times correspondent reports on the impact of a 10-year drought in the u.s. southwest and the measures being taken by states and localities. "washington journal" is next. host: on wednesday, christine o'donnell. thursday, senate majority

leader, harry reid, debating sharon angle of the tea party. good morning. we want to get your reaction this morning to a headline in "usa today." it is on social security benefits. 58 million social security recipients will go through another year without an increase in their monthly check. you can start dialing in now. we have a fourth line set aside for social security recipients. we will get your phone calls in just a minute. here is the article written by the associated press. it says that the government is likely to announce this decision on friday. marking only the second year without an increase since automatic inflation adjustments were adopted since 1975. the cost of living adjustments

-- host: we want to get your thoughts this morning. what will the impact be? if you receive social security, we want to hear from you. this week's announcement raises more immediate concern for older americans.

host: arkansas, mike, social security recipient, but you make of this? you are on the air. caller: good morning, i just got up. i heard your topic and wanted to be the first caller. host: what do you think about this? caller: i understand that everyone is in a crunch right

now. my biggest complaint was my 7% increase on homeowners insurance this year. 7% increase on car insurance. i do not know which for they are using, but it is not the correct one. if everyone is going to be kept in the crunch, let's keep them there. the insurance companies need more profits? i do not know what to do, we are going down the drain. close to what is your monthly pay check from social security? how much do you rely on it? caller: how much is my social security? $1,808 each month. host: that has to cover all of your bills?

caller: yes, ma'am. host: clarence, independent line. caller: what you want me to comment on? i hope we get back on the comment -- back on target with social security to really give the people the consideration the need and put things back on equal basis when it was a beautiful thing, you know? host: this announcement expected on friday, those receiving social security will not get a raise.

host: omaha, gayle, democratic line. your on the air. caller: i am on social security.

it is crazy, i have other income. the cost of living has not gone down, it has gone way up. host: do you think that this will hurt the democrats in the fall? even if you read the article, it happens automatically. host: -- caller: the democratic administration, they know how to do the figuring. they have changed the cpi or whenever it is called. besides the $500 billion they have cut out of medicare, i

think it will have a huge toll on the democratic election. host: do you plan to vote in november? caller: yes. host: do you plan to vote for democrats? caller: i am not sure. i have been a democrat or as long as i can remember. but i am not sure that the republican could do it better. host: your thoughts this morning, ralph? caller: in 1946 there were pushing to have social security and, ironically, i was going to go for the option but at age 50 i became disabled somewhere between $60,000.70000 dollars

over a lifetime, i have since drawn out over the last 17 years. host: port washington, the morning. caller: i just woke up to this music and it is pretty terrible. everything else around me goes up. my rent goes up every month. pretty rough one. i was getting the food, but i

did not get the food thing for a long time. i make it 5 with $744, but those food things aren't extra $400, this winter i will get by at $844 each month. host: what do you think your energy bill will be this winter? this time of year i do not turn the heat, unless i absolutely have to. in the winter it will get close to $70 per month. if anyone can answer this, i

have heard it once before, when they figure the index, they exclude food, fuel, and one other, which makes no sense to me. the most important things when you think about they gave to those guys, that money, they put a gun to our head. kicking us down and little bit because the rent was going to go up next year. host: are you going to vote in november? caller: i have lost all faith in my political process.

the democrat, the republican, there is no birth -- difference between those parties anymore. why vote for any of them? nothing will change. obama was supposed to be different. he was exactly the same as george bush. all of these sitting democrats and republicans are in lock step on the real issues. host: did you vote for president obama in 2008? caller: it was my first boat for a democrat in all of the years i have been voting.

i have been waiting for the democrats to grow a pair for my entire life. host: tell old are you, greg? caller: 48. host: you said that you are collecting social security disability? caller: yes, ma'am. host: pennsylvania, good morning. caller: i have been in the entertainment business my entire life, my social security because of the way i live, about $600 per month. i lost my house, that is the way things go. if anyone out there thinks that some deer hunter from the tea

party is going to care, yes, obama is this and that, everyone is trapped, the government really is, but it seems like they care more about me. the people from podunk, the people that know nothing about government, helping you and your social security? this president is doing the best he can and the democrats are the only way. host: more about how social security benefits work, payments increasing in 2009 --

host: one caller called in to ask if energy prices are a part of that calculation in this sounds like it is. curtis, michigan, good morning. caller: think you for c-span. social security, you know, it is just like health care.

there was a time when the republicans were fighting against social security just like they were fighting against health care. right now we are not talking about any kind of reduction in benefits, we are talking about the fact that social security i have a $250,000 check that i got last year. i think that as long as the democrats are in there, they will fight for the social security benefits against the republicans. we do not have to worry about social security.

i am confident that the president will do the best that he can do. i know that the republicans will not get their hands on social security and i think that we have to be patient and understand we are not giving a reduction. talking about $10, $15 that we do not get in a raise because of the cost of living. host: we will get back your phone calls on this, but first some more headlines on this. the money section of "usa today."

host: that is "usa today" on the job outlook. in 23 states, courts are handling homeowners in the fall in "the wall street journal." there is a picture of kim jong il and his son, the headline, "the rising sun." they attended a for raid over the weekend. -- attended a parade over the weekend. you can see this article about korean exiles and the picture below that is a big sure that you can see in "the wall street journal flows both this morning. vincent, you are on the air.

caller: everyone misses the point. we put them in office, it is our duty to take them out of office. i cannot see everyone complaining about the same thing when it should not be. host: we will leave it there. ruth, democratic line. caller: good morning. thank you for taking my call. my voice is shaky because i am so concerned about all of the callers that think that the democrats and republicans are the same. they are definitely not the same. i have a brochure from citizens in the congress, wall street reform, campaign finance energy, single payer, health care, etc..

so many people are talking about sitting out of this election, saying that democrats and republicans on the same. they are not the same, they are different. more concerning are some of the candidates that are running that are talking about privatizing social security. if that had been the case, as george bush had wanted to do when he got into office, the money lost to the people who are collecting social security would have wiped them out. i am also concerned about not getting an increase. not for myself, i can make it, but there are some many people who are collecting social security, but the czechs are so small that they cannot afford medicine, food, or even the

basic necessities. the empathy towards people that are not in that top 1/10 of 1% that are billionaires', there is enough empathy that we want to continue to give them the same path, without increasing, which has been going on for so many years automatically for the elderly and the people in need. people, get out the vote. it makes a difference. not all democrats are wonderful, but to have a better chance. host: -- caller: host: juanita, florida. go ahead. caller: thank you for taking my call. to me a raise -- hello? host: go ahead. caller: to me a raise is social security, but it is not that

important. once they go up on medicare on the deductibles, like the lady before, people that cannot live off a small amount that they draw on each month, just $5 or $10 would be so much better for them. that is my point. you go to a doctor that takes medicare, you can look the bill, get it from medicare and how much the markup is. anyways, i wanted to call and voice my opinion. host: before you go, the prices of things are annoying and have you seen that with food? there have been stories showing the price not going out. caller: well, you know --

host: are you there? caller: i am here. host: go ahead. caller: with food, i am a vegetarian. i go to a farmer's market for all of my vegetables. i do not pay attention to them. i do not eat meat, but i do purchased bread and freeze it. i purchased things that enable me to be able to live off what i draw. host: you have probably seen the dustup between republicans and democrats over the chamber of commerce, spending money in the election cycle and the president's saying that some of their ad money is coming from foreign corporations. that is a front-page story in "the washington post." here is an advertisement. >> karl rove, ed gillespie,

cronies for bush. they are stealing our democracy, taking millions from secret donors. it appears they have even taken secret foreign money to influence our elections. it is incredible. tell the bush crowd and the chamber of commerce to stop stealing our democracy. host: karl rove responded yesterday to that advertisement of one of the sunday shows. here is what he had to say. caller: -- >> a desperate political ploy from the white house to distract from the jobless recovery and the terrible economic news last week and the coal face it -- failure of the obama health care proposal to gain support. the president of the united states that accused the chamber of commerce and myself of criminal violation of the law by spending foreign money on

american political campaigns and they have not one shred of evidence. this is a desperate and disturbing trend by the president of the united states to tar his political adversaries that is on restrained by fax or evidence whatsoever. host: that was karl rove yesterday responding to the attack from the democratic national committee. albuquerque, new mexico. caller: what if the to talk to you. i m f zero -- what a pleasure to talk to you. in four years away from social security. many thanks to the woman from connecticut, she was a wealth of information and right on the money. it would behoove americans to pay attention to what is going on in france. millions of people have been getting into the streets to keep

the president there from raising the retirement age to 62. with a lovely retirement package that makes social security look like a pittance. and they have complete health care until the day that they die. americans need to become a bit more savvy about what is going on in the rest of the world, they need to literally get in the streets. but the last comments i have to make, as far as democrats and republicans are concerned, the biggest concern with democrats is about whether the payment becomes larger. with republicans the biggest concern is about whether you have social security at all. host:-me, independent mind, south carolina -- daphne, south carolina, in the pan and line. caller: i count on my social security 100% since my husband

passed away. in these past few weeks my bread went from $1.90 to $1.29. my yogurt went from 376 -- $3.76 to $4.24. my milk when from $2.29 to $3.80. everything is going out. i do not know how they can say that the cost of living has not gone up. i am starting to struggle from month to month. host: we will go on to new mexico. republican line. good morning. caller: this is such an interesting conversation. the people utility bills, get

back to barack obama when he was running for office. many had the cap and trade program passed. they are going to push this in the lame-duck session. he said that if they past that it would extremely increase energy costs. if you are paying $30 now, it will be $90 when we are done. the social security system is broke. i expect any day or any one of these months i will get a letter saying my benefits will go down. if they were truly doing it to fix the budget, it would not bother me that much. just like they are doing now, they will throw the money away. these democrats are not doing you any favors. republicans and democrats, many of them are socialists. look of fabian socialism on your

computer and look up what those people want. host: md., help me with the name of your town. caller: [unintelligible] host: i am on social security. -- go ahead, sir. caller: i am on social security. a woman a few moments ago, you mentioned something about food prices going up. the food prices have jumped. nobody can keep a straight face on television. not one of the senators, not obama, and nobody can keep a straight face to say that that is not true. it has not doubled, but it is getting close. we are paying more for gasoline. how is it that they cannot drop the price of gas caugh?

