>> in a few moments, you've hear from stuart rothenberg. after that dik armey of freedom work works tomorrow morning, we'll be

joined by the group americans for prosperity. washington journal is live on sfan everyday at 7 a.m. eastern. >> this year's studentcam is in full swing. make a 5-8 minute video we take

c-span on the road bring our resources to the community. washington your way. now available in more than 100 million homes. created by cable and provided as a public service. this is about an hour. >> good afternoon. my name is david kaukings.

>> i will be editing this briefing having something when i

signed up to go to college in the fall of 1978, i couldn't get into molysci 101 the first semester. . i was told it was a great class because of the t. a. you may now know he represents new jersey now in congress. but the professor was stu.

i can say that it was one of the best college classes i ever took. there are lessons i draw from that class that i think about everyday from work. one question still rings in my ears everyday. here is the question. i will step off the podium and ask the question and stu will answer it. politics are everything scomplan and suppose mortgage by different people. >> thank you that was rob

andrews. at the time he was just a kid. now he's a member of congress and i'm doing this. that was a yoke rob and i used to do. this was rob. this are people in west virginia in this room.

you heard me approach this as a cold blooded mefb congress. i don't have issues. i don't even care what you think about the issues. i'm like a color commenter. i'm going to look back to the election and what happened and why. look a little bhit at the exits and what it means and where we are headed and spend a couple of minutes on 2012. or maybe 2016. let's jump ahead. i was going through my files. i prefer to call it my junk. i came up with this article that

appeared in the l.a. times in january 2010. written by a historian. she wrote the social history of the united states >> it was written as 2010 as 1994, relax democrats, relax. we had it again accept it was bigger.

many of us saw it coming. when 89% of voters agree on anything that's a big thing. if you are a typical cross section in a business group and

i raised the subject of ghorg bush. you could hear republicans in the audiences shying.

they weren't upset but democrats were bitter. they were angry. so no two years later only 14% said their family situation didn't improve.

if you are a republican, you did in the go out to vote with the energy and conservative. you regarded this administration as going too far on the stimulus, mandate on healthcare reform, cap and trade, involvement in chrysler and gm, nationalizing the banks. if you were a conservative republican, you were angry with the expansive independents

actually have real lives. they are increasingly concerned with taking billy to the dance and susie to little legal but they don't have four hours to be watching fox. they have stuff to do. they have jobs.

nothing wrong with ming sensitive to the mood if you are not obsessed with politics how do i feel? >> swing voters tend to evaluate poll tish ans and parties. two different groups. conservative voters and swing

voters. if we had a job recovery? how do you feel? were there any drinks involved? but you'd feel better. you ask look at the exit pole and see things changed. we had different kinds of people voting. we predicted that. there was a change in sentiment among the people who did vote. this electorate was whiter, older and more republican. >> two years ago, whites constituted 74% and this time

78%. african-americans two years ago 13% and now 10%. age is when really matter. old folks voted. >> i was once talking to a group and look add around and noticed there must have been a bunch of republicans in the group because it was a room of old white guys.

my friend said to me, have you looked in the mirror lately? remember 2006. voters 65 and older split evenly. two years later with a presidential election with barack obama and john mccain, they moved slightly more republican. this year, 59% republican, 38%

democrat. four years ago, they were split even. seniors voted dramatically more republican. was it healthcare? was it dramatic change that they didn't like. >> and proportionnally fewer younger voters. 18% of the electorate 18-point

democratic advantage in 2006. 18. >> two years ago, democrats had an eight point advantage. 56 to 38. think of this two years why does it matter whether democrats voted. i printed this off many, many moons ago.

now 48 districts going into november's election. mccain won but voters voted for a democratic congress. of the 48, republicans have already won 36. there was still one race still outstanding. two years later, four years later. the same republican voters said that's enough, i give up, i'm

voting republican. from mississippi, chet edwards of texas. bob year bright of alabama. these are republican voters. often the democrats voted the way the district wanted. this time they said we are voting republican because we have to change washington this means you are toast. goodbye.

he was our typical liberal democrat. he looked like a college professor. a former state department official in 2006, he just said i'm sorry, we like you but you have to go. she came in and talked about how independent she was going to be and the republican congresswoman at the time who was now the robot and drove for anything the republicans did and she's too conservative. she came in to say i'm a moderate she won and ended up

voting for the stimulus and healthcare and everything else. you may be for you'll of those things. the point is she was representing a very con serve tiff republican district. voters fired her. the problem is somebody like bobby bright who voted against the stim luis, against healthcare, against cap and trade and voters through him out. same thing with bobby bright from alabama. you know how you hear that people don't like congress they personalize the district.

nancy pelosi, i don't like her but i like my democratic member. it didn't work this time it didn't work in 2006 or 2008 for republicans when they tried to do it it is important to think about who came in. this kind of change occurred up and down the ballot. this senate class was evenly

divided this class was evenly divided telling you about the next class loaded with democrats the evidence of a real republican wave. the following state legislative chambers changed powers the indiana house and main house, main senate. the minnesota house, minnesota

senate. the mopt house, new hampshire senate. 19 chambers changed. something like 500 seats. voting for change all the way up and down the ballot. they turned out in wisconsin, michigan. we held in florida and texas and the like. when you look at that map for governors, it's a dramatic

development. is this the first year to have a bad election the only good news for the democrats about that is republicans won so many congressional discorrects.

they may have to eliminate the public seat here. who are these republicans? a lot of different kinds of guys. there are some experienced. shockingly in michigan, prove you can run a bad campaign and winment there are other people, new people coming who are experienced. legislatures and savy political people. dan webster who i think was president of the florida state senate at one point.

bob gibbs, the state snafrt ohio. central and south georgia. there are plenty of these people. also a bunch of guys who are really different. bobby comes into my office about a month ago. across the river is a town. davenport. this is northwest. five of us in the roam.

an area where there is an international harvester factory. held by a democrat for a number of years. he sits down tell me what you do. he owns st. joseppies pizza house. this guy obviously does not have a summer home. ten children and he owns a pizza place and the place is closed sundays so he can spend time with his namly and his employees can. you get the picture. why did you decide to do this?

three months after seeing what president obama is doing, he went home and he and his wife prayed, he decided to run. ever run for office, no. ever run for politics, no.

we talked about his family. i said, you are a dentist, you must have a lot of money. the dentist my family uses we've made them rich. he said my practice is located on a particularly not affluent part of town. >> how are you balancing your dental practice with being a candidate? >> he says, no. i sold my practice to run for congress. i almost had a heart attack. >> what happens in if you lose? >> i'll move and open up another practice. >> if i told my wife i was going to do something like that, i'd be divorced. sheed shoot me.

i'm going to roll the dice and risk it all running for congress. he did win. it tells you something about motivation. another guy. have you ever run for office? ever given money, no. we talked. he is a doctor, a surgeon. i said, well sounds like you are a perfect tea party candidate. i said the tea party must have loved you. he said, they didn't love me at

all. he said what happened was, when i indicated that i was interested in running and announced i was running, the local republican party people. they liked me and endorsed me. when they endorsed me, the tea party people told me i was part of the establishment and went and found something else to run against me.

i asked about the class of 1994. they said those guys had the right instincts, no but when they got to washington, they sold out. we are not going to sell out. they regarded 1994 as guys who caved. i could see why people would say that. as a washington person, i think you need to cave a little bit they learned a lesson. other people learned a different lesson. the 1994 people ended up creating a backlash.

was about to have a glup like this. they talk when cats -- hearding cat cats it is bad enough that he will have to deal with rand paul and this guy lee from oout it

looks like he won't have to deal with you'll have to balance in. i was a little surprised. if you had been in washington. we all know john bainer, you've either played golf with him, played ghofl with him, smoked a cigarette or cigar with him.

he comes from like apple orchard ohio. like in the movie buy buy birdie or something. west chester. he's from very red republican ohio. bill clinton or braub are

differing personalities. after the election, in 1994, bill clinton said i hear the message. i understand it. i got it. if you told bill clinton you wanted him to be somewhere, he would say how fast do you want me there. bill clinton really wanted to be liked. wanted to be liked. when he lost the midterm in 1994, that raises other issues. the party got spanked. he said to himself what do i have to do to regain these

people's support and affection. the question is is whether this president will do that and whether you are convinced he understands he bares responsibility and how he needed to change. if he does, there is still significant burden of republicans to figure out what to do with him. i was surprised that the incoming speaker say, we shouldn't be celebrating now. we can now get back to doing the people's business.

both said you are going to be surprised. >> we have to show that we can cover. we are not going to spend the country into the poor house. we have to show that we are grown ups it may be that we understand that as well. there's no analysis. look at my emails they want to

take the fight. the point at which you've made the fight. now you have to find a place to exit or say we made a point successfully, now let's move on to something else. do assume that braub can't be reelected in 2012.

anybody who tells you they absolutely positively know they will or won't win is not somebody i would advice you to listen to. i'm sure they'll be all over shawn hannity but reexist the temptation to actually listen to them. just think back to the first quarter of 2009. i'll take you back quickly. the president's job approval was in the low to mid 60's. is . there's a special election in new york. the democrat ran supporting the stimulus against george bush saying the republicans didn't

want to give the opportunity to bring about change and they won the district. it was still about george bush, republican congress and change. a year and a half later, the republicans were the congress of change. everything that intervenes. from now to the next year or year and a half, so many events, we are all so event and ins driven. >> clearly the president needs an economic recovery. he needs you all to start feeling better about yourselves and the country. that probably means you have to kneel -- well, they have turned the corner. he doesn't have to have a full blown.

he knees a sense of recovery. you don't want another whip saw election. you'd like to see things improve so you can run and win and say look, we are doing pretty well. mart of the question is about the republican field. anybody who tells you they know who is in the field is going to be the nominee worth ignoring. forerunners are mit romney. i'd be skeptic al. with mitt, we've been there before. he's got healthcare. how his healthcare in massachusetts is law that resem bells the law conservatives

hate. sarah palin. this is a sarah palin free zone. somebody said to me, can you get into her head? i said what? i think she hasn't done the necessity thing. i'm not saying she conned do the necessary things but i'm saying now, she has made no effort to create the dechth and seriousness that one needs to be president. look, we will elect some pretty squirly figures to lower offices. profess al wrestling to the governor of minnesota, comedians, maybe it's just

minnesota. waeft lift the in california. but as for presidents, you know the people in iowa and new hampshire, they take their jobs really seriously. they judge presidential candidates differently. ia, i'll vote for some guy for congress to send a message.

it worked really well for chris dodd. tall, tan, good looking, he's looking at the presidential race. he has to demonstrate some expert he's. he's kind of now like the republican barack obama. he's been in congress let's

leave the lobbyist outside of it. he's from mississippi. have you looked to see where mississippi sits on the stat tis yiks in terms of health, he had kiss and income. thift realities. what do the adds say

if you know mitch, he went to work for indiania. mitch is short, slight and bald. i can identify with some of that but it is not your typical politician. maybe 2012 will be the year for that. come to think of this it he is very, very white. maybe he is the alternative. >> in this country, we go from a young guy to an old guy. maybe mitch is the counter

weight to barack obama. he is a family person. his wife may not want him to run. the other name i'm hearing and i'm shocked. another member told me from wes of mississippi from a very republican, conservative state, this member said, you know the name i hear the most of, people are asking me about is chris christi of new jersey. i thought out there? there are people who know and are thinking about chris christi? these are the same people who are watching jersey shore? i grew up in manhattan, so we

had a particular view of jersey as well. people in wyoming, new mexico, texas, kansas they are looking at chris christi. this member said, they like the fact that he's straight forward, in your face, he does what he says he's going to do. tells like it is. they find it refreshing. do i think the governor of new jersey is ready to run for president? i don't know. he's been governor for 15 minutes. but i am told he is getting very strong and long looks from the financial communicate ut in new york. and running for president now is at least partially a financial thing. i keep an eye to see whether he's interested. the republican race is wide open.

except and unless things get out of hand in the interim. my friend from nbc says there's nothing the white house is afraid of more than an unemployed russ feingold. it could be somebody like russ feingold. normally, something like this. i would take a question or two. does anybody have a quick question or two? i'd be happy to answer. usually i do a lot of q and a.

you can ask about a race or personality or we could go home. last one and first one. >> what's next for the tea party. >> that's a good question. thank you. people have asked can you tell me about the city council race? new york. the tea party is here for the short term. the lesson was that they were effective in organizing andener guying the republican party and had an impact in republican primaries. republican presidential candidates saw that and noticed that. they will look for candidates and keep them relevant. i think they'll be involved in other fights. we have another senate class coming up. is it ten republican senators.

