congress works on big issues before the final days of the democratic controlled house and senate. we will talk about the president's tax-cut deal and what it means for you as a taxpayer, for the economy, and politics, with a couple of members of congress. john campbell, republican of california, keith ellison, democrat of minnesota. it all wrapped in a layer of politics. in fact, many say the 2012 presidential election is under way. yesterday new york mayor michael bloomberg gave a speech as many -- that men meet -- that many see as a testing ground of a possible presidential bid of his own. that is what we want to talk to you about. we will show you a clip of his speech -- and we will ask you what you think of a possible bloomberg presidential bid, what it would mean for the country and what it would mean for president obama and the republicans. here are lines for you --

good thursday morning. it will be interesting to talk to you about presidential politics in light of all of the negotiations on capitol hill. let me show you what the front pages of another tabloid spoke like. here is "new york post." inside, the head mine looks like this -- firebrand might give d.c. hell and signals possible presidential run. the highlights that day -- that day point out. a sense of what his speech was light yesterday. a columnist in "the daily news"

writes about it. in it, he writes -- we want to talk to you what you think about that, what a third party, if that's the route he goes, will do in terms of president obama and the republicans. jonathan allen is on the phone with us with "politico" lead story. democrats fall behind obama in compromise with gop. a day of a lot of debate and discussion and dealmaking on capitol hill. to give people a scorecard of what to watch today. >> such a big score card. obviously the tax bill, the movement, the degree to which you will start to see not just moderate democrats getting behind this tax cut to deal with

the president but a little bit more of the veteran leadership of the democratic party, particularly in the house. i did not necessarily expect a majority to get behind this. i suspect most will be against it. it but with most republicans voting for it when it comes to the floor you really don't need a majority, just committed core to put it over the top. there are a ton of things happening on the floors of the house and senate, particularly in the senate today. the house passed the dream act last night which basically would provide a path of citizenship of the children of illegal immigrants to be essentially grow up here and go to college for a couple of years or served in the military. the senate is taking a cloture vote on that. not expected to pass. cloture motion in the senate on the 9/11 health care bill for first responders in new york.

also expected to fail because 42 senate republicans said it will not let anything through until this tax deal is done. speaking of spending bills, the house passed a year-long continuing resolution yesterday that would fund the government about $46 billion less than what the president asked for. about 1.09 trillion dollars -- $1.09 trillion. a different version, more of omnibus, more detailed sort of typical spending bill that has all of the various departments really sort of individually paid for. continuing resolution from the house is sort of a stopgap. it essentials retry is to keep things in line where -- essentially tries to keep things in line. host: a great deal going on.

let me very briefly wrap the politics ribbon around this, a quick explanation why harry reid is scheduling votes on things he knows he is likely to lose. >> i think there are a couple of reasons. there is a desire on the part of harry reid and other senate democrats to show their constituents that they care about the issues that the constituents care about -- dream act, 9/11 first responders bill. yesterday there was an attempt to give senior citizens $250 check in lieu of a cost of living adjustment they will not get because of the lack of inflation. to these other things democratic activists and voters wanted to see happen at and it is important to the senate leadership to put these on the floor to show that they care about them. additionally they want to draw a contrast with republicans on the issues, things they can take to the next election. saying they are insensitive to

the needs of various constituencies. really a political imagination. nobody expects these things to pass in the senate. the but the test of those do allow for messaging. host: could you give us 20 seconds about this -- to lead into the discussion about michael bloomberg and his consideration of a presidential run in 2012. yet a piece about whether or not democrats are considering a challenge to president obama. let me get that on screen as you explain what you did on that piece. guest: that was my colleague, jonathan martin -- host: sorry, two jonathans. guest: nothing has materialized but there is certainly frustration on the left. we will have to see what happens there. host: the place to watch this morning if you are a c-span viewer with a channel changer --

senate or house? gigawatts in the senate today. most of action and the house will be behind the scenes. -- watch the senate today. host: thank you for all of your insight. jonathan allen writing a story, a tax-cut deal gains came on capitol hill. we will talk to one democrat and one republican from the house later on on what they think about the tax cut bill. but now let's turn to presidential politics. a quick look of michael bloomberg and his consideration of throwing his hat into the ring in 2012. >> first, and this is the easy one, and still confident spirit building confidence is a big part of getting the private sector to invest. there is much pessimism and the system because there is much uncertainty about what washington might or might not do on taxes and regulations and

policies. and that uncertainty breeds economic paralysis. banks have money, but they are reluctant to loan. businesses have money, but they are reluctant to invest in new equipment and new hires. families, feeling a double-dip recession, are reluctant to spend. the potential for progress is there, but nothing is happening. why? because government solutions whose ambiguity. -- ooze do it. bureaucrats are writing thousands of regulations over the health care and financial services industry, the fill in the blank sections. writing these regulations will probably create more jobs for lawyers and accountants to interpret, explain, and evade the number of real jobs created by the legislation itself. with billions of dollars at stake, this process has chilled

economic activity. we need certainty, rationality, consistency, and predictability in the roles of the game, improving individual business confidence is the most powerful way to stimulate the economy, and best of all, it's free. host: michael bloomberg yesterday. talking about what your reaction would be as low board is reported to be considering a 2012 presidential bid. georgia, republican line. first up. caller: love c-span. been calling your great network for 30 years. i just want to say i am a republican but i am also a member of the tea party. michael bloomberg is a fine man but he will never make it. we are trying to make our counted the small business capital of the world and we want to get people like tom gray or mitt romney and jim demint, people will cut spending and taxes. if we are a very conservative state, as you well know, and bloomberg, he would not even

register in this state. i was very disappointing -- disappointed that john boehner did not pick somebody like kingston, those other kinds of candidates that will sell in georgia and i think across the country. in my opinion, i think bloomberg is a fine man. susan, he is not a big enough tax cut and a spending cut or, somebody like jim demint and the lombard, as you know, he does not have that reputation. judy bloomberg, as you know, he does not have a reputation. host: jersey city, new jersey. you are watching from across the river. caller: bloomberg is the best man for a better job. the tea party people should learn from him. should listen to him. this gentleman who just called, already made a judgment. bloomberg digging if he could fit into the tea party, if the

tea party could fit into bloomberg, he would be a tremendous force. the tea partiers could benefit from health care reform just passed by democrats. i am a democrat, never voted otherwise. i would step out and i would vote for bloomberg. but again, the tea party is an interesting force but they need to learn. they needed to let go of some of the hard and fast notions they have and learn, tax cuts for millionaires don't benefit the average tea partiers. they suffer from the same problems in health care and there is already talk about reforming what we have. i pay $500 a month, $600,000 a year for health insurance and that i never use.

-- $6,000 a year for health insurance that i never use. and there was a public option, compounded, 80% de not use health insurance -- 20% to -- there would be so much to pay for health care. host: kristin from alabama tweets this -- the next call comes from bloomfield hills, michigan. hank, independent line. independents are what people are dying for 2012. what are your thoughts? caller: i like bloomberg but he would not -- unless he had money to buy an extra term. he violated what he was sworn in office to uphold, to serve two terms. the fact that he has a lot of money does not make him all that appealing to me. like meg whitman in california.

just having a lot of money does not make you a genius. i of wondering what could do for america that he has not been able to do in new york. he has his hands full. as far as a bloomberg court jim demint or some of these people with the bigmouths who do not do nothing and don't have a record to show of any kind of accomplishment, i am amazed bloomberg would even consider. he seems more like a democrat than anything else. i want to praise the president for the way he handled the gulf stream problem, the way he handled health problems, the way he is working so hard to make government work again. i think he is doing a great job. host: thank you for your call. to the president, david broder talks about the tax cut deal and writes in his column -- centrist on the rise.

that is what david broder says this morning. also on the mind of a writer in "the new york times." she writes -- back to your telephone calls. staten island, joe, republican. good morning. caller: i would think that mayor bloomberg would be a disaster.

he hasn't met a tax he did not like yet. he ran as a republican and then an independent. just because the is a billionaire, will he now try to buy the white house? i would like to see him run and get his -- blown off because he is a disgrace. new york is in bad shape. he bought a third term, which was just a disgrace. two-term limits and he basically told everybody vote for it and you will get another term, too. he is dishonest, a crook, and i would love to see him run and get his dogs blown off.

host: new mexico is up next. this is chris calling on our democrats' line. good morning. caller: thank you for c-span. i would just like to say that i live in new york for five years, in this city, and it was beautiful. i did not leave until -- before 9/11, and then all of a sudden i realized the city was doing much better. i really think the city is doing much better with bloomberg up there. even though i am a democrat i think they are making the right choices as far as taking care of people. even though the tax cuts are coming down, it was still for the people so we do not have to pay as much money. i don't know why the republicans are complaining about what is going on with no whole entire process of trying to get together -- the whole entire process of trying to get

together with party relations. so, i don't know. i am just trying to figure out how to do that. i look forward to watching c- span again. host: thank you for calling in. a call from silver spring, maryland. kevin, independent. caller: how are you today? host: independents are what everyone has their sights on. what do you think? caller: michael bloomberg running for president kind of reminds me of ross perot where he has this really extensive business backgrounds, did really well in it, but for some reason those people in national politics were never able to gain traction. but they do well locally, do well to run for mayor, city council, senators, congressmen, you know, those types of office, but for some reason in presidential politics they are not able to gain any traction.

it makes me wonder if he considers it, would he go as independent, a third party, or try to make a run as a democrat. if he does, what would do to how president obama has been moving things over -- you can see over the last couple of months, since the midterm elections he has been moving toward the center. if he gets a more centrist challenger, will president obama immediately shooed back to the left to try to regain that incredibly liberal base that he lost or that i think he is losing because of the things he is doing right now? host: thank you so much. america.gov has a piece about third quarter -- third-party presidential candidates, picking up about the role of independents.

there are some statistics -- ross perot in 1996 got 8.4 percent -- 8.4 million of the popular votes, no electoral college votes. 1992, 18.9 -- let me turn the page. john anderson in 1986, zero electoral college votes. 1968, george wallace, 46 of the toro college votes. back in 1912, the guy who got the most electoral college votes in his third birdie bid for the white house was teddy roosevelt running on the bull moose progressive party, 88 and a tour of college votes in that effort in the turn of the last century. -- 88 electoral college votes in that effort. texas, scott, a republican. caller: good morning, susan. as a conservative and republican leaning, i would say, ron, michael, ron.

i hope it gets in because he will pull from obama's base and for sure obama will be toast if he gets in. he will be the ross perot to obama. he is, as the michigan caller said, it democrat at heart and a liberal, progressive. he will not run well in georgia or texas or any of the southern states. he will be a disaster for obama. so, ron, michael, ron. host: monte tweets -- we are talking about mayor bloomberg and his possible consideration of a presidential bid based on a speech he gave yesterday in new york city outlining his concerns about d.c.'s approach to the economy. next is a call from missouri. this is roger who is a democrat. you are on the air. caller: good morning, susan.

