host: with about wof two weeks to go, the "wall street journal" report this is saturday morning, a democratic strategist are acknowledging they're abandoning now about a dozen house seats that the party now holds as they try to salvage their majority in the chamber by shoring up candidates with better chances. no cost of living rise with social security next year, the second year in a row. one headline this morning has president obama considering

government layoffs now, even furloughs to help handle budget matters. and the "new york times" and others report that the department of justice says it does intend to prosecute marijuana laws in california aggressively even if state voters approve ain initiative to legalize the drug. federal government versus california on legalized marijuana. what do you think? the department of intends to

prosecute marine la laws even if state voters approve an initiative to legalize the drug. first call on this story this morning from houston, texas. mark, republican, what do you

make of all this? caller: it's another thing about california. i mean, they're bankrupt and the last thing they really need is people smoking marijuana. i mean, think about it. and jerry brown were to come back, what has jerry brown ever done, promote marijuana? so it's california, marijuana this, marijuana that. they're bankrupt. host: let's hear from john now on the line for democrats from michigan. go ahead, please. caller: i completely disagree with the caller from texas. and what happened to the will of the people? i mean, the government, and where are the tea party protesters on this one? that's what i'd like to know.

if they're all about the will of the people and the freedom and individual liberties. host: let's see if we can hear from any of them this saturday morning. virginia, eric, independent. our topic, the federal government the jusssiss department versus california. what do you make of this? caller: if you read the first paragraph again, it clearly states that the department of justice is going to make a move on the people despite the popular vote. that's kind of scary to me because i thought that the united states was of the people, for the people and by the people. and for the united states department of justice to egregiously just make this decision without considering the will of the people, it shows me that we're not in a free society, that we're actually living up under a nazi regime. host: let's see what else we can learn here.

now we go to california. james, republican. thanks for getting up so early. caller: i'm voting on this measure, and i know a dispensery person -- well, marijuana is everywhere, by the

way. it's not a recreational drug, you can get it as easy as you can get a beer in other states, here. and i think i'm going against that. so eric holder he's for it? host: the lead says that justice is going to prosecute these laws despite what california does. caller: so eric holder just wants to make money off this. so well i'm going to vote no on this measure, and if dispensery owners they're campaigning against it as well because they see it as just a measure for the government to come in and swoop in on their business. and so i'm -- and all my friends are voting no as well. host: ok. prop sigs 19 up for a vote. and the "new york times" writes that the l.a. county sheriff, who has been one of the leading opponents of this measure, quickly embraced the justice department stance.

he said the initiative was unconstitutional and vowed to consider enforcing marijuana laws no matter what voters do in november. next call, north carolina, rita, democrat. good morning. caller: good morning. thanks for accepting my call. i'm one of those open-minded democrats who tries to listen to different points of view and i agree with some of the political leaders that this 2010 mid-term is going to be an important election for all of us for a while, and i think that the 2008 elections was a water shed election. but for 2010, i think that the issue of marijuana is just going to be one of the issues that's going to complicate the election force this year. we've got a lot of things on our plate and i'm disturbed

about a lot of the big issues that we face. we've got young people who are college graduates who -- who can't find a job because of unemployment rate is so high for their demographic group. we've got a 9.7% unemployment rate in general that's been stuck there for a while. we've got fellow americans that's demonizing muslims and undocumented workers. we've got housing foreclosure crisis. thank god it is halted for the time being. but sadly, this 2010 election that's coming up, we've got just part of our nation's top leaders in congress who are actively trying to solve our nation's challenges. host: a lot there from rita in raleigh. let's hear from another call from california, los angeles. independent, what's your take out there in california?

caller: i'm for the proposition . host: we're listening. caller: i'm for the proposition. it's just about time that this is, the law has been in the books. even i'm voting beyond that. i believe all the drugs should be, all of them, all of them. if we want to have any more information, go to . . thank you. host: todd on the republican line. caller: the will of the people is for it. we just passed no gay marriage. they threw that out. we had no benefits for legal aliens. they threw that out. so this is all a hit and miss when it comes to our leaders.

there is the will of the people for it over there. so this argument about the will of the people being thwarted is kind of a joke. host: here's a quote from the "new york times" piece.

host: florida, tony, democrat h. hi there. caller: good morning. i think that the obama administration is making a mistake on two fronts. i dare say that having lived in california most of my life, people that voted for obama in california overwhelmingly will vote for this initiative. and he probably will move the best -- i can see a third party forming because of that out there and he probably will lose that state in 2012 should he run again. the nonpolitical reason is there ought to be prosecuting all the mortgage frauds that's taking this state of flaw down and many other states. what about the anchors? not one of them has been brought up on charges yet and

we know that there's terrible foreclosure fraud going on. why isn't that being prosecuted? what's happened to this obama administration? host: lots of calls from california this morning, and the west coast in general. here's one from san francisco, independent. caller: good morning. i'm so happy to get through to talk about this. i'll vote yes. i'm all for it. i think it's a great thing. it will solve a lot of our deficit problem if we can get the taxing in order and get all that. i think it would save -- it would do a lot for our deficit. host: what about the headline though? caller: you know what i have to say about that? law enforcement needs to go after pedo files, criminals, murders. if they're goig to waste the resource bottedsering people, maybe they've got migraines or

god forbid a cancer or aids or something and want to smoke it. if people just want to smoke it in general, it's much better chan alcohol. you don't see anybody getting beat up or we'd smoking. the only thing you're going to see is somebody assaulting their refrigerator. that's about it. host: oregon, what do you say? caller: good morning. good morning to c-span. i'm very concerned about this. this has got me really reflecting. i think that we entered into a financial crisis in this country due to the irresponsibility of the banking industry. independent of either republicans, democrats, or independents. and i think that trying to legalize marijuana is simply a way to generate money to help us get out of the financial mess that california is in with their foreclosures. and i think it's very

irresponsible to try and drug californians to solve financial problems. i think we need to go back to the banks, we need make sure that the banking industry, which is the most powerful industry in this country, needs to be held accountable for what they did. host: there is a similar message via twitter to us on this story.

next call here. tennessee. larry, democrat. what are your thoughts? caller: well, from a different perspective, my wife and i are sitting here smoking a joint

and drinking our morning coffee. we've been doing this probably for 40 plus years. as you can tell i'm totally incoherent. i don't understand the people calling in -- i mean, drugs were in the bible. opium use was rampant. a lot of the miracles in the bible, people are tested, people being on drugs. and for 2,000, 4,000 years we've been trying to eradicate drugs. but everybody out there is on something. if it's not vike den it's xanax. this drug rf free america is a bunch of crap. and the part you read about how well the program is working, that stole my thunder because i say, let's keep doing it like it is, it's working so well. host: to the republican line now where david is on the line from talssy, the state capital in florida. caller: good morning. i have two comments to make. one is how the government

literally pumped tons of cocaine into compton in the 1980s to start the jeno side across the united states. and they have a blind eye to that but yet they're going to prosecute people for marijuana. the second comment is that when the mad cow disease happened up in canada, that literally wiped out all their economy and you're talking about not the state going bankrupt but the whole country going bankrupt. the only thing that saved that country from bankruptcy is the 30% of the marijuana sales within that country and exporting out of that country since then, that article was produced in forbes magazine about four or five years ago you can look that up and the comments about the compton and the crack issue, that is astounding that, again, after

the drug is legalized that the justice department would try to enforce laws upon that. again, just looks to me like the government is being like naziism and just saying one thing and doing completely the opposite. host: texas. and you're on the independent line. caller: good morning. i think that it's interesting that the government is putting so much emphasis on marijuana and alcohol causes so much damage in the country. and it's a drug. the fact that it's legal a lot of people feel, oh, it's ok because it's legal. you know, the damage that it does is just ridiculous. the second point i wanted to make is there's so much going on as some of the other callers alluded to with the housing and the foreclosures, that's in the

banking industries, that's what the main emphasis i think should be on. people who are already smoking marijuana in california have been smoking it. sure, there will be some new people who will do it just like there are people who have a beer or get wine when they turn the legal drinking age. but for the most part, i personally would rather be in a society and on the street with people who are dealing with marijuana than people who are incoherent on alcohol and can't control their motor reflexes and trying to drive.

bobby, republican, good morning. caller: good morning. i've watched your program a lot. i've seen the head of the columbia university medical schools watch and he was on here on your program. i believe you may have interviewed him. he had quite a lot to say about problem associated with marijuana and marijuana use and abuse, thc. my question goes now to, has california in its great wisdom

thought about what they're going to do about people like police officers, first responders, surgeons, people involved in transportation industry, people who operate trains, people who operate trucks around california? it's a drug that aters a person's mind. we don't even know the effects it has on neo natal, on unborn babies. this is an absolute disaster. it's more of the circus i affect from california.

washington, d.c., bruce, democrat. you're on the air. caller: my question is, basically, i really don't understood -- as far as, since way back when it's always been something to get off the street. but it's been proven that it helps on all types of medications or cures. or at least for the most part. just helping a person in need, i mean, acc, whatever the case is, whatever the drug is, it just seems to make sense to me to -- what's wrong with just

having a pill? there's a lot of illegal drugs that's been subsidized or helps persons in some way -- i mean, it just makes sense to me to take the points out of the drugs and pharmaceuticalize it and then it's like a prescription drug like anything else. host: we get the point. thanks for weighing in. florida, gary, republican. federal government versus california on legalized marijuana. what do you think? caller: it seems like there's a lot of reasons to allow the legalization of it. i mean, the war on drugs has been such a failure and such a waste of resources. just like the waste of resources with law enforcement personnel would free them to do possibly more important things for society. you look at the cigarettes and the alcohol that are so destructive that they're legal. that seems very hypocritical.

from my experience of use and friends and associates that have used it, it doesn't seem to cause any harm. and it does seem like it could cut down on crimes related to drug use and trafficking. it might take away the misticism of something illegal. people like to do things when it's against the law. when it's no longer against the law it might use that mystique. i don't see what it can hurt. and there may be very many benefits related to it. host: besides this marijuana story there's a good bit of news in the paper this morning on other topics. tht the front page of the baltimore sun.

this from the social security administration just yesterday. in the "washington post," they follow up on an interview that president obama did with members of the trotter group, an organization of black columnists. here's one of the headlines. he did not rule out furloughing employees as some states have, but he warned that such action could result in a loss of services for taxpayers. these were members of the trotter group. he addressed a range of subjects including election mome temperature and campaign

financing, the economy, and the district schools. obama deflected complaints from republicans on capitol hill and conservative think tanks that federal government is overpaid. here's his explanation if you're interested. dade city, florida. todd. back to our question on legalized marijuana. good morning. caller: i had a quick question as far as unintended consequences. and i'm trying to figure out. how are you going to handle these drug-free work places, which is one of the reasons how you keep your costs down as far as insurance? how are they going to deal with that? because marijuana is one of those that stays in your system

so long. and i'm not sure if there's an accurate way to determine the level of marijuana that's in your system. and also, i wanted to comment real quickly on something. there's a product out there that a lot of people are using today that's synthetic marijuana, they call it k 2, k 3 and things like that. i'm not sure if you're aware of that product. but what you're seeing is a lot of these people that are on probation and things like that are using that. because it's not detected at this time. so there's a lot of problems out here. i don't really agree with this just because there's just so many unintended things that are going on with this product. host: terry from indiana. republican. what are your thoughts this morning? caller: my thoughts are that it's the least harmful drug of all and it said that if it was legalized it would hurt the mafias, the street gangs and cashtels terribly because it's their number one seller and our

government could make at least $35 billion a year off of it. and nobody wants to would join gangs any more. host: here's the -- we have segments coming up beginning in about 15 minutes where we'll talk about the u.s. economy and jobs. we'll talk about fed chairman ben bernanke's speech yesterday. we'll talk about foreclosures. and want to remind you about our "newsmakers" problem every sunday right after washington journal at 10:00 and 6:00 p.m. eastern. our guest this week, sheila bare, the chairman of the fdic, here's a short piece on how she thinks regulators using this new d.o.d. frank law should determine which financial institutions are so shaky.

