long, long time. i've been tweeting and facebooking this all week long encouraging people to read this. . .

>> they would like to say they are monetizing the debt. they intend to monetize, to buy treasurys for the purpose of lowering interest rates for economic growth, not to monetize the debt. look at the intentions, don't look at the actions for it what is happening in government is a systematic replacement of the pool all blow by the rule of man. look all over the place. look at our regulatory policy. look at our fiscal policy. look at crony capitalism. look at our foreign policy and look at our monetary policy. the rule all lot is being replaced with the rule of man. it started a long time ago.

humphrey hawkins is a good place to look. we are in an era where people are not familiar with the precepts of sound monetary we came off this. with sound economic growth. those of us in the x generation -- i was born in 1970. i saw many young people born in the 1980's and 1990's and we did not know what this stuff was. we were not around during the stagflation days. we were little kids went nixon pulled this off the gold standard. we did not go through these fights. we did not understand these ideas. we better come up to speed as a society now. we better get back into understanding what sound money is and how it is a necessary precondition for economic growth.

these are the things we have to get involved in very deed we don't understand what is happening to our money, we want to truly understand what is happening to our country. there is nothing more insidious and then -- that a government can do than to deep bass its currency. yet this is in fact what is occurring. the federal reserve believes they have this thing figured out. they believe that they can think this up -- stuff for better than millions of individuals acting in their own self-interest in the market. they believe because of the powers they have received, paying interest on reserves and other exit strategies that they can clean this up in time. they think they can put the cruise missile to the goal posts meaning they believe they can turn all this stuff on, deploy all this money, run the printing presses overtime, and mop it up in time for getting inflation under control. it is a fatal deceit.

here is the basic point -- they believe that they can figure all of this out, reagan the economy and full as into growth which is inorganic and pull it out just in time. that week and mothball its money supply and we are looking at the measure of inflation driving down the highway looking in the rearview bearmirror. if we look at lagging indicators. we look dead corn, not looking at the dollar or the yield curve. we miss it. that means when you are driving down a highway looking in the rearview mirror, you have pasture off ramp and is your turn. we are driving the car with a foot on the gas pedal and a foot

on the break very we're undermining the precepts of sound money which is a necessary precondition for economic growth. there are no shortcuts that will get us toward the foundations of a pro-growth society. low tax rates that are predictable and fair, regulations that are transparent, fair, equal to everyone based on sound science, the rule of law and contracts, getting rid of crony capitalism, getting this debt taken care of, and of course, is sound money. these of the basic foundations of economic growth that are necessary. those of us from our corners of the capital will be advancing this conversation. judy has done a phenomenal job getting this into the hands of americans. i will reintroduce a bill. i have been in congress for 12 yearsconnie mack and i

introduced this bill. getting humphrey hawkins amended once and for all to focus the fed on its primary mission which is money. , price stability, the soundness of the dollar. the dual mandate as the fed running all over the place embracing doctrines that are necessarily in conflict with one another. let's get the fed back on its primary and singular mission, sound money. it is the only arm of our government in charge of our currency. all these other arms of government are not in charge of employment policy, fiscal policy, economic policy. the fed is the sole guarantor of our money. that is what they should focus on and that is what we want to get this block back to. we want to get the fed back to a role with a are pursuing sound money. we want them to show the marketplace how they are doing it so we can take the guessing

game out of it. this is so that people have faith that they can save and take risks and invest. it is all about restoring the value of the dollars. it is all about restoring it as a reliable standard of the unit of measurement of value. we are the world's reserve currency for now. we will not become the world's reserve currency in the future if we abrogate this responsibility. if we try to reduce things in the short run to get a short- term stimulus at the expense of medium and long-term growth. these are the things that will affect our future. this will affect our living standards and the sooner we can reclaim those founding principles that made america so unique and so exceptional, the better off we will all be. all of these issues come in conflict with one another i will conclude with what i begin with. do we want to read-apply the

rule of law so that each and everyone of us has our own opportunity to make the most of our lives so that we are not picking winners and losers in government, not gaining the system for the special interests and the people who can read the system, do we want to get us back to a system that is as good as gold, a system that is reliable, a system that treats everyone the same, and a system that says no matter who you are, you can be what you want to be if you take on your own effort and work hard? we don't want the government setting the rules and rigging it before some against others part we want the rule of law reestablished. the rule of law is a society that can grow and prosper. this is a role so america can lead like it used to do. that is a society we want. we are coming at a tipping point

