[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> part of the defense bill president obama signed on friday includes new limits to transfer detainees out of gaunt no bay. also, a federal investigation about how they spent money has resulted in the formation of an independent community. the unemployment figures came out. the figures stand at 9.4%. our question for you this morning, what it means for you, that number. and give us a little context of your experience and the job market, what that figure means as far as overall unemployment

and what it means for the federal government going forward. here's how you can weigh in this morning on the jobless rate. the numbers are on the bottom of your screen. if you want to send us an e-mail, you can do so. and if you are familiar with twitter.com as many of you who follow us are, here's the breakdown or the specifics on the front page of the wall street journal.

that's the "wall street journal." here's another view of the jobless rate numbers from the pages of the financial times this morning. this is james policy writing along with robin harding. there's a couple of stories to put it into context. one of the things we want to do is your thoughts.

what it means to you what we want to get for the next 40 minutes or so. the numbers are on your screen. we've added a fourth line for those of you -- this is specifically if you found a job in the last year and you want to share about your experience in finding a job and how long you were out of work. if you want to weigh in on that for those who found a job in the last year, a special line 6280184. that's the 202 area code. so we will put those numbers up during the segment. again, you can also send us an e-mail and hit us up on twitter, too. ohio, republican line, is up first. marsha. go ahead.

caller: sons can't find jobs and haven't been able to find jobs for over a year now. and they're moving in my house and i can't find a job. so we're all really screwed, because we're only living in a one-bedroom trailer and it's really killing us. host: and is it unemployment keeping you afloat or how are you managing it? caller: unemployment. yeah. host: how many weeks have you been on so far? caller: my son's been on a year, i've been on a year. my other son's been on six months. it's hard to find anything. there's nothing. host: what did you do before you lost your job? [inaudible] host: and your sons, what did they do? caller: worked in a factory that we don't have no more. host: closed up? caller: yes. host: we appreciate the call

this morning and thanks for weighing in. again, we want to see what that unemployment figure means for you out there who view us. georgia, democrat's line. good morning. caller: good morning. host: tell us what you think about the 9.4% jobless rate caller: it means this country is going in a bipartisan fashion and i think the president is doing a good job by trying to bring democrats and republicans together for job growth in america. host: going forward, what does that mean then in the political sense? what does it mean for politicians as they work on these issues here in washington? what should it mean for them? caller: well, it means that the people of america were serious about the last election and that it means that republicans

and democrats need to work together in building this economy. host: you can weigh in again on twitter this morning if you want to, such as the one who identifies himself as boring file clerk has. mississippi, democrat's line, louisiana. good morning. caller: good morning. my thoughts on the jobless rate a year ago i was unemployed. i was unemployed at a plant in mississippi called con air. host: and what type of work did you do? you're going to have to stop listening to the tv and just keep talking. go ahead.

caller: i did aluminum extrusion for commercial buildings. host: what happened to your industry there? caller: it shut doun. host: so when it shut down, how long were you out of work some caller: i was out of work for a year. host: what do you do now? caller: now i am a teacher. host: how did you make that transition from working in the industry to being a teacher? caller: ok. i took up the -- at the job center we went there and i applied for schooling. and they paid for the schooling and now it's great. i think the unemployment rate will boost if they give president obama a chance so everything will be just fine, if everybody can work together in congress. host: washington for the line that we set about for those who found work. vince, go ahead. caller: yeah.

first and foremost i'd like to say i'm a registered independent and i -- my background has been in real estate and i can tell you that just like most professions it seems like 20% of the people do 80% of the business which is a good thing. however i just seem to notice that the business climate is for the most part at the corporate level, whether it's small business, big corporations, the management level, they're counting every penny and it's not a very favorable environment out there, especially in my industry. i realize that at one point a couple years ago i needed to go to work for myself. so people just need to get informed themselves and realize that government dependence is not the direction that most people should be taking their

life. and to be self-sufficient and self-sustaining and saving for a rainy day and living within your means are golden rules, in my opinion. host: so as i understand it, do you still sell real estate sor do you do something else completely? caller: i got out of it. too much of a roller coaster ride. so i branched out and started my own business, and i am hoping to just continue to grow with that. like i said, the small business and just business climate in general is not at a good place right now. and i'd like to see that change. i'd like to see that get more competition into everything. host: before you leave us, what do you do? caller: right now i'm a small automotive -- i have my own dealership and so that's what i've been doing for about the last six months here. host: how's that going for you? caller: it's just as slow if

not slower. everything is tied to housing as far as it just seems like to me many things are tied to housing. people buy a house every few years or so and they hope to generally speaking upgrade, and people's housing prices have been crashing and not doing well, that's for most of the country. we see some rebounds, and i live in an area that's been ok and been relatively for the most part not as hard hit as some other places on the west coast. but i can tell you that just in general business is not in a good place right now and i think it needs to change. people need to pay attention to what the government is doing. host: i appreciate the input there. 103,000 new jobs added. the unemployment rate falling to 9.4%. now looking at specific industries where employment rose. the leisure industry, hospitality industry, and the health care industries are touted as far as job growth is

concerned, those markets have seen some considerable job growth. we're asking you, looking at this number of figure 9.4% what it means for you and to give your own context. you heard from vince, got a job or transitioned into something else, or you want to add something else as far as your own experience. we're giving you the chance to do so this morning. you probably saw ben bernanke yesterday testifying on the employment and economy before the senate budget committee. this is what he had to say about the market and the long-term future. >> although it's likely that economic growth will pick up and the unemployment growth will decline, status toward the objectives is expected to remain slow. the projections submitted by the committee or fomc showed that not withstanding forecast of increased growth insy and

spe, most expected the unemployment rate to be close to 8% two years from now. at this rate it could take four to five more years for the job market to normalize fully. host: some more input off of twitter this morning. columbus, ohio on our republican line. good morning. caller: good morning. host: go ahead and with your statement. you're on the line right now. go ahead and talk and stop listening to the tv. caller: ok. first of all, host: we're going to put you on hold while you gev that resolved. if you are on the line waiting

to talk to us, go ahead and turn down your tv until you hear us talk to you, and that makes the flow a little more even. pittsburgh, pennsylvania. tom, you are calling on the line for those recently employed. caller: good morning. i was unemployed for two years since el and only recently, february of this past year, sow, found a job. however, the job that i found only pays $8 an hour and it's casual part time. ten hours a week. so i am no longer on the unemployment rolls. however, i do not have a full-time job. this seems to be something that's predominant in our area where

host: what did you do before? caller: exploratory research on alternative fuels and now i'm a clerk at a local community college. host: as far as going forward, assuming that you're going to move on from what you do, do you have some long-term plans as far as finding new work or finding a new job or getting some more training? is that in your future? caller: well, i'm college educated and i have a pretty good background behind me, and that and my age seems to we b what's stopping me from getting a job that pays a living wage. i'm in my late 50s and when you go out into the market and compete, i've found that my age is a factor though no one will

directly state that, that seems to be a problem with everyone in my age group who has been unemployed the past couple years. we cannot find work that will subsist our families and bills and incomes, like everyone else, i've cut back as far as i possibly can and this $80 an hour job -- a week just doesn't cut it. i'm still looking for work but the only hans is to take on three or four jobs. host: with your background i know one of the things that we've heard on this show is about the growth of green technology as it's known. could you translate some of your experiences to that? caller: that's what i was working in. we were working in alternative fuels. we are doing research on creating an alternative fuel.

and the company made major investments and it's not going anywhere. host: thanks for your input this morning. phoenix, arizona. thanks for waiting. independent line. caller: good morning from arizona. the 9.4 rate to me, i've been really forte. i've worked the entire time. i'm in a construction industry even though it's devastated i'm in a niche business where we kind of have a corner on a lot of markets where what we manufacture. we manufacture steel rolling doors for loading docks, airplane hangars, stuff like that, military installations. but that 9.4 you said they added 103,000 jobs last month, that's great but still that's not even a drop in the bucket. it's going to long climb out of this hole to get back on track. it's terrible. this town in phoenix, i don't

know, it's just devastated. this town has always been largely construction industry. there's not a heavy manufacturing base in this town and it's just terrible to see what's going on. i hope it gets better soon but i don't see that happening any time soon. host: the editors of the wall street journal take on the numbers by titling their editorial, the job blahs. this is what they have to say.

if you found a job in the last year, we have set aside a line for you. and for the folks that follow us on twitter, as many do during the course of this program, you can send us a tweet. long island, new york. christopher, go ahead. caller: good morning. my comment is basically with the start of the new congress it looks like the republicans are going to conduct business like they have in the past, which is frustrating, and the democrats really haven't gotten the message across that they have actually created jobs and done things. and it seems like we're going to have this par lay back and forth between both sides until we get i guess closer until the ste election. i had what i thought was a fairly solid and good-paying job. i was a plumming contractor. i worked for a family business for almost 20 years and made a

very good living with retirement and medical benefits and it just evap rated. and like the gentleman from pennsylvania said, i had nothing to support, it's conjecktur but i feel the same thing like he said about age and experience level. it seems to hold you back. they would like you to come on but they're either wary because of your age. mime, i'm 52, or you just have too much experience and they feel if something better is comes along you'll be leaving. it's ashame. and the gentleman in phoenix is kind of spot on as well. construction drove that area and it looks like construction in certain places, the unemployment rate might possibly above this 9.5%, probably i would think maybe 13 to 15% when you start to look at it. because a lot of people have stopped looking.

host: what type of work do you do now if you are employed? caller: i'm unemployed right now. for almost two years. so i'm coming to the edge of the cliff here. i'm in this group that's probably going to have to recertify pretty soon and possibly won't be able to. i was lucky enough because i had some assets saved tover years that i was able to weather this a little bit. but again, with unemployment in new york state it's only about $405 a week. it's taxable in both the state and the federal level. and there hasn't been really a substantive increase in that benefit in probably 17 to 20 years in new york state. i understand all states are very strapped for cash. but everything i've purchased in the last 17 to 20 years has gone up in price or up in cost. and here's a benefit that workers who have worked actually have paid into it. it's insurance. it's not like it's a handout.

host: youngefield, north carolina. lowice, you are next on our republican line. host: good morning, pedro. and happy new year. -- host: thank you. caller: i'm an object jen aryan and retired ten years ago from the health care field. and what i want to say about unemployment is this. when i was first married in 1950, everything, everything i owned, everything i put on my body was made in america. it wasn't just made in this country, it was made well in this country. and people wanted to buy it. from all over the world. where those manufacturing jobs are gone partly because of government policies and partly because of the behavior of the american people who want to buy things cheap. they want to have everything but they want to buy it cheap.