>> one of the thing the fed is going to have to do is figure out which companies should be determined as systemic. which companies could cause broader financial collapse if they were to go down beyond just a set of sps. and i'm curious, as somebody who was early to see problems developing in the mortgage market dorks you see a need to -- like hedge funds or do you have in your mind whether or not criteria should be used to determine those? >> i don't want to be too definitive because we're up for comment on that. we want to look at the comments before we make some decisions here. generally speaking with me it's more about interconnectedness than about sheer size. and you're right the criteria should be what will be the broader ramifications if this institution gets into trouble. with that said, i think those ramifications should be 230 cussed on the public interest. for instance, credit support

where there be a major disruption of credit availability if an institution were to get into trouble. i think just the fact that private financial institutions or their counter parters will take loss as they go down. that should not be the criteria. and i think to the extent there's too much internalization of risk within the financial sector that's something we need to deal with now on a supervisery basis. >> do you expect this will be a small group, a large group? is it too soon to tell? >> i think it's too soon to tell. i think it is too soon to tell. host: "newsmakers" tomorrow. sheila bair, the fdic chairman. back to the phones now on our topic for the first part of the show, federal government versus california on legalized marijuana stemming from a "new york times" story. also written in a lot of other places this morning. here's the headline, u.s. will enforce marijuana laws state vote aside. regardless of what they do with

prop 19 on november 2nd. again, this would legalize the drug for recreation now. the federal government is going to prosecute laws. arizona, michael, republican. good morning. caller: thank you for taking my call. i'm very interested in some of the topics everybody has been the talking about and i'm amazed about the sane and rational pay everybody's expressing their opinion. i'd like to address two subjects here and that has to do with the so-called harm of marijuana that is protected against by the laws that crirnlize possession of it. for instance, if i'm arrested and charged, say convicted for possession and use of marijuana, little mary living in phoenix a couple hundred miles away is not protected by that. now, -- by that arrest of me. now, if i say, i go to court

and i want to have a trial and i tell the jury to bring in evidence that shows that the activity for which i was arrested and now on trial that there was no activities there, that is blame worthy. in other words, the only harm to blame, whatever, i may be doing to society, is not subject to scrutiny by the jury because the law is supported -- the law is used for that. in other words, the judge won't say this but he might say something like, well, we don't have to show that because it's in the law. so everybody who is convicted of marijuana or any other drug has no ability to go into court and show that their particular activity was blame-free, harmless. and in fact, it's similar to saying take marijuana or methamphetamine locally, anyway, if the police arrest somebody and they suspect they're under the influence or

have used an illegal drug, they take them to the hospital emergency room and have tests done. methamphetamine and marijuana being a schedule 1 drug supposedly being so harmful it ought to be obvious by their activity that they're doing something harmful to themselves or an immediate threat to the safety and health of the society. host: michael from arizona. betty from little rock, arkansas, what are your thoughts on this topic? caller: well, i don't think it should be legalized because you've -- i don't think it should be legalized because there will be people who get arrested for drunk driving or drinking usually they have drugs on them, too. so they are using it together. they're using both of them together and that's why they're getting into all this trouble.

to the campaign trail this morning, in different parts of the weekend and different nightsors one race that we're following is this one. it's in the philadelphia enquire this morning. democrat has the lead but still obama not taking u.s. senate race in delaware for granted, ab event we saul yesterday. they show here the president and the vice president from delaware shaking hands with the canned depate, the democratic candidate there. chris coons his name is, not taking anything for granted. even the vice president's home state there. and of course mr. coons is facing chris teen o'donnell the republican. one other pictures in the paper today, presidential aid for sanchez. the orange county

to that "wall street journal" now.

michigan now, paulette? caller: paul ito. i think the department of justice's case in california is without merit. it is frivolous and it is a fruitless caucus. i would rather see the government take their time to prosecute corruption with cities, states and counties, agencies, the appointments of financial managers. and i'll give you a fact. we have an grievance against

the city of detroit police department. this is a ten-year case under 14141. this is a case -- the city of detroit police department has to date has utterly failed to comply with the federal judge as well as the justice department. and i would like to see them spend more time on cost of living adjustment issues, jobs, misconduct, civil and human rights violations. thank you very much c-span for doing this nor senator stevens. thank you. host: the caller mentioning ted steens, the late senator making some news again today in alaska. a "washington post" piece. some last words from ted stevens.

it started airing on friday. there's also an interesting piece in the "new york times" op ed section. they talk about threat response. they're focusing on where african americans could make the difference in the election h you can see it here in this

chart but they focus on each of the states that are in play. the black voting age population and what that all could mean in terms of that vote waying the race in these various parts of the country. it's a "new york times" piece. and as we continue to look at this chart we'll take a call from hawaii this morning, mark on the independent line. good morning. caller: good morning to you. i think the obama administration will prove true

to continue to enforce the laws despite if california does pass the legalization of marijuana because a couple of years ago here in the county of hawaii on the big island, the voters passed by 63% of the voters in that particular election to have a can bass lowest law enforcement priority. well, the county got out of the eradication business because we got the state attorney general and federal dea grants turned down two years ago last june, two years ago back from then, and but the feds and the state police have continued with the eradication of the growers and they are following the minimum

flight rules over residential areas. so it's actually gotten worse. and of course federal law and state law does superseed local county laws. soy just think it's worth a try. if it gets 50% plus one vote we'll see what happens. now, they're saying the think tanks, i think it was rand corporation figured out that it won't hurt the drug cartels that much and marijuana is a detrimental drug in many ways but it's just so entrenched in society now that we've got to try something different. so thanks again for letting me have my say. host: that was mark from hilo. lee from louisiana. republican line. we've got a couple minutes left in this segment. caller: good morning. well, how many years have they fought to stop people from

smoking cigarettes because of lung cancer? now they're saying smoke. you know? and marijuana burns up their lungs and also their brains as far as that goes. and they're trying to encourage it. what are they trying to do get rid of the public? it don't make any sense to me. where is the cancer institution in this thing? maybe i'm wrong that marijuana don't cause lung cancer, but any time you take anything like that into your lungs it's not good for you. that's for sure. not like taking medicine. so i don't know what in the world people out in california, they've gone nuts. well, they've always been nuts. that's no problem there. because i was out there one time when i was in the service and, yes, they are crazy out there. and i don't know if they

legalize it, then they ought to shut down all those halfway houses where those dope heads go to get treatment because they're going to have more and more and more and it's just going to cost the taxpayers more money. host: that was lee on the republican line from baton rouge. before we wrap up, i wanted to turn your attention to one other story that broke in the post. the "washington post," below the fold.

old town maine, chris, independent caller. fed versus california on legalized marijuana. what do you think? caller: i believe that what i've heard is that marijuana is a great paper product and then you only need to mix it with water to turn it to paper. but the wood product you need to use a lot of poisonous chemicals to turn it to paper and it plutes the river, then those chemicals are pushed into the river and poison the river. so it's hard to understand why we don't go with marijuana products and the same a as if

we're going to make clothes out of marijuana you don't need a lot of spraze. cotton needs to use a lot of spraze to keep it from getting insects on it. so it seems like a miracle plant to make paper and clothes that would not poison the earth or destroy the land. also, it creates neuro genesis on a new study. it initially stupe if is but the long-term it promotes neuro genesis and thanks for letting me speak. host: last call, gerald, houston. good morning to you. caller: i just wanted to dispell all these rumors that a lot of people have about marijuana being somewhat more dangerous than alcohol or cigarettes. i know that a previous caller was referencing people smoking and then driving buses or police officers smoking in california. but alcohol is completely legal and all the city officials and

everyone that's in a safety position that's perfectly within their bounds to drink when they go home. the same laws that prevent us from being drunk at work can be enacted to prevent us from being high at work. also, one of the main reasons why marijuana is even legal in the first place is because of the companies that run the prisons because they want to keep the prisons full in order to make more money. there are more people incarcerated that smoke marijuana when we could be incarcerating child molesters, rapists, murderers, and the like. thank you for letting me -- thank you for taking my call. host: that will do it for the calls for this segment. one more twitter message on all this as we look ahead. this viewer from california. we will take a short break and

then we will return to economic matters and the outlook in the fed chairman speech from yesterday, senior correspondent for the fiscal times will be with us. plenty more of your calls.

>> this case presents a question whether dying citizens in full possession of their mall faculties at the threshhold of death due to terminal illness have the liberty to choose to cross that threshhold in a humane and dignified manner. >> in washington state vglucksberg. listen to the case at 6:00 p.m. eastern on c-span radio in washington, d.c. at 91.1 fm. on line at c-span radio.org. >> all this weekend, live coverage from the texas book festival on book tv with eugene

robinson on the splintering of black america, i think red beten cort on her six years of can't tivity in the colombian jungle. plus authors on the obama presidency and throughout the weekend panels on medical mysteries, capital punishment and infamous fugitives. get the entire schedule at booktv.org. >> washington journal continues. host: at the table now, fiscal times senior correspondent, spent 25 years in the news business, foreign correspondent. economics. first time on washington journal. i wanted to get your reaction to this. it's fed chairman bernanke made a speech yesterday in boston hinting at further stimulus. what exactly did he say and what exactly is coming? >> guest: the federal reserve is going to engage in a policy that's called quantitative using which means essentially that they're going to buy more

government bonds. it's really to pump more money into the economy. it's a little unclear about what the volume of that is going to be. but what bernanke was signaling yesterday is that inflation is not a concern, which most americans understand intutively. and that they're much more concerned about keeping this economic recovery going. are host: what's the hope with pumping more money into the economy? guest: the government is running huge deficits so, therefore, this doesn't put further strains on financial markets. you know, by creating the cash that is necessary to both keep the economy going and to keep government spend going. host: and from what the fed chairman said yesterday and what they might want to do, what are the potential pitfalls and problems with this? guest: well, in the short run i think -- i'm not a macro economist, i'm a journalist. but i think in the short run there are no pitfalls, really, because inflation is nonexistent. long run, there is potentially

