at 8:30 eastern, democratic representative gerald connelly of virginia will take your calls about the budget and deficit reduction, and political unrest in the arab world. our series on the recommendations of the national commission on fiscal responsibility and reform continues with commission member of alice rivlin. host: in a new washington post poll, americans want to cut the debt, but they're not willing to cut entitlements such as medicare and medicaid. that is what we want to talk about this morning on the "washington journal." are you willing to cut entitlements to cut the deficit? we have divided our phone lines a little bit differently this morning. we have done it by age. if you're 65 and older and you

have an opinion about cutting entitlements to cut the deficit, the number is on your screen. if you're between the ages of 40 and 64, the number is 202-737- 0002. for those of you under 40, the number is at the very bottom of the screen. here is "the washington post" article. "poll finds little backing for debt remedies."

the article goes on to say that the president and congressional republicans have set out sharply differing blueprints to deal with the looming problem. obama has called for agreement --

now, here are some of the numbers when it comes to cutting some of the entitlements. first off, in order to reduce the national debt, would you support or oppose cutting spending on medicare? support -- 21%. opposed -- 70%, strongly opposed, 65%. cutting spending on medicaid -- 30% oppose that, total oppose, 69%, strongly opposed 52%. cutting military spending -- 42% support that while 56% oppose it. raising taxes on all by a small percentage and making small reductions to medicare and social security -- 45% support, 53% oppose.

raising taxes on incomes over $250,000 -- 72% support, 27% oppose. cutting entitlements to cut the deficit -- what do you think? we have divided it by age. we will start here. buck, how old are you? caller: 80 years old. host: what do you think? caller: i do not think you should cut the entitlements on medicare because you are a people who bought into the medicare system, social security, and the only have to pay a certain amount. i was in the military course some years. i worked in civilian life until i turned 78 years old. i have paid into this all my life, ever since i have been doing. you have people buying into

this. it is not right. i do not think cutting entitlements on medicare -- host: buck, you happy with the way medicare is administered? caller: i hear that it will be cut back. i do not think that is right. i am already paying into the system. i do not go to the doctor that often. i go to him twice a year for my physical checkups and that is it. host: thank you or call in this morning. how would you cut the deficit? caller: there is one way to cut the deficit -- there are a lot of bases overseas. they should be cut in germany and some other places where we are spending a lot of money and paying a lot of money to keep these places opened. why don't we bring them back home, opened up some of the places we of closed in the united states, and then create

-- we have closed in the united states, and then create more jobs in the united states? host: thank you for calling in. mary from albuquerque, mississippi. caller: i think we should have a flat tax across the board. it is only fair that everybody pay a portion of their income, no matter how small, no matter how large. that we cut out the loopholes for the rich. it would have the poor pay something. also, earned income needs to be completely cut out. if you have been around people who get earned income, they waste it on stupid things like vacations, new tattoos, new tv's. it is ridiculous. host: so you are not willing to cut medicare at this point? caller: medicare should be left exactly as it is. i work in the medical industry.

if you see the fraud in the medicaid, it is unbelievable. the people that are on medicaid -- they take medicaid and they use their money to buy big cadillacs, diamonds, designer clothes. it is ridiculous. the american people who are around these people getting all of these entitlements are sick and tired of seeing how it is wasted. we're sick and tired of the fraud. host: we got the point. dust and is 28 years old, calling from columbus, indiana -- dustin is 28 years old, calling from columbus, indiana. caller: if you have to cut it to keep it, then we should cut it. because, if we do not, me and my little girls are going to be paying, like we are now, going to be paying for everyone else to have a program.

if you're going to keep taking my money, i would appreciate it if you fix the program. i like congressman ryan's idea of giving the power to the states. i believe 50 people working on the problem is a lot better than one big group. here in indiana, we did not vote for nancy pelosi. i know the people in san francisco would. we would vote for a man like mike pence. host: all right. kim is 44 years old and she is calling from california. caller: good morning. i think the cuts to social security are totally unfair. they're listed as an entitlement. however, that is something that people work all their lives and pay into. by no means, it is that government funded -- by no means

is that government funded, or it should not be. hello? host: we are listening. caller: as far as custom medicaid and medicare, if it would eliminate the illegal residents -- as far as medicaid and medicare, if they would eliminate the legal residents, that would eliminate a lot of the wasteful spending. i do not think it is fair that they're getting the medical attention, food stamps, having babies after babies. they are eating up the majority of the titans that natural-going bang people -- the entitlements that natural-born people have. host: we are talking about cutting entitlements to cut the deficit. if you want to send us a sweet, you can -- a tweet, send it to

twitter.com/cspan. good morning, robert. caller: good morning. thank you for c-span. nobody is talking about cutting people that are on medicare now, are going to be on medicare in the next 10 years. the people who are worried about that need to stop worrying. the second thing is, the people that are not on medicare yet, i did not know what they realize, once you go on medicare, your insurance goes up. i worked all my life. i paid for my family, $200, to 1 $20 per month, for medical insurance -- $200, $220 per month for medical insurance. i do not think people realize that they will pay more. once we get to where we decide what to do about medicare, even

if they have to pay a premium, you already have to pay $320, 2 $1, what -- $320, $200, whatever level that you are in. i think we could cut the government across the board. if somebody put a number and just cut everything by 10% -- businesses do that every time they get in trouble. they adjust to become more productive. they do it with less people. host: i want to go back to your first comment about it not affecting people for the first 10, 20 years. is that fair to those under 40? if there were cuts may come to somebody who is under 35 years old? caller: cuts as far as benefits when they become 65 or 67? host: do you think that is fair?

caller: they could do all kinds of things, like other countries do. there is no reason for somebody to sit back and wait for the government to take care of them when they are 65 years old. if they think social security will take care of them, they are crazy. right now, what social security pays does not take care of hardly anything. $1,700 amount to somebody who was making $2,500, $3,000 a month does not cut it. host: thank you or calling in. our next caller is from massachusetts, donald, 75 years old. good morning. caller: good morning. thank ts to c-span. i find it interesting that these programs are called entitlements when we pay into them. to balance the budget on the backs of seniors while the rich

go completely unscathed and get more and more, i find the time has come to really put the taxes where they need to be put, not on the backs of senior citizens. thank you. host: thank you for calling. next call, nashville, tennessee, judy. caller: i agree with the last caller. if i'm correct with what i have heard before, ge had $16 trillion in profits, but did not pay $1 in tax -- you have people who are out here on disability or social security, or even people on unemployment that pay taxes. i believe that is where the entitlements should be cut, that they should pay 10% of of the

top of what they make before they take any deductions. that goes to the government. that would cover any of our deficit. it would take care of social security, medicaid, and medicare. irginia,antilly, va. mauricio, 34-years-old. caller: i was listening to ron paul. i believe he should be in office, ok, but, talking about the deficit -- they are going to be cutting deficit. statewide are going to be cutting a lot more than you think. they are not telling us the truth. i knew they were going to do this. i do not like to hear that we will be paying $5 and to $8 for gas. we need to change the politicians in washington. they are not honest.

they're not working for us. thank you. host: another call from texas. mr. peterson, 71 years old. good morning. caller: good morning, peter slen. how are you, partner? i miss you. host: it has been about a month and a half since we talked. caller: i guess that is about right. host: what do you think about cutting entitlements to cut the deficit? caller: i want them to leave it alone. i do not want them to do anything to it. host: why? caller: it pays for itself. it is already paid for the next 20 years. host: are you worried about the deficit? caller: yes, i am.

host: so, where do we cut? caller: oh, boy. military. to many jets -- too many jets we don't use and ships we don't need. host: all right. how is mrs. peterson? caller: she told me to tell you she is 80. host: you married an older woman. caller: she is 10 years older than me. we have been married 45 years. host: good to hear from you. we will talk to you in a month or so. caller: i'm coming up there to see you. host: we're looking forward. all right. next call is from tim, hunstvill

-- huntsville, alabama. whoops, sara, 33 years old on the line. lousivi -- the lewisville, ky -- louisville, kentucky. caller: i am already receiving social security disability. i am a conservative. the young people in america -- there should not be an entitlement process. they should not assume someone should -- we should not assume someone will take care of us. the reason i am actually on disability -- i was careful to follow the rules. i remember back when the new deal and everything else was made to get us out of the, you know, the depression back in

1929, and the 1930's. there were these programs made to make as a civil society. i do not think the entitlement process is running the country. it is something we need to continue -- is ruining the country. it is something we need to continue. i do pay a small portion each month. not as much as i would pay for insurance to receive the medicare, but there is definitely something that can be done, that needs to be done. i wanted to comment on the gentleman a few callers ago. he said what businesses should do -- take 10%, then after that it needs whatever way to be, and things run better.

the economy will start to fix itself if we allow it to. i did not think dumping anything into it or providing more services -- do not think dumping anything into it or providing more services -- we want to call a progressive. in my mind, it is socialism. the entitlement process -- i think that no one should expect -- host: we got thte point -- the point. from "the washington post" --

finally, raising taxes on incomes over two and $50,000 -- supported by 72% -- over $250,000 -- supported by 72%. this tweet from linda -- tim is 34 years old in huntsville, alabama. caller: i am amazed that all of the people who never looked at the budget and find out how much we could get out of it if you cut or raise. some have looked at the income produced by those making over