and you can't buy things cheap from another country and expect to put a young and middle-aged american people to work in this country. we have to have a movement in this count by both in the government and in the populous to say i want to buy american. i want to support american people and i want to see them have jobs. there are a lot of policies that our government has that go against that like e.p.a. policies that have driven manufacturing out of this country. and we have to look back at that and we have to look at ourselves and say when we go to the store, am i buying american? am i putting some young or middle-aged american person to work today? host: alexandria, virginia. joe on our republican line for those who have found work. good morning. caller: good morning.

well, i like what that lady just said. can i add something to what she just said? i think she's on the right track as far as people buying in the united states. they need to stop outsourcing jobs. in fact, i think they should put a higher tax on imported items to people are more driven to buy domestic items. and that tax could help pay for the people that are unemployed. and the other thing is that i had some of these jobs i applied for where i didn't get the job because i didn't speak spanish or japanese here in the united states. and so i was a technician. i got laid off at one point. got my own contractor's license. work was slow. my wife and i split up. we lost our house. basically somebody called me and offered me a job in germany. imagine that. i can't get a job in my own country but i got a job in germany. that's how i came to

alexandria. i can't go yet so i'm stuck working here. but i've got to say i had the highest paid job i had in the history of my life when i came out here. host: and it's still in the similar industry or no? caller: the same industry. in fact, i was making as much as my wife who is a doctor when i came out here. host: do you currently have a job in germany? caller: i have a job here and i'm working on trying to go overseas. host: where you had an offer from caller: yeah. host: what was the pay? what kind of pay we're talking? caller: the pay will be the same here except for certain additional expenses that i'll be reimbursed and stuff. but my first month here because of my overtime i made close to $12,000. so that wasn't too bad. considering that i probably didn't make that all year long as a contractor in california because there was no work.

and a big job i had in california for what i do, you have to be licensed, and there are too many people that aren't linesed doing the work and the state won't enforce it. host: there's a story in the "new york times" featuring an interview with the former secretary and the story about michael powell, obama the centrist irks a liberal lion.

del ray beach, florida. sue on our independent line. we are looking at the jobless rate and asking what it means for you. caller: thank you and good morning to everybody. i just want to let you know that i was laid off twice from the school board the last two years. i was hired back. my husband was working in -- for a friend who had a contract and the contract was not renewed after two years. to let you know i agree with everybody that called that's over 50. it is very hard to get a job. i worked in one office for tu years and i was told by an evaluator to take that off, it aged me. i didn't get one call. my husband never had unemployment. to let you know, he went back to work part time unloading

trucks, which is not his profession, at health care in the morning for a major retailer. after two weeks they realized he was in the wrong spot. he is now management. my daughter who has never worked, out of high school, was also not on unemployment, she got a job the first day she looked saving to go to college next year. i understand that people don't like the spending. but at some point it does need to be taken care of. also, everybody talking about manufacturing, i grew up the daughter of a steel worker. in 1970 he sold his production and workers to monterey, mexico. he kept the management portion in cleveland for a year and then let the whole thing go. i also want you to know that you will continue to keep in touch with your senators. there was a tax law that was voted down to start taxing the things that are brought to close the loophole to companies

that sent jobs overseas. it didn't pass because of four democrats and all the republicans. so i want everybody to maintain what is going on. they are trying to bring jobs back here, they're trying to impose tariffs. they are trying to change the tax laws to make it better for kbs to companies to be here. so make sure your representative votes that way. host: this morning off of twitter california, republican line. robert. good morning. caller: good morning. host: what do you think the 9.4 figure means to you? caller: scary but good. it's not gone up. i think it will go down. i started my own business

again, i'm in the security alarm industry. and there are jobs out here in california. you just know where to look. host: how did you find yours? caller: well, i've been in the industry for 25 years. i renewed my business license and made a few phone calls and started getting work. host: so you're in security? caller:, alarms, cameras, home alarms and commercial alarms. host: now, those are tied to say the housing industry and it's really bad in california, how does that work for you? caller: a lot of my service there's a company called protection one which i'm a subcontractor for and they got the power to go ahead and do it on marketing and get sales done. independent contractor, it's hard to keep up with large companies. but fortunately in the security industry, when crime goes up, our industry does good. host: are you optimistic about the future as far as employment

is concerned? caller: very optimistic. my company owns -- my brother own as company in arizona. it's hard out there but he's sticking it out and things are looking good in his areas. host: in the "new york times" talking about the defense bill a side-bar story.

along side this story this morning as far as the defense budget is concerned, there's a story featuring robert gates and mike mullen featuring the budget plan. later we'll take a look at the details of that plan and what it means for the various departments of defense that will come on later this morning. ohio, michael, good morning. caller: yes. good morning. very good. well, sort of good morning. host: what do you think about the figure? caller: the 9.4% is a joke. i don't even know why you people even report those kind of figures at all because it's pretty much meaningless. it's based on no real factual

information about how many people are really unemployed . host: how did you come to that conclusion? caller: i came to that conclusion over listening to figures over the last about ten years or so. i've been watching all the employment figures throughout the bush administration as well as the obama administration. and i can tell you that when perges are presented to the -- pe percentages are presented to the american people it's a joke. you have to look behind those figures to find out what's going on. and the 9.4% is generally a meaningless figure. the real figure has been really much higher. host: when you say you have to look behind those figures, what do you have to look at? caller: well, you have to look at the number of people who are

really unemployed, not the people who are looking for employment and still on the unemployment rolls as far as being paid unemployment. you have to look at the total number of people who are not only looking for a job because they are being paid by the unemployment agency, but also the number of people who are no longer being paid by unemployment agencies. host: we have another contribution off of twitter this morning on what the 9.4% figure means. staten island, new york, robert, republican line. caller: yes. the 9.4% job rating, it definitely is an improvement but i look at the whole

picture. i was retired as a fire fighter in new york city, i was hurt before september sutsdz. in a fire. and actually, my pension that 1.8% figure that salaries have gone up, my pension in ten years has not even gone up, the lost of living 1.8% on the whole salary let alone that because it's only on the first 18,000 of my pension. so what's happening more so where i am in new york city and in the burrows here is many of the local newspapers and things publish what civil servants are getting and sort of attack it. but when i first got on the job there were friends of mine that got christmas bonuses more than i made all year to go into burning buildings. so the reality is i pray for all those out there still looking for jobs but our civil servants and military and people that help to run things

are this was actually a little bit of a silver lining for anyone who was on a fixed income because real estate here is still way out of price for new york city fire fighter that's retired and it also, if we didn't have this recession, i can tell you if things remained the way they were, i would have been close to more like lower middle class than even middle class. so if there's any silver lining it would be that many people on fixed incomes, especially if they were forced into retirement by an injury, would actually be slightly above what is going on. and i do feel for people that are out there looking for jobs. but i do believe that things are going to get better. most definitely. host: that's robert from staten island. a story on the front page of the "financial times skt this morning looks at the oil

spills.

caller: good morning to you. it's an honor to talk to you and i'm very proud that the media is finally getting up to try to get everybody to understand what's going on in our country. a beautiful country. now, my statement is going to be regarding some people being able to find work. number one, the government allowing the old companies to raise the prices on everybody is making it extremely impossible to afford to go to work. as a matter of fact, people end up paying to have to go to work. and number two, if we do concentrate and trying to keep our products from going across the sea more so than buying the products from coming over this way, it would balance pretty

much what we're gaining or losing. my point being is slongs the media is being as long as the media is being advised of what is going on here in our country, and what we need to do is more than just speak about it, to make actions of it will extremely help this country. and i do appreciate everything that our senators and congressmen are doing. but we need to do one thing. take control of what it is going to cost for the average person to go to work so they can afford to go to work and maintain a home. host: next call is danville, illinois on our independent line. jason, good morning. caller: yes. thank you and good morning. i agree with your last three to four callers as far as the jobless rate percent they're giving us. i feel that they pencil push a

lot of the paper work to get more of the public view on board with them. the area that i come from, i've watched jobs, businesses leave over the last several years. we had a g.e. business leave our area years ago. we've watched general motors plant a few years back. and the jobs in our area have just dwindled. the only jobs available are low-paying jobs to where like several of your other callers have mentioned, you can't provide for your family at the rate that they're coming across with. host: what kind of business do you do? caller: i work for a distribution center. we distribute groceries to grocery stores. i've been lucky enough to have my job for the last eight years. host: and is that based in danville? caller: yes. host: talk a little bit then about as far as if a lot of these industries are closing up

that you mentioned, what it's doing for the local economy there? caller: it's killing it. the city has tried to take the moneys that it has or that it gets from funding and beautify downtown danville but it's not doing anything to bring jobs to the area. it's not doing anything to help the people in the area. a lot of the big problem is when they do, the unemployment rate, they look at these bigger cities or bigger areas of the country instead of folks in more the smaller areas which hold the more populous of the whole nation. host: nebraska, thanks for holding on. jerry on our republican line. caller: yes. i was just going to say that i thought last time they quoted the unemployment rate we'd created 230,000 jobs and the unemployment level never moved. this month, they created

103,000 jobs and it dropped three-tenths of a percent. is it just a coincidence that the drop that's come is just before the state of the union address? host: i can't answer that but in our next segment we're going to have a gentleman from the "wall street journal" who studies and looks at these figures and could maybe answer those types of questions for you. he'll talk about the economy later on we'll take a look at the constitution as it's being read in the house and as a basis for bill making. and in our last segment, a look at the defense budget. michigan, you are the last call. go ahead, mike. caller: good morning. i'm a 47-year-old conservative from west michigan that lost his job of 24 years in four months -- and four months. i didn't want to do unemployment, therefore i took a job that was one-third cut in wage in order to eater a different -- enter a different

industry. host: what did you do before and what do you do now? caller: i worked for a heavy equipment dealership, tractor trailors, and now i'm in the tool and dye industry. host: tell me a little bit about your thinking behind making the switch, and especially a switch that came with a pay cut. caller: well, the industry i was in, i worked for a trucking industry, and the owner was a second generation owner and they decide that had they just didn't want to do it any more. we were a viable company. things had slowed down. and that just kind of left me a little frustrated. i wasn't sure if i wanted to continue being in the trucking industry. and so an opportunity arose so i pursued it. and in the insurance industry didn't work out for me, so i tushed to something i was familiar with from high school

and i was able to get a job. host: now, i can't determine your age but tell us a little bit about as far as we've had some people call in this morning saying that age was a factor of them not getting hired by another company. caller: you know, i don't know. if i merely could have typed a little better i probably would have gone into the insurance industry. but another opportunity arose and i believed that was the direction i was being led so i pursued it host: what do you think about the future of employment here in the u.s.? caller: well, i believe that it is probably higher because unemployment numbers are based on people who are looking for work and i believe there's a lot of people out there that are probably just quit trying. host: mike in wyoming, that will be the last call. thanks for all of your input this morning as on this topic. we are going to continue on the topic of the economy. you want to stay for our next

segment. we'll have a look at the constitution, especially as you probably seen it being read in the house this week and as the lawmakers want to have portions used to cite a new bill. coming up to talk about the economy, we'll take up that discussion when we come right back.