it is his right to run. i don't think he will get an attraction. i think he would muck it up for president obama. you know, president obama is dumb like a fox. he got pretty much like he wanted and set up just right so that if he succeeds, he's got it in 2012, if he fails, it will be back on the republicans. people will wake up, independents and all. the only way i would not vote for president obama is if vice- president by iran and i would vote for him, but that is not going to happen -- is a vice- president biden ran. let them run. he will muck up the borders. host: mike from new haven, conn.

independent. caller: good morning. exactly what we need, another corporate pulpit. or i should say a prostitute what -- say a prostitute. what we should be talking about is the wikileaks exposed as part -- as far as pan am and the deals with bp and letting the terrorists though. we allowed it. what is going on? we are supposed to have transparency in our government. the democrats say they are going to and beach bush, blah blah, and we are still going on and the meter is still running on the debt. when are we going to wake up? just we need, another billionaire running the show. host: michael from new haven, connecticut. let's listen to a little bit more of mayor bloomberg, some of his speech yesterday. >> over the last 12 months in new york city has been leading the nation in private sector job growth. in fact, our economy has grown

twice as fast as the countries and eight times as fast as rest of our state. our economy has grown faster than any other major city in the country, and none of that growth has come from wall street. it has come from other sectors. since last october we added 55,000 private sector jobs in industries with average salaries between $35,000 to 92,000. these are middle-class jobs in accounting, engineering, advertising, health care, retail, tourism, and even construction. here at the navy yard we added 2300 jobs over the past eight years and we are set to add an additional 3100 over the next three. host: one thing mayor bloomberg in the last election cycle was endorsing candidates. here is a "the new york times" ps from september.

supported meg whitman, hosted a fund-raiser for harry reid in his town house in new york city, and more endorsements -- john hickenlooper, michael bennet, democrat running against ken buck nd endorsed a mark kirk, an illinois republican, for senate and supported joe sestak and pennsylvania, in nevada he embraced mr. harry reid whose challenger wanted to phase out social security. martin o'malley of maryland. that is bloomberg and his endorsement in 2010. talking about presidential politics 2012. the next call is from indianapolis. suzanne, a republican. you are on the air. caller: thank you for taking my call. i saw an interview with

bloomberg and he was talking about a mosque and i thought he came off -- well, i did not like the way he came off. he was talking about the people who opposed the mosque in a way that they really were not smart enough to have an opinion. it is such a sensitive issue, so many lives lost near where the mosque is going to be built and i did not like the way he came off, thinking that the people against it were against it did not have a reason to be against it or were not intelligent enough to have a reason. i just don't like the fact that he switched parties. and i don't think he would get the republican nomination -- i did not know what party would run for but do you know -- who i think might challenge barack obama is helleri clinton. she might definitely challenge him and she would probably win. host: c-span junkie tweets us --

suzanne mention his mosque speech. writing in the "new york daily news" talking about the speech he gave yesterday -- this morning's "new york daily news." marietta, georgia. carla, democrat betty caller: i would very much consider bloomberg because i feel that president obama -- huh?

host: i am listening. caller: president obama failed to do any of the campaign promises he had promised. this tax cut reduction is the last straw for me. i would definitely look at bloomberg. host: julie is an independent calling from winston-salem, north carolina. caller: thank you. it has been a long time cents -- the line at host: you have your tv volume up. it is causing feedback. caller: 1 seconds. -- second. i am sorry, my tv was a little bit high and i cut it back. host: ok, sir, go ahead with your comment. caller: i was born during the great depression but i remember all the way through. talk about bloomberg. i changed parties and became an independent because i did not

want to have the zero -- 20 the party anything. i like to vote for those who look out for the people. they talk about millionaires. roosevelt was one of the best presidents america ever had he gave the people hope during one of the worst things that happened in america, the great depression. hoover, a republican in office would do nothing to stop it. so, when roosevelt died in he won every election until he died. and he also looked out for the people. it did not matter if they had money or not. he looked out for the people, and because of that he was called a traitor to his own class. i don't care who it is, millionaire or who was, if bloomberg runs, i hope runs as an independent paired host: ann writes --

here are some e-mails. the next comment comes from ventura, california, and that is a republican. caller: good morning. what i wanted to comment on wasn't that people tend to have a very, very, very short-term memory. anybody talking about democrats bringing a challenger to mr. obama or the republicans bringing some kind of challenger to mr. obama really forgets that the campaign that this guy ran back in 2008 -- at this moment,

i am not necessarily an obama fan but at this moment he is dealing with matters at hand. when he goes back on the campaign trail, any candidate, no matter what his ideas are, are going to be up against the same thing that nixon was up against with kennedy. mr. obama is an effective communicator. he comes across well and it -- when he gets in front of voters again he is going to turn them his way. that is what i wanted to say. host: next is a call from detroit. dorothy, a democrat. caller: thank you for taking my call. when i hear people criticize president obama do have to remember, he was very young when he was campaigning. i tell them, look how fast his hair turned gray once he got to be president and he really learned what was going on in politics in america and in the world. when you are in the day's high positions there are things you know that you are not allowed --

when you are in in these high positions there are things you are not allowed to tell the people. seldom do they tell that is why i fear something like wikileaks coming out and telling bredesen obama should not be criticized. he is -- president obama's and not be criticized. he is the most intelligent i have seen and i am 67 years old. i love of the man and i can see where he is trying to take this country. but in politics there are always those who will try to all the progress back for that ordinary person in order to get more wealth and power for the rich. and this is where i feel a lot of our problems come from because we have too many people in high positions making money off of this country through wars. i remember when my husband died, he was a vet for vietnam, he died in 1976 and i was told, misses cleveland, you are working, you got five children,

whenever you make, you will still get your social security and be a pension for the children but when ronald reagan got in and there were like three or four months of each year that i did not get the money promised to me and my children. host: we have to jump in. other people want to talk this morning. susan page has the news analysis piece about the tax cut deal. tax-cut deal is a test case for new political setting. in it, she writes --

talking about conducting a focus group in philadelphia, a mix of republicans and democrats urging bipartisan compromise but expressing wariness for tax cuts for top earners. ward is an independent. caller: good morning. i really don't care if bloomberg runs or not. if the runs, it will be fine because he will blow his money. i think barack obama is one of the greatest president we ever had. whether don't vote for him just don't know what is going on. let's go, barack obama. when that next race. host: myrtle beach. keith, republican. good morning.

caller: to the young member who just called, obviously at nine. something percent unemployment, i would like to know how well the president is doing, how the hope and change is working out. getting back to mayor bloomberg, the people of america during this last election back in november made a very clear statements that they are sick and tired of progressives, liberals. they want smaller government, less taxes, and they want government to stay out of their business and let them succeed, let the private sector create jobs so people can get back to work. they are tired of the tax and spend, tax and spend. we don't have a budget problem in washington, we have a management problem. i think the people of america made that very clear this last election.

the days of people count tailing in washington, getting potomac fever with and the promises have come to an end and the people here certainly in south carolina made it very clear with john spratt getting thrown out. people want a conservative government and they want them to work for the people. they are tired of the tax and spend and without representation. host: boringfileclerk tweets -- we are talking about the possibility of michael bloomberg presidential bid in light of a speech in new york, one at a series finance national issue. he was born valentine's day of 1942. will be 69 in february of 2011

-- his official biography. a veteran political observer in "the washington post" was also thinking about michael bloomberg this morning. he writes --

let's listen to a little bit more. in this he talked about immigration and jobs. >> making sure companies are able to hire the people they need brings us to our sixth and final step.

fix immigration. there is nothing we can do to unleash innovation in job growth that would be more powerful than fixing our broken immigration system. right now, our immigration policy is a form of national suicide. we educate the best and brightest from around the world and then we tell our companies that they can't hire them we should them home where they can take what they learned here and use it to create companies and products that compete with ours. and the rest of the world is thinking us. they are doing everything they can to attract these very people. and we are doing our best to help them. host: the supreme court heard a case on immigration. coverage in "the new york times" today. just as elena kagan sat this one out.

likely to be sustained at the supreme court arguments if only because of judicial of arithmetic. atlantic city, new jersey, is next. caller: i would like to say that i am actually disappointed with how people are treating our president right now. i know he has a good hearts -- if he has to give a little to get a little for a lot of people out there struggling, then i think that is what he should do. i think he is a great man. and as far as bloomberg is concerned, it runs he would probably make a good executive because he knows what he is doing. but i think people should look at what the president is doing -- try to help a lot of people who cannot help themselves in these tough times.

host: an earlier caller mentioned wikileaks and it is the lead story in "the new york times." hackers attack sites considered wikileaks foes. written out of london by a guest on our "q&a" program last sunday. you can find lots of coverage and analysis. the business page -- presidential politics. albany is next. tracy, independent. caller: good morning to everyone. thank you for c-span. i do not think obama will run in 2012. host: you don't?

caller: the democrats have not had obama's back. but in the business back in public -- had all that power, even though they had all that power -- he is not going to take a time and really have to step on 50 states like last time. the really think obama wants to go through this again but the democrats? they don't even have his back. host: i was going to ask you as a new yorker what do you think of mayor bloomberg? caller: i like bloomberg. i think he is the little crazy in regulating how much sugar you can have, taxing so that and stuff like that, but i think he is pretty good. i think you would be a good president. i don't have anything against him. i do not think obama will definitely run in 2012, why would he? no reason to. host: tracy from albany. ann tweets us --

other news from "the wall street journal." nobel prize, angry over the award to a dissident. jeremy page rating from beijing. it is turning into a global showdown.

next is a telephone call from norway, new york. good morning to gary. caller: i would like to know how they are doing about social security. i did not know what it guard -- what they are going to do. i know they stopped the $250 thing. host: yesterday it failed in the legislative bid. here is a story about it this morning from "the baltimore sun." one more call is from pensacola. linda, you are republican. linda, are you there?

we lost her. we will close and come back in a couple of minutes but the first of two members of congress, john campbell, republican of california. we will see you in a few minutes on that. >> middle and high school students, as you work on your documentary's for c-span's studentcam competition, here are a few tips from the judges. >> one of the things i look for when watching videos is you, the student. i want to see you and your personality and that helps make your video stand out from the rest. >> what i'd like to see most in the studentcam entries are a real investment and karen in the topic that you will be telling us about. be sure to be interested in what you're telling us. if you are not interested in what you are presenting, chances are, we probably won't be, either. >> 1 tie breaker of -- for me a lot was a requirement on using

c-span video. i am looking for videos were people looked at the c-span content and said what element of c-span video makes the most sense for telling the compelling story i am trying to tell? >> for all the rules, that lines comprise information and how to upload the video go to studentcam.org. >> fourth amendment rights and illegal search and seizure, saturday on c-span rigell's landmark supreme court cases. >> all those who claimed there was a search warrant, absolutely no evidence of any magistrate asked for a search warrant. no record of a search warrant. >> listen to argument on c-span radio, in washington, d.c., 90.1 fm, nationwide, xm satellite channel 32 and online at c- span.org. find great holiday gifts and are c-span store. from books, deede's, mugs, umbrellas, and more. available online at c- span.org/shop.