$500,000, and they said -- these are figures from the irs. if you took all income over $500,000, we would still have $800 billion in deficit spending per year, and that is assuming that they do not take their money elsewhere and that continue with their same habit, and they are controlling -- continuing to work and give their excess income away. that is assuming that none of these are small business owners that will just tell their people to go home, we cannot afford to keep you. that is making a lot of assumptions. right now, 1/3 of our spending is entitlements. you have to cut entitlements. you cannot cut the military. military is only $700 billion. our deficit is $1.60 trillion. it is about 2 1/2 times larger

than all of our military spending. a few years ago, we were not spending -- we were only spending $2.3 petrillion per eyar -- year and we were taking care of people. we were wasting money. host: president obama was out at facebook headquarters yesterday. he had a little bit to say about republicans and their budget proposals. >> he wants to further reduce taxes for the wealthy, further reduce taxes for corporations, not pay for those. and, in order to make his numbers work, cut 70% out of our clean energy budget, cut 25% out of our education budget, cut

transportation by 1/3. i guess you could call that bold. i would call a short-sighted -- it shortsighted. host: mary tweets in -- clinton township, michigan, dorothy. what you think about cutting entitlements to cut the deficit? caller: i do not think it is a good idea. i do not think they should raise the debt ceiling. the reason they need to is because of the increase in spending and all of these programs and the so-called investments. i do not think it would be right. i want to make a statement about something a woman caller said a few callers ago about people the collect medicaid or food stamps or whatever she was sent -- who collect medicaid or food stamps

or whatever she was saying. i have been married for 25 years. for the first time in my life, i got food stamps. when i was in the store and outside of the store, people were around me. we turned in our nice car and got a junky car, because that was all we could afford. the guy labeled me as suliving f the state. it was the first time in my life that i had to resort to getting help from the state. i did not believe they should cut programs that help people who are hurting, but i do believe that there should be good policy. there should not be all of this fraud that the lady spoke of. if that guy is out there that

confronted me at the store, i copious listening. i ended up driving and crying because i was humiliated so badly. host: thank you for calling. bill e-mailing from glendale, california. as regular viewers of the "washington journal" know, we have been looking at the fiscal commission's recommendations all week. we will look at another tax overhaul proposals today with alice rivlin, for the of the fed. -- formerly of the fed. good morning compare, ed. what do you think? caller: let me start off by saying, i agree with the that is a commission reduction of --

with the deficit commission reduction. i would be willing to pay 15% in taxes if it were flat tax on everybody. secondly, the big bucks are in medicare, medicaid, and the military. i think there has been enough discussion about that this morning. i will not add to it. the big area where there could be cut is in the block grants to the states. here in fairfax county, they get a block grant for dependent children and others from the federal government. when i talk to politicians in fairfax county, they say they have no incentive to police that to make sure that it is getting to the people who really need it. one example is a woman from honduras who came into the country about 3 or four bonds

ago. she is already on section 8 housing. she is getting food stamps. the friends that she works with our coaching her in the other programs that she can get -- are coaching her in the other programs that she can get. i think that is unnecessary. it is a combination of raising taxes and cutting programs like these block grants, which can be misused by the state's. h-- states. host: thank you or calling in. -- thank you for calling in. from "the hill" --

o -- political

nora is 63 years old calling from new york city. what do you think about cutting entitlements to cut the deficit? caller: i think you need to reform them. perhaps with the budget committee, maybe we should do something like that. i do not believe in completely eliminating them. i am 63. i just recently retired. i have to pay cobra. cobra is expensive. it is almost $500 a month, just

for myself. medicare -- they keeps saying it is an entitlement. people pay into that. everybody has to pay medicare part d when they are eligible. they keep talking about not raising the debt ceiling. you have to raise it. do they want the country to go into a depression? the people are already hurting. they do need to reform them. they need to take away some of the loopholes. some people should not even be eligible for medicaid. host: nora, you tell us you are 63 years old. did you go to social security already? caller: yes, i did. host: it is quite a reduced payment, isn't it? caller: it is reduced by 25%, but i get a good social security

check because i paid a lot of money into the system. i made a good salary. i am a retired physical therapist. host: ok. you have two years for medicare kicks in for you? caller: yes. i have to have some kind of medical insurance. if you look at the outside insurance, it is quite a lot of money. paying myy i am cobra. it is cheaper because it is a group thing. if you have a pre-existing condition, you pay a whole lot for insurance. it is very costly to go see the doctor. you have to go see the doctor every couple of months if you have to have lab work, prescription drugs. if you do not have health insurance or a drug plan, it is very, very expensive, the your living on a fixed income or working. -- whether you are living on a

fixed income or you are working. you need medicare. people paid into the system. host: that was nora. next is dylan. caller: this is phillip. i do not agree with cutting the deficit on the back of entitlements for the seniors. i think it is a joke. i really believe the only way we're going to do anything about the deficit as well as the debt is we have to change our foreign trade. most people do not realize is that every item that comes into the united states, every imported item, whether it is a pair of socks or an automobile, the u.s. government has to cover the cost of that item. once that item is in the united states, it then goes to the people, gowend we, the

in and buy it. the u.s. government is liable for all of that stuff coming in from all around the world. i went to emerson college. that is a mass-media college. peter, think you're the best announcer i have really listens to -- i think you are the best announcer i have really listened to in a lot of years. i recommend any student going into mass media to watch and listen to you. they will be better for doing it. host: you're very kind. thank you, sir. the next call is from james in lexington, alabama. do you think social security will be there when you come of age? caller: hopefully. i hope since i pay in every day it will be there when i turned

65. -- turn 65. i am not sure. host: what you think about reforming entitlements to cut the deficit? caller: it is a great idea. it needs to be done. there are certain things that need to be left alone. our military does great things. i have been enrolled in the military. i do not think the cuts should go to the military. we need to focus more on congress. we can look at what they make compared to what our military people make. it is not even a comparison. they're making cuts in the wrong places. in the business that i work in, we manage apartments and i see people cheating the system every day. one of the things that i think would help with the deficit is -- everyone taking advantage of the system, for instance with food stamps or any kind of government benefits -- they

should require mandatory drug tests for anyone who is going to receive benefits from the government. i think that would help in the long run. host: thank you for calling in. another one of our regular twitter users -- next call from harry, 58 years old, the suburbs of chantilly, virginia. good morning. caller: good morning. how are you? host: i am good. caller: there are a lot of ideas popping up, some valid, some not. it is just nibbling around the edges. these ways to cut back are just not going to fix it. what we have is a war against

mathematics and we're going to lose. we have the biggest bubble in population heading for the barn right now, the baby boomers. there is a much lower birth rate. there are fewer folks coming up to replace this rather large bulge of folks who are heading to their retirement years. the mathematics are just not going to work. we are using a program that was designed in 1965. i would like people to think about what their lives looked like in 65, what the technology cost in 1965, what the technology looks like -- i would like people to think about what their lives look like in 1965, what the technology looked like. host: thank you or calling in.

this morning on the "washington journal" -- bernanke for calling in -- thank you for calling in. this is from the "wall street journal." the state supreme court rejected those claims and the obama administration has been a staunch supporter of the project as a way to create jobs and spur offshore wind development in the u.s. mr. salazar said that his agency --

lead editorial in the washington journal -- the "wall street journal" --

vancouver, washington, maria, 65 years old. hi, maria. caller: i have never called in. i have never seen you before. i find your program fascinating. my idea is this -- i am 65. i am getting social security of $774 per month. medicare wanted $150 of that to give me plan b or d or

something. if it had not been for medicaid picking up that one under $50, how would i live -- that $150, how would i live? my food stamps are $74 per month. for the people who are working and have medical insurance and everything, they can look at social security and medicaid as entitlements, but people have paid into that. social security has been used by the government as free money for years. it has made the deficit not look as big as it was. host: are you concerned about the national debt? if so, what would you do? caller: the only president who has ever been without a national debt, would you believe, was coolidge. we have had a national debt in

every presidency, except for coolidge. i did not know that until yesterday. so, what i would do, i would, militarye, take the out of germany and korea and japan and just about everywhere that we are supporting countries from the cold war. we don't need that. i would certainly get the rich to pay their taxes and not take -- we are losing the middle class altogether. i mean, look at mcdonald's having 50,000 jobs and they had 1000 applicants for a mcdonald's for four jobs. host: we will leave it there and ine on to damien

philadelphia. caller: i'm disappointed with all the baby boomers. i understand that they paid into the system. at the same time, they spend all of the money. they burned up the national resources and the fossil fuels. they lived in the sweet spot of american history and now they do not want anything cut. now it is too late. nobody my age that i know works expect social security or medicare to be around when they retire. we have to pay for the current users and find our own retirements. it is very difficult -- fund our own retirements. it is very difficult. we also need to have some kind of means test.

if you're rich, you proudly should not get social security. host: what kind of work do you do? caller: i am the doctor. host: do you make a good salary? caller: i make a decent salary, but nothing near what the people who trained me made in the 1980's. i make a lot less money compared to what they did. my student loan debt is much higher. compared to the amount of time i spend in school, what i make, it is not compared to what it was back in the 1970's and 1986. host: that phrase, "living in the sweet spot of american history," is that your own? caller: i have this debate with my mom all of the time. world war ii -- vietnam. nobody told them to do that.

cheap oil, cheap fossil fuels, that was a great time to be american. host: i will use that some time. i hope you do not mind. i like that phrase. do you take medicare patients? caller: absolutely. i am in a group. i cannot have a choice. -- do not have a choice. we also take medicaid patients. a lot practices do not want to take medicaid and medicare patients. host: that was damien calling from philadelphia this morning. here is the lead in "the washington post."

also want to show you what "the new york times" is leading with, if i can locate it here. they're talking about the republicans and writing bids and and yet not to -- the republicans in writing benjamin netanyahu to address -- inviting benjamin netanyahu to address congress next month. greg mortenson. kristof knows him and has worked on issues with him. "detroit suburb fights pastor's

mosque rally." that is in the "wall street journal." this is the front page of the "wall street journal."

it talks about the stock market increase yesterday. in the lead story, "hurdles confront obama's campaign." last call for this first segment, idaho, lary, 68 years old. caller: good morning. it is a pleasure to speak with you this morning, peter. i have a couple of points, but i will be brief. i served 27 years in the

military. i put my life on the line many times. he asked me if i am willing to give money to help our country -- you asked if i am willing to give a little bit of money to help our country -- absolutely. it does not bother me that people are smarter than me and make more money than me. i do not begrudge them that. this sounds like the bolshevik resolution -- revolution. we are raising a class of which i do not believe we will ever be able to get rid of. they do not take care of apparent anymore. their parents take care of them -- they do not take care of their parents anymore. their parents take care of them. they're just sucking the life out of our country. host: did you hear what the

doctor from philadelphia had to say? he was 38 years old. he talked about his parents' generation, the baby boomers, living in the sweet spot of history, doing exactly what you just accused the younger generation of doing. caller: this is not necessarily the younger generation. we're about the only country in the world that does not take care of our elderly. when i was in vietnam, that was one of the main things that these people were fighting for -- to take care of their elderly, to take care of their parents. we cannot take care of their parents. we shove them into nursing homes. one point i would like to make, i just wonder, over all of the years i have been watching c- span, i wonder how many of those people that have called in have started jobs, have created businesses that have contributed to the welfare of our country. that is all i have to say. you have a good day, peter.

host: thank you for calling in. in about 45 minutes, representative gerald connolly will be joining us. up next, we will talk about the debt ceiling limit. >> here are some of the programs featured on c-span this weekend. friday, three former secretaries of state talk about american diplomacy, a revisit of the starr versus clinton case, including a lawyer for monica lewinsky. on sunday, president ford's son, then general -- jenna bush

hager. tom brokaw and vice president biden will talk about bob dole. on monday, political strategists on same-sex marriage in america. for complete list of this week and's programs and times, online programsis weekend's and times compan, go online at - span.org. >> this weekend on "booktv," jennet conant. then ed lengel debunks centuries-old myths. sarah bell -- vowell, also this weekend. find the schedule at booktv.org. sign up for book tv alerts.