the threat of people would say rising interest rates and inflation. but that's certainly not the threat faced by the economy today. host: i wanted to invite our viewers to phone in with their questions and comments. we're talking about the economy here with the senior correspondent for the fiscal times. we'll get to your calls as soon as they start coming in. but here's a little bit from the fed chairman yesterday in boston. >> central banks for the first time in many decades had to sake seriously the possibility that inflation can be too low as well as too high. a second complication for policy making create bid low inflation arises from the fact that low inflation generally applies low nominal interest rates which increase the potential relevance for policy making of the zero lower bound

on nominal interest rates. because the short-term poly interest rates cannot be reduced below zero, the central banks have employed approaches that do not rely on reductions in the interest rate. we are still learning about the appropriate management of these alternative tools. host: and as we talk with mr. goozener here, here's the signal. they say bernanke makes the case taking on low inflation as we talk about a high jobless rate. what do you think is the best hope for the jobless rate based on any knew move by the feds? guest: i think the jobless rate is going to stay high for a long period of time and i think that the feds' immediate concern is probably to avoid a double dip recession. if we're worried about a double dip recession, what we're not talking about is a very rapid

expansion which is what's needed at this point in order to really bring down the jobless rate. we're not seeing the kind of economic growth that is necessary to do that. and so if we slip into a double dip recession, as it's called, the jobless rate will get worse. and i think that's the primary concern. host: a reminder where we've been in the last couple of years, you can see that it now stands at 9.6%. it was 4.7% back in september of 2007. you can see the uptick there up to present time. one more point about the fed chairman. the "wall street journal" talks about not what he said but what he didn't say. they were struck more by what he didn't say in this nearly 4,000 word speech about inflation. he never once mentioned the value of the dollar. never mentioned exchange rates despite the turmoil.

can you give us some more insight? guest: the administration has been -- and other foreign gots have been pushing the one country in the world whose currency has been considered way overvalued -- undervalued and that's china. and it makes us more competitive in the international stage if it false. that means more jobs in this country. so it could be a macro economic concern if foreigners because of the declining fall of the dollar are less interested in buying u.s. government debt. but as the other part of the policy that the fed chairman is aiming towards is for the fed to buy more u.s. debt. so that's not a really a short-term concern. so a cheaper dollar is good for the economy. host: as we go to calls, broadly speaking with the

economy, where are some bright spots as you might see them right now? guest: well, the private sect senior beginning to hire. the last unemployment report we saw that government jobs went down significantly and there was growth in the private sector employment. that's what we really need for a robust recovery is for the private sect tor recover. so one can only hope that these are the green chutes that the economy needs in order to really take off. you know, the argument really becomes, does the government need to continue shoring up its side of the economic bargain by not laying off hundreds of thousands of people. and where that is really going on is in the state and local governments across the country who have to balance their budgets. so what we're seeing is the sort of anti-stimulus going on in the states across the country. and you can do so much anti-stimulus that it actually undermines the private sector recovery. host: lets gout of washington

for a minute and go to the states. we have callers coming in from just about everywhere you can imagine. ohio, betty democrat, what's your comment? caller: my question is with bernanke wanting to buy all this treasury stuff, what is the effect on the short-term interest rates like your credit cards? and then your long-term interest rates like your mortgages? is it going to affect that any? host: effect on credit rates. guest: mortgage rates are on historic lows and you would have thought this would have had a major impact on the housing market but it has not. it certainly hasn't offset the other impacts, the foreclosure crisis which really we need to have policy responses to that. low interest rates are not the possible. and the fed buying interest rates are going to remain low. that has been the most remarkable thing is how no matter how high the deficit has gone there is the theory, and

it is true certainly in the long run, that government deficits can contribute to higher interest rates. but we don't see that at all in the bond markets or the mortgage markets. as far as credit card rates are concerned, this is really the banks that are involved in setting those rates. and they've remained quite high compared to underlying interest rates. and of course, you know, we're -- that again the banks have been trying to shore up their balance sheets in order to in the wake of the crisis that we had two years ago. and to a certain extent, they are doing it through high interest rates, this one small piece of it, but they've maintain their profitability and credit cards. and as people have been reducing their own household debts. so again, this is a question of what's going on in the private market, not really a factor of what's through interest rates set at the fed. so i don't think what the fed did yesterday is going to have much impact on mortgage rates.

it won't send them higher. and i also don't think we'll have much impact on credit card rates. host: those very low historic mortgage rates. can you explain why that hasn't pumped up any volume economically? guest: well, i think there's two issues here. one is that the people have a very different attitude about housing today than they might have had two or three years ago. when you've lost 30, 40% of the value of your home and in some markets even more, you don't rush right out to buy another house. and so we're seeing the turn in housing that has historically been a part of the u.s. housing market has almost disappeared. people aren't moving also because the economy is just so lax. so you have really two factors playing there. so with the low interest rates just people are not buying houses. host: let's go to wisconsin. adam, independent. good morning. caller: thanks for taking my call. i just wanted to point out

something that people aren't really talking about that a week or two ago that the economic policy institute and i think a yale economist pointed out that we don't have struct federal unemployment. we are not so vastly undertrained that we just can't find jobs. the unemployment is across all sectors, which is because demand is so low from consumers which at this point is because nobody has any money. so nobody has a living wage to keep the economy at 14.2 trillion every year. and that's because corporations don't have the money to goy a living wage if they're going to be as large as there are, there's an economist that shows that every large company in the u.s. is in a state of extreme diminishing returns. and if they almost collapse they're able to get a bailout because they're so entrenched to jobs. host: let's hear from our guest. caller: well, the demand, the

current recession is a factor, is an art fact of the continue -- the continuing recession is an art fakt of the continuing demand in the economy. whether there are structural reasons for lack of demand, and i think the economists, like the economic policy institute, would argue that there's been a real mall distribution of income in the united states, too much going to those in the top not enough to those in the bottom. that i don't think is the immediate cause of the lack of demand in the economy. it's really two factors. we talk about unemployment being at 9.6%. what we also forget is that there's probably at least as many people unemployed, as unever underemployed. and what this great recession, as has been called by the "new york times," what this recession has done is created a tremendous number of people whose incomes have declined sharply even if they're not unemployed. . . nevada

senate race between harry reid. >> i believe my job is to

create policies to encourage the private sector to do what they do best and that's to create jobs. >> my job is to create jobs. she's talking extreme. we have to do this and we've been doing it since bolder dam was created 23 years ago. >> gets back to your further notion of a policy response in washingtons. there one on the jobs front that's realistic and can work? regardless of who's management congress is snund >> well, what the government can do is a second stimulus plan and politically, that's probably a nonstarter. especially after the result of the election. if the current poles are indicative not what we'll see on december second. that's what the government has it's command. i go back to what i said earlier. we have a tremendous

antistimulus going on across the country and it's what's going on in our state and local government. you know, government spending is about 1/5 of our economy. give or take a few percentage points on either side depending where you're the business cycle. it's the one factor that can be controlled by government and when you're in a deep recession. since john cane said it's the government's roll to come in when nobody spends to keep the economy going, that's generally been the policy response. the private sector needs to get jump started and was interesting to listen to the two people in nevada debate. the one side said let's spend on infrastructure under the other said let's get small business going. you need both. host: to portland, oregon. keith on the republican line.

good morning. caller: yes, i am here. host: go ahead, sir. caller: little bit concerned what the feds will do to try and pump more stimulus to create economy easing. i'd like to the economy to like a house on fire. the feds are trying pour gaston fire to put it out. the last thing you can do, in order to get out of debt is go deeper in debt in my own personal life with my own house, if i take on debt and i end up borrowing more money, inevitably i make the problem worse and there's going to be big paying down the road. host: one point of view, there? guest: the concern about debt in the economy is certainly split collspl

politically resonant. much more people are concerned about jobs though. while debt is a long term concern. the majority of americans are concerned with getting economy going again. the caller talked about the house on fire. no one would call this economy a house on fire. this is - looks like we have a lot of embers that are sort of glowing after the collapse and what we need to do is figure out how to get a fire going again in this economy. so far, you know the private sector - after the first stimulus plan, after the bank where is bailed out, did not get jump started by those efforts and so, something else needed. the fed is using tools at it's command and be in part, i would think pause it really looks like congress especially in this election will not use the tools at it's command which the only thing that would be a second still laws plan.

host: fort worth, texas. democrat line. any? caller: i wanted to find out why - if we had 700 billion dollar stimulus package and there's 350 - say million people in the united states if i'm correct there. if we gave a million dollars to every american in the united states, what would that do to the economy? host: let me ask you first, where would that come from? caller: where did the $700 billion come from? host: good point. what would you do with your million? guest: i can't do the math. but 700 billion divided by that is more like $2000 per person. not a million dollars per person. that said, you have to remember where the 700 billion went. about a third of it went to

state and local government and you know in order to make the cut backs that were going on that level, not worse than what they were. and then, you know, a lot of it has gone into infrastructure spending that's took a long time getting out there by the nature of that spending. now we see when we drive around the down trail. lot of road projects that are for instance. this being done with stimulus money. you know the american reconstruction money, and you look and say, wow, that a took a while. here is the finally but that's the nature of that beast. engineering planning. gear up for that kind of spending so we're just starting to see some of the effect office that now. host: if it's not hugely noticeable. if it's not great, let's paint a picture. republicans take over congress. people are still looking for some kind of help. what realistically was

republicans have to say? if they were in charge again, what would they be saying and possibly doing about the economy? guest: think that's a very interesting question. i think we've got little indication of what policies they really want to adopt. i think that when the macro economists said a republican congress would hire and bring into government and take a look at the factors at play, they're really the same that the democrats look at and the same constraints that are there. we'll see a lot of debate about tax policy. and that's one of the big issues they raise. so no one is saying, democrat or republican, let's - you know, withdrawal the middle class tax cuts to balance the budget. everybody is for that. the question is should tax cuts go to the well to do. the - i think some kind of compromise or if they control

congress the president will decide if we do that my guess is the democrat president would go along with the taxes for the well to do, after all, if the deficit is not a short-term concern the democrats believe that then you'll say, well, that's not how i spend the money but at least we're not taking it out of the economy. so that's my guess. they'll focus on tax policy and my guess is they'll continue the tax cuts and that's another way of spuring the economy. the debate there, what the democrats would say is this is a less efficient way to get money into the economy. they would rather spend it directly. greater multiplier is a debate. you can bring in economists on one and or the other and view which side is right. maybe the american voters make that decision right now. host hose we have 20 minutes

left in this seeing innoc segme. more from john baner. >> this speech is about jobs. why? because the american people are still asking the question, where are the jobs? and in this coming election you have one issue. jobs. it's about jobs that were promised to the american people by the current administration and never delivered. it's about the jobs our economy should create right now but isn't creating because of the policies that are coming out of washington. it's about the jobs our children de serve in the future, that may never have because washington is burying them under a legacy of debt. host: we'll get to the president's clip later. any reaction to that? guest: fairly remarkable the

republican has been able to seize the jobs issue. when you've been president for two years and the economy is in a deep, slump, americans especially in the political arena have very short memorys the is seeds of the current job crisis were sewn well before the democrats had control. and you know, this goes back to events that took place - you know, the housing bubble and collapse and all of that. you know, if you look historically, say president reagan, for instance, who came in - was at that time the worst recession since the great depression. think was in 1980 and in the 88 he also lost a tremendous amount of ground. americans yet in the end his popularity survived that in the hands. americans have short memories. the republicans because the

democrats have been in have been able to rhetorically seize the jobs issue. i think we have to step back for a minute if you're going to be objective and say this is a series of factors that brought the economy to where it is today that we're to the extent policy was to blame. both parties were to blame. host: charles. independent. welcome to the program? caller: appreciate you accepting the call. we hear a lot about the political spin, but using objective economic day tax what's been the impact of the recovery act in part? and then the other part is how do you think the public would be perceiveing the economy if increasing rumor had not made the speculation about unemployment not exceeding i believe the 8 point 5 percent?

