it gives you an inside view. we never heard that before. we never heard the terrorists intimate conversations with their bosses. >> this month "q&a" expands to two programs. tonight, terror in mumbai. >> this morning, "washington post" correspondent dan baleds has the latest political involvement including the ramifications of a g.o.p. controlled house in 2011, challenges facing the obama administration, and 12i presidential politics. then peter wallsson, a member of the financial crisis inquirey commission, talks about what's next. and later simon louisiana russ and georgetown professor randy barnett debate the legality of the new health care law, requiring americans to purchase health insurance. washington journal is next.

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>> our focus is one measure passed yesterday and signed into law by the president. don't ask, don't tell. our question is, will it change the military? send us an email or on line at twit twitter >> this morning, the piece is

called a changing tide. you can read it on line. it will be historic when the president ask signed the don't ask don't tell bill. it will be a mile stone for civil rights. this may be the brown v. board of education for gay rights

>> we'll let you listen in on some of the debate from the

senate floor we covered yesterday. >> on the republican line. good morning. caller: to equate this with a race of people or culture is an a bomb ination. it shows you the generation of people that have been raised in the talk show age. i worked many years ago in a ministry called teen challenge after i had been involved for years in a drug addicted and homosexual lifestyle that would have destroyed me before i was 30. homosexual at has a predatory

and transtorry nature to it. there are people born this way. a lot of young men who get into through different ways in and out. i would like to know those examples of thousands of people that were drummed out? was it sexual assault? how many were just innocent little lambs? >> we do ask if you phoned in the last 30 days, make room for others host: thousands of members of the military forced out after their sexual identities were exposed. more than 1300 troops had been discharged through the policy. this came an end 65-31.

now the legislation heads to the president's desk. >> good morning. i don't think it is going to change the military at all. if anyone is ready to put on that uniform and ready to sacrifice for his or her country. they should have a right to be open with his or her lifestyle. >> i am a former military person host: thank you for your call. caller: this whole thing is a farce. years ago. black and white soldiers were separated. that proved to be false.

the black tank core was honored greatly and black pilots never lost a bomber. i was in the service from 1951-1953. it was a gay soldier that saved my life. ran out into fire and dragged me back host: where did that take place? were you in korea. caller: yes. this is a lot of hog wash host: thank you for the call. senator lyns gram saying if the don't ask don't tell policy works out the president will own it.

obama own don't ask don't tell. some saying the critics should have been here. the senator explaining why he voted for don't ask don't tell. several others voting to end just hours after a successful filibuster of the bill. he joined many republicans trying to block the bill. overall the policy that bars gays and lesbians to serve.

these are not fashion gurus or perez hilton. these are people defending our country and have a mind set to

do just that. i don't think sexual orientation has anything to do with it. >> thank you for our call. the president is expected to leave for hawaii on wednesday. the debate including option to the measure by senator john mccain. >> i've heard from thousands of active duty and retired military personnel. they are saying senator mccain.

it isn't broke. and don't fix it. all of this talk how it is a civil rights issue. the military has the highest recruiting and retention at any time in history. this debate is in the best interest of our national security. i'm aware that this vote will probably pass today. we'll see the talk shows.

most of them have probably never served in the military. you know. we'll repeal it. all over america, there will be gold stars put up in windows and put up that don't partake in the elite schools or the salons of georgetown and other liberals here around the country. there will be additional sacrifice. i hear from master sargents and leade leaders. the senate votes.

will this change for the military? caller: i don't think this will change anything. this is long overdue. for john mccain to say -- what he's saying is we shouldn't do anything about this. if the american people think it needs to be repealed. all you tea baggers out there shouting "freedom" it's hip cat cal. john mccain is getting a little

too old >> concerned that a court action is changed. once this is signed into law, he will proceed with the planning necessary. the legislation provides the appeal. the chairman of the joint chief's of staff written by the department is consistent. he concludes by saying the successful implementation. proactive cases in the core values of leadership.

leaders can compliment this change. caller: good morning. i am a retired general. should marines know that there

is perhaps a gay marine to the left and right, that undermines the professionalism of the marine corp. if they have a problem with that, then they don't need to be in the marine core. over the course of 35 years, i know i served alongside a gay or lesbian soldier from time to time. people say, how do you know that? well, you just do. i don't think passing this will have any negative affect in the military services. right now, there exists all sorts of provisions to reduce the risks to service members

>> basically, we don't allow military harassment in the military right now. these thoughts are crazy host: senator biden announced he was undergoing treatment for prostate cancer. he showed up for the vote on saturday despite saying earlier he would be unable to do so more from the senate floor leader

harry reid. >> the military and see what the pentagon thinks; they did that. more than 70% of the people who served in the armed forces believe it doesn't matter at all. and this is really exemplified, mr. president, in a story that appears in the "las vegas sun" newspaper today. i will read two paragraphs from this story. the pentagon's report is done, and it conclude thad revealing the law would do little to affect troop readiness. in fact, most of the troops interviewed for the report indicate they didn't think it would be a problem. a majority of them said they had served with someone who is believed to be gay or lesbian and it doesn't bother them or affect their unit's effectiveness. now, mr. president, listen to this. for example, the report quotes a special operation soldier who said, and i quote -- "we have a gay guy in the unit. he's big, he is mean and he kills lots of bad guys. no one cared that he was gay." end of quote. mr. president, that says it all.

as barry goldwater said, you don't have to host: those comments from the senate floor. thank you for being with us. guest: thank you for having m host: what was your take and his comments. guest: john mccain has been the leading force against this repeal. the push on this as well as the

democratic leadership in the snachlt he sees this as pure theater. it is as if they are doing something to payoff their con stilt u one si. he has taken a tough approach. at the same time critics have come after him he has signalled that he would back a policy change. in the end, he went down swinging and thought it was a political exercise host: his long time friend and at one point considered a 2008

republican nominee leeberman. there was a moment when the two looked at each other, smiled and went about their business. guest: that's right. mccain and leeberman have a great relationship. he has said he would back him no matter what. this is an issue where they split. leiberman is more liberal. he issen line with mccain. this is one where they clearly

split. read supported the repeal of the ban host: the dream act which would give children a pass to citizenship. pointing out that the future remains equally uncertain. what happened? it just doesn't seem like there is a report to take on the measure republicans have labeled this with the same amnesty. this would do that for some

children thatten list in the military or go to college. hence the name dree act. yit yiks were able to label this as amnesty. they were able to work with some moderate democrats. most republicans opposed if. they fell short. next year, there will only be 53 democrats in the senate. getting this through seems highly unlikely >> the u.s. story points out to republica republicans. the debate continues they'll

probably do more tomorrow and tuesday. reid wouldn't give any sort of time commitment. they are not going to jam republicans on this. they are going to give enough time to offer and consider on this. republicans are converse ly assuming. something will have to give. continuing resolution expired on tuesday night. do they extend for more or roll the dice for the republican support.

they'll need to have significant set of republicans. >> the final point, have you ever seen such a jam packed lame duck session? they were scrapping that spending bill as they opened thivengs up. was hard to imagine host: it will be a continuing resolution. the house is back on tuesday. what are you looking for tuesday and wednesday. they are going to have to reach some sort of agreement to extend that funding. it's unclear. i'm sure both sides are adding

the extra money. that is probably why we have not seen a longer turn. a lot of lawmakers would have no resource to stay in washington house republicans will begin the process and take a serious whak. ? the lead story on this hour. with the new roll. bringing you up to speed with how the senate is doing today

the don't ask, don't tell policy. john mccain sticks to his convictions, period. caller: of course it will change the military. if there were no alcohol on military bases. it would be quite a different problem. lieberman probably never lives in the barracks. . i did. the first guys back from town have been drinking having been

gay soldiers. chances are, their inhibitions are gone and they will hit on straight soldiers. if straight soldiers come back first and they know there are openly gay men, they think they have to pull guys out of their bunks and throw them into showers. that's the reality. if there were no alcohol, this would be no problem host: this comment, it prevents gay soldiers from having any kind of private life. if one man in the army is dating another man on his own time, and

his commanding officer finds out and asks him about it, the soldier can either life or tell the truth. either way, he risks jep ar diezing his career. >> i have been a real military wife. nobody ever mentioned the hetro sexuals left around the country never took care of. this is a disgrace too.

i don't condone this. but this is a fact. they have been left in japan and korea. mr. mccain, tienl -- time for him to relax. he is completely out of touch with the world. the bottom line, the question "don't ask, don't tell." will it change the military? caller: it will. it will unleash the human potenti

potential. my first roommate in the service was gay. i never knew it. he never hit on me. he was the most outstanding airman in the unit. performance appraisals was outstanding. he helped train me to do the job i did. all of that potential had been lost because someone found out he was gay. imagine all of those people graduating from military academies we have spent hundreds of thousands of dollars on,

soldiers. never have i seen a straight guy turn gay because he's drunk. benefits are much gritter. how can john mccain say the military is not hurt when you can see it today. the leaders we have, they can fight for that today. we have this comment. "it is all a big nothing. what makes you think you are so special? "joaning senator in overturning the policy. the subway that moves the senators to their capitol to their offices.