>> the ipod mini is no more. no! don't take it away! i give you the ipod nano. [laughter] >> in his monologue, mike daisey comments on the world as he sees it. but agassi -- the agony and ecstasy of steve jobs. >> my monologue comes out of my obsession. >> find out more sunday night on c-span's "q&a." you can download podcasts of "q&a." it is available at c- span.org/podcast. "washington journal" continues. host: robert nichols is the ceo

of the financial services forum -- c zero of the financial- services forum. -- ceo of the financial services forum. caller: we are an organization comprised of the chief executive officers of 20 of the largest financial institutions doing business in the united states. host: in view of the financial services forum, does congress have responsibility or obligation to raise the debt ceiling? guest: absolutely. we think it is critical to do so. i think it is worth taking a moment to talk about the historical perspective. the debt ceiling is simply a cap on the amount of u.s. -- that the u.s. government can borrow. it applies both to debt owed to the public in the form of u.s. bonds as well as debt owed to the trust fund commercial security, medicare. it was establish in 1917. it has been raised somewhere in the vicinity of 74, 75 times.

10 times in the last decade. it was last raised in february, 2010, the tune of about $14.30 trillion. host: why is it so important in your view that it be raised? guest: it is absolutely fundamental and critical that it be raised. what is at risk here is, if we default on our debt, there are a couple of things that will be phenomenally negative consequences. we will have a spike in interest rates which would do a couple of very negative things. it would create a huge drag on the economy. it would probably impact an already very sketchy labor market situation. our economy is in the estate of fragility. if we have a huge spike in borrowing costs, that will hurt job prospects and hurt growth. also, as you know, there are

several drivers of our long-term debt -- social security, medicare, medicaid, the interest. if we have a huge spike in borrowing costs, it will make it harder to pay down the death -- the debt. there will be all sorts of international aspects, too. host: here is a chart that shows the debt ceiling over the last 10 years or so. you can see where it currently is here. their worry, 2010. the current debt ceiling is approximately 14 -- february, 2010. the current debt ceiling is approximately $14.30 trillion, raised from $12.40 trillion in december, 2009. you can see how it goes up from 2001 on, increasing almost exponentially. from 1996 to 2001, the debt ceiling was $5.90 trillion, held

there until june, 2002, when it was raised to $6.4 trillion. the republicans are making noise about the debt ceiling. bob corker was just quoted as saying that the debate over -- the budget debate will be powder puff compared to the debt ceiling debate. eric cantor recently said that the gop will not grant democrats their request for the debt limit increase without major spending cuts or budget process reforms. even though you think it should be raised and it is vital that it should be raised, do you understand where republicans are coming from on this? guest: i sure do. it is not just republicans, although they have voiced with some intensity the need to get our fiscal situation under control. everyone would agree we are not on a sustainable fiscal path right now. the are two debates happening.

one is the current debate -- there are two debate happening. one is the current debate over the budget. in the context of a larger debate, these issues have been joined. the democrats have a couple of senators who of also said, if you want to lift the debt ceiling, who have -- who have also said, if you want to lift the debt ceiling, we should marry that to a plan to get our nation's finances in order, to cut up the credit cards, so to speak. i think that makes sense. the white house often its opposition to joining those ened its -- soft an opposition to joining those together. they know that they need to work together in a bipartisan, collaborative way with congress to tackle both things. we need to lift the debt ceiling.

it is critical. it is important for economic health. numerous folks have said if we do not do it, we will spiral into recession and it will make the earlier financial crisis look like a small event. we need to get on a proper fiscal course. host: at what point is that too much -- is debt too much? academics look at the debt to gdp ratio. we are at about 90%. that is a very scary to think point -- scary tipping point. we need to get to a more proper balance. that is what this conversation is all about. it is an important conversation. we are, frankly, encouraged that it is taking place. we're focused and educating members of congress on the need to lift the debt ceiling --

focused on educating members of congress on the need to lift the debt ceiling. host: why was the debt ceiling raised so many times from 2002 to 2010? guest: we made a lot of commitments for future spending in the form of medicare, medicaid, social security, interest, military issues. we have just been making commitments. the long-term debt -- commitments that we have made. this current congress, and this is one thing that we have been meeting with congress with, is to talk about the consequences of default. when we meet with the new members of congress, we talk about the vote on the debt ceiling. it has nothing to do with current spending. it is honoring previous

commitments congress has made. that is one thing -- a lot of these freshmen are dealing with the debt ceiling issue for the first time. for the freshmen, we have been making the point that this is not spending you have authorized. this is honoring commitments that the united states has made in the previous congress. it is important to honor those commitments. host: is this $14.30 trillion already spent or is it just promised, as well? guest: it is promised in the form of social security, medicare, medicaid, a whole host of things. host: but it is not necessarily spend money it is commitments that we have made. host: we're talking about the debt ceiling debate that should

begin shortly in congress. when do you see this coming to a head? onst: commerce's role return may 2. it will be first and foremost among the issues they take up. secretary timothy geithner sent a letter in early april saying we would hit the debt limit on or about may 16. if congress will have about two weeks until the approximate date. the secretary does not know the exact date because it moves around based on the tax receipts and health expenses are paid. he will not know the exact date until early may. he believes it will be mid-may. i think this'll be one of the first issues. host: jeff is a republican in gilbert, iowa. caller: this is the same, that give us the scam that if we did

not do the bailouts, we would collapse and die. i have the news. we will not default on the debt. but the taxes that come in can go directly to the interest on those bonds. the fact that we would be faulted is a lie, and a scam, and these people are promoting this to put theory into us. the very first dollars that tiny timothy geithner can put into the money can go directly to those bonds. everything else can go directly to the military, social security, medicaid, medicare, the fbi, etc. any money that we do not have left over can just cut out of the non--usable square -- non-

usable programs. guest: i share a different view. u.s. treasuries are the bellwether upon which all global interest rate structures are based. if the dollar is the global reserve currency. if there are benefits to the nation from that. the dollar's value is linked to the debt rating. roughly 50% of all global trade happens in dollars. russ -- roughly two-thirds of all reserves are in dollars and 80% of all financial transactions happen in dollars. if we were to default, our credit rating would be downgraded. i do not share that view from jeff. you have financial institutions globally teetering as the value of u.s. treasuries fell. that would put currency markets

into chaos and disrupt the flow of trade. interest rates would spike, making it harder for us to achieve economic growth as a nation, and it would be harder to actually pay down the debt. i think it would be a significant event. several analysts have made this point. jpmorgan chase just released a very thoughtful analysis of what would happen from the global standpoint. so, i would not minimize in any way, shape, or form, the risk to the global markets if we were to default on the debt, and the ensuing downgrade of our nation. host: were you surprised by s&p's decision? guest: it is very serious, of course. when you look at our fiscal position, you cannot say you are surprised. it is another important and vacation -- indication that we need to get our fiscal situation

in order, and i think it is encouraging we're having this conversation in congress about getting our fiscal situation in order because we desperately have to. if you see what is happening in europe. nations are facing huge challenges as a result of living outside of their means. the fact there is a sharp focus on this is a positive. host: was it an intervention? are you happy? guest: for those set at naught in came a sharp focus this is great. it puts the issue on the table. it is important that we do something. there has been talk about getting the fiscal situation in order, but there has not yet been a bipartisan plan to do so. we need a plan, and we need to take action. what is positive is that there is movement in that direction.