in this country. this comes to us in a couple of ways. it comes to us in an economic form. this is one where our debt gets us. it may put us in a tailspin spiral where we lose our standard of living and managing our decline economically. another tipping point is where we take individuals in society and take away their chance of making the most of their lives. we don't want a society of a majority of takers verses of makers. we don't want a society where we transform a safety net into a hammock. people will think of consumption and where they get that from versus taking risks, planning, investing, working, being an entrepreneur. these are the tipping point we are reaching and the sooner we acknowledge this, the better off we will be. i would simply say that some money is an issue that has to come back into our lexicon and something that people who have enjoyed the last few decades or

years can now take for granted anymore. it is something we have to get our money system back on path. if we do, america's best century will be this century, not the past century. thank you very [applause] ] >> thank you, congressman. up next is my other favorite monetary economist, dr. lowery white. he has taught at the university of missouri in st. louis, the university of georgia, and that new york university. he has been a visiting lecturer and a visiting scholar at the reserve bank of atlanta and a visiting fellow at the. he has been an author of a number of monetary articles. dr. larry white. [applause]

>> thank you. when freedom works announced the schedule of this event on its face but page yesterday, fence made a number of comments and my favor of those red," how the fed has failed, really? in 10 minutes?" i don't have time to talk about every case where they have failed us. especially the fed staying within its statutory authority. those of us who think the fed has no business conducting fiscal policy to the tune of $1.50 trillion has no business bailing out the creditors of financial institutions and has no business deciding which sectors of the financial market. the documents that were released last week detailing the fed's action mannequins have only confirmed that the fed has failed those of us who believe in the rule of law rather than

the rule of central bankers. i don't want to focus on recent events. i want to focus on the historical picture. this is based on a working paper i have co-authored. it is available at the cato institute website. the fed has failed on its own terms. it has failed to achieve its own stated objectives. it has not tainted the business cycles. it has amplified them. even if we put aside constitutional objections to the fed, they have failed on pragmatic terms. recessions have not been less frequent or shorter or less severe. defenders of the fed will say that we don't want to go back to the system that existed before the fed. it is true that there were three

major financial panics. over its history, the fed has not made panics less frequent. we have had five banking panics in short order between 1930- 1933. those were worse than any panic's under the pre-fed. . it led to the terrible collapse known as the great depression and more recently we have had the financial panic of 2007, the worst since the great depression by some measures. that ushered in today's economic woes. defenders of the fed no longer say it has abolished financial panics. they used to say that before 2007. they say let's not just a fad on one mistake. how many times will they have to say that? as the fed lowered unemployment or increased real growth or lower real interest rates in the economy? no, but we should not expected

the fed to do those things. the fed should focus on one objective which is using its control of the stock of money to maintain the purchasing power of money. using that leverage, the fed cannot improve real economic growth in any sustainable way. there is no rationale for the fed to have a dual mandate. some people call a bipolar mandate. what the fed does control as the purchasing power of the dollar. it has notoriously failed to preserve eds. before the fed, silver and gold standards kept the dollar constant. since 1914, the dollar has lost 95% of its purchasing power parity dollar today buys only what a nickel bought in 1914. is having the fed in charge

consistent with sound money? -- sound money. ? ? they have not done it in practice. the fed defenders say isn't inflation steadier and more predictable? no, somebody buying it wanted- year bond or thinking about making a 30-year mortgage faces more uncertainty today about the purchasing power of the dollar then an investor faced under the classic and gold standard. the market for 30-year bonds have pretty much collapsed. should we give the fed credit for at least preventing deflationary? first we need to recognize the distinction that seems to escape ben bernanke which is not all deflation is bad. when productivity is increasing, when computers become cheaper to produce, it is a good thing that their prices are allowed to fall.