>> "washington journal" continues. host: john campbell is a republican of california and member of the budget committee of the house of representatives talk about this transition period and what the new congress will look like. thank you for being here. of course, the big story is what the fate will being of the president and the gop tax-cut bill. what are you planning to do? guest: i am going to oppose a, quite strongly against it. it seems out there that much of the opposition is from democrats. three reasons i am against it. first of all, i did not believe it is going to provide much and economic boost. everybody talks about spending these days, how we need people to go out and spend. if you want long-term economic growth we need investment,

savings, and, frankly, we need reduction in debt from all the bubble's we had earlier. a lot of this spending is not going to create long-term economic growth. it will provide a temporary jolt to the economy but not the long term. hist sort of a sugar high of the for stimulus and we will come off the sugar high of the stimulus a year from now. what it is going to do is tremendously increase the deficit. i am in favor of extending all of the tax cuts and not raising taxes on anybody and doing it permanently. we could talk later -- i do not believe that actually has a cost. but that is a separate issue. but there are many things that definitely have a direct cost to the treasury. the deficit commission just reported and talked about the

significant challenge we have in this country with our long-term deficits. this is going to make the situation substantially and considerably worse. so, i think we are -- that this deal, unfortunately, is not going to do much to help and long-term economic growth. it is going to significantly worsen our long-term economic deficit, our long-term economic debt problem, and it is going to lead to some much greater economic problems down the road. h., i think i need more acts -- like host: i think i need to give more explanation. it talked about the deficit commission. leaders of the presidential panel, erskine bowles and alan simpson, saying the compromise ignores the cancer of national debt and they are frustrated it was announced just days after their plan was put forward. guest: i completely agree. host: you said you do not think the tax cut -- extension of the

tax cuts would have impact on the deficit. guest: if you look in the past, the way the congressional budget office -- they are very good people but they are do what they are told. the way they are supposed to score, there term, how much a tax decrease caused the government is what is called a static modeling. they assume that people don't change their behavior when tax rates go up and down but i am a cpa, a master's in taxation and i used to prepare tax returns and you do, when the tax rate moves around, the first thing you do is sit down much your client and say let us figure out how we can avoid this, how we can compensate for this, whenever. when tax rates go up, people make adjustments, when they go down, they make adjustments. of the look of the last major decreases, 2001 or 2003 or go back to 1994 -- the 1995 decreases, those actually resulted in increases in

revenue. revenue to the federal government went up because people took economic activity to a higher level and brought more revenue into the government. when we had tax increases in the past, many time revenue actually goes down because people change their behavior and their economic activity. because when we extend the tax rates, we are not lowering taxes, we are keeping them where we are now, i and not saying that i believe that keeping the tax rates where they are is going to provide any huge economic benefit at this point. but what it will do is avoid having a negative. the other thing i should mention about this tax bill that i forgot early on is that one of the biggest problems in the marketplace right now, with businesses, investors, with people, is uncertainty. there is a lot of uncertainty in the general market and you can't

change that but there is government uncertainty, what is called the washington a risk premium. people don't know what your taxes are going to be next month, what the death taxes will be, regulations, health care. one thing we should be doing in washington is reduce the uncertainty. everything in this tax agreement expires in two years or less, absolutely everything. so, it is not reducing the uncertainty out there. if we want to reduce uncertainty we need to make some things permanent. that is another reason i believe this is not -- this deal is not solving the problem that exists out there. host: our viewers will have lots of questions and i want to invite the participation and we will put the phone numbers on the screen --

there has been an announcement about what the committee chairman ships will be like. "the new york times" today paul ryan, daryl issa, ways and means, dave camp, education and labor, john klein, foreign affairs, judiciary, lamar smith, peter king, homeland security. one specific one, the naming of hal rise for procreation. picking up on a peace we had in "the wall street journal" today.

you are a fiscal hawks, what do you think? guest: he is saying -- and hopefully he will come through -- that the appropriate -- appropriation committee culture needs to change. i have been one of the more vocal about their marks in the house. -- earmarks in the house. i think they have been the gateway drug to overspending. i am pleased republicans and house and senate agreed to a ban on all earmark for the entire congress -- for this year and next year as well. hal rogers has been a part of that band, and i think it is great. the culture of the appropriations committee is going to have to change. in my view. it has been a committee of spending where obviously -- it

appropriates money, that is obviously its job. but it has sort of been where, all right, democrats want to spend something, republicans want to spend something, so let us make agreements. that is how we got into the deficit problems we are in it and it kind of happens with the tax cuts -- you want these benefits, let's do all of it. that is how we are getting into this deficit problem instead of shrinking things. the appropriations committee, i believe -- and i hope in the future -- needs to be one that, instead of conducting a lot of oversight -- i don't think we need to go through and necessarily cut everything by 10% or something like that, but let's talk to every government agency and make them justify their budget, make them justified, do they have accountability in place, are we getting the bang for the buck in each and every department, and does not, there are probably

whole departments that probably do not need to be there and others that may be should not be cut at all. i hope that is the sort of thing the appropriations committee will be doing in the future. host: one more story about a culture on capitol hill. thes morning's fed page in " washington post." here is what he writes -- these cases illustrate the endurance of washington's traditional power structures -- guest: this may not be the most popular thing to say -- i don't share the disdain for lobbyists that seems to often be in the public venue.

the constitution provides that people have the opportunity to petition their government. the country is much bigger now than it was then. i am from california. to petition your government from california is not an easy thing to do. so, people have banded together and hired representatives to represent them on their interests. i don't know why that is such a terrible thing to do, and i don't know why the people, those citizens to band together to represent them, why those people are necessarily tarot -- terrible people. i know the president when he campaigned in 2008 was not very kind in his words, and so forth, about lobbyists and his role but yet he has them in his it ministration, too. when someone is coming and -- if you are a freshman you want someone with experience because you may have a lot of ideas, you

may have a lot of vigor for things, but what you don't have is knowledge and experience on how this town and how this place works. so, those freshmen are looking for somebody with knowledge and experience. with 87 new republican freshmen you cannot just take from a current staff, not enough. yet to get some from somewhere else but i do not see it as such an awful thing. host: we set the table and brought his way -- your thoughts on the tax cuts and your concerns about the deficit and the dead and talk about the organization of a new congress. let us get our viewers. we will begin from a republican caller named charlie from citrus county, florida. turndown that tv volume and go ahead. caller: good morning. this question is to mr. campbell. i just wanted tell you. i am an immigrant, 60 -- 62 years in this country.

i am republican but the politicians should be working together, whether republican, independent, and democrat. using more common sense -- education is wonderful. president truman had no college education but he ran this country to the best of his ability. i think a lot of the people, they go on well for, they should be taken off -- not to pay them but let the government create jobs. let them go to work. if your family needs $500 a week or $500 a war, let them work for 200 or 300 and give them the balance. what happens, they stay home, create problems, they get drunk. host: i will jump in. you have given us a couple of issues. concern about people working together and talking about government creating jobs. guest: first of all, on working

together, starting january 5 you have a republican-controlled house, democratic controlled senate with a lot of republicans in it, and then you have obviously a democratic president for two years. we've got to work together. the simple math of the way government works. so, we've got to work together. i don't like this tax deal. it does not mean i did not think we should not have a tax bill. we should agree on something. i just believe that in order to get what we republicans believe we ought to have -- and we believe that just not raising taxes, making these to permit tax rates, leaving them alone andin order to get that, in my view, we gave up too much. we are going to significantly worsen the deficit. if this tax bill was not to go through, we still have to sit

down at the table and figure something out. we should not let taxes go off on people. government does not create jobs, the private sector creates jobs. government does not create productivity. the private sector creates things. this is one place where i disagree with much of the policies of the president. it seems many of the job creation programs is the government create temporary jobs. what i believe we should be doing is creating an environment -- what government should be doing -- is creating an atmosphere under which the private sector feels more comfortable creating jobs. those jobs are longer lasting. in the end, we need to get money to pay for these jobs, so you cannot get the two out of balance. host: detroit is next.

caller: i could not agree with you more about the government not creating jobs. however, i do disagree highly about taxation, in terms of republicans. they use language very well, they say we do not want to see taxes raised for anyone, which is true, but the problem is, the wealthy have a different tax rate. of course, it would not be a benefit to them. i would challenge you, go back ally whatus historic ple taxes in the past did for us. it worked extremely well in the

1950's. could you comment on that? guest: i did not bring the exact statistics with me, so i will have to quote it from memory. high income individuals, they are paying a greater share of taxes today than they have at any time. they are now paying the highest share of taxes. that is without raising their taxes more relative to everyone else. so, i think, the argument that people of some accomplishment that have been successful enough to make $250,000 a year and up, that these people are not paying their fair share is wrong. if you believe that they should

pay 75%, that is fine. you are welcome to that opinion. but, historically, they are paying more than they ever have. secondly, if he wants to create jobs, -- you want to create jobs -- because a lot of these are small businesses. income flows through on tax returns, individual tax returns. that means taxes are paid for by the individual. so a lot of this is small business passing through. i have been a small business owner. you can make money by reinvesting. if you want to hire more employees, you need more capital

in the business. so when you take this money away from people, you are taking away the potential capital from which they can grow the business and hire people. if you want better paying jobs, you are not going to get it from people making that amount of money or less. you will get it from people making more than that that set up the business that hires those people. i understand the idea that people should pay more and more, but it will actually work against job creation. rather than having an emotional reaction, let us think about how we can better create jobs. host: based on your explanation of the share of taxes, you are comfortable than with this chart -- this is from "the washington post" this morning -- showing

the largest parts of the push tax cuts recipients -- bush tax cuts. guest: let me tell you why i completely disagree with the premise on which that kind of charge is made. that is how much money they are going to get from taxes. from the tax decrease -- extending a tax cut. it is not a decrease. to have that kind of analysis, you have to assume all money earned is the property of the government, and the government allows you to keep the

percentage they desire. so this is basically saying, we the government are allowing the people to keep more of their money because we are entitled to it all. that is not the way i look at it. the way i look at it is the product of people's intellect, sweat, risk-taking, the money a long as to them. the idea of leaving people with their own money is somehow a gift to them is absolutely wrong and completely backwards. that is where i disagree with that chart and agree with those charts that show a percentage of

their income as a percentage of their total revenue to the government. host: richard in massachusetts. independenct. caller: i listen to this congressman talk about getting together, but the problem is, they do not listen to the people. do you know how many times i have called my congressman, senator, do you know how many times i have called my governor? i get nothing. he is in committee. he is doing this. they give me the runaround and i get so aggravated. my vote does not even count. host: what is an example of one issue you called about? caller: i called about social

security. i was a firefighter for 34 years. i am 66 years old. i get a pension. when i get my social security now -- this month is my first check -- they took 50% because they said i had a pension. i said to the woman, who gets the other share of the money? she said, somebody who needs it. that was a slap in my face. i go to work for $9 an hour now. they do not care about us. guest: let me respond to social security. it is interesting what has happened. when from the roosevelt set up social security, it was not a wealth transfer program, a

program of subsidy or anything like that. individuals paid in an amount of money, and they got the amount they paid in back, no more, no less. it is increasingly becoming a subsidy program, where people who do not pay in do not necessarily get what they paid. and that is actually a distortion of the original intent of the program, back when it was put in place in the roosevelt administration. i agree with you, but one of the things is, social security is bankrupt. we are going to have to make some major reforms to it, or it will be gone.