>> i want to thank the republicans who voted against this. putting freedom on the line for us. i want to thank all of the gay men and women that are fighting for us today in afghanistan and in iraq. we honor your service and now we can do so openly. this is an historic day. i am just delighted with the strong by partisan vote.

>> eight senators joining in repealing the don't ask, don't tell vote. the pentagon will be leading the he have ors supporting. he did not want this to go to the courts. we are getting your reaction. tina has this review. our military continues with the coping. host: karen joining us. caller: good to be with you. of course it will change the

military for the best. i am a republican, a conservative. i know many, many gay people. i know that they know i'm hetro sexual. they would no more hit on me. you don't hear about gay rapes. what you hear about is hetro sexuals bashing gays. we need to allow everyone into the military. we are wasting time fighting against allowing our gays into the military when our 9/11 responders are dying because we refuse to fund their healthcare. where is the common sense in our

country? where has our sense of duty gone? >> in the vote repealing don't ask. host: sheila is joining us on the democrat line from georgia. caller: good morning. marvin was totally correct. the last lady that called in is totally correct. this is just ridiculous. what do these homphobics think is going to happen when the president signs this bill into

law. that all he's gays will take off their clothes and attack people? i don't think so. i know gay people too. they don't want anything to do with hetro sexuals host: in 1993, 44% of people believed gays should be allowed to serve. today, 77% of americans think so. host: dan joins us on its independent line. caller: a pleasure to join c-span. first-time caller host: welcome to the conference. caller: i just like to thank the senate for stepping up to

the plate and allowing this propeel process. someone had mentioned it has been long overdue. the person people have spoken. it is time. this comment from twitter. and this headline from the times. a gay commander in chief, ready or not?

host: good morning. will it change the military? the gays as well as women and minority need to step up. apparently according to mccain,

350,000 combat troops will redesign. caller: i can go back further in my services. i did serve from 1958 to 1962 in the service.

i had some very distinct experiences. the first was in basic training in 1958. a gentleman i had made the acquaintance of. another musician. we had fallen into the habit of spending sunday afternoons in the rec hall playing music. one day, i was sleeping in. this gentleman came from one unit over. he would say let's go to the such and such. as he did, it become bit of an

approach. i don't know how else to put it. i felt it was an approach. that was the end of it. we had no further action. he went his merry way and hopefully had a successful career host: bottom line. good thing or bad thing? caller: it's a good thing. there are going to be problems host: i'll stop you from. thank you for the call from california.

>> the week before christmas, the liberals were stirring and boy did thi they growl. the rich folks were necessary

willed all newing in their bed in hopes they be spared like the president said. nancy and bernie were hunting the corpse they could tap. caller: i had various dealings.

there are approaches. if you told them you were hetro sexual, they respected your viewview host: this real progress. disrespected for most of the past 16 years. welcome to the journal. caller: it is early here but i'm a trout fisherman but i am headed out host: there's a photograph of sarah palin from her

documentary. a look at the style of the 2012 candidates. go ahead with your point. caller: thank you. in big bear, red lands, california. red lands is what got this thing going. this is the doe vieted states military. ran paul is the subcommittee chair.

>> i want the markets to regulate and occur and regulate differently telling that banks have to make certain loans. >> yes. i don't think we need regulators. law and order.

chairing the subcommittee. airing at 10 a.m. of course all the programs can be heard on the radio in a preview of the guests. a look back at 2010 and what might be ahead in the new year. welcoming vice president joe biden. some of the wrafrnging members of the committee. also the usa administrator.

the senate's majority whip. at 3 p.m., in the state of the union. the president of the national association of letter carriers finally at 4 p.m., host for the nation and republican senator lyns gram. five network tv talk shows brought to you by a public service. reairs at noon. state of the union and face the nation from cbs. listen to them all.

satellite radio. down loadable or go on line >> if i could gret people to understand >> as the jus, what is said about wiki leaks on line. it is washington your way. washington journal continues. welcome the author of two books.

fearful they will go too much to the right. the question is what posture he will take. there is a moment in the white house briefing room as the president walked to the podium

with the capture of "take your child to workday." it continues with that photo and a lot of political buzz in that town. an historical moment to see them there and have the president hand off to a former president to deal with the debate and decision of the tax bill. >> a delightful conversation.

bill clinton has become significant asset in some of these fights. they popped into the area where robert gibbs' office asking how do you pop the door? we want to go to the briefing room? there was a christmas party for that afternoon. the last thing people were expecting was to see either obama or clinton. no one anticipated.

it looked like he was not going to leave the podium there for a while. the reporter smartly continues to ask questions. president clinton clearly wanted to answer them. >> the former president's book decision points number one in the "new york times" best seller list. >> i think there is such interest in the bush presidency. no question he remains a devicive figure. likely to get a lot of readers. >> the gains were made but democrats can fix california. the way to stop just before

nevada. when was once the youngest governor and now oldest governor to deal with the budget. >> california would be the big story in the country because of the fiscal problems and because of the size and importance in this country. the political issue gets swoern

in. there will be i lot of people out there wandering how they will deal we are seeing that shape up already. it is almost as if the house and senate campaigns are starting even before the 2012 presidential campaign starting slower than we used to. we already had candidates.

senator obama and clinton nearing the starter gate not likely to get into this in spring. even the darker horses are taken. in this town and in new york, a lot of media. a spring debate. politic co-and msnbc. yesterday cnn put in the debate. will all these debates happen? >> i can't recall a time when more debates didn't happen.

by the time most these events were scandaled. i don't know, we had so many debates that we began to suffer from some debate ma feeing. how anxious is the media campaign. >> your colleague has managers versus populous. the edgy and defensive, culturally conservative. tending to be someone more

moderate. a terrific piece and friend. we wrote a book together. he is marchly good at looking through the graphics. within the republican party, there is a likely scism. as the party has broadened out, romney and palin tipify their two polls. let me ask you about the speaker, nancy pelosi.

she grew up in baltimore. her dad, the former mayor. what changes do you think we'll see. .

they want to see some action. as we saw over the tax bill, nancy pelosi and a lot of democrats in the house are fearful that the president is going to make deals they think are anathema to the principles of the democratic party. host: she was not at the signing at the white house. the bank nor was senator harry reid. -- guest: nor was harry reid. what it did was it signaled the now-significant gap that exists between house democrats and the white house. it is a great deal of respect among people around the president for the speaker and

soon-to-be minority leader of the house. there is no question that their agendas are different and their constituencies are different. i think the president and the white house are much less focused on the liberal base of the party and more focused on the center of the electorate. the danger of that is that you need and energized base. the president can only go so far in irritating the house democrats or the base of the party. he has a tricky job to do if he is trying to cut deals with the republicans on the one hand and keep its base energize on the other hand. host: our conversation is with dan balz of "the washington post."

someone asked if it does not seem that nancy pelosi is the clear leader of the democratic party. guest: the president of the united states is the leader of the democratic party. she speaks for an important part of the democratic party. i cannot recall an instance in which a congressional leader has eclipsed the president in leading the party. there are always tensions within political parties. we see it in the republican party, in the tea party versus the establishment and we see it now in the democratic party between the liberal base and the president over some issues. not all issues, by the way. that tension is going to play out. at the same time, the entrance of both nancy pelosi and president obama is to maximize the democrats' possibility of winning elections in 2012.