one of them must be from maine. if you are olymia snow, you have to be looking out for the tea party person. clearly they were a plus overall and a minus nice in individual races. norton beats bennett. puts money on it. mike cast will wins, he's the u.s. senator both tea party folks and sarah palin. they are important. they are going to stay significant. we'll be talking about them for two years. they may cause long-term

problems inside the republican party. what do the tea party folks back home thinking. are thi they thinking i've gone back to washington. the way forces go. sooner or later major parties find a way to co-opt them. they find a way to go strong. thank you very much [applause] in the house mainlying or the transition. more now about the elections from freedom works chairman dik

armey from washington journal, this is 40 minutes. with dick armey of freedomworks, part of the tea party movement. "our latest tea party candidates let down republicans at the final hurdle." "tuesday nht was in some respects a failure. never has the house of representatives changed hands without the senate following suit, and the tea party movement should take the lion's share of the blade. the republicans fell at least four seats short of taking the senate. there were responsible for the book cost of at least three senate seats that were essentially there for the taking. guest: i got a kick out of that story. what i found interesting is the financial times placed right above that story two perfectly

ideal establishment candidates in california, very well-known successful businesswoman, funding their own campaigns. they lost, too. writedn't they "outrageously well-founded moderates led down in california." nobody lives everything they put upo the fact of the matter is, 55 elected members of the house of representatives and 12 new senators are . . flu -- it would probably be me, because i do not think

charlie crist could have beaten me. the fact of the matter is, these folks got out there to change america, take it back, make the government conform to their commitment and requirement for constitutionally limited small government. they define this election and i put that down as one of the more amusing stories i have read about the campaign. host: a republican of south carolina says candidates matter, and it depends on what type of candidate you run in each state. for carly fiorina, it was more of an uphill battle for her. republicans could have taken more seats away from democrats but he says it was a good night for republicans, but it could have been a better one. we left some on the table. guest: if i were lindsey gramm and i was concerned about the loss of the seed in delaware, --

if i were lindsey graham, i would have said with allf your standing and all of your credentials and your $3 million, why did you lose to this woman who is hardly known? the fact of the matter is, they had their best course from their stable in the race. they backed their horse and the horse lost. if somebody let down the republican party in delaware, it was their favorite son nominee, not the woman who won the primary fair and square, became their nominee, and found that they turned their back on. host: wednesday graham goes on to say that we do not have a snowball's chance to win the white house. if you think delaware was a wake-up call for republicans, then we have a shot in the long

term. guest: i think delaware was a wake-up call for the republican party. if you're going to have an open primary, then have an open primary. those of you who think of yourself as the in crowd within the republican party that got your hands on the letters within the republican party, had a favorite-son candidate like charlie crist, who was endorsed by everybody, including lindsey graham. if you have that favorite son, that favored daughter, that person, then you bring your horse across the line. but if your horse loses to somebody else, somebody that you are saying -- they whined for months. my party -- my problem with the tea party backed candidates, if they lose, they will not turn around and the support of our nominee. in every instance where a republican primary candidate

lost the race and then turned and supported the democrats or refused to support the republicans or ran as a third party -- in every instance, it was the establishment party's favorite candidate. so if anybody let down the republican party, it was those people who said,, we have a right to have an open primary and we will see it through to the general elections only if our pet project is the winner. but if somebody comes and upsets our favorite in the primary, we are walking away and washing our hands of them. host: does that apply in the general election of alaska? guest: one thing i will give senator be some rakowski -- when she decided that havin lost party's primary for her party's nomination, and therefore i will run as a write-in candidate, she

sought it through. but what wednesday -- but what lindy graham would say is we need republicans in the final analysis. fine, then stand behind your party's nominee. they did not do it in nevada, and they did not do it in delaware. murkowski put her own fate in her own hands, in respect of of the republican party of alaska. she won as a write-in party candidate. host: so should minority leader mitch mcconnell and presumably the next bigger of the house, john boehner, a compromise with democrats? guest: i think what you need to do is understand -- first of all, do not get into the trap we got into in 1994 and 1995.

this is not the question of dueling mandates. the democrats have said the american people gave us a mandate and we areoing to do what they wanted if they do not like it, thecan take it anyway. now, if the republicans say we got a mandate and we are going to do what we want, they will run into the same problem. what they got is a new set of directives from the voting people of america. your group of hired hands, we appreciate that you have this great opportunity. we welcome the opportunity to call you the honorable mr. congressman and be deferential to you, but the fact of the matter is this nation needs a serious public policy reset, and from big government control and domination and spending into financial oblivion to fiscal restraint, responsibility, and governmental respect for the will and the right of

constituencies to be free. host: how the republicans can fill their pledge. he sai specifically i believe we can make changes like slowing the growth of benefits for the wealthiest earners and index the eligibility age to longevity. these ideas represent a viable alternative to the unsustainable status quo, and they can be delivered while mang no other changes for those aged 55 and older who currently receive social security and medicare. do you support that idea? guest: what i like about paul ryan is that he is secretive figure and i am very excited about him being the budget chairman. here is what bhers me. every american citizen today, if i have a new grandbaby, th poor little child gets a social security number before she leaves the hospital. as soo as she gets a job, the

government forces her to take some portion of her earnings and put it into the most badly mismanaged savings retirement program in the history of the world. what paul ryan seemto be saying in this article is that he joins the chorus of voices that says having forced everybody in voluntarily to go into the government program, they can be subject to the wednesday of politicians. and if indeed we politicians cannot meet our obligations, let us be free to choose who among you will sacrifice your life savings and not get a return on that. host: so it sounds like you do not support that. guest: it does not sound very responsible to me. what if your private retirement program said to you, we appreciate you put your money with us all these years but we are not going to give you your annuity. the government would sue them. i will give paul ryan a better option. why doesn't he say to every

young working man and woman in america, you are free to choose to forsake your social security benefits. you be free to choose. it is a much better thing. if i choose to not subscribe to a government program, then i and exercising my liberty. if in fact the government says we were hahappy to take your money for all your working years, and because you were prudent enough to do something yourself in your retirement years, we are saying to you, you don't get any of your money back. host: that sounds like a fundamental difference with paul ryan. guest: is a very big difference with paul ry. who will be in charge of my life savings, the or politicians? host: should they oppose paul ryan as budget chaman? guest: no, they should not

oppose paul ryan. he is one of the brightest people -- host: but you disagree with him. guest: we are not in agreement on everything. he has a right to be wrong about some things. he is right about most things. in the end, what you're saying realistically, we must come to terms with the fact that some people will get their retirement benefits and some will not. you are saying i put myself now on the side of big govnment, and let somebody in washington decide that this guy at 409 hemingway street gets his benefits and the guy at 408 does not. paul ryan knows this. every american young person -- yourself, if given the choice to drop out of social security tomorrow, you would do it that quick because you know by the time you're 65, they will have taken your life savings all your life and give you nothing back.

host: let's move on. do the tea party candidates deserve to have a spokesman within the leadership ranks? michelle bachman wants to be the -- should somebody like rand paul getty leadership position in the senate? guest: you go before the members of your caucus and present your case. i did it eight times and i did it successfully eight times. it was not always easy. let those people in that body, in accordance with the rules of the body, select from those who compete. in the case of michelle bachman, i believe she wants to run in opposition to jeb hensley. he has been one of the most

reliable opponents to big government, unnecessary spending programs -- tarp, stimulus, a banking regulation. he understood the issues and has spoken with them with great -- spoken on them with great thoroughness in the house. no one could ever say that he is not a small government conservative. let them make their case i front of their colleagues about which of the two of us will serve the functions of this office wh the greater degree of efficiency and fairness. nobody is entitled to a leadership post. it is an honor and privilege and the duty extended to you by the discretionary choicof your colleague. host: dick armey is are desperate rick on the democratic line in california, you're up first. caller: i went up to see the only president in the last 70 years to balance the budget and pay down the national debt, in your tea party were there with

all kinds of signs, yelling all kinds of horrible things about him. sos this really about a balanced budget and national debt? why are they complaining about clinton. it has nothing to do with national debt. it has everything to do with the democrats bng in the white house, and they are still mad at clinton. sorry about that socialist comment, randy. guest: i do not know what it is you are referring to. in the political discourse -- and remember, all political discourse is just one step shy of brain death, in respect of of what partisan discourse it comes from. i was there. the one thing i will always admire it and appreciate about president clinton is when we worked on budget matters, for all the eight years i worked with the president and during his entire presidency, he personally sat at the table and worked through the negotiations

with the members from the house and the senate and the white house. we negotiated our way to a balanced budget. now, when the negotiations cled, we had the president saying i and i alone got you to a balanced budget, or his advocates said that. the republicans set by and i alone got you to a balanced budget. the fact of the matter was it was rigorous, detailed, long- te strenuous negotiations over a long period of time between the leaders of both parties and the leaders of both the legislative branch and the executive branch, the office of management and budget, secretary, treasury, citing these meetings. there were substantive discussions that took place over a long period of time, and we got to a balanced budget. we are very pleased about that. but i am no more willing to concede that it was president

clinton who got us there all by himself than he would be willing to concede that it was dick armey that got us there all by himself. we did it together. i bet you a dollar up against a doughnut that president clinton would say the same peri. host: in january, they will have to vote on whether or not to continue running the government or shut down the government. they have to raise the debt ceiling or the government shuts down. you remember in 1994 what happened. do you recommend that the tea party candidates stick to principles and do not shut the government down? guest: first of all, raising the debt ceiling is unpopular for everybody. host: do you have to do it? guest: it has to be done. i understand that for there is not a person alive that does not understand it. but the fact is, it is a

regrettable thing. you're sitting there saying, especially the new members, had you been more fiscally responsible in the past 10 years, five years, four years, three years, last year, we would not be here today facing the need to do desperate and i resent that i have to vote to raise the -- to do this. and i resent that i have to vote to raise the debt ceiling. i understand this has to be done, but if in factou are going to get me to vote for it, let me have you tell me, just as you would do with your irresponsible son or daughter if they ran their college bills up through the roof, you are not going to do it again. you will show some restraint in the future. you will have some sen of trade off between this government program and the obligations you already have in place that you just cannot add another program because you think it would look pretty walking when you cannot afford

the programs you already have got out there. how about a little discipline? host: on the republican line in thornton, colorado. caller: mr. armey, thank you so much for being available here. this i a different question of where you left off, but out here in the republicadesert of metro denver, we have had a tea party candidate at the governor's level where there was a divisive party, and now we have a democratic governor. what do you suggest be o remedy for off-year elections in not gathering dust in gathering notust the conservative perspective -- ingathering not just the conservative perspective, but -- guest: this is the problem that you have always. you had in colorado the same situation. you basically had three candidates on the ballot, two of whom split their ballot, leading

to one person that neither one of them agreed with. in florida you had a sittion where charlie crist said i'm going to run as an independent, and as an independent he looked more like a democrat than he did a republican. in the end in florida, marco rubio did. in the final analysis, if you are the candidate and if you are, in respect about the circumstances, i think you take a look at marco rubio he said it is not fair that the lord god almighty dealt me hand, i have to win my race in respect of who else is in that race. at means i may have to double up on my efforts. i may have to consolidate my efforts. the fact of the matter is, given the nature of politics, as joe miller is discovering in alaska right now -- if there is another

horse in the race, it's not like the only person i have to do is out run the baird -- no, i have to outrun the bear and you too. host: kevin, in new jersey. teacup just a commentary from a 37-year-old -- caller: just a commentary from a 37-year-old hospital worker, an independent democrat. the whole team party mement and the republican party, they are trying to separate themselves from the neocon- cheney crowd. to the average person my age, i think i am a pretty well educated knowledgeable person. the way it is reviewed, -- the way it is viewed, they look like religious nuts. i work in a critical care unit and i know the problems of health care top to bottom. i work where people are

ventilated on life-support and everything like that. what i s a lot of the republican party doing is really kind of putting rigion out there and all this stuff. it is really, really negative, and it turns my crowd of ticket. -- it turns my crowd off to it. guest: understand something. this grass roots movement known as the tea party movement holds no allegiance or very much affection to either political party. they are just as bitterly disappointed in the republicans as they are the democrats. and they have been severely criticized by the evangelicals and america. i happen to be an evangelical. they have stayed so focused on economic isss -- finance, budgets, taxes, and so forth -- and did not address a lot of the social issues.