the good things about the deficit commission is, they have made it safe to talk about the third rail of politics. if we leave social security alone, it will fail. we have to make changes. that is the debate we are going to have. talking about listening to people -- two comments. if you look at the last two other actions, in 2006, 2008, republicans were swept out of office, out of the white house, out of congress. to me, that shows the vibrancy of our democracy. we republicans were not listening, so they threw us out.

now they believe that democrats are not listening, so they want to throw them out. that is as it should be. as a member of congress, obviously, you get a lot of input. you often hear from people, i am a constituent and i want a, and you are not listening to me. but for every constituent, there are other opinions. there is no unanimous view of anything. we have to make a choice of what is best. for example, with this tax cut deal, i believe it is a bad deal for america and will result in an increase in the deficit and a lot of bad things. does that mean that people like it? you have to put a stake in the

ground where you believe is best, what is best for your constituents. and if they do not like it, they will have the chance to replace me. host: dean from colorado writes in -- guest: ok, and this person's point is? host: that they are not overtaxed. guest: we need to separate these into two camps. corporate taxes that pay the corporate tax rate. we have the second highest corporate tax rate of any industrial country on earth. part of the reason we are losing jobs to other countries is not because of low wages all the time. in fact, i know a number of

instances where companies have moved overseas, having nothing to do with low wages. we can compete, even with higher wages, against any other country on earth, for most jobs. but if the tax situation is substantially different, that is where we are losing jobs. we cannot have the second highest corporate tax rate in the industrialized world. i understand the feeling of some people, but it is the old saying, you cannot like employees and eight employers. if you want jobs, you have to create an environment in which employers can get a benefit from hiring people. -- like employees and hate

employers. host: next phone call from san antonio. caller: congressman, you sound great, but nobody is saying that we need to cut the size of government. we can pay a janitor through the private system $30,000, and the same guy in the public system makes $60,000. this is something that we are not even talking about, paying for government employees. there is a saying, the rich get richer, the poor get poorer, but the rich do not set the tax rate. only government does. so is the government making the poorer.r

when you take more money out of that business guy, whatever product he sells, he is going to raise the cost. so who is paying for those taxes at that guy is complaining about? no one seems to be explaining that. i would love to hear more about that. guest: i agree with everything you just said, so we will not have much of an argument there. we are talking about the size and cost of government. that is what republicans campaigned on. that is why we have 87 new freshmen. now we need to deliver that. talk is one ban, but now we need to deliver.

-- one thing, but now we need to deliver. what did the president say the other day, i am itching for a fight? i hope that we do not end up with a big fight. i hope we can agree that increasing the cost and size of government is not a good thing, that we have to start getting the deficit under control. i have to believe the deficit and debt is the single greatest threat to this country. great civilizations collapse from within. weekend collapse of ourselves from within if we do not tackle this. -- we can collapse ourselves from within, if we do not tackle this. host: we have that clip of the

president itching for a fight. >> i would be happy to see the republicans test whether or not i am itching on a fight on a range of issues. i suspect they find that i am. and i think the american people will be on my side on a lot of these. but right now, i want to make sure that the american people are not hurt because we are having a political fight, and this agreement accomplishes that. and there are a bunch of things that they are giving up. from the republican perspective, the earned income tax credit, the college tuition tax credit, the child tax credit, all those things that are so important for some many families, those are things that they really opposed. so 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. host: can you give people a sense of what you see in these planning meetings? what will the next six months look like in this town? guest: i think we are likely to lock horns with the president in the next six months, in fact, in the next three, four months. that will probably set the stage for the rest of this congress. when the president said that -- i never doubted that. the president has his own opinion, he is well rooted in them. i expect him to defend them. i am well rooted in mind. i intend to defend my own ideas. that is politics, that is democracy, that is government.

he presents his position, we present hours, we battle it out in the court of opinion, and we see where it goes. i have often said, when we were in the minority -- actually, when we were in the majority -- democrats are just sniping at you. tot is the minority's job, criticize when they think you are wrong and then to offer an alternative. that is what we tried to do the last few years. i have had a feeling that we will be clashing on spending. i had first thought that it would come in the summer, but things are shaping up,

perhaps in march. host: in "the washington times" -- this is not the first time congress has tried, and the pressure over the weekend builds. guest: so far, by the way, reaction for this calendar has been praised. i think the mistake that the pelosi calendar made is there were five-day work weeks but not much time in the districts.

in the end, -- when i am in washington, i see washington media, i listen to washington radio, but i do not represent washington, and i do not think my constituents want me to represent washington. i cannot represent them if i am never home. i think we need bigger breaks. when we are in washington, the there for longer periods of time, more time to get stuff done, but then have more full weeks where we are back in the districts to talk to our constituents, listen to our constituents, and remember that is where we live. otherwise, we will not represent where we come from. host: next phone call from st.

charles, missouri. democrat line. caller: you seem like a nice man but i have a problem with your party. it seems you all are not interested in governing, only turning it over to the private sector. they want everything in private hands, medicaid, medicare advantage. it costs them another 17% for them to administer the program. if the republicans were interested in lowering the deficit, they would eliminate tax cuts for the rich. over $700 billion, which we borrowed from china, is the cost of these tax cuts. thank you. guest: i suppose some people

might say that democrats want to turn everything over to the government, republicans want to turn everything over to the private sector, and neither is it true, but there is a debate between the two where we draw that line. that is what the debate is about. no question, republicans believe, the private-sector, because of the accountability of it, because of competition, if you do not perform, you will go out of business. the private sector -- because of that incentive -- does things more effectively and efficiently than government. that said, because there are certain things where we are interested in public policy, we do not want it all about

efficiency. so therefore, we have a government aspect involved but they are out there to achieve some public purpose. so where do we draw that line? i believe we have gone too far toward the public sector and it is costing the effectiveness of government programs. they are not helping people like they should because they are not effective or efficient. i will come back to something that i keep on mentioning. $700 billion on the tax cuts, maintaining the current rates for people making over $250,000 a year, $700 billion is the estimate. actually, i do not think it will cost anywhere near that amount. the tax deal they put together earlier this week is estimated

to cost $900 billion over two years, not 10. of that, less than 10% of it has anything to do with people making $250,000 a year. many of these are not tax cuts at all, they are direct payments from the government. host: joan from randolph, vermont asks in e-mail -- guest: 12, i am going to say there was job growth -- well, i am going to say there was job growth, up until 2007.

a lot of that job growth came after 2001 and 2003 when all the tax cuts went into place, in spite of 9/11 coming in, which was a great shock to the economy. from an economic sense, remember how bad the economy was in october, november, december of 2001 because of external influence? they did provide jobs. now what is happening is this uncertainty being created out there is costing jobs. businesses are afraid. there is a lot of cash out there, but they are afraid to invest it because they do not know what the regulations will be, whether they can get a return. those are the things we need to create certainty about. host: arlington, texas. tom, you are next.

caller: this guy and every other republican says that the government does not create jobs. tell that to all the people that make the bombs, tanks, ships, everything else the government uses, the military uses. he is a liar, a bald faced liar. that is all there is to it. guest: well, ok, tom. when i say government does not create jobs, where does government create the money to create jobs? they have to tax the private sector. that is where they get the money to pay for those things, unless we borrow it. unfortunately, that is what we're doing now. we are borrowing a $0.46 on every dollar that we are spending.

i understand there is a lot we need to make for the military, but $0.46 of every dollar is being borrowed right now, and that is unsustainable. nobody disagrees with that. at some point, they are going to stop lending us money. you cannot tax the people at boeing enough to pay for boeing, if that makes sense. host: our last caller for you is from asheboro, north carolina. ann. caller: good morning. you have hit on a lot of things. you touched on capital investment, credits, deductions for businesses. i would be surprised if a good

accountant, if they do not get that net income as low as they -- and we allusiness pay taxes on our net income -- the problem is the accountant works for the business. in other words, businesses try to punt everything back into their business as a capital investment or get a tax credit or deduction so they do not have to pay any net income tax, if at all possible. so the republicans and democrats both need to tell the truth to the taxpayers who pay on that income. the more your net income, the more taxes you should be required to pay. guest: was there a question there?

host: it goes to your point about the share of taxation. let me put these two on, which match with her theme. chris tweets. here is another e-mail -- so people are suggesting that rich people should pay more because they earn more. guest: but they are paying more as a share of what they are doing. tax rates have gone up and down all over time. the top tax rate has varied since the tax rate went into creation. i think it was 6% over $1 million in 1936. it was definitely a tax on the rich when it was put in.

i remember when tax rates were 70% in the 1960's, as low as 28% under president reagan. the rates have varied, but the deductions have as well. when they were up near 70%, again, i was a tax accountant, people could take action to reduce their income in various ways. we have an announcement of wealthy people giving money to charities. when they give it away, they will not be paying taxes for quite a long time. the idea that corporations pay no taxes is simply not true. we have the second highest tax rate in the industrialized world. host: that is all for our time. if you would not mind taking 20

seconds as we close -- preparations for the new congress. what can you tell the independents what will be different with congress? guest: we are going to run things differently. i do not agree on policy with many things that nancy pelosi is doing. most bills were done in the speaker's office, little was done in committee. people are not able to give amendments. we are going to have a much more open process. hopefully, we will get a lot of bipartisan agreement from things coming out of committee. then when it goes to the house of representatives, this is the bill, both up or down, people will be able to offer changes and then give a judgment on whether or not to vote up or down.

there are a lot of things that have been bottled up because so many people are concerned about health care, various other things. there are things upon which the republic may rest, but are important segments of the economy. if you take a bunch of those and put them together in aggregate, they may create a noticeable move in the economy. that is what we are hoping to do. a lot of these are not partisan or ideological. they are simply trying to fix something that is wrong or on certain in a certain part of the economy, and we want to do this in an open process through committees, in a way that people can see, then bring them to the floor, some will pass, some will

not. then i think they will see the house operated in a more transparent fashion, less top down management than it has in the past. host: thank you for being on. we will continue the discussion about taxation and the budget with our next guest, democrat of minnesota keith ellison. first, a news update. >> new york democrat anthony wiener speaking earlier on abc says president obama is acting more like "negotiator in chief and leader of the country" on tax policy. he does not believe he fought hard enough to protect party values as he reached an agreement with republicans. he went on to say that "the president has the ability to move the needle and i do not think this administration understands that." further senate action on the

don't ask don't tell policy in the military has been delayed while majority leader harry reid where to find more votes to support the change in the law. robert gibbs says he is optimistic repeal would happen. meanwhile, former democratic senator sam nunn has reversed his decision. in an interview with the associated press, now says that he believes gays can serve effectively and openly. he says society has changed and the military has changed. >> just in time for the holiday season, the supreme court, c- span's latest book is being offered at a special price. just $5 including shipping and

handling. a compelling view of the modern court, rich with history and tradition, with 16 pages of photographs, the telling the architecture and history of the building. to order copies of "the supreme court" go to c-span.org. place your order by december 15 to receive your copies in time for holiday gift-giving. host: next this morning we have

congressman keith ellison. he chairs the progressive caucus. we have been talking about the gop's tax compromise plan. how do you plan to vote? guest: at this point, i do not plan to support it. i think it will expand income and wealth gaps in our country that will not only put wealthy people in a position of increasing their wealth, but also in a position to purchase political power, which i am influencel dbe used to the election, as we saw in the campaigns. i am concerned citizens united is going to be on steroids next time around, and part of the reason is because this tax deal will stuff the pockets of those people who would want to use their wealth to purchase even more political power. host: what would you like to

see? guest: absolutely, the ui needs to be done. host: could you explain that? guest: usually, noncontroversial matters will go on the calendar. in order for it to pass, you need two-thirds of a congressional vote. ordinarily, he would need just a simple majority, but if you want to pass it on suspension calendar, you need two-thirds. we did that get that because republican members did not support it. host: where do you think this will all play out, just hearing from the conserve republican -- a conservative republican? guest: if i were to say this is

going to happen, that is going to happen, that assessment would be based on this moment, but time moves forward. if we had leadership, we might be able to get things the way it should be. i will tell you, there is no way the estate tax should be part of any agreement. it is an absurd and over to the ultra rich. i do not know if you are aware, but this estate tax deal would hand over $335 billion over 10 years to about 3500 estates in this country. this deal will benefit 3500 states. it is that looking out for the american people? -- 3500 estates?