>> what is standard and poor's? guest: it looks at debt, financial instruments, and makes judgments about the worthiness of such instruments. there are three major rating agencies. s&p is one of them. host: did the other agencies do the same thing? guest: not yet. host: do you expect that they will? guest: it is certainly be the case. host: why did they have so much power that they could affect the stock market as much as they did? guest: they are a neutral arbiter of what a sovereign entity, a nation -- there are very few places where you look for independent analysis of the fiscal situation of an entity, and that is one of them. those agencies play an important

role in our broader financial system. as an individual investor, you should do as much due diligence on any investment you want to make the route your investing lifetime. -- throughout your investing lifetime. you can only do so much, and you want to look at third parties. that is the role they play four minutes a palace and four countries themselves. host: robert nichols is the president of the financial services forum. we're talking about the debt ceiling. the independent line. go ahead. caller: i am calling with suggestions to keep us out of the debt without raising the debt ceiling. one is the 7 billion a year the went to the top 2% in tax breaks. they need to give that back to the government.

they can keep the interest that they made off of the money, which is a lot of money, $6 or $7 trillion. the oil companies need to start paying royalties. oil, the way i understand it belongs to the citizens of the united states, not opec, and not speculators. the oil companies need to pay royalties. they need to pay money back to the federal government to be used on this stuff for the last 10 at increases they have put on us out here. if the speculators lose money on their end, it is too bad this time because they should not be allowed to speculate on our transportation. guest: ted makes a point about taxes. there is a debate about tax reform. what will the future of our tax

code look like for individuals and companies? the president, secretary timothy geithner, they have been talking. they are in the initial stages of coming together to say what will our tax code look like going forward? from a corporate standpoint, the u.s. has the highest -- highest court -- corporate taxes in the world. you have businesses saying we would be glad to trade off some of these unusual aspects of the code for a lower rate. the same conversation is taking place with regard to individual tax rates. somebody said to me that our tax code is held together by bubblegum and rubber bands. it looks like it. his broader point about what the tax code should look like, it is

a valid one. it is very complex than many would say is a drag on economic growth. probably, it needs to be updated host: the next call on the debt ceiling for robert nichols is susie, here, in washington, d.c. on the line for democrats. caller: i have one question, then a couple of comments. i agree with the previous gentleman. i think all subsidies should be removed, even if we have to limit them to 5, 10 years. i think that would not a great deal of the income that would help to pay down the debt. in addition to that, i think one of the questions i would like to ask is -- living expenses. you have congressman living in their offices. why should the u.s. garment --

u.s. government paid the cost for them to live in their office? in addition to that, why is it necessary for them to go home every week? who pays for that? host: she is looking for ways to cut the debt. guest: sure. with regard to the question are their costs associated with members of congress sleeping in their office? i do not know if there is more than a very marginal incremental cost. i note in the elegant capital of goma, they do keep the lights on at night. it does not get us to solving our debt situation. i served on capitol hill for many years many converse women and men -- congress when in and

then go home every weekend, and some not so much. it based -- is based on their judgment. each member of congress is giving a travel allowance to account for that. with regard to the top of her question about ways to solve the debt, the long-term debt situation -- the big drivers are social security, medicare, medicaid, and interest on the debt. those are the long-term drivers of our debt. that is why the conversation that is under way makes sense. both parties have identified aspects of the entitlement reform conversation that is taking place that i think is sensible. first, people that are 55 and older, there should be no changes to the commitments made to them. we're talking about the younger generation, 55 and under. there is no formal plan yet, but

as an observer, and those who had commitments made to them, have worked, ari in retirement, or will soon be in retirement, my own two sons is you leave that aspect alone. host: ben, you will have some 45-year-olds that say i worked all my life. why am i being arbitrarily -- guest: if there are changes. if there is no plan on being negotiated in an acute sense. a lot of the conversation is reducing the rate of growth in some of these programs bursas cutting the program. the thought is -- against cutting the program. the thought is if you do not do it, they will go away altogether. between the decisions of not having them in the future, or having them grow at as slowly

paced, i think it is a no- brainer. host: robert nichols has spent his career working in the treasury department and began his career as an aid in the office of the chief of staff in the and george h. w. bush administration. given your republican background, this tweet -- guest: i do not think it is contrived. congress has had to raise the debt ceiling 74 or so times, and 10 times in the last 10 years. it is unfortunately the situation of where we are. again, i do not see perfectly of eye-to-eye there. we have to raise it, it is

critically important. the economic down sides aren't too cute, too sharp, and would be -- are to the queue, too sharp, and will provide negative economic consequences. the fact there has been a sharp focus on putting our nation on a fiscal path -- again, i do not think that is a non-positive thing. host: louisville ky, marked on the republican line. caller: i believe the of the -- i believe that the debt ceiling should be raised on one reason. i believe we should be going after these people that we took out of the bailouts, and making them pay a bigger percentage back on what they have received, and try to bring the deficit back down.

also, i think we should tap into our reserves on our guests, and bring gas down so people can afford to go places, spend money to vacation, to buy things and products, and that is what i believe. i do believe that he should raise the debt ceiling to bring this country back the way it used to be, and as strong as it was. it is not just this country. the whole world is kind of bottoming out. i think that is the only way you will do any good. host: market. we got the point. -- mark, we got the point. guest: the capital injections

that were made in the financial as petitions under the tarp program have all but just a tiny minority been paid back at a handsome profit for the u.s. taxpayer. most were in a matter of months with a healthy profit. that, with the exception of just a handful of enterprises, most of them had been -- have been paid back. that was a successful program to provide stability of at a time of great instability from global standpoint. host: this tweet -- guest: i would refer her to the congressional budget office along a coast of entities that

could identify where -- along with a host of enstatite -- entities that could identify where our debt comes from. the largest drivers are commitments we have made was social security, medicaid, and interest on our debt. i would refer to the congressional budget office or any other nonpartisan entity that she views as a credible source of information. host: does wall street have any role? any responsibility in the federal debt? guest: well, restate your question. host: does wall street have any role when it comes to the size of the federal debt? have they been a player? have they been complacent? guest: i did not think so. if you look at the cbo, and the house and senate committees, they'll have done numerous

charts identifying where they -- the debt has come from, and you will not see the financial sector as part of that. i would not share that view. i would say that with regard to our role, one thing that we have been doing is meeting with members of congress and just educating them on the economic consequences, particularly the financial market aspects. what will happen to the financial markets, the equity markets, the currency markets, globally, if we were to go through a debt we fault. we have, peter, and then playing a thoughtful role to educate thaters of congress, com securely the new ones. host: when is the nexts have -- congress has made a point of all of the problems we have now.

we can directly blame them. i remember when president obama had the five major bankers come to his office, and i was thinking we americans have spent all of our tax dollars, we borrowed money, spend all of that, and now we are being asked to use more of our tax dollars. when the bankers when there, i do not think we got anything in return it reminds me of loan- sharking, and i think it is a shame this country has to be this far in debt and nobody has been held accountable in either party. guest: jack, i do agree that we need to get our fiscal situation in order, and i believe with a passion and emotion you hear from jack, he would like to see that happen, too. there are a lot of things we

could do to create jobs and allow the economy to grow and put us back on a path to prosperity. one thing we have not touched on is the issue of global engagement in trade. last year, half of our economic growth was from trade, exports, peter. one of the things congress needs to do, in the context of looking at tax reform, debt/deficit, all of these things are important. and they need to get the free trade agreements done to open up to the markets. that is critically important. for every $1 billion in exports, that provides for 6000 american jobs. one thing we could to make the pie bigger, put more americans back to work, is to expand overseas markets. we need to get a free trade agreements done. we need to go to these emerging markets and open them up for our exports.

host: robert nichols, president of the financial services forum. thank you. coming up, alice rivlin will join us. we have been looking at the fiscal commission's proposals for deficit reduction. today, we will look at overhauling tax policies. that is coming up in about 45 minutes. first, representative gerry connolly, a democrat of virginia is up next. we'll be right back. >> let's meet one of our top winners in the student cam competition. the scene was to produce a video on a topic that helped them better understand the role of the federal government. we go to knoxville, tenn. to talk to one of our second prize winners, and eighth grader. how are you doing? >> i am doing well. >> why did you choose tax policy? >> it was a timely issue, and it

was a really big decision for the federal government in washington, d.c., that effected just about everyone in the country. >> what did you learn from the people you interviewed? >> we learn the tax code is something people need to take seriously and i understand thoroughly. >> what do you think about the state of the economy right now? >> the economic storm that we mentioned is beginning to subside, and i think the sunshine will come in a couple months or so. >> how important is compromise in deciding economic legislation? >> i think it is the key factor because both plans that congress had had, there are pros and cons, but they need to get the best of both, and that is exactly what happened. >> how was the compromise effected you in your community? >> it has effected us because the increase in available spending money has just about

effected everyone in the country, and not only us, but everyone. i think it will definitely help us of the whole we have a dog. >> if you were an elected official, what would you have done differently? >> i did not think i would have done anything differently, because it turned out great, but i would probably favor the republican plan because as professor bruce said in hour documentary, the millionaires and billionaires in our country really make up a big chunk of our economy, and if they were forced to pay more money through taxes, as president obama wanted to, that would just low our recovery down even more. >> what have you learned from ornate -- working on this documentary? >> the tax code is important, and the federal government he says everyone. >> -- defects everyone. >> what is the message you would

like to share with people? >> we really want to share the the federal government has a really big impact on everybody's daily lives, not only through taxes, but the economy in general. >> ani, to allow for talking to us. >> thank you. >> here is a brief portion of the documentary. >> by ensuring that americans have more to spend, save, and invest, this legislation is adding fuel to an economic recovery. >> they were passed with this expiration date -- this artificial sunset at the end of 2010. >> unfortunately, congress was divided on the topic. president barack obama developed a compromise. >> permanently extend the bush tax cuts for all families making less than one at $50,000 a year, 90% of the american people. >> republicans from the lead

extending the tax cuts for the entire population was the way to go. john boehner was the leader of the republican effort to convince congress to extend all of the bush tax cuts ^ >> extending of the current tax rates and making them permanent will reduce the uncertainty and america and help small businesses begin to create jobs again. >> you can see all of these videos and olwen in documentaries and continue the conversation on our facebook and twitter pages. >> "washington journal" continues. host: we are pleased to welcome representative gerry -- gerald .onnolly -- gera you mentioned you held a town hall meeting last night. what happened? guest: we had our biggest town hall meeting ever, 31,000 people

on the conference call, and we did a poll on medicare, and we ask them, do you favor the paul ryan approach which dismantles medicare, or did you prefer to keep medicare the way it is? 1300 people participated, and the results were overwhelming. it was 73% to 23% favoring maintaining medicare as we know it. host: which is pretty much the same as the abc/"washington post" paul. how do you get 31,000 people on one conference call? guest: people can e-mail, get on the phone live. an awful lot of people participate. we can get the more substance as

a result. this was my 11th, and by far the biggest. host: when it comes to cutting the national debt, on a scale of 1-10, where is your concern, and what would you do? fiscal hawks. i've balanced 14 budgets in a row at the local level. we can not print money. i believe we have to live within our means and get our fiscal house in order, but the deficit cannot be the only priority. there are strategic investments a great country has to make. it is a balancing act. we need to preserve and enhance strategic investments of getting our fiscal house in order, and that is a problem i have with the republican approach. we seem to know the cost of everything, but the value of nothing. a great country cannot afford that approach to budgeting.

