. and then a look at china's growing economy. a former commerce undersecretary franklin lavin joins us. later, our series on the november elections continues. we will talk to the president of the campaign media analysis group, evan tracey, about political ads. this is "washington journal." host: president obama in his second goal will address tonight will stress progress in iraq as he appears to a campaign promise to exit the country. live coverage at c-span starting at 8:00 p.m. eastern and we will cover house republican leader john boehner's speech on iraq at the american legion convention later today. go to c-span.org for more details. a lot of opinions in the papers about the situation in iraq. should we expect a long engagement there? the troops remaining in the country for years?

or should the president stick to the 2011 deadline of withdrawing all troops. what are your expectations? the phone numbers are on your screen -- here's "the philadelphia inquirer" this morning with their headline about the speech saying president obama will not say mission accomplished. that is the front-page this morning. front page of "the washington post." it carries the falls. it says the speech could raise unrealistic expectations among the public about the chances for calm in iraq. and the timing may be seen as having more to do with the president's political needs than with real signs of progress on the ground. we will read more from "the washington post" this morning.

in the opinion pages, "the washington post" editorial says, in iraq, a long engagement. it is in america's interest to play a continuing role. what iraq needs most of all americans is patience. that is "the washington post" editorial. eugene steuerle -- eugene robinson argues, the fog of war's and. to be always have unintended consequences. -- they always have unintended consequences.

a lot of opinions in the paper. john mccain, ryan crocker, stephen hadley all right thing in the papers. bloomingdale -- bloomfield hills, michigan. caller: thank you for c-span. i am just so proud of what our president is doing. he is keeping his word and bringing our american heroes home with dignity and honor that they deserve. nobody is firing at them.

they are not being chased out. these folks are coming home and i think it is a proud moment for america. it is a -- historical. and what he is doing in afghanistan has to be done. host: it says in the papers today that the president will call former president bush before his speech and talk to him. do you think the president either privately or publicly should give president bush credit for the progress in iraq, tell the american people that the surge did work? caller: absolutely not. what our president barack obama was against the war from the beginning. all of these stories about weapons of mass destruction, we had no business being in iraq in the first place. i think over 4000 lives lost paired $750 billion, 32,000

injured american heroes that we will have to be paying pensions and everything for over the next 65 or 70 years, it is just a tragedy. i don't think he owes a george bush or dick cheney anything. and i think he is doing what is right for the american people. that is my opinion. host: your expectations are come december 31, 2011, that he stick with that deadline and he pulls all troops out of iraq? caller: i think he will. so far he is batting 1000 percent in keeping his promises. and i think this president will do whatever is necessary to bring our boys home with the honor and dignity that they deserve. i have confidence in that. host: let us hear from bill on the republican live from indianapolis. you are on the air. caller: yes, this is bill. from indianapolis. i called you the other day about this young man talking to you on the phone. he calls in all the time.

he is a republican, he is a democrat, he is an independent, he is from 15 different towns up he is from 15 different towns up in michigan, he tells you different -- 15 different names. he sounds like a very intelligent man but how can you believe anything he says when he calls with 15 different names, 15 different cities in michigan and he calls all the time and you guys just let them, let him, let him. host: bill, i know it is a -- not a perfect system. we are working on it and have tried to identify the caller. obviously he puts a lot of effort in getting past the system that we set up to catch people who call in before 30 days. we need to allow 30 days between the phone calls. i am going to go to paul, independent line, orlando, florida. caller: good morning, greta. i love c-span. i am a c-span junkie. but i am calling -- bill is spot

on. i hear people calling this thing i have been trying to get into c-span for three months and the very first caller -- mike from birmingham, republican, gregg and independent, hank as a democrat, a union president, walter as an independent. it is just not right. now to the point -- this is george bush's victory. you have the secretary of state, the vice president and this president all vote against the surge. and now he is going to take -- tried to take credit for george bush's victory. i love c-span. thanks so much. try to do something about that pathological liar that calls and all the time. i mean, he has called in -- about the last three weeks, he has been in, like, eight times. host: ok, paul, we got it. nick. democratic line.

croft and, maryland. caller: what prompted me to call was your question right back to the first caller or second caller, i don't know exactly who, yes does george bush, should he get any credit for iraq. host: what i was asking is the president's press secretary was asked repeatedly yesterday in a press briefing about whether or not president obama was going to give credit to president bush -- just posing the question. what do you think? caller: president bush -- the iraq war was the worst military adventure in my 58 years. my first call to c-span was because of the iraq war. if you listen to the tapes i said for the hearts and minds of our soldiers they should have found weapons of mass destruction but for the hearts and minds of our soldiers there should have been direct contact between saddam hussein and 9/11. as the bush administration professed.

and for the hearts and minds of -- there should have been a direct link between al qaeda. the iraq war -- and then this other gentleman who called in other gentleman who called in about the surge, you remember, the democrats took over and the worst offender don rumsfeld, you did not hear them anymore because he disgraced the military. chairman of joint chiefs of staff, colin powell work -- colin powell, disgraced the military when he went to the united nations. general pace and general mires under rumsfeld, they had to resign in disgrace. host: we are talking about your expectations for iraq. the president makes that speech on the situation there and the withdrawal of troops at 8:00

p.m. eastern time. following this speech, expected to be 15 or 20 minutes, we will open up the phone lines to get your reaction to the speech tonight on c-span. this is "the wall street journal" editorial this morning.

host: beaufort, south carolina. democratic line. your expectations for iraq? caller: almost 4000 men according to the media guide, americans. from george bush, sr., to george bush jr., carried out, we have slaughtered those people. george bush jr. should be brought up on war charges. he is a criminal and blood is dripping from his hands. thousands and thousands and thousands of people are dead

because of the united states of america. host: we got your point. independent line. dallas, oregon dear caller: i thought that last woman was absolutely right. and you are the foxy as a woman i have ever seen. host: moving on to david, republican line. caller: my name is david nance and i just thought i would call because i think that they were wrong when they say that there were no weapons of mass destruction in iraq because they found trucks that were made for filling artillery shells with poison gas and when they found them they were dismantled, but they were clearly there and in my opinion, that is aimed weapon of mass destruction. when everybody says they never

found them, well, that is clear evidence of a weapon of mass destruction, capable of being made, so they had plenty of evidence to go win. host: illinois, mike, and abandonment. caller: the expectations for iraq -- it is good. they are going to finally become democratic, which george bush wished for. it was not the weapons of mass destruction that was a failure, it was the saddam hussein, of the u.n. sanctions that he broke and broken broke if everyone remembers. if he had the weapons of mass destruction, it would have been terrible and many more would have died. the americans to sacrifice to bring iraq to a democratic nation should be honored and that is what i wanted to say.

host: a tweet from a viewer. c-spanwj. st. charles, missouri. democratic line. good morning pretty caller: good morning, correct that. everything about this war was a lie. we destroyed that country. we destroyed the people. hello? host: we are listening. you have to turn the television down. caller: i turned it down. we murdered over 1 million people and it was all based on a life and my expectations for iraq is it will continue to be a disaster for years to come and we can thank that more ron george bush for that. host: long island, new york. pete. are you with us? i think we lost pete. let me show you from the

website, cost of war.com. total cost of wars since 2001, about $1 trillion -- iraq, $744 billion and afghanistan, 328 billion. akron, ohio. joan, democratic line. caller: what are your expectations. i think it was totally ridiculous. it was based on all lies and of anybody wants to go to truth both -- look on links television and they will tell you the truth about it. the bible tell you, you have to bind the strong man and you can take that country. it was all about the oil. guess what, america, who owns the panama canal? they hovered up -- her readout, and china owns the panama canal.

host: let me give you to look to the future. what do you want from the situation in iraq? what sort of stories? should the president withdraw all troops? caller: he needs to withdraw. but let me tell you something. you are missing the biggest point. iraq is really the original babylon. it will not be able to stand on its sell. -- on itself. united states is the mystery babylon, the lady that is not -- that sets on the water. host: the front page of "the atlanta journal constitution." $5 billion wasted in iraq. of the project sitting idle, 40 million for a prison, $165 million for a hospital and $100 million for a water treatment

system. corpus christi, texas. randolph, independent line. good morning. caller: good one. i just got one comment. nobody speaks of the millions of people -- millions in iraq right now that are free because of what the united states done. thank you. host: new jersey. frank on the republican line. caller: good morning, greta. you've got a great show. greta, people fail to understand something about the middle east. when the middle east becomes the stabilize, the whole world becomes destabilized. saddam hussein invaded a sovereign country -- he was given time to get his people out of there. he ignored it, so we went in. and after that was resolved, the first war, then he violated the u.n. treaties, time and time and time again, was shooting at our

pilots, shooting at our airplanes, and it was about time that somebody went in and taught him a lesson. i do not know why everybody thinks iraq was such a waste and why george bush did not do the right thing. his father, in my wife -- my eyes, did not do the right thing. he did not finish it the first time. host: let us go back to 2003 when george bush announced the invasion of iraq. here it is. >> i want americans of all the world to know that coalition forces will make every effort to spare innocent civilians from harm. the campaign in a harsh terrain of a nation as large as california can be longer and more difficult than some predict. and helping iraqis achieve a united, stable, and free country will require our sustained commitment. host: if you want to watch all of president bush's announcement at that time, you can go to our video library, c-span.org, and

the upper right of right hand corner of the website is a link to the video library. kansas city, sherry on the democratic line. good morning. caller: i was just going to say, somebody really wants to know the facts they should watch the testimony in the iraqi inquiry in the u.k. we were told that iraq did not have w. north dakota -- wmd and it came out that george bush was just pushing for regime change. what we have done is just left that country open to influence from iran. so, leaving afghanistan and going into this war was just totally wrong. host: the opinion pages of "the wall street journal" has stephen hadley, former national security adviser to president bush writing why we fought and what we achieved, the lesson of iraq.