host: mr. goose gozner? guest: i looked up a study and by an economist at princeton and another and they estimated if the recovery act and the actions of the fed had not been take then the wake of the financial crisis, that the economy would actually be about 11 and a half percent lower in terms of economic growth than it is today, which would mean unemployment at least 50%. think about somewhere between that and a 100% higher. our unemployment rate would be closer to 20% than the current 10% and what percentage of that was the actual recovery act? maybe a quarter of that. they attributed most of it to the monetary easingn the wake of the banking crisis. the recovery act clearly had a major contributing factor to improving economy and not allowing it to fall into what could have been most economists

and these economists said, could have been another great depression. host: here's the piece from president from recently on jobs. >> before i was inaugurated and before joe was inaugurated, we lost 4 million jobs in the six months before that. we lost almost 800 thousand jobs the month i was sworn in. 600 thousand a month after that and the month after that. before our economic plans were put in place we lost almost 8 million job because of their policy. and that means that it's doing to take a while for us to get out of this hole. there's still millions of americans that can barely pay their bills. millions of americans that are just barely paying it off. millions of middle class families struggling even before the crisis hit and they are out there treading water. i know. so of course, people are

frustrated. of course people are impatient with the pace of change and believe meeshgs so am i. host: recent campaign event there. rich laurie in the post has this story. it's a venue piece. high texas has the jobs? he writes more than the half new jobs are created in the loan star state. texas alone. what does austin know that washington doesn't? at it's simplest don't over tax and spend. void letting unions and trial lawyers run riot and display enormous knee on sign saying open for business. guest: i wasn't aware of that. you know, half the new jobs? whatever factor is at play i'd like to see the data. that's somewhat surprising to me. be that as it may, the last time i looked at the politics in texas was on the verge of electing a democratic government for the first time in many

decades. you know, the issues that are raised when you talk about the trial lawyers and many of the site issues are important political issues. but when we look at the macro economy and what effects that. they really are not each hardly bumps in the road. either on the way up or the way down, these are really separate issues and don't come into play on what policies - again i don't know that texas factor. host: caller from colleen, texas. pete. good morning. caller: good morning, sir. theodore roosevelt said this country should not fear the crooked man that gets caught. he goes to jail it's the crooked man that does not get caught that america must fear. from country wide we had a settle of the civil suit with the f.c.c. for 7 $7,000,000 of

the 139 million dollars he profited. that was a pretty good deal. i disagree with your guest's assertion that the economy doesn't have structural problems. look at nafta. that's where our jobs went. we make nothing in this economy anymore. 25% of the economy is financially based. financially, based economies creates nothing but winners and losers and the winners have greater access to the politicians leading to greater inequity. the strength of this nation was the middle class. we're going back to the gelded ages. i'll thank you for taking my call and i'll listen to your response. host: thanks. any response? guest: yeah, maybe i misspoke but i wasn't trying say the economy doesn't have structural economies but it is possible, how over the have recovery without dealing with the

structural problems. the education, workforce. distribution of income - these are things if you're going to have - and also as caller mentioned, what sectors of the economy are going to be robust in the next recovery? that's little unclear. certainly the financial sector drove what was going on in the u.s. economy during you know the last decade. the decade we completed. and i think a lot of economists would take a look and say, that really can't happen again. we need other sectors to drive economic growth. our manufacturing sector. maybe alternative energy. catching up on the stuff and those are things policy needs to a. however. even just the normal workings of policy, just sort of status quo you with have recovery without a dressing them.

probably a more anemic recovery. host: following up. country wide executives settle fraud charges. two others that led the lender make a 7 $3,000,000 deal to avoid trial. put a story like this in perspective as it rerates to economic concern. the structure of our system as that caller said. guest: without knowing exactly what's involved in the deal with country wide situation, and anthony mazi l.a. we still have a huge problem in the housing sector and that's been the headlines over the past week or two, where we have the on-going - the legitimate for closure documents being handled by the banks. which could in fact under mine and create huge legal problems,

where all the prime lenders were selling and packages for the banks. you know put together. so this is a situation where, i don't know where the fcc is going with this, but a lot of people say we have to root out the fraud and this gets to what the caller mentioned. there was a tremendous amount of fraud in the mortgage markets during the housing boom and bubble and until we root that out legally, and we're not going to be able to have a stable housing mark net this country again and one that's growing and that's huge part of the economy. this is an important part of every reagents economy is housing and we need a vibrant housing market and in order to have it, you have to have strong legal structures. you know, just everybody that's ever bought a home knows you sign seven different documents before you're allowed to take

out a mortgage. in the validity of those is called into question, we're not going to have a recovery in the housing market. host: whole separate segment on the for closure situation in 15 minutes or so. if your surprised by this. no cost of living rise in social security. how come? guest: well, this is interesting. first off, there's no inflation and cost of liveing is in an adjustment that the social security administration makes to social security checks every year based on the underlying inflation. the problem with any cost of living adjustment clause whether in a union contract, sometimes have them. most of them probably don't anymore and social security still has one. any time you do that, what people actually experience is not necessarily what the overall basket of goods that goes into a

cost of living adjustment is. so in this case, take senior citizens. seniors are going to have rising health care premiums. if especially if they're in health care medicare advantage plans and part of that is because of health care reform. also simply because underlying health care costs continue to rise and it's senior share of that goes up. in that one particular aspect of their basket of goods, they're seeing real inflation and that may create a lot of upset among senior citizens while they're not getting raise in the social security check because overall inflation is low, the specific items they're buying may be going up. so it's a troubling situation and could cause some political problems. >> back to the calls. miami. good morning. caller: good morning. always great show.

i have a comment - several - u i want to share one. how come we don't allowed the public to be in control of where our money gets done? i.e. when we do our taxes, can have a box on our tax form that says we want the money to go to the government or our deficit. thank you. host: interesting concept. guest: we have representative governments in the united states and the founding father's said if you don't like what your representatives do then you get to vote every couple of years and change who you have in there. individual choice in terms of government expenditure would make everything pretty problematic. and national defense or spending on health care. ho host john. democratic line? caller: i have a solution to the economy.

all we need is 50 million cars away to tax paid citizens and then we have to pay taxes on it. they have to get 35 miles per gallon and be made in the united states. only giving tax payers it would cost less than 500 million dollars and stimulate banking, manufacturing and shops. it would take the economy off. and fifth - ho host let's get a response. guest: they tried a piece of that with the cash for clunkers. earlier in the obama administration. i think one of the thing use have to worry about any time you actually to a direct demand program. whether a first time home buyers program or cash for clunkers program. what economists say is it drags demand forward so. if i'm sitting there with a car that i have and it's only two

years old and somebody give please a mass incentive i may not pay attention to it. somebody that replaces a car every five years. well, maybe all the incentives will make me do it early, but you know, what that means is that later on, that demand is not going to be there. so five years down the road when my part of the fleet gets old enough to replace the part i'm in, that's how the car mark set. certain part of the fleet gets retired and you buy new cars if you drag it forward you're going to pay later on. host: republican line? caller: before they main question a comment. there's a real disconnect between supply and demand and pricing models. i think the term, stag inflation needs to be revisited the main question point though, i keep

hearing people pounding the table and say create jobs, create jobs, but how in the world can you create a job without demand? somebody goes out and puts their lives savings into a small business and sets up on the corner and takes on a lot of debt. they don't have demand. goodbye in the few short weeks, they're gone and stuck with a lot of debt that we don't need more of, but you have to get the money into the people's hands to be able to spend it when they talk about the cola cut backs, seem to me that's still l still out of the hands of people that would spend it and build small business and create demand for jobs. things seem backwards to me and maybe you can shed light on that. thank you. host: think the caller said what we talked about.

guest: we do not have stagnant inflation but stag nation. there's no inflation in the economy. the federal reserve board chairman said not only do we worry about deflation, not inflation. but your exactly right, we have to create demand. one way to create that is to get people working again. another way to create demand is to give the people who are working more money. another way to create demand is for the government to spend money. and all of those things probably need to be tried in order to get this economy rolling again. the idea that the government needs to spend money is the one that is politically the most controversial at this point. but i think that macro economists who, you know understand historical trends would say that's precisely what's needed at this point in time. host: last couple of calls on the my.

denver, independent line, jim? caller: thanks for taking my call. they've a quick economic and quick political question and maybe you can answer those. i'll preface it by saying i'm very discouraged since obama took office, republicans have fought every step of the way just to retake office against any progress that the economy may make. having said that, the quick economic question. if 70 percent of the economy is consumer demand. spending and if they don't have money and can't spend and there's not jobs, it's a circular thing and the biggest asset the consumer has is their home and the housing bubble created this so, whatever stimulus package comes out, seems to be should be driven back into the banks lower the cost of the house. the interest rate the monthly payment for 30 million homes. thus putting money back into

consumers pockets so they could go back and spend jobs to be economy side. now on the political side and this is just a question. maybe you can help with this or not. i've watched bane around the guys try to fight every step. is there any sense for the president to work closer with the governors across the country where they can't print money? they have real problems to ground to solve and if he worked closer with the governors, they may drive their senators and congressman to say, hey, support this project or this stimulus bill or because this will help us. so two different questions, i'll let you answer to that. thank you. host: go ahead. president richard nixon created revenue sharing back in the early 70's will the united states had a - those days what

was considered a fairly deep recession. unemployment hit 70 percent. probably a pretty good idea and because we talked about earlier. the states because they have to balance the budgets are engaged in massive antistimulus program now. raising taxes on residents and combined cutting services. massive cuts in services across the board and so therefore, some of the federal government is the only government in the united states that can legally run a deficit. therefore, although i think there's one state without a balanced budget requirement. basically the federal government is the only one that can run a government. it can use it's powers to give more money to the states in order and do it in away that not only bails out the butt but helps stimulate the economy. host: one last call for the guests. ohio. democrat line. hi. there? caller: hi. there. i was wanting to ask a question

of your guest. i see he's with the - chief correspondent and i was wondering, when they go out to write their stories and write articles about this, doesn't anyone go out and inquire or look around these towns all over this country? i've noticed that everywhere, when you travel, and my second question is, i wonder why they don't lower the interest on these loans and mortgages. if they were running a 4% loan, look at the people that could pay their loan and plus even pay action extra. host: anything you want to talk