host: as we learn from robert nichols, we are at about 90% of gdp when it comes to debt. what is the limit? guest: there is consensus that we cannot allow this. there's even a consensus of the how much we need to cut. the question is how we get there. what are our values and priorities in getting there? that is what the debate will be. host: one of the things in the "washington post"/abc poll is that 72 percent of the people's support -- support raising taxes. do you agree? guest: we will look at the issue of the bush tax cuts. for the purpose of been intellectually honest, both sides fudged the issue. democrats focused on the upper-

income folks. if we allow those to expire, we save about $700 billion. the middle class tax cuts are the most expensive. the entirety of the bush tax cuts, if we did not address them, are going to cost us $3.30 trillion. often, the very people that are professing their deep concern for the deficit do not want to talk about adding that through tax cuts. host: is there anything in the paul ryan budget that you found appealing? guest: note. i think it is a very radical document. i think it does not reflect a majority of americans values or priorities. good for him for laying it down as a clear alternative, but it would take america back to a time that frankly i think would be the law of the jumbo with the fittest survive in. i did not think that is the

proper approach for seniors and the disadvantaged and likewise. his suggestion is to give further tax cuts to those that are well-off, and basically let loose, and allow people to fend for themselves, who over generations this country has decided otherwise. we do need a social security program in place. we need a medicare program in place we will have a great, a vigorous debate about that. host: finally, before we go to calls, the president visited your district in annandale, virginia. who was invited and how did the meeting go? guest: i do not know how the white house, organizes that. i saw some familiar faces, and a lot of new people. a lot of the people that attended were students carry out the diversity in the audience was a door -- enormous it

reflects the growing diversity of my community, and northern virginia. he had a vigorous office, -- audience, took a lot of questions, and he is accomplished in that format 10th. this is the eighth such forum he has done in northern virginia. host: congressman gerald connolly is our guest. the first call is from car on the republican line in texas. caller: thank you. i would like to ask about the debt ceiling. how much should we raise it to, and why do we actually need it? guest: good question. there's a lot of demagoguery about the debt ceiling, and a lot of misinformation. voting to increase the debt ceiling is simply to acknowledge that we have bills that needs to be paid. not voting for the debt ceiling

is to frankly walk away from those obligations. it is not a vote that says i favor growing the deficit. it is important that the issue be framed correctly. your previous guest made it clear what the consequences could be if we were to fail to meet our obligations by not raising the debt ceiling. one of the first things george washington did through his secretary of treasury, alexander hamilton, in the new american republic was to establish the credit worthiness of the united states in the family of nations. was a wise thing. it was controversial. thomas jefferson and james madison were not keen on the federal government taking on the individual debts from the revolutionary war for the former county it -- colonies, but hamilton had the wisdom that we would be taken seriously as a player in the international community. we have paid our bills and

obligations ever since. the consequences of not raising the debt ceiling, not doing the right thing, and not demagoguing that, are almost too horrendous to complicate -- contemplate, and i fear we could send the global economy back into a recession if we were to do that. the congress, as john boehner said when we first widget he first became speaker, we need to have an adult conversation and act as adults on this challenging subject. host: this tweet -- why not bring the ryan plan to the senate, find out who supports it? guest: i am all for having a vigorous debate about the plan, and let's see where everybody stands on that. we had that debate, we have a vote in the house.

was a strict, party-line vote with four exceptions on the republican side. not a single democrat voted for, which is not healthy. hear highlights why the plan is so controversial and not acceptable to so many of us. polling data is overwhelming that the public does not support the paul ryan plan. goes way too far and does not reflect the values of the communities that we represent. host: from manhattan, mike, democrats line. please go ahead with your question. caller: thank you. two quick points. only an american can a republican and influential people get poor and middle class for people to argue in their favor and in favor of tax breaks for the rich. it is so ironic. wealthy persons in this country have so much debt the rest of us do not even realize.

that is number one. number two, i never hear specifics about opening up medicare to younger and healthier people to buy into the medicare system. i will be very quick. i am 53. i paid about $6,000 a year out of my own pocket for pretty good health insurance. i never use my health insurance, but maybe a couple of hundred dollars a year. my understanding is that 80% of insured americans are healthy and use their health insurance very little. billions of dollars could be raised and go into the medicare system, which i understand has a low administrative, 1%-3%, operating costs as compared to private insurers that operate at 17%. that could go into the medicare system, and maybe even the federal government could make money off of the healthy people

like myself, who would jump at the chance. host: all right. we got the point, mike. congressman? guest: you made several points. let me start with the paul ryan budget, which would further cut taxes for the well-off in america. i represent a wealthy district that i believe people that are successful, good for them, and we do not want to do anything that punishes them. i broke with my party and favor the extension of all of the tax cuts even for the wealthy, temporarily, while we try to get the economy back on its feet. but, to actually have yet another tax cut for the upper- income brackets in america, offhand, while we are cutting everything else for seniors, students, the six, the poor -- i think it is the wrong set of

values. that is why i welcome the debate. i think the more the paul ryan budget is examined, the less accessible is going to be seen as biased most of our fellow americans. it is about values. where are your values? with respect to health care? -- with respect to health care, opening up medicare was debated as a part of health-care reform. his single-payer system was debated. he even creating a one government auction was also debated. we did not go that route. your point about healthy people participating in risk pools is a very good one. a large chunk of the 30 million americans that are not insured that will be brought into the insurance program in america are, in fact, young, healthy people. that is good for the risk pool and good for everybody, and i think will contribute over time to bring down the cost of health

care. if that is a good point you make, and it is why i think the health-care reform bill, if allowed to be implemented fully will have a real, positive impact on both the cost of health care and the accessibility of health care. host: congressman gerry connolly, after graduating with a master's degree from harvard, served for 14 years on the fairfax county board of supervisors, the last five as chairman of that board, and he is on the foreign affairs and oversight and government reform committee. you're on the foreign affairs committee. to lead an article in your local paper, "the washington post -- did you agree with the strategy the nato countries are employing? guest: it is a high-risk

strategy, and one concern is that there is a creeping commitment on the part of nato. if i favored the no-fly zone to prevent massacres. frankly, in compliance with national law, we had the arab league calling for intervention in a fellow arab country. we have the security council of the united nations calling for all necessary steps to stop what book like a blood bath about to happen. that was a humanitarian intervention that was limited in scope in terms of establishing and enforcing a no-fly zone. now, we're looking at a creeping mission terror we are the and advisers, training, and equipment, and so forth. it is to help the rebels against a very determined push back from the gaddafi supporters. i am concerned about that. where does this lead? what is the end game?

nobody likes gaddafi, and i think we should be spending time and energy trying to find a face-saving way for him to leave the scene. this creeping mission is of concern, because i'm not sure what the end game is. host: pauline, massachusetts. caller: i have a question about the entitlement spending. it is two-part. when you say the medicare, medicaid, and social security, we just cannot take it anymore, our federal benefits, insurance, and pensions included and that number? -- in that number? i know we all say we need a shared sacrifice.

it is their shared sacrifice being made to federal pensions and health care? guest: actually, in the republican budget, there would be a great deal of shared sacrifice on the part of federal employees and federal pensions in terms of an increased premium costs and increased contributions to their plans, as well as a five-year freeze on their salaries, which is a considerable burden for federal employees. i think they have been an unfair target by an awful lot of politicians in washington. they're an easy punching bag, but, you know, the overwhelming majority of federal employees are working for you, the public. they are very dedicated public servants, without whom the united states could not function. a little more respect for the work they do, and the dignity they bring to their jobs is very much in order. with respect to the point about

entitlements, it is important to remember that everything needs to be on the table if you are serious about actually getting your arms around the structural debt that has built up over the last 12 years. that means entitlements. entitlements are 43% of all federal spending. if we have focused, here, and in washington, on the continuing resolution and pretty much all of the cuts, out of 12% of the funding pie that is domestic spending. you cannot balance this budget, bring down this cumulative debt, only focused on fall%. he need to look at 100%. it to look at tax expenditures, national security, and discretionary spending as well. host: grace tweets in.

the next call, ohio, brandon. caller: you had the deal on the compromise were people making a significant amount of money would have tax cuts. to me, that ideology makes sense, because as speaker boehner said, those people are the small business owners that are providing jobs. first of all, what you think the trade-offs are between these jobs and getting the economy back from a recession with tax cuts? also, several republican members of congress have called for a complete rewriting of the united states tax code, particularly mike tyson of california. what would you like to see done with that? guest: with respect to the debate we had about the expiration of the bush tax

cuts, i favor the temporary extension for economic reasons. democrats do not like to always hear this, but the top 5% of income brackets in america accounts for 30% of all spending. i felt we read such a fragile point in the recovery we cannot afford to risk those people closing up wallets and checkbooks and no longer making purchases and investments in the economy. it was too dangerous but, that is a separate discussion with the longer-term issue of can we afford the tax cuts? the total cost of the middle- class and upper income tax cuts over the next 10 years will be $3.30 trillion. here we are in washington fighting over whether public broadcasting or public radio ought to get $5 million. what about $3.30 trillion?

we need to have an honest conversation about that, and whether that is the right economic policy want to pursue, and whether those are the values we want to embraced. that is clearly a priority for us that supersedes critical investments like in infrastructure, research and development, and education. host: is it time to cut defense spending? guest: secretary gates has led the way in identifying about $400 billion in spending that can be saved. he has gone up after some weapons systems that he thinks are obsolete, or really are cold war vintage that we do not need, or in some cases cannot afford. he is looked at systems that do not work or have huge cost overruns that now make them of luxuries we should not have and cannot afford to read i think he's done a good job in leading the way, and i think we should follow his lead in looking for

opportunities for internal savings in the department of defense, both to fund other innovations, and to make sure the country is secure, but also, frankly, to see where we can trim. we should bring the same approach to defense that we bring to any other part of the federal investment pie while understanding that we need to make sure we are strong and that national security is not weekend especially in the post-9/11 world. host: congressman gerry, is our guest. stanton, mich., becky, democrat. caller: i would like to say i love my president. i am sick and tired of people -- he either does it too fast, too slow, no matter what he does is wrong. i just want him to know that i love him so death, and so do all of the democrats that i know.