. the thing is, i do not know where it is going to end up, but if we lift our voices, if we do that, we can perhaps alter this agreement so that it is closer to what is realistic. host: we will put the phone numbers on the screen. you can send your questions or comments by e-mail, twitter, and phone. i want to show a clip from the president this week. we started the morning talking about presidential politics, showing a column that he has his eye on the 2012 vote. >> what do you say to democrats who say that you are rewarding republicans? a lot of progressive democrats say that they are unwilling to budge. you are asking them to get off

the fence and budge. why should they be rewarding republican obstructionists? >> i have said before, i felt middle-class tax cuts were being held hostage to high income tax cuts. it is tempting not to negotiate with hostage-takers, unless a hostage gets harmed. then people will question the wisdom of that strategy. in that case, the hostage was the american people. i was not willing to see them get harmed. now, i could have enjoyed the battle with republicans over the next month or two, because as i said, the american people are on our side. this is not a situation where i have failed to persuade the american people of our rightness.

we are not operating from a position of political weakness with respect to political opinion, but the problem is, republicans feel this is the single most important thing 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. host: keith ellison? guest: i am a supporter of the president. there are some progressive liberal democrats that have been tough on the president. i am tough on the republicans who demanded these kinds of concessions that would create this deal, which at this point, i do not agree with. i understand the president is in a tight spot. i understand that. there were some other things

that we could have done which could have strengthened our position in a considerable way. turning up the energy on the american people, i guarantee, there is no democrat in congress that would be glad to be here over the holiday if it meant getting the ui extensions we want. i do appreciate the president is in a tough position. there are things about this bill that are good. i just think because we are having to pay is too high. not only that, it puts republicans in a strategic position, over the long term, to have a better chance to beat us. that is not something that i believe served working america. host: let's begin with a tweet from billbaby --

guest: i do not believe we should have an aristocracy in america. we should have a meritocracy. i know there are some people who do not want any estate tax. they want to take all the wealth they accumulated and conferred upon their children so they can have a generational aristocracy. america is not based on any such notion. america is based on the idea that people will be entrepreneurial, will have on an annuity, will get out there and create. if you want to create an america where you have a tiny number of people inheriting generation after generation of wealth and a large number of people who are so economically desperate that they cannot do anything except take any job offered to them, then this is the way to do it.

we should stand up against that. the estate tax should be 55%, if not more. and it should be at a significantly lower threshold. host: alice from clayton, new jersey. democrat. good morning. i would like to know why the democrats waited until republicans got elected before they did anything? why did they not vote on the extension for unemployment before the election? why are they going against the man that we elected to lead the country? they are acting more like republicans than the republicans. guest: i understand your frustration. this is a frustrating moment. you have heard me say that i am

cautioning democrats not to attack the president. i think the people who forced this unholy compromise are republicans, and the president did what he needed to do. the fact that i do not agree with it means that i have to abide by my conscience and my district, where i had been receiving an overwhelming number of calls against this thing. you asked, why did we not act earlier? we have been trying to get unemployment insurance passed for a long time but republicans in the senate blocked it. the reason why is there is a rule to gain cloture. you cannot have a simple majority vote. you need 60 senators before you can end the debate. that means they can debate endlessly and hold things up. i also mentioned before, when we

tried to pass unemployment insurance, in the house, we ran into roadblocks there, too. there has been no shortage of energy expended trying to get this passed. i promise you that. i go to the work force centers in my district as often as i can. people know me there. i asked them about the reality they are living as they are facing unemployment so that i can be in touch with the urgency that they are experiencing. thank you for the question. host: "the new york post" prince a poll this morning telling us that 66% support the income tax deal and extension of unemployment benefits. when you get into the details, there are partisan differences.

guest: we have a difference of opinion in congress, don't we? host: and with the public. guest: unemployment insurance is a very stimulative measure for congress to pursue. it takes money and index it into the economy and increases demand, which is necessary to improve the economy. if we do not have on employment extensions, we could lose 600,000 jobs fairly quickly. the unemployed person has some money, they go to the grocery store, that means the research

and keep their nephew on the job and he will be able to pay his rent or mortgage. then that dollar circulates and helps everyone out. if we do not have an employee of insurance, that person is going to lose their home and is going to hurt the economy. unemployment insurance is good for the economy. it is something that we should support. i have not even mention how vitally important it is to the individual family who needs groceries. then they will be going to the food shelters, if they can, and that creates a desperate crisis for the individual family. the unemployment insurance is very stimulative to the economy. people are looking hard for jobs. we know that for every open job,

there are five people looking. there are not enough jobs, so we need to stimulate the economy and create more. host: next phone call from st. louis. pat is an independent. caller: i am tired of hearing this class warfare. if you live in new york, you could be a teacher or firemen and be classified as rich. every person who is rich in this country has worked hard, got out with their blood, sweat, and tears, and made themselves successful. when the government decides to take $0.39 out of every dollar that you work for and distribute it to people who do not work, whether they can work or cannot work, is unfair. more than 49% of the people in

the country pay no tax. many of them get a rebate from the country, from people like me who work. i am in the upper income bracket, husband is a physician. i guarantee, the only tax break we get is what we can save a way in our 401k. i put my kids through college, not borrowing from student loans. i am tired of being demonized. i give to charity. i pay my fair share in tax. i believe the majority of what the people in the country pay their fair share, and i am sick and tired of saying the rich do not get taxed enough. maybe those 49% of people who do not get taxed, maybe they should be responsible and start paying for something. the government has failed you if you are in the bottom percentage of the country. host: you have given us a lot to

work with. guest: thank you. i appreciate your sentiment. i take issue with a few things you said. you said the rich got richer by working hard and not relying on the government. did the government supply the police officers to protect your home? did the government supply the firefighters and emergency medical service? what about the roads that you drive on every day to go to work? that is the government. we all rely on government and there is nothing wrong with it. what we can do together, we should. the military keeps us safe. that is the government. nasa is the government.

this idea that there is something wrong with the government and rich people did it all themselves is not true. what about the gi bill? you say you did not take any tax breaks? what about the mortgage interest deduction? did you take that one? what about your two children? i am sure you are proud of them. did you take the child tax credit? you take your deductions. let us stop this idea that the government is the enemy. it is how we live together. of course, we should have private enterprise to allow private -- we should have initiatives to allow private enterprise to grow, but we've need to live in a civil society. i am sure we do not have polarizing views. it is a matter of the right balance. it is not a matter of class

warfare, it is a matter of class fairness. this is a debate we will continue to have. host: this and you were asked the presidential powers question, assuming a deal is not successful legislatively -- guest: i think potus needs congress to act, in this situation. host: edberg in kentucky. you are on with keith ellison. -- edward in kentucky. caller: why did president obama agreed to take $120 billion out of social security next year? they want to lower the rate that people will pay. guest: i think that is a fair question.

i have the same question. i know a lot of people think the payroll tax deduction, 2%, it is a great thing. it will make it easier to hire, allow people to have more money in their pockets, and that is good, but you raise an important question. it is taking money out of social security. they say it will be replaced from the general fund. so we should not see any short- term decrease in social security, but what we will see over time, the general fund borrows money from social security. social security gets money from the general fund, general fund gives money to social security, where does it end? are we not setting ourselves up for an attack on social security where it cannot pay for

itself, and then people are put into an argument to undermine social security? this worries me. not that i agree with the deal, but i am satisfied that the people who came up with the deal working at it. it is something i am concerned about. host: this viewer tweets -- would you have supported the compromise of taxation over $1 million? guest: i would have looked carefully at it. the me tell you this, susan. republicans say they want all the 2001, 2003 tax cuts extended permanently. democrats -- first of all, we

agree that everyone would get a tax extension up to $250,000. i thought that we would come somewhere in the middle so we could negotiate on the number of years of the extension, negotiate on the amount. what ended up happening is, a lot of other stuff got into the mix, including the estate tax, and i am not here to sign up for schumer's proposal at the moment, but it is better than this deal, but i do not know if i would have necessarily supported it. as a congressperson, i would have had the duty to dig into it, but off the cuff, probably. host: an e-mail from a viewer

-- guest: the fact is, that is sort of the argument to say we have to take what is on the table. i do not agree with that. we could have, and should, continue to negotiate for the very best products for the american people. somebody says, after the republicans take over, it will be worse. you can always bludgeon someone into taking a bad deal based on that kind of argument. you have to buy this car now because it could be more expensive tomorrow. i do not buy that. you act like a leader, engage, bargain, old tough, you make sure that people are ready to walk away. in this situation, we did not

signal that we would, in fact, walk away, and that we would make sure that we bargained hard. i guess, at the end of the day, we need to insist that unemployment insurance extensions go forward. i do not believe the republican caucus would allow people, on christmas eve, to be without. if they have that kind of gumption, i would like to see it on full display on c-span. host: massapequa, new york, this is dennis, a democrat. amoco -- caller: i started a c-span forum on facebook, c-spanliberal. at the second point, as a progressive and liberal, i have

a plan to force the republicans to uncouple any tax cuts -- reducing fica and any richman stacks cut by boycotting three companies, two from john boehner's estate, boycott wendy's restaurants, boycott j.m. smoker -- schmucker and the person who distributes jack daniel's. i tell you why. people can use their economic power and demand from their ceo's to get the republicans to uncouple the tax cuts and just passed the unemployment benefits. and we will destroy the power of the republican party with consumer boycott of companies to give money to conservatives. thank you. nice speaking to you.