the better the president does, the better the whole party will do. in the end, they are going to be alive even if they disagree in some debate's going forward. host: a piece on friday that a lot of attention calling the president, "the comeback kid." guest: someone said he "hearts" obama. there were two pieces that he wrote that were complimentary of the president. he believes that the tax deal that the president cut was one in which the president got more out of it than the republicans. he wrote that column a couple of weeks ago. as the signing is about to take place, he is essentially saying

that if he wins reelection in 2012, we will look back to the day the announcement was made at the beginning of his comeback. i think we have a ways to go before we know the degree to which the "comeback" is taking root. host: we are with a dan balz of "the washington post." . caller: mr. obama, i am not a follower of the republicans or the independent. the next thing you hear is about is not an american. he is a socialist. he is just like teddy roosevelt, a socialist. i am having a hard time

understanding what you guys are saying up there. he is an american president. he is the commander in chief of the united states. host: thank you for the call. let me take his comic and bring it back to your column. what was the --let me take this, and bring it back to your comment. what was the message in the midterm elections? guest: the economy has created a sour nest on the part of a lot of republicans. -- a sourness on the part of a lot of republicans. there is no question people are going to be unhappy. a lot of people do not believe the federal government, whether it is the president of the united states or both, have

dealt effectively with that economic crisis. people have seen money go into banks, financial institutions, auto industries. they see executives getting bonuses. they say, what have you done for the middle class or the working class? that is one of the messages that have come out. the second message is unhappiness over the policies president obama put in place to deal with these things, particularly among conservatives and independence. there is the feeling that we were throwing money at a problem and we were created sizable debt for children and grandchildren and future generations. and that size and scope and reach of government became an element of the midterm elections. the third element, which is what i spoke about one minute ago, is this question that washington is broken. the two parties can not get

along and they spend more time fighting amongst themselves been worrying about the country. all of that became part of the mix throughout the course of the year. we could see this coming for a long time. this was not a surprise outcome. i think what we have seen in post-election polling is that, while it was a defeat for the democrats and it said that president obama, it was not necessarily an endorsement of the republican agenda. as a result of that, president obama and the new republican leadership in the house have some proving that they still have to do. host: have you been following the note-label group. p -- no-label group? guest: george will is dismissive

of it. we have seen this effort in the past to try to bring some harmony and some comedy to our political debate. i do not know whether the new labels group will have any effect on that or not. it is a difficult thing to pull off. as john glenn once said, it is trying to radicalize the sensible center. we have watched different groups try to create a bipartisan shifts and create forums where the parties could work together. on an interim basis we see this happening, we see different sides coming together on a particular issue. at this point in the country, we are polarize. the republican party and the

democratic party are so homogenous compared to what they used to be. the most liberal republican in the house of representatives is probably more conservative than the most conservative democrat in the house of representatives. that is not the way it used to be. you have the country having sorted itself out into two camp, liberal and conservative with some centrists in the middle. while this group has good ambitions, how you actually put that into practice and how you convince people in the capital during political campaigns to lower the temperatures is a much more difficult thing. host: we will see some of that as we get the census information as the redistricting begins in earnest next year. we have a caller on our line for republicans. we are here with dan balz.

caller: 0, promised he was going to support the victims of genocide. since he has been in office, he started flip-flpooing. do you think -- he started flip- floping. do you think he will finish this thing for the last time? guest: i am not following this issue closely. i saw some e-mail traffic friday about this. i would be surprised if this were resolved. host: larry at this point.

the republicans are trying to coordinate attacks on public employees on private government and subsidized businesses. the larger issue is what republicans are trying to get from republican governors. guest: there are two issues. what is the issue of the relationship between republicans and republican governors. in 1994 when the republicans won the senate, they had a group of republican governors that had already been in place and adopting activist, conservative domestic policies. the primary was welfare reform. there was tommy thompson and john engler in michigan. that led to a national welfare bill in 1996. the same thing may be happening

now. there are a lot of republican governors who have significant majorities in their legislatures. they will be trying to put in place policies to deal with job loss in the economy, to deal with state budgets that are strained tremendously and facing significant shortfalls. they will deal with education reform. they can provide a model for governance. it will be a model for the republicans in congress. there is a big and growing issue in the states because the states are strapped for money. i was at a meeting last month in san diego and talked to several new governors, john kasich in ohio and scott walker from

wisconsin. they talked about the issue of public employee compensation and their desire to do something about it. i think public employee unions are more on the defense's -- the defense of that i can recall in long time.a host: what does the president's overall job approval rating tell you? guest: there has not been much movement for many months. he is somewhere between 45% and 50%. in some polls he is slightly more positive than negative. he is not where the worst of our present have been in terms of public opinion. he will want to try to move that

up. host: 71% of americans have been hurt by the recession. guest: there was an interesting finding in the nbc wall street -- in b.c. "the wall street journal" paul. -- nbc-"the wall street journal" poll. the question was asked, what was your defining moment? many people said 9/11. this time, more people said that it was the recession. but the people out of work, it was a terrible poll. for what has happened with 401k's and dow security, this is a country full of people who -- and job security, this is a country who feel less secure than they were a few years ago. host: people were asked who do

you trust to help middle-class people and help with health care reform. the president has an advantage of 53% to 38%. guest: there is an overarching question that we ask. it is on the big problems facing the country and do you trust president obama or the republicans in congress. president obama had a narrow advantage. neither president obama our congressional republicans have the upper hand at this point in the eyes of the public. in 1994, republicans in congress had a more significant advantage over president clinton on a number of those questions. after the 2006 elections when the democrats took of congress when president bush was still in

office, democrats in congress had a significant advantage over president bush on those same questions. even though the republicans won big, they have not one bank the hearts and minds. host: it is 77 degrees in hawaii this morning with the first family is, but the president is still here in washington. guest: the president will not get to his favorite vacation place for a while. caller: i would like to thank you for your insights this holiday season. i would like to make a comment before my question. i commend you for working for "the washington post" because it is the last newspaper that i read that is considered to paternalism in the united states. you were speaking about how you were going to have the dates

coming up and no one has declared to be running for office or present during 2012. we have a lot of republican candidates or possible candidates who are pundits for fox news. i wanted to find out -- i know there is a breach of contract if they declare that they are going to run for the presidency. i wanted to find out from you a little bit more about that and if you know anything about it or the history of that in the united states. has it been an ongoing issue or is it something new? we have truly professional politicians now working on news channels and then deciding to declare at the last minute so they can continue to rake in as much cash as possible. host: rick santorum is under

contract at fox news. john bolton is looking at a 2012 presidential bid. sarah palin is a consultant on the fox news channel. newt gingrich is also there. he has appeared on this network. the others are not allowed to. guest: this is not a brand new issues. it is much bigger now than it used to be. when pat buchanan ran for president in 1992, he was on cnn and had to disassociate himself with cnn as i recall. we have never seen this many people -- it is a good question. part of the issue is the money. the more appointed issue is the exposure. these politicians, at this point in a presidential cycle, will

enjoy a more exposure stay on for the time being as fox news contributors, then they would if they declared their candidacies and had to make their way as politicians. i think there is a combination of the financial incentives and also the desire to stay as visible as they can before an audience that is likely to play a significant role in the nomination process of the republican party. host: one of the under the radar names is someone who worked in the bush administration, mitch daniels. someone on our twitter pate said that mitch daniels will be the guy. -- twitter lapage -- twitter page believes mitch daniels will be the guy. he is a no-nonsense

politician. he is seriously looking at whether he is going to run. some people i have talked to recently who are convinced he is going to run -- he has said he is going to wait until his legislative session finishes in the spring to make a final decision. he is one of a number of people looking at it. the closest equivalent is govern a haley barbour of mississippi. he was a political director in the reagan white house. he was active in washington in different ways. he and mitch daniels have left washington and have become governors of their states and have developed wreckers that there will take on the campaign -- that they will take on the

campaign trail. host: and another viewer says that john thune is another possibility. guest: it seems that he is creeping toward the starting gate. he has a lot of attitudes. he looks like he could be a potentially strong candidate. i think there are questions about john thune as there are about all of these candidates. all of us have got around to talk to people are looking at this race or strategists who are involved in it. it is a notion that for every candidate's strand, there seems to be a weakness. you can go down the list and say so and so has this problem and so when so has that problem.

everybody looking at this has concluded that this race may be as wide open as any we have seen on the republican side for a long time. host: we have a caller on our line for democrats. caller: thank you. i hope i will be able to finish my point. thank you for c-span. i think i will become addicted to it. president obama is a centrist. when his liberal friends assumed he would be more on their side, they were shocked that he ran the harvard law review from the metal. as we talk about these he ran the harvard law review from the middle. president obama will be the next president. i wish you would look at mitt romney and proposition 8 in california and who was behind

it. there is a movie called "to the mormon prophecy." host: will religion be an issue for mitt romney? guest: possibly. it was a factor in his campaign the last time. he gave a speech in december of 2007 in which he tried to put the issue to the side. i do not think it ever got a full airing. it is a potential issue. we do not know how serious it will be. there are other issues he has got to deal with beyond that. we may see that play out in some of the states with evangelicals questioning the govern a's religion. governor's religion.

guest: john bolton is one of the most provocative conservatives out there. he as a prolific writer. almost everything he writes has a considerable amount of edge to it. he has been tough on president obama on foreign policy. if he gets into the race, i think you would have to say realistically that he is a long shot for the nomination having never run for any nomination before and not having any obvious financial network to be able to attack -- be able to tap into. he will add something to the debate. host: we have someone on the republican line. good morning. caller: i have a couple of questions.