i just had to say that. [laughter] guest: the next time i seem i will tell him that becky from loves him.as an appare host: did you have anything else to say? caller: the cutting of anything that has to do with schools, particularly college, i feel that republicans were the ones that got clinton to sign the things said that we are a new world order now. what they all said was that we will be going to school and having desk jobs. we will not need to work in coal plants because we are just too good for that. we will all go to school and have wonderful jobs. now, what are they doing? they're cutting the funding.

it is ridiculous. guest:. -- guest: i keep on saying budgets are always about values. the republican budget slashed head start funding while calling for additional tax cuts for the well off. that is a strange melia. we know headstart works. we know investments in early childhood learning help kids for a a lifetime. it averts crime, and significantly increases the probability of success academically and in their careers. it is a win-win and an investment with huge payoffs. the republican budget slashed funding for pell grants which make millions of young people eligible for colleges and universities. it is one of the great achievements of the letter 20th-

century and early 21st century america. we ought to be proud of that. we know it has paid off in terms of raising incomes and standard of living in america and keeping us competitive. cutting back on those investments is penny wise and pound foolish. it is not a value that i share, and i'm glad you do not either. host: congressman tom keller tweets in guest: i do not know that anyone is asking the higher earners to pay more. there are several questions on the table. they deserve an additional tax cut above the one they have right now? that is what paul ryan has put on the table. president obama, who as you point out was in my district earlier this week, has suggested that we return to the tax

levels of the clinton years, and he points out that if you want to look for correlations, the clinton years, at a higher tax rate that exist today, produced the largest expansion in american history, which 25 million new jobs created, an economy that was booming, and a balanced budget four years in a row, and projections that we would have served losses every year for the next 10 years to pay down the federal debt entirely. if you go back to the year 2000, their articles in the wall street journal with people wringing their hands about what we would do without a federal debt. of what happened to the bond market, u.s. treasuries, if we do not have a debt? the next eight years took care of that. host: t anotherweet ? guest: i believe it is an anchor

in the u.s. economy that without which you will rattle the real estate markets even further. right now, they're still in recovery. we still have 40% and 50% unemployment rates in some pockets of the construction industry. while the rest of us have a great recession, they have a great depression, and they are very much still trying to recover from that. in real-estate, it was the real- it is still trying to get back on its legs and. so to do anything that roils that market, especially as something as profound as repealing the mortgage rate interest deduction, to me, it makes no sense and absolutely brisks the economic recovery. for economic reasons, i think it would be most prudent -- imprudent to do so, and i do not

support that. host: when congress comes back, do you foresee libya hearings? guest: i do. i think we have to have a discussion with the administration and others as to what is the situation on the ground, and also what are our goals? is it just simply the removal of muammar gaddafi? we do know that some of the many revolution start off with a lot of noble intentions and high motivation, but they do not all end well. the russian revolution, the french revolution, even libya was part of a revolution in 1969 that higad high hopes. we need to make clear what our interests are and how we are coordinating with our allies. so i think we have to have that discussion definitely. host: next call comes from

connecticut. andy on the independent line. caller: where i live, every year my property tax goes up every year. obviously the government does not increase the taxes 2% to 3% every year. i think they are not taking enough taxes out. my second question is where in constitution doesn't say federal employees gets health insurance? -- does it say federal employees get health insurance? guest: let me just say respectfully i do not know the answer to the challenge that a lot of people are uninsured is to make even more people uninsured. i do not think we should be engaged in a punitive action and

against the federal work force. i think the answer is to get more people covered by health insurance. that is what health care reform did. it will bring 30 million more people into the system. i sent out will probably be a good thing. i think it is -- all of us will benefit from that. all of us pay a hidden tax and our health insurance premiums for uncompensated care, largely people going to the emergency room for their primary health care because they do not have access to health care otherwise. i think a more comprehensive approach that brings people and rather than punishes people for the fact that 20% do not have health insurance is the better way to go. host: california. however, republican line. caller: could you put the chart that shows the history of our deficit on the screen? host: the debt.

let me find it. in was your question related to that chart? yes. caller: i think it is interesting to look in the last 15 or 20 years how the debt has increased. maybe even going back to what is known as the great society. we must remember, of course, to create dollars for the great society, social security was put into the general fund. this gentleman is articulate, much like our president. most harvard graduates. the latest from michigan, i must say, i love this president, he is charming, he can debate, he is beautiful. he has commanded the english language. unfortunately, if you look at the chart that we are talking about today, there are some

serious issues that need to be addressed. the next guest you are going to have on your show will explain in simple terms to democrats and republicans just exactly where we are and what responsibilities we all need to take. let me mention one other thing if i can. there was a column written a few days ago in my local paper, and the interesting thing there is that taxes will be addressed, but before we address the tax issue, we have to give the spending issues on the table in a place where they can be dealt with. guest: let me pick up on the last point you made. i do not agree that we need to

focus exclusively on spending or primarily on spending. and i believe everything needs to be on the table, including revenue. that is part of the problem of the fundamental dishonesty about the debate, especially on the republican side. it is said that 86 of the 87 freshman republican elected last november took rover norquist's pledged to never raise taxes or do anything that looks, smells, or resembles raising taxes. when you have taken such an absolute lead to, you have taken off the table some options that are critical. enhancing revenue, whether it be looking at oil royalties or other sources of revenue we might be able to recover or enhance, i think it is being dishonest if you say your overriding commitment is to reduce the federal debt. to only focus on spending smacks

a little bit of an agenda that is also designed frankly to reduce the size of government and to basically give up programs you have never supported in the first place. with respect to the chart on debt, we are all entitled to our own opinions, but if someone said we are not entitled to our own set of facts. fact, the last president leaving the white house and the country debt-free was andrew jackson. that is a long time. the last president to actually build up surpluses that were projected to last for the next decade and pay down the entire federal debt was bill clinton, a democrat. if george bush came into office with the active assistance and the fundamentally dishonest chairman of the federal reserve, the tax cuts would not hurt us

in any fundamental way in terms of fiscal policy and the debt and a matter of fact it has bled the treasury dry. the second thing that occurred with republican complicity in warsess was starttw two that were entirely unfounded. the first time we went to war and did not pay for them, did not ask anybody other than our soldiers on the ground to pay any kind of price or sacrifice. by the way, you may remember, at the time there was a general who honestly said these wars are going to be expensive. he was fired because donald rumsfeld and president bush did not want it to be known that it would cost well over a trillion. the third thing they did was to create a drug benefit that was

entirely and paid for. that took the record projected surplus and turned it into a record deficit. on top of that, we have a great recession. revenue goes down, in fact it plummeted from 21 present site of gdp to 16%. -- from 21% to 1 6%. that is automatic. those things had a double whammy on tops of the structural deficits that the bush administration and republican majorities in congress consciously entered into. they knew what they were doing, and they did it. instead of paying down the federal debt, we are burdened with historic high debts that have to be addressed. host: in this chart goes back to the year 2000.

actually 1996. the federal debt ceiling 5.95 trillion dollars. today 14.3 trillion is the debt ceiling. virginia, huntsville, alabama up. caller: thank god for c-span, for repinank gofd column away -- rep connolly. i want to thank president obama for not cutting the medicare and medicaid program. i have paid into it for over 40 years. i do not use it, because when i retired i had a government insurance that was available to me. i also do not receive social security, but i am concerned about both because most of my friends and relatives are on social security.

they need to restore every penny that they are taking from social security, and you need to pass a social security will never be privatized. every person that has paid into medicare and medicaid should be able to use it. i just want to say that i do not know if you have gone on line to look at paul ryan. it is like jim jones on kool- aid. it will destroy this country. guest: let me just say to you, that is a colorful analogy, but not one i share. i know paul ryan, and i think he is a very sincere and earnest colleagues. i happen to think he is crushingly wrongheaded in his budget. i think it is if basically a

compilation of very conservative republican reactionary policies and use that have dominated the last half century. -- views that have dominated the last time century. in many of them opposed to social security when fdr was in the white house. it is not a surprise that the continue to want to find ways to get at the program that they consider socialistic or something like that. the fact of the matter is social security and medicare have both done their jobs. they provided income security and taken the most vulnerable group in america and turned them into the most covered. they are programs that work. they can be improved, and there are things we can do to make sure they're there for the next generation. i will not support the privatization of social

security. host: mike in canada. caller: i would like to get your comment on the thomas jefferson quote./ "i believe that making institutions are more dangerous to our liberties than standing armies. if the american our people ever allow private banks -- [inaudible] the issuing power should be taken from the banks and restored to the people from whom they pbelong." do you support ron paul in auditing of the fed? guest: i am a strict constructionist when it comes to war powers. i believe we have gone way too far in the power of the

executive. the constitution could be clear -- could not be clearer, the only power to declare war reside with the united states congress. we need to right that balance. i do not think we should engage in war without an authorization from the united states congress. i think the constitution is very clear about that. you read a quote about the bigness of banks. andrew jackson succeeded in dismantling the bank of america. after he left the white house there was a financial panic in great depression of 1837. the doomed, a tenure of his it successor. i do not know that was a great legacy for america. there will always be this

tension in america between banks getting too big and too powerful and the need to make sure that there is a democratic element to anything that approaches that. i think that is a healthy tension, and we will have to decide where the balance is spirit of the modern financial system is something without which it would be hard to imagine as functioning. it needs to be regulated more appropriately and regulations need to be enforced, which was part of the problem that occurred prior to the bubble bursting in 2007 and 2008. that is why we passed the dog/frank act. -- dog-franc aodd-frank act. host: gerry connolly, thank you for being on the "washington journal. " when we come back, we are