so all of a sudden, in all the best characterization's of these fine people that you have seen in the popular press, this is the last one that i would have thought that somebody would have gotten, that you say they look like a bunch of religious not. there really is interesting to me. that is very curious. it shows me something about the degree to which real, ordinary folks just like your neighbors, and i bet you a nickel that sobody in the church yugo, the hospital you work, or somebody in your family is active in the movement. and you go, j and grace, they are not nuts. they are part of that. i assure you that they are not a

bunch of religious nuts. they are probably about as normal as you are, and they are focused on economic issues of jobs, taxes, spending. their biggest concern in the world is the potential insolvency of america before the world. host: what's next for the tea party movement? specifically when it comes for the 2012 presidential election? guest: first you have to understand that this party is not about politics in the religious observances. these folks are more concerned with policy. they really believe they can work with their new-found champions on the kindness to help them pass good legislation .hrough the congress coul they are interested in assisting the movement of good legislation. now, it is true that they understand the power of their

involvement in the electoral process to the advancement of their ideas, and they are looking at the candidates, principally at the white house level, and at the senate level, because they are acutely aware of the fact thate have another one/third to look at in the next election cycle they will have some of their favorite senate projects. let me remind you, the first people who fell to the tea party movement were republicans in primaries, not democrats and the general. host: is that what happens in 2012? are tea partyers looking at olympia snowe in maine? guest: you will have to talk to the folks in maine. if i were olympia snowe, and i said, gee, i am out next time --

up next time, i need to look at what would be a very important faction of votes with in my state and see what i can do to address is. host: is it a warning to people like olympia snowe? guest: again, understand, these parts have advocacy in the heart -- these folks at at a to see in their heart and mind. they love america, the love of the constitution. it is sheer genius. you swore an oath to protect the constitution. we are saying to keep your oath. it h to do with it will be exercised restraint in spending, will you have some sense of discretion in spending here and there, will you respect my personal liberty? host: let's hear from our republican, ron in new york.

caller: mr. armey, i would like to tell someone that -- im part of the tea party, and i think we ought to get rid of the department of the environmental agency. i am a truck driver and i've been a truck driver for 50 years and i have seen gary, indiana, a full as soon as they moved in, -- fold as soon as they moved in. environmental advocacy is killing our labor force. why don't they get rid of those people and let tse people go and do their job? i can see safety and see some environmentalists -- it has gone wacko. they are shutting down all of our factories -- host: ok, we got your point.

guest: one of the things i've been saying for years, and i used to say it as a professor to students, most of life's great lessons were taught to you by little bromides given to you by your mother and grandmother. you can have too much of a good thing. that is sort of what we have from epa. maybe we have too much epa discretion across the country. they have taken a little bit of -- a little bit of knowledge goes a long way. i cannot think of anybody in america that has taken more abuse than congressman joe barton from texas, who has consistently insisted that the environmental protection agency used good science, and they treat him like some kind of hate monger who despises the environment.

to avoid the dilemma at your mama talked about, a little bit of knowledge being a harmful thing, if we spend so much of taxpayer money on environmental interest, would it be a bicycle that we have the best science possible? -- wouldn't it be advisable that we of the best science possible? why is it bad for joe barton to insist that the epa used good science? and this and our rental -- this environmental fantasy movement is so afraid of truth. just be smart about doing what is necessary and maybe we will not be losing jobs. host: democratic line, bill from washington state. caller: this is just a quick side bar. you were mentioning the

constitution, and i thought was kind of a point, because putting the constitution -- congress is supposed to make war, and they have not done that since december 8, 1941. how do you feel about the blue dog democrats that went down? democratic't the party and republican party have their conservative wings and liberal wings? host: mr. armey. guest: the blue dog democrats have been in a dilemma for a long tim they are sort of a square peg in a round hole. usually square pegs in round holes get whittled down. but the blue dog problems came first and foremost in the fact that they are so aggressively rejected within the democrat party. there is very little tolerance for people who don't buy into the assertively progressive

party line of the democrat party. i would say that my friend cheet texas -- your problems began with neglect by democrats, who never liked you much anyway. and the republican party basically -- voters look at them and say, look, chet edwards is a democrat attending to be a republican. why don't we just vote for the guy who is really running as a republican? nobody is entitled to a seat in congress. you get in the race, is open competition, and you get thousands of people who you don't know who make a selection based on how they perceive your credentials and performance. chet maybe could have overcome the prejudices and neglect of

his own party and the appearance of a misfit with the voters at large in the waco area. he carried it off and got away with that bag for a number of years. host: sarah palin has a video with her take on what e election meant. >> across the country, everyday americans are standing up and they are speaking out, and based on what i have seen, there is more than enough reason to in america.h we're going to get back to the time tested truth that made this country great. they have enabled us to weather tough times before, and they will see us through the challenges we face today. i am confident and i am hopeful, because this is our movement. this is our moment. this is our morning in america. [applause]

we are going to stand up and we are going to speak out, and it may take some grenades going -- some renegades going rogue to get us there, it may take pokes shaking it up to get there. [applause] we have got to do this together. host: mr. armey, your reaction? guest: it is amusing, because i'm fascinated. i have never met sarah palin myself, but i am fascinated by the appeal she has to this movement. i personally think the reason is, first of all, this is an authentic movement that has, frankly, gotn very lite respect. as an attack, assault, -- it has been attacked,ssault, mocked

might just about every big shot in america, on both sides of e aisle. but they are so aware of their authenticity, their sincerity, and it hurts a little bit -- i am really who i am and i wish you could have the decency to portray me as am, instead of this caricature if you keep putting on tv. they identify with sarah palin and her authenticity. did you see the play on words about "we made some of us have to go rogue." it was not the democrats saying she was going rogue that day for that brand. it was the republicans. a bunch of smart alec young political operatives thought they had the right to tell this candidate, being the candidate

for vice-president -- these young yale graduates have the right to tell them what to say, and damned if she did not go rogue and say what she had to say. i'm smart enough to be my own person and say what i have to say -- they call it going rogue, we call it being real. host: who is a more viable presidential candidate, sarah palin or marco rubio? guest: the voters have to decide that. marco rubio is so excited about the privilege and the duty that has been given him, being senator of florida. i have left the politicians for years. i have seen people and their first race for city council and they start planning their presidential race. marco rubio said, look, the people of florida give me a good opportunity and trust and i am staying focused on that.

i thought that was extremely mature on his part. he exhibits a levelf maturity and responsibility and that one does not often find any people who seek public office. i'm really excited about him. host: independent line. jack, you are on the air. caller: thank you. i would like to ask you how you doing,- how phi gramm's and his life. he created the enron scam with kenny boy. host: care to respond? guest: you are kind of a non- kind person and i feel bad for the people who have to live with you every day. phil gramm is a wonderful person and his wife as well.

they are both, i understand, quite happy in private life. if you had a chance to sit down with them and talk about their happiness, one of the things that would say that one of things that is so wondeul about being of three citizen in private life is that i don't have to listen to barbs from people who got a mean, nasty attitude i bet they are enjoying the fact that they did not watch the show this morning. host: we will go to the republican line, wyoming. caller:hanks for taking my call. i have watched for years the stock market going up and down. and social security being talked about. it is going to be insolvent. i am getting close to the age when i am going to be looking adt it, hopefully 10 years. i am really concerned that we need to do something so that we do not give it to the pirates out there on wall street what do we do to make sure they are

more honest with our money? guest: well, i mean -- i don't know, itt sounds like you are about 60 years old. take a look of the money you put into social security during all your wking years, and how it grew or did not grow, the return, the level of annuity benefits you get when you are 65, and compare that with what you would have done having put the same amount of money into the stock market or an annuity program there. now, having done that, recognize that that money that yoave t into your private savings account and is now due to you in your old age, at your choice, when you want to start a new ace and flopped -- start annuities and flow money back to you, is a matter of contract

law. at the age of 60 today, here is what i would be worried about -- five years from now, if im 65 and i go to apply for social security and they asked me to report on the other private savings and other sources of retirement income and they see that, indeed, i have done well at taking care of myself in addition to social security, they are very likely to tell you, "i'morry, but you are not getting your retirement back." the same government would prosecute the private enterprise a firm that holds your 401k, but they did that, and is very likely today to do that to you. watch the next five years and see where you got the best return on your investment, in the private sector, where y saved and grew, or the public sector, where you grew at a governme obvious;

right? in some ways we know the answers and there's some nuances underneath. democrats had a very tough night in the house, and it's still going. our count shows 63 losses, i think, as of this afternoon, and there's a few more to come, so that's a monumental change in

the house, and i don't -- if you even watch what happened yesterday and watch what happens today, senator mcconnell gave a speech which i'm sure you watched at the heritage foundation, he talked about working together and also talked about having a vote to repeal the health care law, and if he can't get that, repeatedly try to have a vote to repeal the health care law. i think that gives you an indication of what we are in for in the next few years. i think it's going to be tough. i think the republicans feel very empowered and are going to push very hard against the white house, and if they can get some bills over there to make the president veto it, so be it. if they can sort of jam the senate, they're going to try and do that. i think that they have a strategy. they came in riding this tea party wave, and i think that's going to create some problems

for them, but i think it's also, they're going to have to respond to it. a couple just one little interesting fact so far that i've seen is of the losses by the democrats in the house, all but i want to say seven or eight were in districts won by president bush in 2004 which was the last, what we would call the last nonwave election. democrats are looking at this now as the voters sort of returned in those districts to their traditional voting pattern after democrats had success there, and now they have to recruit people to run again in those districts, and it's not going to be easy. i'm sure my colleagues would agree for us who cover congress the next two years are going to be pretty interesting and entertaining and fascinating to watch i think. >> so, emily, what do you think? do you have a similar take, or do you think we might actually

see some compromise? >> well, i really think that the republicans and the democrats who have come out and sort of said, well, what the voters said is they want bipartisanship and for us to work together. i think they are right. that's what the voters do want, but what the voters voted for is gridlock. you can't split the house and senate between two parties especially given the tea party wave that brought in the new members # of the house and expect to get a lot done, and just listening to the rhetoric over the last two days of democrats and republicans, i mean, republicans are saying we're vindicated. mitch mcconnell said the american people appreciated we said no to everything in the senate, where as harry reed had a conference call with his caucus yesterday where he and his leadership was basically saying we're operating from a position of strength with the presidency and senate majority.

to me that spells not a lot of change. >> at the same time, the president invited members of congress and invited the governors, he gave a big speech today and yesterday about look, we took it on the chin. it didn't feel good. it felt bad, you know, and at the same time, you know, mcconnell today said obama needs to be a one-term president. which is it? >> i think it's going to be interesting to watch the dynamics between the white house and congress. i mean, between how's the administration going to approach things now? you think about the three big pieces of legislation that passed. democrats had such overwhelming majorities that they never had to negotiate with republicans. they said they were going to and they can point to signs where they did, but health care,

stimulus, and now reform, if you add up the republicans who supported those bills, you have less than 10 easily in the house and senate. the numbers are now that in the house the republicans run the show, and in the senate the democrats don't have the option nymph peeling away one or two or maybe three republicans to get deals done. you have to assume now anything that gets done in the senate has to really include some true bipartisanship, some conservative republicans or traditional republicans at least. another fascinating thing to watch in the next couple years is the relationship between the republican leadership in congress, the tea party back candidates, and the tea party itself. if you listen to the folks who represent the tea party, they feel the people they voted in the office they are responsible for are on probation as one person said. they're going to check every

vote and they're going to be like the nra or any other pro-choice and pro-life group. if you don't vote a certain way, we'll make a note of that. what's their reaction going to be? think about the whole scott brown nomination when he came in. the tea party was very excited about him, and then it faded away and there was everything from disappointment as far as the tea party was concerned. that will be worth watching. >> what happens? does john boehner have to immediately try to do something to get these tea party, these new pea party-inspired freshmen vested? or do they go old school? carl, what happens? >> well, i think the republicans will come out immediately and push for spending cuts. that's probably the easiest issue for them to deal with, and that would be responsive to the tea party folks. they do have one really big

problem coming up, voting to increase the debt limit or the debt limit has to be increased, and republicans have let democrats do that in the past few times not giving them any votes at all, and then hammering for that obviously, and now the republicans are going to be responsible for that or responsible for not letting that happen. that is going to be a really great story to watch. i think that they'll push for spending. i think that's their easiest way to do it, but i think that they're going to have a hard time fulfilling all the desires of these groups and people put them in for this rapid change or a 50% or 40% cut in the budget. i mean, that's just going to be hard to make happen. >> does that mean there's going to be cracks in the unity? republicans were able to stick together over the last two years and oppose the democratic agenda. i mean, do you foresee, emily, a

divided republican conference on either side of the senate or house? >> well, i think the senate gop conference has serious thinking to do, especially some of the old bowls there, the appropriators for example some of whom are still very much in favor of earmarks, and have defended themselves, you know, about and the need to do that, and i think as carl said the debt limit is going to be a big issue too. i'm of two minds on this spending issue. on the one hand i feel this is probably where democrats and republicans have the most opportunity to compromise because you've already seen a lot of moderate democrats feeling sticker shock over the last couple years says especially in the senate saying all right, that's it. we're not voting for nymph this, and of course the republicans are taking back the fiscal of romantic conservatism.