i picked up a lot of newspapers and a lot of different media. i am a conservative and i what fox, i slide over here and do it as nbc. i read your paper and "the wall street journal" and usa today. does this feel at all to you that the liberal media is not accepting what happened in the last election? in my opinion, if you look at the statistics as far as who turned out within the republican party, what age groups turned out, compared to democrats, it looks like our side of this thing is more energized. i can tell you i almost feel more energy now that i felt in 2008 when we were running with mccain and sarah palin. with the primaries and the

debates, and everything lost its luster on the republican side after a while. guest: there is no question that there is more energy within the republican party then there is in the democratic party now. we saw that play out in the midterm elections. the question is what will the electorate look like in 2012 as opposed to 2010 and 2008? from the history of presidential elections, the electorate is bigger and broader in a presidential race than it is in the midterms. the party that is most in its size in the midterms tends to do best. i do not think there are any illusions in the media as to what happened in november. when one party wins 63 house seats, the most since 1938, the outcome of the election is obvious and clear and the message is clear.

in comparison to some previous elections, this was a protest election born out of the anger and dissatisfaction we see in the country. it was not a wholehearted endorsement of the republican party. the republicans now have a great opportunity if they can show here on capitol hill and in the states that they have answers to the problems people are worried about, they will be in much better shape than in 2012 with the possibility of winning. incumbent presidents are difficult to defeat. that is the history of it. whether it is a republican president or a democratic president. if you are an incumbent president, you tend to be the favorite. at this point, that is what president obama is counting on and hoping for. he has a lot of work to do to make that happen, particularly

because every forecast we see for the economy shows a slow recovery and a slow decline in unemployment. he may be facing reelection in an economy where the unemployment rate is above 8% or still above 8%. that is a tough environment to run in. host: there has been speculation that he could face a primary challenge like president carter in 1980. what are the kinds? --what are the odds. ? >> i think they are low. if he gets farther away from the base, they could increase. if you look at our roast meat -- all or most recent poll, the

agreement that he cut with republicans on the tax bill had widespread report across -- widespread support among a wide range of groups. they did not like parts of it, but they like the compromise. his government -- his compromise on afghanistan is upside down. there are significantly more afghanistan -- there are significantly more liberals who think the war in afghanistan is not worth fighting. that is not a top line issue right now. at this point, i would say that the odds are low that he would face a primary challenge, but it is not under it -- not out of the question. host: fox news out with its own survey this weekend. two opinion dynamics.

jay is joining us on the independent line. caller: can you hear me? guest: yes. caller: i have a question for you about medical care. i have decided to ask a different question instead. someone once said that when it comes to politics, some reach a point where they have to betray their country or the electorate. do you think we are going to elect a politician who betrays the electorate and not his country? hosall of these businesses are closed up and everybody expects the fed to help them out. we need to help out each other. where is our camaraderie in this country? i would like to know your personal opinion, dan balz.

guest: it is a great question, jay. you are getting at the longing, the yearning, and the desire in this country for a genuine leadership and leadership that is able to bring the country together. as i said earlier, it is difficult in this environment for any politician to be able to do that. that is for reasons of ideological divisions and because of the general nature of the political environment and public opinion today. i think your point is an important one. how do you get beyond the pettiness of some of the debates going on? three-point scoring that many believe is the primary motivator of many politicians in washington.

we need to get to policies that both sides can agree on. nobody has the magic answer for how to revive this economy. we are in something more than the classic cyclical up and down or down and up. we are going through some huge structural changes in this economy because of globalization and other things. what we went through in 2008 brought all of that to a head. a lot of different things have been tried. there will be some new things tried with this new congress and the present. there is no guarantee those are going to make an instant or significant difference. the president and the politicians preached patience. i think that when they are lacking real solutions, that is what they hope for. republicans are impatient for good reasons.

[captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute] host: your newspaper this morning called it shocking and reyer, the senate voted on-- -- shocking and rare, the senate vote on the tax cuts. the president addressed it yesterday in his weekly address. >> this is about the safety and security of america. that is why this treaty is supported by president bill clinton and president george w. bush. it is supported by our nato allies and the leadership of the united states military. the vice chairman of the joint chiefs of staff said this week that the military needs this

treaty and they need it badly. that is why every president since ronald reagan has pursued a tree like the s.t.a.r.t. treaty. everyone -- pursued a treaty like the s.t.a.r.t. treaty. host: the s.t.a.r.t. treaty is the next big issue on the agenda. guest: it looks like the president is likely to win that fight. he will have been successful and productive in a lame-duck session. he wanted to get an agreement on the british-era tax cuts. he was able to do that. -- on the bush-era tax cut. he was able to do that. if he gets the start treaty, which was a significant priority of his or the lame duck -- for the lame duck session, he will be able to go on vacation.

host: to you have another book in you? guest: out there is another book. there is a good campaign coming up. it is probably good material for a book. host: thank you for coming back. guest: it is a pleasure to be here. host: the commerce clause. what is that and what impact will it have as the court takes issue with the health-care bill? we will have more on that later in the program. next, we will have a guest from the ctfc. and we will take your calls. we have cartoons from newspapers around the country.

"washington journal" continues. host: a veteran of washington, d.c. politics. this report has been delayed, why? guest: the whole process has been mismanaged. we had many months to do this report. we were supposed to get a draft of the report in april. we did not get in the draft until late november. the piece is about 450 printed pages. it is complex stuff. we, the republicans, have not to an opportunity with

review its -- an opportunity to review it. we have not seen the whole report except in the last few days. it makes it almost impossible for us to have a reply to the position that the majority is taking here. host: one of the many stories of what happened is that the competing narrative of the republicans and the democrats made it difficult to have bipartisanship on this. can there be bipartisanship on what happened on wall street or are there competing narrative? guest: there are competing narratives. these are important questions because they determine how the government will react to things in the future or whether there will be another financial crisis in edt. this is not the sort of thing

you can easily proposed. we have not had the opportunity to come together on an agreement. we did not actually discuss what worthy causes of the financial statement until things are right this year. we did not start of the commission's activity this year. it has been a difficult process for the republicans because we have not had an opportunity to have the kind of input one would have expected we would have as members of this commission. host: why was the commission set up and beat republican members of the commission? guest: the the former chair of the house ways and means commission, a white house official who was the head of the present's national economic council -- of the president's

national economic council and the former head of the congressional budget office. the republicans are well skilled in the washington event. they understand economics and they could have been major participants in the preparation of this report. unfortunately, i do not think we had the opportunity to do that. when it came time in late november for us to hear about when we were going to start seeing this report, we would told -- we were told it would not be ready in time for the deadline, which was december 13. that was the statutory deadline. the commission was supposed to be finished by then. we worked to that deadline. then we were told it would not be ready at that point. we were inclined to vote against

it and to oppose the closing down -- to oppose continuing the investigation. we wanted to close it down and get the report out. that is one of the reasons why we developed this statement that we put out. we put it out on december 15. that is recognizing the date that the commission was supposed to report under the statute. this has provoked a lot of controversy. there is going to be a lot of controversy about what happened in the financial crisis and why it happened. unfortunately, there is a tremendous amount of commentary coming out of the internet and being "the new york times" that is beginning to show the depth of the feelings on both sides.

that is unfortunate. what we need in this country is a serious discussion of why this financial crisis occurred so that we can assure ourselves that it will not happen again. host: one at the map of what happened was the passage of the dodd-frank bill -- what aftermath -- one aftermath of what happened was the passage of the dodd-frank bill. guest: i think of the dodd-frank bill as obamacare for the financial industry. it does about the same thing as obamacare did for the health- insurance industry. it takes control of the industry entirely. this is a massive piece of legislation that takes full control of the major financial institutions. these are not just banks we are talking about. we are talking about investment firms, securities firms, holding

companies of all kinds. they are all subject to full regulation under this bill by the federal reserve. in other words, all of the effect of regulation, which tend to be negative, they raise costs, they tend to suppress an ovation. all of those effects will occur with this regulatory structure that has been placed over the entire financial industry. that is why this issue of what caused the financial crisis is so important. this bill was presented as a way of preventing the next financial crisis. it is based on an analysis of what caused the financial crisis. that analysis has not yet been done by the financial crisis inquiry commission. we have not reported yet. congress passed the bill that

purported to respond to the causes of the financial crisis. the republicans did not think -- i am sure democrats on the commission thought and will present information that they will say we will get to your phone calls in a moment. we talked about this issue. our guest said it was the banks rather than fannie mae and freddie mac that were partly responsible for the financial crisis. here is your comments. most >> of the bad loans were originated as a result of what we call private label securitization which originally had nothing to do with fannie mae and freddie mac. these were securities that banks

and investment banks were issuing and they had close relationships with predatory lenders and lenders who were engaged in fraudulent activities in putting out laws. those are the worst of the laws. fannie mae and freddie mac have been unfairly labeled as a cause of this problem. host: your reaction to her comments? guest: is one of the things that the commission could have cleared up. she does not have the facts. no one really had the facts. when our report comes out, there will be enlightenment about this. there has been a lot of talk about fannie mae and freddie mac. the situation as i see it is that there was before the financial crisis began, 27 million subprime and other high- risk loans and assistance. of that number, 19 million were

either the responsibility of fannie mae and freddie mac or fha and other government agencies or banks that made many of these loans under the community reinvestment act. 19 million which is about 2/3 of the total bad loans in the financial system where the responsibility of the government. fannie mae is not the only responsible party. it is actually part of a government housing policy to increase home ownership which is a perfectly good idea. the trouble is, they did it by forcing private entities and fannie mae and freddie mac or private entities though they were backed by the government and banks under this community reinvestment act, to make laws that would -- that they would not have otherwise made. that is really the underlying cause of why we had a financial crisis.