that is the kind of deflationary we had in the 19th century. the second kind of deflation which is bad is prices fall because people are hoarding money for the money supply is shrinkingpre-fed deflationary is mostly good. under the fed to watch, there have been several episodes of bad deflationary period 1920-21, 1930-33, and 2008-2009. no credit to the fed for that. as real output been more stable? the great hope of discretionary policy was to stabilize the macro economy to smooth out business cycles to fine-tune the economy. it has not happened the fed's record is especially bad between the first and second world war but even since world war two, although the statistics used to

seem to say that the economy was more stable, the statistics we now have thanks to the efforts of the comments -- of economists no longer say that. a leader in that statistical revision by the way it is christina romer. she has never been a tea party year. ier. the older statistics were biased as the only included a few commodities series. today, we measure more widely. when we had just the statistics to take account of that, the pre-fed period looks more stable.

we don't see any improvement even though today the economy is much better diversified and muslim -- much less agricultural barrett we should expect to improve stability even if the fed had no effect for the fed has done worse than have no effect. the fed had naturally more stable economy to deal with the matter is watch, the economy has been less stable because they have tried to do too much with monetary policy. fine-tuning has turned out to be destabilizing in practice. we can try measuring stability by looking at the frequency and length of recessions. if you look at the old free sessions using the new statistics as christina romer reported in 1999, the average length of recessions is one month longer in the post-world war two era than before that. she said that in 1999. with we had in the recent recession, the case for the

fed's failure becomes even stronger. as an aside, let me say that the feds bail out during the recent crisis did not save the economy. they have sharply increased the bad incentives for reckless bank and financial market behavior going forward. i am not saying we should go back to the execs system we had before the fed. that system was far from the best available. various regulations weekend of the banks in that time, setting the stage for those three panics i mentioned. after the panic of 1907, congress convened in national monetary commission. congress concluded that the system was broken and a serious regime change was needed to improve it. unfortunately, instead of trying deregulation, they gave as a central bank. in 2010, in the shadow of the panic of 2007, we have just as much reason as people had in

1910 to conclude our system is broken and a serious regime change is needed to improve it. hopefully this time around, we will learn from our failed experience with the federal reserve system. hopefully, we will try free banking and sound money and banking without artificial restrictions and privileges and bailouts and a commodity money regulated by market forces instead of by a committee of political appointees, thank you. [applause] >> this palle represents what i believe is the kickoff on a major national grassroots education campaign. we will make sure that every activist that cares about economic issues in this country gets a copy of this pamphlet and that will be the building blocks for a serious national debate as we go into the next congress. finally, i would like to ask the ceo of atlas economic research foundation to come up

for closing remarks. , brad. >> thank you so much. i just want to say how thrilled we are to see this conversation moving to the forefront of public policy discussions. the history of our organization is intertwined with a legacy of the great economist of the austrian school which has been rediscovered in recent years because of its business cycle theory. our guide to sound money that judy has offered as a quote from hayek. " all those who wish to stop the drift toward government controls should focus their efforts on monetary policy." to many of us who believe in the cause of living government exhort -- ignored this urging about this topic of sound money.

atlas launched its sound money project in 2008 with two principal goals. to revitalize and bring more attention to the academic conversations that can lead us back toward sound money principles and the second goal is to foster more collaboration with the organizations and scholars who are connected to the atlas network, a loose confederation of think tanks around the world who believe in protecting individual liberty and limiting government. one great example of this is the partnership with freedom works to publish "the guide to sound money." we are thrilled to be including academics in this project like dr. shelton and dr. white. now we see political leadership coming, i am excited to see where this will lead. we are hopeful we are at a point where there will be public demand and political will to

address the hard questions about how we can restore a sound money principles. anybody of cares about this topic, go to sound moneyproject.org. you can download this guide and support the educational work that atlas has been carrying out. anybody who wants to learn about the broader work of atlas, visit atlas.org. you can also go to freedom works.org. join me in thanking freedom works and our distinguished panel today [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> in a few moments, president

obama's news conference if it on the deal is reached with congressional leaders about extending tax cuts. "washington journal" is live at 7:00 eastern with segments on the tax-cut deal and the wikileaks case. we will also be joined by the louisiana governor to talk about his new book. and the house of representatives is back in session at 10:00 eastern. a senate governmental affairs subcommittee is looking into the may 6 market crash when the dow jones industrial average dropped 700 points in a few minutes per witnesses are scheduled to include the head of the securities and exchange commission and commodity futures trading commission. live coverage is on c-span 3 today at 2:00 p.m. eastern. >> just in time for the holiday system, the supreme court, the latest cspan book is being offered to c-span viewers at a