that is hurting everyone. host: we are talking about no raise for social security in 2010. diane, what you think? caller: the little bit that we would get would not make a big difference with what i have and the money that i put in savings. without my savings, i could not live. i would lose my house. i would have to go live in high- rise tenant building and get what i could get. you know, when you get a gas bill or an electric bill, people look at it, you are looking at 5 cents each month. i want to say one thing about the way you people talk about increases. how many years ago were the flu shots $15? now they are $25. what kind of increase is that? my health insurance, my car insurance.

i have more than $200, you know. i cannot understand why the things are not going out. with that lady in south carolina, with food, she should talk to someone that knows how to shop. i do not mean to degrade, but you can get a big container of yogurt instead of a box. host: that line this morning is no raise for social security benefits. the chairman of the ways and means subcommittee has introduced a new bill for payments for seniors. host: vernon, new york.

caller: are you there? host: we are listening. caller: to the man who thinks so security is going broke, he is wrong. it is solvent through 20 -- 32037. in terms of the callers, this is not a democratic problem or an obama problem, it is a problem of the law. they have revised through reagan and clinton held it is calculated. a concerned citizen should contact congress to find out what the basis is. host: to his point, we read this before, the cost of living adjustment is set each year by congress in the 1970's. jerry, republican line, columbus. caller: hello. how're you doing? host: doing well.

your thoughts? caller: i am calling because i wanted to say about social security, the lady that mentioned about france, you have to look at europe as a whole. what is happening is that the most generous benefits, like france, greece, spain, they are going bankrupt. this generous entitlement program, which we have unfortunately been booked into as well, it is bankrupting these countries. you must look at it as a whole. we cannot afford to do this. unfortunately, the people that say it is solvent until 2013 or whatever, they are failing to understand that social security has been rated for decades by congress in order to pay for all of these other programs.

host: cable chatter narrowing the landscape according to "the washington post." host: this is a story about candidates going on from the cable networks, republicans on fox news, democrats on msnbc. it says that -- coastal georgia, michigan, good morning. caller: i heard one of the

callers asking about whether the price of food had gone up. well, if you take a look from two years ago, we did not get a cost-of-living raise. and we did not get one this year. the price of groceries, depending where you shot, has gone up 20% to 30%. i do not know what planet these people are living on, but costs are going up everywhere. and they do not figure the cost of fuel in the cost of living. why? i do not know. the way that fuel goes is the way that everything goes right now. oil companies raise prices, everyone raises prices. when the price of gas goes down, nobody dropped their prices. host: where did you hear that they do not consider energy prices? caller: i asked that question

to bars to back when he was there. host: from the article this morning it says that social security payments increased by 5.8% in 2009, the largest increase in years after the spike in energy prices, but they did quickly drop in 2008. by january of 2009 it had dropped to below $2. as a result, social security recipients received an increase that was far larger. they did it in 2010 and 2011. it sounds like energy is part of the equation. host: as far as the price of gas, i do not know what they are paying down state, but we are paying over $3 per gallon appear. another lady that called in talking about social security, yes, the korean war was paid for by it, the vietnam war, and i

would not be surprised if we are paying for the wars we should not be involved in now. i believe that ron paul and a couple of others who have been thinking about this, get our troops out of there, get them home. host: that line is that democrats are conflicted -- the head line is that democrats are conflicted. for the party nominee in missouri is proving to be a tricky proposition. you can read more of that in "the wall street journal." de obama midterm message is to support the party like it is 2008. "

"obama host: kansas city, kan., good morning. caller: listing the to have on this morning should not be. we were told, two years ago, that there would be a two year

freeze on social security raises. we were told that two years ago and i am guess -- and i guess that i am the only one that heard it. another thing that i am irritated about is that the only people that use the word obamacare are republicans, but no one corrects them. it is called the affordable health care at. i think it is the reason they do not identify it by the proper name, because that is exactly what they tried to do and the insurance companies even gamed them on that. every piece of legislation pushed through has been watered down. host: ok. president obama is not the only one holding a rally. sarah palin is holding a rally. if you go to the republican

national convention website, she will be in florida on the 23rd. patricia, republican line, good morning. i think i have the wrong line, wait, are you there? caller: i am here. host: go ahead. caller: i wanted to talk to the person on television about the economy and prices of things. host: ok. go ahead. you are on the air. caller: i am not patricia. host: what is your name? where are you from? caller: diane, florida. can you hear me now? host: you are on the air. caller: story. i live on a fixed income. plus i have been raised to believe that you live on what you get, you do not get into

credit. it has been difficult, i was put on disability for a birth defect that i had that finally got the best of me, i was not able to work. for the big raise that we got on social security disability, it amounted to over $20. in the other years it was only by $5 or $7 in terms of an increase. for my groceries, i have to watch them closely. the only thing i have to work with. they went out just over 71%. stuff like that cost me $12.93, now costs $22.13. you know? everywhere that i turned there is another feed on my utility

bill of $5 or $10. i even heard one lady in the 43 store tell someone that was buying cigarettes that it was supposed to keep people from smoking, but it has not from what i can see. they added a $10 fee from the government, but as soon as they announced that they would do that in september or whenever month it was, that same next week they jumped the fee at the grocery store by $10 to said that they were trying to predict what they might lose in sales as they went up and the percentage of people buying them might drop. every which way to turn. my son, he spent 17 years in military and because of a medical discharge he was discharged. i had to help them with their referee bills, cutting them down

to $212 each month. host: been a little bit more about campaign 2010 this week, from "the new york times." host: debates this week --

host: planes will, ohio, independent line. our last phone call. go ahead. caller: i have a heavy financial background as an economist. a few callers have it right, but many are misinformed. do not believe what to hear from washington or read in newspapers or wall street. inflation runs around 15% each year.

fees inform people that they are sending us all down the toilet with these costs, because people on social security keeps track of all of these costs. we have been since we have been retired. every week we go to the supermarket or wherever we buy our growth trees and everything goes up by 15%. when they give you a number that is 2% each year, that is a total lie. host: coming up next we will turn our attention to the fiscal situation in many cities across the country. coming next with christopher hoene of the national league of cities. we will be right back. whacks the c-span local content vehicle travels the country, looking at some of the most closely contested house races leading up to the midterm

elections. ♪ >> how you doing? bless you, sir. how are you? good. mama is doing fine. love this. thank you. i need your help on november 7. i appreciate you. i will listen to you, come back and keep talking to you. you can look at that a couple of ways. sometimes saying no is a good thing. the other thing is that there is the party of k-n-o-w. the first district of arkansas is very diverse. made of the delta in the east, the ozarks on the west.

a very stark contrast in geography. culturally, similar contrast. socio-economic status, this is one of the poorest districts in the united states. the folks here are hard-working folks that balance the budget, providing a good living for their families, hard-working, good people. >> voters in his district are typically very conservative that the national level, but they will elect democrats fairly solid at the local level. that is pretty historical. there has not been a republican elected to the first contestant -- first congressional district since reconstruction. lee crawford, a radio broadcaster with a bit of a media empire that crosses the agricultural span of the district, and jazz carter, the

democrat in the race, marion barry's former chief of staff. you have the quintessential understanding of washington, d.c., understanding the district, going up against a first time republican candidate, who understands the bread and butter issues. i think if you asked for up and down votes on the big issues that have dominated the american political agenda over the last year, health care, the stimulus, cap and trade, carjack, some of those issues, you would find them in total agreement on those issues. how much they truly feel that way on those issues is debatable, but that is the message they are sending. >> this race is about people, not me, my opponent, or the national party's.

it is about the values that the people in arkansas have and the person that will fight for them, regardless of the party. it is about sending someone to washington and conservative arkansas about used. >> where i do see differences is that chaz coffey definitely has more experience given what is going on in the district. higher education, agriculture water projects. crawford has a broader, populist appeal of going up there, opposing the big agenda items that you are telling our opposite to the wishes of the voters in the district. you can see him being that kind of member of congress. host: what the folks are looking for now is a genuine citizen legislator that reflects the

values of the differences that have made a contribution here and is not entrenched in washington as a bureaucrat, is not one of the political elites. i already have a job. i want to keep my job and make sure that everyone has the opportunity i have had. >> the first congressional district is going to feel like a coin toss. perhaps your best way of figuring who will win the election. as the voters decide who they like in the race, as the ads are running, none of them will identify themselves by party affiliation. it will be their name and identification. i would not be surprised to see a 60-49 final. it could be that close. >> the local content vehicles are traveling the country as we

look at some of the most closely contested house races leading up to the midterm election. for more information on what those local content vehicles are up to this season, visit our website, c-span.org. >> "washington journal" continues. host: we want to welcome christopher hoene to the table this morning. what is the state of cities across the country? guest: many of the bad impact of the recession are coming due in the city's, payne is intensifying in it will get worse to 2011 before they see some turnaround. host: what are the main factors? guest: we are expecting to see

property values decline. host: are the property taxes the main issue wide revenue is down? guest: it is the new issue. for the last couple of years it has been that sales tax revenues have been down. host: what is the impact of that lost revenue? guest: for the first time in 20 years it means that cities are making cuts that we have not seen in the history of our research. host of like where? guest: personnel. layoffs. hiring freezes. early retirements. the full range of personnel cuts. host: we have seen some headlines over the last week saying that some cities, like pennsylvania, harrisburg, on the brink of bankruptcy, have been able to avoid that, but why is

that? city's claim bankruptcy? host: it is a fairly rare issue. what you are seeing in harrisburg is that the debts of larger than the actual operating budget. for the majority of cities that is not the case. that are in line with what the conservatives in a year. for them the major issue is that they are making cuts. but we will see a few cases where they flirt with bankruptcy. host: what kind of debts to the have that is more than what they're bringing in? guest: there is an incinerator plant that they build several years ago that they were hoping would produce a certain amount of revenue each year. this one was slow to come on line. not producing a revenue that they expected. host: so, this is infrastructure?

guest: basically. host: some of mayors and governors are meeting at the white house with the president to talk about the importance of infrastructure spending for their states and cities, but if they have to pay the cost of front for infrastructure and they do not see the benefit many years down the road, how can these cities afford more infrastructure spending? guest: in many cases they cannot. in terms of maintenance operations and new projects, it is one of the places where cities cut things first. they cannot guarantee the costs associated with the years ahead in a downturn. host: like last week, chris christie said that it would not go through with a tunnel because the projected costs were going to be more and we had to one of picking up the tab. is that usually have woodworks?