npr on the night of the election said we're going to have to cult spending more than we tried to even in the lame duck. i think there is compromise there, but at the same time, i think depending on how fervent some of the new republicans are about cutting these things, you could have a government shut down scenario if you can't get the guys who voted for raising the debt limit to vote for it. >> eric cantor who will be the number two republican in the house has said that they wouldn't have a shut down. now whether or not you can, you know, make that iron-clad, i think obviously what happened after 1994 and the backlash from the shut down, you know, there's a scenario where you could have no bills passed, but an agreement that you're just under the permanent continuing resolution or something like that. i'm there's government -- i mean, there's government shut

down that doesn't seem like a big deal if there's a government-wide default because they can't increase the debt limit. you're talking something pretty international finance. >> it's just continuing finance and keep the government operating and not true to -- >> something that's different this time from the 1994 takeover is the republicans didn't get the senate. it creates a whole different dynamic. >> normally when the house flips historically since 1930 -- >> since world war ii. >> whenever the house flips the senate flips too. that's historic. >> the republicans on capitol hill are still responsible for delivering things, but now it's a divided government that might empower republicans actually because -- >> from the tea party thing, one

the things i was very concerned before the election about the potential of the tea party backed candidates coming in, and i started making calls to former aids and some current ones to find out how is the republican leadership especially inspect senate going to deal with this. they said that the leadership basically had to move quickly to try to assimilate them in there, that mcconnell and his team would have to really try to channel all that energy and all that ideas into the constructive ways and not destructive ways. his message would be to a tea party backers that this is halftime on a much longer game as far as getting to a presidential election is concerned. it goes something like this, you know, we wop the house -- we won the house, this far from the senate, the president has it and no signs of economy getting better. we don't want to do anything to divide republicans and unit democrats. how does he do that?

he has to think strategically and be psychological about it. the tea party someone described as part policy and part person personality. sharon angle is not there and christine o'donnell and ken buck will not be there. people coming in the gop are essentially in what they already have. the caucus is broke up in little factions there's the conservative jim demint where the tea party candidates might align themselves. there's a very small moderate section, and it's going to be curious what people like ron johnson from wisconsin, how he will vote considering he's from a very democratic state, so will he join that moderate faction? but the result of the republican caucus is follows k --

kyl and it's just more of everybody. the same issues they had before will persist. one objection in the senate if it's on a specific issue is no different than ten objections. they still have the run the same traps for each person that objects. it's going to be a charge because they are 100 ib dependent contractors, and i think there's going to be a point where you look at the fights on the floor or the committee hearings versus the final vote. the tea party republicans will tell you that on 85% of the issues, they are all the same, and they make the case on the first big votes they take in the senate or in the house, they will be on the same page. the bush tax cuts at the end of the day vote with mcconnell. health care, repealing health care, they vote with mcconnell. anything that looks like cap-and-trade, they vote with

mcconnell. part of their strategy they say is take that energy, you know, put them on the education department and earn their stripes. you know, find out what it's like to work on the committee. if you have ideas and support, maybe there's a policy to reduce and atrack mod ram democrats. it's channeling that energy and giving them a platform of sorts. >> what happens in the immediate term? we're coming back to session on november 15. there's a lot of lame ducks in the house. a lot of lame ducks. you know, everyone is throwing things out. what's going to happen? obama said we need to do s.t.a.r.t. and the bush tax cuts expire at the end of the year with a continuing resolution to deal with and the medicare reimbursements with doctors. what is actually going to get done and will we find people are more or less inclined to do

anything? >> i defer that to emily. >> i think the most likely scenario, although it's not a sure thing is they kick the can down the road on the bush tax cuts in some way, kick the can down the road on spending although there's talk of trying tuesday an omnibus, and the question in my mind is of course, for how long? did they just kick the can on government spending until february or a year long continuing resolution? i don't know the answer to that. i don't think there's a lot of appetite to compromise on the republican side on either of the issues, and the best that democrats can help in firm term -- terms of spending is a cr at this year's level. it's probably going to have to go lower than that. >> i want to talk about the

democrats. >> one more thing on the lame duck. i want to know what's going to happen president bush tax cuts. if those expire, when people get their check on january, they'll see less money, and the republicans turn around as they started before the election and go the democrats went out of town without putting this on the table. republican, you know, it's an easy argument to make that the republicans can say we're about to adjourn and on january 14, everyone will see less money in their paycheck in the recession unless we address that. >> about lame ducks, you know, they are no notoriously awkward situations. you have people who have been defeated and now some of the most popular people coming back. >> the chairman of powerful committees. >> yeah, the three chairman, earl pomoroy, a very popular

member and you have a week or two of people cleaning out their desk. i don't know if there's appetite for a big fight. a lot of people would prefer to come in, have their going away party and literally go away. >> under the staff that has to get their resumés cleaned up. >> speaking of going away parties, what do you think nancy pelosi is going to do? >> i've been told, i'll say this here. i've been told confidently today by people who know she's leaving and that she's staying. [laughter] >> and you guys wanted answers. >> that is a true statement. >> i've been told the opposite that she's staying and then leaving. [laughter] >> yeah. >> i think the speaker is taking a lot of time talking to her allies, talking to people, and trying to make a decision what she's going to do. the -- she i talked to people who were

with the democrats were election night and said she was very stoic and worried about her numbers. these are people she in some cases talked into running again and worked hard to save them. i think they're loss was a personal loss to her. i don't think she wants to make a decision very quickly. i'm sure there's members who feel both ways. i talked honestly to members who think that they might need a fresh start. i talked to others who think she should stay. i know that nancy pelosi certainly we all had this experience is not someone who walks away from a fight, and if it's perceived that way, she'll say. the "new york times" today taked about how the election strategy evolved and there's a quote in there from a republican saying, you know, this is all about getting nancy ploys sis fired.

if she sees that, she'll say i'm not going to be fired. i honestly think she's still making her decision. >> how long does she have? i mean, the election was tuesday. it's now thursday. she's kind of in her office, not saying anything except to dianne sawyer a-- apparently. how long does she have? >> the longer she waits the more it's out of her control and if she's lucky people rally around her or say she needs to go. they'll talk to us and saying this is ridiculous. we need a plan. we don't have anything. granted the senate democrats have the luxury of retaining their leader in this election, but the first thing harry reed

did was have a conference-wide conference call with all senate democrats to give them a pep rally talk, but the house democrats haven't had that yet. they have not regrouped, and so, i mean, i think who knows when that magic moment happens with the tipping point as it were, but i don't think she has that long. >> as far as the senior democratic leadership is concerned a conference call yesterday with harry reed and they go through their opening statements and everybody -- there's been scuttle among staff and press whether reed is getting tossed out. a reporter asked a question specifically for kick -- dick durbin, do you support harry reed? they both said at the exact same time, absolutely. the reporter was not sure who said it. she asked which one said it and at the exact same time they both

said, we both did. [laughter] >> the person who gets the job is never the person who makes the first move. if they end up with 53 seats in the senate, but they feel pretty good about that, the senate democrats. they feel good about that. senator reed actually won his race more comfortably than a lot of us imagined, you know, michael bennett, that's probably one the most amazing results of the election cycle. >> in colorado? >> in colorado, appointed senator in this environment in that state to win reelection. they feel they were able to make sure argument in some cases pretty well and contrast that with the house where, you know, if the republicans may be slightly under performed in the senate, they overperformed in the house, and you know, at some point there has to be an

accounting for that. >> who controls the agenda? is it obama or john boehner? >> nobody asked the president at the press conference yesterday if you're still relevant, but you know they were thinking about it. what do you think? >> i think to some degree the house republicans do. they're in a position to control -- that's the one thing the senator republicans always said about harry reed when something goes wrong, we don't control the schedule or calendar. well, in the house, if john boehner is leader, he will. they will decide what comes up for votes and what the votes will look. they can't throw things over the sidelines and say it's a bad bill. they have to write legislation, get it scored and go through the waiting period of wondering if it touches the deficit and get the results back. on the other hand, the president is the president, you know, he

controls the pulpit and has the microphone, and he will have to work with harry reed to do things to counter whatever the house republicans decide to do. they both have skin in the game now. >> i think that's why i said originally the voters just voted for gridlock because it's very difficult to have two different parties with two very different sets of priorities with different agendas and sending them to each other. you know, it's i think that it's going to get really muddy in terms of that, and the president hasn't shown a tremendous ability as far as i've seen to drive a message of any sort which is part of why he's probably in this predicament that he's in, so you have a president who was great on message in a campaign can't control a message as the

president, and then you're going to have two guys battling out in the house and senate for who's controlling the agenda. >> i thought we controlled the agenda. [laughter] >> the one thing we haven't talked about though is 2012, which is, i mean, you know, we have a president running for reelection, that's going to be his number one priority. well, come -- you know, november 3rd became his number one priority. republicans want to win the white house and take the senate in 2012. what does that mean? >> there's a big conflict between the president's priority and microphone mcconnell's priority obviously. i think having the president -- i mean, historically, you know, a second term, you know, president running for reelection generally does well. i guess the true test is going to be the economy. i mean, two years is like, you know, 50 lifetimes in politics. there's so much that happens between then and now.

what's going to happen? afghanistan? what's going to happen in pakistan? what's the economy going to look like? where are the jobs going to be? is there another unknown thing we have not considered sitting on the wings waiting to fall on this country? having the presidential ticket changes things. when nbc went through a research to guess how things would look in polling, there's a consensus if all the people would have voted in the 2008 presidential election and voted in the midterms, the result might be different and be dead-even, but now it is what it is because the turnout was low because it was a midterm. i think it remains to be seen, but one of the big factors is the economy. >> what does that mean for the agenda? if the president runs for reelection and senate republicans who say it's a two-cycle strategy and didn't expect to take the senate in 2010, but in 2012, how does that affect what actually gets done

or doesn't get done? >> well, i think you described a prescription for gridlock in some respects. there's obviously, you know, we talk about the permanent campaign, but now it's like the really superpermanent campaign. the day after the midterms, people are now talking about the presidential race. it will color what's going on. a lot of things will happen that's not serious legislative efforts, but about making a point. however, and i think senator mcconnell, leader boehner too. you find this in congress, you have to do something. something has to happen. both sides need accomplishment to campaign. you can't, especially with republicans in power, you can't just say we stopped this. we have that. you have to produce something. they do try to find areas where there is agreement. i think spending cuts are going

to continue to be something that's talked about. democrats argue that they have been obviously much more fiscally responsible than republicans. they think they are the pay as you go party. there's room there. i think energy is an area to get something done. president obama is a supporter of nuclear power. it is a being -- >> as long as cap-and-trade is not in the discussion; right? >> exactly. i think there's things to be done on energy. it's a popular issue, an issue that breaks more geographically and on partisan lines because it depends what part of the country you represent. i think energy is something. i think there's a little bit riding on this deficit debt commission. you know, if they could, this commission is supposed to produce something by the end of the year, am i right? >> december 1. >> if they produce something with some ideas in structure, that might be something that

both sides can get behind. i just fear on any spending issue at this point now, the republicans have to outcut no matter what democrats might support. i think they have to find some areas where they can say turn around and say we did something. if they can point to it -- >> that goes for both sides? >> right, both sides. if they -- if an -- it's even better in creating jobs. >> i think they're going to try to look for ways, i think whether they succeed or not is another question, but i think both sides are looking for ways to address the economy as ken was sort of eluding to. that's the other message i think that people and politicians take from the elections is the economy has not recovered and people feel they are hurting and the politicians are just fiddling while rome is burning.