guest: innovative. for sure. and i think it is thinking outside the box. and i want to just encourage more people to come up with creative solutions to this problem. host: an e-mail from a viewer -- guest: you know, again, i want to encourage democrats not to attack the president. the president was given some awful demands by the republican caucus, and i think argued in good faith, and so, i am not here to criticize the president and i just want to tell democrats, you know, you attack

a democratic president to much you end up with a republican president. he did the payroll tax provision because he thought it would put more money in the pockets of citizens and stimulate demand and job growth. and i think he extended the top 2% because that was the essential demand of the republican caucus which, of course, will add about $700 billion to the deficit over 10 years which says to me that all of their tough talk about the deficit is really not sincere and that they don't mean it and that all of this talk about putting debt on our children and grandchildren is political posturing and not really what they are all about. what they are about is making sure the top 2% get money, and atop the state holders get a lot of money.

host: politico features the vice president. as you know, he was in negotiations on this outcome for many days and you see the headline -- next telephoneur call. lexington, ky. a bill is a republican. guest: hello, bill. caller: good morning. he said earlier in the program you do not want to see aristocracy in the united states. you, sir, are the aristocracy. you as a member of congress have a better medical plan than 90% of americans and after only two terms in congress you get full pay, which i think it's about $100,000 a year. you are in the aristocracy, you are the problem. you will not be here at the next election, sir. good day. guest: thank you, bill. exercising his first amendment rights to express himself and that is fine. i will say that i have blue cross/blue shield, just like so many americans but i don't have

some sort of special medical plan. that is not true. and aristocracy -- i think -- face the voters every two years so how can i be a member of aristocracy if i have to face the voters every two years? and we have to run hard. democrats who have been in office for many years lost this year. aristocracy by dennis -- definition of people not subject to the voice of the people. they have money, wealth, power, that does not put them subject to the whims of what people would want. host: the congressman is with us for about 10 more minutes. thursday morning's our mornings where we get the unemployment numbers. here is the ap story -- applications for unemployment benefits are at the second lowest level of the year. evidence companies are cutting fewer jobs. the labor department said first- time claims for jobless aid fell by 17,000 to a seasonally adjusted 421,000 in a weekend

ended december 1 -- december 4. wall street analysts expected a smaller decline. guest: it is good news. i am hoping we will continue to add jobs. i continue if we had unemployment insurance passed, it would help. if we also continued to stimulate small business grow by improving access to capital, that would help. i would also like to see us pass a wpa-style jobs work program which i think would be very important given so many local governments had to slice their payrolls, resulting in fewer cops, firefighters, public works people. but i am happy about those numbers. host: while we are talking -- a tweet -- guest: we have been hearing about the fifth tier. clearly the 99ers are people

past the point of receiving unemployment insurance benefits. i think it is essential that we make sure that given that unemployment is still hovering right below 10% that we could look at the 99ers with not just compassion but with a savvy economic mind and understand that these people are going to cost and we need to put money in their hands -- again, so we can inject demand. host: maryland. john is an independent. caller: thank you for taking my call. a pleasure to speak to use, sir. -- to you, sir. i have a question about things that have been worrying me. i served 40 years in the army. i am drawing, of course, a pension -- very modest, but barely grossed $19,000 a year. i am also disabled and i was put

on social security disability last year. i am only 58. if they did not pass these tax cuts, how will that affect people like me. we are not considered seniors, jets, we are in that gray area. we don't make that much between our pension and social security, plus, we pay taxes on it, too. how would that affect people like me if it does not go through and we are stuck in the middle. guest: to tell you the truth, i would like to get more information from you to note exactly what programs you benefit from and to get a tighter look at your profile. he asked me this question so i will take my best stab at it without having been able to do the homework that i think would

be necessary. first of all, i don't think -- if these tax breaks don't go through i do not think it will affect you much at all. the reality is that these tax rates i think are not going to hit you. also, i don't believe you have a huge estate, so i do not think this will affect you in that situation, either. i would say there are things you will benefit from. you will benefit given that your neighbors who are unemployed will have some income. you will benefit because they will be able to pay their bills and they will be and in neighborhood that does not see more foreclosures and people being in more desperate situations and increasing poverty. but i think that given what you told me, you live on pension and social security, i do not believe your situation will change a lot. but, of course, i do not know

your whole situation so i am basically just taking a guess. host: we had two members of congress, one a republican and democrat who are not supporting the compromise. the thought it was important to get the voice of someone who is. janet tavakoli -- congressman henry cuellar from texas. guest: when we are trying to get the recovery back, remember december of 2008 we were losing 750,000 jobs a month. we are trying to get out of this recession, and during this type of recovery we need to try to do everything we could to survive -- provide stability and make sure people have money in their pockets and not only extend what

we have but also the payroll tax holiday will be good. but i think extending everything at least for a couple of years will give us time to get out of this economic situation and hopefully revisit this at a later time. host: let me ask you, we have been talking a lot about this this morning of the c-span audience and maybe we can respond to some of the issues that percolated. fewer funds going into social security -- and the viability. guest: the money going into social security is dedicated going into that. both under the democrats and republicans -- they have been boring money and we will pay you

back with ious, and that is the question, are we taking it in one hand and put into the of the park and say aye will pay debt. thank you, henry, very much. that is what the government has been doing. many essentially we have to address the issue of social security. the cost of the tax cuts i think is a little higher than the stimulus bill, so people saying you have to reduce the deficit but to not raise the taxes, there is a slight contradiction. i understand that but it is one i do accept. host: how would a program like decrease in payroll tax help spur jobs? guest: it is not only that but also the small business incentives that we set.

i believe one would look at most of the jobs that are created by small businesses, so the tax incentives for the small businesses, i think it is completely important that we spur jobs. this is one thing for the folks saying we need stability, we need stability, because we do not know if there is certainty, hopefully we -- and two years, there will not be excused for those people asking for certainty. they cannot say we did not know whether taxes are going up so we cannot hire. it takes that argument away. we are doing what you are saying, so now create the jobs. host: it is not by any of the stretch of the imagination perfect but for the economy right now.

guest: no piece of legislation out of congress will be the perfect piece of legislation. and of the circumstances i think this is the best we can do. host: any sense of the nose counting? guest: i talked to some of my blue dogs, and are some folks that do support it. i guess we will find out. my thing at the end of the day, it will pass. host: congressman henry cuellar , democrat of texas, who will be supporting the plan. i am disappointed, no one willing to make predictions. in our last couple of minutes -- going back to the president. tweeting --

guest: i am elected by a group of people who sent me from minnesota to represent in the congress. i am not an employee of president obama. president obama is a man i admire and i support him on almost everything but because he and i agree -- not that i think he knows more than i do -- that i have an independent basis of understanding. i have done my reading, but my fact checking, and i have come to a different conclusion about what the possibilities are. look, the president is not a king. he is the man who has to face the voters just like anybody. he has his own views on how he will solve problems but members of congress do, too. and i think it is important that we understand the invaluable and important balance of powers that our government has with in it. congress is a co-equal branch of

government. congress is not less than the presidency. the presidency is equal to the congress, and vice versa. i guess that is my answer to the question. host: houston, texas. you have the last question. caller: i watch you on tv and i'd like your presentation and stuff. i love my pastor very much and there is a saying in the bible about a richman that gave servant the money to go out and invent -- invest. the american people is the rich man. they gave me banks the money to invest and they hit it in the ground. they gave the money to wall street and the mortgage companies and a winter and buried it. and bp not only buried their money in the ground, they have gone up on the price of their gas getting back of the american people. barack obama invested in the gm,

he and president bush, and gm has posted -- tell them about the number gm posted. you have to invest money and make money and i would urge you, sir, invest in the american people. even though you do not like what is going on, invest in the american people, thank you. guest: let me thank the caller again. i am all for investing in the american people. i believe in the american people. but i also believe the american people are trusting me to try to advocate for the best deal for them. that is what i am doing. let me also just remind the emirate that general motors is now a viable -- remind the caller that general motors is now a viable company, a private business now pursuing its interest in the marketplace. and we will make money on the tarp. we bailed out the banks, we will get the money back. we have gotten a lot of it back. i am very grateful for being

here today. i believe in mixed government -- private sector, for sure, but also a government role. they play off of each other to augment both and make sure we have a good life for the american people. so, thank you for having me and i look forward to coming back. host: look forward to having you back as we close here. pretty interesting politics at home. handicap for the audience? guest: democratic governor, both houses in minnesota were taken by republicans in the last election. coming up on redistricting. and we also have a huge deficit of about $5 billion to $6 billion. what i will tell folks is that i think we are going to have compromises and the state of minnesota and i will keep you posted. host: thank you for being here. happy holidays. final guest this morning --

janet tavakoli has not spoken -- outspoken about the analysis of what has gone wrong in 2008. looking especially at fannie mae and freddie mac in our next segment. first, an update from c-span radio. >> 18 past the hour or. applications for unemployment benefits dropped last week to the second lowest level this year. the labor department says first- time claims for jobless aid fell by 17,000. wall street analysts expected a smaller decline. claims have fallen steadily in the past two months, raising hope companies will soon accelerate hiring. defense secretary robert gates in remarks earlier at the u.s. embassy in kabul, afghanistan, says the u.s. must be willing to do more financially, diplomat. diplomatically, with countries that have problems before they erupt and have military action. in a meeting with the out about the crown prince the secretary

is expected to talk about security worries with iran, the tariff threat in yemen and the uae's continued interest in a more sophisticated missile defense system. update on the korean peninsula. a top chinese leader met with north korea's kim jong-il in it p'yongyang. china is under heavy international pressure to diffuse the tension that increased but not for the apostle recent artillery attack in ireland -- ireland near a disputed border area that included south koreans. north korea depends heavily on china for economic assistance and diplomatic support. china fought on no. 3 apotheosized during the 1950-53 korean war. those are some of the latest headlines on c-span radio. >> this month, for the first time on television, c-span 3's american history tv is showing interviews from the nixon presidential library oral history project. sir david frost and his 1977

interviews with richard nixon. also airing this weekend, from harry s. truman library, a discussion of americans containment policy after world war ii, threat of the cold war and the wars in iraq and afghanistan, then special: -- the head of rare books and special collections of the library of congress on the federalist papers. see the complete schedule online at c-span.org/history, or you can press the c-span alert button and have the schedules e- mail to you. american history tv, telling the american story every weekend only on c-span 3. >> "washington journal" continues. host: janet tavakoli, derivatives and securities analyst outspoken about her views about what happened to our economy in 2008 and what the government response has been. you are here in town specifically to talk with people about fannie mae and freddie mac. the needs of audience about the

meeting you attended? guest: this was a meeting of the federal housing finance agency, supervision summit. they are the new regulators for fannie mae and freddie mac. they wanted to know a little bit more about my point of view about how we got here. one of the problems that even elite athletes have, they know their goals but they cannot tell you where they are at and how they got to where they are and why they are not at their goal. that was the objective of the meeting. host: we will try to specifically focus on fannie mae and freddie mac the welcome the discussion of the larger issues and state of affairs. give us, please, a sense of the size of the problem with fannie mae and freddie mac. guest: a norma's problems. loss estimates of up to $700 billion. we do not know -- enormous