the federal government gives you money to start a project, it runs over, states and cities have to pick it up? guest: it is what tends to happen during a recession with the people worry about infrastructure costing more than projected. right now what you are seeing happen in new jersey and elsewhere is that people are clamoring to figure out who will cover the excess. host: we saw the headlines over the last week about foreclosures and the crisis with foreclosures that some have called for, such as a moratorium on going forward with signing off on them. what is the impact with cities and their budget? guest: the biggest one happens in terms of properties that are essentially vacant, which are a

threat in terms of crime if the properties are not maintained, hurting other property values in the neighborhood. that obviously translates into property tax revenues and sales tax revenues. the big concern is about what it means in terms of safety in the community. host: what is the impact of that down the road? guest: it can take several years with these properties to cycle out of being vacant, owned by a bank or some other type of holder, taking several years. the concern is that much vacant property will be sitting in these cities for a long time. host: who is in charge of city budgets? guest of cities themselves, state government creatures in a

legal sense -- guest: the cities themselves, although state governments have made them creatures of themselves. host: in the situation of stimulus money, coming down to the city level, have the city's already received stimulus money? we have heard about stimulus money winding down. guest: cities have received their money at this point. the other one-third came to the local government planning organizations. most of that money was in the form of infrastructure related projects and most of that is being spent in 2010, where we build one out in 2011. the concern over the effect of the stimulus is that the report will not be there. host: has that meant an increase in the infrastructure?

guest: ijaz in the short term. there have been a lot of projects coming on line, paving streets, repairing bridges, which has helped in the short term. but the cities have a several year cycle in front of them. the fact that that support will not be there is a concern. host: what is your projection for eight getting better for cities? guest: that will largely depend on what happens for the economy between now and next year. if we continue to see signs of economic growth, by 2012 or 2013, revenue will start to come back. if the economy stays slow, this could play out longer. host: we saw the headlines morning, speaking about it with our viewers, no raises for social security benefits. people will not see an increase in the benefits check, meaning that they have less to spend on

goods and services in their own town. host: that has been happening across the economy for years, people's sense of wealth and income has been lower, so they are not making purchases on things like cars and electronics. the fact that they feel that their homes are not valued highly means that their bill -- and being much safer in terms of investments. host: we are talking about the economic woes of cities with christopher hoene of the national league of cities. fort lauderdale, your first. caller: going back to what you were talking about in the beginning, what you should have did was everyone call on the republican line, the ones that were against spending, where the

governor is giving away the revenues as tax breaks for the wealthy, so that you can take care of priorities in the city. for so that you can have an extra benefits for social security. we need to call that bluff. the people causing these conflicts are the republicans. democrats need to get out. host: richard, republican line. caller: the real problem is that the democrats are controlling most of the cities. .

on the one side people mostly want the services that cities provide and don't want to be decreased in the times that we are in now. on the other hand nobody wants to see their taxes or fees or revenues raised so you have this problem where the cities are trying to figure out how to keep services at least a pretty high level but without the revenues that are there. and both sides feel that the other side are not particularly serving their needs. host: brooklyn, jonathan on the independent line. good morning. caller: good morning. my comment is this -- i think a lot of folks have selective

apple nearbyia. they fore gsh amnesia. they forgot in the last few years before president obama took office. to put the republicans back in power after they ran the economy in the ground, i think it is a little, little delusional on the part of republicans. host: do you have a question for chris hoene? caller: texas, that's the only state i know about. as far as the stimulus packages we were getting from the federal government, rick perry would, you know, take them and then he would use them for things like to balance the budget, you know, for the state. he took an educational stimulus package and instead of using the stimulus package and the state, you know, the state pays in the budget for education, he only used it for the stimulus

package. he didn't do the state. so when they came back again this time with a stimulus package, the federal government says, you know, you got to do it this way. and he said, no strings attached, no way because he wanted to use it again where he wouldn't have to pay it out of the state budget. guest: i think what's happening with the stimulus money in the states and cities around the country, in almost all cases the local officials would prefer a little bit flexibility of how they would spend the money. a lot of times the priorities change from jurisdiction to jurisdiction or from state to state, so they'd prefer as few strings as possible in order to spend that money in their own mind as effective as they can locally. host: we'll go to the independent line. caller: good morning. i'm on the air now? host: you are. caller: ok. thank you.

i have problems with people -- and i know times are tough. times are tough for me as well. but i have problems with people who believe that they shouldn't pay for anything. i don't know how you can have an effective fire department, police force, postal system or anything else without paying for it. the republicans are good examples. they want everything but they don't want to pay for anything. and we can look at the wars. didn't want to give -- didn't want to give unemployment to the 99ers there in new jersey. stopped a jobs bill for building a tunnel to create more unemployment. i'm here in california. of course, our taxes are high, and i'm willing to pay them to

keep our standard of living as the best we can. host: to add to his comments. here's a tweet from a viewer who says oversimplification. people want the services but don't want their taxes to go. this ignores the rising cost of services. guest: right. one of the big difficulties for state and local communities is that taxes are going higher than their revenues can keep up with. this issue what people are willing to pay for are what cities are trying to address as they try to balance their budgets right now which is trying to ask their residents, what is it that you actually prefer for us to fund -- to provide and how would you like us to fund it and that debate is happening, thankfully, in a lot of cities around the country. host: what's some of the big ticket services that cities provide? the things that cost the most. guest: overwhelmingly it's the public safety services, police and fire and emergency. there's lots of equipment, the

personnel are in high-risk jobs so the pay and the benefits are a little higher in order to compensate them for the risk that they undertake. and so, you know, a good -- if you had to pick the single largest item and single city budget it would be public safety. host: doesn't the federal government help with that as well? i've seen homeland security grants to help out for the firefighters, the first emergency responders. guest: that's true, there's homeland security grants. there's a cops program to help cities fund police officers on the streets. the federal government has been supportive here. every year, however, those appropriations are in essence under afact in some regards. and they have an increased in dramatic ways in the past number of years. they don't want to lay off cops and firefighters, etc. host: are the federal government decreasing that? guest: the problem is it's not increasing and meanwhile the

cost of providing those services are going up and meanwhile city revenues aren't coming in. staying flat is not happening. host: keith on the republican line in palm beach, florida. caller: you must not have a lot of callers because that's the quickest i've got in. cities are paying for parades. they started a $2 million trash can thing where the truck picks it up automatically, everybody has matching black and turquoise trash cans. the unions are strangle holding us, the police and fire departments, and, you know, republicans want to pay for services but the ones that the government is supposed to give the police, the fire, all these things that the infrastructure, the roads, but we're paying for

all this other stuff. they're starting programs during an economic time that's down and you go to the map on all these states that are in trouble are democrat states, democrat cities. these people do not know how to run a city, and then you have california, people getting paid $400,000 for city possession. we need to pry -- priorityize ow money in these cities, county, state and federal, and until the money stays here instead of sending them to washington and begging, this bad corruption and bad spending is going to continue. guest: well, the one thing i would say, the pain in this case for cities is actually nationwide for the most part. it's not restricted to democratic cities or republican cities. it's -- a couple local

officials we know, there is no republican potholes or democratic traffic lights. they're all facing revenue difficulties now. the callers are talking about, about how to fund these services and what services get provided are actually fairly universal right now. host: we'll move on to minneapolis. nick on the democratic line. you're next. caller: yeah, hi. can you hear me? host: nick, you're on the air. caller: thank you very much. mr. hoene, i just have a quick question for you regarding obama's stimulus plan as outlined in his philadelphia speech today. host: hey, nick, please turn that television down. guest: ok -- caller: ok. one second. host: you are talking about president obama's plans for stimulus. go ahead. caller: i wonder where all the initial money for the -- you

know, repaving of all the roads and extending all the runways and so on and so forth that he was talking about, where all the initial money is coming from? and, b, mr. hoene, the professional opinion, do you see this working? guest: well, the stimulus plan in terms of the stimulus plan that's already been in effect, the $787 billion that's been spent out over the last couple of years, has mostly been spent. the money came from the federal government, obviously, and went down to state and local governments. much of it in infrastructure. so much of that has been spent in road paving and bridges and i'm sure people have been driving around the country seeing signs saying this is a stimulus project. it's very epful to state governments in terms of helping them to shore up budget shortfalls and helping them to prevent stopgap measures and help on infrastructure projects the question is, what do we do

going forward? and whether there is need for more stimulus spending in local governments particularly at a time, last week we had jobs reports showing that they were cutting jobs in the private sector. the president is responding to a new development in the economy in terms of trying to figuring out what to do to help local governments. host: can cities attract corporations, companies to their towns by -- with tax insent mbs, other ways? guest: well, you often see cities try that strategy. most of the professional opinions and search about that shows -- research about that shows that the big factor seems to be quality of life. whether there are other businesses of a like nature that are in that community. and access to things like easier transportation if they have to deliver goods into a particular region. so what you're seeing mostly in

this arena, in this environment is that the cities are trying to focus on those quality of life issues and figuring out what the local industry is and where they can most attract like industries. host: the national league of cities puts out studies on learning to do more with less money, change how services are delivered and fight for local jobs, partner with the private sector for infrastructure projects and receive federal funding. partner with the private sector for infrastructure projects, what do you mean by that? guest: in truth there's very little that local governments do in this day and age that isn't done with respect to the private sector. a lot of local services are delivered with private sector vendors and businesses involved. there are a lot of private sector businesses in most cities and regions that do a lot of their work around local infrastructure provision on things like roads and buildings and the maintenance and provision of those kind of

services. so there's an opportunity for cities in this environment to actually reach out to their private sector partners and say where do we most need to be investing now so that both sectors, both of which are facing their own revenue shortfalls and economic issues are making strategic choices about where investments are made. host: isn't it true that the last four decades they increased the business welfare program, decreased business services, stopped using city banks? what about the prospect of increased business welfare programs? guest: well, cities are offering some sort of incentives for businesses in order to locate in their jurisdiction. whether that's a welfare program or whether it pays off in terms of the long-term revenues is a question cities are increasingly ooh value waiting as they go forward. so -- evaluating as they go forward. they're striking those deals and looking at the private sector saying if you can't convince us you've made back

this money we've offered you in incentives in a three, four, five-year period, then we're no longer going to offer that kind of incentive. they are looking closely at these arrangements. there are trying to be responsible. we see a few cases of that not working. the majority of times they're looking pretty closely at them. host: david on the independent line. good morning. caller: good morning. i think partly what we have here is a failure upon our citizens' part. what we got is what we've been doing. we haven't paid attention to our county commissioners, our city commissioners. i know where i live one of the problems when revenues were very high for 2003 through 2007, they knew they had roads that needed to be paved and infrastructure projects yet they did pet projects or other things that weren't necessarily as high a priority but it was good for the people in power and for their constituents. and we're getting what we ask for, and i'd rather see a lot

of the infrastructure stuff go move towards the privatization route where people pay a direct service fee for companies that pave it, through lease agreement or privatization. it's like me going to wal-mart. i go to shop, they provide a service and i pay for it, so it won't be politicized. host: what type of services would you see private sector owning? caller: well, roadways is a very simple one in general. they got to get rid of the gas tax if they are going to do that. you know, you got to take away a revenue source from the county saying, ok, fine, you are not going to collect gas taxes because we'll pay it through tolls or some other means. and then that way you pay for the service directly. if it's owned by a private company, you pay that company to maintain that road. host: david, let me bounce a tweet off of you saying water, sewer, trash, business licenses and sales tax, if my city can't make it running these monopolies then there's a

problem. caller: i agree. there's a lot of money in water. you have a volume, you have a lot of -- people need to pay off what it's worth and that's the other problem. transportation is a good thing but nobody pays for what it's worth. they're either paying too much to run it or they're not charging enough of what it actually costs to run it. guest: the viewer, david makes two great points. actually, first, that people need to stay informed about what their local governments are providing in terms of services and how they're funding them. a lot of times local officials are operating on some assumptions about what local residents' preferences are and local residents need to have a responsibility on what they want. and the second thing is infrastructure and david is right. we haven't priced our infrastructure effectively in the sense of charging the actual fees that we should be charging, for example, to use the infrastructure that's provided. so things like toll roads are good things.