>> on the energy fund, mitch mcconnell laid out try things to be compromise on. i don't think -- there's not a lot of qawrl about battery powered cars. clean coal mr. mcconnell talks about and find pockets in the country where coal producing states have a little push back there. nuclear power is another one so i think there's low-hanging fruit. people shouldn't forget in congress they passed an energy bill with bipartisan support, and when they were talking about doing an energy bill, you know, they said go back to that. it had things with agreements. they can go back, find those things, and move forward on that to create jobs, jobs, or jobs which is what we'll hear over and over and over again. >> that's lisa spelled out; right? >> yeah. >> to that point, the tea party

obviously has been great for the republican base. the republican strategists and the people at the top also know that this election was about up dependence, where independence went. they want independence, and they say you can't win independence by not doing anything. you have to produce something, and i don't think it's going to particularly pretty. >> what about the message? what are we going to hear over the next two years or coming weeks from obama, obviously, compromise, how is he going to try to get in a winning position? i'm not talking voting-wise, but getting the public behind him and do what clinton did? obviously there's the issue of try an giew late and the republicans, how will they get on offense and control the message? what do you think both sides will be saying? how will they sell themselves and get on top? >> i think the republicans are going to say we're listening to

the american people because mr. bohner said that yesterday. >> what if -- >> we're still listening. >> i think that's what mitch mcconnell said yesterday. the white house has got to change. the democrats have to change, and if not, maybe there's more change in 2012, ie, we'll take everything. >> what does obama say? what is obama's counter? >> i think if you look at it in the simple form, it's a huge conflict as there's supposed to be. on one hand they need to work together, and on the other hand you don't win by saying look what my democratic friends and i have done together. they are the bad guys, we're the bad guys.

you find some, you know, a balance which i assume they'll do and low hanging fruit to show compromise, maybe it's emergency or spending. it will be an interesting thing on who can prove they can cut the most, but then at the end they have to find some separation too, and what's that issue going to be on? republicans now that they control the house, they have the opportunity to pass bills. i mean, they can basically pass a bill, get it scored by the cbo and shows tremendous amount of savings. here's what we have, we sent it to the senate and they sat on it. what do senate democrats do? at the same time will they pass the same bill to show it's a little different? it's going to be a constant conflict. i'm curious what the first compromise will be. it's probably spending because the president has to run and they need money for that to happen. >> i think it will be interesting to see how the republicans act.

if the republicans continue to resist overtures or like at the meeting that they're going to have later this month, then they're going to say, see, they never have wanted to work with us. they've never wanted to do that. i think already this morning that the speaker in leader reed's office when they heard of senator mcconnell's idea of repealing health care, okay, do you want to repeal health care with people with preexisting conditions? that's what they will do. they will push back along those lines and they want to take away things for the american public basically. >> i think the obama white house has two options. i mean, they are already kind of positioned and try to position themselves with we want bipartisanship. this is what we campaigned on and the republicans didn't work with us as carl was talking about. if things don't happen and the

economy doesn't get better, they have a villain to blame. it's the house republicans and because of then we couldn't get this done. if they do have compromises whether it's low hanging fruit or bigger stuff like clinton and welfare worm or something like that, then they will say, look, we promised we'd do it, and we did. they have options here to frame the message i think. >> do you think that obama followed the clinton model though? do you think that he -- i mean, is it really even possible? can we even talk about getting something as big as well form -- welfare done? >> i think anything bigger than a bred basket at this -- bread basket at this point is vital. if you're the president you have 18 months to get anything big done, and now we know why. that's what they did. they went after health care, the science regulatory reform bill, and the stimulus.

the notion of getting anything massive, you know, i think one republican told me that the notion of anything comprehensive is dead on arrival. anything exroansive, you know, sweeping energy, sweeping education -- >> immigration? >> you know, sweeping, it's like al cart things. no wholesale shopping this year. [laughter] maybe you're a costco person, i apologize. [laughter] >> i think the fact the senate didn't flip changes the situation from when president clinton was in though; right? then he had the entire republican congress as a foil, and he was allowed to try an giew late the democrats because they were not in power in io place. i think it makes it a lot different for president obama and i think it makes the discussion of using congress as a foil for him to win a second

term had it not changed over is a little diminished in some ways because the contrast is not as clear because harry reed is still the majority leader. it's a little different situation. about the white house i would, my colleague peter baker brought this up at the white house yesterday when asking or someone did that when, you know, the president met with the republicans the first time after the election and eric cantor was having a discussion with him and said well, we won the election, eric, we get to do what we want to do. i guess those roles will be reversed in that first meeting coming up. >> one thing i'm curious to see what happens in the course of the new congress is something that byron described to me is the bleachers. there's a new phenomena of talk

radio and 24 hour cable and these amazing amount of outside groups and their influence. you know, it's really a small percentage of people that engage in that, but that's the same percentage that vote every election, so what is the reaction going to be to that? i wonder if the tea party how accountable they will hold the people that got elected too on some of the first votes on things. >> they are already threatening too. >> yeah. some people take a we will not compromise staps which is a direct conflict with the founding fathers thought the senate should work. it's supposed to be a compromise. that also will be something i look forward to seeing how that unfolds as weem try to -- people negotiate on things. >> do you think the senate becoming more or less relevant? >> you know, maybe i'm a senate snob, but i think the senate is always to some degree the most relevant because that's where the --

that's where things get tied up. the house routinely, we heard pelosi talking and we passed 4 million bills because the senate is where things have to get done and bills have to be cut. >> will it still play the same role then? >> look, it plays that role even when both chambers are the same party. look at health care, the biggest bills to be passed, where did they get held up? the senate. they had to jump through hoops to pass health care. same team. stimulus, harry reed had to peel away one or two or three republican votes to get that done and same with financial reform. the majority can steam roll the other party. when it's in the senate, that's where it gets gummed up. no matter what the machination is, it's the senate that stops it. >> that's where the bipartisanship emerges if there

is in or the gridlock. >> obviously, we are playing this boehner versus obama dynamic. i think that's where the tension will be. >> yeah, it is relevant and all 100 members will tell you that. i think the house is the story right now. >> right. >> and that's going to be the focus, but of course, they got the ability to make things happen in a little different way, but, you know, there's going to be a much more attention on the house at least at the start of the congress i think. but some members of the senate themselves will get a lot of attention i think. >> yeah, i think that is where the narrative is. i think at the end of the day, you know, to some degree some journalism is about story telling. you is john boehner raising to power and one of 500 children, i mean, 11. [laughter]

and the president obama -- >> taking his call. [laughter] >> i was off a few numbers. i think that's the narrative and that may be the easiest place to draw the contrast. when you running for reelection, if you're trying to win against your o ponts, you have to -- opponents, you have to figure out who the good or bad guy is. i think that's an obvious place people will look. >> who are the members you're watching outside of the leadership? who else are you keeping an eye on or blocks of members that you think are either going to be more relevant than they had been in the past or just people you think will will be worth keeping any on? >> in the senate we were talking about that before hand, but actually if you look at the senate and who -- there's a huge republican class coming in, and i think it's at 13 right now, so probably 8 or 9 of those are establishment republicans. they are not tea party

republicans, but at the same time, they may be feeling some loyalty or a need to be more tea party esque once they come in to hold to the standards to the people who bucked the establishment and what no. i think those are the interesting people. what does rob portland do? does he attach far to the right? he's note a conservative fire brand but more of a deal maker. will he serve that role in the senate or won't he? you know what i mean,? mark kirk and some other guys who aren't as -- >> a senator from illinois -- >> yeah, how are these guys going to operate? are they going to be themselves? will they be someone different because of the message that they

believed they received from this election? >> i think that, you know, the senate -- it's -- there's so many great and interesting personalities and stories. rob portman and roy blunt, they come into the senate immediately as players. they are really skilled legislatures. he was the number two guy in the house. >> you can probably flush the story out, but a colleague of mine was reminding me if things were different k roy blunt could be the speaker now. >> right, john boehner just beat him. you have those folks, and one group i'll watch in the senate is the moderate republicans because they were key -- >> like olympia snowe? >> i won't name names because i don't want to label them. [laughter] >> as soon as it comes out there's going to be a primary. >> right. now that senator snowe is up for election, she's going to be running in a new environment.

i'm not sure if the republican won the governor race in maine? >> yes. >> okay. i think that's the first time in sense maybe the 70s that there was a republican governor in maine. that's a new environment. does that affect how the people who were the keys really to making the agenda happen in the last two years, does that affect how they act? the house is just going to be -- you know, you want to watch paul ryan, the new budget chairman a whiz at this stuff, and what's he going to do? dave camp, chairman of ways and means i presume. >> darrell -- >> yeah, you won't have to look far to watch him. >> you can take that. >> he's going to be very aggressive in pursuing oversight, so there's, there's plenty to keep on eye on i think. >> someone mentioned earlier there's basically including

independents, 23 democrats in cycle as of today, and they obviously are worth watching. some of the names on that list include jim webb. >> ben nelson. >> jim nelson. >> nike luger. >> how would you like to be senator herb cole of wisconsin who watched russ feingold get taken down by a guy who was virtually not even a national figure or a state figure until he ran for reelection. i think the word that will permeate people's minds in congress is the word spooked. i think people are going to be so spooked by what happened, it's unpredictable, votes about the deficit, spending, votes about their colleagues. i think that's going to be interesting to see if that manifests itself in any way as far as votes are concerned. >> another group i'll watch is

the members of the appropriations committee because, you know, it was the best committee and most powerful committee, and now it's more like a liability. you used to get on there, send the money home, and it's the ticket to reelection, and now it's a negative. it will be fun to watch to see if there's a change in culture at the appropriations committee. mr. john boehner said he wants to change the whole appropriations process. that will be interesting. >> and don't forget jim demint. >> and his colleagues aren't. >> yes, he put out a lot of money to support the tea party backed candidates. it there an allegiance forming naturally or in an unnatural way around him and tom coper, they were tea party before tea party was cool. [laughter] that's how i look at it.

>> is there anything that mcconnell has to do to do with jim demint? obviously they are not personally close. demint that has proven to be difficult. >> i think they have to quickly co-op with a hand full of tea partyers he's going to have, and just from talking with people before the election, i think that was, that was the plan, you know what i mean? mcconnell and demint have no love for each other at all, and even though co. burn and demint have the same leadership, but if any, mcconnell would say to the tea partyers here's tom, let me introduce you. >> i don't think it's any secret that senator demint has not

endeared himself to his colleagues in the republican conference, and i think there's even more unrest about him, and there's already stories written about this today because of what happened in the election. i mean, the senator mcconnell obviously feel if they might not have had such conservative gym demint endorsed candidates in colorado and nevada, you would be looking at the house seats. one thing to watch with senator demint is of course who can handle himself well is instead of ken buck, and christine o'donnell, he has dan costz and roy blunt and some other activity. he's being joined in the

conference by people he opposed in the primary. that may cause him some heart burn at some point. >> at the end of the day, it is still very much a very coledge yal body. if you go to work and your colleague is throwing you under the bus, it's hard to get beyond that. maybe it's not obvious, but at the end of the day winning, anybody has to deal with coalition, who is joining you and standing with you on legislation. that makes it tough. >> i want to bring it close with a lightening round. >> i'm not good at that. >> one, i want you to predict whether nancy pelosi stays or goes and two, predict if harry reed fills out his entire six years of his term. carl? >> i'm banned by new new "new

york times" policy from making predictions like that. you can say it both ways. either way i have to deal with it, so -- [laughter] i'm not sure about harry reed. i can definitely see him not doing six years. >> i can see him not doing six years as leader. >> i don't know if that's what you're talking about. >> both. the full six years and -- >> i think he fought too hard for this, this win from two days ago. >> i meant as leader. >> i'm not saying it's happening any time soon and i have no conclusions that it would, but -- indications that it would, but i envision four years from now he has a transition of some sort because i don't think he runs again for sure. as for pelosi, i wish i knew and i could get inside her head and know what she's thinking. i think and maybe i'll get in

trouble for this, but normally it's been any time in the senate so maybe i won't get too many calls, but i think if the democrats in the house are smart, they'll allow her to leave gracefully because they probably need some new blood. >> that's why i didn't want to answer that question. [laughter] >> i'm a dead woman now. [laughter] >> i can say with absolute confidence that i have no idea. as far as the nancy pelosi part goes it's just, it's just not my strong suit as far as the house is concerned. i think even to give an honest assessment, i don't know enough has transpired yet. one of the amazing things about working on the hill is even if you don't report something, you think you have a good of idea of what will happen, and somebody mentioned that nancy pelosi has to talk to her caucus. i can remember standing in the

hallway that this will happen, and they talk, and it doesn't happen. i think the key things she needs to factor in whether she stays or goes needs to play out. . .. >> i want to thank you guys for joining us. thank you for listening. i guess we just applaud the group. >> thank you. [applause]

