guest: will see a lot of things. there is one we did dealing with college that specifically called "drawing in debt." there is one that i did invade the books but some efforts -- i did in may that looks at some efforts across the country to use technology to save a lot of money for the institutions and students do as well, if not better, then they were before. we have a policy blog where myself and other members of the team offered thoughts on policy issues and thoughts of the day not just with higher education, but with k-12. host: ben miller, thank you. that does it for today's "washington journal" and we will be back tomorrow. thanks for watching today. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> you're watching c-span, created by the nation's cable companies and presented as a public service. here's what we have coming up for you. at 1:00 eastern today, live coverage of today's white house briefing with spokesman robert gibbs. a midterm elections are one week from today and each night here on c-span we are showing debates from key races around the country. here's what we have coming up for you tonight. we'll start at 7:00 eastern with live coverage of the debate between candidates to be south carolina's next governor. an hour later the focus is indiana's senate race. we'll also show you a discussion with the tea party express.

and finally a pair of house debates from new hampshire's second district and pennsylvania's third. in the meantime live right now on our companion network, c-span2, a green energy forum, hosted by the atlantic magazine. panel discussion topics include energy policy and low-carbon economies and profiting from green energy. that's live right now on c-span2. c-span networks, we provide coverage of politics, public affairs, nonfiction books, and american his industry. it's all available to you on he television, radio, online, and social media networking sites and find our content any time through c-span video lie brarery. and we take c-span on the road with our digital bus and local content vehicle. it's washington your way. the c-span networks. now available in more than 100 million homes, created by cable, provided as a public service. the federal deposit insurance corporation is hosting a

conference this week on housing finance issues. conference looked at shifting trends in mortgage lending as well as foreclosures and mortgage modification programs for those who can't afford their homes. the first day featured opening remarks by federal reserve board chair ben bernanke and a speech by fdic chief sheila baird. it's about 50 minutes. >> good morning, welcome to the fdic. i'm fall coopiac of the fdic, one of the programs organizers, along with doug of the chicago federal reserve. let me begin by welcoming you to today. you can see it's -- as you can see it's been wildly popular and i expect we'll have two good days of discussions. before we start, let me just tell you a little bit about

logistics. if you haven't found them already, the rest rooms are out the backdoor to the right and follow the signs around. so they are basically back over here. we are going to be pretty crowded today so if we could all get seated. there may be some standing room in the back at the end. refreshments and lunch time today and tomorrow will be -- the food will be outside. you'll need to grab it and bring it back and eat on the table since we don't have a room big enough to feed us all in one place. we'll be eating in place. with those few welcoming remarks, let me introduce doug, co-chair, who will introduce chairman bernanke. >> thank you, paul.

good morning. my name is doug i'm from the federal reserve reserve bank of chicago. over the past few years i have been co-chair of the federal reserve system effort addressing issues associated with mortgage markets and co-chaired that effort with alicia williams, my colleague at federal reserve bank of chicago. the program committee members that helped put the program together were also members of that effort and they joined forces with the fdic to develop the research program and the policy panels that you'll see over the next two days. my task this morning is quite, frankly, somewhat of an unnecessary one as most of you are aware of the background and recent activity of our first speaker. we are very pleased to have him with us this morning. let me set the stage for his opening comments. ben bernanke began the second term in february as chairman of the board of governors of the federal reserve system.

in that capacity he also serves as the chairman of the federal open market committee, the system's principal monetary policymaking bodcy. he previously served the federal reserve system in a number of capacities, including a term as a member of the board from 2002 to 2005. prior to that working with a number of reserve banks as a visiting scholar for research efforts. immediately prior to assuming his current federal reserve position, dr. bernanke served as chairman of the president's council of economic advisors. in addition to his recent public policy positions, the chairman's academic credentials are quite impressive and much of that work is associated with the appropriate policy responses surrounding financial crises. similarly during the current mortgage crisis, he has strongly encouraged research efforts within the system aimed at finding the appropriate responses to current problems. additionally, he has supported

the system outreach efforts aimed at providing assistance at the local community level. so he's an ideal candidate in my view to address this conference. we are fortunate to have him join us this morning. it's my pleasure to introduce ben bernanke. >> good morning, everybody. 7 -- it's really nice to be here this morning and to welcome you to this joint conference of the federal reserve system and the federal deposit insurance corporation. our program over the next two days is going to highlight policy oriented research on the u.s. housing and mortgage markets. i'd like to thank the many talented people at the federal reserve system and the fdic who worked together to make this conference a reality. before i address the specific topics of the conference, i would like to note that we have

been concerned about reported irregularities at foreclosure practices at a number of large financial institutions. the federal banking agencies are working together to complete an in-depth review of practices at the largest mortgage services operations. we are looking i tensively at the firm's policies, procedures, and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures. we take violations of proper procedures very seriously. we anticipate preliminary results of these investigations next month. in addition, federal reserve staff members and our kearnt parts at other federal agencies are, evaluating potential effects of these problems on the real estate market and financial institutions. any discussion of housing policy in this country must begin with some recognition of the importance that americans attach to homeownership. for many of us, owning a home signaled passage into adulthood

coinciding with the start of a career and family. high levels of homeownership have been shown to foster greater involvement in school of civic organizations, higher graduation rates, and greater neighborhood stability. recognizing these benefits our society has taken steps to encourage homeownership. tax incentives, mortgage insurance from the federal housing administration, and other government policies all contributed to a long rise in u.s. homeownership rates from 45% in 1940 to a peak at 69% in 2004. but as recent events have demonstrated, home ownership is only good for families and communities if it can be sustained. home purchases that are very highly leveraged or unaffordable subject the borrower and lender alike to a great deal of risk. moreover, even in a strong economy unforeseen life events and risks in local real estate

markets make highly leveraged borrowers vulnerable. it was ultimately very destructive when in the early part of this decade dubious underwriting practices and mortgage products inappropriate for many borrowers became more common. in time, these practices and products contributed to problems in broader financial services industry and helped sparked a foreclosure crisis marked, as you know, by tremendous upheaval in housing markets. now more that 20% of borrowers owe more than their home is worth and an additional 33% have equity cushions of 10% or less, putting them at risk should house prices decline much further. with housing markets still weak, high levels of mortgage distress may well persist for some time to come. in response to the fallouts from the financial crisis, the fed has helped stabilize the mortgage market and improve financial conditions more productly thus promoting economic recovery.

what may be less well-known, however, is what the fed has been doing at the local level. as the foreclosure crisis has intensified, federal reserve staff and our research community development and supervision and regulation divisions have actively collaborated to support foreclosure prevention at the local level and promote neighborhood stabilization initiatives. a key initiative developed under the leadership of federal reserve bank of chicago president charles evans has been the mortgage outreach and research effort known as more. more involves all 12 federal reserve banks and the board of governors in a collaboration that pools resources and combines expertise to inform and engage policymakers, community organizations, financial institutions, and the public at large. the fed is particularly well suited for this effort. our community development experts are working on the ground to promote fair and equal access to banking services and

to improve communities. further, federal reserve staff members are conducting empirical research on mortgage and foreclosure related topics, and are reaching out to industry experts as well. we are focusing on the hardest hit cities and regions of the country. a new publication released this week offers details about the more effort. copies are available here today and it is available online at the website of the federal reserve bank of chicago. the report identifies approaches that the fed has particularen to mitigate the foreclosure crisis and i would like to briefly share highlights of that work. we have helped many of our community development partners organize day-long megaevents that have served thousands of troubled borrowers. moreover, we brought together housing advocates, lenders, academics, and key government officials to develop foreclosure issues and solutions. in some cases, alliance has been

formed on the spot to create and implement programs that help keep people in their homes. we have also partnered with the u.s. departments of labor and treasury and with the hope now unemployment task force to help unemployed homeowners avoid losing their homes. this collaboration led to the creation of an online tool that allows homeowners and servicers to document unemployment insurance benefits as income in order to qualify for federally sponsored mortgage and modification programs. each federal reserve bank has an online foreclow sure resource center with information on foreclosure related resources, including an enhanced foreclosure mitigation tool kit which provides detailed steps and information for localities seeking to develop foreclosure prevent activities. the tool kit also includes a new foreclosure recovery resource guide which helps consumers recover from the foreclosure process.

a number of federal reserve research projects have also been initiated as part of the more program. they include studies focusing on foreclosure prevention, financial education, and the adverse neighborhood effects resulting from foreclosures. you'll hear more about that research over the next two days. community development researchers across the federal reserve system launch add study in 2009 of the planning and early implementation stages of the federal neighborhood stabilization program or n.s.p. researchers interviewed more than 90 recipients of the department of housing and urban development's n.s.p. funds in the fall of 2009. these interviews and other data gathered during the study provide the first nationwide examination of the effect of the n.s.p. and serves as the basis for a number of federal reserve system reports currently in progress. under the auspicious of the more initiative, the federal reserve

sponsored conferences such as this one and some held last month on real estate owned and vacant property strategies for neighborhood stabilization. participants in that meeting examined the community effects of foreclosed and vacant properties with the hope of better understanding barriers to stabilize neighborhoods and discussing regional differences. as part that have summit the federal reserve released 17 papers analyzing trends, challenges, and possible solutions for addressing foreclosures and promoting neighborhood stabilization. a few of the emerging solutions highlighted at the event included a national first look property program which gives nonprofits and municipalities the right of first refusal on repossessed properties to facilitate neighborhood stabilization. new methods of municipal code enforcement and innovative banking strategies. we'll be using these ideas and

others to inform our community development efforts over the coming year. to ensure we have access to more detailed data on mortgage and credit markets, the federal reserve system has created the risk assessment data analysis and research or radar data warehouse. this new platform will help inform our monetary policy, banks supervision and regulation, and community development. over the next two days i understand that you'll be hearing about policy oriented research on the u.s. housing and mortgage markets an area of first order importance to policymakers. you'll have the opportunity to discuss the current situation and the outlook for mortgage foreclosures, consider their consequences for neighborhoods, and evaluate efforts to mitigate foreclosures. also you will learn results from various studies that have examined mortgage modifications and factors that have led to defaults. and finally, you will consider the future of housing finance.

all of the papers on the conference program are direct interest to policymakers and should lead to better informed public policy. i hope we can draw upon this information and success of the more program to explore new and creative ways to address the foreclosure crisis. at the fed we'll continue to encourage further research, participate in discussions, and coordinate work among groups striving for sustainable homeownership and the recovery of the housing markets. thanks for letting me come and address you this morning. i hope you have a terrific conference, very important topic, and we appreciate your participation and interest. thank you very much.

>> if i could have your attention, please. i'm from the fdic. it's my pleasure to introduce the next speaker. in june, 2006, sheila bair became the 19th chairman of the fdic. she came to the fdic with a wealth of experience on capitol hill, u.s. treasury, regulatory and academic experience, and to say she came and hit the ground running would be putting it mildly. those of us at the fdic soon came to realize how forward-looking she was on so many fronts. i think it was not long after that that the rest of the world came to see what we saw which is

how far ahead she was of so many people on so many issues. and it wasn't just on issues like the need for loan modifications, the need to improve the securitization process, the need to try to instill some market discipline where it had lapsed, but her leadership on all those policy issues was critical, but then during the actual crisis when it arrived, the way she led the fdic was critical. i think both the fdic and american people have -- owe a big debt of gratitude to the way she led us through that experience. so with that i'd like you to please join me in welcoming chairman sheila bair. >> thank you. that was one of the nicer introductions i have ever received. obviously you're only as good as the organization you lead. i think the fdic has proven

itself throughout this crisis and continues to do so. hello, everyone. thank you for joining us for today's joint federal reserve-fdic conference on mortgages and the future of housing finance. or goal in organizing this conference was to bring together some of the best minds and policy industry and academia. so welcome, to present research and exchange views on the difficult problem that the mortgage crisis has exposed. and to consider what changes must occur going forward. i'm confident these discussions will contribute to a better understanding of the issues. i would like to put my remarks to the steps we must take now to restore public confidence in our housing finance system. owning your own home has been a powerful american ideal, but through the early decades of the 20th century, our financial system has not particularly effective in making credit available to would-be home buyers. from sloan associations -- savings and loan associations frequently did provide long-term

am am torizing loans -- am torizing loans. other providers, including commercial banks, tended to make only short-term, nonamortizing balloon loans that required borrowers to refinance every few years. rapid growth in mortgage lending during the 1920's on this unstable institutional ground set the stage for a rapid rise in mortgage defaults as home prices fell by half in the great depression. it was amid the policy interventions and financial reforms of the 1930's that the modern governmental role and mortgage finance began to take shape. in response to the crisis, we saw the introduction of the federal home loan bank system, the homeowners loan corporation, f.h.a., fannie mae, federal deposit insurance, and federal charter for savings and loan associations. these government agencies and interconstitutions became the foundation for a revolutionary financial product, a long-term, fixed rate amortizing mortgage