to there? guest: second caller in a row that asked this pumping money into the economy. when your sitting in a house worthless than your current mortgage you have a problem. each at 4% you don't have a big incentive to refinance and taken to old mortgage when the house is worth potentially less. there's policy responses to that that we've been basically not able to achieve. banks or bobbed holders appose them or congress couldn't see it's way clear to that. but it's a huge drag on the economy and so, therefore trying get the housing market through, requires a policy response. which we so far haven't been able to muster. host: what else should we think about or look for economically in the weeks and a month or two ahead? guest: well, i think everybody's eyes are on the politics right now and i think

it's unclear what will happen november second. republicans will clearly make gains. what the actual shape of the congress after november second. what they attempt to do the lame duck session for those still there and what will happen in the new year, i'm afraid my crystal ball is cloudy on all of that. i do know that a lot of things need to be dealt with. the government doesn't have a budget. the tax cuts will need to be dealt with. there's each things like the doctors fix in medicare that will come up. i think we're going to' see a lot of fiscal issues. sort of meat and potatoes because the calendar is driving, they're going to have an economic impact one way or the other. think you're going to see most politicians. republicans or democrats will say, how to we resolve the short-term issue we have to deal within such a way to spur

economic growth. host: senior correspondent for the fiscal times. go to fiscal times.com for more of his reporting and other items on the economy. thanks for your time this morning. guest: thanks for having me here. host: we'll expand that discussion. to talk about mortgage for closures around the country and how bad things are. what might be done about them. we'll have a separate line for those going through a forecast or about to and are involved in one way shape or form. we'll do that in five minutes. let's talk about the missouri senate race. jake, explain first who are the two candidates and what they are bringing the the table and what the case is for the voter? guest: really compelling race

in missouri it's a battle of political heavy weights. the missouri secretary of state. many folks may recognize the last name of her because it was her father. exactly 10-yearsing a today that was campaigning for the united states senate and was killed a plane crash and of course, he won and his will was a pointed a seat and she later lost but now the doubter is running for the seat in her own right and she's vying for a place. retiring republican senator up against her is roy blunt who is a congressman for southwest springfield, missouri. at one time this was perceived as one of the democrats best chances for turning over a gop seat. now the polls have gone in the other direction. the economy remains sour and it looks like for the moment, it's

roy blunt's campaign to lose. host: what's the money? what's the advertising been like? guest: um... it's been every second. every show you watch, you're going to see not only advertisements from the campaign. not only advertisements from the party, but also these third seat advertisements. these groups. american crossroads. chamber of commerce i believe is running ads here. they're in the news lately. also we recently had annra ad tar ge targeting robin. you can't turn on the television without seeing 1/2 hour blog where each going out. sort of made no pretense about not going negative. there's negative campaigning and

robin is hitting more for being a washington insider in congress 14 years and roy hitting robin in on the fact that he thinks she dealt with pelosi and obama. interesting because robin never serveed washington, just in jefferson which shows the republican strategy is if they're democrat even not passed they're going to vote with the current leadership there. host: touched on money there. we read this week the democratic senatorle committee is scaled back a bit for robins. that true? guest: they're very sensitive about whether or not they're scaling back. the reason is not they don't only want to be seen as raising the white flag but also don't want to discourage their candy kate ir they're not funding adds as previously.

of course ad buying is fluid but it's a level of confidence that you want to spend less close egg closer to election day. they have to scale back with the spending in missouri at a time when robin is struggling in the polls and they're looking at other races. most noticeably in the desert. so the whole map plays - there's a dynamic that has to do with missouri. each if nevada is on the other side of the country the money democrats spend there will effect here. host: talking about one of the senate seats in play. one of the many seats in play. jay wag maybe is political reporter for the st. louis dispatch. one of the reisn't debates here on c-span. social security and medicare

came up. we'll look at a short bit of that and talk to you for a second or two more. >> someone said over and over again you thought medicare should never have been created in the first place. you said it congressman. i didn't make this up. you said more than once so to come in missouri and say you're a defender of medicare you're the only person i know that's bragged about cutting medicare. you need to stand up on your record. if this is what you believe, talk about it. >> her comments are just like thes. phoney and misleading. i've never said i was not for medicare. i've never said i was not for protecting medicare. >> you said it shouldn't have been created in the first place. >> you do not have me on tape saying that. >> we'll roll it later. host: what issues resonate with folks in missouri right now?

guest: well, you know on the ad both sides have one arm misleading advertisement. the republicans say, well robin will vote with - well the democrats have taken extrapolated things and they - the - they might not get, despite all that back and forth there's three issues. economy, economy, economy. and matt said, st. louis now. the analyzer state through ri. last year was purchased and an acquired by a o ko company, bel brewer. state that's slowly seeing this erode and looking for solutions in the new economy. we're not as hard hit but we're struggling and that's the key issue. people will vote with their

pocketbooks. he was sc she was viewed as a sharp candidate. no candidate seems to be able to drum the economic atmosphere so, i think they may score points with the medicare and social security, but you know that's just on chatter to the real issue of the economy. and in the voters mind it's the economy, not doing well, the democrats are in power and that's who they're going to take it out on. everything else a distraction. host: as we wrap up. any big name visitors either from the white house or from gop leader? what will make the difference one way or another in this race? guest: i was surprised so see any big name democrats. joe biden was here but when the president came in earlier this summer he did a fundraiser and

roy blunt used that image in the commercial against her. i continue think that will happen. roy blunt will run the clock i think and i don't think he'll risk attracting attention by bringing someone in. it's going to come down the only way i they ron can overcome the deficit in the polls is if she has a sprint to end all sprints and perhaps roy blunt has some type of stumble down in the end or the - something happens nationally. the so-called october surprise. this does not look like democrats should be able to take this seat. host: political reporter for the st. louis dispatch. up dath us. thanks for your time this morning. guest: thank you. host: we'll continue to talk about these races and remind you to find more campaign

information. get more information at c-span.org. /politics. now it's john taylor at the table. president and ceo of the national community reinvestment coalition. you can't pick up newspaper without seeing the word foreclosure in there. how bad is it? guest: pretty bad. we're in foreclosure are really the enemy of any economic recovery in the country. we're looking at a million a year now as before you might see $250,000 maybe. and there's at least 11,000,000 more on the horizon so a lot more than we've actually seen. it's something we really need to deal with if you're going to see hope of economic recovery in the near due future. guest: millions of homes and then the legal problem. what's happening there? guest: there's a system called

mortgage electronic system that allowed the big banks in wall street to grease the skids so millions of loans could be securitized. turning out too fast because they didn't have due diligence and the kind of detailed record keeping and production of documents you would normally have when you have a mortgage given in a note, that you know, that in fact those document where is sort of finding some of them were plagiarized. some were sent unsigned and some even with people that paid off their mortgages in this quest for speed to push tremendous amounts of product up to the secureization market, the quality control that normally you have in these processes was already thrown out the window. host: some of the big banks and lenders put a moratorium on

foreclosures. what should people take on that? guest: think that's good idea. we need to take a step back and make sure families are in a position to continue to pay on a mart gaining but for a modification or area finance. maybe a different interest rate and principal reduction. maybe using government's program. there's a number of things that can be done to keep those families in properties to prevent those from happening. problem is there's such a backlog now paul, it's next to impossible for those working with the homeowners and lends in services to try to modify the loans to be able to do night timely manner. moratorium would be a good thing. it would help all consumers or homeowners. those like myself and i assume you paying fort mart gauge on time would be limiting the foreclosures making sure people get loans that they should have

got then the first place. reasonable interest rates and terms. no documentation and all the kind of abuse of processes that got us into the mess. host: make this special point for the viewers. over the next 35 minutes we'll take calls specifically from people involved in one way shape or form in foreclosure. maybe you're an owner or about to have foreclosure. maybe you foreclosured. maybe you're in the business or a renter who's owner is being foreclosured if you have a connection to this directly, we invite your call. that number is 202-7370001. national community reinvestment coalition president and ceo. this latest blanket over the mortgage situation with the paperwork happening too fast. what's the broad picture then for housing and then connect

that to the economy. will it extend the problems for a certain period of time? guest: well there's no reason foreclosures on properties a pan donned that a sorry can't shouldn't go forward. but this quest to sort of high speed train foreclosure. the foreclosure mills created by a number of the services where they've hired the attorneys just pushing these things so fast. even people paid off the mortgages are getting caught up and getting foreclosure notices. to the extent we're able to take the time, whether through a moratorium or just through appear idea of freeze to help those in a situation where they can be assistd to stay in their homes because they're still working and still have the ability to pay. there is disconnect between the amount of mortgage and principle because they got alone unsustainable to the extend we with really not just have a freeze or moratorium but make

sure we take off the table from the foreclosure amounting foreclosure problem, those who are responsible homeowners that continue to pay, that'll help everybody. host: not everybody shares the moratorium on foreclosure. >> not someone that wants a nation wide moratorium? combes guest i think if there's question about the documents there. it's appropriate move. those should be halted until the case files are reviewed for all pertinent information. new affidavit executed where the original was not sufficient. all those processes need to be in set. no, i think a lot of sad fact is a lot of the vacant property is investor owned and we think the regulation should be that those

owner occupied home that all the policies have been followed. even there, it may well be the case a sense of payment has been made and at that point, it's necessary to move on with it and it's tragic and i don't like it but the market has to clear and if the family can't afford making even a modified payment then something else has to happen and i regret it but that's where the system has to work. host: sheila bear will be on tomorrow. john taylor, your reaction? guest: she didn't totally disagree. she said we should help those in a position to be helped and if we have vacant properties we should proceed. the problem is you need a space in order to do that if there is high speed train and there's all the lawyers and securitized services pushing masses of people through the foreclosure process as quickly as they can, the opportunity to respond to

those that could be kept in the home and have a decent mortgage disappears. it's important to take the time to process a lot of the millions of families into loans to remain responsible homeowners. host: democrat line? caller: good morning. wanted to make a comment and see if this has been allowed or addressed before. the ability to make these loans seem to be me to be tied back to where, i'm old. and - credit scores. back when - i was doing things, you know, there was no such thing as credit scores. you went in and it was your ability to repay and if you had enough collateral and now the credit scores give away as long as you can borrow from one credit card to pay another and

you keep the credit score good, then you can be loaning things. i want to see what your comment was on that. i'll take your answer off line. guest: yeah i think the lady hits the nail on the head. we got away from what was a very good and responsible system of finance. not only mortgages but there types as well. they actually didn't make loans to people if they didn't have ability to pay. when wall street said, make any loans and we'll bye what you want. there's no question that's what drove this whole thing. lot of investors money looking for a home and investment banks wanting to secure mortgage backed securities and they sent out and said, we'll buy anything and the rating agencies complied and slapped triple-a ratings on to many mart dpajs that

shouldn't have been made in the first place a lot of people in the loans thought, i wouldn't be getting loan if they didn't think i was capable to pay this back. the lender says my property will grow, interest rates will drop. all these things because basically the lender concerned about getting fee at that point. they were done with it. i think this caller really gets at the heart of what the problem is. we once had a financial services sector that made loans to people that could afford to pay it back. ironically these new financial reform had legislature language that said you can't make loans to people unless they have the ability to repay it. the fact that we have to legislate that shows how far we are from the basic fundamental responsible lending practices we used to have. host: pensacola, florida.