[applause] >> i'm supposed to let everyone know where they are supposed to go for the breakout sessions. the economy breakout session is going to be in the amphitheater, the defense breakout session will be in the oceanic room. i don't pretend to know where that is. but i know it's not far.progres.

i guess i'd like to start this with a note that another long time budget watcher, stan tweeted yesterday the morning the result of tuesday was going to be gridlock, stalemate, and shut down. i'm not sure i agree with that. it seems kind of conventional. so i'm going to let these guys have a few minutes to talk about what they think is going to happen. then we'll go to some questions. one the questions that i'd like to put on the outset is how can gridlock, stalemate, and shut down be avoided, or can it? which of you

-- >> you had a mandate to cut spending and increase jobs. almost anything that you do that will cut spending is also going to cut employment, there are very few things outside of cutting spending that the government will do to stimulate jobs, particularly in the near term. i think you are two party that is are coming at the question of

governance and an entirely different way. we have a huge divide between the political parties over the question of what is the roll of government? and that is what i think caused stan collander to make that prediction. it's very hard to see one party that thinks that government should play a major role in trying to restore economic growth and the other party who believes that government is the problem finding very much common ground. you will have, i think, an effort by the house republicans to try to cut spending in any way that they can. and you will have an effort by many in the senate and by the white house to sustain, particularly the most important parts of the spending effort. or of government spending. with agreement to cut

spending in certain places, but not nearly as deeply as i think the new republicans are going to want to cut it. that's going to result in a very delicate dance. ultimately, if one party -- if one house of congress decided that they are not going to spend money, it's pretty hard to make them spend it. the republicans in the 1990s when they controlled the congress, they got themselves into such a difficult situation in terms of their public image that they had to go along with much higher spending simply to avoid a confrontation that would look like another government shutdown. i don't think that's necessarily the scenario that's going to replay itself in the same way. and the white house, quite frankly, is going to have to get a lot smarter politically, in terms of dealing with the opposition than they've demonstrated so far if they hope to win

that confrontation. so with that, i'll turn it over to bill. >> thank you, scott. thank you, john. for the many years -- when i worked on the hill for many years in the senate, whenever the president's budget came out on the first monday in february, we always had a staff exercise where we had to put together an instance analysis. and it had a half-life of about two hours after it was produced. sometimes i feel kind of similar about some of the conferences. in all due respect, what we say here has a short half-life. having said that, who's in charge can have an impact on the economy and could, of course, work both positively and negatively. i think congress matters. i think fiscal policy matters. i think spending and revenues matter.

and just being an old budget person, i think still deficits and debt matter. so might argue when the republicans were in charge in congress, during the bush presidency, they did have an impact on the economy. maybe a negative impact. one might also argue, it seems to me that it was the independent federal reserve system that helped create the bubble that brought about the collapse of the financial system and the severe recession beginning in 2008. that they were responsible for. and congress really didn't matter. alternatively, i think you could argue that the voters apparently felt very strongly on tuesday that democrats in charge of congress these last two years did not do enough to correct the negative impact of the economy from either the

previous administration or the federal reserve. and therefore, what they did too much of or not enough of that they did matter. so i think placing blame on a credit appropriate or not on congress, it doesn't really say anything. at least the american public thinks congress matters and should have something to do with the economy. as these two professors out here want in maryland, reinhart and roggard in congress has been pointing out the last two years, large financial crises do long-lasting damage. and they are characterized by three things historically. asset markets collapse, they are deep in the prolonged collapse. this then is associated with the profound

decline in output and employment. and then the real value of government debt tends to expand. i think the real difficulty going forward over the next two years, many years, regardless of who's in charge and regardless as who is to blame for the economic woes that we have today is the fact that our democratic system that has operated so successfully to prevent quite frankly tyranny and has shielded us from extremism with it's built in shared balance of power. and a tendency towards deliberative decision making. and divided government. that that's same system that we honor and respect from our forefathers is the same system that works against congress today in manage an effective fiscal policy in a

coordinated monetary policy. a few days ago before the election, the "financial times" said to mix together democratic defeatism, republican recalcitrants, and tea party hysteria into a system designed to slow down decision making, you do all of that, and you have a recipe for paralysis. maybe that's where stan was coming from. i think it's a very unfortunate that this is coming exactly at the wrong time in our economic cycle, and our fiscal outlook. i think the feds action yesterday to try to increase liquidity into the system with its planned purchase of $600 billion in long term treasuries raising their prices and longering long-term interest rates to hopefully increase long-term investment and employment and growth.

i think the fact that this occurred the day after the election was purere serendipity. of course, the goal of the action was to drive down the value of the dollar. you are going to find critics that say the fed have overreached, the fed is going to double their amount, and therefore, they are going to increase inflation. so what would now this congress do? scott says cut spending. fine. but what spending? i've looked with all due respect to my colleagues in the house. i've looked through the pledge for america. i cannot find anything specific here. okay? on that score. >> if you can't, bill, i

don't think anybody can. >> let's be more specific. again, very carefully stated here for a republican, is this the right time to pull the punch bowl away when the economy is still fairly week? extent tax cuts, sure. i think it will happen. i think it'll happen in the lame-duck. i think a deal will be cut there. but this is the lame-duck and you're going to add to our long-term deficit with that action. you are going to require more borrowing later. so how are you going to get this back to a sustainable debt to gdp ratio going forward? i think given those two professors continual admonishments about the financial crisis and how long it takes to work off something like we went through, i think

the action of the fed yesterday was appropriate. inflation is not a problem today. and that i think congress should work somehow within the tandem with that policy to begin developing a very measure long-term bipartisan fiscal plan to restore some economic growth that will quite frankly not calm very quickly over the next two years. unfortunately, that plan requires congress willing to make some extremely difficult political decisions. that they have been unwilling to make in the past and i'm not quite sure that the change in control, particularly in the house, is going to change that. it will cut spending. we'll try to cut spending. but it is not likely to make it's way that easily through a senate or through a presidential veto.

now you cannot veto yourself into higher spending with an appropriation bill. but i think what it really means is bipartisanship working across the aisle, and it probably means freezing, scott is not going to like this, freezing appropriation accounts, eliminating programs. it means a reducing reimbursement rates for highly sensitive programs, social security, medicare, medicaid, farm subsidies, public pension programs, and yes, it also means to make a fundamental restructuring of our tax code to do away with the mere number of various tax credits and deductions and yes, it means increasing revenues and dare i be so bold as to say some form of a consumption tax or national sales tax. i think it can be done. i disagree with the conventional wisdom that we are in for two years

of stalemate. i want to be -- i guess i'm still naive enough. i want to be optimistic about the future. i look back that something that scott and i went through. we had divided government in 1994. we had government shut down. and we came to a bipartisan agreement in 1997 and moved forward and worked together in a bipartisan manner. so congress, i think, does matter. i think the federal reserve matters. and i think that we will continue to work together to find some solution and i'm -- i want to remain optimistic that we will find that solution in the division that exists today. >> well, okay. so let's walk back through some of what you'd just touched on. both of you. i want to spend just a minute here talking about the fed for a minute. i want to move from that into another point. that is there is a very

strong argument from -- mostly from the right wing. not entirely. some people on the left wing have the same sort of view. the fed has overreached. it's out of bounce. it is a problem. i think if he were in an unguarded private moment, ben bernanke would say, congress isn't doing anything. we had to act. you had mike pence come out and say the action yesterday was out of bounce. i think you've got a broad, unfocused tea party argument instead needs to be reigned in, if not abolished altogether. certainly there's a few folks out there who have argued for that. i wonder if just to start this, and in an idea of trying to figure out where there's going to be agreement, is there going to be agreement sort of in the middle that maybe the wings are wrong in

arguing that this extreme position that the fed was out of bounce. is there a possible -- is there a possible ground here for john boehner and mitch mcconnell and harry reid to conclude that -- and whoever is in the charge of the democrats for the house. i'm not sure we know who that is yet. we need to agree to take the extreme things off of the table. i'll throw one more out there. the notion that a debt limit maybe a cause for a potential shutdown. sometimes in the next six months. the debt limit. if treasury comes to congress sometime in the first part of 2011 and says we need to raise the debt limit, there are going to be a lot of tea party folks who say, no, we are not. those are two kind of dangerous spots, aren't they? >> well, i would say first of all, i've seen

efforts within the congress over the last 30 years to try to rally a movement within congress on the policy. the constitution actually delegated the power for the congress. so the creation of the federal reserve was a delegation of congressional authority to an independent entity. and there is illegally, i think there's a lot of standing for the congress to get in fault. but i think there are very few members who understand monetary policy at a level that they are comfortable having a big fight over that. and the ones that do or probably more accurately, the ones that think they do, which is often the major distinction have a hard time rallying this peers to get involved with it.

say, on the other hand, if the tea party movement decided that this was an issue that they wanted to engage in, i think that they have the kind of power right now that they really could bring their leaders to toe. i do not think that republican leaders in either the house or senate are going to take the tea party on any time soon. i think they are -- i think nerve that party is afraid of them. i think they've got the capacity to challenge members. a very substantial portion of -- and not many people realize this, but assuming that we end up with 62 -- an increase of 62 seats for the republicans in the house, which is kind of where people are coming down right now. that means that you've got a freshman class of 88 out of a total of 242

republican seats. that's a huge block within the caucus. it's 35% of the caucus. if as many as 30 veteran republicans in the house were to vote with the freshman and the freshman voted this a block, then they could control the speakership, the committee assignments, and the legislative agenda. so there's, you know, -- you've got a lot of muscle among this group of people. and i think one the problems of the leadership is pence has much stronger connections to that group of 85 than mr. boehner has. i think he has to do a fairly delegate dance on that. >> mr. boehner does? >> yes. >> with respect to the debt limit, i'm not so worried. you know? i think about the koch

brothers. i don't know whether their net worth is $10 billion or $20 billion or whatever. but i would speculate there's a significant amount of that debt that's in u.s. treasuries. and they are not unlike an awful lot of other people who have been funding the movement over time. and the fact that the people that they sent to washington are going to default on the debt of the federal government, i think would not be a -- something that they would like. and i think that -- >> so the koch brothers and the chinese will be making common cause. >> that's right. absolutely. i think as hard as it is, there will be a lot of back and forth. the democrats are probably going to say we'll vote for this thing. but you put up the 218 votes first. then we'll vote for it. >> i i -- you know. i was going to say, scott, that first of

all, bernanke is a republican, he was appointed by a republican president. thank god today the federal reserve is there. i do think that they may have taken about every tool in their tool box and used it as far as they can go. i don't know what the next step here is after monetary, you know, quantitative easing. >> no qa3 out there? >> i don't see it. i think he's tried. he's recognized there was stalemate in congress that was not being addressed. so i think it's -- i think the debt -- i think -- yes, there's going to be a populous to do away with the federal reserve. i don't think that's going to happen. our system is dependent

on the federal reserve and federal system. thankful for it. anger is not a strategy. you can be angry about your government, but fine. what's your proposal? what's your strategy? and saying i've been through this so many times cut spending. cut spending. fine. but tell me. let's be clear. your 2/3 of our federal spending is social security, medicare, met interest on the public debt. you can't get public interest on it. let's be honest, medicare, medicaid were were those discussed during the debate? if anything, no. i'm back and the president -- i get so

frustrated in these debates and discussions. your here in washington now. now reality will set in. you'll find out we're not going to default on our debt. and, in fact, maybe it's not maybe one the solutions to reaching a bipartisan agreement or a compromise will take us up to the brink. but then to tie the extension limit has yet maybe this wasn't the best example. it was tied. >> well, it was also true in '95, and the ultimate deal in '96. i'm glad you agreed on that point. it would be very bad if we wound up impoverished. because the dollar was worthless. let's move on. if we are not going to have a fight over the debt limit that stops the world from working, and if we are not going to have the monetary policy engine stopped from keeping the economy rolling, fiscal policy

becomes the other choice. there are still calls for additional spending and/or middle class tax cuts to promote a resurgence in the stagnant growth that we have now. 2% doesn't meet the need. bill, you said you thought that in the lame-duck we'd see an extension of -- i presume you mean the 2001, 2003 tax cuts. is there an opportunity to go beyond that? is it a good idea? can the anti-deficit crowd be quieted with an additional middle class tax cut on top of that? >> first of all, there was -- i think there will be an extension. and, in fact, i believe the president even today is talking about working out some sort of an