>> our guest, you may have heard several of the callers coming into the segment saying when you take a look at the 9.4 figure it's not the real number. is there a difference between the number that we see and the actual number? guest: the 9.4% figure is the

official rate, that includes people out there looking for work in the past four weeks. the labor department does provide other measures. and the broader measure is 16.7% in december. and that includes people who want jobs but have given up that active process of looking for work and some people deciding it's not the right time and they've moved out of the labor market. they would want a job otherwise if conditions were better than they are now. host: depending on who you are, how would you say if you're the government, how do you look at the number? if you're the administration how do you look at the number? guest: the most recent number looks good on the surface to go from 9 plt 8 to 9.4%. but it's probably not sustainable. a lot happened because people dropped out of the labor force and that's not a good thing if people are just so pessimistic that they're not even searching for work right now. so if you were to look forward

a few months you're probably going to see that number go up again before it comes down. and that's as people see conditions improving in the economy. because they are improving, just very, very slowly. and hopefully more of the those people will come back in and regain some of that hope. if you are in -- republicans in congress, you probably would have been looking at this with some treppedation seeing that the economy was recovering for the president because that's obviously very important for his 2012 reelection prospects. and everyone wants over time the economy to improve. but this is kind of a figure that's clouded a bit. so it's hard to specifically say that this is a market improvement right now. host: you said if you look at other areas, that you see sign that is the economy is improving. what are those areas in a broad sense? caller: we've actually seen manufacturing while still weak picking up. so it's expanding, unlike during the resession.

consumers are back spending again. and we went back to the level of retail sales before the recession started. global trade is picking up and u.s. exports are back to the levels before the financial crisis where they took a deep turn in late el. so across the board just about every metric for the economy is up, including jobs. jobs are finally we had in december this was actually the first year that we had 12 straight months of uninterrupted job growth in the private sector since eff. so that was an important. 103,000 jobs. and et is too slow to bring down the rate materially. host: can you give examples? the couple are obvious but especially when we see figures that employment rose in the leisure, hospitality and health care. what is meant by the first two? guest: if you think about

hotels, resorts, people are spending money again. when the recession started into late et, everyone was holding back a lot. they weren't going out and spending, weren't traveling. were just trying to save. you're seeing people go out and spend it on movies, vacations and that sort of thing. that's really important because it's a very important part of our economy in terms of the overall output. host: so as far as policy decisions are concerned, especially now that the congress is one of the things they want to do is improve the job market, what does it mean as far as the future as far as specific policy decisions that have to be made? guest: we saw in december an important one. not only extending the bush-era tax cuts but also coming up with stimulus which has become a dirlty word in washington but it was about the -- it was about lowering taxes for everyone. that started on january 1 and that should help consumer spending a bit. the other big thing we're going

to see congress and the white house discussing is trade and how to improve trade and improve u.s. exports. and that plays into a lot of the president's decision this is week on appointees to several white house positions. and it also comes up with the visit later this month from the president of china and the u.s. south korea trade pact that has to be approved by congress and a number of other trade deals sitting and waiting. and trade is a big initiative from the white house to did you believe exports over five years and they're going to be focusing a lot on that and trying to boost a manufacturing sector that's taken a lot of hits. host: if you want to ask questions, the numbers are on the bottom of your screen. for those of you on twitter ben

bernanke testifying yesterday before the senate budget committee. one of the things he talks about is the idea of cutting spending. here's his response. and if you could put some context to it. >> a long-run issue. it has to do with the problems are not just this year or next year. the problems go out decades. and i think it's not too soon to have a strong set of measures that will bring down deficits over time so that we have at some point a stabilized and then declining debt to gdp ratio. so i think action is needed but you're not going to solve the problem by just making cuts for this year's budget. you need to thing about the whole future past. host: spending a big issue nowadays especially on capitol hill. guest: it is bage issue and we're seeing with tht new congress and talking about

immediate spending cuts. a lot of this that we're hearing in the past week has been political theater talking about cuts because we're talking about cuts of a very small scale when you're dealing with the overall budget. what the fed chairman is talking about the is the more structural issues with the budget in the long term and medium to long term beyond just this year we're looking at unsustainable increases through the health care costs and social security, all of these things are just not going to pay for themselves in the way they're set up now. and so the fed chairman is making an important point to not immediately cut spending right now. that's actually not the first priority because if you cut spending right now there are programs out there that in which people have jobs that will be hurt if you immediately go and do some drastic cuts. host: such as? guest: for instance, in health care, there are one people who

will be hurt. even anything where you have workers employed that's going to be a hit to the economy if you pull back those jobs right now. so the fed chairman is trying to underscore the idea that it's not necessary to send this signal right now that you're making cuts for this year. what financial markets are looking at are really the years two through ten and beyond and seeing the u.s. is dealing with the deficit in some way. so what looking for is a plan. so the idea is to let some of the spending continue right now because there is some support for the economy. but come up with a very clear plan and pass it to make sure that the budget does come closer to a long run sustainable trend. host: you talk about the signs of improving economy. talk about the fed roll, especially that was made to purchase treasury bonds. where that falls into the long-term goal as far as the

administration is concerned about stabilizing the economy. guest: the fed moved into that decision starting in august and started talking about this in late august hinting that something was coming and the announcement came in early november. the economy had gone through another bout of trouble. early sow it looked like things were improving from their session and then the europe mess hit and they went into their fiscal troubles and that caused some turbulence and global financial markets and weakened the u.s. market and led to some weakness and confidence among business and consumers that we were just getting out of in the october-november time frame. so the fed decision to buy 600 billion in long-term treasury bonds was designed to provide some additional boost to the economy. it was intended to lower long-term rates but we saw the economy was improving anyway so long-term rates were going up. what it did do was help push

people out of treasury bonds which are considered very safe and into the stock market and other riskier assets and that movement into riskier assets has helped the overall market. it seems to be helping larger corporations by seeing their stock prices go up and they're proing going to run the course for that program through the middle of this year. host: now, they run the course of that program. is it only because, according to what i read, because interest rates are so low they can't do anything else that way so they have to come up with these other methods of trying to stabilize? guest: exactly. usually they would use the short-term overnight lending rate to bring interest rates down. since they already brought that down to zero in december of el, it's been using these other methods to try to deal with the economy. so that's really their attempt to do unconventional monetary policy. it uses some of the same tools, just in a different way. and right now they're hoping

that they can sit and watch the economy recover for some time before having to deal with anything else. if there's another bout of trouble, they certainly could restart discussions about expanding that. host: first call is from kentucky. democrats line. good morning. caller: good morning. i want to talk a little bit about patriotism. i believe that it is an obligation for big business and the rich in this country to create jobs rather than ship them overseas. i think this all started with nafta. and the republican philosophy is that if you give the rich the tax breaks, big business, that they're going to create jobs. they are not doing that. they have not been doing that for the past eight years. and i think they're sitting on the money and i think they have an obligation as americans and

patriots to create and invest in this country. they're not doing that. i have a problem with the people who are such as the tea party people and people who call themselves patriots. self-proclaimed patriots. that's not something you call yourself. guest: well, the caller is right in that you do have companies sitting on cash right now, about $2 trillion on nonfinancial corporate balance sheets. that's a lot of money sitting around that could be invest t. from the c.e.o. per spebtive, their legal responsibility is to shareholders, not necessarily to the u.s. or any patriotic motive. so they're looking at this and seeing around the world where can we invest our money in the best way. and they're finding some better opportunities abroad right now. so the congress is starting to go through this discussion of what will it take to keep some of that investment in the u.s.

rather than abroad. there are things you can do with tax rates and with tax policies to either require companies to keep some of that money here or to encourage them you're seeing other countries, canada, the u.k. lower their corporate tax rates. and that's designed to keep some of their companies in their home countries rather than moving to the u.s. or anywhere else. so there's a beginning about what can be done in the u.s. to deal with this particular problem. host: off of twitter hf guest: that isn't an argument that's coming up a lot more right now. there are tariffs for u.s. products going into other countries. if you talk to any exporter in the u.s., they say these are unfair tariffs. how can countries bring their products into the u.s. without

any tariff and than we can send them? so you're dealing with this. cat pillar is seeing a lot of the demand for its machinery in china and in developing countries and are trying to get close tore the source where those products are going to be sold. host: as far as the economy is now, the president is going to speak in february to the chamber of commerce. what's the political message? what's the economic message? guest: the political message is important. there's the president coming back to business. there's been a rift, business and the president and the white house are not doing everything they should be to support corporate interests in the u.s. and this is kind of a coming together, if you will. and then the economic message is we need your help and it's really to appeal to business to spend some of that $2 trillion sitting in cash to create jobs in the u.s. and to really

further that dialogue a little bit more about what business actually needs. . . >> the chief of staff announcement was an interesting one, because he was top executive at j.p. morgan chase. a big bank.

kind of exemplified wall street, and the white house had been seen as beating up on wall street. and even before that. and so the president is kind of making a conciliatory gesture here, but also somebody who was skilled in his work on trade deals. one of his main roles is trade promotion and pushing some of the trade deals they were working on at the time. so bill daley has experience as a telecom executive and banking executive and he will be able to be that voice, and someone envisionists can go to as a voice and a willing ear in a way. host: sudeep reddy on our show.