we're seeing a lot more movement in that arena. seeing a lot more private sector investment in terms of trying to buy up some of these public assets and then provide them but at a fee that sometimes the public sect hor felt they can't charge -- sector felt they can't charge. we have a lot to do around the pricing of things so people have a better understanding of what it actually costs to provide those services. host: what about water, sewer, trash. he says they are run by monopolies, what does he mean by that? guest: they require a lot of upfront investment and they take a long time to produce the revenues that might come with them. so what you tend to see is only the public sector jumps in this arena first and they essentially run it without much competition from the private sector. but that model has been slowly changing in this country right now. the private sector is increasingly realizing that there are large pieces of infrastructure that they can help run, and in some respects bring private sector business

models in and in some cases provide a way to charge a fee tore it that maybe is more acceptable and people understand that it's privately provided, that they weren't -- they didn't find acceptable when the government owned it. host: chris in alabama tweets in, your reduced cops and firefighters and it disincentivizes people to relocate to your area. david on the republican line. you're next. caller: thank you very much. first of all, there's a false argument that by cutting city government you are going to hurt the public safety aspect. the real waste in the government locally -- i spent several years of running a tax revolt in florida. things like corporate welfare, failed social welfare. the biggest waste i want your guest to address, all the benefits, and these are union generated benefits, pension benefits that can't be paid, health benefits that can't be paid. what i'd like to see is our pensions go to a 401-k style so

the police officers know when they retire the money will be there. they won't have to worry about a political battle or mismanagement of a fund. but most of all, the people in the private sector are making just as much in salary as the public sector. the benefits are higher than the private sector and can't be sustained. guest: one part of it is true. one part is -- needs a little bit of clarification. so it's true that actually state and local governments have a lot of unfunded liabilities right now in pension and health care benefits. and a lot of that has to do with agreements that they've made with employees over time there have probably put benefit levels at a -- in a place that for some of them is unsustainable in the long term. part of it is demographics. the baby boomer generation and the sheer number of employees that are entering retirement in the next 20 years means those costs are ballooning because of the sheer numbers. the other piece of it, and there's been a lot of attention to it lately, is the issue

whether public sector employees are paying higher or equal to private sector. most studies say this isn't true. the comparisons get made, jobs that can be compared, public sector accountant or -- host: is that salary to salary? are they factoring in their benefits? guest: they typically are factoring that in. if you compare apples to apples, the two jobs that are largely the same like a human resources officer. it tends to be the case where you see the salary levels equal and maybe the benefit levels are a little bit higher in the public sector but that's about 20% of the jobs. if you take the rest of the jobs, a lot of them just aren't comparable. when you take, for example, a city manager of a city of 100,000, that person is probably overseeing, you know, a work force of 10,000 people, a large operation, and they're not being compared to, say, a chief financial officer of a

company the same size. it's a misnumber saying that the public sector folks are being paid higher. they do have higher benefit levels because they're not being paid at a level they would be paid in the private sector they're being compensated on the benefit end in order to attract people in the private sector. caller: i just had a brief comment just stating the fact that it's amazing that you see the people around election time . like vice president joe biden the other day made a comment stating we should have spent more money to get the economy going a little faster. however, i guess political tactic people said it was almost like political suicide or hurt to the democratic party and economists stated this was in essence had some factual points to it. host: jimmy, paul writes this

morning in his opinion piece in "the new york times" about that headline. it's, hey, small spender. federal aid to state and local governments wasn't enough to make up for the plunging tax receipts in the face of economic slumps. so states and cities, which can't run large deficits, were forced into drastic spending cuts. and why there is a widespread per exception of why government spending has surged and others haven't, there is widespread perception that government spending has surged when it hasn't, is that there has been a disinformation campaign from the right, based on the usual combination of fact-free assertions and cooked numbers. and this campaign has been effective in part because the obama administration hasn't offered an effective solution.

guest: there is debate on whether there is spending at this point in order to stimulate the economy or whether we need to be controlling the deficit. most of the concern about spending has had to do with stimulus issues, but in truth that stimulus -- the stimulus funding that's out there, the type of stimulus funding that goes forward is a small percentage of the nation's g.d.p. so in some respects you can justify more spending if it would actually create more economic activity. that said, it's true that people should be concerned about deficits. the question is when you turn that corner, whether you -- how much longer you can do spending before you then start to bring deficits under control which increasingly happening as you have people around the country as the economy is sort of only slowly recovering saying, we have a little while before we need to turn that corner and maybe we need to do a bit more spending in order to offset cuts that cities and local governments are spending. host: you look at other credit

rating agencies, they are not getting the best rating out there. it looks like rating agencies are a little bit nervous about cities and how they're doing. guest: well, they're certainly nervous and they're playing close attention to what's happening with city budgets. the timing issue is about when could stimulus funding be most helpful? and the reality is that states and cities and cities in particular are going to be facing a difficult two or three-year period ahead. so you can actually, if you look to put federal funding into effect that actually hits at the right time, you can do that right now for local governments around the country because they'll be facing the worst of the impact. host: what happens when moody's gives cities a lower rating? guest: their cost of borrowing goes up. if you take out a loan you get a better interest rate if your rating is good. if your bond rating goes down it's like getting a credit rating downgrade, means you'll pay a higher interest rate on

all your borrowing. the debt that the city has taken in in order to pay for a lot of their infrastructure projects has higher costs associated with it. most cities would go out of their way to avoid those downgrades because they have longer term costs associated with them. host: the rate of borrowing for what projects, infrastructure projects mostly? guest: noesly infrastructure scomblokets. that's where cities incur most debt. they go into the bond market to get the large amounts of money to do the upfront costs associated with infrastructure and they pay it out with a 20-year period or 30-year period. host: and if you're an investor and looking at some municipal bonds for such and such city and they get a lower rating, are they not attractive anymore? guest: they're less attractive. one of the unique characteristics of municipal bonds, they're much, much safer than other forms of private sector investment. cities rarely go bankrupt. they rarely default on their

debt. and so this has been a very stable source of investment for most folks. but in this market it also makes sense to take a close look at the bonds that you're investing in in the sense to make sure that the cities themselves are in fairly decent fiscal shape, they're balancing their budget, their debt costs are closely in line. host: if a city were to go bankrupt, would the federal government have to pick up the tab for those municipal bonds that they aren't able to pay? guest: not necessarily. mostly, it becomes like a credit issue for a consumer. the bond goes unpaid and some cases the state government may step in. the federal government normally isn't on the hook in any great way for when this happens. but it's been so rare that we don't really know exactly what would happen if there were more of these instances. host: augusta, west virginia. joe on the republican line. go ahead. caller: yeah. a lot of things that i was going to say has already been said.

i would say the local and state would be the best people to decide where money should go. particularly in infrastructure. and that's already been addressed, because that produces jobs and revenue. and instead of the entitlement programs, which, you know, if they're funded they're not producing revenue, but the main thing i wanted to address is the fact that money and power equals corruption. and that i think a lot of people in this country know that one of the problems that we have is not enough money. i think it would be very interesting to find out over -- i mean, just the last 20 years because a lot of these people that were in power still play a big part in politics, how much tax money has been paid in because there's tons and tons of money paid in and it's not -- it's the corruption. you were talking about the pensions. well, the unions and things are demanding higher and higher salaries, more and more

pensions and i hear -- i understand from some truck drivers that the work ethics in some of these unions are just horrible. they get there. they have to unload their own trucks or load their own trucks. if their union members take a break, they have to take the break. and that kind of work ethic doesn't add up to anything good for the country. host: ok. that was joe in augusta, west virginia. go ahead. guest: a couple of things on the pensions and the union side of thing. one thing happening around the country right now is cities face lower revenues is they're forcing a renegotiation in many instances with their unions whether they're looking at the wages and health care benefits much more closely. a lot of unions have stepped to the table and accepting lower rates of pay and benefits than they did in the last decade recognizing things have changed. the second issue is that there's a larger trend in play which is city governments are starting to move to different types of pension and health care benefit plans.

you are seeing two tiers emerging where folks guaranteed certain pensions and health care benefits, those are being protected because they're near retirement. but the new employees coming in are facing more private sector-like pension and health care benefit plans. there's the change afoot here as well. host: thank you very much for your time this morning. guest: thank you. host: coming up, we'll pay attention to the falling dollar. but first we want to give you a campaign 2010 update on the pennsylvania senate race. joining us on the phone is chris brennan, political writer for "the philadelphia daily news." the incumbent, who is -- will no longer be in this seat, senator arlen specter, who was a republican and ran as a democrat, beat joe sess tech in the primary, is now going to campaign for mr. sess tech. -- sesteck. why now? >> he's being deployed strategically in the city of philadelphia. he's still very popular in

philadelphia though his favorable -- unfavorable ratings in the state are not so great. i think that this is a chance for joe sestak to raise some last-minute cash. he's known to close late. nobody knows that better than arlen specter. sestak was behind in the polls going into the may 18 democratic primary, and with the help of a rather devastating political campaign commercial, closed the gap and beat specter quite handedly in the end. i think specter will help him raise the money that he will need if he's going to have a shot at former congressman pat toomey. they will be holding the primaries in a downtown law firm. it's a private event. it remains to be seen whether specter's going to have anything to say publicly about sestak before or after the

event. there's a curious dynamic here. when it became clear before the may 18 democratic primary election that sestak was starting to close the gap, people started asking arlen specter if he would endorse joe sestak if he was victorious and arlen specter sort of said he would support whoever the democratic nominee was. joe sestak on the other hand repeatedly said he couldn't imagine a scenario in which he would lose to specter so he couldn't address the question of whether he would endorse specter if he won the democratic primary. so i got to think that's something that arlen specter remembers. host: the white house has been involved in this race. our viewers saw the president there yesterday. the vice president has been to the state many times. what will happen over the next few weeks? will they continue to visit the state?