problems. they don't know because they rely on third-party to meet their standards. that can be a very dangerous things. that and -- basically a blind date with an unknown. underlying standards are movie star but they are thinking of someone like the grid -- gregory peck character but they are getting a extract of the walking dead. -- extra from "the walking dead." , that has bled into the portfolio of fannie mae and freddie mac. because of that, formally sound loans that were in their portfolio are troubled, and that is because of the few to drop in the value of housing and rising unemployment. formally sound loans are now in trouble to the tune of one out of 10 mortgage holders in the united states is more than 25%

under water, and that means the value of their home is 25% less than the value of their mortgage. more than 4 million people are more than 50% under water, meeting -- meaning their home is worth 50% less than the amount of money they owe on their homes. most of the bad loans originated as the result of what we call private label securitization, that originally had nothing to do with any may and freddie mac. these were securities that banks and investment banks were issue will and they had close relationships with predatory lenders and lenders who were engaging in fraudulent activities. those are the worst of the loans. fannie mae and freddie mac had been unfairly labeled as the cause of the problem. host: in terms of remedies from washington, the republicans taking over the house just announce their new team -- from alabama will be chairman of the

house financial services committee, opposed barney frank held. his statement -- as chairman of the committee i will honor our pledge to america and at the priorities of the american people delivered last november. protect taxpayers by ending too big to fail and the administration's unlimited bailout of fannie mae and freddie mac. if congress ends the bailout, what are the cascading effect? guest: the really good question. when we talk about too big to fail, we got here because all the banks knew that when they engage in activities that hurt the banks, they contrast bernanke to fund. a different action -- acronym, trust bernanke to fund. this is not the first time would be about banks. in the 1980's the banks basically were insolvent because of latin american loans they imprudently made. it took the saudi money, instead

of letting the saudis land to the black american countries the banks wanted to do very little more -- work for high fees. they got regulators to back off regulations with glass-steagall. in a mortgage market encouraging predatory and fraudulent lending again, doing very little work to extract high fees. and the banking system was more than twice over broke. if it is linked to what is going on with fannie mae and freddie mac. they helped disguise the problems on the bank's balance sheet. freddie mac and fannie mae were supposed to be supplying loans and supplying their guaranteed. instead, they bought toxic securitization is from bank. remember when jim law court announced he would buy $170 billion of so-called aaa residential mortgage-backed securities from banks and put them on the balance sheets of fannie and freddie, i was

appalled. it did not end there. hundreds of billions more that went on to the balance sheets of anime and freddie mac. at that time, all of these securitization should have been investigated because what banks were doing were marking of the value of new loans. you cannot possibly be making more money packaging of new risk products with lower underwriting standards as he made when you were packaging up sound loans. red flags the sec and rating agencies, both failed as but the key culprit were the people driving the money train. a highly educated bankers -- and crony capitalists are excusing this behavior is a lie, well, the rating agencies, the banks, they thought housing prices will continually go up. i am here to said that no structured finance professional uses an assumption of ever rising prices when they do an

analysis. it is on its face ludicrous. asking you to believe that i leafless -- sophisticated people who wanted to get millions of dollars a year did all of their analysis based on the assumption housing prices will always rise. host: i wanted to get to calls but just of your description of fannie mae and freddie mac' becoming part of the credit default swaps that were securitized -- but my take away from michael lewis's book is that the management, and then endorsed by the board of fannie mae and freddie mac wanted a piece of the action, that, in fact, the banks were making a lot of money and they wanted to be able to have a piece of it. so was it the banks were using fannie mae and freddie mac to share -- guest: that is a good point, because it seems that they were willing victims and wanted to get on board the money train. but where were the regulators at the time? i talked to jim lockhart in a

conference of december of last year, wall street journal" the future of finance conference and i asked him, why did you allow this, what could you have possibly been thinking? he seemed quite distraught when i asked the question, as if he had no power. he suggested congress had put pressure on him. so, i do not know if you ever get the true story because now everyone else of laying blame on everyone else. to answer your question, i don't know. i would like to know more of the facts of how it all happened but obviously it is not a business model that works. what we have to do now is assessed the true magnitude of the losses -- look at the loan file, what is the probability of the loan will default and if it defaults what kind of recovery and i expect? is it salvageable? are the people employed able to pay? do they want to continue with

the mortgage? because we neglected this for years it has become a hellacious lee huge problem. this is granular. you are dealing with individuals, if human beings, -- so it is a case by case basis. 4 million home owners, more than 50% under what. 7.8 million home owners, borrowers, more than 25% under water. it is hard to call the home owners when they own more on the loan than a home. the host: for janet tavakoli, time to begin your phone calls. we also have two graphics that it's played more of the history of fannie mae and freddie mac. for those of you less familiar about how the institutions came about, a bit of an explanation. let's begin with tallahassee. kim is a republican. you are on. caller: in 2009 -- when they

started marking to market and how that helped to -- the bank's high that assets and i'm not writing of their losses and they would continue but the rally and how -- with a rally and the fed has cut the discount rate for the bar was still low -- for borrowers still low. they made money off of the american people and there has been a large transfer of wealth. host: mark to market accounting procedures. guest: the way you put a question to the other was brilliant. it is a great question. i had met with jamie died in march of 2009 in new york -- jamie dion in march of 2009 in the. in market to thousand nine he

said i really wish i had listened to you about that. you will recall that was a time congress said in a tax bonuses by 90%. the banks still had to mark their books to market and they were all looking really bad and people were demonstrated out -- demonstrating outside j.p. morgan markets. when i met with jamie he looked like he was falling apart, just a basket case. kept repeating himself several times. he said, if we have to have -- people my office, that is what we have to do. he was worried about the survival of his bank. at the end of the meeting he said i think i will go home and have two martinis instead of one, and i said if i were you i would not have any martinis, i would be hitting the gym. he really looked distraught. this is the kind of thing where you worry about people putting a bullet in their heads. now he is the talk of the block because, once again, we bailed out banks. if you look at the top 10 banks together, one thing to keep in mind is the fdic does not ensure

our banks. the fdic insures small domestic depositors. and the 1980's -- i did not know the percentage now -- foreign deposits were 50% of the banking deposits because we need to support foreign savings and if it goes away we are in trouble. jamie was staring at a light in the end of the tunnel that was an oncoming train. as you rightly point out, by waving mark to market for the banks it allowed them to cover up the magnitude of the losses. when i was looking at the bank balance sheets and i drew a circle around them, since the fdic only ensures a small domestic depositors our large banks have to ensure other large banks -- that is out the system works. therwas not enough equity paid in capital to the bank that could absorb the magnitude of the permanent value destruction. not talking mark to market but talking about real permanent value destruction and really

those assets really did need to be marked down to that level. but the banks could not do that because our banking system could not support it. the only balance sheet big enough was the fed balance sheet and that is why they stepped in. after having saved the bank and after having failed to regulate the banks, the fed failed to investigate them and now the fed is covering up for them. one of the ways they are covering up is changing the accounting rules so that banks can deny the fact that they still have assets, balance sheets. i could name others except mortgages, like the triple x products that it bought from insurance companies still marking almost a full value. at that and out the banks to cover up with a problem and as you point out, the fed funded of them with low interest rates which basically means that people who invested and money- market funds and elsewhere don't get any interest on their money, so they are robbing income from you to allow the banks to try to burn their way out of the

problem with your money basically. host: a few stories related to this discussion. in "the new york times" -- prosecutors, federal prosecutors, stage a sideshow while the big tent is empty. -- may notice prosecution' backdating prosecution's were a bust. not that it was not a true scandal. they invested more than 100 companies. the point of this is what is happening to the judicial side is a side show while there is not much investigating going on about whether or not there was a crime committed in what happened in 2008. "richmond times dispatch" -- home prices hit new lows, among one of the most markets in the united states. also "the financial times" today

says u.s. treasuries biggest sell-off in two years. finally, from "the financial times" -- rising interest rates slowed the pace of mortgage refinancing and the u.s., potentially syphoning off billions from the economy at a time the housing market remains fragile. big, complex topic with janet tavakoli. our next question from oregon. mike, democrat. caller: good morning, susan. a pleasure to speak with you guys. thank god for c-span. are you familiar with the book "the devils are here?" guest: yes, i am. caller: i am halfway through it and i have to wire my jaw shut. from what i understand what is going on now, corporate fascism is alive and well. host: what is the gist of the book he is referring to?

guest: if you look in the acknowledgments you will see the also relied on my book, "dear mr. buffett." brian lamb interviewed me about that on the financial meltdown where i do a scathing critique of the mortgage lending crisis and the securitization that were put together and i said it was a widespread massive ponzi scheme. i and mentioned that later on in the book -- i am mentioned later on in the book but i was little disappointed because it pulls its punches. instead of taking a point of view and a grin out what happened and who was most responsible, almost like a shrug in their shoulders to say everyone is responsible and i wondered how it happened because stephanie's husband has been a prosecutor on the enron debacle and she wrote a book on " the

smartest guys in the room" that did have a point of view but this book has much less of a point of view. now her husband is a defender. i noticed all of his friends were at the party. suddenly instead of pointing out who the culprits were, the book basically went out on that point. -- wimps out on the point. there are some wonderful facts of the book. but that book really pulled the punches. host: i went to say earlier when you made a mention of jamie dimon -- he is head of j.p. morgan chase and sits on the board of the new york fed. it talked about chronic capitalism, expanding a bit about decisionmakers, sitting on fed board at the same time they're running a large financial institutions. guest: it is a difficult thing to say who should sit on the board of the fed because you would like qualified people and interested people.

it but the problem with having interested men on the board is a double edged sword. thomas paine warned a columnist -- colonist, you should not to rely on the words of interested men tied to money and the crown. letting him sit on the board of the fed -- yet, you certainly want his expertise but you have to be a little skeptical after the banking system is blowing up, his bank is involved in some of the she deals, long and wrong -- shady deals come along and wrong and falling apart at the seams because he is worried about the viability of a lot of business lines. even today if you look at the activities j.p. morgan has been involved in, they get a large trade in the commodities area where they were basically using taxpayer money to gamble on coal, and that did not do well, if you look at their last earnings statement. and i wrote a critique.

bragging about how everyone -- they are basically using the taxpayers' checkbook. basically trying to corner the gold market. they had over exposure to gold and lost money. this is a time the united states is at war. although gold is not a strategic commodity, it is close to being. now today we find out j.p. morgan accumulated an enormous copper position and it looks like they are front running exchange traded funds, they want to launch an exchange traded fund and looks like the are front running back for profit. they will probably say they are doing it for client business but i would love to see the definition of client. a persistent rumor that j.p. morgan may face billions of losses because of an enormous short position in silver. i am just giving you one example of speculation doing with taxpayer money and use j.p. morgan as an example because you brought them up, but i can be similar examples and correcting

market, credit defaults what markets. we had no reform coming out of washington of any meaning. totally being punked. host: california, you are on the air, republican. caller: you are my new heroin -- my goodness. it is so refreshing to hear someone who has been knowledge of -- and accounting background and can see this for what it is. i am a very conservatively trained accountant with a history working in public accounting and doing what it up and down the state of california. but i have worked part-time in a nonprofit industry for the last 10 to 15 years but i am also in litigation right now with a hedge fund. i am a little different -- victim of a freeze out merger on a company that started in my home. what i have been learning the last two years and my research, it has made me ill.