when the facts come out, many people may not change their minds because of politics and partisanship but many people will find they have to explain why it was that the government created a system in which we had so many bad loans in our economy. when those loans defaulted, they caused banks and others, not only the united states but around the world, the were holding these mortgages or the securities based on these mortgages. host: there are 10 members of the financial crisis in korea. our guest is one of four republican members. he is a veteran washington, d.c. and works for the former governor and vice president nelson rockefeller. he was the chief counsel in the ronald reagan white house and was in the treasury department in the first four years of the ronald reagan administration. he is the author of four books.

our first call is from middletown, new york, good morning. caller: i will hang on if you allow me to respond to his response. the underlying cause, i just heard mentioned. if you are going to do your job well, you will have to deal with and expose the lobbyists that are behind the big banks, the medium-sized banks and the way they persuade and sway our politicians to do what they want to do to get legislation the way they want it, to make themselves more profitable and make themselves very risky institutions. if you are going to do your job, you have to deal with expos and the lobbyists, naming names --

exposing the lobbyists, naming names, campaign contributions, to accept those contributions, both parties. you have your job with liquidity and derivatives and credit defaults swaps. some of the experts don't understand these. i am a saber. i have my money in cd's i have saved a lot of money in my day. i had a bank that went belly up and the s -- fdic was there. there was no reason for me to have to go through the steps of experiencing a bank to go that way. i will wait for your response and allow me to respond. guest: first of all, let me respond to the question about the lobbyists. they take tremendous hits. i may have been in washington too long, but there is a real function for people who lobby congress. what congress is dealing with is

exceedingly complicated. we want to be as sure as we can that when decisions are made and laws are passed, at least all of the organizations, people who will be affected adversely by those laws have had their views fully understood by the congress people, the house members and senators, who are voting. i hear a lot about lobbyists being troubling and there are many lobbyists who have caused a lot of controversy because of what they did and some of it was not entirely honest. there is real value in having people who are representing others and telling congress how things would actually work. as to the question of whether the lobbyists are excessively influencing the people in

congress, senators and congressman, i think we have pressures on all sides coming in. there is no indication that i have that the banking industry or the financial industry is any more influential than any other industry. in fact, if you look at the dodd-frank act, you can see that the banking industry lost huge amounts of business and profits because of what the dodd-frank act did. we can talk later perhaps. i hope will have the opportunity to say how it affected the banking industry but if you think the banking industry was influential, you can't explain the dodd-frank act. host: do you have a quick comment? caller: that was a very general response about the nature of lobbying. phil gramm with his shenanigans

during the clinton administration, he's not in the legislation at the end of the clinton administration which he was unable to for the months and years prior that enabled the banks, the legislation that enabled the banks to deregulate. with a man like you at the helm, we are in a lot of trouble. host: a quick comment? guest: i think he is talking about the pact signed by president clinton and endorsed by president kate -- clinton, endorsed by the secretary of the treasury, robert rubin. i think there is a lot of misinformation there. there is information about this that everyone should read host: this question came from twitter.

can you ask why goldman sachs is still open and no banker is in prison? guest: i can't explain that except that goldman sachs has been investigated by the sec and they are currently probably being investigated by the justice department. it has never been determined that they did anything that was of a criminal nature. that is also true, it seems to me, of the bankers. i know many people are angry about what happened but that does not mean that there was a crime here. we should not be talking in those terms, either. we are talking about people who were doing what they thought was going to be good for their firms and their shareholders. at the shareholders it may have turned out not to be so. that is because many of the experts in the field did not really understand the kind of things that were happening in

the mortgage market. that, i hope, will become clearer when the report of the financial crisis inquiry commission comes out and there is associated data that i hope i will be supplying which will show the complexity of this issue. host: our guest is a member of that commission. republican line from detroit, good morning. caller: thank you for taking questions. i find it a little odd when i call that i presume to have close to the knowledge to form a question regarding such matters. i wanted to ask and attach myself to the last three callers. robert rubin back in 1990 s sought a wfgbh -- i saw a wgbh

documentary where he underestimated the capacity of banks, the weakness of the financial system. it ended up in a disaster. it was wonderful to hear somebody apologize and admit an error. i want to say that the country has lost sight of the red flag across the board. in all sorts of matters. why is it that fannie mae and freddie mac, i believe chris cox was the chairman and had to report periodically before the congress under oath, i believe -- clearly, they did not tell the truth on numerous occasions. guest: i can't say that i know any specific case in which fannie mae and freddie mac did not tell the truth under oath. there are instances which i think will be exposed in the

report of the financial crisis inquiry commission where they did not fully describe the risks of that they were taking when they filed with the securities and exchange commission. chris cox was chair of the securities and exchange commission. when they filed, they did not fully disclose the risks they were taking. that was one of the reasons why we had this financial crisis, in my view. many experts in the field looking at the disclosures that were being made by fannie mae and freddie mac did not realize that they were taking risks on subprime loans to the degree they did. they ended up holding a huge number of these subprime loans. when the great housing bauble that we had began to deflate in 2007, those loans began to fail in unprecedented numbers. it was the failure of those loans that brought down all of

these financial companies which is what we think of as the great financial crisis of 2008. host: is their failure in the oversight by the bush administration to make sure these faulty loans did not go through? guest: absolutely, all of the issues with fannie mae and freddie mac requiring them to acquire these affordable housing loans which were in fact subprime and other high-risk loans began in the clinton administration, was pressed by hud through the clinton administration and writer the bush administration right through to the end. both these administrations were responsible for doing this. i hope we can get away from the partisanship associated with this. we should be talking about what is the appropriate government policy here and whether the government was too much involved in trying to direct funds into mortgages and

housing under a social policy rather than an economic policy. host: who chairs the committee -- commission? guest: philip antilles. gelides. he was in the commercial land development business and then he ran for governor against governor schwarzenegger in california but was defeated in the last election host: lafayette, indiana, good morning. caller: it is my understanding that social security will pay 2% less which will generate a lot of consumer spending. my question is, they did away with civil service in 1983 which is due to end in 2013. there are still many people working under civil service.

instead of paying 7% into that fund, will they be allowed to pay 5% so they will have some consumer spending money? guest: this is not an area that i studied it particularly. i think you were referring to the amount being paid into social security is in the recent tax bill were one of the stimulus to the features is that there is a reduction in the tax that is paid by employees into the social security fund. actually, i thought it would have been a bit -- would have been better to reduce the number that was paid by employers as well as employees because that employers would be more inclined to hire people. there is a huge wedge. there is the cost of hiring someone. if we can make that wedge, that caused lower, it is more likely someone will employ a person. that is really what we want.

we will -- we need much more employment in this country. host: car run a, calif., democrats line, good morning. caller: merry christmas. when the social security was established, it it was not an entitlement. it is money that people pay into it. i realize it has $2 trillion and they would like to get into their coffers. the american people have a trust fund. that should be the question. how can americans and expect anything to change when somebody warned about the system collapse repeatedly and was blackballed? thank you and god bless america.

host: let me ask you something more specific. you and others keep writing about systemic risk. what is that and how did that lead to the problems we faced in 2008? it guest: in general, it is the idea that the failure of one institution could spread to other institutions. if a bank fails, the money that it owes to other banks and other institutions would not be available. that would cause those institutions to fail and that would create a kind of contagion throughout the economy. that is the classic definition of systemic risk. in my view, that is not what happened in the financial crisis at all. what we had was something closer to what you would call a common schock. that as many of the institutions were holding the same assets and when that asset class failed and we are talking about

mortgages, when those mortgages failed, many of them work week and poor quality mortgages. when they failed, that caused all financial institutions at the same time to look very weak and be in danger of failing. it was the danger of failing that caused a huge panic among investors, counterparties, lenders, and others and people stopped lending to one another because they were not sure which of these institutions was safe and which was not. host: home prices are either stable, low or depressed. interest rates are still at or below 5%. how long will this last? what will move us out of this finance -- housing crisis? guest: it is difficult to tell. housing prices are continuing to decline. many economists believe we have not seen the bottom in