caller: we had a labor board participation rate at 66%. since those three years things have gotten more worse. i think 18 years ago i milton freeman said we were a socialist economy, and since then we've become much more socialist. and karl marx said they are going to spread the wealth and equal things out but they are raising the world up at our expense and bringing us down. they are spreading things out. what we've got to do is totally revamp our government. but the biggest problem is k-street, the criminals that surround the capital, bribing our politicians and -- host: so caller for all that that you've said, what would you like our guest to

specifically address. caller: that's all i have to say. i don't have any questions for him. guest: well the caller makes a point. in the labor force looking for jobs, it is true that it was around 65% or 66% a year ago and that was a good point for labor force participation. it was at a good place, and there's a reason you wouldn't have the other third of the working force -- working age population in the workforce. some are staying home because they have a spouse and some have chosen to go back to school. so it's not necessarily being on government programs. but we've seen that figure drop over the course of the recession and even the recovery it's come down closer to 66%. that's because so many are taking themselves out of the

labor force. they are just seeing that there aren't opportunities there for them. so you have a lot of people going on disability benefits and that's troubling. it has yes cases for the long run of our workforce, and it's something the government needs to deal with in some sense. making sure there are enough jobs out there and encouraging people to be part of the working force rather than take themselves off the sidelines. host: from nashville, tennessee, go ahead. caller: i appreciate your show. it's informative. the question i have is there was a website i was looking at talking about the money that leaveses the country. and it's not finding its way back in. what kind of impact is that really having on us? guest: well, there are a lot of

ways money can leave the country. whether you're talking about actual cash leaving the money. -- leaving the country. the biggest question is investments. are people who have capital to invest, are they looking to developing countries? china, india, brazil. russia, places where you see more opportunities to make money quicker than you can in the u.s. and that's a big problem. because obviously it's not going to create the jobs in the u.s. and carry some longer term yes cases for the shifting of balance in the world. there are some attempts now to deal with this, to figure out ways to keep money in the u.s. that's through tax policy or investment incentives or some other measures from the government. and that's something that we really need to work on right now. you've seen this over the

course of the decade. companies moving abroad and making investments abroad. we were talking about machinery going abroad. and that's in part because of stronger development in those countries. so the important thing is figuring out a way to grow our country faster. >> president hu jintao to visit the u.s. soon. how much trade talk is going to happen during that visit? >> well, there will be a lot of trade talk leading up to it and surrounding it. and the white house administration has been pushing hard on china over the last queer, trying to do something about the chinese currency and get the chinese to appreciate their currency and let it flow more with market forces. that's been a serious problem. it goes back to broader issues we have in the u.s. americans consume too much from

abroad. particularly chinese products. and we're not investing enough here. and there's a balance of trade issue here. and china is making so much money from some of these products and the u.s. exporter will say they are sending things here unfairly and using currency to seek that advantage. so to deal with the longer-term problem, you need china to keep more money at home and invest more in the country there. and the u.s. to spend less abroad and more at home. and so that's the really dealing with some longer run issues that the overall g-20 will be dealing with throughout the year and other important countries, germany is dealing with the same problem. not dealing or consuming enough at home. host: so as far as the conversation about trade, has it been a one-sided

conversation from our experience with china? guest: yes. they make products we want and make them cheaper than we can make them here. that's an issue that once we decide to pursue global and free trade, how do you roll that back when there are other countries outperforming us on cost and product. caller: good morning. the nasa space program, do you have a sense of the total annual budge et for nasa? and under the category, can we aford that full program? just wondering in magnitude, the total cost for nasa. guest: i don't actually know the specific budget figure for nasa. but it is true that a number of law makers have put nasa on the list as areas for possible cuts if you're talking a trillion-dollar budget deficit, you have to find cuts

somewhere. win lawmaker said maybe we don't need to send as many people into space. we already have robots and are participating in other missions. but that's one area that's come up as possible cuts. these are all things that aren't really the biggest issues. but they certainly do add up. that's why it's important to see where you can get cuts over time. the biggest issues aren't being discussed very much. it's really social security, medicare, and particularly the defense budget. it's growing, and secretary gates this past week did offer a proposal to reign in a little bit of a that spending. but we're probably going to have to see much more to get the budget balanced. caller: hello. good morning. i was wondering about -- i think it was 1998 that president clinton granted china

a most favored nation trading status, something like that. and i heard some companies actually get a tax advantage for putting theiral factory overseas, and wont wondering why we can't just add more tariffs to these products coming in. i think it's just ruining our country the way these products are coming in without us protecting our industry like other countries have done for years and years and years. we're just throwing our jobs away. guest: thank you. the u.s. message has always been to try to send a message to countries abroad by opening markets and pursuing free trade to whatever extent possible and the caller is right. it seems unfair and probably is to a lot of exporters in the u.s. trying to make their products viable in the global marketplace. so the china issue in particular has been one that's

especially vecksing, because the clinton administration and to some extent the bush administration has pushed this very hard to open china, and china has been unrepenitent in its currency and trade policy and is enjoying very much its status as a rising global economic power. so until you put some policy in place. and you're seeing this developing with democrats and republicans. actually more of a grassroots effort which is important. people are going back to their businesses saying they can't compete against a currency that is not moving with market forces. and so you're starting to see a build in congress to force china on this issue. that alone sent a message to countries abroad that are weighing what to do about their currencies. host: gene sperling back in the public eye as far as an

economic team the president revamped. what's the message by adding mr. sperling and these other figures? >> well, i think guest: well, i think president obama said yesterday this was a position sperling was in in the late 1990's and he has experience doing this, which is dealing with a divided government. you had republicans in congress that you had to work with. and gene sperling is seen as somebody who is going to be able to work across the 50eu8. the national economic council is a body that has to pull together all these different pieces of government. and sperling was known as somebody who wanted to pull the rest of his party closer to the center to be more realistic about what they could accomplish. but he also did something for lower and middle-class families in his time. so the debate among liberals

and progressives in the u.s. about the role of sperling and how much credit should he get and how much should he be seen as kind of the right person for this position. is he going to pull obama too far to the center, or is he going to hold on to some of those principals he's been pushing in the last few years. host: jack, independent line. caller: good morning and happy new year from a beautiful part of the country. you know, if we could take a look at the amish, they pay teengs god. they -- pay tangs attention to god and their friends and family, and that's it. and they seem to be employed. and they are always taking care of each other. they are not worried about traveling the world.

and there's a lot to be said about -- take a look at the amish. thank you. host: next call. unless you want to respond to anything there. chris on our democrats line. caller: thank you for taking my call. good morning to you both. well i agrow with you on the points you made on the unemployment rate but there are still a lot of unemployed and underemployed people looking for works, and i don't believe they are counted. an article said the economy needs to generate $ -- generate 125,000 a month to keep the unemployment rate from rising and deal with population growth and nowhere in the article it mentioned how the rate went down .4% when only adding 103,000 jobs.

can you explain that? guest: absolutely. the unemployment rate is measured through a separate survey. it's a survey of households and individuals. and the workers. and the other is an establishment survey from businesses where you get the payroll and job creation figure. so they dovet walls match up. so i sometimes interpret in the short time those movements. the unemployment rate went down in large part because of people dropping out of the labor force. it wasn't for a particularly good reason. as you said, there are a lot of people out there who want work and are unemployed or underemployed. and when you look at that figure closer to 15%. the 1 3,000 you -- the 103,000 you talked about is -- if you only get that number, then over

time you're really not going to reduce the unemployment rate very much. so we still sit in this 9%-10% range if you don't start creating jobs at 25,000 a month. even thank you grow twice as fast as we did in december, about 200,000 jobs a month. you'll only bring the unemployment rate back down to 5% in the next decade. so it will probably be the early 2020's before you bring down point guard something like that, to get to that point. we've seen periods in the u.s. in the 1990's, we had a good track record for job creation. if we were to see something like that you'd have a little more hope, but right now we're basically read thing water. host: what happened in the 1990's to make that happen?

guest: the development and introduction of technology into business improved both manufacturing and workers who you were sitting at desks. that's a huge improvement inal productivity that helped a lot of things. you also had agreements early in the clinton administration to lower the deficit and deal with that problem early. so that kept interest rates down and allowed countrys to invest well. some of this was because of the internet boom and you had a whole new industry being created. and very good jobs at the time being created in the u.s. in software and computer programming and everything that goes around the computer industry. host: joel, independent line. good morning. caller: good morning. can you hear me? host: yes. you're on. caller: i want to talk about nafta. i've been in the business of

construction for 35 years. as of 1999 business has started dropping. i was industrial, commercial, resident denial. huge -- residential. huge companies once they put together, for instance, all their products, g.m. in one c.e.o. is where we lost money. now all the jobs are going overseas. now we have the e.p.a. going with [inaudible] where companies cannot build. send the e.p.a. over to china or everywhere else, and see what they are going to do to the e.p.a. they will destroy it. our e.p.a. is too strong. we got to back them down. guest: there's actually a good point about trade and some of the inequities involved in trade deals. the u.s. has always been trying to make this push to qualeds

the requirements on -- to equalize the requirements on trade on both sides of the border and haven't been terribly successful in doing this. so you're seeing this force the develop. people looking again at nafta. but there are actually some more important developments now of course, with china and india and a number of other intelligence -- those regulations make a big difference in the kinds of products that are produced and the cost in which they are produced. so that gets to the fundamental issue of comparing cost to development and even cost-to-labor. there are even buyers around

tomorrow world that say they want american products, because they have a longer track record and can last longer than the newer products made in other countries, and the really important thing is to figure out how to make them to equalize them in some way for all the other costs beyond labor. >> the president may have floated the idea of changing the tax code. is that a serious discussion? >> it is. but it's still only at the discussion phase. you had the various reports that have come out from the deficit commission and others. a serious start to overhauling the tax code both for individuals and for businesses. on the business side, it's coming up a lot, because the president is trying to appeal more to businesses, and there's a come planchte that the corporate tax rate is 35%. -- there's a complaint that the corporate tax rate is 35%.

if you were to bring some of those rates down, you would lose some of the tax breaks. some are actually not suffering very much with a 35% tax rate. so unless you were to go industry-by-industry, and it's happened. it's hard to come to a conclusion for all of business on what to do in a case like this. for individuals, that's going to be a much harder push, because there's not a single lobby coming behind with a single tax code. starting over with a tax code, and instead of having thesal brackets which now go up to -- you would remove some important deductions such as eliminating the mortgage tax deduction. these are things that weigh on the cost of government and the tax code. so if you were to pull out some

of those deductions, you could probably get the highest rate under 30%. but you have to deal with all the different lobbies. the housing industry has already been weighing in very strongly on everything. caller: hello? host: you're on, sir. go ahead. caller: yes. i would like to know how we expect to get jobs created if we don't build things. we put so much of a price on them that people can't afford them. such as general mortse. they -- motors. they build a new car called the bolt. $40,000. how can you afford to pay for them? >> well, other countries are coming up with cheaper cars. there are cars more competitive

coming out of india and china, for instance. so the broader question is really about how do you raise incomes in the u.s. to be able to afford all the products that we're making here. and that's just a matter of growing the economy and making sure the improvement in the economy is not going to just the highest-income people but going to people in the middle class who would go out and buy a lot of these products. >> woodbridge. scott on our independent line. >> good morning. i just have a question and want to see if i'm missing something. but the discussion on the critique of china and allowing their currency to ascend. i'm just wondering if america isn't somewhat hypocritical in that in that we manipulate our currency as well for monetary

policy from the fed. and artificially. i mean, right now they are in the process now of devaluing the dollar artificially. you know? so i'm kind of wondering just because china does it directly for direct manipulation, and we do it through sort of the back door, i don't understand the difference. maybe i'm missing something if you can help me on that. guest: well it's a good question and the question from the chinese that eb man plates their currency. that everybody manipulates their currency. so unless you adopt a free market where everybody -- maybe not even have individual country currencies, you wouldn't be able to deal with a problem like this. what comes up with the china issue is it seems to be more than what countries normally do , and the extent to which china has taken it.