loan that could depend on stable sources of funding and that the trade and organized liquid secondary market. it is hard to overstate the importance of these developments in creating the era of prosperity enjoyed by america households in the years following the second world war. when our system of mortgage finance was a model for the world. but with the been fit of hindsight, we are able to see the cracks in the foundation of this prosperity that few were able to appreciate at the time. investment in housing flourished while other sectors needed investment lag. for example, we were more adept at financing and building suburban homes than at providing the transportation and other public infrastructure needed to support these new communities. as a result, americans today spend more than twice as much time stuck in traffic than they did 30 years ago. and a system of mortgage finance once a model for the world has turned out to have a serious flaws. the institutions saw the network

decimated when the high end volatile interest rates of the late 1970's and earl little 1980's would give the industry heavy exposure to interest rate risk. many s&l's gamble for survival with risky real estate loans that ultimately broke the savings and loan insurance fund. the main lesson of the s&l crisis here in washington was the danger of moral hazard. the crisis led to reforms designed to limit the ability of federally insurance institutions to take on balance sheet risk at the expense of the deposit insurance fund. so we then saw a shift in mortgage funding away from savings institutions and toward mortgage securitizations, first by the government sponsored mortgage enterprises and by private issuers. by the mid 1990's, the g.s.c.'s would finance aller more than half of mortgage department. private zurtization also began to grow rapidly. issuance of private m.b.s. rose

from $50 billion in 1995 to a peak of more than $1 trillion annually in both 2005 and 2006. at the height of the housing bubble. the logic that drove growth and securitization was built around the bundling of finance services. no longer was a single institutional lender responsible for originating and driving funding and servicing mortgage loans. the securitization were paragraphs elled out to different entities. at the same time, instruments used to fund mortgage lend wrg customized to particular risk preferences and sold to institutional investors in the global financial markets. two government sponsored companies, fannie mae and freddie mac, took advantage of their implicit government backing to build large retained investment portfolios and take on too much risk at the expense of the broader public. figures released indicate the crisis related losses to taxpayers as a result of the backing will eventually total

between $142 billion and $259 billion. at least the g.s.c. started with a businessic set of underwriting standards that covered most of the mortgages they purchased or guaranteed. at the height of the housing bubble, private mortgage backed securitization goes into anything goes bazaar where brokers and lenders lowered standard while underwriters he and issuers kept dreaming up new ways to package risky loans into highly related securities. in a bid to recapture market share, the g.s.c.'s lowered their standards, throwing the market into large purchases of poorly underwritten loans. in the end the flaws of the system boiled down to three fundamentals and interrelated problems, miss aligned incentive, implicit government support, and the emergence of financial companies that were too big to fail. all along the chain of securitization from originators to securities underwriters to

investors and regulators, insufficient attention was paid to both safety and soundness and basic consumer protection. with each of these parties acting on its own interest, the system as a hole lurched toward disaster. the latest controversy of securitization relates to concerns that legal documents required for foreclosures have in some cases been improperly exercised. we are working closely with our federal regulators to get to the bottom of this problem. our initial review suggest that is fdic supervised nonbanks have limited exposure to the situation. but we continue to work on the issue with relating to other institutions through backup examination authority. in addition, we are in contact with investors who have purchased banking assets from the fdic, structure transactions managers, to verify their foreclosure claims are client

with the law. we have made it clear that losses associated with improperly executed foreclosures will not be eligible for loss share arrangements until problems are appropriately remediated. in retrospect, there were warning signs of servicing standards were eroding. those signs should have called market participants and regulators alike to question current practices. for example, servicing declined significantly over the past several years. we should have been asking how servicers were able to achieve such efficiencies without sacrificing quality. sadly those types of questions were nod asked. as regulators embark on changes, we need to get back to basics and spend more time understanding and where necessary questioning the business models that drive the earnings and create the risk present in the banking system. the funding controversy are time consuming and expense jiff foreclosure is. as i repeatedly said, foreclosure should be a last

resort undertaken only with bona fide loan restructuring efforts have not succeeded and all legal and procedural requirements have been fulfilled. at the same time, i feel that the litigation generated by this issue could ultimately be very damaging to our housing markets if it ends up prolonging those foreclosures that are necessary and justified. the regrettable truth is many of the properties currently in the foreclosure process are either vacant or occupied by a borrower who cannot make a significantly reduced payment and have been in arrears for an extended period of time. ultimately i think this problem will require some type of global solution and i would suggest all interested parties consider some type of triage on foreclosures, perhaps providing safe harbor relief if the property is vacant or the servicer offered a meaningful payment reduction and the borrower simply still cannot perform on the loan. we know from experience that

reducing the monthly payment through modification raidses the chances that the borrower will make good on the loan. we also know that in too many instances servicers have not made meaningful efforts to restructure loans for breaux rowers -- borrowers. our research on loans modified shows that raising the size of the payment reduction from 10 ters to 40% or more can cut the default rates by half. given the foreclosure backlogs, timing and restructuring efforts make sense now more than before. they have been impeded by insufficient servicing staff. in a larger sense the controversy is just another indication of the need to improve institutional practices all along the chain of securitization, origination, to securities underwriting, to servicing. the misaligned incentive that has been built into the process

has left back office operations far too week to support a robust system of mortgage finance. if we want to rebuild housing finance into a more solid foundation for economic future, we will need to act decisively toe fix the underlying problems that led to this current crisis. we must start by restoring market discipline to our mortgage finance system. this requires that the securitization process incorporate features that empower investors to perfect form due diligence on the quality of mortgages going into securitizations to level disclosures. it also requires that the economic incentives of issuers of securitizations be in line with the long-term performance of the security advertised loans. -- secure advertised loans. these steps require greater transparency. clearer better documentation, servicer incentive in line with the investors as a whole. third party oversight of servicing that will ensure effective loss mitigation. and finally very high, easily verified regulatory underwriting

standards or risk retention requirements for issuers that will require they take some share of every investor loss. transparency, clear authority to act, and realigned incentives support strong quality by bringing the pressure of market discipline to bear on all components of the process. the fdic recently took the initiative to establish standards for our long-standing safe harbor for securitizations. our final rule approved in september established a standards for disclosure, loan quality, loan documentation, and incentives in oversight of servicers. the standards are aligned with the s.e.c.'s new proposal on foreclosures and incorporate the interagency risk retention standards required by dodd-frank once they are adopted. they create a competitive set of incentives to ensure loans are made and managed in a way to sustain lending and maximum value for invezzors. and the result is insistent with

the dodd-frank mandate to provide risk requirement on all but the most conservatively underwriten loan. give the cree cent change in accounting standards that made our safe harbor rules obsolete as well as the urgent need to restore investors confidence, we believed it was vital to give the market some clarity and realign our safe harbor with the change to accounting standards. too big to fail is one example of the type of implicit federal banking selected private companies that has particularen root in our financial system over time. among the most prominent examples are fannie mae and freddie mac which the market regarded as having the implicit backing of the federal government long before they were placed in conservativeship in september of 2008. whenever investors are led to believe that policymakers will not allow a company to fail, market discipline is weakened. the inevitable result is more risk taking that only raises the value of the implicit government backing.

shareholders and company insiders capture less of the upside gains over time while taxpayers get stuck with potentially catastrophic losses in a time of crisis. clearly any situation can only be regarded as a failure of government policy. that is why when it comes to reforming the mortgage d.s.e.'s, we must rule out a continuation of the type of implicit government backing that they have enjoyed in the past. homeownership remains an important national priority. and maintaining stability and mortgage finance through economic and financial parts may require some form of ongoing government support for securitization. if so, the net support must be publicly acknowledged, appropriately priced, subject to audit, and bought by the full faith and considered as read ift u.s. government. these are the basic rules that govern the fdic's deposit insurance program. any program of government support to the marketplace no matter how unintentioned that does not appear -- adhere to these rules, potentially exposes

taxpayers to unexpected and unpredictable loss and could undermine public trust in both the market and government. at the same time, well-intentioned rules to promote certain types of financial activities can unless carefully structured result in implicit government backing that leads to problems down the road. this is why the fdic supports bond legislation that helps express concerns about recent legislative proposals that could shift risks from investors to the deposit insurance fund. the fdic is a welcomed balance legislation to encourage the development of a viable u.s. covered bond market by clarifying the rights and responsibilities of issuers, investors, and regulators. covered bonds are simply general obligation bonds issued by a finance.financial institution backed by a pool of loneds. covered bonds could be liquid for mortgages. and properly structured they provide a way to transfer to private sector investors rather than the u.s. government.

improperly structured they could lead to another system of implicit government guaranteed. in particular we should take care in looking to the european model which provides for virtual government backing of covered bonds. for instance, while covered bonds represent a potentially important source of funding, some proposal would give covered bond investors a super priority in our receivership process which would transfer credit and prepayment risk from covered bond investors to the fdic. this would result in decreased market disbill clinton from investors who know their risks are essentially backed by the fdic. the increased cost to the deposit insurance fund would be borne by all banks large and small through prior deposit insurance premiums. i know this is not the intention of the congressional proponents of the covered bond market, and want to work constructively with them to resolve this issue. the financial reforms that grew out of the great depression create a government institution that supported financial stability and the availability of mortgage credit for decades

after they were established. but their recent process in mortgage finance has revealed critical flaws in our system that compel us to make far-reaching institutional changes that would determine the shape of our financial sector for decades to come. instead of creating vast new sources of institutional support for the financial sector, today's rear forms are geared toward clarifying the rules. just as dodd-frank clarifies, the rules for resolving systemically important financial institutions, we must clarify the rules for government support of mortgage securitization. this is the had work of good government. and by participating in this conference, you share your commitment to gettinget details right and making our system more stable and efficient in the decades to come.

i'm happy to take questions now. do we have mikes here? go ahead. [inaudible] >> i think there is a securitization markets seems to have -- there was unfortunately about a year time period where a lot of that fell back on to balance sheets. you're right. there was, i think, it increased the stigma. several being retained by

institutions. earlier in the crisis, they thought the party was going to keep going, the home prices would go up. we should have done a better job of regulating them. a lot of that went back on bank balance sheets that had not been there. that was primarily a function of the market. i don't think that risk retention is a panacea but i do think requiring large investors retain a vertical flight of risk so that each time there is a loss they take some piece of it that is very important. i think that's also important for the capacity of them as servicers. we are also seeing problems now with conflicting demands commong investor classes because they take different -- their loss exposure is different. that can create the appearance

of conflict as well. but servicers retain some individual charge of the securitization. i think it's very important. most importantly can be used as a lever to get very, very tough underwriting standards that apply across the board to all issuers. i think it will achieve an important objective. >> you talk about how you see covered bonds fitting in with the home loan advance system currently in place? >> well, i think multiple sources of funding for mortgage activity is fine. so long as they are not in perfect government guarantees backing them. as i indicated in my remarks, let's acknowledge it, charge for it, and actuarially -- i think that we have had this for a long time. this will continue to be an important source of funding.

especially for community banks. they don't have the capacity to do covered bond issuances. i think the market standing side by side will replace securitization market. you need mup tillp sources but i don't think there's inherent conflict there. >> thank you. one of the questions that we hear from investors frequently is how do you balance the immediate to mitigate foreclosures with the basic right to get back the collateral values. when you extend credit if you're never going to be able to foreclose, you don't really have any chance of recoupment of anything. you have states where it can take a year or two years to foreclose, is there anything that the federal government should be doing here to create a smoother process or more expedited process to both weigh efforts to mitigate as well as

to get foreclosures where that's the only outcome? >> i think that's right. ultimately foreclosure is a necessary piece of this. and that's unfortunate that is the way it is. you're right. if the loan is not performing any longer has the right to recapture the collateral. that's why it was a secured obligation to begin with. yes, we do need -- i think we'll get into more and more problems with the issues that are surfacing now on servicing which is one of the reasons i tried to throw out a few ideas how we can triage the process and make sure it continues moving forward. it seems to me vacant properties, there's clearly been a significant payment reduction. there's been clear efforts to work with the borrower and they can't make it, those are two categories where we should focus on letting those go ahead. while at the same time when there is an unoccupied property, when we don't have the efforts to do restructuring, that maybe

those need to be more time spent on them. investors need to be part of the equation, too. if the first plaintiff the payment is reduced on the first plain, those are all factors that need to be brought into the mix. at the end of the day foreclosure process regrettable as it is needs to keep -- the market needs to clear them. there is no way around that. i think we need some type of global solution where people, all the different stake holders in this process, come together and try to determine a global solution that makes sense. we need to keep moving it forward. it's going to be very detriment to our housing market if it doesn't. >> thank you for your time. in managing the global solution for the foreclosure process, i imagine some of the pain will get shifted to the banks. how do you manage that with the

basil 3 potentially adding more capital charger so at the end of the day we are getting tighter underwriting for mortgages and tighter credit availability. >> well, first of all this is a risk that all institutions need to understand and analyze and reserve for. if mistakes have been made there are additional exposures that need to be taken, that's what needs to happen. and i guess i would say that just underscores the need for more standards going forward. to say if the argument is, well, you're going to have losses here we didn't expect. i don't buy that. i don't buy that at all. it proves just the opposite. the basil 3 there is ample time to adjust to the new standards. i think frankly we can go faster here. they are at 6% already.