>> yeah, i think you'll hear them quite a bit. president obama and vice president biden very popular in philadelphia. i think you'll see them here. you may see biden in things like scranton and pittsburgh where he's also very popular. it's an interesting sort of balancing act for joe sestak because he rejected the white house's and treaties to get out of the race. they wanted him threeve arlen specter in the primaries. reject that had. rein and then he won and then -- he ran and then he won and he's trying to make great political hay around that around the campaign trail sort of declaring himself an independent democratic stepping up to his party which in this year with the anti-incurvency fervor, that's a pretty good hessage. so it's dicey to both be the guy who stood up to your party but then also held and embraced the party in a political rally

such as they had in philadelphia. host: the republican candidate in this race, pat toomy, has been ahead by -- toomy, has been ahead by seven points. what will be fort right, upfront and center in the next couple weeks in this race? >> the thing that jumps out most to me is the question of the undecided voter and whether they just stay home on the election day. the -- our latest "daily news" and franklin poll shows that the undecided vote in the toomey and sestak race, it was 39%. if you look at the likely voters, it's 32%. that's a full third of the electorate that are undecided after a great deal of advertising and a great deal of media attention. this is -- this is a national race that's getting a great deal of attention. and the fact that a full one-third of the voters still don't know how they're going to vote suggests to me a real

scenario that they wind up staying home. host: one final thing here. will the two square off in a debate? when and where? >> there are -- there's a debate in philadelphia. there's another debate scheduled in pittsburgh. i believe there's a talk of a third debate. i know they definitely have one scheduled at the national constitution center here in philadelphia next week and then there's also -- they are going to follow that a couple days later with a debate in pittsburgh. host: chris brennan with "the philadelphia daily news," thank you. >> thank you. host: if you're interested in knowing what debates will be covered and leading up to the november 2 election, go to c-span.org/politics. joining me at the table this morning is desmond lachman. he's the resident fellow at the american enterprise institute here to talk about the falling collar. what is the status of the u.s. dollar? guest: well, what's occurred since the last few weeks is the

dollar has declined by about 7% and that has been because markets perceive that the u.s. economy is faltering, that the economy is running out of steam and they fear that the federal reserve will have quantityive easing which is basically -- quan tif easing which is basic -- quantity tif easing which is basically printing dollars. the fed could be buying a gain hundreds of billions of dollars of u.s. treasury bonds and that means there's more dollars floating around and they're already fronting this by selling the dollar. host: ok. what does this mean for jobs in the country? guest: well, it would be helpful in terms of a weaker dollar means the united states can now compete more effectively in markets, that they can export a lot more. what it also means is that the federal reserve engages in that

kind of policy, what they try to do is try and get down long-term interest rates. so it reduces the cost of borrowing. the trouble, of course, is that the united states is not operating in isolation. it's being part of the global economy, and moving the dollar down is creating real difficulties for the europeans. you know, so what we got is the euro is now at $1.40, which means that they can't export as much as they were before so the german recovery then runs into difficulty and this could cause problems for europe's periphery countries like greece, ireland, portugal, spain. those countries that have been under pressure. if we now have is a strong euro, it means their exports are diminished. host: for those following this

and see that countries like germany and other european countries seem to be doing ok because they're exporting more than we are, isn't this a matter of the united states just trying to catch up and make sure that we come out of this recovery in ok condition? guest: that's a legitimate claim that the united states should be pursuing policies that's in the united states' interest. the dangerous thing is people trying to promote exports at the same time through their weakening occurrencies, we see something that's reminiscent which is beg thy flabe kind of policies. what -- neighbor kind of policies. what we're seeing is a currency war, termed by the brazilians, that the united states is trying to cheapen its currency. japan intervenes on its own without really consulting its paid partners. we've got china being engaged in currency manipulation for

many years now. you know, so it looks like it's a free fall, we are not getting the coordination and the danger is this could be a slippery slope in which we get countries retaliating with trade measures. you know, we've been there before in the 1930's. that's something that we really want to avoid from a global point of view. so what one is missing here is global coordination of policies. you know, countries the united states has legitimate interest in engaging of easing but it would be better if this was done in a more coordinated way. host: this viewer tweets in, what does the lower dollar mean for servicing the u.s. national debt? guest: well, a lower dollar would -- the united states basically borrows in terms of dollars. so if you were really trying to

figure out what a lower dollar meant it would mean what if the interest rates that the united states would be paying? if the fed does drive down long-term u.s. interest rates through quantative easing, the united states has financesed itself mainly in dollars. it's what charles de gaulle referred to appropriate steps that the united states has, they can borrow abroad in its own currency. if we get lower long-term interest rates, at least in the short run, what that means is the united states pays this. the danger, of course, in the end this could lead us into inface, interest rates rise, servicing the debt could be more expensive. host: for our frequent viewers, you've been seeing headlines in "the financial times" about a currency war. here's "the financial times" this morning. "global clash over the economy." why is this talk of currency wars, no coordination between

economists, you see it in "the financial times," but you're not seeing it in the u.s. papers? there is no talk of a sort of currency war. what is the impact of it? is it realistically happening or could happen? guest: we do see it in the united states press but we do see it from our vantagepoint which is basically that china is engaging in excessive currency manipulation and what's been occurring is the temperature on the hill has been rising, that there's been a lot of talk. in fact, there's been legislation that is making its way through the hill that the house approved taking measures against the chinese, really putting pressure. so we've seen it from our point of view and i think that we've already got a legitimate case is that china grossly manipulates its currency. its currency by many estimates is something like 20% undervalued.

they accumulate $400 billion a year in reserves. the reserves are $2.5 trillion. there's no doubt that china is manipulating its currency and china is not moving on the currency even though it's given us commitments. the chinese, though, at the meeting saying the united states is running an irresponsible policy, that they're now going to be printing money, that they're going to be driving their currency down. so they're viewing it from the chinese perspective and i think that that is really where the danger is, that we really need to find some common ground and this weekend's meetings at the i.m.f. failed singularly to get any coordination. what they did is just kick the can forward to the g-20 meeting in early november in korea that hopefully something gets resolved there. host: the i.m.f. managing director spoke about the i.m.f. world bank meetings that

happened in washington over the weekend. here's what he had to say about the currency issue. >> what i want to explain is that the discussion that takes place, not only between china and the u.s. but with other partners as the very important one and i think that we're arriving where people aren't discussing the right stuff. discussing the right stuff is that is the rate. the real problem, as we said before, is the rebalancing question. and the move in the rate will be more consequence than the balancing of the country. i think everybody understands this, there's no way for the global economy to be stable, to achieve growth everywhere if it's not done in a cooperative way. again, that's the message from the framework that we're going to provide for the g-20. i think it's more and more understood by the authorities. and from what i expect, the

prospects of this idea would be strong enough to avoid conflicting situation and trying to take into account the argue of the different parts to find a win-win situation which exists which is described in this framework. the win-win situation in which everybody is better off rather than trying to find the best solution to the global problem which as we know doesn't work. host: that was the i.m.f. managing director speaking after the i.m.f. world bank meetings over the weekend. desmond lachman is our guest. you said they failed to come to some sort of agreement. he is talking about framework. here is what "the financial times" says this morning. the lack of any substantive agreements and brinkmanship is likely to exacerbate volatility in the month running up to the sowell group of 20 summit. guest: it's true trying to coordinating policies, that we

really need to work together, that we need to get a framework but there's another thing to get real action, substantive action, on getting that kind of coordination. and i think that what we saw at this weekend's meeting is just a hardening of possessions. the chinese say they're not moving. the japanese still talking about wanting to intervene. the united states giving no indication that it's not going to go through quantative easing. hopefully something changes between now and november 12 when we have the next g-20 meeting. to me it sounds like a bunch of platitudes. host: do you believe there could be currency volatility, and if so what's the outcome of that? guest: i'm hoping -- i think there almost certainly will be currency volatility in this kind of environment where different countries are pursuing their own interest where there's a lot much uncertainty. we don't know what kind of

quantity tif easing will be on the part of the united states. we dornt know what the japanese will be doing, at what stage they will be intervening. that leads to currency volatility. but i think what one really hopes for is we can find common ground. i think it's not a question of the exchange rate. it's a lot broader than that. it's a question as to the united states needs to deal with its fiscal situation. the chinese need to encourage consumption. that we need to get broader agreement on overall policies, the exchange rate san important part of that. but it's not the only part. and what i think, as we saw at this meeting, is we saw a dialogue of the debt. nobody really was giving any ground. host: don't the chinese say we do consume, we just consume from germany, we just don't consume products from the

united states? guest: no, that's not really the case. the chinese grossly underconsumes. their consumption is very small fraction of g.d.p. but what's more significant is the chinese consistently run surpluses on their trade accounts. so if they want us to reduce our deficits, the counterparts, the logical counterpart is they need to follow policies that will reduce their surpluses. if the united states just reduces its deficit acting on its own there is not going to be significant aggregate demand. everybody will get in a global recession. one wants to get the united states to fix its deficit situation, but you also want the chinese to fix their surplus situation and hopefully you do this in a coordinated falings. we are just not getting that. the -- coordinated fashion.