agreement. question will be whether it's just on the middle class or for those above $250,000 or whether that goes up or not. >> you seem to suggest today without a whole lot of specificity, we talked all the way up to the top. >> all the way up to the top. i think the question is for how long will you do the extension? i think that's an given. my issue here is that extending the current tax code with all of its warts and failings is not the solution in the long run. so i would hope the extension is not very long. unfortunately, it could be for two years. we'll go through this again. oh, by the way, let me just as a side bar here. because people will say, hoagland, you were there when you did the tax cuts in 2010. this is one the -- i was. and we did put together the tax cuts in 2010 --

excuse me in 2001 that then resulted in being expired. and as scott knows, a lot of this has to do with the budget geeky stuff because we couldn't extent it without erasing the bird group. that's a different issue. >> the reason that we are fighting about this, is because of budget geeky rules. >> expect and one other big issue though, please try to remember where we were in the spring of 2001. we were dealing with projections of surpluses as far as the eye could see. and that tax cut went into effect in the spring and probably the timing on it turned out to be fairly decent. because it became -- it really became effective right after 9/11. >> the checks were going out in august; is that right? >> so it worked out okay in terms of the

stimulus. but the problem is that we should never have made tax cuts for 10 years on basis of projections that nobody could have trusted anyway. that was the projection. and that's why the tax cuts are expiring here at the end of the reconciliation period. >> i think it's important when you look at what this new majority that's taking over the house representatives is willing to do with respect to fiscal policy and half of fiscal policy is revenued to begin with. you are not willing to touch revenues, then you are very much constrained. every successful deal, budget deal, going back as far as i can remember, and that's unfortunately, quite a long time now. it has involved some

measure of revenues. and i think if you look at the problems that we have, and i think we have some serious budgetary problems long term, they are largely related to the demagogue fy of the regulation. if we keeps revenues at 17 or 18% of gdp, we are going to run up a horrible debt. but revenues is not something they will look at. they have just concluded a campaign where one of their major points was that the other party was trying to cut medicare benefits. so they obviously are not going to do very much on medicare. and i would add social security as part of that. and as bill mentioned, the servicing the debt is something that nobody can cut. so we are down to about 34% of the half of the

budget that's spending. out of that 34%, half of that is defense. and they -- i have not given me any indication that they are willing to do anything with defense. i think defense, military uniform pay is going to tonight to go up with the cost of living. :

but you're not going to get very far. i think they are going to be surprised and deeply frustrated by what they can do given the constraints they put on the fiscal policy they are willing to accept. >> and the new republican majority has already said that they are challenging the defense department on its $100 billion cut over the next five years. that really is off the table. >> i don't want to work for a united states senator, it seems you work for him for life. and so i don't want to co-opt something that is going to happen in about a week and a half here before the president's commission reports or does not report. report, but earlier this year, senator who i work for for 25 some year, and my very, very first boss in this town, dr. alice woodland at the congressional office formed a

task force on debt reduction out of the bipartisan office here in town, and we have been orking on this and they'll be coming out with a report on that. it's coming out prior to president's commission. i can only highlight for you that even though i tried to get to balance in 2020, that is not going to be the jargon. the jargon will be reducing the debt of gdp to 60% or some level so we're not a greece. we're going to change the whole prosecution. those coming to town say balancing the budget, that's not it. the issue is can you lower the debt of gdp to a sustainable level, otherwise we're in real

deep do-do. that's the number. >> everybody's come to the conclusion that 60% of dg -- gdp is a sustainable place? >> that seems to be the consensus, yes. to get there though, you can still do what you were suggesting, john, you can still do that by having in the short term a, let's call it what i think it would be, is a payroll tax holiday while we're in a short timeframe limited to find the prime the pump on more time, but with that you have to have a deal for how you're going to address it in the long term, and that means coming back with again fundamental changes to the tax code, fundamental changes to our entitlement programs, and it's not going to be pretty or

easy. that's where we are today it seems to be. there's no way to grow yourself out of there or spend own cut your way out or tax your way out. it has to be a combination of all the above. >> bill already touched on something i was going to ask youth. i'll throw this to you. we have the president's fiscal policy commission which may or may not make recommendations on the first of december. it's convention thal wisdom in this town that commissions do what they do and it sits on a shelf and nobody agents. the only one i remember with enough to succeed is greenspan's commission in 83 #. >> i'm not sure we have the same level of crisis mode. >> yeah. >> but certainly the thinking is i presume that this election with its focus on debt and

deficits and stepping all -- spending and all that there seems to be a crisis that people are talking about. >> can we rally the public to 60% of gdp? >> that's the problem. that's the problem. >> i seriously question -- i mean, you know, there are democrats and republicans in this town who can get together and put together a very sensible path. unfortunately, they're not in office. >> i was going to say none of the people i worked for in this last year were elected this year. >> you know, i have the impression of this new republican majority that they would fight an effort of the type bill described which i think sounds very reasonable, and i think people that have studied the federal budget and

fiscal policy and national debt in any period of time would see the need in moving it in that direction, but i don't see any prospect at all that it would be -- you know, it's not that they wouldn't help try to pass it. they would do everything within their power to try to defeat a proposal that approximated what bill just described. >> so in the alternative, we have one member of the house, a smart member of the house, who has put forth his own plan, paul ryan. the document you pointed to a minute ago as far as i know doesn't adopt any of mr. ryan's approaches to solving what he regards as a serious fiscal crisis. is paul ryan too much for the republicans at this point? is he thinking too much for them? he's going to run the budget committee, so it will be an interesting game; right?

>> the chairman to be with all, i shouldn't really say this, but like scott says when you've been in this town as long as you have, you start to worry about this. paul ryan was a staffer in the united states senate, worked on the budget committee with me many years ago, so that shows you how things circle around here. is he too much? i think what paul ryan has put out is very bold, very courageous. it's huge. it does address the issue. i think he would have to do is little bit more on the revenue side to balance it out, but thank goodness somebody is laying out, proposing something so that you can start and work on something. at least he has ideas. at least he's putting it on the table and is willing, and having put that out, he's still

reelected here i guess, so i think it's helpful to have those ideas, but it's an idea. it's a proposal. in our system of government hopefully some of that filters in and at the end of the day we end up with a product that starts to address the concerns that he's raised. >> the republicans did remarkably well on tuesday with the senior citizens people over the age of 65 voted democrat i mean, voted republican by 58% which was a significant driver, and they also as is always the case voted in very large numbers, so they had a strongly disproportion impact on the results. i would say if paul ryan's proposal becomes more than a think piece and sprawled out in greater detail so that senior

citizens understand what he's saying and it has something to the republican party, they can kiss that 58% good-bye and get 28% in the next election. it, it focuses a huge part of the burden on low income senior citizens who really would have no way of compensating for it, and it's, you know, in fiscal terms, it's realistic. it does make serious cuts unlike the pledge to america, but those cuts are going to be viewed as very unfair and undually harsh by, i think, huge proportions of americans, not just senior citizens. >> we weren't supposed to get into a fight up here, so we won't do that, but i will say

that i believe that most of the proposals as it relates to social security and medicare quite frankly more likely to hit the young people out here than it is to hit the current retirees going forward. i agree, it's hard to sell that and convince people you're proposing reductions in medicare or social security that do not affect the current recipients, but the current recipients here who are quite frankly of not even getting what social security has been already quote promised to them. >> well, that's the issue; right? we don't know that maybe for me or us if we retire we might get some of what's been promised, but the 20-somethings out there paying in now are not necessarily in that boat. is question in the audience? i'd be happy to throw this open. yes, in the middle.

>> cameron lucy, 12 years at omb, worked at emery and all those folks. you guys are kind of heros. i'm asking the question of where's the leadership on the senate side specifically to try to find a way to look at all three of the drivers, the economy, the revenue side, the fiscal side, and broaden the conversation so that instead of just talking about personal income tax, maybe we talk about some of the things that you left off the table in the 90s like capital gains or corporate rates. >> i guess to the senate, i personally am sad to say that bob bennett from utah of course

didn't win his primary, and of some of the leadership thoughtful side, i think he was one of the more thoughtful senators who worked across the aisle, and so to be brutally honest with you, i'd have difficulty telling you right now where the leadership is. i presume my former ranking member, now chairman of the house senate committee, mr. conrad thinks about these issues. unfortunately, he's up in 2012, and i wonder if he would decide the farm bill is more important than the budget in the next two years and may consider that as the opportunity to leave that area. i'm sure if i sat here long enough, i could get myself in real trouble by talking about various senators, but i think you raise a basic point.

it's not so much -- i guess it's not so much the leadership in terms of economic and fiscal policy from my perspective. it's more the ability to reach across the aisle regardless of whether you have an expertise, and i'm going to show my age here in terms of i know he left under a cloud, but danforth and george mitchell and tom daschle are willing to work. >> dare we say it's time for adult leadership? >> it would be nice. >> does mitch mcconnell hold the balance of power in the senate today? >> i think he has a lot to say. how's that? >> about how the senate will operate the next few years, and i think he can be a real key to whether or not there's a willingnd to work with the

president in a bipartisan manner and reach across the aisle. he's going to have a tough time even with the senator elect from kentucky who already said he's going to challenge him every day. i mean, i never heard of him. is this on the record? >> it's on the record. >> i better be quiet. it's on the record. [laughter] >> i mean, i was quoted several years ago saying rather snidely that the house was very both parties in the house were very happy to send tom koa -- coburn to the senate. i think those difficulties are going to be compounded significantly with rand paul and

a whole cast of new characters, and also by the fact that you got this external force and all the outside money not coming through the republican senate campaign committee. it's coming in independent expenditures from people driving this agenda, and with a threat that they will take on incumbent republican senators in primaries if they don't behave in a certain way, and that greatly changes the kind of authority and bargaining power that a leader in either party will have, so i think mcconnell even though he's going to be positioned to have a lot of influence over the majority has got huge problems within his own party that will actually put him on a shorter leash than he's been used to.

>> further questions from the crowd? if not, i have one. so the republicans have said, and i think promised almost they will try to repeal health care. probably not going to happen, probably couldn't be done over a veto or get it through the senate, but, bill, you'd know more about this than me, isn't it possible that there are provisions in the health care that require proarpgs in the come -- appropriations in the coming year, and if there's no money, than a lot of these things will not just happen? >> well, you're asking a budget person when you should ask the appropriator next to me. >> i was asking the health care expert at the moment. >> it's a good question because obviously first of all i'm not wearing my cigna hat right now.