getting to 7% is not going to be a huge lift. i think if anything this underscores the need for strong capital basis. it doesn't weaken the argument at all. [inaudible] >> do you expect additional legislation and then possibly related to loan modifications people have always questioned servicers, and how that may or may not affect the process? >> i don't know -- i think we are still getting information as chairman bernanke indicated to you this morning. all the bank regulators are working together and doing loan level file review.

and i think we need to get to the bottom of what the nature of the problems are. the procedural i think -- i don't see it's going to require legislation. there's something else going on there. we may need to consider that. but my hope is just given the timing and need to keep moving forward this is something that the parties without legislation come together and agree on. but there are a lot of different stakeholders in this and it's -- the state and local officials rightfully so are very interested in protecting their legal requirements as well. i think it's going to take a lot of communication to try to come up with some global solution. i hope it does not require >> there has been some question on whether mortgage servicing

or risk capital firms under basil 2, and what's your opinion on that? do you really believe that mortgage servicing rights have limited value? >> well, i think mortgage servicing rights have volatile value, and i -- we supported the basil 3 compromise which allows mortgage servicing rights to count as capital up to 10%. so there's a cap of 10% and there are several categories many of you is not secure capital that can be counted up to 10%. 15% aggregate cap on all those. i think another approach would have been -- anything that wasn't common equity would have been disallowed. this negotiated compromise. they are the things theure pea

ian minority interest. so i think what was worked out was something that we can live with. they are capped out at 10%. it is a very highly volatile and i think that needs to be taken into account by regulators and put in constraints. [inaudible] >> investment in transportation. i'd also probably add secondary education. >> it's a long list. i agree with you. energy. >> where do mortgages in the real estate market fit? how do we know when we are overinvested in mcmansions or other real estate markets? and what's the function of

federal government? >> i think that's right. if you were starting from scratch maybe you wouldn't -- any time you step in with government subsidies you are going to be skewing the allocation of resources. if you are a premarket purist you are going to say that interferes with the efficient allocation of resources. i think we are not starting from scratch. we are starting from trying to correct and repair a long era of heavy government subsidy -- subs ziization of mortgage finance. it's not just g.s.e.'s. it's tax code changes, it's the federal home loan bank system. it also supports the housing finance. we have set this in a variety of ways and i think we need to recognize that that has the allocation of resources, and we are paying economic price for it now. i don't think there's a chance we could go back to the days and

undo it. and let the market decide how much capital should be am located to housing. i -- allocated to housing. i don't think that's realistic. perhaps helping us construck models going forward that will have more not pure and complete free market discipline at least some better measure of private sector not governmental involvement to provide for housing finance. i think it results in the misallocation of resources and we are paying for that again in terms of structural unemployment and sluggish recovery and other sectors hurting for recovery from capital. >> can we wrap it up now? one more question? >> sure, i'll take one more.

>> could you speak up a little bit. >> with respect to basil 3 and specifically the systemic risk buffer, if we overshoot and go with the first example of 3%, does that create an incentive for banks to engage in riskier underwriting for mortgages? and attempt to cover higher cost of capital? secondarily, does it create the incentive for them to release reserves inappropriately in an attempt to meet those higher capital levels? >> i hear it's a risk capital you are going to increase pressure with more risk taking. i think the basil 3 accord has been well structured. you should also note that with basil p is also going to become changes in how large institutions risk their assets. in particular trading assets

that have proven themselves to the highly toxic during this crisis will have much, much larger capital charges, particularly as compared to better lending which will have more favorable capital charges. it's an argument to be made by a lot now that the large institutions aren't taking enough risk. that's why we have such a contraction of credit. very high capital charge and trading assets, more reasonable capital charges on the banking book. maybe this will provide requirements will want to innocent a little more risk taking with regard to making loans. we have certainly seen a big contraction think point. want makes to take some risk. there's risks to making loans. there's risk to small business loans. a lot of banks are worried. maybe that's why not so many are being taken. you want a level of risk taking. to some extent going back to the opposite direction. higher capital charges coupled with i think it could help

incentive someone in areas we would like to see banking activity. >> please join me in thanking chairman bair. [captioning performed by national captioning institute] fun too [captions copyright national cable satellite corp. 2010] >> from political could he's mike allen today, exactly one wake week from today voters will be heading to the polls to choose their candidates for congress. republicans will pick up a net gain of 51 house seats. only 39 needed to control the chamber. over in the senate he's predicting a pickup of eight seats where 10 are needed for control. here are a couple of hunches for

two high-profile races. senate majority leader harry reid could still win his bid for re-election in nevada. and democratic representative joe sestak could still win the open senate seat in pennsylvania against republican pat toomey again more of that store in politico d.n.a. on that story in politico. >> a reminder each night here on c-span we are showing debates from key races around the country. here's our lineup for tonight. beginning at 7:00 p.m. eastern. live coverage of a debate between candidates to be south carolina's next governor. an hour later the focus is indiana senate race. and tonight we'll also show you a discussion withal russo from -- with sal russo from the tea party express. and finally a pair of house demats from new hampshire's first district and pennsylvania's third. up next the final debate between kentucky's u.s. senate candidates. republican rand paul and

democrat jack conway. they are running to replace republican senator jim bunning who is retiring. a mason-mixon poll of voters released on october 21 showed rand paul leading jack conway 48% to 43% with a 4% margin of error. while the cook political report is rating this race a tossup. and c.q. politics leans republican. from yesterday. this is about an hour. >> welcome to kentucky tonight. good evening. i'm bill goodman. we'll focus on kentucky's u.s. senate race. our guests are jack conway of the democratic party and rand paul of the republican party. gentlemen, thank you for joining us on kentucky tonight. >> pli pleasure. >> this race and many across the nation has painltsed this election as one of the most expensive, nasty, and weird campaign seasons in recent history. a campaign of witches and grizzlies and in your race more

charges and countercharges than you could shake a stick at. the herald leader said saturday, the war of commercials has been dominated by broad sides against the candidates not information about their proposals. raymond blithe of frankfurt emailed me today and wrote, after months of blissening to the constant negative ads that inform me of all the reasons why i should not vote for the other guy, i would suggest to both candidates that they spend this time telling me why i should vote for them. tonight in your final joint appearance i would like for you to concentrate on your positions on these issues and i promise we'll get to as many as possible. before we start that discussion, i want you to tell me a little bit about yourself. the very nature of a campaign sometimes paints a portrait of you that your opponent wants the public to see and not who you are. after all not everyone reads every newspaper article or reads

every mag purple eagles -- magazine piece. wherefore you live in a city or farm or small town in kentucky, we are a state that is characterized by the importance of family and neighbor. so to begin with tonight, i want you to describe your community that sur --surrounded you as a chile and how your personal biography might shape the hopes and aspirations for all of kentucky's children. we'll begin alphabetic live. mr. conway. >> thank you very much. pleasure to be with you again on ket. i appreciate that insightful question. my background and my parents shape everything about me. my dad grew up on a family farm in union county, kentucky. our largest corn county. all of the commonwealth. my great uncle ran the family seed business down there. young and conway seeds. my father eventually after serving in the army made his way to jefferson county and on the g.i. bill after serving in the

army put himself through law school at night. along the way he met my mother who is the daughter of a union black smith. my grandfather worked 47 years in louisville. on my mom's side of the family i'm the first to go to college. i'm the oldest of four children. they instilled in me an ethic of hard work. when you are knocked down to pick yourself up, dust yourself off, to study hard, work hard. to appreciate the commonwealth of kentucky. i know a lot of people look at me and say he lives in louisville but don't know i took a dozen trips a year to union county and every week end we went down to union lake and i asked and fished. -- and skied and fished. my father taught at high school during the day. very much self-made family. i love them very much. my wife and i want to raise our daughter to have the kentucky that i knew and to have our best days still ahead of her. >> dr. paul?

>> i'm a physician. i have been married 20 years to my wife, kelly. we had our anniversary this last wednesday. celebrated on the campaign trail. i have three teenage boys. william, duncan, and robert. they are 17, 14, and 11. i grew up in a small town and always wanted to live until a small town. i could have gone anywhere, to any city or any part of the country but i chose to come here. my wife grew up in russellville, her dad was louisburg, they are related to steven and robert ashby, the original surveyors, had a land grant from george washington. would he would like to get the land back. but they have been in kentucky a long time and i chose to come here because i like living in a small town as a kid. i grew up where i could ride my bike everywhere. i rode it to school for eight years. baseball practice, football practice, mping. you could ride your bike everywhere in my town. i think it's been great for my kids to live in a small town.

i coached little league. i coached soccer, basketball. the one thing i won't reveal is my win-loss record. i have enjoyed it and i like being part of a small town and community, bowling green is a thriving community with university that gives it that energy and vibrancy that is to have a university town. >> you both know education is so important. we know that teachers are such a key determinant about the quality of education that we all have received or will receive. i want you to now tell me about your favorite teacher and why that person has proven in your life to be important to your life and your success. dr. paul. >> my first grade teacher was mrs. dusick, she lived down the road from us. everybody lived close together. and first grade i think is a fascinating time for kids. i think we sometimes don't really appreciate it as much as we should learning to read

aspect and the ability to learn at age 5 and 6 and maybe earlier that it was just an explosion of learning how to read and just books after books after books. having a teacher who recognized that you like that and promoted that for you. i think was something i won't forget. >> israel all -- if we all look back into our past, we have a teacher who brought us to where we are -- we all stand on the shoulders of someone who helped us a long way. a few people leap to mind. when i went to high school i thought i would be an orthopedic surgeon or architect. i had a teacher for three or four years, a guy named john price, at phoenix high-school who taught me about geography, civics, history, and the way history can informed decisions we make in the present day. he was more than an instructor.

he was someone who helped you fulfill your potential. i certainly would have not gone to get a public policy degree, or before i am if it were not for john price. the other, not a teacher in a classic sense, but a woman who taught me organization, not to act like you have the answers when you do not, but how to find them. >> a couple of quick questions. what is your favorite kentucky state park? >> lake barkley, right of the lodge, looking down on to the lake. >> [unintelligible] close by. >> fiction, non-fiction -- what is the latest piece of fiction that you read it? >> "the poison would bible" by

barbara kingsolver. >> i read a lot of non- christian. the last piece of fish in the red was probably "the da vinci code." >> i would like to give me your thoughts on the issue without stating your opponents viewpoint. i'm sure there will be differences. we will have a discussion about where you disagree. to begin with, what important issue facing the country -- and if you are elected to go to washington, what will be job one for you addressing that issue? dr. paul? >> jobs in the recession, but also how government interacts with that. government competes for precious funds, and we need to send less money to washington and keep more money here in kentucky. our recession numbers just live up, over 10% now in kentucky.

president obama is making a mistake that he thinks government is the answer to everything. we need to have more respect and understanding for how individual men and women, entrepreneurs, create jobs thing of the president is laying down more regulatory burdens. he has added a 2500-page health care takeover bill that i think will create more unemployment. he has added banking regulations that will add more regulations to your local bank. when you talk to local businesses in the kentucky, they are already very concerned about the ability to get loans. my biggest fear is the president through all his new regulations will keep us from getting out of the recession. >> i think that job number one is jobs. i have a jobs plan. if people go to my website, we

have something we are calling home town tax credit. i am a different kind of democrat. in fayette county they're looking at washington and say no jobs are being freed. we need to provide incentives to the private sector. -- new jobs are being created. we would shut down offshore tax locals -- loopholes. the estimates according to moody's that we've read about three-quarters of a million jobs nationwide. we have to get the small banks lending again. george w. bush in the late 2008 bill that a lot of banks on wall street. regulators have come down really hard on small banks. i cannot tell you how many bankers have said they are not certain of the rules and need cleared it. it is the $200,000 or sell loans

to small businesses that can mean expansion or even a lifeline. >> the question really is, do you believe a more or less regulations? obamacare adds thousands of pages of new regulations. president obama it is for the banking regulation. these are making it harder for local banks. the banks in kentucky fail, yet all new regulations are heaped on them. i have not know it -- i have not met a bigger that is in favor of it. these will stifle jobs. we have very different positions. the president's takeover of health care was wrong. i think the president's regulatory bill is exactly wrong. i think it is very dangerous. >> he is wrong.

one kentucky bank did fail, and a number got tarp bailout funds. i'm concerned that we learn our lessons after the meltdown in 2008. we needed prudent financial regulatory reform. the banks too big to fill got a bunch of bailout money, and acquired smaller firms. now they are even bigger. we need greed and regulations to make certain wall street is not gambling with our money. -- we need prudent regulations. we need to make certain that we learn our lessons and was sued is not gambling with deposits. it is very important after the meltdown of 2008 not to sit down and say no regulation, leave everything alone. leaving them alone in the first place is what got us into the mess. this is about prudent oversight and regulation.