we are just not getting that. the chinese in june indicated they will move their exchange rate at a faster rate. they barely budget against the law. the dollar is depreciating against the other occurrencies which means the chinese is depreciating against the other occurrencies as well. we get tension between europe and china and if the global economy does slow down a lot, one would expect these tensions to be exacerbated. and this is a rather dangerous situation. host: desmond lachman is a resident fellow at the american enterprise institute. before that he was at sol mon, smith, barney. he was senior advisor to the european department at the i.m.f. as well. atlanta, darrell on the democratic line. good morning. caller: hey, how you doing? and to c-span and to your

guest, i'd like to say i agree your guest's assessment of the currency situation, but i disagree with the solution. i'm hoping that we have some volatility in the currency market because the middle class has been taking it for the last 20 years. if anything can happen that will cause us to get away -- get away from nafta and i.m.f., bring back jobs, bring back industry to the united states, i'm all for it. if that means that there's volatility in the currency markets, china is upset with what's happening with their investments in the united states and we in the united states are taking it in, we're buying everything from everybody else, there's no jobs here -- look, i'm a lawyer, and i have a management degree and

i work for myself. the average working man out here is catching it. i understand what the professor is coming from. if currency fluctuations will help the united states and there is quote-unquote some form of trade war then all for it. have a nice day. host: desmond lachman. guest: i can understand your concern and i really share your concern. i think that the united states should be pressing for a fair deal. it should be pressing china a lot harder to appreciate its currency to reduce the excessive savings, that they shoulding buying more goods. i think that one has to find a balance that if the united states dollar cheapens by far too much, that creates pressure elsewhere. and what we're already seeing is we're seeing countries taking measures to stem the in-flow of capital coming into

their countries. we could be seeing greater trade restrictions. and our experience in the 1920'snd 1930's is with the global system breaks down, that is not in our interest. you we already gained quite a lot from engaging in trade with other countries. we really do want to increase our exports. if what this does is unleashes a trade war, unleashes competitive devaluations elsewhere, it's not in anybody's interest. that's what we should be trying to work at, we should be trying to get a coordinated global solution that is fair to us, that we really want to balance the playing field but we don't want to take measures that can really take us down the road towards a trade war, towards a currency war. host: just to add to that, this is this week's "christian

science monitor" and in that they say some accept that protectionism can save american jobs but at a cost. it says that a citing a study by the federal reserve back of -- bank of dallas, she says the cost to the economy pro protectionist policies runs to $100 billion a year in higher prices for goods. guest: right. i'm talking about something that's broader than that. if trade really breaks down -- host: right. guest: then it means that all of our industries that are

exporting abroad, they're not going to be able to export abroad and that's going to be very disruptive. not only to the global economy but to the united states economy. you know, essentially the united states is the country that needs to be exercising leadership on the trade side. we shouldn't be engaging in excessive restraint. i think that we are being far too soft, for instance, on the chinese. but one really does have to take into account that pushing them too hard can spark a real trade war. i don't think while that might be more harmful to the china than it's going to be to the united states, it's nevertheless going to be harmful to us as well. so what we really should be trying to do is we should be trying to negotiate something that is fair to all parties, but i think that currently my

assessment is we've been far too patient with the chinese. this has been going on since july of 2005. the chinese keep promising that they're going to move very much faster on the currency. they renege on their agreements. might be time to reconsider how to deal with the chinese, but nonetheless, i would keep in mind that one doesn't want to go too far and lead to something where trade relationships break down. we went there in the 1930's, and that wasn't a pleasant experience. host: hagerstown, maryland. chase on the independent line. caller: yes, i have a question for desmond. when you -- host: we are going to move on to san antonio, texas. albert on the independent line. what's your question or comment? caller: i have a comment. it's not directly dealing with the currency but it's indirectly. my statement is, the whole

thing is about trade. you know, we need politicians in america to be concerning about america. everybody worries about other countries, they don't care about america. basically you got american corporations using taxpayer money as a tax break, go to other countries, building companies over there and they're shipping their own things to our own country and that's where we're losing jobs. host: is that true? guest: no. i think that might be a little bit extreme. you know, i think that we really do need to realize that we are operating in a global system. we are operating a system where we get certain kinds of benefits. we do want to have greater access to these countries' markets, and we do want fairer exchange rates, but i think if

we really turn inwards that is really not going to be in our long-term interest and that could be destructively of -- destructive of jobs. i think the united states, i agree, might be taking too soft a line on these trade issues. but we really don't want to go to the other extreme of really antagonizing our trade partners and really causing the system to break down. host: as our guest talked about, the house in september passed legislation aimed at china's management of its currency. if the senate were to pass that legislation and the president to sign it, the commerce department, according to the "christian science monitor," the commerce department could view currency manipulation as a trade subsidy. that would allow the united states to impose trade tariffs. it's clear, however, if the legislation would pass muster

with the w.t.o. for these trade disputes. it goes on to say, though, that as the white house is learning, china is not happy with the u.s., as our guest has indicated. it says the chinese are believing they are not getting the respect they deserve for the might of their economy. in late september, china increased its tariff on poultry imports from the united states from 31% to 105%. so they've already shown they will fight back. guest: right. this is really the danger. you know, i think -- i don't want to minute fies the fact -- minimize the fact that there is a huge problem with china. i find china's policy response rather difficult to understand. they really do seem to be waving a red flag at congress, take them on. they look like they want to go for a fight. it takes two to come to an agreement. my view is that the chinese are

really being -- part of the reason is they think that they've got a huge amount of leverage over the united states in that they are the country that is buying the united states' treasury bonds. they are the country that's financing the united states. and they think that they've got a real weapon that they can dump all these treasuries on the market. i think that they're making a real grave error that they by ignoring the rising temperature on the hill, there's so much patience that they can expect from the united states that i really do think that the chinese need to move -- that they themselves periodically acknowledge that the currency needs to move a lot. but then what they do is very little in the subsequent period. you know, hopefully, i wouldn't be putting the blame on the chinese-u.s. trade dispute. i would be putting a lot more

of the blame on the chinese for really not moving -- you know, it's very clear that the currency is undervalued by 20%. it's very clear that they manipulate the currency to an egregious extent. i think that they're just expecting far too much forebearance on the united states' policy, and this is really the stuff of which international policy mistakes are made. host: all right. we're talking with desmond lachman of the american enterprise institute. he also worked at the i.m.f. the i.m.f. and world bank meetings happened over the weekend here in washington. issue number one was the value of the u.s. dollar and other currencies as well. chicago, mary on the democratic line, good morning. caller: good morning. can you hear me? host: we can. go ahead with your question or comment. caller: comment and a question. i think you are superb. you ask a lot of questions that i want to ask but i don't really know how. the second thing is i hear all

the time they talk about the united states printing money. i don't understand when did we start printing money. we didn't start with obama, did we, or have we been printing money for years now? guest: yeah. the question is that the united states, of course, once you create the paper reserve way back in 1913, we've been printing money ever since that started. so this isn't something under the obama administration. what is really noticeable over the last couple of years has been the degree to which the united states' federal reserve has been printing money that there's been a quantum leap, that we've never seen anything like this. the united states federal reserve expanded the balance sheet from $800 billion to $2.3

trillion, and that was basically in response to the great economic recession of 2008-2009 when we saw the united states' financial system looking like it was going to collapse. ben bernanke really had to step in with extraordinary measures. .

to try to get the economy moving. it is really the last two years that the printing has occurred at an accelerating rate. host: edward, missouri, your next. please make it fast. caller: on the currency fluctuation, i was looking at historical charts recently in terms of currency trading. i suppose that one question

would be -- how can currency destabilized as long as we have currency speculator is that can affect exchange rates just exactly like they were affected while at $140 per barrel? and on china, the chinese government has a lot of smart people. you know, educated, financial, economics. we would be hard-pressed to find one person in the united states congress that has a degree in finance. they do control their currency, but they do it many times in

relationship to the dollar by purchasing the u.s. dollar. guest: in terms of currency speculators, 1971 we looked at a folding exchange rate. we have had folding exchange rates for 40 years. we do get times when there is greater volatility and political uncertainty, disagreements where we do not know what governments will be doing, which adds to the currency volatility. i would not put the blame on speculator is as much as the fact that we would not know what the rules of the game marked and where we are going. in terms of china, certainly the

education level is rather high. as being run by the communist party and political leaders, they have many different views from the technocrats. the chinese see an imperative in creating many jobs for the people coming off a land, moving into the city's. they really feel that they should promote exports and keep their currency very cheap. what they're doing is operating their currency from the chinese interests, keeping currency cheap, expanding the exports, in that way producing jobs. consistent with united states interests. as mentioned before, the chinese

are already making political miscalculations in terms of the ability on the exchange-rate issue. >> late last month to the geiger went before the house financial services subcommittee on international financing and the issue of chinese currency came up in the exchange between the secretary and christopher lee of new york. >> we believe, as you do, that the exchange rate is undervalued. in terms of the regulation, when you are talking about something as basic as market forces with currency, it is killing american manufacturers. i want to make this clear, this is a real problem for us, there

are a number of practices by the chinese government that do discriminate and we are trying to encourage them to end of those basic practices. >> which i think we should, if we keep kicking the can down the road, we will not have manufacturing as we know it today. host: is that true? if they do nothing about the chinese currency in its so- called manipulation, could it erode manufacturing? guest: basically it has been doing that for the last 10 years. the midwest has been hollowed out. much outsourcing has occurred. to a large degree it has been associated with china keeping its currency grossly undervalued. if you allow that to continue,

you must expect china to continue increasing its exports. i think that the secretary is quite right to be losing his patience with the chinese, wanting to push them harder into making that kind of adjustment. basically through the keeping your currency cheap, you are exceeding jobs by giving your manufacturers unfair competitive advantages, like putting a tariff on the united states. it is a central issue. i think that one really wants to be pushing the chinese harder on this issue. host: minnesota, republican line. caller: good morning. i think that the system is already broken.

if these politicians are smart, why not put a national sales tax down to make up for the difference of the chinese valuation of the money? guest: that is effectively what congress is thinking of doing in order to allow them to put tariffs on four chinese under- valuation. if we act in a unilateral manner outside the organization, it could be a not good move. what the united states has been doing makes a lot more sense, trying to get a coalition with trade partners abroad, giving the europeans to bring the european emerging-market countries and putting pressure on china, to do this more in a multi-lateral kind of setting.