looking at tax overhaul policies. first, c-span radio with a news update. jobless numbers are just in. they show fewer people applying for benefits last week, partly reversing a rise the week before. the labor department says the number of people applying for unemployment benefits dropped by 13,000. most economists expect applications to continue to drop. jon huntsman was praised today by china's vice president who called the ambassador an old friend of the chinese people who had made unremitting efforts to promote the exchanges between our people. his comments came during a meeting in beijing attended by ambassador huntsman. and a delegation of 10 u.s. senators led by harry reid. the u.s. lawmakers are in china

for talks with chinese officials on topics ranging from clean energy to human rights. one day after the first anniversary of the gulf of mexico oil spill, were that bp -- word that bp is suing trans ocean for $40 billion. in this follows a report that they are planning to cut the tax bill by nearly $13 billion by writing off the cost related to last year's bill. those are some of the latest headlines on c-span radio. >> every weekend experience american history on c-span3. it is 48 hours a people and events telling the american story. hear first-person accounts of people that have shaped american history. travel to important battlefields to learn about key figures in defense that shaped an era

during the 150 anniversary of the civil war. every weekend visit college classrooms as professors delve into america's history. the presidency, focusing on american presidents and legacies as told through historic speeches and personal in size from administration officials. american history to be on c- span3. get the complete schedule online and sign up to have them e- mailed to you using our c-span alert. host: in our next segment we are continuing our week-long look at the fiscal commission recommendations to reduce the national debt. and on monday we looked up proposals to cut in cap discretionary spending. on tuesday we looked up proposals to restructure medicare and medicaid.

yesterday we with the defense and security spending. on friday we will look as social security. today our focus is on the commission's proposals to overhaul tax policy. our guest is former commission member, alice rivlind. one of the items the commission proposed was to create the single corporate tax rate of 23% to 29% and eliminate all special industry subsidies. how would that reduce the deficit? guest: the problem with the tax code, both the individual and corporate taxes, is that over the years congress for its own good reasons has put special provisions in the tax code. in the corporate tax code there are just dozens, probably hundreds of special provisions

that are advantages for particular industries like oil and gas or sometimes even for particular companies. they can write a very particular provision so that there is actually only -- so that it only applies to one company. these are earmarks' in the tax code. they are subsidies for particular things. the reason they are pernicious is that the more special deductions, exemptions you have come at the higher the rates have to be. we have gotten ourselves into a position as a nation where our corporate rate is quite high, although we do not raise an awful lot of money from the corporate tax. the idea behind the commission's proposal is care rid of these special whatever and tax all

corporate income at the same rate. and then you can lower the rate. depending on how much you get rid of, you can lower the rate quite far. from the point of view of our international competitiveness, that would help us, because we have our relatively high corporate rate, relative to other advanced countries. that is a disadvantage for american companies in the world. in if we had a lower rate, and we got rid of the special exemptions, we could raise more revenue. host: the commission proposed simplifying the tax code and cutting individual rates across the board, making the top tax rate 23% to 29%, and creating a payroll tax holiday for 2011.

why is simplification so important, and how does that raise revenue? the tax code is complicated. congress has put all lot of special provisions in. the ones that most people know about like the mortgage interest deduction for instance are legitimate banks. you might really want to encourage home ownership, but we do it in an upside down way. it is a deduction from income, and that means that higher- income people get to deduct a higher proportion of their mortgage interest. that does not seem fair. if you created a mortgage- interest credit, then it will go to everybody. everybody would get the same amount of their mortgage

interest credit against their tax. if you lower the rate, as the proposal encourages, then you could have a credit at the lowest rate, and that would go to everybody. it would get rid of ionization as a special thing. -- itemization. now the general question is how do we get rid of a lot of these special things, preserve the ones that people would really like to people like credit for low earners and earned income tax credit, the child credit, the mortgage deduction, charitable, but do it in a fair way so that it does not

particularly advantaged people who have high income. that is not what it is supposed to do. it allows us to raise more revenue was lower rates, because not so much income is deducted or exempted. >> when the commission voted in december of last year, the vote was 11-7. you voted yes, correct? guest: i voted yes. host: it was not enough to meet the threshold of 14 boats? gu-- votes. guest: that was sort of a myth. the press loved it. the 49 was left over from an earlier concept of the commission. the idea that you would have

only members of congress on the commission, and they would actually write a law, and that ball would be voted up or down -- that law would be voted up or down by the congress and would take 14 votes to have it voted up or down. as the commission evolves, it was not all members of congress. there were 12 members of congress, and six public members. we were not actually writing a lot. we're writing a report with guidelines. there was nothing to vote up or down. it got a majority of the vote. a got 11 out of 18, which is 60%. -- eight got 11 out of 18, which is 60%. host: we are going to go to phone calls soon. we're talking with alice rivlin. some of the other commission

proposals when it comes to tax overhaul proposals include replacing mortgage interest to charitable giving deductions with a 12% tax credit, which you discussed briefly. permanently repeal the alternative minimum tax, and tax capital gains as ordinary income, and add an additional 15 cents per gallon but for a gas tax by 2015. host: do you think with the gas prices today that the 15 cents per gallon gas tax could go through congress? guest: i think with gas prices today no one would notice an extra 15 cents. i personally would have voted for a higher gas tax or a more

general carbon tax, but i do think we need to make fossil fuels, including oil, more expensive, so we have an incentive to use the more efficiently. host: first call up is michelle on the republican line. we're talking about proposals to reduce the deficit in specifically looking at some of the tax overhaul proposals. go ahead. caller: thank you for taking my call. i wanted to comment on no wonder the snb has lowered expectations for america. -- the s&p has lowered expectations for america. i feel i live in the real world in flint, mich., and come from

normal background. my father and mother worked hard to make things good for our family. my mother packed our lunches every day. there was one of poor women on our block who had four boys and no father. there were certain people in the neighborhood that went in and take -- took care of her. my mother would take her laundry or what everything she could do to make some money. my mother would pay her and take her groceries and help her because she was a good loving woman. i am so sad to see what has happened to our government programs. criment, mich. we have climbe

that is out of control. that is why when i watched louisiana with those poor people cannot get in the car to drive out of louisiana to save themselves -- host: could i bring the focus back. if you could make changes to the tax code, what would you propose making? caller: everything has to be overhauled. it is a cent on the democrat soul to keep these people where these are. guest: i grew up in the middle west. i agree. we need to overhaul the tax code, and everybody needs to pay their share. i think the commission rubber that i served on -- i think the

commission that i served on has the right idea about the tax code. we need to simplify it and also reduce on the spending side. everything has to be on the table as they say. we need a combination of restraining spending and overhauling the tax code. host: one of the things the commission was looking to do was the tax code. did you start at 50/50? how did you begin that? guest: we started by looking at the spending side. that was true of both commissions i served on. everyone wanted to say how can we reduce the spending over the long run? the growth of spending. the growth of spending is

primarily in the entitlement programs, because we have made promises to older people, and now there will be a lot more older people and the cost of medicare is rising. both commissions look at how you restrain health-care spending, and then we booked at discretionary spending, both defense and domestic. after you have done all that, you realize the deficit will still be rising, and there is a lot of spending in the tax code. the special provisions we have been talking about might as well be spending programs, but they happen to have been put in the tax code. that means the rate talk to be higher, because we take tax expenditures out of the game. so we came to look at especially

reducing the tax expenditures, reducing the spending through the tax code. the tax earmarks' if you like. and simplifying the tax code and lowering the rates, which will enable the government to raise more money. host: next call comes from utah. go ahead, colleen, on the independent line. in caller: i appreciate the opportunity and information with the clarification that the guest had attempted to help paul ryan with the proposal that came out much differently than she wanted it to. my proposals for tax reform are a little different. i believe we did not have a great recession, that we actually have agreed inception where there really wealthy

conspired and started early with the secret oil deals that led to the iraq war and the industrial machine, including the money, and i think the oil subsidies have got to be if not totally done away with, only given it a certain percentage of the oil is guaranteed back to the owners of the oil, which are american citizens. guest: i agree with the spirit of your comment, and in fact, in reforming the tax code one of the things that would be eliminated in the strictest version of this thing would be the provision that's our favorable -- that are favorable to oil and gas. i do not see why we should favor one type of investment in the tax code over another.

we should let the market decide where buttons should flow based on net -- were funds should slow based on profitability. . i think that is a good point. in addition, i think we should be taxing the consumer of oil and gas more so that we have the incentive overtime to use less of it. host: have your political views or conclusions altered over time? guest: my perception is that i have not altered, but the world has. i have always been down the middle of the road. i wrote the book in the early 1990's in which i describe myself as a card-carrying middle of the roader. i believe in bipartisanship, but especially right now. we have a problem of the looming

deficit, which we have to get under control. neither party can do it alone. if the republicans come out with the plan of which is all spending cuts come and no revenue increases in quite favorable to upper income groups come it than the democrats will jump on it. if the democrats come out with a plan that is an opposite direction, the republicans will come out against it. and we have debt like -- deadlock. we cannot afford to have deadlocked. on the commission we have both democrats and republicans. we have very different people. senator durbin of illinois who is a liberal. tom coburn it was certainly a

conservative. they all voted for the proposal. they have been joined by two other members of congress, a republican and democrat. warner of virginia and a representative of georgia in what is now known as the gang of six. i think of them as not so much a gang, but six courageous people who are willing to put their political lives on the line and say we have got to solve this problem together, both parties. i think that plan, which is likely to be coming forward next week, it can give the republicans and democrats some bipartisan cover to move ahead together. host: when you were vice chair

of the fed come in did you pay a lot of attention to standard and poor? guest: not especially to standard and poor. the job of the fed is to pay attention to all kinds of indicators, and we paid attention to the stock-market and to other kinds of agencies. back when i was vice chair of the fed, this was in the 1990's, i do not think it ever occur to anybody that the sovereign debt of the united states of america could be downgraded by anyone, and there was no need to even think about it. as gerry connolly pointed out earlier in the program, we had a surplus. we were worried about paying off all of the dead.