special prize, just $5 plus shipping and handling. that is a discount of 75%. this is the first book to tell the story of the supreme court through the eyes of the justices themselves. 10 original cspan interviews are included with chief justice john roberts, sandra day o'connor, and sonia sotomayor this gives readers a personal view of the modern court rich with history and tradition with 16 pages of photographs detailing the architecture and history of the court's landmark building. to order copies of the book at the special price of $5, go to c-span.org/books. be sure to use the promotional code "c -span" when you check

out. >> president obama defended his deal with congressional republicans over expiring tax cuts and unemployment insurance, a deal that has been criticized by some congressional democrats. this is half an hour. >> i want to do what is right for jobs, the american people, and economic growth. i want to make sure that millions of americans are not seeing their paychecks shrank on january 1 because the folks in washington are busy trying to score political points. because of this agreement,

middle-class americans will not see their taxes go up on january 1. this is what promised. it is a promise i made during the campaign and as president. because of this agreement, 2 million americans who lost their jobs and are looking for work will be able to pay their rent, put food on their table. in exchange for a temporary extension of the high income tax breaks, a policy i applause but that republicans are unwilling to budge on, this preserves tax cuts for the middle class that i fought for and republicans opposed two years ago. i will cite three of them. number one, if you are a parent trying to raise your child or a college tuition, you will continue to see tax breaks next year. second, if you are a small business looking to invest and grow, and you will have a tax cut next year.

third, as a result of this agreement, we will cut payroll taxes in 2011 which will add about $1,000 to the take home pay of a typical family. this is not an abstract debate. this is real money. this is for real people. it will make a real difference in lives of the folks who sent us here. it will make a difference in the pace of job creation and economic growth. in other words, it is a good deal for the american people. i know there are some who would have preferred a protracted political fight even if it meant higher taxes for all americans and an end to unemployment insurance for those who are desperately looking for work. i understand the desire for a fight for it i am sympathetic to that. i am as opposed to the high end tax cuts as i have been for years. in the long run, we simply cannot afford them. when they expire in two years, i

will fight to end them just as i suspect the republican party may fight to end the middle class tax cuts that they have opposed. we will keep having this debate. we will keep on having this battle. in the meantime, i am not here to play games with the american people or the health of our economy my job is to do whatever i can to get this economy moving. my job to do whatever i can to spur job creation. my job is to look out for middle-class families who are struggling right now to get by. americans or out of work force through no fault of their hundred a long political fight that carry over into next year might have been good politics but it would be bad deal for the economy and it would be bad deal for the american people. my responsibility as president is to do what is right for the american people. that is a responsibility i intend to uphold as long as i am in this office. with that, let me take a couple questions. >> you have been telling the

american people that you oppose extending the tax cuts to the wealthier americans. what you never said is that you opposed the tax cuts but you would be willing to extend import couple of years if the politics of the moment demanded. when you take a stand like you have, why should the american people believe you will stick with this? >> this is not politics of the moment. this has to do with what we can do right now. this is the choice. we cannot get my preferred option through the senate right now as a consequence, if we don't get my option for the senate right now and we do of 2011,on january 1 the average family will see their taxes go up about $3,000. number two, at the end of this

month, 2 million people will lose their unemployment insurance. i have an option to say that i will keep fighting a political fight which i cannot win in the senate and, by the way, there will be more republicans in the senate next year sworn in than there are currently, so the likelihood that the dynamic will improve for us getting my preferred option for the senate will be diminished. i have an option of just holding fast to my position and as a consequence, 2 million people may not be able to pay their bills and tens of millions of people who are struggling right now are suddenly going to see their paychecks smaller. or what i can do is say that i will stick to my position that those folks get relief, that people get hhelp for unemployment insurance and i

will continue to fight for the american people to make the point that the republican position is wrong. if there was not collateral damage, if this was just a matter of my politics or being able to persuade the american people to my side, i would just stick to my guns. the american people already agree with me. there are polls showing right now that the american people, for the most part, think it is a bad idea to provide tax cuts to the wealthy. the issue is not made persuading the american people. the issue is how do i persuade the republicans in the senate currently blocking that position? i have not been able to move them. in the meantime, there are a whole bunch of people being hurt and the economy would be damaged and my first job is to make sure the economy is growing, we are creating jobs out there, and

people who are struggling are getting some relief. if i have to choose between having a protracted political battle on the one hand and those folks will be hurt or helping those folks and continuing to fight this political battle over the next two years, i will choose the latter. >> what about the last two years? was there a failure on the part of the democratic leadership on the hill or hear that you could not preclude these cuts going forward? >> on the republican side, this is their holy grail. these tax cuts for the wealthy. this seems to be there central economic doctrine. on less we had 60 votes in the senate at any given time, it would be very hard for us to move this forward. i have said that would have liked to have seen a vote before the election.