dan? caller: good morning. what i'd like to talk about if i can make a comment and then ask a question, if my particular area. first of all i'm a real estate approaching and have been for almost 30-years so i'm well versed with the market and here specifically. for - i typically have specialized in waterfront property and in this area i've seen it and homes in general almost de appreciate 50% if this continues we're going to have a serious problem in this area. we've been triple what mied with an economy that's gone bad. hurricane phobia and now bp. it's been virtually impossible to sell property because of what's going on with the bank criteria for getting loans. i called on the lines that bee's foreclosured. i have two loans both with bank of america. one i'm giving back. the other one i want to keep.

i've tried do alone and i can and when you talk to the people that actually take the application they say no because you still own the other you can't do 1/2 loan. you need to get rid of the first one. you know, this is the stuff that goes on. everywhere you try and turn, you hit nothing but roadblocks. there's nothing to help the consumer. you make phone calls and end up with recordings and they say send an e-mail. what the consumer needs is some kind of advocate either specifically for one person per person to deal with these damn banks. sorry or something along those lines. i'm just - i'll stop right there. host: all right. dan, thanks for the points. speaks of the process and the consumer. what can you tell us? guest guest this caller hits the nail on the head. here you have a broker and someone that knows the industry caught up in what is just a

spiralling de value asian of property. he's trying work on a reasonable solution. so he's willing to give up one property and trying remain in the other and what he's finding is going through the government program by working with lenders finding it difficult to navigate through the process. this is such a common story. when people talk about they should foreclosure and get all these people out of their homes you have to realize it's people like dan and millions of you there people out there who are in a position to do something reasonable but they need cooperation and that comes during a period of time where we have a moratorium. someone has advocate for him. he's right. there has to be someone in the middle of the process. legal services attorney. somebody assisting so dan knows his rights and the lawyer understands they're dealing with someone that knows what the options are so a reasonable solution works out.

modification so dan can stay in his home and millions of other people. look, talk about waterfront property going down. every time there's a foreclosure in a neighborhood the neighboring houses lose that much more value and then when there's multiple we all lose more value. we have to stop the bleeding on our economy and market by helping folks like dan and other responsible homeowners to get into a situation they can contribute to the economy and continue to contribute to the real estate tax basis and stabilize properties for everybody. host: john, independent caller for john the lore. hi. there. caller: good morning. i see two problems i'm going to address. fannie mae and freddie mac in 2001. the republican party wanted to destroy freddie mac and fannie mae. what they did was that they took

in, and just basically the - got rid of those who were running freddie mac and fannie mae and they put in those people in about 2003 to run those. at the time that happened, freddie mac and fannie mae went in and bought these bundles and this is part of the problem. and i - and i - your grinning at me. i understand i don't know what purpose there. is other thing too is that, just like the oil industry. we have put mortgages into the commodity industry, and this is the part of the problem, and thank you for listening. host: john let me get to the fannie mae and freddie mac part. you have served on the board is of each of those? guest: yes, i was a big critic

of them for what they were doing and not doing. i tell you, there's been so much miss information about the role they played. there's no question that staying out of this. predator lending for a very long period of time. they did very little subprime lending from 2001 to 2003 they lost a trillion dollars of market share to the so-called free mark total wall street. the subprime independent mortgage companies selling directly to wall street, just ate fanny and freddy's lunch to the point where they are going to get involved in the business. but they followed market. no question. when they jump in they jump in both feet. have a tremendous amount of product. they're in the position and this is where i don't know - i thought the caller would go in

this direction. millions of loans that are potential foreclosure or facing foreclosure. they have the ability and they're under the conservatorship. they have the ability to refire these loans. probably in a way that anyone on wall street or the ban can being do. they really are in the position to be able to refinance the loans because of law. the fact they they own these loans. but they're not. they're doing little. there's a lot of decisions that ham up program has not done. they've only done so many mortgages out of 7-8 million loans but there's the harp program. people don't talk about harp. think that's the correct

pronunciation and they want to refinance these so people can stay in their homes and it's time for them to step and modify loans so people can remain in their homes. host: rachel is involved in a foreclosure. good morning. how are you involved? caller: i'm an attorney for a nonprofit organization and i'm working with different organizations and homeowners beginning like in the 1990's. first dealing with predatory loans and then dealing - you know there were those and then the reason those were created was there was so much money in the market from wall street in securitizations that they had crazy loans being made, it's because there was so much money. that there's so much money available they wanted to put homeowners and make people homeowners to get them into

mortgages and specificly, paid back and has learned, over the years on c-span - which i love. thank you so much - that basically the credit defaults is in everybody's financial interest to make any loan, that's high you have to legislate unfortunately, to make people not make loans that can't be repaid. . .

she has given no reason for her denial. i have another homeowner where she fell behind in mortgage payments because her mother was sick and she was helping to care for her mother. the mother eventually passed away and she gets together all the money to pay backer mortgage to her lender, submits it, the lender, this is $4,000 and she owes $3,000, she submitted to the lender, but lenders sent it back to her and sued her and says you owe us

money for attorneys' fees and costs. host: any specific question for john taylor? caller: on the national level, the servicers have a super- incentive to be able to have an incentive to foreclose rather than to work with homeowners. because of all the fees they are receiving from foreclosing. i am wondering if there is any legislative policy efforts to address this fact? paying think that servicers incentive payments to modify is sufficient. it seems there needs to be some enforcement mechanism. guest: she covered a lot of things. let me start with one of the topics that she really hit upon as she was giving her example is we have a lot of people getting

old and people are dying. , the spouse left the house and the payment may be reduced but there are a lot of seniors and elders who have been impacted by this whole foreclosure debacle. there really is a dire need for lenders and servicers and advocates like rachel to work with those populations to see to it that this generation, for many of america's greatest generation, for them to stay in their homes and be responsible homeowners whether it is to reverse mortgages or other kind of mortgages that keep them in their homes. that is something as a society that we need to be more conscious of what is happening to the elder americans in this situation. as far as legislation, we are in the middle of what will be an election next month that will

decide one way or another what direction we will head the in. trying to get legislation done between now and the end of the year will be difficult at best. there is a lame duck session. there is a bill called the community reinvestment act which that innly law short of what happened in these neighborhoods. this talks about the predatory loans. these are independent mortgage companies that had no regulation. there is an effort now to extend that law to cover those independent insurance companies, investment banks to insure that there is more reinvestment and responsible reinvestment in these neighborhoods so that rachel and the clients she works with and millions of people around the country who are looking for equality mortgages and quality work out and refinance is that they have access to them. people should be looking for where that bill goes. i think it is hr 6334.

it is out of barney frank's committee. it talks about responsible lending instead of predatory loans. host: our guest is john taylor. we have about 50 minutes left with him. marino, calif., kathy good morning. caller: good morning. i had a couple of points. back when things were going like crazy about five years ago, i personally knew -- in the case of people flopped and homes, your average americans doing it, i saw it putting gasoline on the

fire. in england, -- i live in a tourist town that is basically our biggest industry + agriculture right on the coast of california. prices are already very high and they were going higher. i have heard in england and hot spots that have something written into the deed that you have to stay in three years, that's it, unless illness, or your job would overrule that. i do not understand why something was not done all over our country in that case. i saw how was ridiculous. in the long run, i could see how it was going to hurt everybody. orlando,'s hear from florida first. you are involved in a foreclosure? caller: yes,help, help, help. i my small-business owner in

orlando, florida. i am a retired military man and my wife when a small settlement and shared with lottery winners. bankamerica quotas and we switched from suntrust to bank of america. once we got there, we build this business here but business is not upside down. we owe a balance of about $94,000. the problem is, we have a sale for the business and when the bubble burst, the new buyer could not afford to pay the taxes when the bubble burst. she said she is in a frenzy. they paid the back taxes, about $16,000. we paid them $5,000 of that and that left about $11,000 and we want them -- they want us to pay a back in eight months with the economy like this. i have eight independent contractors trying to keep their

family in a low-income area because that is where we invested, back in the low income area. this bank wants me to pay, in addition to the mortgage, they want me to pay them $11,000 back by january. the money is not there and now, we are not behind. we owe them a few late fees. guest: this is unfortunate because the anguish, the paying you hear in this call -- the paint you hear in this call, the earlier cathy -- the early caller, kathy, people were buying multiple properties and flooding them. this whole system was a giant

ponzi scheme which was essentially flooding the market with bond financing that said two lenders and brokers for them to do a lot allowance. -- a lot of loans. it did not look to the future with inflated property values in florida and california. after brokers got their fees and put people in unsustainable loans, as rating agencies slapped aaa ratings on to these loans, the investment bank people took literally millions and millions of dollars in bonuses and salaries, the end is that we are paying the bill because people like kathy and others in florida and california and many states are now trying to figure out how they will sustain themselves. what we really do need is that we need the banks to be collaborative on this. many of them are saying they

are. bank of america said they issued a moratorium on foreclosures of maybe that will be helpful. we will see. we really do need to figure out workable solutions. if the solution is only that we push more people into foreclosure, i would say every citizen in this country will lose. host: that is a sampling of the foreclosure stories in the paper. speed equals money in foreclosure machine. documents, antlers or race or rewards left homeowners and the darker you can read that in the post this morning. mortgage system woes are not isolated. they're not just talking about robo-signers, they are talking about folks who calculate the amount owed on loans. the whole story is focused on those funds. that is in the wall street journal." they are focusing on bags,

builders, investors, reexamining loans is a mixed bag for banks and homeowners. this is in the real-estate section. this is the front page, mortgage damage spread. they are talking about the fast- paced modern financing colliding with a slower machinery of the u.s. legal system. the whole thing might take awhile to work itself out. robin, north carolina is on the line, independent caller. good morning. caller: hello and thank you for letting the call. this is my second time. i was too nervous the first time a few months ago. i think i will try. this is an idea that is out of the box that occurred to me before. i realized that china has a great deal of our money. they have bonds and they have to keep recirculating. they don't like that. especially with ben bernanke's statements, they fear that we might be easing and developing

our money which means their money is worth less. they were preferred to invest in something. since they have a large sum of money and a vested interest that america does somewhat well to pay them back, and let's throw in this, the imf in the past has been able to take smaller countries and tell people how to raise their economy. i am wondering, now with the wto being more and more a level playing field, here is an example -- five years ago, the chinese national offshore oil co. tried to buy chevron but for national security purposes we would not let them. dubai tried to take over the course but we would not let them. the chinese were permitted to take over an oil interests in some texas companies. things are easing. is it possible that the chinese

would be able to dump about $2.50 trillion and take over all of those bad loans from fannie mae and freddie mac? what would be their incentive? whether don't know the chinese government would want to do that. their incentive not to do that would be the same sense that most people around the globe have which is they don't trust the united states as an investment economy and the lager. that is a real problem for us. the federal government and the federal reserve is the primary issue were of investments and of securities. we don't have of liquidity on the market that we used to have. frankly, people got burned and that is from all around the world including china. the chinese government lost billions of dollars investing in mortgage-backed securities that wall street labeled as maaa

securities that were based on dubious underwriting characteristics for these mortgages that collapsed and failed. there is a lot of skepticism about whether it is safe to invest in america. i am hoping that the dog frank villages -- which has legislated against the kind of practices that it will signal to the rest of world that it is safe to invest america. the of notion of america -- of governments coming back and investing is a ways off especially at the scale this caller just talked about. host: you were raised in the housing projects of boston. not too far from boston is falls river, mass., go ahead. caller: the housing in florida, i move to florida. they told me to put $1,000 to get a house.