if you are interested in that there next to that, senator john mccain writes about the surge in afghanistan. saying unless president obama understand the reasons for success in iraq the president will not likely lead a successful strategy against the taliban. long island. pete on independent line. go ahead. go ahead. caller: greta. i have been a c-span watcher. i love you. you are the smartest one there. on this whole iraq deal, we had to leave saudi arabia after 9/11 and we needed a base somewhere in the middle east, so i believe that iraq is the most convenient spot. we are never getting out of there. we will be there for as long as there's problems, and there is the middle east, we will be

there. host: flipping around the channels, you will probably save press secretary robert gibbs. he will be making the rounds of all the morning programs previewing the president's speech tonight. also, from the papers this morning, the mideast peace talks that will begin this week. starting on wednesday night with a dinner at the white house with all of the players and the president and then the formal discussions began on thursday at the white house. -- excuse me, the state department. "usa today" writes, 10 lessons to learn from past 90 -- mideast talks. "the new york times" leads with a story saying the outlines of a state begins to emerge in the west bank. security has improved, business is bustling, and people are looking towards that as a way to discuss the two-state solution. that is "the new york times"

this morning. the "the new york times" editorial is about the mideast peace talks. new chance for peace. mr. obama will kick the talks off wednesday night with a white house dinner. that will make for a fine ceremony and important symbolism, they write. -- on the republican line. what are your expectations for iraq? caller: i just can't understand how obama can be so concerned about the iraq war and how many people have been killed there and maybe killed now when he is

not the least bit worried about all the babies he is allowing to be killed at this time everywhere? host: barry on the democratic line in philadelphia. caller: good morning. i'd love c-span and i think you are doing a wonderful job -- i love c-span. i am perturbed about how republican get on your line and the first thing they want to do is-democrats. the second caller called and complained about the first caller. the one that just hung up, the first thing she said is obama. they refuse to give them the they refuse to give them the dignity of calling him mr. obama or president obama. they still refer to sarah palin as governor palin and she quit her job. host: i'm going to try to keep us on top -- topic. joseph, oregon. caller: i really actually think of iraq were drawn out

just a little bit too soon. just a little bit too soon. say -- from a garbage in the trash can opposed to on the streets. we have a tremendous mess -- view of the sexiest woman. host: good morning, steve. we have to stay in iraq. we don't want to lose what we accomplished there. keeping in mind we keep -- bear in the wrong reasons. saying we found weapons of mass destruction. it also said our country was in danger. they did not have a rocket that could shoot 100 miles. that was a lie that we went in but now we are there we have to finish the job that we started. and obama is basically still cleaning up george bush's masses and the people, the single issues like the woman who called in about the babies, yes, you can vote republican in to stop abortion but they are going to

mash -- mess up your air. host: and other news this morning, in alaska, the senate primary that will drag on cents -- has dragged on since last week. the absentee ballots, they will begin counting them in that state today between the primary race between joe miller and the incumbent, senator least some murkowski. peter, republican line. peter, republican line. tucson, arizona. expectations for iraq. caller: bringing up that saddam hussein lied to people all around him -- he wanted them to believe he had weapons of mass destruction. that is why there was bad intelligence -- he was trying to lead everybody into believing, the people around him.

president obama, at the time -- it took him weeks or months to admit that it was even a success. one more thing about the rally's in washington this weekend. everything was peaceful and people should bring that up as an example to the rest of the world about americans and how we assemble. host: on the glenn beck rallies -- glenn beck last night open up his own websitethe blaze -- his own website, "the blaze." >> phone call. expectations for iraq? caller: i am expecting iraq's economy takes off. and i think democrats, republicans, and independents alike will understand the fact that iraq can add to the bailout

the deficits of the ninth stage once they get industrialized. host: chicago. democratic line. you are next. caller: how are you this morning? host: good morning, carl. caller: my feeling is i am glad we are pulling our troops out. i know that it is probably not going to be peaceful over there -- you might -- some might want to keep troops there forever. but i think the media was wrong -- saying george bush is right. how will you say something about him being right when they never challenged bush about lying about the war in the first place? 4000 of our troops died over these lies. so, president obama says george was right -- no, never. these people died. 36,000 wounded. many seriously. but in the future, i expect that they are still going to be --

have not even formed the government. they are going to still have problems. we will need to be there. these republicans need to remember, they keep saying we don't have money, we could save money by leaving. host: let's go back to april of 2008 when then general petraeus on the situation in iraq, talk about the need for a surge. >> as i have repeatedly cautioned, the progress made since last spring is fragile and reversible. still security in iraq is better than it was when ambassador carper and i reported to you last september and significantly better than it was 60 months ago when iraq was on the brink of civil war in the decision was made to deploy additional forces to iraq. a number of factors have contributed to the progress that has been made. first, of course, has been the impact of increased numbers of coalition and iraqi forces. well aware of the u.s. surged. less recognized as iraq has also conducted a search, adding over

100,000 additional soldiers and police to the ranks of its security forces in 2007 and slowly increasing its capability to deploy and employ these forces. host: general petraeus in 2008 talking about the u.s. surged. ryan crocker talks in the paper about the future of iraq. saying washington needs to stay engaged and slow down its clock. we have the persistent -- persistent problem of the washington clock runs much faster than a baghdad clock. he goes on to say --

akron, ohio. dan on the democratic line. good morning. caller: don't pay attention to the people who knock c-span. c-span is great. it seems to me the surge, i seem to remember than paying the sunni and shia not to fight and i'm wondering if they are doing the same in afghanistan. people need to really pay attention. what they are doing is taken up the military but adding more private contractors. they are not leaving. thank you very much. host: austin, texas. rodney, independent line. caller: i was looking at an

article in "the new york times" business section and it was talking about how wall street is disowning president obama. this kind of ties in to what you were asking about iraq. the last caller talked about the military contractors still there. i would venture to say that, in the president's speech, it will be clearly omitted from anything he will say about the military contractors who are heavily sponsored by wall street. host: all right. the president will speak tonight at 8:00 p.m. eastern time. live coverage on c-span followed by your reaction, phone calls,,, and questions. obama's speech carries pitfalls, the headline in "the washington post." what happens if the black hawk'' go down next week. tens of thousands of troops in

iraq are expected to engage in defense of military action if necessary and special forces troops will continue to conduct counter-terrorism missions. it says here -- paul bremer, the civilian administrator from 2003 until 2004 believes the bigger threat may come in 2011 when obama promised to remove the approximately 50,000 troops who remain. obama has been resolute, promised to withdraw all by the end of 2011, as arranged by the status of forces agreement signed by president george bush. it moves on to note that president obama has only given one other oval office speech and that was to talk about the bp oil spill and it says that details about tonight's speech, that ending combat in iraq may help offset concerns about afghanistan. even after deploying an additional 30,000 troops there, taking the total to nearly 100,000, the reduction in iraq

means that about 30,000 fewer troops are serving in harm's way abroad. one administration official said. the reduction freeze of financial resources, including domestic funding for roads, bridges dish, and schools, a point, well _ tonight. an official said that the president will describe the kind of expenses we've been making in iraq versus the kind of investments will be making here at home. south dakota, and been on independent line. caller: you do a fine job. it is awful hard to get on this program and i finally made it this morning and i hope you will let me finish what i've got to say. i got on a long time ago with a brian lamb, and he was my favorite. it was for support -- it was republicans only. i called on the republican line at that time because i was registered republican and i had voted republican. however, i did not vote for

george bush -- they cut me off. somebody called and blamed it on president bush. they pass the iraq liberation act during the clinton administration, 1998, and clinton said that saddam hussein was a tyrant who needed to be removed. later on, after bush became president, hillary made the comment that the intelligence that george bush was getting, president bush, was about the same that they were getting. so, it was not just george bush. i was opposed to it. a couple of people -- i heard on c-span. shortly after we got into that, he said we do not understand

those people. i am an old man. i listened to c-span for about 30 years. "washington journal." i have listened to that gas several times. most people do not even know who he was. pat buchanan also said shortly after we got into the war, he said it was a mistake and said it is going to be like vietnam, we should not have gone in there and the quicker we can get out of better off we should be. host: we are glad you made it in today but we have to move on so we can get other voices and. in a "new york times" op-ed piece this morning, paul will for its -- wolfowitz says korea might be a model for iraq. germantown, maryland. tony, democratic line. caller: thanks, greta. i think most republicans have never heard of the story of the

-- where two nations were in the war and to end the war one nation gave the other the white elephant but in order to receive it you had to be able to have a lot of money and take care of it. so they waited until the nation took care of the white elephant over and over again until they finally went broke and after they went broke they just walked in and took over the kingdom. host: a lot of headlines about the economy. "washington times" -- facts spent on small business tax. obama, gop both claim to be champion jobs growth. from page of "usa today." also and "the washington post" -- obama promises new jobs a. -- aid. about his speech in the rose garden. if you want to watch it, go to c-span.org.

a 15-minute speech. if you go to c-span.org, go to video library, you can watch the entire speech. "the financial times" -- president struggles to convince voters on the economy. below that, a story about construction, saying that industry holds the key to rebuilding the jobs market in the u.s. grand forks, north dakota. mark, republican line. caller: good morning. i guess, my hypothesis is that considering the alliance between the saudi royal family and the u.s. government, that these two organizations are both involved in bringing terrorism to iraq. five quick points -- three if you have time. during the heat of the iraq war during c-span he carried a former defense ministry from iraq by the name of ali alawi who said he has firsthand

knowledge of suitcases of cash from saudi arabia going to al qaeda in iraq and killing our troops. saying coming from saudi charities, which would be under control of the government. made of 2009, c-span. richard holbrooke, special envoy from afghanistan and pakistan, the special envoy for obama, he testified before the house foreign affairs committee and said that current taliban fighting is coming from saudi arabia. recently on c-span they carried an update which involves the representative from kuwait talking about the situation in iraq and he said there is no way that he and the saudis would allow a shia-run democracy to exist in iraq so he made open threats to take them the government we have been trying to stand up. kuwait and the saudis are the allies of the u.s. government and they are both playing so -- both sides of the terrorist war, in my opening.

host: and of the words. the business section of "the new york post." their headline is president obama could name of elizabeth warren as the consumer czar during this recess. but the sources are just speculating. speculating. "the wall street journal" says report card for cards. it would rate fuel economy and emissions. government veers into issuing opinions. report card for the latest green card. that is "the wall street journal." journal." the front page has a story about climate panel facing heat. investigation calls for fundamental reform at all and a group on global warming. below that, the story about the money members of congress get for travel. the story, a follow-up to a story that they did recently.

it says the congressional investigators are questioning a half-dozen lawmakers for possibly misspending government funds meant to pay for overseas travel. university park, illinois. robb on the democratic line. we have been talking about expectations for iraq. what are yours? caller: good morning, greta. i really don't have really high hopes for iraq. if we had not gone into and invaded iraq under nefarious reasons, i believe it might have been a positive outcome. host: ok. anything else to add? caller: they keep talking about the surge is working, we invaded a country the size of one of our states. i would like to see if our search would work in a country like china or russia. we had a warmonger vice- president. host: we are listening.

caller: and an elected born- again christian invading a country like iraq that did not attack this. host: president obama earlier this summer in may talked about removing combat troops at this time. here is what he had to say. >> it for many years our focus has been on iraq. year after years our troops faced challenges as daunting as the work complex. a lesser army might have seen its spirit broken. but the american military is more resilient than that. our troops persisted, they partnered with coalitions and iraqi counterparts and through their confidence and creativity and coverage we are poised to end our combat mission in iraq this summer. host: present a bomb in may talking about removing troops. he will give that address in

iran -- tonight, his iraq speech, said the speech from a law office. 8:00 p.m. eastern time. coming up next here on "washington journal" we will turn our attention to tax code reform. president obama's advisory panel on friday put out several options for tax reform. eugene steuerle will be joining us, he was former assistant treasury secretary for tax analysis from 1987 through 1989. we will be right back. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> adjusted it, i signed a declaration for the -- yesterday i signed a declaration for the state of louisiana.