housing yet. the government has prevented us from reaching the bottom. we will reach the bottom when houses -- housing prices stop biting and many other people come in and start buying. they know they can get a good buy on a house. if they think housing prices will continue to fall, they will not go -- a woman by for the feeling that they will lose money on the purchase that will make. the best answer is to allow the market to clear by allowing prices to fall to the bottom, then people will come in as buyers because there are plenty of people who want to be buyers, and we will start to see a recovery. host: among your books is a book about ronald reagan. your also the co-author of nationalizing mortgage risk. tennessee, good morning. caller: i disagree with you

about goldman sachs. i understand they created the mortgage swaps and they bet against them failing and that is how they would make money. i blame the hedge funds and wall street for this crisis. to much speculation going on and the banks tried their best to do some things. i heard that 59 bankers were indicted. i don't know if that is true or not. what do you think? guest: i have not heard that number. i am not sure i have heard of any indictments of bank, per se. there was a major civil suit brought by the securities and exchange commission against goldman sachs that was openly settled without goldman sachs admitting or denying any responsibility. what happened there is exceedingly complicated. goldman sachs in that particular

case took the position opposite of the one i think you were suggesting. they were saying that these would be good mortgages. they were not betting against the mortgages. however, the party of the other side did by credit defaults what that enable them to bet against the mortgages. that turned out to be not a good deal host: one of our viewers asks how we can click bubble when the fed is still printing money and keeping interest rates low? > guest: this will be difficult. the fed is trying to help the economy recover and there are a number of major problems here. one of them that is getting increasing attention in washington is whether the fed has a conflict of interest here. they have been given two responsibilities. one is to create and maintain a stable currency and the other is

to assure employment. and reduction in unemployment. though past two different roles are in conflict in a way because in order to improve the employment situation, they have to create, in effect, more money or keep money less tight so there is more spending, more opportunity for businesses to have credit. the danger of that is that in the future that can cause inflation which is opposite of a stable money supply. in this new congress, this new republican congress, there will be new attention paid to that issue. the other question you raise is whether what the fed is doing is a sensible policy. there is a lot of disagreement there as well as agreement. the disagreement comes from the

fact that many people believe they will be issuing too much money and that will eventually result in inflation. if we look at commodity prices and gold prices and the things that are usual indicators of a fear of inflation, we are beginning to see those indicators show that kind of fear. i think many scholars worry about what the fed has been a. doing. alan greenspan has been blamed at the time for keeping interest rates low at the beginning of the 2000's. he was afraid of deflationary and he was afraid that unemployment was too high. now, he is being criticized for that and ben bernanke is being praised for doing exactly the same thing right now. we will not know until well into the future whether this has been a sensible policy. host: one of the key oversight

players will be congressman ron paul will oversee the committee that oversees the treasury. guest: he will be more skeptical about the fed. the fed is a remarkable institution. there is a substantial argument, a good argument, i think -- and in fact boatpeople left in the right make this argument -- they say in their rear leg room -- regulatory responsibilities, in a major way caused a financial crisis but when congress can around to voting for what to do about the financial system and what kind of powers to hand out to the regulators in town, the fed got almost all of them and3 . it is remarkable the fed survives these things time after time.

host: our line for independence, good morning to caller: happy holidays, gentlemen. i can't abide what i consider these been coming from this gentleman. it shills for the banks. i am calling from ground zero, sarasota, fla., a fort myers. the headlines in the newspaper refused days ago -- foreclosures, new wave coming, more people lose their homes. the decimation in this area has been unbelievable in the last couple of years. i will not -- i have also read quite widely about how this was caused. i have read neutral observers. i have read several books. i read the major newspapers. no neutral observer that i have

read gives a huge amount except for the legislation passed in the late 1990's with the clinton administration and gramm bill -- but the overwhelming people i read it -- i have heard from mortgage barker's -- brokers in this area -- it was the big investment houses on wall street and the banks that were pushing these loans. it was because they would shop these things up and get the rating agencies to put aaa where did not belong and they would sell them around the world and get 6% or 7% and they could not get enough of these mortgages. when the brokerage houses were pushing these things and leverage up with insurance --

host: we also have a twitter saying why did the republican members of the commission issue a report that blames only the government. wasn't the market to blame as well? caller: let me leave you with a quote -- several months ago when the banks started raising credit card rates in the midst of this decimation that is going on, senator durbin said on national television, "there is not much we can do about this. the bank's own cost." us." guest: there is an awful lot of material to respond to. i think it is important that people wait on their judgments until they have seen the report of this commission. it is not only the majority report but whatever minority report there is. the facts are not fully known.

unfortunately, much of this material was never made public to the extent that was made public, it was not understood at the time. there is a substantial case here and i have tried to make it, that government was bought by air of many of these loans, these mortgages, that you are complaining about which are failing even to debris the reason these mortgages were made because the government was standing there buying them. the mortgage brokers and the other originators had plenty of reason to make these loans. the loans would go to the government and was not only the government. i want to make that clear. the private sector was doing this, too but to a lesser degree. the companies like countrywide were buying these loans and their packaging them and selling them privately to investor.

that was a minor portion. that was about 1/3 of the bad loans that were made. 2/3 were made by the government. unfortunately, it is not known now about the role of the government in making sure these things happened. when the report is out, maybe there will be more information and some of those neutral observers that you're talking about will change their minds. host: 1 more email -- the country continues to live with the fallout from a financial crisis. it is clear you don't agree with whatever the report will say. can you let us know what actually did cause the financial crisis? guest: i have tried in this discussion and in what i have written that will eventually be part of the report of the commission to say that we have to look at who was holding the bad mortgages when the crisis began?

the most important question that the commission should be dealing with, i am not sure they ultimately will, but the most important question is -- what caused the decline in underwriting standards that we had in this country? we used to have a requirement that to buy a home, you had to have 10%-20% down payment, a job and in income and other debts had to be within come kind of limit. -- within some kind of limit. those standards deteriorated from 1992 until the financial crisis occurred in 2008. why did that happen? the reason i think it happened based of my research and some of the material i have seen with my work on the commission is that the government wanted those standards to decline because they wanted more people to be able to buy homes so they had to reduce the underwriting standards and so these people

would have credit. that, unfortunately, cause the creation of 19 million really bad and risky loans. the private sector did the same but to a much lesser extent they did 1/3 and the government did 2/3. it was the collapse of the week mortgages that ultimately caused a financial crisis. host: on -- from twitter -- we need to return to times when banks needed to hold on to mortgages so they would be more careful guest: that's true, but the banking system is not large enough to finance all the mortgages in the united states. we have a much bigger finance issue with mortgages than simply the banks. the banks take deposits, but the number of deposits that commit to the banks in the united states is too small to support

all of the mortgages americans need for their homes. we have to have some sort of supplemental system. we have been using a system called securitization where mortgages are packaged and sold to investors a brown the world. that is a good system. it works very well for car loans and other kinds of financial instruments. it should also work for mortgages. in this case, it did not. one of the things, in the case of mortgages, it did not. we have to look more carefully at why the underwriting standards for these mortgages declined so substantially from a beginning of 1992 when a new affordable housing requirements were placed on fannie mae and freddie mac up until 2008. my own view based on my work is to say that it happened simply because the government wanted

those standards to decline in order to provide mortgage credit to a larger number of citizens. host: our last call comes to us from nashville, tenn., democrats' loss caller: 9. line. the republican line is to protect the banks. they will now find a reason to regulate. -- they will never find a reason to regulate. clinton came to the middle which is another term for being a slave. guest: if we are going to make charges like this to one another, we will never settle these issues. the republicans do not always oppose regulation. i think the republicans oppose regulation went adds costs, reduces innovation, and change.

in my case and the case of many other people, we need some regulation in the mortgage area. we have a market failure there in the sense that, exactly what i was just talking about, underwriting standards sestet -- declined substantially. we had standards that required mortgages to be the way they were before 1992, that is a down payment, a substantial down payment and the person taking out the mortgage have to have a job and income, then mortgages would be much better assets and would not have had the kind of collapse we had in the financial crisis in 2008. host: a member of the financial crisis inquiry committee, thank you for your time. have a nice holiday the lame- duck session continues on capitol hill and the senate will be in this afternoon and the

house will return on tuesday. there will be a continuing resolution that will keep the federal government in operation through the holiday and into next year. the next big issue in the senate is the start treaty where you can see live coverage beginning this afternoon on c-span 2. coming up -- coming up a couple of minutes, the legality of the health care bill signed into obama this past march. we sought a test in a virginia court where a judge ruled that one aspect of the ruling is illegal. we will have more on that in a couple of minutes but first, some of the latest issues and the sunday morning programs. >> topics on today's sunday tv talk shows include the afghanistan and pakistan strategy review, the gop agenda in the 112 congress, and a look back at 2010 and what is ahead in the coming new year. we begin at noon with meet the. press

they will have biased -- vice president joe biden. also the mayor of newark, new jersey and republican strategist mark mckinnon. christianne, and pour will have as our guest senators john kerry and richard lugar. on fox news sunday, guests include senate majority whip dick durbin and senator john kyl, the senate majority whip. also bob mcdonnell. at 3:00 p.m., state of the union. they will have senate majority leader mitch mcconnell and the president of the national association of letter carriers. at 4:00 p.m., is face the nation from cbs. the guests include armed services committee chairman carl levin and republican senator lindsey graham. also republican senator jeff