so that's the u.s.'s complaint and the u.s. is not alone. they are leading the charge being a global power, but you hear that from other countries, and they are all pushing the u.s. to push china on this issue, but china is certainly acting in its self-interest, but there's a risk. the economy is growing very, very quickly creating an inflation problem. they are having a much higher inflation rate than we are going through right now. inflation can lead to -- also, through their policies, they are trauing in a lot of foreign investment and -- they are drawing in a lot of foreign investment, creating bubbles in different areas, so it reflects

more to a -- to the degree to which countries are manipulating their currencies. there's obviously been some movement up and down since then , since the strengthening of the u.s. economy. it's seen as kind of a normal effect of u.s. monetary policy when you're trying to grow your economy, and obviously the dollar is going to move up and down according to the -- host: john on our democrats line. go ahead. caller: ok. i'd like to talk about financial services a little bit. let's say i'm a logger or a miner. own a small mining or logging company. in order to operate, i go to the bank and get a loan. cost me say 3%, which is pretty reasonable. so when i have to add that to the cost of my raw material,

then in order to convert that raw material, it goes to a smell turf or saw middle. they add another 3% with the loans they need to operate. then it goes to the wholesaler. and the wholesaler borrows money to buy his commodities with, which costs him 3%. then it goes to the retailer. 1% just to use a credit card, 3% to keep his business running for the banks. then it comes to the buyer. and the buyer in fees and interest rates on his credit card probably somewhere around 20 pt. -- 20%. so here we are around 35%- 40% of something that i buy in the store, and it all goes to wall street. guest: well, the caller has just basically laid out the case for why people don't like

a lot of what happens on wall street and don't like the financial services industry, and they have been profitable. but not all of those loans go to wall street in the bigger sense. the big banks. there are a number of smaller community banks involved in the lending process, and they all have their own risk lending to companies along that chain. but this is the entire debate about financial services regulation and how much should you restrict the banking secter? it's already heavily regulated. the question is whether you should put more or less and whether or not that would hurt the process of the banks making money and the businesses being able to borrow at the rates they need in order to make their products. host: sudeep reddy with the "wall street journal." you can see his work.

wsj.com. thank you for your joining us this morning. guest: thank you. host: used as a reference, the constitution will be read. later we will have frank oliveri. with "congressional quarterly." he will talk about cuts to the defense department. wambt to show you this tweet. someone writes where are the cartoons, exclamation point. they better not gyp us this weekend. >> through the ink and pen of political cartoonists.

>> "washington journal" continues. host: something done on the house floor that's never been done before, the reading of the constitution. and here's how it started. we the people of the united states, in order to form a more perfect union, establish justice, insure domestic anquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this constitution for the united host: and here to talk about the move not only by reading the constitution but what they plan to do with us. our guest is with us. what does that mean to you? guest: it's the first time it was done and it's about time. if the tea party stands for

anything, it's about restoring the constitution in our nation. they sent to washington huge numbers in the house, and they are going to begin at least the debate which we hope culminates ultimately in a more limited government than we have today. government is simply out of control. the deficits, the debt are just the leading edge. government is doing far more than the constitution authorizes it to do. and that's the main problem here in washington today. host: can the constitution be used, as far as future legislation is concerned, can it apply to things today even before the framers had current-day issues in mind? guest: this perhaps will be shocking for your listeners to hear, but most of what the federal government does today

is done without authority. there is no authority under the constitution to enact obama care. and people are starting toal realize that, because ever more people today are reading the constitution and discovering that congress has only 18 enumerated powers. and so the basic question that should be put to congress is is this. where do you find the authority to do all this regulating and redistributing that you're doing? and the answer is there is no such authority. the framers of the constitution imagine had the most power would be left with the states or people to be exercised in their private capacity. they didn't imagine this behemoth we have here in washington today. they had in mind a limited government. life was supposed to be lived mostly in the private secter, each of us free to plan and

live our life with our own values and not what kind of day care the government will subsidize and on and on. i could go on. there are over 300 federal agencies here in washington that regulate every aspect of life. this isn't what the constitution is all about. and the american people are starting to wake up to that. that's why we have this new house in washington today. >> so you would see them using the constitution to get rid of some things. guest: well, this is the beginning of a very long process, pedro. you cannot end social security or medicare or medicaid tomorrow. we've got to slowly transform these programs into something that is more consistent with a constitution of limited government.

so it's going to take a long time. but right now the important thing is to get the debate going because we went off the tracks back earlier in the 20th century. in fact, if i can take a point in explain that to you. the progressives at the turn of the 19th century fundamentally rethought our conception of government. the founding generation saw government as a fundamental evil. the progress i was saw it as an instrument to solve all kinds of problems. the only thing was that the constitution stood between that agenda and what the -- was allowed under the constitution. so what they did was try to implement this at state level at first in the early part of the 20th century. then in the new deal they moved over to the federal level. that's where ultimately when roosevelt didn't get his

programs through, because the court found them to be -- it essentially turned the constitution on its head. and that's the focus of the modern la vy on this that we have tae. host: talking about the constitution as it's being read and used in the house. if you want to make statements or ask questions, call phone dental -- call us. first call for you, sir is from our democrat line. caller: i want to know why did the light bulb go off for this

cato institute. i don't mind paying more taxes if someone is going to have health care. i have health care for me, so why can't someone else have health care for themselves? and please stop calling it obama care. it's health care for the people in this country. i am an american, a black american who has health insurance and would love to see someone else with health insurance. if it means paying another dollar. i will pay it. guest: what you said is that you have health insurance. you have taken the responsibility to seeing to it that you are covered. you'd like to see other people do it too, but not everyone has taken on that responsibility. some for reasons that are perfectly innocent. others because they simply don't want to. so what you have raised is the fundamental question.

who is responsible for each of us? we started with individual responsibility, not collective responsibility. we've moved toward collective responsibility over the course of the 20th century. the problem with that is it gets us in a downward spiral. and we see this especially at the state level when we look at states like california, illinois and new york. and we're seeing it at the federal level too. more and more people are collecting from other people, and the people paying for themselves and the other people are saying we have had it. we don't want to do this. at the state level they are moving. what you have in a state like california, for example,. is taxpayers leaving tax takers coming in. that is a death spiral that cannot continue forever. so what you suggest is very nice on paper, but the way it works in practice if we're going to be a free people is a

generous practice like in the states of new york and california. host: the house g.o.p. weaponizes the constitution. that's a line that says we are a nation still wrestling with how to define the nation welle fair. -- well fare. guest: it is a blank slate. details to follow later, to be filled by subsequent generations as they see if it. well, if that were the case, it never would have been ratfied. don't forget the founding generation fought a revolution to rid of us overwhelming

government. and then the declaration of independence, especially states and how they were running rough . guest: it was designed to be a document for limited government. and there are countless provisions that demonstrate that. none more clearly than what i said at the outset, the doctrine of enumerated pours. it shall powers. look at article one, section eight. you can see them. now if david corn and others say these clauses are so baud, you can read them to alou all the government we have today. if that was the original understanding, they never would have ratified the document. that's not what the framers and

ratifiers had in mind. and there's evidence everywhere as to what exactly they did have in mind. and in fact, i can give you even better evidence. did you recollect the deal when this constitutional revolution took place, and we moved from limited to expanded government. here is what franklin roosevelt said writing to the house and -- the house ways and means committee. he knew exactly what he was doing. even better was rexford tugwell reflecting on his works. he was one of the principal architects of the new deal and said in order to get our programs through, we had to engage in tortured interpretations of a document that was intended to prevent them. notice, they knew exactly what they were doing. so when liberals today say the

constitution allows all this government. they are just dead wrong. look at the people who were responsible for turning the constitution on its head. they didn't believe the constitution allowed for all this government. they knew they were engaging in slight of hand. but they thought they had a huge reason to do it and the effect of all of it is to abandon rule of law and pose in politics. so much of today is politics, and so little is law. >> -- host: can you text us? you are on with us on the republican line. caller: you make a lot of sense. the lady that called in and said she is happy to pay for hers and would like to pay for someone else. no one stops these filthy rich

people like the obamas or soros' to pay for things for somebody else. we saw that on diane sawyer's show. you think she kicked in half a million dollars to pay? no. she steals it from obama care and that's how they work. the democrats wouldn't have a problem if we read the communist manifesto but if we read the constitution it's outdated and terrible. they are the ones that are outdated. guest: i like that caller. nobody is stopping us from engaging on private charity. in fact,, we are the most charitable people in the world look at who contributes to tragedies around the world. haiti for example,. government contributes a great deal. but private charity contributes much more. so there's nothing to stop bil

-- bill gates and others from contributing. there's no one that should force it, though. that's called theft. caller: i was worried about the second eament in the constitution. when and why it was adopted. can you tell me that? educate the people on that. guest: well, first of all, every man was expected to be a member of the militia and to provide his own arms for that purpose. so they wrote the second amendment right after the first to make sure the right to keep and bear arms was to be protected. is it -- part of the reason was they wanted to protect themselves against an oppressive government.

that's a little different today. but the basic point is that this is one of your basic rights is self-defense. whether it's collective self-defense through a militia or something. it's taken so many years to get clear about the meaning of the second amendment. which i'm pleased to say the cato institute's bob levy was on the part of the helping underwrite and the court decided a right to keep and bear arms is a right not by virtue of being a member of the militia. right now we're litigating how extensive that right is. two years later in the mcdonald case out of chicago, that statute in chicago was found unconstitutional. so even the states cannot inthibt right to keep and bear

arms. that in a nutshell is what the second amendment is all about. and of course, as you know, caller, and probably from your question, the left has sort of treated the second amendment as an embarrassment. that's unimportant to. because it's not an embarrassment. it's there, and it's there for a reason. host: jesse jackson made that point on the house floor. >> i also want to be clear. i recognize this is a request. this is a request, that in reading those dedacted -- this is very emotional for me. this is very emotional for many members given the struggle, and i am not trying to take a shot at the process. mr. goodlatte knows me and he knows the spirit which i am approaching this. given the struggle of african-americans, given the struggle of women, given the

struggle of others to create a more perfect document while not perfect a more perfect document to hear that those elements of the constitution that have been dedakotaed by amendment are no less -- dedacted by amendment are no less serious to improve the country and to make the country better and our sense in our struggle in whom we are at the congress of the united states at this pnt in american history and our desire to continue to improve the constitution, many of us don't want that to be lost host: was there a loss? guest: no. there was not a loss. they read the constitution as it exists today as amended. the parts that are left out are the parts that are no longer law. the point of the objection, it seems to me, and it was brought

out yesterday in a very nasty "new york times" editorial, is that the left wants us to wallo in the since of the past. we all know about the since of the past. slavery. jim crow. the failure to give women the vote. let's remember that when the constitution was written, the franchise was far wider than it was anywhere else in the world. so the idea that you should treat this as though we should have been born pure right from the outset is simply ahistorical. so they left that out because they wanted to read the constitution as it exists. nothing should surprise anybody about that. but as you know lots of folks on the left like to denigrate not only the founders but the whole limited approach to federal government. because their inclination was

to -- host: lou, go ahead. caller: thank you for this wonderful program this morning, and god bless you for doing this. i just love it. basically, i have a lot of problems with the way our government is. article one, section one of the constitution is one. all powers shall be vested in a congress of the united states consisting of a senate and house of representatives. where in the constitution does it give the right of bureaucrats to pass laws and rules and make them. to me we are not being governed. we are being governed by a committee of dictators. they weeded out all these people to make rules and laws. and i've had enough of it.