this morning i signed a disaster declaration for the state of mississippi. >> as the gulf coast marks the fifth anniversary of hurricane katrina, look back at how the government responded to the crisis, once -- online at the c- span video library, all free, every program since 1987. washington, your way. join our conversation on the american revolution, the making of the constitution, and the importance of historical study sunday with historian and pulitzer prize winner gordon wood on book tv. your calls, e-mails and tweets on c-span2. science and technology week continues tonight on book tv prime-time with famous scientists. in his biography of isaac newton, he describes isaac newton as the chief architect of the modern world. and the contributions women have made to the field from the madame curie complex.

and historian walter isaacson documents the lives of robert einstein, whose theories shape the future of scientific thought. book tv and prime time, tonight on c-span2. >> "washington journal" continues. host: eugene steuerle, let me read in this headline. moe berg-led economic panel pushes lawmakers to simplify the tax code -- volcker-led economic panel. a group that was looking at taxes. 7.6 million hours are spent doing taxes and 140 billion a year to comply with the tax code. since 1986 when congress and the administration overhauled the tax code, the code has been changed 15,000 times. you were part of the discussion in 1984 and in 1985 leading up

to the 1986 reform. what does it mean it has been changed 15,000 times for the work that you did back then? guest: it means we have not simplified, that is for sure. it also means taxpayers are constantly subjects to more and more uncertainty, not just respect to what is happening in the past but uncertain as to what will happen in the future. it makes planning heart, it makes the cost of compliance hard. it is actually a hard tax code to enforce. if you are sitting at the irs and an agent, and you are not sure what is coming. it has created difficulties. it is clearly not the way we want to operate. host: this advisory panel -- let me show our viewers the actual report. the president's economic recovery advisory board, they put this out at friday at 2:00 p.m. and it just includes options. they are not making actual recommendations. first and foremost in this report is simplification. it and they are looking at

simplifying the tax code, not only for families but children as well. can you talk to us about what that includes, what sort of options there are? guest: the commission did not take a stand really on much of an anything, which is an issue we should probably discuss. none of the options they put forward make sense. there are quite a few provisions if you have children, dependent exemption, a child credit, earned income job credit, these can be combined into a more simplified structure. things like exit -- education subsidies, of which there are more than a dozen. they are convinced -- so confusing that a significant of percent of people who are eligible not comply. we could combine these into one or two type provisions. there are all sorts of capital gains tax rates that are confusing. special exemptions for different groups, different income levels,

different rates. it is just an extremely complicated set of issues. there are a lot of options where they took sort of combination of proposals aimed at the same target and they said we could simplify that quite a bit. host: how easy is it to simplify the tax code? guest: it is very hard. the reason is really more political than economic. it is not that it is hard to know that if you have a dozen provisions applying to one thing that it is confusing and you can combine into one or two. what is hard is the politics of winners and it loses. let us take a simple case. you pay 30% tax rate and i pay 10% and let us suppose for all of the reasons, we basically had equal income, equal needs, equal number of children but yet i am paying a much different rate than you. if we say, let us forget about the 30% and a 10% rate and let us give us both the 20% and one

of us will be a loser, one will be the winner and the loser protests quite mightily. not only did the losers' protest in some sense more than the winners but now that you have the system, remember, you have to get the majority of the house, majority of the senate and the president to go along. you almost got to get a super majority to reform anything in our current system, particularly on taxes. host: of the debate coming up in september from what we are hearing for capitol hill will be whether or not to extend bush cut its -- does the advisory panel looked at that in its report? no, no they don't. in fact, the panel basically proceeded with a lot of shackles. essentially, the president asked them only to examine simplification. he said he did not want to have any tax increases on families

making less than $250,000 a year. in some sense they were highly restricted in what they were able to examine. so, you have this debate on simplification going on over here, if you want, and meanwhile, the gigantic budget debate, which includes taxes, of course, is what the next couple of years will be spending about $30,000 per household and collecting about 20,000 in taxes. it is a huge gap. and we all know that we have to do something about that gap. so we have a separate commission. host: the debt commission. it guest: the debt commission, dealing with that issue. how to mix the two is just an issue this commission did not address. host: what do you make of this advisory panel putting out this report on a friday at 2:00 p.m. in august, no cameras, and it was the report and the discussion, the vote on it was a

made available via an audio stream, but no cameras, would you make of that? guest: the commission has some decent proposals in here. but it really did not go very far. it did not examine many issues. it is really not a very comprehensive report. quite honestly i think the commission members felt like there commission really did not have a lot of push behind them, and so i think in some ways it did not put in a lot of effort that you might want. you can even tell that a little bit if you know the people in town at treasury and other places that worked on the report, you see them missing from the acknowledgments or just very sharp right up on real complex issues. basically i think the commission did its minimal job. but did not do a lot more. host: we are showing the list of the board members. this was -- the group was run by

austin -- staff director and chief economist there. what do you make of the list of the people, the names? what should you was no? >> the commission members >> the commission members essentially are those individuals that are part of the economic panel the press and put together during the campaign, for the most part. very few of them are actually tax experts and even the tax experts -- were not experts in the details of how you run a pension system or how children's provisions are applied for what are the complications within the irs. it is the type of panel you might gather if you think you want to get consensus on really making some steps forward. but again, they were not asked to deal with major budget issues. they were not asked to make proposals. the pros and cons, and manages and disadvantages are a little bit -- host: a little bit what?

guest: almost bawling. you feel like you want something but it is not there. my colleague had a great line on this. he wrote that he felt like he went into his car and turned on his gps system and he was trying to go somewhere and said, you could take a left at the next week but, maybe not. you might go four more blocks, take the right, another left, and another left, but there is a scenic route if you want to go this third way. so at the end of the day it did not really give people a lot of guidance. host: let us go to phone calls. winthrop, maine. helen on the democratic line. caller: first-time caller. thinking about hot-button issues and topics that are sort of the third rail. one thing that really irks me is about lack of discussion about tax exempt properties, specifically of religious institutions. for example, i live and a small town.

we have several churches. they are great. but i pay property taxes, they don't. when we get to mega churches, principally out and the west, with hundreds of thousands of parishioners, it seems that these people should also -- these churches should be paying their fair share of taxes. the police, fire protection, those types of things. and also i may not be correct but i understand that the housing that is provided usually free to the religious are also tax exempt. as are their pensions, health insurance, and other salary- related things. i would like your guests to comment on that, please. guest: let me make one minor correction, the pensions and other items typically of religious organizations and non- profit, they get about the same treatment as, say, workers and the private sector and the

government sector. but you are right about the real-estate. real-estate in many jurisdictions receives a property-tax exemption. this is a major debate within those jurisdictions. it is not, for the most part, a federal issue, at least in terms of property tax exemption. it tends to be a state and local issue. and if you are interested in this subject further there is a writer on it by the name of evelyn brodie, sometimes colleague of mine, and i would be glad offline if you want to send me a note, i would be glad to refer you to that literature. host: if people want to find out what you are writing about are talking about, where should you go? go? guest: www. govwedeserve.org, based on a book i co-wrote -- governmentwedeserve.org.

host: justin, independent line. caller: i wanted to comment about the to eat -- to london and $50 tax hike, only putting back on the wealthy -- $250,000 tax guide, only putting on the wealthy. looking at 10 or 20 years down the road, inflation is going to take off and anyone making say $100,000 or $150,000 a day will be consumed by the $250,000 tax bill down the road. i did not think that is hard to argue with -- just after look at the example of the amt to look at. i hope folks will listen up and remember that the politicians are not all that concerned always about what is good for us. they are just concerned about what is good for washington. thank you for listening. have a great day. guest: the architect of a correct -- the alternative minimum tax set up, if you did

not pay regular taxi and at play -- buying alternative minimum tax, it ended up hitting more people, it is not indexed with inflation so more people are subject to it over time. but congress tends to offset some of the increases, one step at a time, one year at a time, tries to defer those from taking place. you are right, more people would become subject to the attacks all the time if it is not indexed for inflation or real growth. the other side of this is a that he essentially since about 1987 we have had a government, both sides, democrats and republicans, who basically decide that they cannot ask the public to pay for anything so we have had a series of tax cuts and spending increases that we have not paid for. so, we are in this box, as we mentioned earlier, of having spending even for the next couple of years of 30,000 a year, tax collection of 20,000.

we do not even get out of this box when the recession ends. that means people will be asked to give up something. either asked to pay more taxes or asked to cut some of their spending. and that is a tough, tough road for politicians. and it is not entirely their fault. it is sometimes us, the public, or week, the public, who basically tell -- if you vote for any thing -- but they will be voted out of office. they are scared to tackle these issues. it is actually reflected in this report. host: how so? guest: the president and the white house could have said we really want to be able to make some of the tough choices, we want to deal with, say, some of the tough budget issues -- we want simplification. we know we will identify and losers. but in identifying losers' i think we will make a better and think we will make a better and more efficient tax code. basically the commission was

held off from making those types of choices. if a commission cannot make it, which is independent and does not have to worry about being voted into office, why do we expect those being voted into office will meet tougher decisions? guest: go back to 1984 and 1985, leading up to the 1986 tax reform bill. what was the drive than to overhaul the tax code and what were the lessons learned? guest: several drives. there were a number of major problems people finally decided to have to tackle. tax shelters were growing as mad. that is a slightly different tax shelter but they were growing quite profusely. i arrest was claiming it could not administer -- administer the system. and we also had a president interested in lowering rates and was convinced -- not when he ran for president but as he sat in the oval office -- that he would be willing to exchange floor rates for a broader tax base.

also in respect of the budget, there were a lot of budget issues. we started having an admit such as 1982 and 1984 deficit reduction act that did cut spending and raise taxes somewhat. we had social security reform that did some of the same. we had some movement on the deficit at the same time that we undertook this tax reform. we also had at that time i think some real leadership on both sides of the aisle. i still remember in tax reform, president reagan getting together with dan rostenkowski, then a very powerful chair of the ways and means committee and they agreed if we are going to work on this together, i will not criticize you if you do things i did not agree with and you did not criticize me -- that is in a package we will both agree on. you had a leadership there and leadership in a number of committees in congress. senator howard bacon, dementia -- leaving out of their important -- bob dole, even on the republican side.