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vehicles. this is washington your way, the cspan networks available in more than 1 million homes, created by cable and provided as a public service. "washington journal" continues. host: our topic is the legality of the health care bill. we are joined by simon lazarus. thank you for being with us. and randy barnett. you were in pensacola florida for a 20-state class-action lawsuit against the health care bill. the nexus of this is the commerce clause of" the congress shall have the power to regulate among several states." that was the argument that was used in virginia to rule against the aspect of health care law. can you explain? guest: the congress shall have

power to regulate among several states and with the indian tribes. one thing that john marshall said in his argument about the commerce clause with that the enumeration of these three different commerce clauses implies that there is something that congress can't reach. the commerce clause that you read has its limits. this case is about if there are limits left of the commerce clause. host: going back to when the bill was passed, when people say one vote does not matter, scott brown became the center for the massachusetts and the language in the health care bill changed to get support that was not there originally. can you comment on that? guest: i think that is exactly correct. the senate bill which became the bulk of the final statute was passed at the end of 2009. that was before scott brown was

elected. it was not altered in order to pass. host: let me ask you about taxes obverses penalty which became part of the language in the debate guest:. it was always under stood by constitutional experts that the individual mandate that was a requirement that most americans who can afford could carry health insurance could be justified as an exercise of the power of congress to regulate interstate commerce. it could also be justified as an exercise of the power of congress to raise money and spend it or tax and spend for the general welfare. perhaps those arguments would fell but it was understood that both of those arguments were basics for the power parity, -- the commerce clause got a great deal more general attention.

that is how the notion that somehow the administration had shifted its emphasis. it is not really true. host: will this case go to the u.s. supreme court? guest: if any court of appeals strikes the law down, it is guaranteed to go to the supreme court. they will hear any law where a federal law is struck down. it is always a discretion but the court may decide to let it sit in the court of appeal. i think they will feel an obligation to take up this case. blood i don't think a red of american supreme court justice will miss an opportunity to rule on this case. host: 80 judge could be anthony kennedy, appointed by ronald reagan's guest:. he could be a key judge but there are key justices. the strongest single opinion in

support of the constitutionality of the individual mandate, i would say, is an opinion written in 2005 by justice antonin scalia. he came down very hard on how broad the government's powers are to use the commerce clause and the necessary improper clause 2 support. legislation. i think justice khalil will have to twist himself into a pretzel -- justice scalia will have to twist itself into a pretzel. host: does congress have the ability and authority to legislate individual mandates guest: ? ? guest: let me go back to the scott brown think it i don't think the language was changed but congress had a choice to

exercise tax power and enacts a tax and spending scheme or would they exercise regulatory powers. the senate chose to wreck -- exercise its regulatory powers because it wanted to avoid the charge it was raising taxes. host: with scott brown, a point was that the house had to pass the senate version and that they changed it would go back to the senate because he was in the u.s. senate and i would have delayed the process further. guest: what they did not realize when they started having second thoughts about their power and wanted to assert the tax power and thought they could do that in reconciliation between the house and senate, there were no longer able to do that after scott brown got elected and there were stuck with the commerce clause-based senate bill. host: the issue of individual mandate that congress can legislate? guest: it is my view that this

is outside the power of congress to regulate commerce that takes place between one state or another. it is unprecedented in the history of the country. congress has never used it, is clause power to make citizens buy something from a private company. anything that has not been before lacks precedent for doing it now. caller: good morning, all. i would like to read a quote and get some feedback. i think it pertains to all the health care and everything involved in what is going on today. let me see if you can guess who wrote it and when. " we, , bankers must proceed with caution and protect the lower order of people who have

restless commotion. we will show a policy of apparently yielding to the popular until our plans are consummated. we can declare our designs without fear of that organization -- organized resistance. the courts must be called into our aid and debts must be collected and bonds and mortgages foreclosed as rapidly as possible." host: can you get to the essence of your questionnaire. caller:? guess who wrote this and when. everything involved in our government has become a corporation. we have lost our constitution. guest: what is the answer and we will have our two guests respond. i have no idea the water that quote.

there was a time in our history 100 years ago when the supreme court was very consciously an activist court on the side of business and on the side of finding things in the constitution that would enable it to declare unconstitutional economic and social regulatory programs very much like the health care bill before us. in my view, what we are looking at now, is a watershed moment when a newly conservative court will face the question about whether it will revert to that era and that type of opposition to programs that democratically- elected officials act. having said that, i have no idea who made that quote. host: who is the person caller:? it was charles lindbergh, a senior who was a banker and it was a congressional speech done

between 1907-1917. host: thank you for the call. [laughter] if congress demanded my choices for spending, where will then sticthat end? guest: this is such a watershed. if the courts said that congress cannot pass economic mandates or make you buy a certain service, there is only one lot in this history of country that would be struck down because it is the affordable care act. they have only tried to do this once before. there are no other consequences of the congress never having to do what they have not done before. we need to draw a line and this may be as good a place as any but i don't think it will have radical implications. guest: that is a point on which we disagree. is involved in the

litigation and needs to convince the court that the individual mandate and health reform law or unconstitutional. that is not a big step that is consistent with existing law. that is what litigators' always sorandy must know that is not entirely true. i believe very strongly. only one lot would be struck down -- only one lot would be struck down -- a law in one would be struck down. -- only one law would be struck down. what is important to understand

is the opponents of health reform have tried to make the requirement that most americans carry health insurance as some kind of radical imposition of a sort that has never been imposed before is simply not true. it is functional in no different from requiring people to pay medicare taxes. medicare is a government-run insurance program. we have to have a large insurance pool of contributions in order to make sure the funds are available to pay for the treatment of people who are really sick. with the health reform law, congress decided not to create a government-run single payer system but instead to build on the existing mixed system and retain the system of private insurance. in order to replicate the necessity to ensure there is an adequate pool of funds, congress

imposed the requirement that most people carry insurance. it is just like the system that we enacted in massachusetts in 2006 which also has an individual responsibility requirement. it is not that unprecedented. with respect to what will be overturned, when these lawsuits were filed against the health reform law, virtually every expert perhaps with the exception of himself and a few others including highly respected conservative experts, said the lawsuit had no chance because the theory's they were pounding were inconsistent with existing interpretations of the commerce clause and the tax and spend power. what these lawsuits are are an effort to change the constitution, to change existing interpretations, to roll back

the constitution to what it was before the 1930's when the court put congress in handcuffs and kept it from an active what we would consider critical social programs like social security, environmental laws, and so forth. some of the possible litigation like attorney general cuccinelli of the virginia are very open about this. others have been more surgical in the way they approach this. host: simon lazarus is with the national seniors center. the roberts court has already sided with citizens united. they will use protest corporate ideology, not constitution. south portland, maine, good morning. we will go next to south bend,

indiana. caller: i have a quick question. when some people by car insurance, they don't buy the whole kit and caboodle. they buy a small amount to get them by. does this health-care law -- can somebody by a minimum amount of health care in order to get by? do you understand what i am saying-guest ng? guest: this healthcare plan makes you buy a cadillac health care plan. this is the reason why companies like mcdonald's are getting waivers because of they had to provide their low income workers with the fall an array of benefits that the law mandates, they will deny workers health care benefits that all

and they will be forced into a government program. unfortunately, the law will restrict the amount of choices. that is not something that is under- challenged in the courts today. host: go ahead, caller. caller: when they pass all like this, is pretty unpopular. it is not working out well and they are spending all this time in the court system. why can't they just go "oops" and try it again? guest: we should recall that although there is opposition, majority opposition to the overall idea of the health care reform law, individual parts of the law are very popular. in particular, parts such as the

protection that will be afforded to people who have pre-existing medical conditions. if you're not under a group health plan and you have a pre- existing condition like breast cancer or prostate cancer or diabetes, you get turned down by insurers. you have nowhere to turn. this law will change that. that is very popular. i should point out that it is that portable law -- it is that part of the law that is supported directly by the individual mandate randy and his allies are trying to undo. congress has support from state governments and from experts. unless everyone who can afford it is in the pool and making a contribution, we cannot fulfil our goal of giving access to

affordable health care for people with pre-existing conditions and that is very popular. host: you're not compelled to pay the health care, just the panel did. penalty.the panel to gues guest: i am not involved in the lawsuit. i have a view that this is an unconstitutional claim to power by congress. as a constitutional law professor and a citizen, i am concerned about this. simon is concerned about the health care and welfare of the people. i think we are on equal footing. guest: i did not mean to imply it -- guest: back to this question --

the congress is free to enact a tax and spending scheme and that's what medicare is. if medicare is constitutional than medicare forever was constitutional. they chose not to do that. there is a constraint on congress when they choose to an tax power. they changed their theory. that gets around the only constraint on the tax power that is currently recognized by the supreme court. host: if the federal government must tell me that -- tells me that i must buy a product, what limits remain on the government? guest: i would be happy to add to that. and those with whom he agrees have done a good job of convincing many people that congress supples the requirement that we carry health insurance,

the next thing it will be doing is requiring us to eat broccoli and some others don't like that so that is frightening. with all due respect, i think that is a proper m again theyth myth like the one about the death panels. what randy is saying is there is no limiting principle. if congress can make require -- require people to carry insurance, what can it do? there are a couple of good answers. the limiting principle was was very well articulated by chief justice william rehnquist, a very conservative chief justice in one of the important federalism cases.