i thought this was a strong position for us to take into the election. this crest allied -- this crystallized the positions of the two parties. our proposal to make sure that the middle class is not harmed and we do not make these bush tax cut permanent for wealthy individuals because it would cost the country at a time when we have these looming deficits, that that was the better position to take and the american people were persuaded. the fact of the matter is i have not persuaded the republican party, mitch mcconnell or john boehner, and if i cannot persuade them, i have to look at what is the best thing to do given that reality for the american people and for jobs. >> back in july, you forecast that unemployment would be 7.7% in the fourth quarter of 2010.

2. is it going to do more to boost growth and create jobs? >> this is not as significant a boost for the economy at the recovery act was but we are in a different situation. when the recovery act passed, we were looking at a potential great depression and remind us in unemployment go up to 15% or more. we don't know. in combination with the work we did in stabilizing the financial system, that is behind us now. we don't have the danger of a double dip recession. we have a situation where the economy although growing and company profits are up, we are seeing some job growth in the private sector, the economy is not growing fast enough to drive down the unemployment rate given the 8 million jobs that were lost before i came into office.

what this package does is provide an additional boost that is substantially more significant than i think most economic forecasters had expected. you have already seen some over last 24 hours suggest that we may see faster growth and more job growth as a consequence of this package. the payroll tax holiday will have an impact. unemployment insurance probably has the biggest impact in terms of making sure that the recovery we have continues and perhaps at a faster pace. overall, every economist i have talked to suggests that this will help economic growth in this -- help job growth over the next several months and that is the main criteria by which i made this decision. this is something that i think everybody has to remember. i would speak especially to my

fellow democrats who i think rightly are passionate about middle-class families, working families, low income families who are having the toughest time in this economy. the single most important jobs program we can put in place is a growing economy. the single most important anti- party program we can put in place is make sure people have jobs and the economy is growing. we can do a whole bunch of other stuff but of the economy is not growing, if the private sector is not hiring faster than it currently is, we will continue to have problems no matter how many programs we put into place. that is why when i look at what our options were, for us to have another five months or so of uncertainty, not only would that have a direct impact on the people who see their pay checks get smaller and then impact on people who are unemployed and literally depend on unemployment insurance to pay the bills or

keep their home or car, in terms of macroeconomics, that would have been a damaging thing. >> the unemployment rate was just north of 8% when the last recovery act and now it is 9.8%. will the unemployment rate go down as a result of this package? >> my expectation is that the unemployment rate will be going down because the economy is growing even though it is growing more slowly than i would like, it is still growing. how fast will it go down? how quickly will the economy grow? when our private sector businesses going to start making investments in plants and equipment and start hiring people again? there are many economists who have been struggling with that question. i will not make a prediction but i can say with confidence that

this package will help strengthen the economy. it will help strengthen the recovery. that i am confident about. >> what do you say to democrats who say you are rewarding republican obstructionism? many progressive democrats say they are willing to budge and you are asking them to budge. why should they reward republicans? >> let me use a couple of analogies. i have said before that i felt that the middle-class tax cuts were being held hostage to the high end tax cut for it i think it is tempting not to negotiate with hostage-takers. unless the hostage gets harmed. then people will question the wisdom of that strategy. in this case, the hostage was the american people and i was not willing to see them get

harmed. this is not an abstract political fight. this is not isolated in washington there are people on unemployment who will not be able to pay the bills when their insurance runs out. there are people right now or just barely making it on the paycheck they got and gwen that paycheck gets smaller on january 1, they will have to scramble to figure out how they can pay their bills. how will they keep making payments for their child's college tuition? i could have enjoyed the battle with republicans over the next month or two because the american people are on our side. this is not a situation where i have failed to inform the american people about our position. the polls are on our side on this board we did not operate from a position of political weakness of with respect to public opinion.