host: senator domenichi did say the tax cuts add to the deficit. do you agree? guest: if you want to give both sides, tax cuts and to the deficit, so the spending increases? since 1997, basically done everything on the deficit increasing side. we increased the sense cent -- spending but did not tell the public will have to pay. so we did not pay for that. we did not pay for entitlement increases. the case can be made that we should incorporate drugs into medicare. then we had big, domestic spending increases as well. we went through a long period where we did not pay for the tax cuts. if all you do is reduce taxes temporarily, somebody has to

make up for it later on. it is a tax cut for you and me, but we are playing down on our children and our future. we decided we wanted to keep taxes low and raise spending. that is fine, if you are willing to pay for that long run, but let's be honest. host: president obama is now saying that now is the time to raise the taxes on those making a certain amount, to bring down the deficit. guest: basically, the people making over $202,000 is not a very large group. -- $250,000 is not a very large

group. host: is that a start? guest: yes, but you can only come back to them so many times. also, it is giving a hint that we can get whatever we want from government. all we have to do is tax the rich. that is not true. the middle class gets most of the benefits from the government, but also must pay for it. that is what politicians are afraid to tackle. host: walker, indiana. james. caller: i was hoping that this would be a segment on the tax code, not allow the love of taxation. if you say that politicians are the problem, then they should the problem, then they should not be able to write the tax

code. my tax code does not have any audits, no deadlines. there is a bill in congress right now, that unfortunately, you will not have an opponent on. maybe they are afraid of taking power away. could you explain the fair tax? if you cannot, you certainly have no business being on the program today. it would cost hardly anything to implement. poor people could get some necessities back. even the rich would love this tax cut. it takes the power out of the hands of washington and back into the hands of the people. i believe this is house bill 25. guest: as you indicate, this is

a tax that attempts to collect taxes on retail sales. the complication with most examination of the fair tax is the rates that proponents have argued for do not raise in the revenue streams. a lot of those people want a lower level of taxation. we can debate whether you can do that through a fair tax or just lowering rates through the current system. either way, you have to cut spending. if you do not raise enough revenues, taxes tend to be high. that is, in part, because a lot of the other provisions cannot apply well to services. state and local governments have a difficult time taxing services. most of our taxes are on goods.

your legal services, medical services, which are growing quite large, tend not to pay the retail sales tax. one of the problems with this tax is whether or not proponents are willing to raise it high enough to raise the streams of revenue. host: i would encourage james to go to our c-span video library and type in the words "feared attacks." we have discussed the issue many times. -- "fair tax." next phone call. caller: i believe in the b.a. t tax -- vat tax. i do not know why we have such a

complicated tax code. steve forbes is proposing a more simple idea. the bush tax breaks for the wealthier earning over $250,000 should expire. this trickle down from the rich is a payment. it is not a tax rate, it just goes back to the tax rate. trickle down does not work. the politics trump's common sense. we are taxing at a rate of 17% gdp, spending 24% gdp. we need to tax at 19.5% gdp to balance the budget. illegals do not pay taxes.

if companies did not provide if companies did not provide compensation for undocumented workers -- host: the we get your point. let's get to the figures, taxing at 19.5% gdp. guest: those numbers are about right, but i think the spending ais higher now. the average tax rate for several decades has been about 18.5%. getting to the budget ton of things, we have all of this growth in health and other programs that is pushing tax rates into the future far beyond what we may be able to do with. the issue of the day flat tax. the notion is we could provide a simplified tax base, few exceptions, deductions, exclusions, credits, but those

are separate issues. we can get rid of a lot of those, a lot of tax breaks, whether you convert to a tax cuts -- flat tax or stay with the current system. another complication i should mention is most of the flat taxes that are proposed are really consumption taxes, the exempt to configure and amounts of capital income from taxation as well. you do not have to do that to go to a flat tax, but that is a part of the component. there is the issue of whether you want exempt capital income, versus taxmmerses --ve structure. for instance, let's say you do

not want to tax the poor. well, most flat taxes have an exemption for that. robert hall admitted that it was not really a flat tax. later on in testimony, he said he was not really sure that he cared that we had an absolutely flat rate. we can debate on how progressive you want a system to be depending on where you want rates to be. host: martin feldstein had this to write in the "wall street journal" in july -- what is he talking about when he

refers to tax expenditures? huh guest: within the tax code we have a lot of these tax breaks, but many of them look like spending programs. we have in the heart of housing and urban development. some are for raising our children. we have tax breaks for commerce. tax breaks in almost every area of the budget. in some areas, the tax breaks are more important than what goes on on the spending side. it earned income tax credit is bigger than what we typically call welfare, temporary assistance for needy families. we have a lot of spending items in the tax code. what martin feldstein is

suggesting is we could go a long way to reducing the debt without increased tax rates. it should appeal to people who want to reduce spending as well as to those who want to have a simplified tax code. one way to do that is to get rid of some of these tax breaks i would say there is a strong liberal consensus to reducing tax expenditures as something that we should do. i testified before the budget commission on this very item. host: is that the debt commission? you testified before them about these issues. guest: tax expenditures, yes.

guest: again, it is like cutting its spending program. the tax program raised the issue of all of these expenditures, although they did not want to address the budget issues. there are basically talking about combining them. host: are you hearing from folks serving on the commission and that is where there could be consensus, likely to be topping

their report? guest: i do not want to speak for the commission, in terms of where they will grow. a one or two of the members have said that we need to be looking at tax expenditures. host: next phone call. caller: we could take care of this so a ninth grader could understand in but we do not want understand in but we do not want to put h&r block out of business. you could have been a system set up on the low bonded rate. it but stop government from having to pay for it itself. this person should get a deferment on his taxes.

host: let me ask you, do you have deductions on your tax form every year? caller: i am 80 years old. i do not have to worry too much about taxes. host: one way the report talks about simplifying the tax code, simplification of the process, at least, if you do not deduct anything, the irs sends you a form already filled out with how much you go, how much you paid. how much would that reduce the cost of collecting taxes, why do some people look at that as a good idea? good idea? guest: one of the costs we see directly into the cost of filling of the tax forms. i have to say, a lot of the

administrative costs to the tax system are not just born pulling up the tax system. up the tax system. it has to do with record- keeping, all of the deductions, credits that we can take. if you want a simplified form, one way to get there would be to reduce the number of options we have. that is probably the major simplification. the next question of can you go further and have the irs return the integration -- the information already filled out? in truth, a lot of the statements that we get from the bank are not right. so if the irs is filling up our form based on incorrect information and send it to us and then there is the question of what obligation we have to correct it, or suppose they did

not have the information. i do not know about you, but i often get al lot of 1099 forms late. late. there are questions about how much the irs can do in providing this for us. in terms of wages, w-2 is pretty accurate, so maybe part of it could be done by the irs. if all you are going to fill out is your wages -- host: peter in the origin. caller: thank you for taking my call i have a question about the mortgage interest deduction. by senator, -- my senator has a

bill that would simplify -- 3018 -- would simplify the tax code. we come to find out this mortgage interest deduction represents $600 billion every four years, and in addition, 70% of that goes to people with incomes over $200,000. so the question is, how can we provide affordable housing to folks that make less? home ownership is critical. thank you. thank you. guest: certainly, senators wieden and gregg have been pushing for this tech expenditures we have been

talking about. in terms of the expenditure, you are right, it is a provision that favors middle and upper income people and excludes lower income people, mainly because they do not itemize their returns. i do not want to say that they do not get the benefit from the tax code, but not from this. we encourage not only home ownership but ownership of large homes through the tax code, but only if you have higher incomes. peter was exactly right, the cost is about $150 billion a year for the exclusions and deductions for housing. the question is whether we can reallocate this money a little bit more evenly across the income distribution. there are some that would argue that, yes, we could.

particularly for second homes or very large rooms beyond what one needs to have a decent house. host: danny on the republican line. good morning. caller: i am a republican but i am for the terror attacks, 100%. am for the terror attacks, 100%. i am pretty well schooled on this, and you aren't planning on the fears of a lot of people. when that does is encourage us, who know better, to fight harder for the fair tax. unsure your just would agree -- i am sure your just would agree. every project under the unfair tax would be less than it costs

under the progressive tax. there is a 22% government tax build into everything that is purchased on the shelves. on top of that is the state tax. host: mr. steuerle, give us your thoughts, and then we will come back to you. guest: the unfair tax, we would tax consumption and not capital income. you are actually correct in saying that somebody has to bear the burden of a tax. if you talk about who would pay the retail sales tax, who would not pay, somebody has to pay no matter what.

in aggregate. -- in aggregate, we will pay the same, regardless of the tax system we may want a fair system, but the level of spending will be compare well. you are correct, somebody is going to pay this tax one way or another and it is built into the cost of what we buy, what we make on our wages. host: are you still there? what do you think? what do you think? caller: he just repeated what i said. under the fair tax, you have to understand there is no such thing as a gross take home. you take home the gross amount of your track. that would be the greatest stimulus. right now, people have $600 the week extra in their paychecks to

spend. that is a stimulus. host: an argument against that? guest: because we would see the thaksin directly, we would have more of a tendency to save more. also this notion that we would have greater freedom, you could argue the same thing would have been with the a value added tax, other consumption taxes. in the people with more money on net, it is not clear -- if i make $100 and i pay $20 in income tax, it may not be different if i spend the $100. on that, along with bill have $80. the argument for that tax is, at least i made the choice to pay that tax.

host: panama city, florida. independent line. caller: why is 50% of the nation paying no income tax, is that fair? guest: hope the numbers on those that do not pay taxes come from our tax policy center. we tried to provide data that can be used by everybody. we try to provide a fair presentation of the facts. some of that number, it can be misleading. some of that goes back to the fact that we have exempted a lot of people in the recession. another aspect of it is, a very large number of people who do not end up paying taxes, increasingly, these are people

who are elderly. then we have an earned income tax credit, another one of these cut expenditures, so have you calculate income tax credit? if we would count all spending against taxes, more people would get more in benefits from the government mandate pay in taxes. that is the type of system we have. i think you need to be a little bit careful with the number. and if you want to raise the taxes on the people not paying tax, it might be more efficient to just cut the spending that they have and clean their taxes floor, which then becomes more revenue that you can spend. host: according to reports about this tax panel advisory option,

and look at tax avoidance from small businesses. it sounds like there is a substantial chunk of small businesses. guest: in some ways, the united states is better off in some ways. the little-known fact about the debt crisis in greece is that a number of greeks do not pay a tax. they have an even larger number of small business. when it comes to something like our wages, they want to deduct the paint -- and wages they pay you. they want an accurate report on what they are doing, so then they file a return with the irs that said you got the wages, and they withheld taxes from you.