i got the house bu. i moved in and started working. they say that you buy the house as is. i made the payments every month. they said for years that i am the best customer they have. it is an investment and kept growing from $72,000, that house came to be one of the best ones in that neighborhood. it was close to bush gardens. it became like $200,000 on the market. because i made a mistake -- it wasn't my mistake, [unintelligible] in one year, they did not put

the insurance on the house, they said they forgot. someone broke in the house, nasty water was coming inside. i called them and said i need insurance. they said they will call the insurance and they called me back and they said you don't have insurance. vague -- there is supposed to be a policy for that. i paid the money and they were supposed to pay everything. host: what happens now with your situation? caller: they pushed me. they said we did not make a payment. i use the money to fix because what herld not guest: fix comments reminded of is that regulation matters. scarlotta people who -- there

are a lot of people and the patron saint of deregulation was ronald reagan and he did a lot to make sure that we reduced oversight and regulation of financial institutions and that continued through the bush administration. the problem this lady has of not having insurance or adequate coverage, in most states, this would not be something that would be left to chance. there would be oversight to make sure those things were properly in place. there with the protections that insurance companies on fairly withdrew their insurance. regulation matters and this is part of what got us into this mess. consumers, average americans need to be protected enough so that agencies are overseeing various industries to ensure that they are not abuse of that there is no neglect. callslet's take our last

back to back. lebanon, maine, you are first. caller: about four years ago, my husband lost his job. he was laid off. our house went into almost a foreclosure. we were contacted by many people go over to help us with their mortgage and make sure we did not lose our comp. we went into that category and got help on that. we thought it was held. some residential mortgage guy called us and said he could help. they had somebody who would buy our home as long as it appraised at the right value. they came in and apprise the home more than what we thought it would appraise for. we closed on a with the option to buy it back within three years. someone was investing in our home which was great spirit.

we signed it and it was an uncomfortable situation. we came to find out that almost one year later when we millibar mortgage payment in like we were supposed to, we got our credit back for it was supposed to be and in about a year, we called everyone to purchase our home back and could not get in touch with anyone regarding our mortgage. about three or four months past that when we try to get in touch with these people, a share shut up at our home that told us we were in foreclosure. these people that we mail the check to never had their mortgage. now we were in foreclosure and the people who bought our home or in foreclosure. host: fla., outside orlando, you get the last word before mr. taylor wraps up. go ahead. caller: thanks very much, gentlemen. in may of 2006, the office of

federal housing enterprise oversight issued a report that essentially proved to us that fannie mae and freddie mac ought to be released from the oversight of the federal government or at least they should be privatized. that particular report goes on at length about the various types of inappropriate accounting methods and inappropriate tactics that the officers were using at the time. in particular, it showed that fannie mae started buying and guaranteeing mortgage-backed securities in 1981. at one point in time, their chief operating officer wrote to the ceo that the old political rally was that they took no prisoners and fatal opposition.

-- and faced little opposition. i am not sure a takeover of them may and freddie mac will assist in this environment. i want to know what your guest thinks about that. guest: fannie mae and freddie mac, for most of their history up until the early 2000's, did a good job of expanding access to housing and mortgages to middle- class america. it was all done with prime lawns, very responsible securitization. the criticism is that they were not doing enough to make sure that the chipmaking the way up the economic ladder also had mortgages that were secured by fannie mae and freddie mac. these are problems, not subprime lines. when fannie mae and freddie mac lost a tremendous amount of market share in 2001-2003, jumped full force into the subprime market and began to offer loans that were not as

strong from an underwriting perspective as the prime loans, loans that ultimately because they were riskier, were loans that collapsed these institutions. they proved they could do the right thing. if there is adequate oversight and capital reserves, there is no reason we cannot have a quasi-private vehicle that helps responsible ownership to be the law of the land. host: our guest has been john taylor. ncrc.org is the website for his organization. we have about 40 minutes left in this saturday edition of "washington journal," coming up after this break, we'll look at a steady that looks at the cost of college dropouts to the american taxpayer. first, a look at this week's news from the pens of political

cartoonists. ♪ ♪ ♪ ♪

♪ >> "washington journal" continues. host: our guest is the vice president's of american research. the institute put out this new study finishing the first lap, it is called, the first -- the cost of dropouts from university. what did you find out? guest: we are embarked on something that is the completion agenda. we have opened up colleges and universities to more and more students. we recently discovered that many

of them are not graduating. the conclusion agenda has been focused on the issue getting students to cross the finish line and graduate. this study is about a basic fact that you cannot cross the finish line if you stumble in the firstlap. if you can't finish the first year, you will not finish college. i have no idea how the big the numbers would be are standing. about 1 million students per year start college and university as full-time new beginning students. this is only four-year colleges. these are students who packed up and the parents dropped off at college. they are all going for one purpose and that is to get a bachelor's degree of about 300,000 of them each year do not come back the second year.

we all know students this has happened to. we know it is a tragedy for the family. it is a heartbreak for the kids. hopes are dashed, time, money, all of that is gone. this report says that there are substantial costs for taxpayers that have not been documented very well. over the last five years, $6.2 billion in state appropriations, money that the state legislatures have appropriated to run colleges and universities, mostly public but in some states private ones, $6.2 billion went to colleges to educate students who don't come back for the second year. $1.5 billion in federal grant money, $1.4 billion in additional state aid directly to students, those are taxpayer dollars. to me, that is a lot of money. i want to go back to one other issue -- we know this is a story

that is sad for individuals but they are also paying over $8 billion in tuition to these colleges and universities they don't come back to for a second year. some of these students will end up someplace else. they may end up in another college or transfer or they may drop out for a while and come back. the fact of the matter is, most of them are not this is a very expensive proposition at a time when states are running out of money. host: let me invite the viewers to fund them with their questions or insights on this issue about the cost of college dropouts to taxpayers. the phone numbers are on your screen our guest is mark schneider, the vice president for american research. how do we define a college dropout? you said some might leave one place and go to another?

how to quantify that? >> the federal government has a statistical system called the integrated post-secondary education data. we could go into why this is not the kind of data system that the nation needs, but basically, in order to participate in federal student grant programs, title 4, universities have to report to the federal government, and students are in this cohort that our first year students and then they have to report how many returned part-time or full- time. the cohort this is defined on our only full-time beginning students and represent half of the students in the united states. these are the most successful students in the united states, by the way. a drop out in my report are the students who enrolled in year

one and were not enrolled in that university the second year. there is not a national system that tracks transfers. from other surveys, we know that most of the students who do not come back for a second year are not in higher education years later. host: you define a drop out that what are the reasons these 300,000 leave? guest: this turns out to be the most interesting debate that is going on at the current time. we know students are coming into college and maybe they are not ready for college. they have spent time doing the applications and spent time about thinking about getting into college and not thinking about what they do when they will get there. many students take remedial courses and that is one of the major risk factors. if you do remedial education, you don't [unintelligible]

about four-year colleges. remediation rates are very high. there is a tendency to say is the students' fault. they are not ready, too many are going to college, and there is some truth to that. when we look at the performance of different colleges, we can see that some schools are taking students with the same kind of challenges as other schools and they are doing a much better job. one of the messages in this report is that we really need -- this report is aimed more at state legislators and trustees. i think we have to develop an incentive system for states -- states have to develop incentive system to get their colleges and universities to do a better job with the students they have. i also believe that we really need to embark on a serious crash course on what works in keeping students in school. our playbook is almost empty in

terms of trying to figure out what it takes to keep students in school for the second year. i believe in states like ohio, we need to reward schools were doing a good job and let schools are experimenting and work hard to identify what works for the -- to increase students' success for their students. host: phone calls are coming in and here are more statistics. the u.s. spent more on higher education than any other nation in the world, about 30% of students who started college this fall will not return to the college next year. that is something our guests pointed out and 60% of students graduate within a six-year span from four-year colleges. a democrat is first. caller: i met independent actually. i'm a recent graduate of the university with a bachelor's degree. at one point to recognize that the amount of money that the

federal government is putting into our education system could actually be creating an opportunity for economic advancement? many jobs require on-the-job training. a person with a high-school diploma can get this kind of job. what do you think about that? guest: i think there are a couple of points inherent in that comment. even though you mentioned the federal government, the fact of the matter is that by far most of the money that is spent on higher education comes from the states. most of the money that comes from the states goes into supporting state colleges and universities were most students go. that is the first point. the second point has to do with what some people call the upscaling of jobs and whether or not you need a bachelor's degree to get the kind of jobs

that many bachelor students are getting. i don't understand the point about barriers. many, many jobs need a bachelor's degree that may have not required that in the past. employers are paying a premium for workers with bachelor degrees. that is what students want these degrees. right now, the market says, yes, we need more students with bachelor degrees given the high quality skills that the 21st century dictate we need. we do need to think about why the portfolio of training for americans to since -- we need to think about such dividend programs and the apprenticeship programs and associate degree programs. i agree that we need a wider portfolio of programs of high

quality for training the next generation of workers, but the students that i am talking about in my report are students who have chosen to go to four- year bachelor's degree granting institutions. their goal is to get a bachelor's degree. host: mark schneider is our guest, vice president of the american institute fora ute, air.org iseir.or the website. our next call is from alexandria, virginia, republican, good morning. caller: in the study, i feel like some of the state schools has selectivity of the students they are bringing in, in your research, was there a difference between the racial groups or

socio-economic groups, is a problem in one sector or across the board? guest: there are two different questions i believe that i heard in that comment. the first one has to do with the selectivity of school. most of the students got to go -- don't go to the flagship campuses. mustards end up in regional campuses, the state systems. most -- -- most students end up in regional campuses, the state systems. that is where most of the drop out the car is in schools like that. if everybody was as selective or the students were in harvard or berkeley, this would not be an issue but most foods are not going to schools like that. we have to recognize that. unfortunately, again i have to talk about the quality of our did not been sufficient to answer the question about

different ethnic groups. in terms of graduation rates, in fact, the graduation rates for blacks and hispanics are 20 points lower than for whites. host: atlanta, barber, democratic line. caller: thank you for letting me speak. this has really what my appetite. as a retired teacher, i am appalled to see how low the bar of education has dropped over the years. i think some of these students leave because they are not prepared in high school. i know for a fact that sometimes in college the professors are making the kids read out loud because they don't know how to read. motivation is a very important thing. i think we have let our students fail because of two things -- the outsourcing to other countries. there is very little motivation when you graduate from college when you have to pay a huge bill on your mortgage, on your

education, and there is no jobs. the other day i was amazed to hear a commentator say that the best thing that college graduates can do today is to move to japan, china, the philippines, or india. and learn those languages because our corporations are now making sure that their goal is to put their executive offices in this or that country. host: there is a lot there. our students ready for college and what about the jobs? guest: let's start with high school. i care very passionately about that. i have done a lot of work on charter schools as alternatives to existing pathways through the k-12 world. i think we are engaged in a serious reform movement in the united states to try to fix k-