republicans feel this is the single most important thing that they have to fight for as a party. in light of that, it was going to be a protracted battle and they would have a stronger position next year than they do currently. another way of thinking about it is that f. certainly we had made a determination that the deal was a permanent tax break for high income individuals in exchange for the short-term things that people need right now, that would have been unacceptable this is because you would be looking at a $700 billion dollars that would be added to the short-term that

would offset that the deal we have struck here makes the high end tax cuts temporary. that gives us the time to have this political battle without having the same casualties for the american people that my number one concern. >> telegraphing the negotiating strategy about how republicans can be used for the next year because they can stick to their guns and the on willing to budge? >> i don't think so. this is a very unique circumstance for this is a situation in which tens of millions of people would be directly damaged and immediately damaged at a time when the economy is about to recover a. . i have gone through two years or

the rap on me was that i was too stubborn and was not going to budge on a whole bunch of issues including health care where everybody was writing about how despite public opinion, despite this and that, somehow the guy will bulldoze his way through this. that is my point. i don't make judgments based on what the conventional wisdom is pretty make my judgment based on what is right for the country and for the american people right now. i will be happy to see the republicans test whether or not i am itching for a fight on a whole range of issues. i suspect they will find that i am. i think the american people will be on my side on on a whole bunch of these issues. right now, want to make sure the american people are not hurt because we are having a political fight i think the did

-- i think this agreement accomplishes that. there are a whole bunch of things they are giving up. from the republican perspective, income tax credit, the college tuition tax credit, the child tax credit, all those things that are so important for some many families across the country, those things they are opposed to. temporarily, they are willing to go along with that presumably because they think they can beat me on that over the course of the next two years. i am happy to have that battle. i will have that conversation. i want to make sure the american people are not harmed while we were having -- while we are having a broader argument. >> last week, it was busted that you were willing to walk away from the korean negotiation.

>> if i did not that correa a deal done on january 1, the taxes of the middle class america would not go up. that is pretty straightforward. if we did not get the correa deal done by january 1, 2 million people would have no way to support their families. you've got a situation here that was urgent for millions of people. companies but also of labor, the

story was not talked about as much. i am happy to be tested over the next several months about our ability to negotiate with republicans. >> do you hope to use this two- year window to push for a broader overhaul the tax code? >> the answer is yes. part of what i want to do is essentially get the american people in a safe place so that we can then get the economy in a stable place and then we will have to have a broad based a discussion across the country about our priorities. i have started doing that yesterday down in north carolina. this will be the long-term issue. we have had two years of emergency, emergency economic action, the banking industry, the auto industry, and

employment assurance, a whole range of issues, on some state budget. the situation is not stable but for those who are out of work on it is still an emergency. whistled up to focus on job growth. we have to have a larger debate about how is this country going to win the economic competition of the 21st century? how will we make sure that we get the best trained workers and the world? there was a study that came out today showing how we have slipped even further when it comes to math and science education. what are we doing to revamp our schools? what are we doing in terms of research and development to make sure that innovation is still taking place in the united states of america? what are we doing about our infrastructure so we have the best airports and roads and bridges? how will we pay for all that at a time when we've got both short-term deficit problems, medium-term deficit problems,

and long-term deficit problems. that will be a big debate. it will involve sorting out what government functions are adding to our competitiveness and increasing opportunity and making sure that we are growing the economy and which aspects of the government are not held. lping.we we have to look at the tax code and ask what is fair and efficient and i don't think anybody thinks the tax code right now is very efficient. we have to make sure that we just don't paper over those problems by bar weighing from china or -- by borrowing from china or saudi arabia in the context, i don't see how the republicans win that argument. i don't know how they can argue that extending permanently these high end tax cuts will be good

for our economy when we would have to cut vital services for our kids, veterans, and seniors. i am happy to listen to there are. and that will start next year. >> how do these negotiations affect negotiations about raising the debt limit? it seems they have a significant amount of leverage over the white house now. was there ever an attempt to include raising the debt limit? >> when you say they have a significant amount of leverage over the white house, what do you mean? >> they say they will not agree to it unless the white house is