then we go to items like interest and dividend. that part of the system had become much more accurate. when it comes to small business, me doing a bit of work on the side. aybe i'm babysit or have grocery store. i might be the only person keeping the books. often, there is no one of to track the income involved. it is much harder to collect taxes from small businesses, especially income taxes. guest: 1 proposal is requiring small businesses to maintain separate bank accounts from their owner's personal accounts. banks would then be able to report receipts and expenses each year. thomas in georgia. republican line. caller: you want to reform the tax code and everything, but

what needs to be reformed is the wasteful spending in government. we are collecting plenty of taxes, and that is what needs to be brought under control. anything to do with paul volcker, he is advocating world government. i think he would undermine our tax code. guest: i happen to be a fan of paul volcker, but skipping that part, you are accurate, you need to adjust taxes. we have so much spending of the tax code -- by the way, we have a lot of taxes on the spending side as well. but when you are dealing with corporate government, you have to cut through both the taxes and spending. and spending. host: in "the usa toda "usa toda-

she makes the point did she hold onto her in disney stock and then handed off to her heirs when she dies, that would not be taxed. guest: the way to preserve the it earned income is to have the crude gains. typically, for the wealthy -- at least some generation must aving.as s

they probably did not pay much of an income tax for a majority of their life. warren buffett made a comment once that he paid a lower tax rate than his secretary did. if he took into account that most of his income is a crude, in terms of stock value, his tax rate is much lower. so the state taxes often considered a substitute for this. eventually goes after some of the same income. if you think that is not fair for people who have paid a direct income tax, a way to deal with that would be to do with these so-called accrued gains, and some help them offset against the estate tax. host: tax them as though they

were earned income? guest: the point i was making his that her accrued gains were taxed at a zero rate because she never recognize them as income, so if i have these accrued gain to, i bought stock 20 years ago and it has only grown in value, as long as i do not sell the stock, i do not pay tax on those gains. host: laguna west, california. mike, you are on the air. caller: it seems to me the major debate between both parties is pretty in authentic.

the fundamental issue is what size of government do we want? the american tax system right now occur in the cost the government for% of the national income. that includes the taxes for all levels and regulation. the cost of complying with this several million-word tax code. it strikes me that this subject is really talked about. i think the reason for that is very self-serving on the part of those who are involved in accumulating power in washington, to keep quiet because the government. i would say, most americans are shocked at the news that they are paying 63% of the national income to a corrupt government. could i have your comment? guest: right now, the government is paying about $35 a

household, so spending is clearly more than taxes. gross domestic product per household as well in excess of $100,000. that gives you an idea of the magnitude. i agree, there are a major set of problems here. at wedeserve.org, we have made so many promises for the future we need little discretion to policy-makers and elected officials. those decisions could be for a larger government, smaller government. in my view, the size of government depends on the wishes of the public. i do not want to determine for the next generation whether they want a large or small government, but we have not given them this choice. we have predetermined where

government will go. we have done that with spending item that will grow over time, with direct spending items. we need to leave more discretion to the voter to the side this fundamental issue of what size of government we want to. host: eugene steuerle, thank you for being here. next, we will talk about china and its trade strength. >> here are some of the headlines. after more than seven years, more than 4400 deaths and thousands more would it, a combat mission in iraq is ending. president obama this afternoon travels to help us so, texas to offer his offense. he will address the nation tonight from the oval office, live at 8:30 eastern time. david petraeus says he shares the concerns of afghan president hamid karzai about forces across

the border in pakistan. he also said the pakistanis deserve credit for what he calls an impressive counterinsurgency campaign in the past 18 months. meanwhile, a roadside bomb killed five u.s. troops in afghanistan today. palestinian president mahmoud abbas says he will seek an active u.s. mediations in negotiations with israel. president obama is hosting him and president benjamin netanyahu for the first direct talks in nearly two years. hurricane earl, now a powerful category 4 storm headed towards the u.s. today after passing near the caribbean the forecast is potentially to brush the east coast late thursday before heading back out to sea. coastal residents from north carolina to maine are urged to

watch the storm closely. >> this thursday, president obama will meet with the east leaders to restart talks over the east peace. you can see that live, this afternoon on c-span, beginning at 3:00 eastern. also today, the airline pilots association international will hold an air safety for and in the nation's capital. live coverage begins at 1:00 eastern. tonight, president obama will speak to the nation from the oval office on troop withdrawal from iraq and a shift of focus to the more in afghanistan. we will begin coverage at 8:00 eastern. host: franklin lavin served as

the undersecretary for trade at the commerce department. he is here to talk about china's power. i want to talk about "the financial times" -- obama right to be hard on china. guest: i think there are a lot of similarities between the bush and obama approach. it should not surprise us. same countries involved. we are not looking for a radical shift. host: why not? guest: most of the trade is unfolding positively, through regular channels, going through customs, both sides are happy.

there are problems, market access issues, currency problems, but 90% of bilateral trade is normal as u.s.-canada trade. it is not a turnaround, not a house on fire that you have to put out, but there are some problems. problems. host: long time and yours have seen the likes of senator schumer and others holding press conferences talking about their currency, threatening that the congress will do something about it but there has not been legislation passed. guest: i do not think we have political consensus to use trade barriers as a tool to do with the balance. people here can find it frustrating, some are put in a position more they have to compete unfairly, but others

benefit enormously from the fact that chinese products are subsidized. it is helpful to some people in certain industries as well. certain industries as well. i think in the obama administration, they believe it is undervalued and is definitely harmful. as far as what can be done to encourage the chinese to move along is another question. interestingly, they have been doing more -- they had done more under president bush. under president bush. however, to defend president obama, they said that the bad economic conditions are preventing them from doing anything.

host: you currently reside in china. this is "the wall street this is "the wall street journal" editorial -- and can you explain that in english for us? english for us? guest: all the imports in the u.s. are subject to the anti- dumping standards. if we determine a chinese company is selling at a less than market rate, predatory pricing, the u.s. is allowed to attach a tariff to the export. if we determine in manufacturer

is trying to undercut dumping, so to speak, we will have tariffs that come into play. and come down to methodology. how do you measure the dumping? you have to price different items. how do you do that in a market economy? maybe it and use does not cost the same. in france, it would be pretty easy. you can add of the cost of each item. the cost of the steel is not fairly priced. these proposals were mythological points that were easier for the u.s.. i agree with the central thrust, you are not going to win offense by tightening up your defense. we are here to get exports up and compete around the world, that is great, but making it tougher for people to export to us has nothing to do with our

exports. host: what do you do in hong kong? guest: have worked mainly with u.s. companies and china, india, southeast asia. helping u.s. companies who are trying to succeed in the chinese market with a brand strategy. government relations is our first specialty. right now, the world's fair is going on in shanghai. it is the largest world's fair in history. in history. this is made up of pretty much every country telling their own story. i am working at the u.s. building, telling our story to visitors. host: how much it is the u.s.

spending on the pavilion? guest: we are the only country in the world where the the volume is entirely privately funded. the cost of the construction, 90, 46 months, is about $60 million, entirely donated by individuals, corporations, universities, american corporations. host: who is visiting, is this largely a world's fair for the chinese? guest: it is interesting the way you describe it. the majority of people are chinese. tourism is picking up. you go to china to see china. you do not want to see the italian pavilion. you want to see the forbidden city, the head in the house. you want to understand china. host: so what are they trying to

accomplish? guest: more to reach the chinese people. soft diplomacy. let's engage but population, help the average man on the street understand what makes america work, what makes america successful, their point of view. that way, when you come to issues, you have a reference of understanding. host: next phone call. clinton township. caller: i have always heard there were substandard wages for workers there. i have even heard about slave labor. you talk about the free market, that is state-run capitalism. that is certainly not on equal balance with us.

when you say both sides are happy, you do not mention that the environment is dying because there are no environmental controls. that is one of the reason why 9 industry went over there -- one industry went over there, to skirt all of these lost. guest: let me clarify for you. i think is accurate to say that 90% of the bilateral trade between the two countries take place in normal, legal action. it is a separate topic altogether, and i agree with your point about the fact that china is a developing country. people there are paid less than in the u.s., there are certainly a range of activities going on, but within bilateral trade point itself, it is fair to say 90% of

trade takes place in a normal fashion. when you go to a poor country, it is not surprising if they are paid less. they are being paid more now than at any time in modern history, so their wages are going up, but there are still far behind u.s. in terms of wage rates. host: tweet from a viwewer -- guest: both countries have a lot to gain by collaborating and should books for -- look for. of agreement, not points of friction. there are differences of trade, but we need to find cooperation. host: in the "new york times" --

what is happening with china's economy that the government can replace the top executives? guest: this is somewhat related to the question from michigan. they have a significant state sector. gdp in total is probably not much different from the u.s. but they have operating companies. steel mills, chemical mills that are state-owned. normally, we do not have that. they have a huge challenge in china with their management class, with their human capital. they do not have the decade of college graduates, business

school graduates to run corporations. they are trying to professionalize, globalize, and it is logical that they are looking for talent from around the world. it is for europeans, americans, anybody that can fit into the system. is easier said than done, in my point of view, because a lot of these companies have built-in inefficiencies. think about rebuilding an institution in the u.s., it may be awhile before you could get them moved along. host: next phone call. caller: it is my impression that the chinese impose something like a body of added tax for foreign manufacturers to ship into china, whereas with the passing of nafta, we allow them to come in here without any tax implications.

in the past 10 years in not passing of nafta, the manufacturing portion of our economy has fallen from 20%, down to 11%, so we have lost about half of our manufacturing to china and other foreigners. are we facing an unfair competitive situation with the costs that the chinese impose on our manufacturers shipping into china? guest: the u.s. has its own tariffs and duty to tangible, as does china, and -- relative to trade, as does china, but that has nothing to do with nafta. if we talk about greater china, if we talk about greater china, about $100 billion.

u.s. companies compete and win every day in china, but it is a difficult market. the government plays a role in the economy far more in excess and our government does. it takes some wherewithal to compete and win. but there is enormous demand for american brands. american brands do very well over there. the general motors, ford motors, all do well over there. procter and gamble, paul molitor, pepsi, all sorts of -- palmolive, pepsi, all sorts of brands do very well over there. it is just not it is a much more open market to compete in the u.s. host: time to that equation is

how much china gets from germany. could you speak to that? guest: china has higher import penetration than in the u.s. there is a fair amount of import activity from the europeans, japan, korea. what the chinese will say, to some merit, it is not much of it is just manufacturing components and we do not get full bounty from that. we import different parts of the shoe, we will build it, so we do not capture the total benefits of that. host: rate on the republican line. fairfax, virginia. caller: about three years ago, labor wages was not the main reason for the trade deficit. that seems to be the method.