that was in the lopez case where he said we have to distinguish between that which is truly national and that which is truly local which is what the framers had in mind when they adopted a constitution. that is a general point but it is perfectly sound. nothing could be more truly national than regulating health insurance in the public interest. the more specific point is that the health insurance market is a unique market. it is different from every other market. it is different in a number of respects. this makes it no president has a number of policy or as a matter of constitutional law or some analogous mandatory purchase requirement. i'll want to single out one of the unique features for simplicity. hospitals, health providers are required by federal law and many state laws to provide free

treatment for people who come in off the streets and can't pay for it. people who sell broccoli and grocery stores are not subject to any such requirement. they do not have to sell -- veteran have to give their products away. neither do car dealers. once society has said that we will assure you that you will get a decent treatment and we will pay for it, when those people come to the emergency room, someone will pay for that. congress determined that the head to individual family premiums per year to pay for uninsured people is over $1,000 per family. the opponents of the mandate are saying that congress does not have the power to fix that problem. to reach that conclusion, you will have to dumb down the

constitution and roll back to another time and that is a radical change which most people will not agree with. host: simon lazarus ort in the carter white house and randy barnett who is a lecturer at georgetown university. chris in alabama says the mandate is set to fail and it will be replaced with a medicare-based public auction. that is broad of view. let's go to akron, ohio, good morning. caller: i think i heard the answer to my question already. i was called -- i was calling about the on constitutionality of the current practice of people who could be paying money for their own health care but instead they wait until they get sick and go to hospital and get their treatment and it is not free care. the doctors may feel like they are fulfilling their a socratic both but then they said that

cost onto my health insurance costs. guest: what you have heard so far is the argument that congress can make you deliver services to the port or people who can't afford to pay it or they can make a private company do that, they can also make the american taxpayer pay money directly to those private companies to compensate them for it and that is not a scene that has been done before. when the government has services and people can afford it and those services are being provided and paid for by the general public, we pay for those through taxes. there would be nothing remarkable about that. what is remarkable about this bill is that for the first time in order to respond -- to deny responsibility for raising taxes, they decided to have people transfer their money directly to private companies. that seems to be a very pro-

corporate view. it was a way to get the insurance companies to go along with this because they would get all these customers. guest: you've mischaracterized what the mandate does. the mandate requires people to carry insurance. this is not taking money out of the pockets of the majority of taxpayers and putting it into the pockets of people who are poor. this is a protection for the majority of the people who are now paying insurance premiums. as the caller said, those premiums are covering the cost of uncompensated care for the uninsured. the mandate is denied -- designed to change that. it is a protection for the rest of us. host: a viewer asks what's the difference between the health care mandate verses state's right to require us to buy automobile insurance or home property insurance?

guest: it is a remarkable that when you engage in activity, government can regulate the way you do that s. if you decide you want to drive a car, you have to get a driver's license. you may have to get insurance. there would be no challenge if congress was regulating activity. justice scalia use the word activity 42 times and bad old opinion. -- in that opinion. congress is now seeking to exercise a new pair -- power they have never tried before. that is to require you. this relates to the medical marijuana case where one woman could not possess or cultivate marijuana. and the federal government's power to do that was up held. we lost that case 6-3 parity federal government never mandated that the woman grow marijuana. that was something that would be

so far-fetched that no one thought they had that power until 2010. host: is the georgetown professor a strict constitutionalist? guest: i believe in following the constitutional -- constitution accurately. we need to follow what the constitution says. equate whati don't the supreme court says in relation to the constitution. we are found in this legislation on what the supreme court says about the constitution, not what the constitution actually says. host: this is about the health care bill that the president signed into law in march. democrats' line, good morning. caller: my question was about the difference between a mandate to buy auto insurance and this

health care deal. i don't think he elaborated on the question quite clearly. i like to know exactly what he thinks the differences. is. at least fit 50 -- at least 50 other states require you have to have auto insurance. host: but it is an option because you don't have to have a car. guest: the government does not make you drive a car or own a car. if you drive a car on private property, you don't have to have car insurance for that either. you only have to have car insurance for the injuries you reflect on other people. you don't have to have insurance -- car insurance to protect yourself. states tell you all the time how you must engage in activity when

you engage in activity. they are telling you with this law that you must engage in this activity. guest: i think there is no real difference between the requirement that all of us have to have car insurance and this requirement. you have car insurance, it is mandated because it is a protection for other people. if you have an accident, the state wants to make sure that other people are protected against loss. that is the same principal operating here with the individual mandate. the fact that you have to decide to want to drive, according to randy, you are required to carry insurance no matter what -- that is an artificial legalistic distinction of no significance and the real world. everybody knows that driving is not voluntary for almost all of

us. one has to have a car in order to survive in our society. it is not a choice in order to have a car you have to have insurance. that is a good idea very the mandate is also a good idea because one has to use the health care system. you don't know when it will be but at some point it will be. you don't know how much it will cost but it might cost hundreds of thousands or millions of dollars, much more than anyone can afford. the only way to pay for that is through insurance. if you don't have it, you'll end up pushing your costs off on other people. it is the same on car insurance. that is why i think it is a common-sense constitutionally justified requirement. host: simon lazarus is a graduate of yale law school and randy barnett is a harvard law graduate. v douglasille, georgia,

republican line. caller: i would like to ask the question -- why is it the administration wants to change everything including health care? why not just over all the care that we have? why did they just want to cause confusion all the time? guest: first of all, i think we should point out that this health reform program is not a change everything program. it is based on what we already have -- it is a build on what we have program. if we had to -- if we had a change of the program, it would have been a government-run system like medicare that would have extended medicare to the whole adult population. that would have been more of a change does everything program.

this is more of a centrist program that came from republicans and is modeled on the program in massachusetts that governor mitt romney enacted. host: wearing your legal hat, can you walk us through the steps that would lead to the supreme court taking on this case? when you think potentially it could happen? guest: i am watching the virginia lawsuit and the florida lawsuit. there will be a ruling in pensacola probably in the next six weeks. if the judge agrees with the judge in virginia that the mandate is unconstitutional, that will go to the court of appeal. the courts of appeal will have to decide. if any of them should say they should up all the challenge and the mandate is unconstitutional, the supreme court would almost

certainly take it one year later. you are looking at a supreme court case in about two years. guest: i agree with that. there are actually already two other district court decisions which are entitled to equal weight or lack of weight the decisions in virginia and florida. those two decisions, one of which is also in virginia and the other is in michigan, will go to the circuits that are there. both of these cases upheld the mandate. there are differences. one way or another, randy is correct, two years we will see the supreme court rule on this. guest: the circuit courts of appeal split and a rule two different things. the supreme court very likely is to take the case to resolve the

slippery when the circuit courts of appeals are in agreement, say if they said this was unconstitutional, the supreme court would defer to the courts of appeal and denied a petition to hear the case. they could do that. host: quick question from lake park, ga. a caller:? good morning. the point about uninsured people walk into the emergency room and getting free treatment. m at is ayth tha --t uihat isa myth. people pay more for services when you have no insurance that when you have insurance. guest: do you know about m thisthis myth?

guest: we fancy ourselves legal experts. we don't necessarily know about the details. neither of us feel enormously qualified to answer this. guest: we are in agreement about the limits to our knowledge. host: gentlemen, thank you for being with us. we will continue the conversation tomorrow morning. we get under way at 7:00 a.m. eastern time every day. stuart becker is the former homeland security secretary and the bush administration dealing with al-qaida and the potential threat we may face of a holiday season. also, the tax bill and what you can expect next year. that is tomorrow morning at 7:00 a.m. and the senate is back in session today during the noon

hour. the events of this past week as viewed from satire last night on nbc plaza"saturday night live." >> it is christmas eve in washington, a >> d.c. hi, i'm frosted the snowman. it is that time of year. christmas in washington, a d.c. with the new year comes new hope and if you go around the nation tonight, you will find many of those democrats dreaming about better headlines in 2011. i bet you would. ♪ [laughter]