>> would you believe in? the government, or individual entrepreneurs? stimulus package is money borrowed from china to promote job stimulation from the government down. i think it comes from the business people in kentucky and works its way up. it is a clear distinction. the election is about which agenda you want. president obama's agenda that believes in a government stimulus? is it a good idea for a country to run a $2 trillion deficit annually? if interest rates rise again up to 6%, interest alone will consume 25% of the budget. >> some think the stimulus was not large enough, that it needed to be larger to creat more jobs.

this one has created some jobs as you can witness in lexington with the road work done and streetscapes downtown. >> if you divide the $1 trillion by jobs created, $400,000 per job. >> you don't think the recession would be worse other was? >> no, the people were wrong. they did not predict it coming. these people say it would have been worse. you have to ask where does the $1 trillion come from? it is borrowed. we did not have a bunch of savings in the washington. this money is borrowed from china. it is printed by the federal reserve. it is a disaster. i fear it will make things worse. >> if tax cuts worked for many

years, how would a hometown tax credit or cut, how that works effectively? has it been looked at? who havey moody's.com estimated three quarter of a million jobs across the country. they passed a holiday from social security tax credit for hiring an unemployed person. we need to go further. the next u.s. senator from kentucky needs a jobs plan. just saying that people need to take a lesser wages is not a plan. there are clear choices in this race. yes, there are -- for senior citizens, students, veterans, women. >> about the stimulus package, $1 trillion recently we found out some 7000 checks were sent to dead people.

17,000 checks were sent to inmates. this is an example. it is precisely why we don't want to send more to washington. >> we will take a break. we invite questions from kentucky viewers tonight. we want to thank everyone who sent questions in advance of the program. we got money, and appreciate your participation. you can send an e-mail tonight. of first among the general public generaltarp remains one of the most vilified programs ever enacted by congress, the largely as an effort by former wall street executives to build the current executives of mostar. officials in the current

administration, former administrations, and some leading economists insist that the tarp program was a success and alleviated the severity of the crisis. and right now is being repaired. so, was the program a success, mr. jack conway? >> i do not think so because it did not have enough accountability in. the people who created the besmn said you must bail us out. the bigger banks began to acquire the sicker firms, and executives kept ticking bonuses. i have taken on pharmaceutical companies, big oil. you need some accountability. to come in the darkened as for money -- i don't think it worked. >> that money is being repaid, though, dr. paul. >> it was a failure. wrong idea. from the beginning, i ran on it in my primary -- the number one

issue was that i stood up even when republicans were for the bank bailout and said no more. i did not hear much from the other side until recently. but i'm glad they're coming our way in beginning to talk about some problems. i think the tarp program was a mistake. most is it was an asset are all people who did not predict the housing crisis, nor the boom and bust, did not know anything about what was coming. they said if we had not done it, it would have been worse. an organized bankruptcy for aig may have been a better way to go. i think it would already have recovered. but the reason they did not is because it became a pass through four goldman sachs executives. >> if one of you are elected to the senate representing kentucky, part of the tarp program, the treasury is still authorized to spend $50 billion and a program to pay services -- servicers and borrowers to

modify mortgages to keep their homes. he should the government spend tax dollars in an effort to keep borrowers in their homes? >> the tarp funds left should go to restore the deficit and try to pay off debt. the entire $800 billion should never have been spent. president obama, his stimulus package nearly $1 trillion, should never have been spent. i would vote for any unused funds to go back to offset the deficit. >> on the tarp clan, one that freed a a plan to leave other housing problems and people who might deserve to be in their homes and cannot make it? >> it was greeted by bad government policy that kept the interest rate below the market rate at 0, stimulated a bubble. it also was stimulated by the community reinvestment act.

if tell people it was a good idea to buy a house without a down payment. many mortgages are so far under water that you can build and not for four or five months, but they aren't getting better. nothing good is happening to those people. it is really a tragedy, but the tragedy, thinking it through, it is the bad policy by barney frank and others from jack's party who got the community reinvestment act going. they gave fannie and freddie more money. in 2003 they came to the banking committee and said they were $1 billion sharping the conservatives asked if there would make better decisions if we want it to them? now their credit line is unlimited. we have made a serious mistake by giving fannie and freddie more money. >> what about the $50 billion? >> i do not support the bailouts. >> you would not support the treasury's authorization? >> i do not think it is ok to sit back and say there are all

these people who will lose their home. in their homes go on the market. it is not ok to say it is a tragedy, but we should not do anything. as an attorney general i have tried to work with others to make sure that countrywide homes that were sold and marketed wrongly, that people have some recourse. many in the kentucky have had recourse do to our actions. and join with some 40 other ag's to make sure you don't have all these auto-signatures going on these forms. we to slow those down. we need to look at a way to keep people in their homes. in places like kentucky, people pour everything into their homes. in the long term, we need to get back to sound lending practices. when i bought my first, set down with a realtor and bigger and said have to put about one quarter down, never buy a home that is about three times more than you were making in a given year. we got away from that any to give back to live.

>> there is $200 million left in tarp, would you spend it, or not? put it back into the treasury. the deficit is the number one problem. what is his position on this? >> in a minute we'll talk about it, but let me move to foreign policy. if elected he will have tough decisions on trade policy, nuclear negotiations with russia in the middle east -- give me a couple thoughts on your foreign policy platform, and your experience to deal with these areas. >> first of all, i think the u.s. needs to be engaged in the world. the u.s. needs to be a symbol of good will, but we ought to say to partners globally to step up and help us bear some costs. regarding afghanistan, i took my party on over the issue because of the president wanting a surge. i did not hear enough about pakistan or regional partners.

the best we can hope for in afghanistan is to leave it more stable than we found it, and does not harbor terrorists or bear us ill will. to find a solution we need regional partners of all. we must also recognize how big a problem loose nuclear material and proliferation is. my opponent is on record saying it would not be a national security threat if iran acquired a nuclear weapon. it would be a threat to the entire region and world. we need to stay focused on the issue. >> this platform and thisiran --what should be the proper response of the u.s. to iran? >> the most imported but i would ever take if elected is on whether or not to go to war. the vote on declaring war is probably the most important that a senator would ever take. i will only go to go to war as if i or one of my kids were

going. i think that we go in america to war reluctantly. if you talk to soldiers who have been, they will tell you we should go reluctantly, but in defense of our country. when 9/11 it was without question we should not let people organize an attack as. i was in favor of gun. but 10 years later questions need to be asked. i asked recently when i saw 100 gis leading from fort knox to go to off. are we doing enough? are the afghans doing enough to patrol their own streets? the vast majority of these young men and women who are brave and doing what we ask say they would like to see the afghan step up more quickly. >> what should our strategy in iran the, especially as relates to their hints about developing nuclear weapons? >> we do not want iran to have

them and to do everything possible to keep them from having nuclear weapons. we have tried sanctions. the has not been much success with that. but we should not subsidize companies that do business with iran. >> gentlemen, our first phone call from bill. >> thank you, mr. paul, you have taken several positions from social security, calling it a ponzi scheme -- a plan to raise taxes on 90% of kentucky -- up to the lunch counter owners who would be serving up those are stated and explicit positions, but when challenged you have reverse your decision. the you have a rough count as a tomato do have excused your reversal when you claim you have been taken out of context? suddenly, for your record of in decision, how would people from kentucky finding credible? >> i don't think this is an

undecided voter. i have read some of his blocks, he is famous. the people in kentucky would choose me next tuesday because they are tired of career politicians, and those who will say or do anything. the things i talk about are very mainstream -- a balanced budget amendment. both parties are not trustworthy. both have done a poor job of controlling spending. after problem in washington is spending, not revenue. term limits is a great idea and vastly popular with both independents and democrats. i think they should read the bills. on it next tuesday i think the public will decide who has had consistent positions. >> do you want to come to clarify what he said about the civil rights act? >> they have all been mis-

characterized. the discussion was shot down, and he was found to not be telling the truth. it is hard to argue against the straw-man arguments that are not my positions. >> i'm flabbergasted. i watched on msnbc 20 of the most painful and embarrassing moments i have never watched as my opponent question fundamental rights from the civil rights act from 1964. had he been in the senate, he would have been seeking to modify the lunch counter provision. i don't think he can run from the record. people have an important choice next tuesday between someone like me who will stand up for them and social security -- my opponent has called it a ponzi scheme. in the world in which i lived, the kentucky senior citizens

that i see are on fixed income, may be getting a $1,100 per month pension, and cannot afford a 22% sales tax. the students cannot afford college. they need help grants and stafford loans. the veterans need the americans with disabilities act. i talked with max who lost three limbs on the battlefield in vietnam. he was concerned about preserving the benefits and a lot of what my opponent had said. >> dr. paul, let me give you a chance to respond. do you think that social security is a ponzi scheme? >> the 20 most painful minutes on msnbc or chris matthews and jack over religion. what social security is is having difficulty finding itself. is funded by current people

paying taxes. in 1937 when it began the were 42 workers and one retiree, and it ran surpluses for many decades. arriving in the 1970's it was seven workers to one retiree, still running surpluses. but the career politicians were putting it into the general fund and spending it. we're down to less than three workers for each retiree. what does it mean? the baby boomers are retiring. we need to figure out how to pay for it. this year such as it is paying more than it brings in. there is a problem with funding it. -- social security is paying more than it brings in. let's have been a bill discussion about how to fix the programs. >> i want to return to a discussion about social security and medicare. let me give you a chance to clarify some comments made about the 1964 civil-rights act. do you deny that you said that?

is there any clarification to add? >> i never said that i believe in anything remotely related to a segregated lunch counters, or was for the appeal of the act. chris matthews the next they said that jack conway was line. it was false what he was saying. he had some success, but was being dishonest -- he said that jack conway was lying. it has been a recurrent theme because he does not want to run against someone talking about term limits, balanced budget, and reading the bills. the tea party movement is big and strong. we had 1000 people the other day. people want an outsider, someone new. >> anyone can go to the videotaped and watch what he said on npr, in an interview -- he said had he been in the senate he would be seeking to modify the lunch counter

provision. it is on tape. those issues we settled a half a century ago. >> we need to go forward. before we leave foreign policy, one more question. this comes from a piece written by tom brokaw last week. in afghanistan and iraq we have lost 5000, had 30,000 wounded, and spend $1 trillion on combat operations. warsks, why it aren't the and human and economic consequences front and center in this election? we have talked a lot about jobs and the economy. >> we ought to talk more about those people who will return. we ought to talk about it more. my father served in the military. i did not. he served in germany for two years guarding missile silos

during the cuban missile crisis. i have spoken to him a lot about being in the military. brave men and women make an extreme sacrifice. we have for knox, fort campbell in this state. if i get elected i will ask to be on either the veterans affairs or armed services committee because i think it is that important to this state. we have 300,000 veterans here. 50,000 wounded, disabled veterans. we have 12,000 newly disabled veterans since 9/11. we need to stand up for the benefits. my opponent said that we will have to look at cutting veterans' benefits. he spoke out against the ada. we need to talk about these wars, talk about the cost. that has happened with other countries. >> i think once again he is dishonest, misrepresenting my position to try to say something

about the ada or veterans benefits. >> what is your position, then? >> i'm not opposed to the ada and have never said anything against it. i did say the war is an enormous hardship and cost, and we have the greatest nation ever known, the most mighty military around the world and can win any war, and should we need to, but i don't think we're good at nation-building. some nations the five up. afghanistan may be a mission that defies nation-build in. there comes a time when the discussion must happen. i do want to be part of that national debate about asking how long is long enough? we do need to have a real discussion in the country about whether 10 years is long enough. should the afghan step up to

patrol their own streets? >> the u.s. military is very good at winning battles, winning the ground game, but when we get to these political questions as to the exit strategy and leaving country's better off than when we found them, we need to talk about that responsibly. >> do you agree on that point? >> i thought i heard him say we're not all that nation- building -- before you ever commit troops to where you need to think how to bring them home, about the end goal, and what is it realistic. we need to make some we understand the human toll. i thought i heard him say something like that, and i would agree to that. >> here is an e-mail from jeffrey. mr. conley, why do support the healthcare system known asc knownare? and what you oppose it dr. paul. ? >> first of all, it is clear. i would like to fix the

healthcare bill. it is not perfect. he wants to repeal it. i'm not for a $2,000 deductible in medicare which is his plan, it seems. ands at a friend's wedding, he had had a kidney transplant 18 years ago. he has told me numerous times how difficult it is to get health coverage because of its pre-existing condition. under the law now he can get health care coverage. we have 654,000 people in kentucky getting coverage for the first time, 19,000 kids who can stay on their parents plan longer, and women who get a mammogram screenings. he said recently at one time that breast cancer research ought to be brought down to the local level. funding for breast cancer research is supported, that it

