicans, especially on the issue of the aggressive.ere very i think there was momentarily some confusion among the republicans about the bailout because it had the support of president bush when it first went through. through, thereent was a lot of consternation about the tarp and the less well known aspects of the bailout that went on. there were guys like ron paul who were very aggressive in pointing out the lending that the fed was involved in.

i think the republican tradition and values have a strong place in this debate. a lot of the problem we are dealing with house to do with wall street using the federal budget and federal reserve as a kind of welfare reserve. tradition. -- traditional republican values will find that offensive. they've not been communicating that to the voters. they have been portraying the bill as an attack on free enterprise and increasing of big government. a lot of what has been going on is the expansion of the welfare state for wall street. i think most republicans would find that offensive. host: matt taibbi gives his view of the financial reform process. his pieces called "wall street's

big win" in the august edition of "rolling stone." go ahead, julia. caller: thank you for reporting the truth. any republican or democrat, if they are there, all they want to do is line their pockets. that is what the lobbyists do for them. we do not need any more regulations. there were regulators when this whole thing was going on. they did not do anything. everybody was just interested in themselves. we need to have elected officials that care about the country and not just about themselves. you and i know that. thank you for telling the truth. you are young enough to make changes and influence the younger generation to do the same and be a good american.

thank you again. guest: thank you for your comment and question. i agree with you. a lot of people said we needed broad new regulations. the fact is we have a lot of regulations in place throughout the crisis. regulators did not do their jobs. the great example was the aig crisis. aig managed to get itself regulated not as an insurance company but as a savings and loan. there were supposedly regulated by the office of thrift supervision. they only had one insurance expert on their staff. the world's largest insurance company was regulated by an agency italy had one insurance expert. they have plenty of power to step in and prevent algae from doing what they did. they did not do that. throughout the process, there were a lot of people that were

hammering home the point that we do not necessarily need new rules and bureaucracies. if we're going to create new rules, we have to make them mandatory changes. we should not just create a new office somewhere or someone looks at a problem. we should spell out what has to happen if certain crimes take place. the brown-kaufman and then it was a great example. they said if a company gets this big, it has to be broken up. they did not want to leave it up to regulator. they wanted to ride in to the law. almost every regulation of that type was excluded from this bill. basically created a lot of new regulators and offices that made or not do the job. it is very disappointing and not the way it should be. host: how much of the bill have

you read? guest: i have read a lot of the derivatives portion. i have read the volcker rule portion of it. i have read a lot of the colloquies that have gone on about it. it would be impossible for anyone to beat an "expert" on this. it is so massive. the best and hope for is to know the major poet points. there is a wide sense of unease in congress. nobody really knows what the total effect of the bill will be. it is so far reaching. one person said to me that we have no idea what this will do when we let it loose on the public. it touches so many different parts of the economy. it is impossible to say what the effect will be. we do not know how aggressively some of these new regulators will pursue their mandates. it could bring no changes of all

or sweeping changes. we do not have any idea. host: the next call is on the democrats' line. caller: matt, i want to say that i am a democrat. i feel the people's pain who were calling into the show today. i am a democrat. the last caller was a republican. we go around and talk about afghanistan -- about how corrupt they are. it is hard to go to another country and get them to come over to our ways. we are so corrupt. if the united states really wanted to get the unemployment numbers down, they could have made a thing where they could have gone straight to the unemployment lines and gotten

the workers off the line with the recovery act. there is nothing in the legislation says these people have to go through the state to get the unemployment. 10% is going to be the unemployment numbers from now on. the democrats and republicans are in love with money. they do not love people anymore. the love of money is the root of all evil. this country will have to get rid of all of them. i want to thank all of the callers for calling up. thank you. guest: i hear this so much from people. people are so mad at congress. it is conspicuously not a democrat or republican thing. people seem to be mad across party lines.

it is really not a republican or democrat issue. it is really an insiders and outsiders issue. i am hoping with the midterms or next presidential election, people will start to see that more. the problem is the symbiosis between the leaders of the two parties in the financial- services industry. they are particularly guilty in the issue. they are an obvious source of cash for political campaigns. that is one of the reasons why they have been allowed to get away with as much as they have. yet the main reason they have been allowed to get away with so much is that the issues they're dealing with are so arcane and obscure that a lot of the regulators do not understand them. they have to appeal to people on wall street to explain it to them. the problem has been pervasive.

because they are able to access to these elected officials for lobbyists, they're able to convince them that they have to trust them on it. that is been a major problem. host: the last call is from mark on the independent line from indiana. caller: it is a pleasure to talk to you. i find your work accurate and truthful. you started talking about the most important thing. that was ron paul and his movement to audit the fed. you know as well as i do that as a private institution, it is unconstitutional. it is run by the elite bankers in the global corporations. we need to