slapping a tariff on chinese goods sends a bad message for the global trading system. as i have mentioned, we do not want this to be breaking down and we do not want to go down the slippery slope with countries retaliating and escalating the trade protection. really it is a fine balance. my view is that we have been too soft on the chinese since july of 2005. we thought we were engaged in a dialogue where be explained it was their interest. i think it was something like six years or seven years later, we are really not seeing the chinese, so we need to rethink

what we do with the chinese. at the same time i think there is a danger of overreacting, moving in a unilateral manner that takes us down to where the globalization that we have benefited from in terms of economics could break down. host: colorado, good morning. caller: you talk about the chinese protecting their self- interest, they are interested in the united states getting rid of its debts. i do not see how on the face of the earth, cutting spending from the u.s. budget is going to get rid of u.s. debt. we need to have a stronger american consumer and the only way to do it is to add more stimulus to the economy, which is why the fed in the first

place is considering this warrant -- warranted policy. >> i do agree that we need to provide an added stimulus in terms of the chinese wanting us to cut spending in the united states. we would like to see the united states reducing expense budget deficit. at the same time we would like to see the united states increasing its export abroad. that can only occur if the chinese for goods. cutting spending in disregarding what happens the united states

economy, that is not a legitimate press on the chinese product. if the chinese were to say to the united states, the united states would rebalance their economy without putting it into recession. i certainly agree that the united states economy is slowing. if we just cut our budget deficit without getting the chinese to move on the savings issue, it will not be good for the united states economy. host: will the goods in china not become more expensive to rid -- produce if the value is

allowed to be retained? guest: absolutely. it is not simply a question of trying to manipulate the exchange rate. many of the asian countries that engage in that kind of process, if we got them to move on the currency, if other countries did not move with, we might be not gaining as much in the production. which is really of concern right now. countries like thailand and korea manipulating exchange rates. recently what we saw that has undermined the chinese position is the japanese intervention. this is a major economy, trying to get their currency to a different level, allowing them

to say they're not the only ones that manipulate. i have never seen a case of a country purchasing $400,000 each year and suggesting we are not manipulating currency. host: what happens next? guest: i would think that we would go to the november meeting, but i am not holding out much expectation on this. it very much depends on what happens to the united states economy and the global economy. if we do get the euro zone debt crisis paid up and we do not

have some sort of agreement on the global policy coordination idf, what we could be seeing is a rise in protectionism. host: one last phone call from texas. mike. go ahead. caller: one question. what do we export other than financial transactions? every time i ask this question, i get caterpillar, the fence. -- defense. other than that, what is there? we manufacture nothing. is it not amazing that china tries to protect its own population that we cannot do that in this country? to heck with that the global economy. let's worry about the united states. let's forget about these transactions and finances.

let's worry about building something that we export, talking about what we imported from china in the 1930's. i do not think anything other than fireworks. what are we going to do to help the united states of america's economy? thank you have a nice life. host: let me show you something from "the christian science monitor." these other worker groups that have been -- their jobs have been eliminated or jeopardized because of their work moving overseas. you can see a jump in the numbers over the last few years. final thoughts? guest: is an exaggeration to say that the united states exports nothing. exports in the united states are around 10% agricultural goods, high-tech goods. china is not our only trade

partner. something like $1.40 trillion at the united states exports. we certainly want to increase them at a fair value, countries like china importing a lot more united states goods. i do not think we want to give up international trade, $1.40 trillion seems to be to me at least a big part of the u.s. economy by an international trade for a variety of reasons. we really do need the other countries to cooperate and we cannot expect united states to be the only country playing by the rules. cooler heads will prevail.

host: thank you for being here. guest: thank you. host: coming up we will deal with dwindling water supplies, but first a news update. >> a $50 billion proposal to up -- upgrade the roads and railways will be announced this morning. one goal is to create jobs. the finger the announcement this morning on c-span radio. -- you can hear the announcement this morning on c-span radio. dale bodman and peter martins and were amongst those that won the prize that helped to explain economic policies and how it affects unemployment. hamid karzai confirmed that his government had been meeting with the taliban for quite some

time, saying that the talks, aimed at securing peace, having personal, and that those discussions continue. an update on the kidnapped british nationals killed in afghanistan on friday, the british prime minister said that an aid worker may have been killed by her american rescuers rather than her taliban captors. david petraeus said that it is possible she was killed by a grenade detonated by a member of the u.s. rescue team and that the full facts had not been established. >> what are the people watching on the c-span video library. you might be surprised. the most viewed the events of the past day, week, or month, click on the most watched to see the most popular events covered. watch what to what -- watch what you want, when you want.

>> michael powell, reed hundt, kevin martin, tonight on c-span 2. >> middle school students, high- school students, get warrant -- get working on those videos for studentcam. this year the theme is washington, d.c. through my lens. for complete rules and information, go to studentcam.org. >> "washington journal" continues. host: felicity barringer is the national environmental correspondent for "the new york times." thank you for being with us. i want to talk about a situation in the west with water. he recently wrote an article that the headline was water in

the southwest was headed for a day of reckoning. what is the situation? guest: basically, along the line of the rockies there has been in a 11 year drought. 11 years of under-average and in some cases, like 2002, one- quarter of average rainfall, meaning that there is an area of the country where 28 million people live that is looking towards the future where there may not be, certainly will not be the water supplies that they were used to in the past. it may be difficult to sustain continued growth in that area. specific areas like los angeles and phoenix, this is where most of the growth has taken place in the country over the past couple of decades.

we are sort of looking at a tipping point in the country where they have been the growth engine. host: what is the impact of what you just said? guest: you have cities debt have been putting in strict conservation measures for years. in some cities you have roughly a 20% decline in the average per capita water use by people like you and me. at the same time, the growth from both of those cities has outpaced the savings. sort of like the red queen in alice-in-wonderland. in terms of water conservation they're moving as fast as they can but are falling backwards. host: according to "the new york times," phoenix average per tap

daily household use dropped 20%. host: what is going on here. where is the water coming from? why is it at record lows? guest: the drought has reached its record lows and the vast majority of the water for cities like las vegas and phoenix comes from the colorado river, which is a series of reservoirs' the code down, if you imagine a necklace hanging from the top to the bottom, the reservoir is run along it. two of the biggest are near the lower end. those are lake powell in utah and arizona and lake mead near nevada and arizona.

lake mead is really the reserve tanker, the holding tanks for water for las vegas and phoenix. and also for a chunk of southern california. they also get water from northern california. phoenix has a couple of other sources. but the colorado river is basically it. lake mead is about 6 inches below its historic low level, reached in 1956. it has dropped not quite a foot since the article was published a few weeks ago. this means that for a city like las vegas, think about what brings people there. certainly, gambling. but also things like [unintelligible] -- golf.

what does it take to keep a golf course green in the desert? one of the world's best known desert. it takes an incredible amount of water. they have tried to dissuade people with financial incentives and have had stomachs -- some success. are you going to ask a city like las vegas to get rid of its golf courses? those other kinds of things, if this drought continues to tighten, they might have to start thinking about with significant economic consequences. host: what are the local, state, federal regulations in terms of what they're thinking about doing on this issue? guest: the first is to find another source of supply. phoenix has already done some of that. las vegas is already looking to

move across the state in a northeasterly direction to get some water from the snake valley, straddling las vegas and utah. they are also planning for a future when the levels of lake mead might get below the two places they'd pull water from. imagine, if you will, lake mead is a large class of beer mugs. you have two straws in it. one that falls from 1 inch below the top, the other from an inch and a half. they're worried that the level might drop below the second straw. what they are doing is putting in a third straw, an intake level that is 50 feet below the existing top intake level.

underneath the lake right now, this was fun to do when we were reporting on the story, a huge undertaking, very technically complicated, one of the biggest operations in the world, it is the kind of effort that a city like las vegas has to go through to make sure that the water supply is protected for the near future. host: if you look at this map we have been showing viewers, look at the proximity to the hoover dam and think about the electricity that is provided. guest: a huge accomplishment at the time, franklin roosevelt came out 65 years ago this fall to dedicate it.

it was designed as much as a hydroelectric facility as it was a water storage facility. like the water from lake mead, it goes around the southwest. again, to cities like phoenix and las vegas. host: mary, independent line, good morning. guest: i am calling with a serious question. please give me a serious answer. is it not a fact that the massive amount of population growth in the american southwest has come from illegal immigration? it is troubling that the environmental movement refuses to address this overpopulation that causes a drain on water supplies. it is alarming to me that the sierra club and what have you, that used to talk about concerns of overpopulation, once they

started getting in bed with corporations -- host: i think we got your point. would you like to weigh in on the impact of illegal immigrants and population growth in the area? guest: there has been population growth from many sources in the southwest. i am sure that illegal immigration is a part of it. how dominant it is, i could not say. moving from the northeast into the southwest has been a major factor curium this -- factor. this area -- the sierra club had a contentious election years ago where this was on their minds. this is something that is talked about, but at the moment the caller is right, population issues are not at the forefront.

host: felicity barringer joins us this morning from mountain view, california. we are talking about the dwindling water supply. what does it mean for the rest of the country? guest: well, this idea that problems with water are less along the meridian, divided between the west and east, the wet and dry, is a little bit false. look, you had the city of the plant out over the last few years with a major problem. they got into a serious drought. in the great lakes region they are very concerned about

protecting not only quality, but supply of water that they have. and they have always been concerned that there are areas of the country that are not as rich in water and might look to them to provide water. there is a compact amongst the great lakes states and canadian provinces. one of the elements of it is that water cannot be exported outside of that particular region. it is not legally possible to, say, build a pipeline from the southwest to the water-rich portions of the country. host: since it is not possible, legally, what does it mean for the southwest? if their resources are limited only to what is around them?

guest: it means they will have to look very closely at other ways to deal with water supply. parts of the southwest have already tapped into their underground reserves at levels that cannot be sustained. this is true or in parts of texas, tapping into one of their biggest underground reservoirs in the entire country, it stretches from texas north towards. also in california, particularly in their agricultural areas in the central valley they have been tapping into groundwater. one of the places that you can go, it has already been in the

central valley of california, particularly on the western side. how about reusing water? the supply of water in the world does not grow or diminished. it changes through cycles. one of the cycles is based on the properties that we put it through. after the water has been used in a variety of ways, can it be treated in a way that can be reused? we will be looking at that first as a sheer matter of necessity. but this is an incredibly intensive process. there is a desalinization plant going out of sight of san francisco, another one in san diego. these are possible engineering

solutions but they are extremely expensive, even more than the economic expense it takes tremendous amounts of energy. host: we are talking felicity barringer with, who recently wrote that perhaps 9.5 million people in the lower colorado river basin depended on the water supply in the late 1950's, today more than 28 million people. joe, democratic line. caller: i would like to request the to do a program on mountain top removal, directly related to the water situation. here in west virginia, as you are probably familiar, they are destroying the mountains by excavating the coal, ticking off the tops of the mountains. particularly wheat originated much of the water for the

eastern united states, but it is being polluted with heavy metals. once they flow downstream to the river basins of the eastern united states, the programs are about clean water. why are we not addressing the issue of clean water? once this water is contaminated with heavy metal, especially through the release of mercury in the burning of coal, there is no system that actually remove is heavy metals from water other than reverse osmosis. guest: mountain top removal is an incredibly important environmental issue, won the the obama administration has weighed in on as the epa removed permits from certain operations because of what the impact is on streams. not just contamination, but

basically the elimination of the stream by dumping so much material into it. the question of water quality is a bit separate from the water quantity question. everything seems to be linked to everything else in some way. but the issue of pollution is certainly one, particularly mining pollution, is on the front burner agenda of the environmental movement and the obama administration. host: meghan, chicago, republican line. go ahead. caller: i would like to say that we are one nation under god and my belief is that bottled water is a big issue. i believe that america of needs to like save our water.