got a woman to speak out about it. >> what parts would you keep? >> this gets back to your earlier question about how to strengthen medicare. it made no sense in trying to achieve savings that a sweetheart deal was cut with the pharmaceutical companies that did not allow medicare to negotiate for lower drug prices. attorney general, i know that we monitor and negotiate. as medicaid were allowed to come it would be $200 billion in savings. we need fraud units for medicare in each state. the problem with medicare is, it is done from a big bureaucracy. put it in the ag's office. there are ways to strengthen medicare without just taking a

pharmaceutical companies off the table and a grand bargain they had at the start of the healthcare debate. >> are the no positive elements of the healthcare bill that you would reinstitute in some sort of new bill? >> one of the great ironies concerning deductibles is i spoke a ways to fix the problem in the future, not on current retirees or those close to it. but underc butare deductibles are already going up. medicare advantage patience, a 11 million, will have higher deductibles/ >> when does that go into effect the? >> and many go into effect gradually. until 2017 of pocket costs for medicare advantage is not only hurting those on the receiving end, but it is hurting him ina. >> are some of those increases

offset by the savings and? >> there is a lot of shuffling of money going around. the other great irony is medicare is short now because of the demographics. but guess where they got $500 billion? from medicare, and put it into obamacare. it will be worse than we can even imagine. >> the three areas are in effect went into affect during august. for children, illegal to take it away from anyone sick, and co- pays for someone already sick. are you opposed to them all the? >> some things can sound good on the face of it. by now by insurance and i'm healthy. but i buy it because i might get sick. if you tell me that i can buy it

after am sick, why would i get it? if you give perverse incentives, healthy people drop out. it is destroying the marketplace. you need to leave the marketplace. president obama is probably the most anti-business president. very few people in his administration have been in business. i spoke to a guy who will have a $400,000 fine. do we want everyone to have insurance? but if you put that kind of fun on a businessman, you will put them out of business. >> even though he would get government help? >> he has temporary workers. they add them up and say their full-time -- that they equal full-time workers. >> we will have 45,000 businesses in kentucky getting assistance with premiums. my opponent is on records and we

need to return to the healthcare system we had before world war ii. at that time the average person's been $5 per year on health care. you could not readily get penicillin. my opponent is running from the fact that he said about seven times that he supports a $2,000 medicare deductible. many advantage plans are being over-reimbursed. he is trying to argue that the deductibles are going up because he has to run from his own words. the senior citizens i talked to cannot afford a 23% national sales tax, or that $2,000 deductible when the current one is $155. >> perhaps they cannot afford president obama's $1 trillion spending. the guy you support in the primaries -- wanted president obama. he is a disaster for our

country. he is bankrupting us. you sit there and support his policies. it is a disaster. president obama is a disaster. >> did you call for a $2,000 deductible? >> he shows snippets of this speech and take things out of context. i did say that a higher deductible would help to fix the problem, but would be politically unpalatable and not feasible. but there would be ways may be in the future in the people might have to pay higher deductibles, and you may even have to do means testing. it may be coming because we have to figure out how demographically we will pay for it. >> on a racehorse? >> in kentucky people know that you do not attack demands horse, or his dog.

let me say this. he said $2,000 deductible. when he first brought it up, he denied it, until we produced video of his saying. the same thing with the fair tax. it is a 23% national sales tax. he said it on numerous occasions, and now he is running from it. >> you have a simplistic world view. >> are you talking down to me? >> you don't want to present law whole facts. we are eliminating the income tax. you leave that out. it is incorrect. it has an exemption for the first $50,000 worth of sales. no, you do not listen. you over-simplify things in the sound bites because all you care about is winning.

what i have said from the very beginning and have discussed for a year-and-a-half is that our problem is a spending problem, not a revenue problem. the problem is the deficit. when we can get that under control, then i want to simplify the tax code. it is 16,000 pages long. we spend $239 billion to comply with. that is equal to the gross receipts of wal-mart in one year. yes, the cut must be simple. one way to do it would be a sales tax. another way would be a flat income tax. another way would be to lower all marginal tax rates. the one thing that was the best government stimulus we ever had, the only type that works, contrary to borrowing money from china to pay for it -- it is cutting tax rates. but i have an honest with the people of kentucky that from the beginning you can only cut taxes, reform the code, make it smaller if you are willing to

cut spending. >> let's take our second phone call. ms. mary hatfield . >> yes, please, as all a commercial on television today, rand paul against jack conway, and it is insinuated that he was against abortion, but jack conway was for abortion. jack conway, i have met him. he told me he was a christian. i would like to know since they both confessed to the christians -- i'm a little nervous -- >> you want to know their position on abortion? >> i would like to know both of their views. if they are against it, what will they do to stop it? >> all right, thanks. >> i am 100% pro-life, believe life begins at conception. i would support an amendment

for human life to the constitution. >> i am a christian. i think that abortion ought to be as rare as we can make it. i would support parental notification and restrictions. it ought to be rare, but safe and legal. i probably come down on the libertarian view. >> anything else to clarify? >> education, gentleman. the what is becoming increasingly well-educated, as you know. china and india are now gaining momentum. they have more graduates with bachelor's degrees than the u.s. what is the role of the u.s. department of education insuring americans have access to the highest quality of education so we can be prepared to battle in the global market? >> a supportive role. i worked for an education governor for about six years, helped to write the reform act

of 1997 for higher education. i know kentucky needs to get more educated as a society if we will compete with indiana, tennessee, ohio, and of virginia, much less china and india. we have had to -- try to have a accounts and rewards for lower education -- and have worked on reforms for higher education. we need to be committed. committed for early childhood education in that the child who cannot read at seven years old is a likely drop out at 17. depending on the year, between 6% and 10% comes from federal monies. if you were to take that up, the department would really be hurting. we are really good at getting kids into college.

but retention and graduating is dropping off. i think we are now north 9 in the entire world in terms of graduates. i'm glad that the federal government says they will lend directly and have a longer period of time to pay off loans. we need to continue with pell grants and stafford loans and make it easier for young people to afford education. i don't want to see any young person drop out because they cannot afford it. >> you would not cut federal money to support programs? >> absolutely not. we need to get more educated, not less. >> the department of education has basically doubled in size. the no child left behind is a mistake. if you talk to teachers around kentucky will find most agree with me. probably 90% agree that no child left behind is a mandate by the federal government that interferes with the local education of our kids.

you also hear an extreme dislike for the idea of unfunded mandates. you hear it through all of county, city, and state government. the federal government will tell the superintendent of schools in warren county what you can do. in the end, money is spent in one area and the kids do not have computers or something else. i am for more local control was superintendents, teachers, parents -- the local community needs to be more involved. >> on higher education from the federal department, would you suggest held grants and student loans be cut? >> no, but i have proposed getting rid of the department of education -- i would put things we want to keep and to other departments. but i think we have gone too far in terms of federal

involvement for education for most of our history. ronald reagan ran on the platform of eliminating the newly formed department because we as republicans always believed in more local control. rather than transmitting those powers and sending not muchmoney to washington. >> many people watching have gotten education on the g.i. bill, a pell grant, or stafford loan. to say you want to deal with the department and shift money elsewhere -- he was talking about how i am too simple. that sounds simple, but the fact is, you are eliminating held grants and assistance to young people. >> i said we would transfer them to other departments. >> on cap and trade, if the

original bill is dead, what kind of energy bill would you support? would it include measures relating to kentucky state coal, and energy costs? >> i think hundreds of thousands of jobs to be lost with cap and trade. up in henderson we have two aluminum plants that employ 1500. those jobs would be lost. this is a clear distinction. early on jacked has been for cap and trade. the newspaper reported that he sent them a statement of it. even the progress of blogger has said he has had many conversations with jack. and jack has expressed interest in capt. tree. once he found out it was unpopular, he has expressed the other side of things. but kentucky will not tolerate ambivalence.

i will oppose cap and trade and president obama to and nail. >> clarify your position. >> i am against cap entered. i will stand up for the kentucky coal industry. my opponent has said it is one of the least favorite forms of energy. he wants to take things back to the 1930's. we can stand up for kentucky coal and those who mine in. i'm understand its importance. i worked on the tax credit for money when i work for local governor, on redoing some industrial development pieces of legislation so peabody coal could reinvest in my father's home county of union county about 10 years ago. he can talk about my position all that he once that i am against cap and trade, but when the epa stance ford and tries to do with the congress decided not to do -- the attorney general of

the commonwealth filed an action against the epa. "the lexington herald leader" -- his ad is false. i stepped up with governmental action for the people of kentucky to protect kentucky call. >> did you join the lawsuit? >> it was filed about one week ago. the governor directed his cabinet to do it. we are looking at it now from the attorney general's office to see whether we will sign off on it. >> quickly on medicare and social security -- clarify your positions on both, and how you would think that adjusting that if it is the correct word, would reduce the deficit? >> we are short of money in both, simply for demographic reasons. where weting to a time will have one worker, one retiree. everyone has heard the term baby boomers. you will have to make some

difficult decisions. not on current retirees. it is a mis-statement of facts. i do not support raising the deductible, or changing anything for current senior citizens, but for younger people like myself, there may be changes. but on the younger folks, it probably should be directed more towards means, and still with consideration -- the 20% medicare now is picked up for those in poverty by medicaid. >> jack conway, something will have to be done. do you agree with any of these solutions? >> no. the senior citizens with whom i speak cannot afford that kind of cells tax or deductible on a senator nor who says that social security is

a ponzi scheme. if we had done it years ago, we would be in a pickle now. we need to make sure medicare can engage, negotiate for lower prescription rates. doing that would save $200 billion and help strengthen the program. we need medicare fraud units in every state. that is $100 million in additional savings. social security is a social insurance program designed to keep people from starving to death, not an investment club. i'm tired of these politicians wanting to privatize it. i will never do that. >> as we wrap up, a final question. kentucky is and has been the home of many admired statesman and effective leaders from abraham lincoln and henry clay to wendell ford and mitch mcconnell -- which kentucky politician most inspired you to and influence your public life?

>> wow, i have known some great kentucky politicians, the goddaughter to my daughter -- my daughter was born on her birthday. the experience that i had an 18 when it first went into meet with wendell ford, he gave me all this time, showed me around the office building. a couple of months ago we went back to the capital and every elevator operator said this is the nicest man to ever grace the halls of the u.s. senate. i would love to be just like that. >> when i got started in the race, i got started to defend jim buntning. i really admire that he was not afraid to stand on principle. when the senate and congress passed a pay-as-you-go, when no

one else would stand up on the floor, senator bunning said enough is enough. many said the bank of bailout was wrong. he stood on principle and voted as he believed was right for kentucky. >> gentlemen, thanks. good luck next week. next monday, on election eve, our state democratic and republican leaders. along with jennifer moore and john david dike. our election night will begin reporting returns during the news hour, then join us for a full viewing and full evening of live coverage on ket and online. >> that debate happened last

night. some news just before the debate got under way from the associated press -- campaign republican u.s. senate candidate rand paul is expressing relief that a woman who was harmed by his supporters was not injured. it happened last night in lexington before the debate. lauren of the liberal group move as try to give him a fake a word when supporters took to the ground. rand paul said the incident was very unfortunate and violence has no place in civil discourse. elections are one week from today. each not we're showing you debates from key races around the country. tonight we will begin at 7:00 p.m. eastern with live coverage for south carolina. later, the focus is on the indiana senate debate. we will show you a discussion with the person from the tea

party express. finally, some house debates from new hampshire and pennsylvania. from the morning store in politico in an e-mail to the democratic governors' association, former president bill clinton emphasizes five gubernatorial races are crucial to the future of his party. he writes that most governors elected will have broad authority over redrawing congressional districts. if republicans are elected, there could be a decade-long gain of 30 house seats which could cripple the obama administration and reduce the chances of a bright future for our children. this afternoon, the white house is holding a briefing with robert gibbs said to begin at 1:00 p.m. eastern. we will have it live here on c- span. >> every weekend on c-span3

experience in american history to be, beginning on saturday at 8:00 a.m. eastern. hear speeches by national leaders and eyewitness accounts of events that shaped the nation. visit museums, historical sites, and college campuses. american history tv, all weekend, every weekend on c- span3. >> last night the three major governor candidates of minnesota faced each other. the democrat, republican, and the independent are running to succeed gov. tim pawlenty, a republican who is retiring. the newspaper poll released on the 24th found ddayton leading in a survey of 999 likely voters. a political report reads the

race a tossup. this is about one hour. >> three candidates and to convince you they have the best solutions to the critical problems facing minnesota. announcing the budget, whether to raise taxes, and by how much, how to educate your jargon, and how to fund health care -- they are running for governor, and what your vote -- and how to educate your children. >> welcome to the prime-time debate in the 2010 gubernatorial race. we are broadcast live across the state in conjunction with the league of women voters. coming to you live from after a st. paul at the beautiful, new, main hall. we have a live audience on hand. for the next hour we hope for a freewheeling discussion for the issues.