as far as i happened to have a chance. when there was a constitution day one said there's nothing in the constitution to give -- that congress has the right to give their powers away. host: you put your finger on a very important issue. let me take a moment to explain in a little bit more detail how it is that we move from the original constitution to what we have today. guest: there were three basic steps. first of all, and most important in 1937 the eadvice ration of the doctrine of enumerated powers. that was the main restraint on government. the bill of rights was two years later. had this mean we didn't have any protection against the zpwhovet -- government. so that was the first end road.

that's what we're hearing about most today. where is the congress' power to enact obama care. for example,. then when the court bye per indicated the fundamental rights like speech, voting and later personal rights which would getal strict scrutiny if the law economic freedom. if a law implemented those, the court would apply what's called the rational basis test, look the other way, and the law would sail right there. so that opened the flood gates, but as the laws were pouring through, there's so much congress can do to write legislation. i felt they are going to try to regulate every aspect of life. there's a lot of things to regulate. this is what your caller points to.

this is the third point. they started to delegate their legislative power to the new executive federal branch agencies they were creating. that was the third step. that's what your caller talked about. it said that means congress has the responsibility and the duty to the do it. now you've got over 300 agencies, who, as your caller said, are regulating every aspect of life. and they legislate. they execute and then they have administrative law judges who adjudicate them all in the same branch. what we call the modern executive state. so your caller is absolutely right. it's called the abuse of the

non-delegation doctrine. >> when you get statements saying it can't change. but you say it has. how do you explain that? guest: it's a living document. that's how the civil war generation went about applying the bill of rights against the state. because before that it applied only against the government not the states. what happened during the new deal is that indeed they entertained during the first four years of roosevelt's administration. so the question is that the -- are they misreading the constitution? guest: well they decided to do it by slight of hand rather than amend the constitution.

roosevelt in 1937 after the landslide election of 1936, unveiled his infamous court-packing scheme. the threat to pack the courts with those of his own persuasion. they went about rewriting the constitution. that's where the liingal constitution comes about. you can fill in spaces with what we call transient authorities. the constitution is for limiting the government. might as well throw the constitution away and just have us decide everything by majority rules. we don't live under a democracy. we live under a constitutional republic where bipeople are elected to the various offices.

caller: thank you for taking my call. i realize the constitution was written over 200 years ago and they didn't have health care and gas and everything else you said it's unconstitutional to collect money for health care yet we have car insurance that's enforced by law. and it's a for-profit organization. yet people are forced to pay it by law. and it's just communist for them to collect money for a for-profit business that is forced by law. i mean, what other business is there guest: let me respond to that. there's a fundamental dirps between the requirement that you carry automobile insurance and this new requirement that

you buy health insurance. the reason you're required to carry automobile insurance in order drive is to protect others from the damage you may cause them. in other words, you don't have to drive. but if you do, you've got to be in a position to make good on the harms that you cause to other people. that's the way the principal behind the -- and you don't have to buy autoinsurance. you can self-ensure if you choose to do so. and there are people to the who do that. a health care mandate is to be a citizen. this is unprecedented in history the idea that congress can compel a person to buy a product from a private vend irjust for being. fundamental distinction between the two. host: is it possible portions

of the constitution may be outdated in this complicated global world? >> not written. not written in such a general way that it is open to any interpretation. i mean, the first amendment. take that. they spoke of press. well, they didn't anticipate c-span. obviously. but of course, they were speaking of press in a broad sense. so there's no difficulty in incorporating television under that. and so, too, with other provisions. in commerce they didn't anticipate railroads or airplanes and so forth. but that commerce can be chosen to include, if you do want to change things then of course, you do that through amendment. that's the fundamental point.

? -- if people want all this government, there's a way to do it. you amend the constitution. but oui seeing people -- but we're seeing people don't want that. that's why they changed it in this last election. caller: i'd like you to towards interstate commerce clause but when the constitution was founded, people purchased from local industries and bought from a local dress maker. now we're buying stuff. not just from overseas. but new jersey doesn't make cars. it seems the interstate commerce clause is elastic and covers everything. >> i think new jersey does make cars. guest: in any event, to get to your main point.

the commerce clause you hear a lot about today, because it is the clause of the constitution through which so much regulation takes place. . .

indeed, that was the way it was read in the two cases. host: in alabama, congress is authorized to make provisions for the common good via the general welfare flaws. caller: -- guest: it is not really a cause but a phrase with than the taxation flaws. the first of the congress's enumerated powers is the heart attacks which is limited -- is the power for the congress to tax. the fate of the general welfare

-- and i will get to this in a second, but it was meant as a restraint on the politics tax in the following way. the kid tax -- you could tax for roads, post offices, and so on. it had to serve the general welfare. this debate came up early in her history and alexander hamilton introduced his report on manufacturing in 1791 which was an industrial policy scheme for the country. congress almost immediately shelved that. there were not about to engage in that kind of expansive government. the debate that took place between hamilton on one side and jefferson, washington, and everyone else is illustrated of the point. hamilton says there is an

independent power in congress to tax and spend the general welfare. if that were the case, since money can be used for anything, then any time congress wants to do something that is not authorized, but has no power has been given under the doctrine of enumerated powers, they can simply say they were tax and for the general welfare and they can run around the doctrine of the enumerated powers. what was the point of having enumerated converses other 17 hours if at any time they wanted to do something -- enumerated converses the other 17 powers if they wanted to do something? they could have stopped right there. there were absolutely right in that. host: pennsylvania on our democratic line. caller: just to expose one of the frauds that this hoaxster is

propogating. go ahead and laugh. do you think george soros will be happy that you are attacking him because he puts so much money into the qaeda institute? -- cato institute? go ahead and laugh. there is a nice ivory paneled walls and it is a chield for -- shield for wall street. you want to get rid of the general welfare principal because it will be easier for these wall street clowns to rollover the state. guest: tell us what you really think. ok. i do not know where you find these callers, pedro.

this man has obviously not look at our annual reports. if he had, he would see that george soros does not give us one penny. i can stop right there. we do not have wood panels. we're funded by individuals mostly. it is less than 2% of our money that comes from corporations. we're funded almost entirely by individuals and to some extent by foundations, but that is the nature of our funding. it is all voluntary. we accepted no government money. host: cordova, md., on our independent line. caller: good morning, pedro. you hit a grand slam this morning. sir, you are a natural -- a national treasure. we should put more people like you on the airwaves. we home school so my kids get to

read, understand, and think about the constitution. we take frequent trips down to williamsburg which are would highly recommend that c-span go down there and interview people like those who play patrick henry and bring those guys on the line. to my larger point, c-span has had a lot of great issues since christmas. a lot of them tied together. the bottom line is that our country is broke. the only reason we do not do what is happening in europe is because we have the luxury of printing money. the world boxing currency is the dollar. we would be in bankruptcy if it were not for the facts. we need to go back to the constitution. keep doing your great work, sir.

host: -- guest: you are right about the deficit and the dead. there are only four ways the government can obtain money. they can tax, barrault, sell property, which would be a good place to sell money, where they can print money. all of those have reached their limit, so we need to think about not getting more money but ending more programs because we are. . ourselves, our children, our grandchildren. -- we are bankrupting ourselves, our children. fortunate that we are not in as deeply as some of the western european countries and of the constitution as a touchdown for getting this out of this situation host.

host: winston-salem, n.c., on our independent line. caller: how are you doing today? i have one question. this camera from a caller earlier regarding the mandate that states have for liability coverage. as far as i am aware, in north carolina rican -- we can not self insure. there is still a mandate there. i'm understand the logic return -- for a mandate in both situations. my question with regards to health care is how does -- i guess, how is it someone without health coverage getting health insurance from an emergency room or someone else's legally mandated to provide it

with respect with the ability to pay, how does that not cause any problems, might cost to go up, and causing me to hurt as a result -- as a result of someone not having health care? guest: the underlying law that requires that people be given care and those of us responsible being able to pay for it. obviously, this is a problem. it is forcing transfers from a tob. 0-- a to b. the health-care system is a mess. it is a mess because the government has involved since the get go. it was during world war ii that we started down this world -- this road.

employers, in order to keep employees come and give them fringe benefits among which was health-insurance which was paid for by pre-tax dollars and you could pay for it with pre-tax dollars from the employer and the employee. that was the start. from there, there has been an increase in the said of regulations which give us -- and increasingly set of regulations which give us what we have today including what you were talking about. if we had a truly free market in health care, it would be a far superior such a ration to the one we have today to say nothing of the one that is being promised to us under obamacare. in which, most of us would carry health insurance and we would be able to have a system whereby people could contribute to those who did not work could not pay for their own health care to do so voluntarily or you could even

have something like health care stamps like we do with food stamps, rent stamps, were like. -- or the like. it would be less costly because new would not have the monstrous system we have today. we have systems like we do at cato like health savings accounts. it gives us control over what they spend. president obama said the have health care today, do not worry. you can keep it, nothing will change. well, it has changed. under january 1st, there are lots of things that you used to be able to pay for understand that we can no longer pay for under our health savings account. things have changed. eventually, we may lose it. things are changing rapidly. host: florida on the democratic line. caller: think you for taking my

call. i am nervous. i am sorry. i work in the health-care industry. i work with a brain and spinal cord injury program. i worked with a lot of these guys were up $30,000 motorcycles with insurance. guess where they wind up? in the brain and spinal cord injury program for the rest of their lives. i have to pay for that. where is my rights? where is a guy who has insurance on his gun, he shoots himself, then we have to pay? where are my rights to not have to pay for their stupidity? i am sorry to sound like that, but where were you when the medicare plan in the past and there was no funding behind it? -- medicare plan d passed? guest: we were opposing it. caller: where were you when

boehner was taking money from the cigarette industry? the use of justin putting them on the sides of the street? -- are you suggesting putting them on the sides of the street? guest: you are asking where is your right to not have to pay for the stupidity of those people. i think you should have that right, but that means by definition we will leave these people on the side of the street to be taken care of by people who are willing to subsidize them. that is the alternative. host: last call from shreveport, louisiana, on our republican line. caller: thank you for taking my call. we, as a country, are woefully ignorant on the background of the constitution. the argument you hear from the left is that this is a day to

document and how can live by what they told us over 200 years ago when, in fact, the founders went to great lengths to make sure that would not happen. the hypocrisy comes, although they will sit there and argue that we should not have to live by what jefferson, washington, and the like said, but fdr and his social security program for the rest of our lives. i just wanted your comment on that. guest: when you go down the road of socializing things, we are all in this together and that means that the people are responsible and having to pay for those who are not responsible. the only escape, as we see people in california, is it to leave the state because of the rise to become increasingly the