host: does bottled water factor into this debate? guest: it is a part of the debate. the caller is extremely correct. the notion that companies, in some cases companies whose headquarters are outside of the united states, are coming in in doing this illegally for years. how long have people been drinking water from maine? there are bottling plants to go in under the supermarket shelves. they all take water from various cities. usually in the northeast or the upper midwest. down perfectly legally, but people are getting more, from

the places the water is coming from, getting more concerned. why are they exporting something that is such a basic human need? so far as not particularly heard the bottled water industry, but there have been many revolts and objections in vermont and michigan. this is something that is more and more on the radar of local communities. host: one viewer says -- guest: that is actually true. my colleague did a wonderful story on this, there has been a slight liberalization about the water of your roof. remember what i said earlier, as a civilization we will not give

any more water than what we have right now. the fda is going to recycle the system. one of the cycles is the rain. because of the precise ownership claim on the colorado river, in states like colorado where droplets of rain in other systems have defined all the ships -- defined ownership. the water coming out of the sky is supposed to be destined for someone's well. for someone's water rights. meaning that it is technically owned. meaning that it will look silly on the face when you take the rainwater from the roof. host: independent line, minnesota during guest: --

minnesota. caller: i have a couple of questions in the comment. first of all, i cannot believe that she can phone rainwater runoff. most of our water in minnesota comes from the mountains in south dakota. filtered and it comes into minnesota. that is where most of our water goes. when i lived in las vegas, nev., there was water 50 feet underground everywhere. is that water not used staloff -- not used down off the drawing the water from somewhere else? this water used in loss -- not used? of are they drawling the water

from somewhere else? guest: there is water in las vegas. one of the things i was told the the people that are concerned about the water issue criticize the casinos for those fountains, but those fountains actually recycle water from the underground aquifer of las vegas. but again, and aquifer is replenished very slowly and overtime. if you take out water faster than you replenish it, you are essentially drawing down the community savings accounts and it will take years or decades to replenish that savings account. i am not sure what the reservoir situation is underneath las vegas, but whenever it is, it is not something that will recharge very fast. if you take it now in 2010,

2015, 2020, it will not be there essentially for another 100 years. they probably want to do that with some care. host: another trader from a viewer that asks -- guest: a very pertinent question, particularly here in california. there are a number of claimants on a river system at any given time. the time that the colorado river was established in southern california near the mexican border, most of the water came from northern california through a system of conveyances. this had been a matter of debate going back decades.

they are not just individual businesses, communities, agricultural operations. as of the passage of the endangered species act, as a result of that law regulations have been passed to make sure that that claim and, like fish, fish within a river, like salmon that live part of the lives in the ocean and go back up river all kinds of the individual elements of the natural world. if they are threatened by an absence of water, they become a legal claim and.

the regulations that enforce that, recently upheld by some courts in california, means that there's a new competitor to the water that humans are a competitor for. by itself it has lost water to the drought over the last couple of years because of the endangered species act and the claims of the natural world. regulators are now enforce a law that the congress passed the created, essentially, a new climate. host: a new e-mail from a viewer -- guest: it is certainly a very

live issue of there, about this shale that has been exploited newly underground in new york and pennsylvania. i would remind viewers that this process has been going on. it is not brand new. it was used in wyoming over a decade ago. it was the cause of some concern to ranchers out there at the time. there are issues associated with what happens to the process that we are talking about, including chemicals added to the water under high pressure, shooting into the rocks below the surface, freeing up natural gas. does that water with this mineral contents windup polluting the water systems that the community depends on?

the argument over whether it does or not, certainly in wyoming there were bodies of water that were affected, as we wrote at the time. but exactly what will happen as a result of this process in new york and whether it will affect the water table, there is much debate over the actual facts. host: georgia, alabama, florida, fighting wars over water forever. winter haven, florida. go ahead. caller: so glad that you are on this topic this morning. i have been working on it for a long time. we seem to find that we need to manage our water resources on the watershed approach. what i have been looking at lately is the concept of water farming.

holding the rainfall -- rainfall in the soil to make it to the offer, one of the problems in florida is we are sending all of the water into the ocean. guest: endicott -- fascinating concept, the idea of water farming. it is great that this is something you are working on, undoubtedly you know far more about the issues in the southeast that i do. but the point that you made about what is the way to manage water and should not be managed on a watershed basis is an extremely good one. the way that our jurisdictions are set up have to do with the way that our state boundary lines in the county boundary lines are drawn. they seldom have anything to do with the watersheds that run

through them. i do not know if you have been able to put this on your screen, but if you look at the colorado river basin, a little bit of wyoming and western colorado, a good chunk of utah and nevada, including las vegas, this is a jurisdictional nightmare if your water sources are being governed not according to where the water is and what water is connected to other water on the state boundary line. karen's idea is something that is beginning to be talked about more but it is still a bit away from becoming a reality. host: las vegas, republican line, good morning. caller: thank you for c-span. i would like to assure you that las vegas is very cognizant of

the situation in storage it is very important to all of us. felicity already indicated that many of us have given out lawns. -- given up lawns. we have turned to a form of landscaping that uses little water and we still have beautiful, green landscapes. the casinos have been pretty good about making sure that they conserve water to make sure that they make up for lost procedures. most people would be surprised to find out that nevada has virtually zero% of its water supply in lake mead. i was wondering if you could

comment on the legal ramifications to keep nevada from getting a fair share, if you will, of the water supply from colorado, possibly commenting on the idea that one share could be ameliorated by how effective conservation is in a local area. guest: those are excellent points. in terms of the total water supply of lake mead, which goes everywhere from what was the colorado delta down in mexico to an area that is dry much of the time now, the same amount that the united states is trying -- drawing, when the compact was put together it was thought of baa's water for agriculture. but parts of which desert did we

want to claim? how did we want to do it? nevada was not a place where agriculture was particularly fashionable. i heard a joke that the nevada delegates for the colorado river basin commission was mostly absent, perhaps in a local watering hole and that there was not much they could do to get a share of the risk. not much before las vegas was anything more like the city we know today. the las vegas claim on the river water is 2% or 3%. it is 1/10 the amount of the imperial valley agricultural district. both places are deserts'. imperial valley owners were

there early. the legal system of how water rights works essentially has to do with how they got their first. it gets very complicated, very fast. i will not pretend to understand more than simply the thinnest top layer of this. it has been the dominant determinant of the waters contribution with las vegas going up against the eight ball, as it came late. the water rights were jr.. one of the things that was being done, however, was the effort towards creating a a little bit of a market. there were legal limitations, but some claimants can sell their water to other claimants.

going in fits and starts, but as your caller says, las vegas has very few rights. certainly the imperial valley would think that the situation is perfect. in the future, let's say that you did away with some obstacles in the imperial valley sold its rights to the water. selling them back to las vegas. a lot of things could change. host: we have another twitter -- let's take out one part in the middle, that it seems like it could be a real issue. guest: i am sorry, what is it? guest: the issue of dwindling water supplies and what is going on in the southwest?

absolutely, it is the sleeper issue of our time. thinking about climate change, speaking to someone who knows about the science of it, he told me that climate change as a bull's-eye on the southwest. it will get more dry, it will get more hot, and it is the biggest impact of climate change that we, as a nation, are going to feel. we are going to feel it in a place that has been the fastest- growing part of the country for three decades. host: for other parts of the country not familiar with what is going on in the southwest, describe how residents in the area of view their water. guest: there is an old sought out here, i ordered a glass of

water at the bar and the bartender said that you do not understand, whiskey is what we drink, water is what we fight over. the average citizen out here turns on the tap, the water runs. they do not view it as threatened. there has been much conservation over the years that has created household fixtures like low flow toilets and shower heads. so, you are certainly conscious of what it takes to keep a long green if you have one. the caller from las vegas mentioned it, particularly in desert cities, also coming through in northern california, there is a growing consciousness of water as limited resource. growing up back east, i certainly never felt that. i think that will migrate across

the country. i think that particularly in areas where we drawdown ground water or areas like the southeast, georgia, florida, people are going to start looking at this the way that they think about gasoline now. something that we pay a bit more attention to when the price goes up. host: let's try to get more phone calls. trevor, independent line. caller: i have a two part question. what about the salinization? of how effective our city centers at birth -- recycling what they use? that is pretty much it. guest: both are interesting. i think that it really depends on which community were talking about. some communities are relatively

dry, others are more wet, they're very conscious of recycling and reusing, more likely to be true out here in the midwest. you cannot make a firm generalization about it. about the salinization -- about de-stalinization, it is a viable technology, but it is very expensive. it takes an lot of energy. and it has environmental consequences. when you take the salt out of the water, you are putting much saltier water back into the place where you took the water out, so you are changing the marine ecosystem around. so, there are lots of reasons to not look at desalinization as

some kind of cure all. is it going to be a factor? i think so, absolutely. host: independent line, of port washington, maryland. caller: my entire family grow up in the state of wyoming. one part of my family has been battling for 20 years. you have covered a lot of the issues i was going to bring out, but the issues that i see as key are the state's impacting states with water. looking at wyoming, for example, the surface water, they say, does not impact the ground water. you have a well that is being drilled with states saying that welles do not affect or surface water, but it is obvious that the water will decrease. that being said, once you have

states impacting states, state laws and federal laws, is there any more being given by the federal government for the state government in terms of cooperating together? like many of the callers have said, local government controlling water as opposed to it having a bigger impact on the community, you have to live with water. you do not have to buy gasoline to live off of it, but you do need water. guest: these are very good points. hydrology is a science that is largely beyond me, but i think i am correct in saying that most would laugh at anyone who said that there is no connection between surface water and ground water. all r