the candidates have agreed to a format that will hopefully allow it, and focus on several subject areas, that will not require time responses. it will also allow candidates to address one another if they choose to, to get specific answers. in alphabetical order -- dayton served as a u.s. senator, state auditor, and commissioner of the minnesota the barman of economic development, and of energy and economic development. he graduated from yale and was the goalie for the school's hockey team. he taught signs for two years in new york city. he was born in the minneapolis and raised in long lake. he has two sons. the. emmer -- the republican is part of the house, and he served on two city councils and was

part of the law firm. he graduated from the university of alaska where he also played hockey. he earned a law degree. he and his wife have seven children. the independent candidate, a public-relations firm cannot work for the republican senator, and was managing editor of the sun is bibbers, graduated from the university of st. thomas where he now teaches. this is his first run for elected office. he is from minneapolis. he has three children with his wife. >> you have the candidates. let's get to the issues. we will begin with the biggest issue -- balancing the budget. we face a projected nearly $6 billion budget deficit. i want to ask you each to give me the litany of things you plan to do to balance it. emmer, you plan to balance the budget through mostly spendingd cuts mostlyayton, you must we

want to tax wealthy citizens, part-time snowbirds, and the independent canada it wants to expand the tax to cover clothing and such. how you find an area where you would compromise if you sat down with an important legislator after being elected? gov. tim pawlenty says he wishes that the shutdown could have lost a blogger to extract more concessions. would you be willing to go to a government shutdown if you needed to in order to stand for your principal of smaller government and more spending cuts? >> first, before we talk about the bad things that could happen, because that is no one's goal, we need to talk about -- i would change it a little with all due respect, the idea is just spinning cuts -- people need to understand that we will

have more from our general fund to spend two years from now. the next state legislature will have almost 7% more in general fund revenues to spend. ours was the only complete, detailed balanced budget that will force government to live within its means. that is about $3 billion more to spend. we don't believe you need to raise taxes. we believe the government can purchase services expected. that is within the increased revenues. the other part of the discussion needs to be about growing jobs. to answer your question, here is how we get both sides of the aisle to work together. i have offered things like reducing the corporate franchise tax, expanding the angel investment tax credit, and other tax credits that have had broad, bipartisan support.

the candidate who offers a sales-tax increase, i know he talks about reducing it -- that has very little support in either body of the house. proposal to tax a certain segment of the population got all of seven votes. >> answer the question. if it came down to it, would you do what governor tim pawlenty did and forced the government shut down to extract more concessions? >> i believe the government has to live within its means. again, the governor should not push shutdowns. we'll have to work together. leadership is about leaving people to where they need to be. if people are not willing to get together on a solution, then the governor has to leave. >> i did not get an answer the. senator, can i get an answer from you? how far would you be willing to go? would you allow government to

shut down? >> no, i would not shut down government, tom. government gives important services to the people of minnesota. those need to continue. public safety, education, and the like. i have served in the executive branch through nine sessions. i believe in working collaborative leave with the legislature and would do so as governor. we need to make taxes more progressive. taxes are in the 1990's, when the enjoyed much better economic growth, were evenly distributed among the population. now, the wealthiest people in the state with incomes over $1 million, 2/3 of their incomes in taxes. i will work with the legislature cooperatively and constructively to achieve that goal. >> what if you run up against a

legislature that says absolutely no to the tax increases you propose? >> i agree that increasing employment in minnesota is our number one priority. in the short term, the legislature has almost a $6 billion deficit to a -- $6 million deficit to deal with in the next five months. the reality is for every dollar of revenue the legislature is not willing to increase, they have to cut a dollar of spending. they have to tell the people they have to cut a dollar for education, services, government aid. representative emmer would make property taxes go higher. >> tom horner there is no chance you will have an independence party majority in the house or senate. how far are you willing to go to fight for the things you are proposing in this campaign, including lowering the sales tax? >> ne governor has to hold true to his principles. now that these two gentlemen have given their standard stump speeches, let's talk about reality.

what you heard from representatives emmer and senator dayton is exactly why we will have gridlock. every newspaper that has endorsed me almost without exception has said that i am the only one that can break the gridlock because i am the only one who really has ideas are around innovation, ideas around how we create jobs, how we build a better state for all minnesotans, but also the only one that has the leadership, the ability to break through the part is an ideological grid lock that we have seen. you have seen from senator dayton a person who keeps running for one office for another, has never shown the leadership, never shown the ability, the temperament to really be a leader on these difficult issues. we are going to face some challenging issues next year, not just around the budget, but job creation, the future of education, how we spend. all those will take very challenging -- they will be very challenging issues that take

leadership. >> would you ever for a government shut down if that is what it took to get what you want? >> you would hope that you do not have to force a government shutdown, that you can work with legislative leaders on both sides to get something done, but you have to be true to your principles. you have to be true to the state of minnesota, and you have to have a budget that works for people, not just a math problem to make it add up. that is what they did with representative emmer, with senator dayton's party. >> he just reference your series of budget targets you have proposed. within those targets, you have given precious little, if any, detail about how you would achieve the spending cuts you are looking at. our minnesotans -- are minnesotans expected to just assume you will get there somehow? >> i have provided more detail than anyone running for this office. mr. horner has a budget that is

$2.5 billion short. senator dayton has one that is $1 billion short, and he is still making spending promises. there are some areas in our proposed budget in the next two years right now, but for instance, we have not cut k-12 education in our proposed budget. we have not only maintain the state's current commitment, we have added another $500 million. health and human services is an area that someone must get under control. you have to be responsible to date. we have added $650 million to that area. we have to make it clear, when these gentlemen are talking about $5 billion or $6 billion deficit, people do not like it when they find out that it is not the government is losing money. but government wants to spend almost 20% more. >> they really do not like it when the legislature, the governor, democrats, republicans did exactly to the

state of minnesota what you did this year when you pretend you balance the budget at the state level and end up with school districts having to go to four- day weeks. when you pretend to balance the budget and end up with communities having to cut fire and police. when you pretend to balance the budget, and now be as small businesses to balance their payment on sales taxes. that is not leadership. that is part of an ideological pandering that is not going to work for the future. >> mr. dayton, jump in here. >> representative emmer talked about the same level of funding, but we are expected to have 14,000 more students in our public schools over the next two years, so the same level of funding with 14,000 more students is on a per-student basis a cut, just like governor pawlenty has cut in real $1,300 dollars per student. that is why we have overcrowded

classes. that will only get worse under representative emmer's proposal. >> we will talk more about education in a bit. mr. dayton and mr. horner, both of your proposals call for tax increases. is it a good idea to take money out of the private economy and give it to government? second thoughts about that? >> none of us created the $6 billion deficit. one of every $6 the state is projected to spend on health and human services, on education. with that revenue, spending cuts are going to have to come out of very tough decisions. but i believe the department of lebanon has said the wealthiest people in the state are paying only 2/3 a percentage of their income compared to the rest of minnesotans, and i would ask them to contribute more so we can not go to four-day weeks and provide services that people need. >> the money is coming out of

the private economy. wealthy people spend a lot of money to buy products and services that middle-class people provide for manufactured. is it a good idea to take money out of the private economy to the level you are talking about? >> it is a good idea when democrats and republicans have left no other choice. when it is based in tax reform, based in looking at the economy and how we need to move it forward, so i want to correct senator dayton on one point -- one of us did create the problem. democrats created it. republicans created. i propose, and to the point that there is no support for this, that democrats, including the share of the senate tax committee this year, said that the kind of proposal i have put forth is exactly what we should go to. the business-led tax commission -- tax reform commission appointed by governor pawlenty came to the same conclusion. we need a tax system that works for today's economy.

that is what i have had the courage to propose. >> there is no tax reform when you are just adding billions of taxes. you can talk reform, but when you're giving government another revenue stream without addressing structural reforms, that is not leadership. it is not $2 billion or $3 billion these gentlemen want to raise in new taxes. it is $5 billion and growing every day. senator dayton, we have added more per pupil in the last five years than the legislature prior to that ever did. you can talk about throwing more money at the problem, but it comes down to reform and making sure our kids are getting the education that we want, and being beholden to the union head in doing what he wants you to do is not going to lead this state to the types of reform typesk-12 -- type of reform with k-12 education. if we can give the people

administrating our schools the freedom with the need to go to get the highest return for the value, that is where we will see results, but if we are just going to be beholden to the union boss and not let any reform get through, that will not help our kids. >> very brief response. we will have a segment on education in a moment. >> 72,000 teachers in minnesota have endorsed me. i will work with them because i have been a teacher myself in new york city. education is provided three teachers. it is the magic in that classroom, and i am committed to working with teachers, which is have their support. >> let's shift our focus to jobs and economic development. we learned that the state lost nearly another 10,000 jobs last month. the unemployment rate has stayed at about 7%. you have said it is important to pass a $1 billion bond and bill to create jobs. to those create long-lasting jobs or jobs that end up being meaningful in the long run? >> they are very meaningful for

the 20,000 people who are not working today improving those buildings all over the state of minnesota. so absolutely, yes. that is the way in which the government can be a partner. government has a proactive role to play in support of the private sector. those 20,000 jobs are private sector jobs financed with a bonding bill and construction companies employing people in the private sector. they pay taxes, which is what we need to do to encourage job development. along with my energy savings fund where i would loan money out to the schools, starting with colleges, retrofitting buildings, retrofitting heating and cooling systems. save taxpayer money using clean energy. there again, government is a proactive partner with the private sector in job creation. >> mr. horner, you propose that much more modest bonding bill. you have some doubts about how much that does in the long run to create jobs that families can

depend on over the long haul. >> my long term economic development program is not rooted in bonding. that is something that is going to create some short-term jobs. we need to focus that on with the need for investment is. senator dayton's tax proposal -- here is the reality. last week i was in minnesota where they had to purchase a $4 million press that made it possible for them to hire 40 million new people. they say flat out its center dayton's proposal had been in place, they would not have been able to buy that press for higher those 40 people. -- they say flat out if senator david's proposal had been in place. that is the reality. he loves to talk about taxing the rich. the reality is that when he ran for governor the last time, he was the one who was proposing a sales-tax expansion because it is a great thing to do.

it is good economic policy. if we couple that with tax reform, create the incentives for individuals and businesses to invest, invest in new businesses, research and development, technology, new equipment, the kinds of things that drive economic growth. but we have to be honest and say that we are truly going to balance the budget, not come up with a budget where the numbers add up, but the numbers are phony. >> i believe you voted against every bonding bill that came before you in the legislature. why is that? >> when you spend bonding -- it is amazing to me that these gentlemen would propose $400 million in one case for bonding and $1 billion in the other without even knowing what they are spending it on, and the bills that i have seen that i have not been able to vote for -- projects that a statewide of regional significance that provide long-term capital investment, that is where our bonding money should be spent, but when you get bills that

have snowmaking machines in different parts of the state, that is not a project of statewide or regional significance for capital improvement. that is not what we should be doing. you are right, mr. horner. i have provided the only balanced budget, and it would be good if you would provide one with the details so people know when you talk about the taxes you are going to raise, just how much you are going to have to raise to meet all the things he talked about and where they will come from. we believe you have to grow jobs in this state. there is a place for bonding, no question, but we have to put more money in the hands of our job creators and take the burdens we have created through taxation and regulation on those job creators -- we have to relax those so they can start growing business again. >> in cities all over the state, they have said that your proposals would result in higher property taxes.