what i want you to address -- and you have, but the big thing about these fees. my point is that this whole idea of selling as a security or investment, rolling together a bunch of loans as these derivatives, that was a fraud to begin with, it should have never started? w? hy you want to never assess the valuation because each individual loan is going to be hit by these different fees as they are sold, as the individually the thought, and how can you assess which individual loan will be hit with the fee, so how can you value it as you start the whole cycle of throwing it all together. i hope to god you get into regulation and working with broccoli -- you are my new heroine. guest: it is saleh, isn't it?

saleh, as i mentioned about fees, this was a massive ponzi scheme and one of the characteristics is exploding volume and revenue rapidly and that is what banks and investment banks the saw. it became a larger share of their revenue. in order to be able to pay all of that you needed money from new investors to pay off old investors, and those were though people who invested in mortgage lenders that were getting double-digit dividends, the fees and bonuses extracted by people who ran mortgage lenders -- look at angelo mozilo's compensations. managers and employees were taking out unprecedented salaries and bonuses where you saw compensation explode in those areas. to your point, i want to digress and little bit, when you saw all of the fees being taken out, they were fake profits in many instances, unjustified.

one of the myths, by the way, of the meltdown is people say, well, there could not have been a fraud at merrill lynch or citigroup, they lost money, how could there have been a fraud? but as william k. black who wrote a wonderful book called "the best way to rob a bank is on one" the best way to rob a bank is to manage one. what they were doing is extracting hi-fi's at the expense of the shareholders and institutions for which they had a responsibility. that is the classic case of what we call control fraud. goldman did not lose money but they were involved in transactions that were questionable, to say the least. you notice that a lot of the transactions occurred when hank paulson was ceo of goldman sachs, he became treasury secretary and certainly had influence over the way the aig handout was handled where

goldman, chiefly responsible for a lot of the value- destroying securities that they guaranteed, goldman got paid and goldman cronies, trading partners, were paid 100 cents on the dollar whereas other bond insurers were selling for less than 20 cents on the dollar. that is your taxpayer money at work bailing out goldman sachs. host: john, independent line. you are on the air. caller: it is georgia. anyway, i want to address the moral factor of the whole situation. my brothers in christ grafted themselves onto the tree of greed and let me explain in a little thing i have. a fool and his money are soon parted with the person who takes advantage of that awful gains wealth but loses his sold -- takes advantage of that fool

gains in wealth but loses its soul. one of the histories of fannie and freddie is that i think in 2002, the republicans had been trying to get fannie and freddie into the open market, and other words, taking it out of the government. well, they got the people running fannie and freddie out of their -- there and the president has the right to put people in positions. they put the people in there that they wanted. freddie and fanny, at the time that it happened, were not buying these credit defaults swaps. what they were doing was 30-year mortgages with 10% to 20% down. what they did do. i am tell you -- the president got on the air and said we are going to make sure people have houses to live in. this is what happened. i am sorry, but this is

something that is so morally along and has taken people and put them in positions of being treated like they were above one's who did something wrong. i am sorry, my brothers in christ need to wake up to what is happening in this country today. thank you very much to listening to what i had to say -- for listening to what i had to say. guest: thank you for your comments. i would like to think about -- hope all u.s. citizens, due to not give anyone a favor if you burden them with the dead. they are not buying a home but being saddled with large debt. the people who knew the most and were the most responsible and supposed to be prudent finance sears, it seems to be -- to meet the people who control the money train should bear the most responsibility for what happened. and i agree with you completely.

one of the observations i made yesterday to the federal housing finance agency is that this country now notices that there has been foreclosure fraud where banks showed up in court with phony affidavits. by the way, that did not come out as a result of any investigation. it came out because employees testified that they did it. formerly gmac, j.p. morgan, and bank of america employees all admitted to this in depositions. here is the thing. front to back fraud. after fraudulent practices in the origination of loans but the new whiskey products with loan underwriting standards, now the banks, when they want to take people to court to foreclose, are showing up with phony documents. in this country we have laws about recording titles and the transfer of the notes to protect

people's property rights. and the banks, it seems, lost their paperwork and instead of admitting that, or instead of finding the paperwork, or showing up in court with phony documents, and yet it seems as if people are being vilified in this country for the mere fact that they owe money. does what? being the language is not a crime. -- being delinquent is not a crime. been foreclosed upon is not a crime. going into bankruptcy in this country is not a crime. foreclosure fraud, showing up in court with phony affidavits and committing perjury, that is a crime. yet we are lionizing bankers and vilifying and debtors. there is something wrong with this picture. host: long island is next. anthony, a democrat. caller: but more needs -- good morning, ladies and america. i would like to be the first to sign a position to bring back brian lamb for at least a

friday. i miss him. the whole of what is going on is not being scrutinized to the degree that it should and i would ask c-span, susan, if you could look at the case -- in 2001, attorney general of new york brought a lawsuit against a developer for suffering people into these over priced homes -- suckering people into overpriced homes without jobs and money and he hid the fact they would have to pay the high property taxes. there was a collision between big business developers and government for ever expanding tax base -- tax base that went on to also play into this. it made for a robust market of housing, but house and for an economy that did not exist. almost like an investor class housing economy or people behind

the scenes of benefit it because they did not build holding that people who worked a regular job could actually move into. they built these monstrosities. i don't think they could pay the utility bills in these dinosaurs. because the houses have a certain amount of square footage, it and out for a greater tax base so the municipality or the government officials with an allegiance to the real-estate sector loved every minute of it and it was all on the back of the banks. if you look at the attorney general sued -- the man was eventually pardoned and and unpardoned. if you could research that and eventually it would give answers. host: may i use this question to go to policy motivation? we have a twitter message --

that clip is available to watch. he had them on stage with a common goal. the clinton administration also had home ownership as a goal. what motivated the policymakers? a broader tax base for municipalities, was it to spur on the economy, was and community stability by home ownership or all of the above? guest: you ask a good question, what is the motive. i really can't get inside their heads. i, from the point of view of prudent finance and people being able to better their situation when you look at how people better their situation, it is being able to manage the household finances. it is not by burdening people with debt, lying to them about loans with interest rates could ratchet up or principal balance could increase on a loan.

things like option arms, completely toxic product. telling them they could of 100% loan to value ratio when the st. louis fed wrote a piece saying that when there is 100% loan to value, you know as much on your home as the balance of the loan that those borrowers are more likely to default even when they are prime loans. a lot of the problems with pushing people into loans that were approved and were well known. at times people were lied to, other times and ties, in certain cases borrowers committed fraud but by far the biggest problem was predatory and fraudulent lending. in chicago a countrywide employee admitted that in one of the chicago offices, 90% of the loan documents were faked where they pumped up the income on a loan documents and those were countrywide employees, not the borrowers.

there was a dynamic where everyone had a hand in the till, taking the fees out. and money is a very powerful motivation for corruption. the problem with fraud is it tends to in fact everything it touches. you look at fannie and freddie, and they are lobbied all the time to provide jobs for cousins and relatives of people in congress. as if the entire congress was bought off. people don't talk about a much in this town was something we noted outside the beltway. barney frank's partner was on the board of fannie mae while barney frank was regulating fannie mae. if they were a heterosexual couple people say, shut your whites not be on the board of fannie mae and you are ahead of the house banking -- should your wife not be on the board of fannie mae? we should ask the appropriate question -- isn't that a huge conflict of interest? if we want to talk about gay rights in this country, you have to admit that gay couples can be

equally conflicted as heterosexual and why were we not calling people out on things like this? host: janet tavakoli, her book "dear mr. buffett." and her interview in 2009, you confine that also in the video library if you are interested in more for thought and observations. sweetwater, texas. margarita, republican. caller: thank you for taking my call. i am very disappointed because they want to give money to fannie mae and freddie mac and people who live on social security -- i know people who live on $400 a month. i know that there is no man or woman in office who can live on that kind of money, but yet they wanted to give money to fannie and freddie -- what about us?

we voted for them. what do we get? we don't get nothing. we don't even get the two runs and $50 -- $250 they said they would give us. i would like to see them live on what i have to live. host: i will move on because that was a comment, not a question, to annapolis. caller: i have a couple of comments and then i have a question for your guests. henry ford once said in the 1930's that if the good people of this great nation would truly understand how banking worked, we would have a revolution before tomorrow morning. one of the problems that i see is that the federal reserve is the most corrupt institution in the whole world because, you know what, it is not something that works in the best interest of the american people. it is a private banking cartel that has taken advantage of the american people and the taxpayers for almost 100 years.

it is the j.p. morgan, the goldman sachs -- it goes all the way back to the bank of england that also has been meddling with the federal reserve. even alan greenspan last year made a comment in an interview in which he stated that the federal reserve is more powerful than congress and the president. maybe i am the only one that has a problem with that, but i find that quite revealing. host: we are almost out of time -- your question, please? caller: my question would be -- ok, could you explain that how it could be that all of these western governments that have been exposed to this wonderful banking system these private bankers put us under for the last 100 years were all headed for the same thing -- drowning in debt, headed for bankruptcy and yet the private banking

interests, like the rothschilds, who control the system, they are worth over $100 trillion -- host: thank you. gucan you respond to her about the fed did you agree with her observation? guest: i agreed that many of actions of the fed are puzzling. i think ron paul is on the right track. and you will notice that last week the fed it revealed the names that they funded through the crisis and i was surprised to see some hedge fund names, particularly -- i did not want to use the name on camera at the moment but there is one hedge fund that i mentioned in my book that was supposedly managing these collateralize the debt obligations while it managed the hedge fund and they were basically doing trades that benefited the heads fun but that did not benefit the collateralized debt obligation

and the reason for that, they were earning higher fees and hedge fund than the collateralized debt obligations of they can basically rape the investor to the benefit of the hedge fund where they made kingly fees. why was the fed lending money to them? that will be a reason to disqualify them -- being rewarded with that money when they were engaging in activities detrimental to the securitization industry and and directly to the housing market because of all involve the mortgage loan product. you could say the same thing about some other characters on that list. another thing the fed did was they gave contracts to black rock. i looked at some of the deals black rock managed in 2007 and there seems to be no excuse for them participating as a manager. instead, so do those deals should be investigated. yet, the fed gave them the contracts. talking about crony capitalism

and it is global. the united states is supposed to be set up to get us away from those kinds -- kinds of people and instead we have become the chief honchos. host: that is it for our time, i think -- or, duane is our last caller. not very much time. caller: a question for you. i want somebody to tell me how an individual from, say, mexico and, to this country illegally, apply for and receive federal funds to purchase a home, and if they get in a bind, then a house goes back up on the market -- host: that is it for our time. a quick answer to his question? you come you are onto something here. perhaps the past -- guest: perhaps it has to do with widespread predatory lending and fraud in the mortgage market but i leave you to think about that a little more. a little more.