guardian of people's foolishness. if you want to learn more about this, you can go to our web site, www.cato.org, and you can find all sorts of things. we have a pocket constitution that many of the members of congress do carry in their pockets. it has the declaration and the constitution. you can get a copy from our web site. if you want more detail on the issues we're talking about today, i had a piece in "the boston journal" on tuesday calling -- "the wall street journal" called "congress relearns the constitution." would they're going to have to do in order to start rolling back some of this government

regulation is to enact the bills that themselves do not have any constitutional authority but are necessary in order to rectify the wrongs of the past. it'll be interesting to see how they will work out the technical details of that. basically, what so many people are asking, is not to institute so many programs which do not have authority for. there is too much on your plate already that needs to be addressed in the way of past programs that do not have constitutional authority. that is the main point we need to get across. it is not so much the bill of rights that was meant to be our protection. it was the idea of then we gave the government only limited authority. that is what we have lost sight of, the fundamental principle of the constitution, and it goes to the issue of legitimacy. the reason the car the government has is the demint in so far as this is because we

gave it that power. -- the reason the power of the government is a legitimate is because we give it that power. host: roger pilon, thank you. recently announced cuts to the budget. we have the defense and foreign policy reporter for " congressional quarterly." we will have that when we come back. >> thank you very much, mr. president and mr. vice president. you have honored me and my family by giving me an opportunity to serve you and to serve our nation. >> with more than 80 appearances by william daley, you can use the c-span a video library to learn more about the newest additions to the obama administration. there are two of the 115,000 people you can search for any

time on our c-span video library. washington your way. >> this weekend on the c-span2's "booktv," the geopolitical importance of the indian ocean region. on his experiences from "rage company." there is a person everyone decision a person makes. most of the not realize how often it is a shaping factor in everyone's lives. signed into their schedules e- mailed to you with our "booktv" alert. >> i think the news organizations have adapted. overall, news organizations are not doing more foreign news, but the public first responsibility here, too. the public has a responsibility

to keep themselves informed. >> senior foreign affairs correspondent martha raddatz looks at the wars in iraq and afghanistan on a political, strategic, and personal level at 8:00 p.m. on c-span's "q&a." >> the cs then networks provide coverage of politics, public affairs, non-fiction books, and american history. available online, on radio, and on social the merging sites. the that are content anytime on c-span video library. bringing our resources to your community. washington your way. the c-span network now available in more than 100 million homes. created by cable and provided as a public service. "washington journal" continues. host: our final guest is frank oliveri, a congressional defense

and foreign policy reporter. can you tell us about the cuts for the defense budget and put that in the context of the whole budget? guest: absolutely. you were looking at $178 billion. about $100 billion is money they will put back into the defense department for modernization. the $78 billion is a top-line kind. to an average american, that sounds like a lot of money. i would love to have a fraction of that personally. $78 billion in the context of the defense department is rather small. over the next five years, the defense department anticipates spending about $2.80 trillion. this is a fraction of a percent of the entire five-year plan. $78 billion over five years. not a huge number in that context. on capitol hill where there are many parochial programs and

concerns that lawmakers have and where they are concerned about two wars, the drawback in iraq, 140,000 troops in afghanistan with a tough were there, there are concerns that is this the time to be cutting back on defense. secretary gates made a compelling point the other day. basically, but compared to the rest of the world, we spend a significant portion more than all of them combined. the u.s. defense, the military, is quite clearly the best in the world. when he is saying is there are areas in which they have made some cuts and the have made cases where there are problems and they have been consistent problems over several years now. host: did the secretary initially resist the idea of cutting the budget? guest: initially, yes.

the status quo is a much more comfortable place to be. the relative, and even a based on what he had done in past years were last year's five- plan, he is only fractions of of that, too. it is a very small change. it is easing into this. they kill programs that were troubled, the marine corps's amphibious vehicle of the future. they had anticipated buying twice as many at one point then they eventually were going to be able to because the cost had grown so great. you have real difficulties on both ends. this is really the opening volley of a long budget priority between democrats and republicans on capitol hill and on this link with the president. host: can you give a broad brush

of how they affect the individual branches? guest: the navy found about $35 billion in savings. the year force found about $34 billion in savings. -- the air force down $34 billion. it is roughly about $100 billion they came up with in savings. they will get some things back. the navy shifted 6000 people from atlanta-based post -- land- based to sea-based. they changed how they'll buy the f-35's. the second fleet was based in norfolk. they shut that down. the marine corps is funded through the navy. what is important is the joint

strike fighter. the marine corps varian twitches -- variant which is a jumper, they are at a point where they are supposed to begin procuring that. gates said they will have to look at a structural redesign because they are having so much difficulty. the airforce, on the other hand, they are consolidating their operations centers, making changes to communications infrastructure, improving supply, things like that. the army is terminating a surface-to-air missile, a launched system, and they will say something like $1.40 billion in military construction. they will get quite a bit. host: fank oliveri talking about cuts being made to the defense department. your questions and comments can be done by calling the numbers and your screen.

journal@c-span.org and @cspanwj. how will medical benefits to be affected? guest: there are people who are retired military still of working age to the defense department should pay somewhat higher fees to be a part of the military health-care system which is called tricare. the have not raised fees in health care, by the way you and i do not enjoy this benefit, since the 1990 proxy. -- 1990's. they are paying $400 or $500 annually when we are paying thousands. congress has routinely rejected these fee increases so that will

be a fight. this would only affect those retired military personnel who are of working age and often times they will forgo their companies' health care because the military health-care system is so good. there will be some fee increases that he is proposing and, again, it is unclear whether congress will vote. host: the congress wanted so much, the defense department wanted so much, so what will happen? guest: it will be an interesting year. you have two houses divided, so to speak, and the republicans are also dealing with some of ford -- awkward points of views. they want to reduce the deficit but they want to not include defense spending. that is better than 50% of the

discretionary budget. the democrats feel that we need to have some defense involved in this or you cannot make the numbers add up over time. you also have to remember, and the secretary gates pointed this out, defense has literally doubled over the last decade. there is a war going on, for sure, but also remember we have separate appropriations that are going to fund the war every year between $100-$120 billion every year to fight in afghanistan and iraq. there is a lot of money the defense department has been taking in. this is where the priorities began. some have noted that this is a clever play by obama to create a situation where the republicans will have to say no to deficit reduction efforts by the administration. there are legitimate arguments

at both sides. you are on board. politically, it is difficult to have defense cuts during a war. on the other hand, the defense department, it is hard to defend them when you have programs like the joint strike fighter which has exceeded its budget by enormous amounts. the overall cost of the joint strike fighter program they will buy more than 2400 of them and the cost of this is roughly $360 billion. since 2002, the cost has increased by $100 billion over projections. there have been numerous problems with the program, wait related problems, so when you look at just that program it is very difficult to make the case that the defense department does not have areas where they could be able to cut. host: first call from philadelphia, pa., on our democratic line. caller: good morning, c-span.

i feel like i am living in a banana republic run by despots. we need to reduce the cost of the pentagon. we have citizens dying in arizona. host: are you there, caller? caller: did you hear me? we have citizens dying in arizona but they will not cut the pentagon budget. i know they are not related. i am ashamed of america right now. thank you. guest: i am not sure there was a question in that, but this is what we're talking about. the president has laid this out for the congress that congress will now have to work out what their priorities are. there are people in the congress to truly believe that national security is one of our greatest

concerns. it is for to the function of government and they feel like defense spending is necessary. there are people, however, on the other rented the van some of these problems the defense the problem -- the defense department has had with managing budgets and over shooting every procurement program the have launched, and i can honestly not tell you and i have covered this for many years -- i cannot tell you any defense program development that has ever met its cost. now, you are building something from an absolutely clean sheet. this has never existed before. now we are building it in very dangerous dynamics. aircraft, for example, but once you get it in the air, those planes will fly right into the ground so you have to do testing. there is risk involved. american service members place their lives in the developers hands. the costs are difficult to

prevent. it is a to the congress to determine what the priorities are. they will determine what parties are by pulling the purse strings. host: republican , virginia. good morning. -- republican line, virginia. caller: we can all agree that there is a big problem with spending when it comes to the federal government. we all know that with any program, including defense, there is a lot of waste, fraud, and the views which needs to be cut. -- and abuse. i have been really involved with onlinea party side with

discussions. a lot of people in the pentagon, and i hate to say this, but we are talking about government jobs and people who make a lot of money. probably one person -- five people are doing what one person can do, i personally think. i would like for you to chime in and give your expertise, but i think that congress should go down to the pentagon, walked up and down the halls and tap every third person on the shoulder and say, "you are fired." guest: that is pretty draconian. you have to think about this. there are people who are civilians who work in the pentagon. i have covered the pentagon for many years. they are civil servants.

they serve their country just the people in uniform. perhaps they do not have the risks that some do. some go into combat zones and live with the same danger that soldiers do. in modern warfare were you have ied's and the civilians are getting a lot of with their military counterparts. -- getting blown up with their counterparts. there could perhaps be better ways to do business. secretary gates pointed out that they will be curtailing the number of contractors, people who they basically rent out to do work of the defense department. we have found over the years of privatizing certain functions of the defense department did not exactly turnout the kind of savings that people thought which is a strong point that republicans for many years were

making that privatization would, in fact, cut costs. it has turned out to not be that way. and costs more to ask a civilian contractor to work on a weekend less than someone in a uniform. these companies are taking a slice off of the top for profits. the defense department does not have to deal with it when it is their own people doing the work. there are changes being made and efforts to shrink down the process. at the same time, the defense department was taking away the acquisition professionals, people who could look at the process from development to the actual procurement of weapons system to try and get as much savings from the process as possible. many of those acquisition jobs in an honest effort to try and save money, the belief that you could take this hit a lot of the system and leave it to corporations like boeing and others to manage large defense

programs and hope that they would manage this in their own interests cost effectively. it is turned out that has not worked out so the defense department is spending a great deal of money at the behest or the order of converse to bring more acquisition professionals into the process to try and get a handle on spending. frankly, there is not a person in the defense department or the congress who will not telling the cost of doing business has grown enormously in just a short period of time because you do not have the oversight that you need. host: off of twitter, why is the retirement age not mention the dax 20 years is not enough when the rest of us work until age 67 or long terer. guest: 20 years is normal. there are a lot of military people who stay longer and

stayed beyond that. many people who leave the military early, advanced and starts to shrink. it is a bottleneck is climb higher and higher through the hierarchy. some people and of having to leave after 20 years with no place else for them to go. the defense department brings new blood in. it is not a very simple process. retirement age, in the context of society, that is a debate congress will have also when they talk about social security. should they raise the retirement age? they're trying to incentivize that in social security. you can retire at 65, but you can get less money. if you retire at 70, you will get more. it is a very difficult question. within the defense department, police departments, fire departments nationwide, a 20 year standard is fairly common. host: michigan on the

independent line. good morning. span.r: god, i lvoove c- anyway. you can almost forget what you call for. the reason i was calling was because there seems to be -- you know, i have on tape from a few years ago when secretary gates was talking about the waste, money going to nothing. now it does not matter what and any of those hearings that had to do about the budget, this has to be about defense. they always talk about all of the waste. here it is a few years down the road and they never really seemed to do anything about it. they never tell us who loses their jobs from being

incompetent. in the real world, you are eager stealing or [inaudible] guest: defense secretary gates has been pretty proactive about addressing shortfalls in performance. the former program manager of the joint stryker program, a stealthy fighter, when they did a reassessment last to the program manager lost his job. the airforce secretary, the chief of staff were both fired a few years ago based on performance issues based on guarding the nuclear stockpile. there has been more accountability introduced to the system and gates will point that out when he has the opportunity to. nonetheless, the defense department is an enormous enterprise.