willing to agree to significant spending cuts across the board that will go deeper and further than what you are willing to do. what leverage would you have? >> this is my prediction. nobody, democrat or republican, is willing to seek the full faith and credit of united states government collapse. that would not be a good thing to happen. i think there will be significant discussions about the debt limit vote and nobody likes to vote on that. once john boehner is sworn in as speaker, he will have responsibilities to govern you can't just stand on the sidelines and be a bomb thrower

my expectation is that we will have tough negotiations around the budget but that ultimately, we can arrive at a position that is keeping the government open, keeping social security checks going out, keeping veterans services being provided but at the same time is prudent way comes to taxpayer dollars. >> some on the left have questioned this deal and what your core values are. what will you specifically go to the mat on? along those lines, what will be different in 2012 when all of the tax cuts again are up for grabs? >> we will have had two years to

discuss the budget. it will be in concrete terms. over the last two years, the republicans have had the benefit of watching us take these emergency actions, having to preside over $1.30 trillion deficit that we inherited, and point fingers and saying that is our problem. over the next two years, they will have to show me what it is they think they can do. i think it becomes pretty clear after you go through the budget line by line that if, in fact, they want to pay for $700 billion worth of tax breaks to wealthy individuals that that's a lot of money. the corresponding cuts that would have to be made are very painful.

either they rethink their position or i don't think they will do well in 2012. that is on the first point. with respect to the bottom line in terms of what my core principles are -- i've got a whole bunch of lines in the sand. not making the tax cuts for the wealthy permit was a line in the center is making sure that the things that most impact middle- class and low-income families, that those work. reserves that was a line in the sand. i would not have agreed to a deal where some in congress were talking about a two-year extension on the bush tax cuts and one-year of unemployment insurance but meanwhile all the other provisions like earned income tax credits or other important breaks for middle- class families like the college tax credit go away.

this notion that somehow we are willing to compromise too much reminds me of the debate we had during health care. this is the public auction debate all over again. bypass the signature piece of legislation where we finally get health care for all americans, something the democrats have been fighting for for 100 years but because there was a provision in there that they did affectedhat would have a couple of million people even though we got health insurance for 30 million people and the potential for lower premiums for 100 million people, somehow that was a sign of weakness. and compromise. if that is the standard by which

we are measuring success or core principles, then let's faceime,e american people are still not able to conditions. for not being able to pay their bills because their unemployment insurance ran out. that cannot be the measure of how we think about our public service. that cannot be the measure of what it means to be a democrat. this is a big, diverse country. not everybody agrees with us. i know that shocks people.

the editorial page of the newspaper does not permit across america. most americans are just trying to figure out how to go about their lives and how can we make sure that our elected officials are looking out for us? because it is a big diverse country and people have complicated positions, it means that in order to get stuff done, we will compromise. this is why fdr when he started social security, it only affected widows and orphans. you did not qualify. and yet now, it is something that really helps many people. when medicare was started, it was a small program. it grew. under the criteria that you just set out, each of those were the trails of some abstract ideal.

this country was founded on compromise. i could not go through the front door of this without compromise. if we were thinking about ideal positions, we would not have a union. my job is to make sure that we have a north star. what is helping the american people live out their lives? what is giving them more opportunities? was growing the economy? was making us more competitive? there will be times when my preferred option, what i am positive is right, i can't get done. does it make sense for me to tack one way or another because i keep my eye on a long term and long fight, not my day to day news. cycle i don't think there is a single

democrat out there if they look at where we started when i came into office and look at where we are now would say that somehow we have not moved in the direction i promised. take a tally and look at what i promised during the campaign. there is not a single thing i have said that i would do that i have not either don or tried to do. if i have not got it done yet, i am still trying to do it. to my democratic friends, i suggest to make sure that we understand this is a long game. to my republican friends, i would suggest that i think this is a good agreement because they are swallowing some things they don't like as well and i am looking forward to looking them on the field of competition over the next two years. thank you very much, everybody. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> "washington journal" is next with the day's news and your phone calls and the house of representatives is back in session with live coverage at 10:00 eastern. and in 45 minutes, we will talk about the tax cut debate with democratic senator tom harkin of iowa. at 8:30 eastern, we'll be joined by republican governor bobby jindal of louisiana, author of a new book. you can call in with your questions about the legal issues surrounding the wikileaks case. "washington journal" is next. ♪ ♪