12. i agree that is a serious challenge. however, and this tries be crazy, college professors, i was 1 for 30 years, they say the high schools are not go on doing a good job. the high school say the middle schools and into a good job. the mills closed elementary school is not doing a good job. they say the parents are not doing a good job. we cannot write off the next 20 years of kids waiting for pre-k through university. we have a population in the pipeline and in college and we have to do a better job with those kids. host: you talk about incentives for the states. another example of what is good out there but broadly speaking, what should be happening? guest: right now, almost all the budgets for higher education in

universities and colleges are based on seat tiem. are the students there when the snapshot is taken? as long as those seats are filled, the college or university gets its allocation from the state. as long as you have a constant flow of students coming in, the budget is not affected. ohio has a performance budgeting program where about 10% of the money is allocated to schools on the basis of how well they are doing in terms of retaining and graduating their students. if there is the kind of money on the table, then colleges and universities will try to figure out how to get that money. we have gone through different periods of this in the past four

other states have tried this. the usually tried when economic times are bad light now. and then economic times get and all the sudden the incentive to be hard-nosed goes away and these programs disappear of become smaller and smaller. ohio, again, i like that example and texas is another example where there is serious money on the table for doing the right thing by your students. host: let's hear from shreveport, louisiana, good morning. caller: i wonder if you have looked at the difference between male or female dropouts. the reason i ask the best is when my husband was in college at the same time i was, he dropped out that it was an excellent student in high school. my brother in law did the same thing. tax laws did in high school and

dropped out. my son did the same thing years later and the remarkable thing is they all went back. they all finished. they also exceeded. it was just the initial year, that first year that they did not know what happened but they just didn't finish and it took them a year or so to get back and then finish. guest: many people talk about boy problem. actually, if you look at the statistics in terms of enrollment and graduation in colleges, there really is a growing imbalance between males and females in both enrollment and graduation rates where females are doing a better than men. some people argue that we have to go back to early childhood and the early grades where the

schools are not designed to accommodate the behavior patterns and the needs of boys. i will not go there but i can tell you that in terms of graduation rates and the romans, females are doing far better than males throughout the united states. even in areas that were traditionally male-dominated, females are now in the majority in terms of enrollment. there are few fields like physics which is an area which tends to be male-dominated. in general, many, many programs, many at the college level and the gradual level are increasingly female host: back to these statistics from the american institute of research. they have found that the state to proper it almost $6.2 billion to college and universities to pay for the education students

who did not return there for a second year. the federal government gave over $1.5 billion in grants to did not return for a second year. at this together, almost $8 billion. it may not seem like much with all the numbers we float around. explain why the number is in top -- is important to focus on guest:. most of the states are running out of money. most of the money in terms of student grants comes in the form pell grants and the bush administration and the obama administration have increased the amount of money that are going into pell grants. there's a chart that shows the amount of money on an annual basis is increasing dramatically. if we look at the state appropriation, those are increasing and state grants are increasing. when we talk about state money,

we are talking about $2 billion per year in state money and in over five years, i am projecting a florida but we are talking about lots of money in states that are running out. california, for example, is up close to $500 million over five years. theys a big state but don't have a lot of money hanging around. host: 1 million kids start college, 300,000 of them don't return to that college. you acknowledged that some of the move on to other schools. do you have a percentage of how many leave their current school go to a different school? guest: yes, the best information that i have is from a study also done by the national center of education statistics.

this was a survey in 2003 and three years later there was a follow-up survey to find the students. it was about 20,000 students. of the students in 2003 that were freshmen in four-year colleges, 73% of them were still enrolled in a four-year college somewhere. that is about the kind of number i am talking about. this is more accurate because it includes students who might have transferred. a few of the students have gotten degrees and have left the system. 27% of the students who are no longer in the four-year colleges, about 70% of those are no longer in the higher education system. maybe 20% of all students who started in colleges and universities are not enrolled any place three years later. host: we found this fact --

there is a critique of europe or from another leading researcher with an education department background saying that centers to focus on students the return to the originals will ignore the many transfer students to them that first year is not wasted. guest: in that same comment, the number is like 94% of the students enrolled somewhere else. i don't know where that number comes from ve. the survey i quoted as much more recent. the number i have comes from a national survey. it is about 70% of the students that have left of the first school in their first year and are not enrolled in a place according to this service. i don't know where the 94% came

from i don't think that is the real issue. the real issue is what about these first-year students? it is true there is a return in terms of income. all of it is not wasted. wasted is a strong word. maybe that is too strong think of it this way, there is this incredible sheepskin fact which means that having the degree gives you a bomb and salary and having the equivalent number of credit without a bachelor's degree doesn't give you. the sheepskin affect israel. this is what employers look for. finishing the degree has real economic value. host: let's get back to calls. michigan, independent, thank you for waiting. caller: i would like to talk to

mr. schneider. i have been a high-school teacher, a college teacher, a college coach, basically. i wonder if he has heard of bill gates. he was a college dropout. in a lot of money. i think he is one of the richest man in the world. bill gates aside, i was an average student in high school. i went on to a private college. i am 77 years old. i want to a private college. at that time, it was less than $1,000 per year for room, board, books, and tuition. today, it is $40,000 at the same college. the high price of education is atrocious. what is your comment about that?

host: to what extent are the students leaving because of money that they can afford it anymore? guest: there is a problem with financing. students to leave because of financial problems. we have to deal with that. i believe that the caller's comment about the high cost of tuition. that is a different issue and i think it is a serious issue. the cost of college tuition has gone up faster than the cost of health care. it has gone up faster than the rate of inflation for years and years. the real question is about the productivity and efficiency of the model of higher education that we have the united states. most campuses look like something that could have been found in the 1500's in europe. i think there will be real challenges to the existing model of higher education that we have in the united states at the current time.

online education is one example. for profits are another example that might challenge the existing structure. the small private schools or a lead will be around because there will be upper middle-class parents who want their kids to have that experience. for most other americans, the cost of college is a serious issue host: stamford, connecticut, republican, good morning to you. caller: thank you for cspan. one problem is a lack of maturity of many students going into school especially the man. i don't think we have many more. when we have achi beenckified in the last couple of decades. -- we c beenhickified in the last couple of decades.

we should set up the habitat where people do rehab in low- income neighborhoods or home building for people who are in lower income bracket. host: watertown, conn., independent, what do you say? caller: let me run through a few points. i am in the system. i am a college student now. i study anthropology and social sciences. i do is research pertaining to a lot of this stuff. your guest bench and the model being broken. you could not be more right. there is no model for higher education now. one minor example is you talk about how first-year students are leaving and why is that a bad thing. we have a society that promotes of these consumer choices and this topic around to different schools and competition.

there is an incongruity in that little metric of how people are approaching higher education. another thing is that people are not prepared for higher education at a bicycle. the infrastructure in our public school system is really bad. it took me a lot to get to this point. i had to love self correction. people cannot write anymore. we are terrible at arithmetic. there are all these incongruent say guest: is. guest: one thing that is also being changed and people are talking about changing is the amount of choice that students have. we have opened up the curriculum. we let students choose and create their own majors. one of the experiments that people are now talking about is creating much more structured

curriculum with your choices. this is something that is happening more the community college level that the four-year college level. it is a very interesting idea about trying to develop curricula that is much more focused and targeted at developing -- developing competencies and skills curren. instead of creating- smorgasbord, the choices get reduced and are much more focused on competency. that is a movement we need to what host: tennessee, republican loss caller: i have three granddaughters in college and two grandsons in ice cold. anybody can get into college. these tenets for admission are so low. if you fill out the application, you can get in. at graduation, they announce millions of dollars in scholarships. a small high school has been giving these out. many of these kids get thishope

scholarship and they only go for one year and a party hearty for the one year. if you don't put anything into it, it doesn't mean anything to you and these kids are getting in for free. it doesn't cost them a thing. we have lowered the emissions standards. there was an article in the atlanta journal a couple of weeks ago about how much money obama has supported to these historic black colleges. one woman said they take students that nobody else wants. we graduate them. i would feel better about that if she said we educate them. guest: the issue of motivation has been raised by several people. that is important. the issue of maturity is another issue that people have mentioned. these are the students that are coming to these colleges register for bachelor degree programs.

we have to figure out -- campuses have to figure out how to deal with the students because they are not doing their job with the students. that is the message to want to communicate. host: we have a couple of minutes left. speak about the federal government's future role in all of this. guest: it has been fairly limited up to now and higher education. many decades ago, the way in which the federal government would have intervened and support colleges was mostly through student aid t. he pell grant program is the major way they get involvedpell grants are in, day so they go to low-income students and are designed to increase access for students to make college more affordable. one issue we have is that pell grants have not kept up with the rate of inflation.

people are talking about putting more money and pell grants. rather than just increasing the grants, some part of them should be contingent on performance of the colleges and universities in terms of a student progression and student graduation rates. i don't think we should pump more money to colleges without holding them responsible for their success with their students. host: dallas, texas, line for democrats, good morning. caller: the problem of a lot of times is the sink or swim mentality with kids taking too heavy a load the first year. the statistics on burn out of the first semester or first year burnout are terrible luckily, i learned a lot of this stuff in my intro psychology class and the first semester. when i went back and this was a

junior college but when i went back 10 years later, there was a poster in the counselor's office that recommended first semester course that was 17 hours. these are tough courses. obviously, the people in the council of us did not understand the problems with taking too heavy a load. how much of this is due to burn out? guest: let me mention this a slightly different way. the kind of advice the students are getting is critical. i was at a conference recently where someone said can you imagine some colleges think of their students as clients? he said disdainfully. if you think of your students as clients and you are geared toward students success, they might rethink the kind of issues you're talking about. you might think about the course load. you might think about the kind

of course is that students might take so they would succeed. what other kind of student services that might be designed to support students better so they can get ripar? through? when you think of someone sitting in that chair or whether they have succeeded, it is a totally different mind set. the point is well taken. we need to provide students much more support in terms of student services and much better support. host: one last call. welcome area caller: the gentleman on television right now, he went to community colleges back in new york. back in the day, those colleges were afraid. what happened to those type of programs? guest: actually brooklyn college was not a community college, it was a four-year college b