i'll goith my budget hat. >> okay. >> i've gone through the bill. there's a very excellent report when you're out of congress, you have difficulty getting these congressional research services to put a nice study out that shows that which is subject to appropriation and that which is subject to or has been already appropriated subject to transfer. i've gone through the list. i've added it up. yes, there is for fiscal year 2011, about $7 billion in programs that are subject to appropriation, and as scott would know better than i, yes, congress since the appropriation bill originates in scott's old chamber, yes, they could step back and not fund or reduce that authorized to be appropriated. my guess is that's true. however, when you go through the list of those items that are

subject to appropriation, they are the grants, they are the demonstration projects, wellness prevention programs, compared to the effectiveness there, and by the way, the $50 million in grants to the states for carrying out medical malpractice. now, you cannot fund those and have an appropriation bill without those in there, but is that going to fundamentally undermind the larger legislation? no because most of the larger legislation is prefunded through transfers out of part a and b of medicare, or it's an entitlement. now, you can still come back and revisit that through reconciliation or something or you could probably put it an aappropriation bill, a rescission of that which has been, but then the president has to sign that, and i don't see that he would sign that. i don't know how you veto yourself into as i say into

higher spending. you could not -- you could not just fund, but i don't think that this defunding of the health care bill when you really go in and look at the accounts, it will have an effect. it could have an affect on the accounts, but i don't think it underminds the fundamental issue and the changes that are out there in terms of the underlying present of the bill. >> this is the question of the week, and everybody's scrambling to get a more precise answer, and i don't think anybody has gamed is out entirely, but much of what was structurally important is covered with mandatory appropriations that were made by law in this act. it would take a repeal of those provisions in order to stop the money from flowing to, for instance, the state programs to

monitor the premiums of health insurance companies. the -- there are other things that i think are important that need to company the health care bill, but i agree with bill, there are companies that are discretionary that will need to be included in the 2012 appropriation and which may well not be included in that appropriation, but they will diminish the quality of health care perhaps, but leaving them out will not stop the program from going forward. >> on the subject of just, here's the pledge again. i studied this. all you've heard is repeal health care. yes, but then you go on through the other things, medical malpractice. that's possible of a bipartisan

agreement. purchase insurance across state lines, possible. i want to get down to the real nut here. ensure access to patients with preexisting conditions, expansion of the high risk pools, make it illegal for an insurance company to deny coverage with someone with prior coverage on a preexisting condition, and lifetime spending limits. all these things are in the current bill, and once again, it's going back where is the meat? what are you changing, and how are you changing it? >> the individual mandate i think is. >> and that could be a problem. that could be a problem. so let me have a prediction from both of you. scott. you go first. how will this play out over the next six months? will we get a full year cr out of the lame duck or cr into february? will the republicans do what the

democrats did a few years ago and then do a cr carried through fiscal year 2011 and start an appropriations process for 12? what do we see? >> well, i think nobody can answer that question. there is serious interest in doing an omnibus bill. there have been very extensive negotiations between the house and senate over the makeup of that, and there appears to be a bipartisan interest in the senate in passing an omnibus bill, so i -- most people -- >> in the next month. >> yeah. most people are saying that's not possible. i think it may not be likely, but it is possible. i think it would be a service to everybody to have that happen because you would have agencies knowing how much you have to spend. you would give the new congress a chance to come in and learn

something about the federal budget before they start changing it, which i think will serve their purposes better than -- >> there's going to be a lot of freshmen. >> yeah, and i think that would be the best outcome. i think next to that might be a full year cr would be the most preferable because you have all the things resolved and allow the new congress to come in with a fresh, a clean slate and an ability to think more strategically about how they want to play their cards and try to have an impact. it is entirely possible, however, that they will have a three month cr running through the middle of february until early march. that will very likely lead to a major show down with the white house and the senate over how

much specific programs are funded at. one of the things they've expressed anger at a number of agencies including the corpg for public broadcasting, and i think they would be well served to spean more time learning about some of the agencies they are angry with and understand the implications of major funding reductions before they jump in and start to slash. >> unless they decide they need to cut 8 or 9% and close them all down. >> well, i think they need to have a very serious impact study on what an 8% or 9% cut would result in, and i think they'll find out there's a lot of things that they actually feel they support that would be very badly damaged by that kind of a budgetary -- >> you think the odds of an

omnibus or full year are good at this point? >> you know, i think, i mean, i wouldn't say it's 50/50 #, but i think there is a 30% chance of an omnibus bill passing in the lame duck. bill? >> scott's closer to it than i, but i would say that i think the time available in this lame duck session is extremely short when you consider they are back one week with leadership elections, out for thanksgiving, and then back. unless they work up to christmas eve this year, i don't think the time works in favor of an omnibus bill. i think that would be the appropriate approach, and i would expect a cr, but you're right, it would be to cut a deal in three months or six months rather than a year to give people to get educated about the government funding proposal. >> so it could be a long haul

into 2011? anything further from the audience? if not, guys, anything else you want to add? i think this has been good conversation. >> thank you. >> thank you. >> thank you very much for your time. thank you, everyone. [applause] >> oregon congressman greg waliden is leading the republican transition team in the house that will include newly elected and long-term members. he said they will look at policy including the weekly work schedule and the future of earmarks. the transition team's first meeting is next monday. in a few moments an update on the middle east peace process with the chief palestinian negotiator and we'll take your calls about the election live on

"washington journal" at 7:00 eastern. several live events to tell you about today. we'll have more election analysis from the bill press radio program live on c-span 2 at 6:00 a.m. eastern. also on c-span 2, at 9:00 a.m. eastern, the world affairs councils of america conference. participants include former ambassador to iraq, brian crocker and retired chairman. hosted by the weekly standard and washington examiner. panelists include bill crystal and bill barnes. that's at 12:30 p.m. eastern. it is harmless that one is making a star out of britney spears. or cher. but when one takes this notion

of stiff-arm into the national security realm then lives are at stake. americans after a while get wise that the stars and the wizards, the dream teams and the best and brightest really might not be what they are cracked up to be. in that fateful amount of time, chaos and mayhem may come to reign. just a few of the policy leaders critiqued by derek leebaert on sunday's c-span "q & q. >> on american history tv we'll sew shom of the art by japanese-americans in the internment camp and take a look at the increasing political and economic freedom of women in the early republic. american history tv, all weekend

and every weekend on c-span there. >> now a discussion over the middle east peace process and the negotiations between the israelis and palestinians. this is a little less than an hour and a half. >> good afternoon and welcome to today's meeting, a conversation with sa'eb the center is established by congress in 1968. it is a non-partisan institution engaged in the study of national

and world affairs. the wilson center establishes and maintains a neutral forum for dialogue. the center commemorates the ideas and concerns of woodrow wilson by providing a link between word of ideas and the word of policy. and research, study, discussion and collaboration among a full spectrum of individuals concerned with policy and scholarship in national and worrell affairs. today's meeting is basically a conversation between the chief palestinian negotiator and head of the negotiation affairs

department and adam david miller, public policy scholar at the woodrow wilson center. we have distributed the bios of our speakers and i'm sure you are all familiar with them. so no need for me to again introduce them. >> it is very important not to have any interference because this meeting, like any meeting we have is picked up around the world. so please do be kind enough to close your cell phone for

duration of the meeting. i would like now to give the floor to my colleague, aaron david miller and he will start a conversation for five minutes and then we'll open the floor to your questions. let me also welcome the ambassador, who is the first time at the woodrow wilson center and we hope to see him more often. thank you. aaron? >> thank you very much. let me welcome all of you to the woodrow wilson international center for scholars. it is a privilege and an honor for me to host. i should say i've known sa'eb for more than 25 years. i consider him a close friend.

our wives are friends. our daughters are friends. he has been to my home and i have been to his. with close parallels. except for one fundamental issue. while sa'eb's world these days is still defined by -- the world that is still possible, my world is defined more in terms of what is probable and why we still have our disagreements, some may appear today, some may not. i consider him a close friend. second, no one is in a better position in my judgment to offer you and c-span a comprehensive assessment and drue view of the palestinian issue and prospects for the negotiations. sa'eb has literally seen it all. in madrid,

where you and i wer i will never forget how uet secretary of state baker on that day. from madrid to the washington talks, where we negotiated against the backstop -- backdrop of secret negotiations are going on in oslo. to the oslo process, or he became prominently and permanently involved. to the camp david sinnett july -- a senate ju 2000. pretty grim prospects. he has been there through it all. it should be of no surprise to

any of you that he remains a champion and an advocate of palestinian national interest. he is an articulator in the palestinian national narrative. that is his le. i respect that. at the same time, he is also aware of the fact that be is really palestinian problems -- it is a complex conflict in which both sides bear responsibility for the perpetuation and both sides bear responsibility for the solution. that solution must be based, not on an imbalance o power, but on a balanced of interest. the format to date is very straightforward. i will ask him to in questions that i have been dreaming of since i left government in 2003. it encompasses the three areas.

palestinians internal politics, negotiations, and his expectations and a view of the american role. specifically the last 20 months of the obama administration. once we finish with that, we will go to your questions. these are to beuestions. no comment in their entirety and certainly not speeches. let me began. since clarity and honesty have been your trademarks, no one would be disappointed in your responses to these questions. henry kissinger once said that israel has no foreign policy.

it just how does it -- it just has domestic politics. how does it shape the palestinian position and the negotiations? > sometimes -- we are just like any other sid in transitions, societies go

through a period of transition. for us, we are in this transition. that would mean that my wagon will always be overloaded. countries have factions. how do you balance? how do you balance the political geography? palestinians are scattered all over. in many cases, they have to abide by the rules of a given

country they live on a. -- live in. you have an israeli occupation. when the israeli occupation came, -- that will tell you something. that will tell you something about the nature of the negotiations. we are different. we are not your normal conflict. we have people 11 going to synagogues same -- we have

people who are going to synagogue and saying the same thing every saturday. there are people who go to churches every sunday and believe they are hearing and seeing it for the same time. deal with that. been a believe and a divine power- they believe and a divine power. the palestinian politics -- it is to people going through labor

pains, going through a transition period -- transition. they do not feel like they have finished their transition yet. we have many internal complexities. hamas is the palestinian party. the defeated my party. in 18 days, they were the speaker, the parliament, in five weeks, there were the government. i had been elected from the constituency in 2006. my party cost me to deliver a speech in response to the in

tradition -- introduction to the government for a vote of confidence. you are my prime minister. you are my wife's prime minister. they honor their commitment to the previous agreement. it is a political transition, and faction split the role of the government. you are the government for the palestinians. you are everyone. those traditions that we have all for our people, you should hor. unfortunately, democracy in palestine has failed. we won the election and we must

change the charter. since we won the election, it must be canceled. the internal dynamics are so difficult. not because we chose this path. we make mistakes. people are watching us and they want to score points with us and the fall what we do. so far, we have 26 parties. i am happy -- we are on the right track. it is difficult, it is painful, and will take a lot of time.

but this transition is a must for us. >> you provided a good transition to my next question. not to be unkind, but you could look at the palesnian national movement today as a kind of palestinian hump the dump d. you have to political entities, two sets of securityervices, two different sets of funding streams, to fferent ideas about what constitutes the future is palestinian. how did those divisions shape, constrained, the negotiation and the implementation of a punitive agreement with the israelis? did ministration seems to be subscribing to what i would

call the kevin costner school of diplomacy. the main cracter hears voices that say, build it and they will come. is the logic that they will reach an agreement and the agreement will be so compelling that the divisions will heal because they will have no choice but to acquiesce? how do you manage? how did you manage? >> the difference between us and hamas is not an enomic problem, a social problem. if they ran the country, they're good.

was that the withdrawal because of negotiations? to be fair, they never disputed the fact that the plo have the jurisdiction in negotiations with israel. it specified that the negotiations with israel, --

they passed for one thing. i do not think that the division today is because of negotiations. they were always there. they maintained an agreement with you. in 2006, the one. -- they won. if i have an end game agreement with israel, who would prevail? if i do not have an endgame

agreement, i will stop. >> this is a tough one. i think. change is hard. to expect a change in others it is understandable. particularly when you're the weakest party in the negotiation. if you had to identify one in perfection, weakness, flock, in the palestinian strategy these many years, with respect to the israelis and the negotiating process, and there are many strengths, but no one is perfect. we know this. >> israel these are not perfect? shocking. >> what was the most

significant shortcoming in the palestinian strategy? >> i have no army, no air force, no economy. if it is my word against an israeli, we cannot stand a chance. when we entered these negotiations, many people were there, like jim bakker. he denied my exience as a palestinian. i am here.

they insisted that we deny israel without defining the border. nations are no nations without borders. that is where the police give tickets. that is where you have language. american officials insisted that my ticket to negotiating -- at without defining the border. that has been the loophole in the peace process. s spected israeli government' fought -- you have to lower these expectations.

let's see what kind of arrangements -- it will not be a country like yours. the problem we face is not that he wants -- look at what he says. settlements should not be -- what does this translate to me? he had already decided which part of my territory he will give back to israel.

once he finishes this, he will say, come here, boy. this is what we have for you. they come with conditions. i am supposed to accept that. i will not negotiate jerusalem. you have to join the zionist movement. that is what it boildown to. they recognize israe as a jewish state. after he puts all of this list of conditions, he tells me, come and negotiate. why? israel is still deciding wre its border will be. the region is changing. iran, at ahmadinejad.

the only way that this region -- >> we will get to mr. netanyahu in a minute. >> i will come to that later. >> i could identify a hundred mistakes that americans made during the course of -- >> americans and israelis did not make mistakes. exclusively palestinians. >> i could identify thousands of mistakes that we made. everybody strategy involves changes. looking in the mirror, that is the place for that change, whether you are in israeli, palestinian, or american, has again. that is the real question.

you may not want to answer it. but that is the real question that needs to be confronted. why did we do wrong? over the crse of the last two decades. israel has to look and be a mirror to make an assessment of where their tactics and strategies ran off a highway. if they are prepared to do it, it is only logical to assume, even though you are the weakest part, your rights have been taken away. you need to do it as well. let's move on. the pee process. a general question. how would you characterize the status of that process right now, november 4, 2010? what are the chances for resuming negotiations? resuming negotiations that