at the minnesota department of revenue, they said for every dollar you cut local government aid, property taxes go up by 67 cents. same with your cuts in school funding. we were in rochester earlier this week, and the rochester chamber asked about the expenses that governor pawlenty vetoed in the last bill. the improvements in our minnesota colleges and universities. there are some very important projects -- 19 learning facilities that are ready to be improved with governor pawlenty be telling the last bonding bills. there are projects that are ready to go, that will benefit cities all over the state. >> i do need to respond to that. when you talk about local government aid cuts resulting in 67-cent increase, at the local level, i think people need to understand that local government aid was intended originally to provide the communities that do not have the economic base, the opportunity to provide the number one

obligation of government, which is public safety. police, fire, sewer, water -- those things. today, some cities are using it for more than those essential services. people have to understand that of all the local government aid dollars the state issues right now, only 20 cities get over 50%. only five cities get almost 40% of all the local government aid that is issued by the city. when senator dayton says this causes a dollar for dollar increase, it is not true, but there is one thing that is not true, and here it is -- if we do not let the states spend a dollar and it only cost us 67 cents, did we not just save the taxpayers 33 cents on every dollar? what is wrong with that? >> we are going to move on. we are partnering with our sister stations across the state of minnesota, including of in duluth. let's hear from dennis anderson at wdio-tv. guest: -- >> last week, we

learned that a precious metal mining project is going to be delayed. do you think minnesota has a proper balance between allowing job growth while also protecting the environment? >> again, thank you. tom horner, we begin with you. >> i am appreciative that "the duluth news tribune" is one of the newspapers that has endorsed me, and part of it is because i do take a more profitable approach to this. senator dayton has been the campaign complaining about mcpa, saying that it is too lax. his ideological constituencies of the partisan gridlock, but it is not the reality. within the department of natural resources, we have people who are experts, who understand the environmental consequences of these mines, these new opportunities in northeastern minnesota, and they have done a very rigorous review of these

activities of there. what is happening now is that the federal government is stepping in, and the people in northeastern minnesota will tell you that they are willing to go along with it. they are willing to comply. they want a system where they know what is going to happen. they want to know the process, and they want to have an advocate in the governor's office that can help them on this. should we get these mines done? should we do it in a way in which we protect our environment? should we do it in a way in which we hold companies accountable so if something does go wrong, we have the resources from the company's to mediate? absolutely, but that is where the jobs come in. that is where leadership comes in. >> you said there is too much leadership in the state and that it stifles progress. >> there are too many agencies with overlapping jurisdiction at the state level that all create new rules and regulations that we must abide by, and then they all compete for the right to enforce those rules, and it

creates a lot of excess of time constraints and obstacles for people trying to start businesses. not just horizontal it at the state level, but vertically, you have to talk about the county and local level as well. what we have been saying to all of minnesota, and i say to dennis is this -- we have a commitment to our environment. there is no question. it is not a matter party. we are all minnesotan. one of the things that makes minnesota such a wonderful place to live are all our natural resources, and we are committed to be good stewards of those resources. in addition to the commitment of our environment, we have an obligation to the people of minnesota to make sure they can enjoy the quality of life that this state offers them. if we are elected, those mines will be open. >> i have been endorsed by the newspaper in the region affected by these decisions because they know that i was involved in job creation projects there and

throughout the state. i believe and i have learned throughout my experience that strong economic development and sound in my middle projections are complementary. people read the air, children drink the water there before anyone else in minnesota does, so we need to protect those natural resources for them and future generations, and we need to look for every opportunity where we can responsibly create jobs, and that would be my objective as governor. >> we are also partnering with kxas in alexandria. let's hear a question from them. >> according to the minnesota department of economic development, the unemployment rate is 13% compared to just 7% in minneapolis and st. paul. how do you plan to create jobs in rural areas and small towns? >> we have already put out our plan, and first, we would reduce the corporate income tax by a

point in each of the next two years, not waiting until the future, but immediately. in the next two years, that would put approximately $360 million in the hands of employers so they can start making capital purchases and hiring people. second, we are proposing a 10% exclusion on gross income for small businesses. people do not realize that business is commonly identified as llc's -- the owners of these businesses while personal income tax returns. the 10% exclusion would allow those businesses about $160 million -- $150 million or $160 million for them to start hiring again. this should be border to border economic development, not just pockets in minnesota. >> there are several things we have to do, and i laid out a very specific proposal to do these kinds of things, and it starts with local government assistance. we need to make a commitment to lga and hold true to that

commitment so that communities around the state can make predictable investments in their future. second, look at the policies that have come out of democrats and republicans in this last year. that is destroying the role health care system in minnesota. hospitals are now being forced to deal with more and more emergency room costs because democrats, republicans, the legislature, the governor have cut programs. we have nursing homes, 20% of which are on the verge of bankruptcy. many of them in rural minnesota. many of them tied to community hospitals. we need to make an investment in education. central lakes community college is a terrific program that will suffer damage under both of these budgets. they have the equipment and the two-year program, 100 students -- some of the traditional, some of the non-traditional. at the end of the program, they

will place nearly every single person in a job paying $15 or $30 an hour. we do need tax reform. we ought to take the sales tax on capital equipment purchases -- so important to the small manufacturers around minnesota -- and exempted from the beginning, not make them file for an exemption and wait two years. >> mr. dayton. >> businesses in minnesota pay four times more in property taxes than they do in corporate taxes. proposalative emmer's would increase property taxes, and that calculation comes from the minnesota department of revenue, which we have agreed is the arbiter in our proposals, and they have said for every dollar you cut in federal aid, property taxes go up by 67 cents. businesses pay a higher percentage of that than anyone else. they want to provide an incentive for businesses to create jobs, keeping property taxes down is one of the

essential ingredients. i was responsible for tourism when i was commissioner of economic development. i increased tourism from advertising, and there is a multiple of economic businesses -- of economic benefits from every dollar spent in advertising. third, when i was commissioner, we expanded the program for economic development, and we had one of the state of the our economic development programs for local governments and chambers working together all over the state, and i would reinvigorate the program and work with them as partners as governor so we can work with them for every job opportunity in greater minnesota. >> there is not a specific time limit, but if we could keep the "thirdlies" to a minimum, that would help us. the last thing i want to talk about, the issue of expanded gambling. some have talked about it as a way to expand economic development. you have proposed a casino as

part of economic development. >> i proposed it because i think the state ought to get a share of the gambling revenue that already exists, but i do not believe we ought to use it to balance the budget or forecourt essential services. we ought to use it for a rainy day fund or natural disaster fund and is back up funding for a viking stadium. >> our recent poll shows 55% or 60% of minnesotans were in favor of this. >> you have to give it consideration, but you cannot keep finding new revenue streams to grow government at the expense of the private sector. contrary to what mr. horner suggested, it should not be used just to balance the budget. >> that is what i said. again, it is this listening problem that you have where you pretend that you know more than everybody else, and then you talk to the rest of the public

as if what you are saying is the gospel. that is where you get stuck. that is not what we need right now. >> i said i would consider one state-owned and operated casino in the airports in minneapolis, some were receptive to it because i believe mystically need some competition, and i learned from retailers and politicians that competition is good for the consumers, and we would generate revenues than that would go to reduce overcrowding in the schools, and i would devote the funds to education. >> thank you for the brevity of the answers and even the pointed this. we want to hear from our host for tonight's debate, metro state university. >> and the president of metropolitan state university. as an urban university that educates working adults and promote civic engagement, we are pleased to host this evening's gubernatorial debate.

to learn more about metropolitan state, go to www.metrostate.edu. >> thank you very much. this is a beautiful campus, as you can see from that shot, just in the shadows of downtown st. paul. we're going to move now to the topic of education. we touched on this a little bit earlier. mark dayton, i begin with you. you have made some bold education proposals. you said you would pay back the entire $1.4 billion the state goes to education districts. you proposed all-day kindergarten, smaller class sizes, and an end to four-day school week, but he admitted there is no money to pay for most of that right now. are those ultimately going to be empty promises, given the current economic climate? >> my current budget does call for a repayment of the school shift, unlike my colleagues here, which is the reason why my budget might be $190 million

short. if i cannot find savings elsewhere in the budget, as i intend to do, bringing in new commissioners and looking for this cost savings, i would be able to only pay $510 million and delay that $890 million, but i do believe we should be paid the money owed to the schools, and that is money that has resulted in layoffs of teachers and more overcrowded classrooms and unnecessary borrowing by the district. my goal was to increase funding for early childhood education. we are one of the few states that does not provide funding for all-day kindergarten. as more people are working, i will have a chance to make those investments, but the current governor has left us with this budget in the sewers, and that has to be addressed before anything else can be undertaken. >> people on the campaign trail assume those are campaign promises. do you think he can keep those promises? >> not under the budget proposal he has got. senator dayton just acknowledged

that he is $1 billion short, and he is still making spending promises over and above it. you keep making those promises and people are going to go vote a week from tuesday, and they expect whoever they elect to this position will be delivering on what they are talking about. the $1 billion short, suggesting maybe it will be from the ship, maybe it will not -- again, i think it would be helpful if you would put out a complete and detailed budget that shows people exactly where your so- called spending cuts would be if they really exist for how deep the tax increases are going to be, who they will touch $45 $5lion to seven -- for tehe billion to $7 billion you are proposing. let's talk about this for a

second because there you go again. i mean, it is $500 million less than what was projected by the people that are saying, "it has got to grow close " without reform. we believe that if you are going to continue to invest, it should not be just about more money. if money were the only issue when it came to k-12 education or even early childhood education, washington, d.c., would have the best schools in the country, and that is not the case. it is about setting standards and measuring performance. we will increase the commitment as we get the performance, and you have got to start to free up our teaching professionals and administrators and schools to allocate the ample resources that we already have to the kids. it has got to be in the best interests of the students. it is measure, report, reward. measure outcomes, report this to parents so that they can make good choices, and you have to start to reward good teachers

and good schools by paying them more for results. >> tom horner, you said schools do not deserve a blank check, but you propose more funding for education. >> we ought to put more money into early childhood learning. when you have 50% of children coming into kindergarten not fully prepared for success, it is no wonder that among fourth graders and eighth graders, fewer than four in eight are proficient in reading. but i also disagree with senator dayton, when everything is a priority, nothing is a priority. you are simply playing to all of your partisan special interests. this has to be an election where we are not putting minnesota up for sale, where we agree that we are going to make the hard decisions, where we bring the leadership, the tough choices to hold education accountable, but also to recognize that our distinctive competitive advantage always will be our educated, talented labor force. that is where we need to make the investment. >> the dfl party has been

running television ads that basically says schools under governor pawlenty had been failing our economy and hurting our skids, but we lead the nation in a.c.t. scores, and we are among the leaders in fourth and eighth graders in testing scores. to any of you believe that minnesota's schools are actually failing right now and hurting our economy? then the children all over minnesota not getting the education that they need, especially those children coming from disadvantaged backgrounds -- when i go to rochester, minnesota, go to an elementary school, 300 children with 17 languages and dialects spoken, and i see 15 children with one teacher -- i know in an inner- city school with 32 kids in one classroom, you cannot reach that level of children. we do need to provide individual assistance, especially the children in second, third, fourth grade reading below grade

level. in one of our core education districts, they do 1-minute reading out loud diagnostic tests to determine which kids are reading below grade level, and with individual attention, 85% of those children are reading above grade level by the end of the school year. that is the kind of assistance we need for every child. >> how do you explain the high achievement of minnesota students, despite the doomsday scenario painters? >> we have a great tradition of education in this state, and we should be proud of it. we should be proud of our kids and teachers for what they are achieving. our students compete well in science and math internationally. in reading, we have always been a leader, but over the last 20 years, other states have started to pass us by. that is why when we talk about the future, we talk about measure, report, reward, and we also have to talk about real

reforms. i know a lot of folks out there, teachers, the union bosses, who do not like it very much, but we have a shortage of qualified math and science teachers. if we have a resourced out there already, we need to create opportunities for people who have had success in the business world to be able to come into the classroom and use that success by helping us bring the next generation into the 21st century. >> education minnesota has endorsed you. would you be willing to break from them in areas where you think it would be beneficial? >> if people know anything about me after my 35 years serving minnesota, it is that i am my own man. i base my decisions on what is best for minnesota. in education, what is best for our school district. >> if they know anything about you, you have never met a promise that you will not make to satisfy special interest groups. policy makers have failed education. policy makers have failed

teachers, parents, children. it comes when the democrats will not say no to education minnesota and also when republicans pay lip service to local control and go ahead and impose such rigidity on our school districts, on our teachers that they cannot teach. we need to allow teachers to teach. we need to give principals autonomy. this afternoon, i was at a forum of latino parents. i was the only candidate who showed up. the reality of minnesota -- 60% of hispanic and african americans now are graduating from high school. 40% are not in the four-year measure. that is not acceptable. whether we are competing fairly with south dakota, north dakota, or other states, we are not doing well enough by minnesota standards, and it goes back to the minute -- the partisan politics purging minnesota and the lack of leadership we have on this issue. >> that concludes our discussion

on education issues. we move on to the important education and health care, not only important in minnesota but huge in the federal midterm elections as well. again, we are partnering with our sister station in the rochester area, abc six. >> when it comes to health care, minnesota needs to put up $188 million in order to get $1.4 billion in federal money, for early enrollment into the medicaid expansion under the new health-care laws. where did each of you stand on early involvement? >> tom emmer, i will start with you. the current republican in office decided not to do the early talk-i and -- early opt-in. >> my colleagues have been public about the fact that they think minnesota should automatically jump on board and not only spend -- i would challenge a little bit. it is a cost of $430 million to

this state over the next three years. she is talking about leveraging up to $1.4 billion, but of the 11 states given the opportunity, i believe seven or eight accepted. they still do not have the money. more importantly, is what we will do two or four years from now when we are back in the same position. it is time to look at the system and not necessarily say what we should opt into -- not necessarily say what the federal government says we should opt into is necessarily a good idea. minnesota is trying to deliver high-quality care at a good cause. the federal law would provide reimbursement based solely on volume of care. that does not help promote innovation that minnesotans have come to expect, nor do we get reimbursed at the levels we should because of the -- because we have found a way to deliver high-quality care at a low cost. this is not the right idea at

this point in time, especially when we are trying to balance the budget. we should not handcuff ourselves to a federal program that two or four years from now we will talk about raising billions of dollars again. we have to be responsible today. we have to balance our budget and make sure we provide the services to minnesotans without creating long-term financial liabilities we may never be able to repay. >> this is not free money. some people seem to think it is. question of "e correctly the minnesota medical association -- the questioner quoted correctly the minnesota medical association. that money is included in the biennial budget that the governor and legislature have put in place, so the money is there to be committed. it is the most obvious, common- since decision that the next governor could make to make that commitment.