so the notion that a rating agency would downgrade u.s. that was really far from anyone's thinking. right now we're all worried about the future of u.s. debt, because it is rising too rapidly. we cannot go on borrowing increasing amounts every year in the world market. we just cannot do it. our creditors will begin to say wait a minute, we do not want to lend you all that money. that is what standard and poor's is reflecting. they do not know any more than you and i. they see the same numbers. they see if we do not do something, we will be in really serious trouble and our debt will not be financed of will. nobody will lend us that much money. it is a warning shot, but i think it is not as important of

a warning shot as the commissions that i have served on we both said this is unsustainable. have to stop. host: next call comes from syracuse, new york. caller: you were singing my tune to a large degree. .ne thing it's really irking me the republicans are very out front about what their problem is with the efforts to come back to the taxpayer to fix problems that were caused by overspending, and the democrats seem unwilling to engage in that particular discussion, and i do not see how things can move forward without an acknowledgement that we have a fundamental disagreement. one side of the country thinks

it is ok to go and take money from the taxpayer, because we have come up with the reason to spend it or have already spent it. the other side says the constitution is clear, regardless of the fact it overstepped the boundaries over and over, the constitution is very clear that the government has the right to raise revenue when they have things that they must spend on, and those things are pretty much enumerated and have been expanded on way past any place they should have recently been. the democrats will not address that. guest: i would argue with your premise of it. i do think the democrats are addressing it. if you listen off to the president's speech last week, he has a different way of solving the problem. he has freezes on discretionary spending, both domestic and defense.

that is the difference between the parties at the moment. the democrats are more willing to cut defense spending in the report -- and the republicans are not here yet they do cut spending in the president's budget. and the president takes on the entitlement programs. he would put controls in place, more on the regulatory side and less on the market side. i actually am more market oriented, but it is not fair to say the president does not rain in future spending on entitlements. he does. he just does it in a different way. it does seem to me that when you have done all that, and i would be quite drastic and reining in spending, as both of these reports do. when you have done all that, i think it is not realistic to

think we can seem -- stick with the same broken tax code. we need to raise more revenue, but we can do it in a more fair way with lower rates. that is what the commission is proposing. host: from abc news this morning -- guest: i could not agree more. i think kent conrad has been a courageous leader. the president's commission was his idea the consequences of not addressing this problem could be very dire, and we to think it was way up there in the future. it is not any more.

we have seen the consequences of countries that did not pay attention to their debt, portugal, greece, and ireland are in trouble it is evident now that we could be in trouble quite soon if we do not put in place a plan to reduce the rate of growth of debt. we do not have to do with all at once. it does not have to mean a drastic cut in things that do not have -- you do not have to throw programming under the bus. you do have to have a plan in place that will show the world and creditors that we're serious about getting that debt under control. host: what do you think about the president's call for a new bipartisan commission to be led by vice president biden to look at the deficit? guest: i welcome any group looking at this problem. i was a little mystified about

whether the president thought he needed a new group. the gang of six is doing very well. they are all senators. somebody needs to create a group that brings in the house and the white house. maybe this is his attempt to do that puritan i hope the take the report, the gang of six, and say this is not so hard, a lot of people have worked on it. it requires a bipartisan solution, so let's get with it. host: this week came in for you. which would be more fair, raise the retirement age or remove the cap on fica withholdings? guest: i think you have to do some of each. there is no one way to do it.

i would raise the cap gradually on fica, the amount to which the petrol tax applies. the reason that it is as low as it is in the sense it does not cover as much earnings as it to. high income people have been earning a lot more. income has risen at the high end of the skill, so the amount covered by the cap is not as large as it to be in proportion to total earnings. raising the retirement age reflects the fact that we're all living longer. here i am at age 80 talking to you about all of these things. a lot of people are retiring early and then earlier than they to. then growing benefits for a very long time.

that is much more expensive than they to be when people did not live so long. so one way is to raise the retirement age. that is in the report, but it phases in very slowly and far in the future so that people have a chance to prepare for it. another way is what we did in the other commission, which is we will index the benefits to increase in longevity. that is up fancy way of saying if you retire early, you will get less because you are going to live longer. that would be based in very far in the future. -- phased in very far in the future. host: a tweet for you -- how long would it take to base

the tax cut in? guest: people run their lives around what they think the taxes will be, at least some people. things and faphase very slowly. what one piece of tax reform that we have not mentioned is the exclusion of employer-paid health benefits from income. your or employer can ge makes contributions to your health care. that does not count towards your income. having that exclusion is a big incentive to take your wages in health benefits rather than in money. but you cannot do all that at once. in you have to phase it out over

time. both of these reports do that. they base it out very slowly. i think that is a good idea. in both the health reform and tax reform, because it would discourage people from having exceptionally high benefit plans, which in turn encourages them to use too much health care. host: another tweet. the federal government already has an 18 cent tax on gas and still cannot balance the budget. guest: i think you could argue an additional tax would only hurt consumers, but you can also argue that consumers will realize, as they are already realizing because gas prices have gone up, that they need to buy more fuel-efficient cars and

use it more efficiently. so i think the 18 cents per gallon is a triviatrivial compao most other countries. if you buy gasoline in europe, you are paying $4 or $5 per gallon. it is astonishing. i would not go there, but i do think we can raise it. host: st. louis. carroll, a democrat. good morning. caller: i feel like i was in a parallel universe with this woman. she wants to raise taxes on gas. she thinks we should pay more taxes on health care, and that if we use too much health care that will limit us from using too much. i cannot believe it. this is a parallel universe. i do not know where she comes from.

guest: that is interesting. in my universe it seems to me we do have a very expensive health care system. health-care costs go up every year. if we had more incentive built into the system to use less of it and to pick providers that were more efficient and more effective, give us more health care for the money, i think we bit be better off. it is hard to design that, and certainly one does not say everyone is using too much health care, but the incentives are wrong. once you have health insurance, you do not have much incentive to figure out am i going to health-care providers that really gives me good value for the money or not? caller: next call.

nashville, tennessee. go ahead, heather. caller: i would like to encourage readers and viewers to google the point of truth. if you will read the report, you will see that they start diminishing the benefits starting at $9,000 annual income. i think using will be is rather stretch. she mentioned raising the age but what she did not mention is that for every year the age did raise, all beneficiaries will lose approximately 6.5% 7% is usually exception of the benefit for each year that the age is raised.

regarding the gang of six plan, i think that is actually the plan they will put in legislative form. it is not necessarily a new plan. if you do not like this plan, you will not be too thrilled by theirs. regarding the tax reform. the tax reform -- the gang of six will raise the bottom tax bracket by 2% in but were the very top of the bracket from 35 to 28. host: all lots on the table. -- a lot of the table. guest: i would encourage everyone to read the plan, which is called "moment of truth." and also read the plan i and a

whole bunch of other bipartisan folks put on the table, because the more information, the better. the calller is right that the gain of six is building on simpson bowls, because they accept the notion that a solution to the debt problem has to be bipartisan, and it is a good place to start. in a bipartisan plan everybody gives up something. burn put itenator cockbur very well when he signed the report. he said there is a lot in here i do not like, but i have figured out something. if we are going to solve this problem, tom coburn will not get

everything he wants. alice rivlin will not get everything she once. we have to solve the problem. we have to come together across party lines and forge a compromise that maybe nobody likes, but the alternative is worse. if we do not trained in the debt, we might find ourselves in a deep recession, deeper than we are crawling out of now that we could not get out of. that is very serious. host: florida. dan, republican line. caller: i am looking for one democrat to be honest with the american people about the so- called surpluses in the clinton years and how bush threw away the record surpluses. the economy during the clinton years was built on the .com

boom, which greatly fueled the economy. money was flowing, the stock market soared. tax revenue soared. that bubble burst in the last year of the clinton presidency. the economy went into a recession. bush's first few years of office, instead of getting the revenues, he was getting tax write-offs. when you lose money in the stock market, you write it off over a period of years. host: let's get an explanation. almost out of time. guest: you are right that the economy was very good in the 1990's. part of it was the bubble in the stock market and .com. we did have a surplus in the budget in 2001, and then the economy went into a fairly mild

recession. after that we engaged in a quite deep across-the-board tax cuts and increases and benefits under medicare, and the combination, along with two wars, has built up the debt, and we have to do something about it. we have to do something about the fact that we are headed into a democratic tsunami with the baby boomers retire ring and very rapid increases in medicare, and that will keep the debt rising. we have to solve the problem. it is not a question of blame. now we have to do something to solve the problem. host: fort myers, a merrill lynch. quincy on the democrat line. -- fort myers, maryland. caller: they say 40% of the

other part of the country that does not pay taxes, don't they realize that 40% of the people that do not have enough money to pay taxes is the reason why 2% have the money that controls 40% of the cut economy -- of the economy and in and of itself? that is why they should pay more taxes, because they are actually living off the poor. guest: i agree with some of that, and i thought the president was right when he said we should not extend the bush tax cuts to upper income people. our rates, even at the high end, are not very high. i am old enough to remember when the top rate was 90%, and then it was 70%. reagan brought it down to 50. now the top rate to which one would return if we did not

extend the benefits is 39%. that is much lower than it to be. the other thing that people say is there are a lot of people that do not pay taxes coming and they mean income taxes. they do not recognize that everybody who works pays payroll tax. most american families pay more payroll tax then they pay in income tax and that everybody pays state and local taxes whenever they buy anything. or if they own property. there is not as if there is a large portion of the country that does not pay any tax. there is a large portion that does not pay federal income tax, because we have designed the tax to fall on the upper half of the income distribution. host: this tweet --

guest: well, the gas tax has a disproportionate tax basically on their rural poor, and not so much on city people because they do not tend to drive as much or even own cars. i actually think that phasing in a small gas tax will not hurt anybody very much. taxing stocks, one of the provisions of the proposal in simpson bowels is to tax dividends and capital gains as ordinary income.