it has literally billions and billions of dollars flowing in and out of the every single day. then you have the congress that annually is controlling the budget and shifting funds back and forth. not only is it just incompetence but it is also the nature of the system. each year, lawmakers pass a budget that essentially change how you go about doing things. that, oftentimes, can disrupt the system. the have tried to address that in veteran affairs but -- funding where they are on a two- year cycle and they feel like it could help them control costs better in the va. it is a tough question. there is a lot of going on and a lot of well-meaning people. i am reluctant to use the phrases like "waste, fraud, and abuse." a lot of times, these people are not in a situation to succeed. host: is $78 billion a cut in

annual spending or to be realized over an extended period of years? guest: over five years. what will happen is this is $553 billion request for the base funding of the defense department. on top of that, you will see about $120 billion or so more that will fund the war. they are managing about $600.- 64771073 per year. what that means -- $630 billion per year. you will see a 1.5% increase above what the omnibus would have given if they had passed. they did a continuing resolutions of the number is a little bit less. in 2013, there will be a 0.5% increase in the plan for the

defense department base budget. after that it will fly now where there will be no growth at all. beyond that, secretary gates has warned that we will need to see about 3% or 4% growth in defense spending. host: miami, florida. go ahead. caller: good morning. happy enew year. a couple of weeks back, i realized our country sends out a lot of money with breadbasket programs toward other entities and the states. essentially, in the world political theater, they voted against us with resolutions and such. my question is why would it be draconian to stop supporting other countries instead of cutting into our own defense budget? why don't we just stop spending

out of this breadbasket money and had our defenses with it instead of further driving their country into a state of weakness by cutting our own limbs off? we should be cutting the money that goes down there to people who really did not work with us. guest: are you talking about military aid? host: -- caller: there's no sense in spending money. it works against us. i am not trying to be draconian, partisan, or nothing, but it just don -- does not make any sense to be cutting spending on the military. we could really be influencing policy in other countries quickly. host: i will stop there.

there will be money heading to pakistan as reported in "the washington post" this morning. guest: there was a time when we did it take all of our money and support out of pakistan. it was a very dicey relationship. the defense department, our government in general, and the past republican administration was having similar issues, us not providing aid to them and not communicating began to create conflict between the two countries. we started to understand each other less. it is a similar form -- problem with china. china has withdrawn all military contact with the united states. we did not provide a lot of aid to china. in fact, they have been buying our debt for a while now. when you lose that connection with these countries come animosity, misinformation begins

to cloud the relationships. we need pakistan now. pakistan is an important ally in the war on terror. is a place for terrorists are trying to gain a very strong foothold. they are fighting and dying by the thousands against the same threats that we face. al qaeda is very powerful in that country. we try to foster that relationship. i am not saying this is a good or bad thing. this is a policy discussion, but it is widely expected that we need relationships with a country like pakistan because if al qaeda were to get to the point of a destabilized government and perhaps cause problems, pakistan sits on a nuclear arsenal. we are afraid of them coming into contact with these weapons. they want, and are quite willing, to use them against us.

the u.s. feels like, and this was the bush administration and obama administration's feeling, the engage in with them is very important. the u.s. is taking efforts to integrate more closely with some of the governments in africa because outside is starting to find their way -- because al qaeda is finding their way into the government's where they have failed. the idea of the fortress united states where we stay in our self-confidence and everything will be fine, i am not sure if that is broadly accepted. yes, we have difficulties getting along with them. we have a very strange relationship with saudi arabia. they are a close ally with us. we take a lot of oil from them.

we work very closely with them in the middle east. the only reason we are concerned about the middle east is because of the oil. we have a close allies there. isreal, egypt, so on. there is a lot of saudi arabian money going into their coffers. sometimes you have to be in bed with very strange partners, but the u.s. has generally found, historically speaking, that when we disengage there is a greater likelihood of a miscalculation that could get americans killed. host: off of twitter, did the had the same amount of the management that they did during world war ii? guest: i would be hard pressed to know that. there were 8 million men under arms during world war ii and we are nowhere near that amount of people now. that is just soldiers, marines,

naval personnel, air corps. we were highly mobilized for warfare on a world scale. it was a different time. host: providence, ky. we move on to fort myers, fla., on the republican line. caller: i have a couple of comments. i retired from the army in 1980. tricare is fine if you live near a military base, but if you are away from a military base they will not even pay 50% of the cost of medical services. i did not use tricare because it was so good until 65 and then it

combines with medicare and then it provides a good service. i'd like to make another, the retirement. yes, military people get 50% of their base pay when they retire, but that is not compatible with policeman orired firefighters pay. they get more than 50% of their retirement because they have separate accounts for uniforms, rations, and what not. it is not compatible at all. you are right that the system forces people out because they reach limitation and they are senior grade enlisted.

after 10 years, it does no good to move up into commissioned service because then you have to stay in 30 yeras. guest: he retired in 1918 and he is getting 50% of that salary for 1980. -- he retired in 1980. i do believe there are cost-of- living increases, but i did not want to make it seem like he is living off of a 1980-based salary. the military and does not pay like they'v did back then. there are a lot of bases in florida, and it is difficult to get to these facilities. it is difficult for those who use the veterans hospitals in

florida. they're trying to open up clinics, but it is a real challenge. host: riverdale, new jersey. caller: this morning. i understand what mr. oliveri is saying. i know we have to innovate our military so that we can be competitive in the world, but i do not understand why we needed to have all of those bases still from world war ii in germany and korea? why can we not move personnel from those areas so we can cut costs from the military? guest: that is a really good question. this will be part of the debate this year. there was a recent commission that look that the deficit questions and where money could be found. senator tom coburn had proposed closing a fairly large number of overseas bases. there are cases to be made, and

defense secretary gates mentioned that they are looking at overseas bases. you have to work closely with your allies and often times they like the fact that we are there. they like to have a u.s. presence in some form or another. in some places, they do not. the japanese are not happy about troops base in okinawa, for example, and would prefer to see those marines moved somewhere else. there has been discussion about the days come and there could be a chance that they would move out. there are other places where they are not thrilled to leave the region see us leave, perhaps. in europe, they like having u.s. forces presents even in smaller numbers. south korea is another place where we have drawn down significantly the number of troops to have that base there. obviously with the recent upheavals between north and south korea with the actual

artillery fire exchanged, that is a very dicey place. we cannot have a peace treaty there. we are in an uneasy state of war for a black a better term along the borders. -- an easy state of war, for a lack of a better term. there is a debate coming whether there are overseas bases that the u.s. can close down and save money. that will be on the table for discussion. a valid point from the caller. host: on the independent line. good morning. mike, go ahead. caller: first time calling. my question does how much does the -- host: turn down the television. caller: -- host: upton, md., on the line.

-- elkton. caller: an earlier caller suggest we cut every fourth person in the pentagon. a better solution for reducing costs would be to identify and logistical issues earlier in the weapons systems life cycle which would reduce costs down the road and make the system much more effective. as a side note, too, has a 17- year federal employee, i have been deployed voluntarily twice to war zones and i am offended by the president's decision to end [inaudible] that is the end of my comment. think guest: you. -- thank you. guest: my sure a lot of people would be offended by someone's

finger should cut every fourth person. the weapons process does need to be reformed. every year, people talk about acquisition reform and it is a very challenging environment. again, i want to stress, the airplane you see flying out there at one time never existed. it was in somebody's mind. taking it from paper to actual flight, then operating in some of the most dangerous, intense dynamics that you could operate something, it is very challenging to build these things. you were going to have costs. the idea is to find a better way to control the process, to mitigate the risks, and in some cases tried to may be lower the expectations for some of these systems. in the 1990's, there was an idea that we did 85% of what you wanted to visit and that spending and non godly numberless 90% of your overall procurement costs -- an ungodly

number of about 90%. he did not try to get to that extreme performance level because getting almost there was still better than anything out there. good as anytill as fighter in the sky. are still fighters are top-of- the-line. the radar on those things and so on are incredibly capable. judging that is really where you start having issues with money. we have been at war for 10 years now. even before the war started, we were flying over no-flight zones over iraq. our aircraft is being used intensely all the world. what do they want?

they want to scramble the fighters. the air force has committed to building f-22's and f-25's forevery. -- forever. they forgo more purchasing. now all eggs are in the f-35 baskets. b-10, b-52, some number of b-2 are all getting many hours of flight. the average age is somthing like -- something like 25 years old. we have never had airplanes this old flying. there have been some judgment calls that perhaps have not

worked out for the best for us. the have to really figure out how to make this f-35 work. it is an enormously expensive enterprise. you are right that there needs to be reformed. it is easy to just say, but it is quite a challenge to live. host: south carolina, you are on the line with frank oliveri. caller: donald rooms filled gone on the news and said it was $2.30 trillion missing. five never heard anything else about what donald rumsfeld said. guest: i am not sure what you were talking about. when he came into power as the defense secretary, he lived at the defense department and wanted to shift at the defense department did business focusing a great deal on capability

rather than quantity. in that way, he had hoped that he could perform the defense department in such a way that you would have fewer numbers of former cable systems, systems that were forced multipliers, that made your force that much more powerful, a bomb that carried bomblets. that is a very small example. what happened at that point, and he anticipated savings of going to come from this capability shift rather than quantity. there were some people who had problems because there is a belief, and it is fairly well founded when you looked at the chinese developing a large number of aircraft, a belief that quantity has a quality of its own. what happened with secretary rumsfeld was 9/11 and we were

with the war -- in war. he got distracted fighting a war and he took an enormous amount of responsibility for what was being waged in iraq. president bush decided he needed to go and some point. some of the reforms they were proposing for the defense department when he came in never came to the because we were at war. host: one more call. ocean beach, california. go ahead. caller: i the question in regards to pushing the democracy agenda, pushing instead women's rights. guest: they are kind of linked, aren't they? i do some of foreign-policy work. reforms relating to integrating women into society has been proven in a lot of different societies that york econo