-- myth. if he go to their website, national association of manufacturers, they have nothing on labor costs. they talk about spending reform, tax reform, legal system reform, and regulatory reform. guest: i think you are exactly right, and we see this pattern in mexico as well. there are labor differential, but there are substantial productivity differentials as well. if someone in mexico is making one-fourth of the u.s. worker, but that person's ability to use a computer, advanced machinery could be sick in the less. the average education worker of a factory worker in china is about six years of education. about six years of education. very limited. so your ability to use precise

engineering, pc's to look at inventory is limited. not surprising that they can limit their wage demands as well. host: jackie on the independent line, a cape cod. caller: hr 4444 was passed to normalize trade with china. i think this should be repealed. they manipulate their currency, subsidize their industries. multinational companies benefit from this but the american worker is never considered. guest: trade remains controversial and there are people in the u.s. who have not done well more globalized trade. i would say most americans have benefited enormously from the fact u.s. companies can compete and win. we are better as consumers,

being able to enjoy a product from around the world. i do not think that we would be better off isolating ourselves and cutting ourselves off from other societies. open economies move ahead. the isolated economies are the ones that stagnate. host: olympia, washington. joan, good morning. caller: i have been watching you for a long time. when these ships come into, for example, the port of seattle, what do they pay to dock their ship? ship? as americans, we need to look into the fact that, even though we buy a lot of products from china, we need to open up to

other nations and provide some competitiveness to china. we should be appalled at the slave labor that these people are working at. one other comment. many years ago in the late friend who told me, this country needs to be aware of the sleeping dragon because it will destroy the country. guest: the emergence of china in the economic world poses a number of challenges, not only for the u.s., europeans, everybody. it is altering the way that businesses operate around the world and is challenging the economies. i agree with some of your base points, but i would also say figuring out how to sell, buy, cooperate from china will be much more beneficial to the united states than any other

isolationist approach. 16% of the entire u.s. gdp is imports. 1/6 of the economy is imports. within that, about 15% of that is from china. so about 2% of total gdp is imports from china. they are putting pressure on u.s. manufacturers and is causing lower prices, but is also giving benefit to consumers as well. it is in open market where you are free to compete in the international marketplace. host: japan will take two steps to boost the economy. ms. is in not "the financial times -- "the washington post" -- what will this be -- what will

the impact be on world economies? guest: it is a conundrum for their government. they have world-class manufacturing and export with those top tier companies that we all loved. automobiles, electronics. but they have huge structural problems and their economy and i do not see it bubbling up any time soon. guest: next -- host: next phone call. ken on the independent line. caller: i wonder in the future if there could be unionization in china? there have been slow rumbles in that direction. let's say that happens, chinese workers reached some sort of parity, how would that impact us?

guest: you are making an interesting point. interesting point. one of the trends that we are beginning to see in china, because of demographic pressure in china -- china's work force population is shrinking. there is demographic pressure, which is to say supply of the industrialized neighbor if not necessarily keeping up with demand, and there is a work force that once more, not surprisingly, and there is no arbitration structure that allows these claim to be adjudicated in some fashion. all kinds ofals boycotts, strikes. if they occur smart, they will come up with a mechanism that will allow wages to increase, contribute to the belly of workers.

that will create the industrial middle class workforce that we and other industrialized countries have as well. this will take years to unfold, but it is helpful. the competition we are getting from china is not slave labor. it is in auto factories where people are paid when u.s. workers are paid about 50 years ago. maybe $50 a month. those of the best industrial jobs in china. and they're not competing with us in terms of automobiles yet, but perhaps with other products. host: mike on the democratic line. caller: how can you ship stuff from china across the largest ocean on planet, across the continent, and still make it cheaper than we do here? i will listen to your answer.

guest: the shipping cost of a container from shanghai to los angeles is only about $2,000. so the actual price of shipping the ibm and there, let's say a microwave oven, would be only a few dollars. these partnerships are massive and can include specially designed ships with containers that will have 5000, 7000 containers on them. this is one of the great innovations in transportation and logistics in the past 20 years. i live in hong kong. i can go on to amazon in the u.s. and it can be at my home in a few days. i may have to pay a bit more, but the world is much smaller than it was 20 years ago. host: surely on the republican

line. caller: -- shirley on the republican line. caller: there was a question that i could not hear the answer to and i tried to pull it up on my computer. i have a comment and a question. when i walk through the supermarket, i see all sorts of food from china. food from china. i would like to be able to subsidize our farmers in some way. perhaps farmers could get a voucher, something for them. we are losing our farmers in this country. i would love to buy organic food. it is so expensive. if i had extra money and the month, i could buy some decent food. if the farmers are going, the

trucks are going, storage, people are getting paid low wages. i am sick to my stomach when i hear there are little children go to school hungry. a lot of points. let me go through the basics there. there. 80% of the economy is domestic economy. 80% is made right here in the u.s. but 15% or so is imported. about 14% from all other nations and about 2% from china. there is not an enormous amount of products from china, but it is not so much that chinese steel is flooding the u.s. but what happens is when even a little bit comes in, even 2%, is that it drives domestic prices down. workers are not happy about even

2% penetration because they cannot compete. the automakers are looking for less expensive steel and the u.s. appliance makers as well. we would win, if you will, but the manufacturers would lose in that samarra and -- scenario. host: you can go to the c-span series and go to washington journal and you can do a search when you get to the washington journal, web page. next call from ohio, good morning. caller: everybody talks about cheaper products coming from china and all our business is going over there. i want to know who those products are cheaper for. because the working people of this country lost $15, $20 an

hour jobs. there is no way that these products are cheaper to them. it is just cheaper for businesses and the lead in this country. guest: there is no question some people are not better off. but if we talk economics and business, the hardest thing is to look in the mirror. if we look in the major sectors in the u.s. that have problems today, we think of the auto sector. this was not the chinese that put them in bad shape or even the japanese. it was our own decisions. the management leadership in detroit, i would say, and the unions deserves some blame as well. we were the ones that could not make our cars to compete effectively and we were the ones that brought money to build plants that were not used effectively.

it was not a foreign manufacturer that did this to us. it was the fact there we were paying some people on those assembly lines at wages far in excess of their productivity and that is not going to help anybody. we've got our share of problems in our country that i think we need to take care of as well. host: tennessee, james, democratic line. caller: i would like to ask the guest to give his comment on the following scenario. i've thought about this myself and i cannot think of a possible reason for water and getting ready to say. if china is the largest communist country on earth, and obviously in the past has trampled human rights and the workers -- no doubt about it, nobody contends it is not a

communist country. but cuba, who also tramples on the rights of its people -- how does this make any sense? guest: a great question. let me rephrase this generically. at what point in a country's politics would we, as americans, field all right about what pointand upoat would we say that conditions are so bad? one is, if the country itself moves to market economics, regardless of its political leadership and what it calls itself. if it moves to market economics, that at least means that the average person on the street is going to get some benefit from those wages. he is not a slave laborer. he is really working in other

factories. he has a little condo or apartment and has a tv set and can enjoy life a little bit. you contrast that with economics were your only working for the state and you do not get to keep the money that you weren't. that is kind of a slave wages set up. -- the money that you learn. that is kind of a slave wages set up. that is one of the differences between cuba and china. another thing is if a country is not causing problems for us to run the world, then we need to do business with them. if they are causing problems around the world for us, then we need to rethink doing business with them. q. does worked with the soviet -- cuba has worked with the soviets, funding guerrillas. the difference is, china is not working or on the world to cause

problems for us. -- working round the world to cause problems for us. host: alabama, joe, republican line. caller: what kind of regulations do we have in place about reverse engineering going on in china, as far as than duplicating products? guest: when we talked before about 80% or 90% of trade or business issues going along business issues going along normally, right at the top of the list is intellectual property rights -- intellectual property rights. it is very difficult for american manufacturers to deal with this. i would say first and foremost, i would talk to any u.s. company if you are taking in the intellectual products to china, be very careful about your production mechanism. if you have a proprietary technology, do not share that in

china. it is a legal system that is very difficult for foreigners to get a fair hearing. be very careful about what you're doing with your manufacturing process as you sell your goods in china. host: independent line, your next four frank lavin. caller: thank you. host: you are on now, so turn the television down. caller: i will turn it off. from the time it's an open up trade with china and the u.s., china had a policy that it was willing to do business with us, but it did not really want to buy anything from us and the american dollar flowed into china and when to, i guess, the companies or whatever. but the yuan was traded for the dollar and the dollar was saved

by china. i guess we bring deficits year after year after year. back and sayd we come we need to do more trade so that it is evenly balanced? the subprime market that we experience was, i believe, a flow of u.s. dollars that came back into the united states. we like to blame it on bankers or whatever, but there was such a flow of cash that came in that we made loans that were 100% loan to value, and even more, to make value for our u.s. dollar to, say, china. to, say, china. the trade is fine and

corporations are making money, but on the perspective of the dollar reverses the yuan, the dollar never leaves china, be sure of that, but the dollar goes around the world and we try to make value for the dollar. guest: a lot of ideas in that statement. i will just say this. we sell a substantial amount to china and the numbers are going up quite dramatically. china is more open now than any time in recent years. u.s. companies, i think, are just getting better and better in dealing with a challenging market. our sales to china this year are going to come very near $100 billion u.s. our total exports to france, which is an open economy, from the country, our total exports for $28 billion. that is not a small amount of money. just the growth in u.s. exports to china this year is going to

be $28 billion. u.s. manufacturers and exports are going to grow. you can find success in the market. i agree that we are running a trade deficit. they are selling more to us than we are selling to china. that does present problems, but fundamentally, you can find success in the chinese market if you have the wherewithal to get into that market. host: richard on the republican line. caller: a lot of people do not know that when you buy the parts for general motors, it is made in the u.s., but you get it outside the box and it is made in china or correa. it ought -- korea. it ought to be against the law. guest: it is against the law. maybe someone is doing it, but

it is certainly legal to put a corian part in a box that says made in the u.s.a. -- to put a korean part in a box that says "made in the usa" host: next caller from massachusetts. caller: i do not know the way china works there hours that they work in a week, but germany has just reduced -- they had people working on half a week. host: we will leave it there. and just a reminder to turn the television down when you call in. guest: a very interesting point. what the united states did was to increase the number of weeks. not surprisingly, the u.s. has provided a decent the center for

people to find work and germany people to find work and germany has as well and their growth was 9% recently. host: sam on the democratic line. caller: i would like to express concern about the statement you made about shipping containers over here for $2,000. i find totally impossible. i do not find any truth in that at all. guest: what do you think the price is, sam? caller: i do not know, but it has to be more than $2,000. guest: you have a ship that has 5000 or 6000 containers on it. that is a reasonable fee. these ships are common carriers. it is just like a fedex a van or something. different companies show up in

shanghai or somewhere, and general motors says i have three containers to ship and ship says, fine. if you and i went on to more to do it, it might not be $2,000. because we have not negotiated a contract. they might charge $4,000. but there is no sense in you and i are doing about it. you can go online right now and contact the shooting company and ask them the question -- the shipping company and has then the question. host: thank you for being here. coming up, we will look at our series on politics, but first, a news update from c-span radio. >> two men being held in the netherlands might have been trying to test u.s. airport security by putting bottles with electronic devices attached in checked baggage. u.s. enforcement officials say the men were taken into custody yesterday after landing in amsterdam on a flight from chicago.