$188 million, and at $1.4 billion in federal money, it would mean we could provide better quality care for minnesotans and enables hospitals all over minnesota to provide better quality health care to all of us. why is every other hospital saying to all of us, "please, sign this. we need the money for our financial stability so we can provide better quality health care to every minnesotan9." it is the most obvious decision that any governor would make, and i will sign in on day one. >> i do believe we ought to take the early involvement, but not because we get federal dollars. because we have an opportunity to expand access. when you talk to those people who are on the front lines of providing the high quality care that representative emmer towns, they will tell you doctors, hospitals, the other care providers -- they will say that if we do not expand access, if we are not able to take this, the quality will erode. look what is happening already

this year among our small businesses. one of the reasons why minnesota has been a leader in health care is because we have made it possible through good public policy, good decisions, good cooperation with providers, employers, employees, to make sure businesses are able to provide health-care coverage for their workers. i know the challenge of that, having run a company, having been responsible for providing benefits, but we have small businesses around the state having to drop coverage. what we get instead is senator dayton saying we should go to a government-run system. representative emmer saying we should just convert to a voucher system. >> governor pawlenty called on the state attorney general to join a lawsuit against the state reform bill john -- the state health care reform bill passed by congress. is that a good idea? >> it is about politics, not about policy. that health reform bill will not be repealed, and we are not

going to go to a single payer. let's have an honest conversation about what we need in health care. >> do you favor universal health-care coverage in minnesota? >> we should look at how we can provide health care for all minnesotans a low cost. the question about governor pawlenty, the federal bill so far has said that young people up to the age of 26 are now carried -- covered under their parents' health care policies. that benefits students and those just graduating all over the state. it says you cannot deny children coverage for pre-existing conditions. says that preventative procedures do not require a copiague. is there anybody who would repeal those good decisions that benefit the people of this state? >> both my colleagues have been on record saying they support single payer or a government-run health care system. i disagree with both of them. i do not believe the answer is

the federal one size solution fits all. someone approached me yesterday saying that every real estate transaction under the federal health care bill, they will have to pay money to pay for it. on every real estate transaction. what else are we going to find out over the next few weeks? there is an election on november 2. americans understand the federal solution is not the answer for everybody. minnesota should lead in this area. i think the goal that we both have, which is to make sure that everybody has access to the greatest health care the world has seen, is here in minnesota, but i do not think you do it with more government. you create a system where people get more access because they get more choice, more ownership over their own health care. we talked about decoupling health care insurance from employment. let individuals start to deduct premiums just like we only let employers do it now. let individuals give us the

ownership of our own health care. let us work for one of the 30044000 professional brokers in the state to design cover -- design covers the works for us. people in government should start testing the citizens to care for their own health. let us shop one of the 1300 approved health insurance products across the country. it you start giving more ownership to the individual, you create more access because there will be more market access. >> i have to correct that -- one of the good things about having 12,875 debates is that there are a lot of recordings out there. i have never said that i support -- no, it is not. i have never said that, and you know, in all these debates. i asked you three times -- do you support converting public health programs to charity care? three times, you said yes. that is on record. at another debate, i asked if

you support single payer systems, and you said yes. you cannot keep dancing around this. we need stability from leaders. we need the temperament that says i'm willing to be a leader, stick to my answers, and in these people find solutions. that is not what we are getting. >> we have to take a break for a message from our partner in this debate, the league of women voters. >> we are the co-presidents for league of women voters, minnesota. on behalf of the league of women voters, minnesota education fund, thank you for watching the gubernatorial debate. please vote november 2. your vote matters. >> further candidate information is available through the of women voters minnesota 2010 online voter guide, available on our web site. >> i'm being told we are running short on time, so we will try to

keep these answers brief. we will get through several more questions in our remaining minutes. we have not heard about transportation in this particular election cycle, at least at the state cycle, but there are all kinds of proposals for high-speed rail and light rail expansion throughout the cities. tom emmer, do you support any of this? >> transportation policy should be about moving the greatest number of people and product at the greatest value, for the dollars you are putting in. when you say i have not been supportive, and i have been supportive of every transportation option out there, but we need to look at the cost that goes on and, not only the capital cost of constructing it, long-term cost of maintaining it, and how much that will serve the public, how many people and how much product that will move. people need to understand while transit is an incredibly important part of our

transportation infrastructure and always will be and we need to find new ways to deliver transit services, 95% of the people in the state of minnesota travel by road and bridge. we can work to double transit ridership and 90% of us will still travel by road and bridge. we need to work on creating new roads and bridges, and in transit options as well. >> you say you favor high-speed rail from here to rochester. can we afford that? >> we can if we make a decision that that is a priority. the minnesota department of transportation estimates that in the next 20 years, we will need $65 billion to maintain capacity on our roads and bridges. they have identified $15 billion in funding. we have a $50 billion gap. as much as you want to dispute the fact that the state has all of this new money coming in, the reality is we will have to look at how we fund transportation in new and better ways.

i do believe we need an integrated system that includes transit, includes good roads and bridges, and includes both passenger and freight rail. >> can you afford these things? would you favor an increase in the gas tax? >> if you want a real-world example of what happens when government fails to make necessary investments, look at what has happened with our highway and transportation system in minnesota. we kept the same level of funding in -- as we had in 1990, we would have spent $15 million -- $15 billion more. that means increased ingestion all over the metropolitan area, deterioration of highways, public transit system lagging behind. i would appoint a legislature to create and the transportation finance authority of experts in transportation and transportation finance to tell us independently what we need, the scope of those needs over the next 50 years, and how we can best finance them.

we are so far behind now that we have to take significant measures to catch up. >> would you favor a gas tax increase? >> i do not think that is a necessary approach now because the funds are so limited from that approach. relative to the scope of the need. we need to look at adopting what other states are doing, which is transportation bonds that would provide a much larger scope of project over a faster period of time. >> we have about one minute left. we are in the waning days of the campaign. there have been a lot of negative advertisements out there, not many from your campaigns, but from special- interest groups. is it a problem? is there a personal attack for someone to go after your u.s. senate record? >> i do not consider that a personal attack, but i think some of them now have distorted so badly the situation, but those are independent expenditures. what we need is instant reporting of where every dollar is coming from so people can

assess their interests. >> special interests spent $600,000 criticizing you about a couple of dui arrests from 20 or 30 years ago. >> i cannot control what senator dayton's family and the unions do. i made a mistake. that was 20 years ago. i learned from that. i would say this -- we are going to keep running positive advertisements. that one is tragic. i feel for the family, and i am sad that is being politicized, but if it helps one person out there not make the same mistake, run it as much as he won. >> if you do not get off the hook just by washing your hands and saying that those are independent expenditure groups. they are your family, your interests, the kind of people you are bringing into the state, and it is appalling. >> time now for closing statements. tom horner, we begin with you. >> i want to follow-up on that

point. there is a reason why every major newspaper in the state, why every former governor, what partisan republicans and democrats have said that this is the year they are going to vote independent. and in some cases, the first time they are going to vote for a non-member of their party. i have offered the leadership, the vision. i am the one who says how we break the gridlock. i have a career of stability, the temperament to need, the experience to bring people together. when we see the most partisan kind of interests being played to by representative emmer and senator dayton, we are paying the consequences. minnesota is up for sale to the highest bidder. this is not about minnesota being a better state. it is about how minnesota becomes the best state, and that is why i'm asking for your vote november 2. >> tom emmer. >> thanks for having us tonight.

i would say to people watching -- there are three people running to be governor of the state of minnesota. there are only two messages. my colleagues offer the same message we have been year -- we have been hearing for years. they represent the interests of government as opposed to the people it is intended to serve. we believe there should be a new direction in this state. we should have a new government that works for us. it should be smaller, more efficient, and it can still deliver the services we expect, but it lives within its means. we have to get minnesota back to work. that is not a republican, democrat, or independent ideal. that is a minnesota ideal. on november 2, that will be the choice, and we are confident minnesota will agree with us in helping make our vision a reality. i hope they will support us on november 2. >> this election is about the future of minnesota, about your future. there is a clear difference among the three candidates.

my colleagues would raise taxes on middle-income taxpayers, by either a extending the sales tax, or cause property taxes to increase. that is a burden that falls most heavily on middle-income taxpayers and on small businesses. by contrast, i will protect middle-income taxpayers. i will ask the wealthiest among us to pay more so we can make our tax is fairer and i will invest the money in better education, which is the key to better quality health care, better health care services. i will bring in experts to help find efficiencies so that we can reduce the cost of government, so we can provide better quality services to the people of minnesota. because i know that your hard- earned tax dollars can be spent as efficiently as possible. working together, we will make a better minnesota. >> i want to thank the three

candidates for overcoming their debate fatigue and be here tonight. we appreciate it, so let's give them a round of applause. [applause] my thanks again to metro state university and the league of women voters. election day is november 2. we hope to see you at the polls. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> white house spokesman robert gibbs will be briefing reporters today. this was originally scheduled for 1:00, but the briefing has been moved to 2:00 eastern. we will have it live for you when it starts. mid to elections are one week from today, and each night, we are showing debates from key races around the country. looking at our lineup tonight, starting at 7:00 eastern, live coverage of the debates for the candidates to the south carolina's next governor. tonight, we will show you a discussion from the tea party

express, and finally, a pair of house debates from new hampshire is first district and pennsylvania's third. the national republican congressional committee chair, congressman pete sessions, names a handful of democrats as gop targets. he also lists representatives from new jersey and north carolina, colorado, and new mexico as new tossup races for the group. he wraps up his memo with this, "make no mistake -- nancy pelosi's days as speaker of the house are numbered." the latest list of endangered democrats no longer getting money from the democratic congressional campaign committee to help wage their reelection battle. congressman from ohio, representatives from florida, and illinois. a reminder that we have dozens

of debates and stump speeches for you to watch any time on our website. also, there are campaign advertisements and lease to other web pages, all of our website, c-span.org/politics. today's white house briefing in coming up at 2:00 p.m. eastern. until then, a look at the potential impact of the hispanic vote on today's elections on today's "washington journal." director of the league of latin american citizens coming here to talk about the hispanic vote in campaign 2010. what is your group doing specifically to get hispanic voters out? guest: we are doing a massive campaign tried to get the hispanic community is to turn out and vote. we are working in local communities making sure that those who have registered are

primed to vote on election day. host: the hispanic vote could be crucial for democrats. in 2008, 85% of registered hispanic voters went to the polls. we have seen other polls leading into 2010 that says a latino voters are not enthusiastic. guest: i think there were a lot of hopes with the new administration that there would immigration,orha example, and they are not quite as excited, but recently, we have seen a jump in enthusiasm. over 10% increase in just four weeks. we believe this is just because people are starting to focus on the race. host: your center shows that

latinos favored democrats by 62%. guest: we are a nonpartisan group. we just want latinas to go either way. they have shown to be a sort of a swing vote. with the obama-mccain race, hispanics voted in favor of president obama. host: this is "the financial times" this morning -- 20.3% of colorado's population is hispanic. guest: that is what we are seeing across the nation.

states that matter, they have the potential to be the deciding population. and the fact that populations are growing and becoming more engaged, they will play a decisive role in this election. host: does your organization spend money on getting the ground game out? guest: y, we do that sort of thing, facebook adds, but most of our efforts are on grass roots efforts, making sure there are people on the ground encouraging others to vote. a lot of latino voters are of age b they are not citizens yet, so they are not eligible, so we try to get them to apply fo citizenship. once they register, of course, we want them to vote. it is a three step process, b we have started to see dramatic gains in the latino vote.

host: how is your group funded, how much do you spend all that effort? guest:e have member dues. we have thousands of members across the country but we also have support from major corporations, foundations, and even some government support. but the majority of the get-out- the-vote effort is generated by corporate. not a huge amount compared to the other groups that are spending millions of dollars. we are a very grass roots, volunteer-driven effort. it is very different from these campaigns amassing $150 million. host: latinos for reform ran a tv ad telling latino voters why they should not vote. you ran your own tv spot refuting that. let's talk about that.

>> don't vote. >> now tt we have your attention, let's address the immigration reform. both parties have failed the latino community. republican rhetoric has been brother responsible, but so has the democratic party's inaction. this november, when you vote, demand respect. do not just give your vote away because it is expected. do not reward irresponsible behavior. demand respect when you vote. >> it is election time. political operatives are once again trying to suppress us. these self-described patri to undermine the democratic process by increasing voter identifica r