the u.s. department of homeland security says they were arrested after suspicious items in their luggage raised concerned. -- raise concerns. those items were eight shampoo and a bottle with a cellphone attacks to it and knives and box cutters in the checked bags. in new poll about the mosque in manhattan. 71% favor moving the product away from the side, a few blocks from ground zero. in another poll, americans most concerned about key issues are inclined to say they will vote republican in their house race this fall. that same group gave remarks on the issues to president obama. and finally, a federal judge set a suburban philadelphia

district involved in a laptop spying scandal must pay the families of to $260,000 -- the to the families' lawyer up $260,000. those are some of the latest headlines on c-span radio. >> yesterday, i signed a disaster declaration for the state of louisiana. this morning, i signed a disaster declaration for the state of mississippi. >> as the gulf coast marks the fifth anniversary of hurricane katrina, look back at how the federal government responded to the crisis on line at the c-span video library, all free, every program since 1987. it is washington your way. >> join our conversation on the american revolution, the making of the constitution, and the importance of its historical study sunday with pulitzer

prize-winning author, gordon wood. live sunday at noon eastern on c-span2. >> tonight, and technology we continues on "book tv" primetime. james newton is described as the chief architect of the modern world. "book tv" in prime time tonight on c-span2. >> the c-span network to provide crowd -- coverage of politics and american history. it is available to you on television, radio, online and on social networking sites. find our content any time in the c-span video library.

and we take c-span on the road with the regional bus and other vehicles bringing our resources to your community. c-span, now available in more than 100 million homes, graded by cable, provided as a public service. "washington journal" continues. host: "washington journal" summer series this week looking at what goes into politics. yesterday, we looked at the house and senate races for campaign 2010. on wednesday, we will take a look at independent third-party groups and their role in electoral politics. on thursday, there is -- the roles of the polling and whether or not they are accurate. today we will talk about the impact of political ads and what goes into them. let's just begin with what goes into deciding to do a political ad and campaign. guest: at the front and there's

a lot of planning, and obviously polling, and there is a focus group, what has the candidates been up to whether it is a challenger or in the incumbent. then you have a thing like a tv drama were there are opening arguments and the cross and generally someone will try to end on a positive note. a lot of playing on the front end and then it becomes harder when the real shooting between the campaign's start. host: there is a strategy to begin by introducing yourself and then go negative and positive? guest: it generally follows the courtroom drama of formula. a lot of what happens in the middle, they try to plan for an anticipated, but this is an event driven business. what happened to the news will generally turn into political spots and in the candidates are

forced to throw out research and cut quick response ads and getting conversation mode with their opponents. then you throw in groups and parties and everybody else and it is hard for campaigns to stay on message and do what they plan to do from the beginning. host: what is the business of as as far as profits? -- the business of advertisements as far as profits? guest: there is something close to its $3 billion election with every party. that includes production, consultants. it makes money -- it takes money to make these commercials. we have seen people like the cut -- the mccain campaign in 2008 producing a lot of these commercials on their laptops. when production costs go down, campaigns usually find a place to put that money. host: why are had its more

expensive in one area versus another area of the -- what are advertisements more expensive in one area versus another area of the country? guest: it depends on if you are going to reach more people. it is based on the audience available through a given station's coverage. host: as the campaign decide when they are going to air and what program they are going to be on? guest: there is a lot of research into this. there is a lot of micro targeting that has made its way into a television over the years. the reality is, campaigns spend the most amount of money when they have the least amount of people to influence. there is no other business that advertisers like this. you take a product seller and they are constantly trying to sell off cars or dog food or whatever it is. campaigns are trying to persuade the last 6% to 8% of voters two

weeks to go before the elections. they will turn the volume of as loud as they can, which means it will buy as many spots as they can afford. generally in planning, they will buy from the for this day out that they think they can afford to stay on the air until election day. host: if your in florida and you are sick of seeing how this from jeff green who is running for the democratic nomination there against kendrick meek and kendrick meek is running ads, is it going to get worse? guest: absolutely. the senate primary is over and the governor's primary is over. now you're getting into general elections. the primaries are supposed to be a little more genteel, but the reality is they are very competitive. because of the stakes in the state, obviously, florida is very important. it is one to be one of the most

contested states. the house race, senate race, governor's race, attorney general's race -- you go down the list and all of those candidates will be competing to persuade voters why they should vote for them against an opponent and that will continue until election day. host: what does your company do? guest: we are out there basically with computers in every media market. they watch tv and recognize new advertising and bring it back to our headquarters in arlington, va., where we have people that comb these advertisements all day for content. we find out if they are winning and recreated at that the campaigns will use, the parties will use, interest groups will use. incorporation wants to know how many candidates and iran -- if a corporation wants to know how many candidates advertisements

are being shown around the country come out that is what we will find out. we do not really measure exactly how effective they are because that just comes down to election day. day. host: let's talk about negative advertising. people complain about them, but you always find them in a race. guest: everyone complains about them, but they work. they work because there are generally more facts in them. they are interesting in many cases, and they work because voters pay attention to this. the kind of like this aspect of politics. people say that they hate them and will turn off their tv and want to throw it out the window, but it just means they are paying attention. host: if they're talking about it, they're paying attention. guest: and in some cases, look, the campaigns do not mind that the voters get so sick of the ads that they do not vote.

it's kind of a dirty little secret of advertising. in many cases, it drives down turnout. if a campaign can control turn out, then they know, look, this is a republican district and fewer people turned out, there will be more republicans. host: i would say that is the case in senator harry reid's district in nevada. i want to assure you a couple of advertisements in that district and we will come back and talk about them. >> no, i i wouldn't -- would not have saved 20,000 jobs and that we are spoiled. >> we really have spoiled our citizenry. >> she said she would even eliminate the department of education. >> would you eliminate the department of education were just cut it down? >> i would like to go through the elimination. >> she is just too extreme. >> i am mary read and i approve

this message. >> i and sharon engvall and i approve this message. >> obama and harry reid, together, they promised to change america, and, boy, did they. tax funded bailout for wall street, a $787 billion stimulus that failed, and record deficit and skyrocketing unemployment. they say you cannot buy love, but we have certainly paid a heavy price. host: talk about that advertisement. what did you see there? guest: the nevada senate race is one of the most high-profile this year. this is an interesting race because barack reid campaign -- and -- because the reid campaign, and there is a law that has the candidates in trouble. there is not what they can say

that the voters do not already know. know. the campaign is to make engle look like an unpopular choice. when you have a president whose approval ratings are in the thes -- are in the 40's, campaigns are going to look to attach to that in these races. the same thing with nancy pelosi -- very popular in her district, but not around the country. indeed reid case, look, let's make sharon engle look like an unattractive candidate. host: where would they ever those advertisements, depending on what kind of voter they want to get out there -- where would

they ever those advertisements, depending on what kind of voter they want to get out there? guest: political line is always sort of started out the news and then layered out as you can afford. news is the ocean from real- estate of political buying. -- the oceanfront real-estate of political bind. basically, they're trying to get the people that are watching the news because they assume if you are watching the news you are more likely to vote. younger male a numbe programming and that usually means daytime sports. and you will see them buying places like cable news, like fox is great for republicans and

cnn is great for democrats. if there is programming toward women, and there are programs that are skewed toward a female audience. they're just trying to turn of the volume with as much news as they can buy with interesting programming that they can afford. the ideas tuesday on the air until election day. -- the idea is to stay on the air until election day. host: go ahead, caller. caller: i cannot understand how people are ever influenced by these things. i have never change my vote for anything from one of these advertisements. there are legitimate ways to get real information about these candidates, about anything, whether it is a mcdonald's or pizza hut.

the advertisements are not ever -- i just cannot understand people making a choice on the basis of them. the whole thing, it boils down to one thing, that apparently, a great majority of americans are political idiots. host: joyce, can i ask you something? do you always vote? and if so, do you always vote democratic ticket or do you vote on issues? caller: i always vote in democratic ticket because of the issues, for goodness sake. i mean, it is the souks. i have worked for polls, for candidates -- is the issues. i have worked for polls, for candidates, the league of women voters. host: there is not just one issue that would drive you to the polls to vote? caller: no, unless it would be strip mining in west virginia.

i mean, taking the tops of mountains. guest: joyce is unfortunately collateral damage. the advertisements are not really in doubt her. unless it is a democratic primary -- are not clearly aimed at her. unless it is it democratic primary in a state. the political ad the equation here is aimed at driving up name identification in the first case, and in the second case, getting policy issues out there that are going to drive supporters to the polls. but really, it is about and then -- independent and undecided voters that really make up a close race with a month to go. host: are they issue voters? guest: there in the civic duty category. they fancy themselves very independent, but in the end, they know they will vote and they are waiting to make up their mind and have that sort fdot a-ha motive -- that sort

of a-ha moment. the choice here is collateral damage. they're not aiming her. host: republicans are looking to make an issue out of health care legislation. roy blunt, who is running for senate in missouri is out with his dad to advertisement. let's take a look. >> obviously, the democrats in washington did not care what they had to do to pass more government control of health care that will eventually destroy the health care system currently. we need to speak loudly. we need to do this before they force this bill through because we have said over and over again -- they have said over and over again that people may not want this, but they will love it once it is passed. it turns out to be the opposite. it is time to sign his position and we will get the petition to nancy pelosi and harry reid and

barack obama right away. ♪ host: that was roy blunt's advertisement. he is running for senate in missouri, an ad for youtube. i want to assure you -- to show you an advertisement that just came out today, or monday perhaps. it goes after republican candidates on the issue of social security. take a look. >> politicians like shonda be just do not get it. when we should be -- like sean quaddafi, just do not get it. when we should be backing social security, he does not do it. the plan to privatize social security by sean duffy is the wrong choice.

host: 7 tracey -- evan tracey talk about the health care message. guest: is this a strategy to divide people. republicans have done a very good job of making health care an issue. what has been interesting about this election is the democrats ran very successfully the last three elections on the issue of health care. now they have passed a bill that they do not want to talk about. republicans have already branded this obama care and you have probably had $30 million of advertisements, just in the past couple of months since it has passed. really, the democrats do not have a counterweight to that. what you are seeing is an issue that they have used in the past, obviously. they used it in the way that republicans have talked about using it to privatize social

security. now that wall street is in the rearview mirror, they are trying to regain some footing and a half to seek health care -- cede health care because it is unpopular. they're looking for ways to get those voters back. and i think that is an issue we will see a lot of. we have seen it not just in this advertisement, but in a lot of the local races. and in washington, it is an issue that is getting traction. you'll hear a lot about health care and the new bill and social security in the future of coming election. host: political reports about that advertisement that you saw is that it is a nine-week spending that they have for this advertisement and sean duffy his running in the seventh district, once held by retired congressman

david obiwaobey, a democrat. next caller, go ahead. caller: what actually is ways and advertising going to the next level against its opponents? in other words, what if an individual were to approach the campaign with "delong 3" that could bring the opponent -- "dirty laundry" that could bring the opponent down with some sort of mafia since -- malfeasance. what are the pros and cons of the political campaign that received that information? guest: it is a good question. the generic case that you presented, obviously, it comes down to whether it is true or not. and if it is true, to make sure that -- look, the worst thing

that can happen to a political campaign is to run an attack ad and find out that they have done the exact same thing. the test is, number one, is it true? number two, is it relevant? and number three, are we basically immune to having this boomeranged back at us on any logicalevel? that is what goes into what information to use and how to use it. host: we have been talking about the candidates and their decisions to run, but you also have third-party groups out there running a lot of ads. it is often difficult to find out who is behind these advertisements. on both sides of the aisle you see the rise of these third party groups. >> there is talk and talk while

ohio loses 400,000 jobs. >> ideas from ohio in all 88 counties. >> all part of the plan to create jobs. >> the doctors gave us stimulus and debt. >> portman strengthens job creation. >> and now, that is change. >> american crossroads is responsible for the content of this advertising. >> i made there is. >> i am a schoolteacher. >> i am a nurse. >> i am an entertainment lawyer. i am also in mama grimsley. >> sarah palin to release a video on behalf of mama grizzlies. sarah palin, you do not speak for us. >> sure, i attack when my cousin is threatened. you know what threatens me? the fact that my daughter does not have the right to choose. -- that my daughter would not

have the right to choose. >> when my family was unemployed for several months, guess how we survived? unemployment benefits. >> it really gets under my effort and my nails, my beautiful, manicured, covet claw nails. [raor] >> you may think we're on the wrong track because of federal funding for our schools. >> believe me, there are plenty of mama grizzlies out there that would disagree with you. >> you are right, you do not want to mess with mama grizzlies. >> do not mess with us. host: you saw in small type at the bottom of that last add that was funded by emily's list.

what is the impact of these third party groups? guest: the influence is going to be great on these elections. again, there are a lot of moving parts. the group's charter is really just to be disruptive on this basis. basis. they are designed to throw campaigns of message, and in this environment of post citizens united, there's going to be the idea of the average of more realistic. to this point, it has only been on you tube, but these are the things that will be able to attract attention and they will raise money off of these appeals. the problem is, we saw this in 2004, is that i love spending was designed to help john kerry. was designed to help john kerry. it was very much to the left and talked to the left base, which john kerry already had. if you look at the bush

campaign, it got outspent by $100 million, but the two most successful of these two dogs were the swift boat had and progress for america. -- were the swift boat advertisements and the progress for america. there are very few that were memorable from the other side. those are the lessons learned. that is probably what we will see a lot of this cycle. the groups will try to help more politically then firing at the base, which means more negative advertisement, probably going into gray areas. this is really what the groups can do. they can play the bad cop role and the candidates can play the good cop role. there was a senate primary where there were very few negative ads, but the guy one, but there were groups attacking the other candidate in the race.

basically, good cop, bad cop. host: are you talking about the tea party influence? guest: the tea party was in alaska and not so much in the case of colorado. these groups are not so much associated with political parties as much as they are associated with candidates or points of view. these groups will help certain types of candidates. the same thing on the left with groups like sierra club. really, they tend to ideology than they do straight party politics. host: let's take a look at and have from alaska. >> she is so liberal she voted against republicans in congress more than 300 times. the left-wing even calls for a democrat. 80% of her funding comes from out-of-state. that is why governor sarah palin and 80 party expressed support of conservative

republican joe miller -- and of the tea party expressed support of conservative republican joe miller. ♪ ♪ ♪ host: we are talking about the

influence of the advertisement and what goes into making advertisements in this campaign season. tracey.t is kevievan virginia, your the next phone call. go ahead. caller: do you find people doing more absentee ballots earlier, or meaning in their ballot? for example, i can vote absentee and i can just ignore the ads. guest: again, your role would collateral damage in the sense of what the ad makers are going for it. but it is an interesting question because it is really pulling the political outs out further. it is making the schedules -- the political advertisement of further. it is making the schedules start earlier.

they have to run effective spot earlier and more often, because you're right, more people are voting by mail. but it still comes down to how do you persuade the last 8% or 9% of the voters in this race. host: danville, ga., billy on the democratic line. caller: thank you for c-span. i have been trying to get on for the last three years, i guess. what i'm calling about is that no one seems to want to call about -- talk about the hidden issue. that is, race. a whole lot of you whites are voting against obama because of race. host: billy, and not sure where you are asking here -- i am not

sure what your asking here. the impact of race in advertisement? caller: no, not in advertisements, on the elections. host: any comments? guest: political advertisement perspective, it is really about attaching advertisements to candidates. there are certain candidates that go after race or gender. that has been politics since before television. host: on the independent line, paul. caller: a statement and a couple of questions -- i do not know if it would be better to ask a question and get an answer or get going -- or just keep going. host: we are running out of time. kenya has been just one question? caller: how does -- can you ask

just one question? caller: how does one justify spending millions of dollars on one advertisement? if a politician makes it $250,000 per year, how do you justify spending billions of dollars on advertisements? my second question with negative advertisement, people come up with all of these negative things about their opponent, but they only come up with what is an advantage to them. guest: the cost of advertising, again, this is why politicians raise money, but it is actually in a stupor and more efficient than if they spend every day trying to go round the state -- it is actually cheaper and more efficient than if they spent every day trying to go run the state and need everybody. the voter has a very short memory, so you want to deliver your best points, as far as wide

an opponent should not be elected, as close to the election day as possible. it is simple marketing in that case. host: columbia, independent line, you are on the air. caller: the caller to callers ago that mentioned about race, again, i think you could look at that both ways. some people did not vote for mccain because they said he did not like us and they voted for,. they could be both ways -- and they voted for obama. it could be both ways. as far as advertisements been truth, these are half-truths' at best. i think one caller said to go out and do research. if they are targeting people entering half-truths', was the

legal liability of this? some of this is defamation of character. is there any recourse? host: we get your point, mike. guest: i guess the best way to put it is that is your version of the truth in the campaign world. there are always two sides to every story. and this is propaganda. it is not the campaign start to give context. give context. -- the campaign's job to give context. they want to talk about the tax bill, well, it could have been spent building schools. the other side of that is that you could say, yes, we spent the, but we build schools out of it. this is propaganda and should not be confused with what you see on c-span, which is digging deeper into the stories. you can -- is a lot like watching commercials on tv where they tell you are going to get

slimmer and richer. host: dayton, ohio, go ahead. caller: all of the ads do not make sense to me and the reason that they do not is because, first of all, it is a two-party system. you have corporate money and whatever other kind of money. it is not a level playing field. on top of that, -- i cannot think. but it just baffles me, the whole process. it is only two-party system, so if the democrats get kicked off, we're right back with the group that got us in the mess -- kicked out, we're right back with the group that got us in the mess in the first place. host: all right, orange county, calif., good morning. caller: good morning. thank you for c-span, some of

the little intelligent talk that is on television. i spent the last 25 years of making silly things -- making these silly things. host: let me stop you right there and ask you what kind of television. caller: it starts with to your guest is and what of a wanting you to buy and then somebody writing scripts for you are asking for ideas. some of the people that i'm actually producing, the candidates have come in and want to do their own ads, sometimes they are so real literature just the written word that i have to edit down the word by word and take their normal cadence of speech so they did not sound like they were having a grand mal seizure -- grandma

seizure. there was one -- i will not tell you who the candidate was that i was working for. she ended up calling him john -- calling her opponent of the board john -- calling her opponent john "value jet" shattuck. and i ended up getting a cease and desist order. it was just after the value jet crash. crash. a lot of these people do not know what they are talking about and you have to hold their hand in this process. guest: sounds like our caller has visited the sausage factory few times. it is maybe not as easy as it looks to produce the spot and put them out there in a context that matters.

sometimes it is very hard because the candor -- candidates are not actors and actresses. you need a good voice talent and good scripts. and you are trying not to offend viewers, especially those that will support you. host: what is the impact of a funny advertisement? you have seen the use of them increased over the years, especially in the 2008 presidential campaign. guest: this is where it becomes more of an art than a science. a lot of humor, works when there is a really competitive race that has had a lot of negative advertisements and you want to break the tension. you want to be the person at the table that cracks the joke that makes the two uncles stop fighting. and if it is sent with a velvet hammer -- a bold hand as opposed to a scary hammer. fdot -- a velvet hand as opposed

to raise gary hamel. hong there are some -- there are some that do it very well. host: in the florida senate race, is one of the most watched races for that seat and highly contested. marco rubio, the republican candidate, is out with his first ad. the democrats' kendrick meek has not come out with an advertisement since he won the primary, and charlie crist has not come out with one either. let's take a look at marco rubio's advertisement. >> my parents came to america. my dad became a bartender, my mom made, and they've worked two jobs most of their lives so their children with no -- will have opportunities they would never could. the american dream is still a reality, and i approve this message because that is worth fighting for. fighting for. host: evan tracey, why does

marco rubio need to put an advertisement out right now while his competitors are not? guest: it is great timing for him because democrats just came off a very expensive, contentious, nasty senate primary, so you have a wounded democrat right now. charlie crist is a known comparted -- a known commodity and has jumped out of the democratic party to run as an independent. independent. mercurio is something -- marco rubio is something different than what voters have seen in the last two months. this gives him an open plainfield to -- and open playing field. playing field. i can guarantee you the ads will not look like this in the next couple of weeks. but this is open playing time

for him to get to know the voters and maybe get some of those democratic voters that were not happy with the meek primary win. host: we have shown these advertisements, and if you want to see them again you can go to c-span.org and if you go to the "washington journal" web page you can see them there. donnie, go ahead. caller: on these advertisements here, these politicians have done great research on the american people. american people. i'm one of the american people and on gullible like 99% of all americans are. you keep putting of these talking points, these themes, these slogans because the gossip seekers, the american public, they eat that up. host: let's talk about the

audience. what does your data say? are the american public global? guest: -- and gullible? guest: i do not want to call all americans gullible, but again, these are the way the candidates are sold to us. this is propaganda from the campaigns that is paid for by the campaigns. again, it contains their version of the truth. it contains what they produce when they polled to get 51% of americans. it is like how mcdonald's decides to put a sandwich out. they go and a research and find out that some people do not like it too spicy and some do not like it too mild. they try to find that middle ground. it is the same thing with candidates. they're looking for the equation to victory. they are looking for the messages and what it can remind

voters about. the internet is a great place to research these candidates, but do not look at advertising and expected to be there to inform you with all the facts. host: will web advertising replace television advertising? guest: i do not think so. it is a great place for candidates to put things on that do not have to be in a 30-second box. the difference between on-line and a television spot, if you go to look at a video on line, you will probably look at it once. if you will probably e-mail it to shoot to your friend or put something on your facebook about it -- you will probably e-mail it to your friend or put something on your facebook about it, but the messages not sticky. the thing about television is that we have seen it so many times. it is in our subconscious. that is why it works, because it has repetition. it is designed to be where you

are watching or listening. with the web, if it gets e-mail or put up on you to, maybe you see it once, but you do not have the recognition. some people go home and watch their computers at night, but most americans go home and watch prime-time television either on cable or broadcast. oney listen in their cars an the radio. you just cannot get that repetition on the web. host: illinois, you're on the line. caller: i was thinking how interesting it is with the republican party and the tea party movement the republican party did a good job of ruining america and they aren't doing a good job of getting the american public to forget