historian and author. he will talk to us about some the classified -- declassified pentagon papers. crosses for watching this edition of "washington journal." we will -- thank you for watching this edition of "washington journal." ♪ >> next, "newsmakers" what lamar alexander. then the 11th circuit court hears oral argument challenging

the health care law. then the confirmation hearing for defense secretary nominee leon panetta. >> this week on "newsmakers," senator lamar alexander, republican of tennessee and the republican conference chair, the number three in republican leadership. thank you for being here. >> thank you for inviting me. >> of course we have our reporters here to help with questioning. julie hirschfeld-davis is the congressional reporter with bloomberg news and joseph schatz, senior writer with "congressional quarterly." julie has the first question. >> senator, republicans and democrats are negotiating over a debt reduction package that they hope can go along with that debt ceiling increase vote sometime this summer. the group led by vice president biden met again this week. do you feel democrats and republicans are any closer than they were to coming to some sort of an agreement on this? >> not yet, but we will have to agree. there will not be a debt ceiling increase unless we have some agreement on a significant reduction in debt, and that significant reduction will have to include entitlements. so they are in a negotiation, all in good faith. we have some of our best

members of congress and the vice-president in the middle of this. hopefully they will come up with a result. >> but you don't see them getting any closer yet. >> well, i do not know, really, because they are not reporting their day-to-day negotiations, and they really should not. so they're in the preliminary stages. but we all know we have a deadline of the first of august. between now and then, we need to deal with this. i want us to deal with it because it would be irresponsible to default on our debt, and it would be irresponsible for us to not take action that is significant to reduce our debt. >> but wouldn't their deadline be earlier than august 1? when do you have to have something ready so you can take to the senate floor? >> well, that is a very good point. before that. but it does not have to be long before that. my guess is that if the vice president and this group agrees on a recommendation, that it will have substantial support in the house and the senate.

i do not think that eric cantor and jon kyl would bring back back to the republican caucus something that they did not believe could get support. >> can you give us some specific areas where you think republicans and democrats have agreed or do agree or can agree to cuts that you think will be part of this mix? right now it looks like the two sides are so far apart. as you said, the republicans have said entitlements have to be part of it and tax increases should not be. democrats have said just the opposite. do you see some areas that are getting not talked about that are potential consensus areas? >> social security is an example you do not hear very much about. we all remember 1983, or most of us do, when president reagan and tip o'neill got together and made decisions that made social security solvent for a long period of time. no one paid a political price for it. president reagan was reelected in 1984. so social security is an area where we should be able to agree pretty quickly. and while it would not save too

much money, it would be a signal that we could deal with entitlements. you could look at the simpsons- bowles debt commission and see where some republicans and some democrats came to a common agreement. you can even look at the gang of six -- now the gang of five -- senators where they had some agreement. so you put any group of republicans and democrats together, where they are working in good faith, and they should be able to figure out how to stop spending money that we do not have. >> democrats have been resistant to changing social security, resistant to medicare changes like the ones proposed by the house. the republicans have been ruling out tax increases. is it realistic that democrats will come to the table on the entitlement changes if republicans are not willing to deal with tax increases? >> i think is realistic. take medicare. medicare is the biggest part of the federal budget. it is the biggest part of the problem of the spending problem we have. president obama has said that. president clinton has said that.

vice president biden has said that. nancy pelosi has said it has to be on the table. democrats and republicans say that -- the domenici-rivlin proposal, which was bipartisan, said that. the fiscal commission said that, so there is no responsible way to do with it unless you make medicare strong for the future. >> but you supported and voted to advance paul ryan's budget in the senate. >> i did. >> that is getting a lot of blowback from democrats. how do you discuss that with your constituents? >> it is not hard for me at all. i do not think a democrat has a very good standing to criticize paul ryan unless the democrat has a better plan. if you have all the democratic leaders as well as republican leaders saying that medicare is the part of the problem and spending is the biggest part of the problem, and if paul ryan has a plan, then someone needs to come up with a better one. i liked the proposal by former

republican senator pete domenici and alice rivlin, a democratic former budget official. they have the idea of premium support for seniors. but they allow you to go into the marketplace and shop for what you might want for health care insurance. if you do not find what you want, you can fall back on traditional medicare. i think that would make many seniors a lot more comfortable. it would not apply to anyone who is over 55. >> you mentioned that the gang of six is now the gang of five. while they continue to meet and talk with other senators in a bipartisan solution, they are pretty much on ice as far as an agreement anytime soon. i wonder if you still see the prospect for a deal of the scope that they were trying to work on, $4 trillion over a decade, along the framework erskine bowles and alan simpson came up with last year, or do

you see a smaller deal, half that amount, whatever can be agreed on in what is a short period of time between now and august 2? >> i think it all depends on president obama. if president obama decides if he wants to embrace a plan much like the deficit commission he appointed or the gang of six, and that would have to include entitlements, he can get that. he can go down in history as a president who made a courageous decision and i think he would have bipartisan support for it. if on the other hand, he and the democratic leaders decide they want to beat up republicans on the medicare issue in the next election, he will not get that. i hope he will do the former. we badly need to deal with the debt. we are borrowing 40 cents of every dollar we spend. i come from a state where i was governor where we had zero highway debt. we had none. all of our gas tax money goes

to build roads here. so much of it goes to interest on the debt. we have got to stop this. >> that president obama makes that decision to go for a smaller deal, is that something you could support? could republicans support it? would that go far enough? >> it depends on what he recommended. i will do my very best to support any sensible proposal that does something significant to reduce our debt and does something significant about the mandatory entitlement programs which are bankrupting the country. there are many variations of that, and i do not want to rule them in or out before i get them. i am counting on the vice- president in the working group and the president -- you know, we have only one president at a time. he is the agenda setter. he is supposed to say, here is the strategy, here is the solution, i am going to persuade at least half of you that i am right. i think he has in the senate plenty of democrats and republicans open to a wide

variety of proposals. >> on social security, sir, the house republicans -- pete sessions -- have put out a proposal that would allow workers to opt out of social security, take that 6.2% and put it into what is called a s.a.f.e. account, privatizing social security. would you like to see a vote on that in the senate? >> i would be glad to see a vote on it and i think i would vote for it, but i don't think we are likely to privatize social security. president bush tried to do that. he made it the biggest part of his second term. he made 60 speeches and he could not get 60 votes in the united states senate. but there are a variety of ways to adjust social security very slightly so that it is solvent for the long term. what our goal should be is to make these slight adjustments today before we have a crisis and make it solvent and strong so that people can count on it. >> are you concerned about the political fallout of a proposal being put forth by house

republicans on this that could be seen as doubling down on trying to privatize entitlement programs, after the medicare vote? >> that should not surprise anybody. republicans have always suggested, most republicans, and i am one of them who say we ought to try private accounts, let people take their social security money and put it into a private account. sure, i would like to try it. i am a believer in pilot programs rather than apply it to the whole system. but i do not think that is likely to happen this year. what could happen if the president recommends it is a sound way to strengthen social security for the long, long term. and that would be important to the country, it would build confidence in the economy, jobs would start to come back, and we would be feeling better about our economic future. >> as these debt talks go on, a lot of outside conservative groups such as the club for

growth, americans for tax reform, anti-tax groups, groups that are pushing things like a balanced budget amendment, are weighing in heavily with a lot of members. are they complicating the gop leadership's ability to forge a deal here? are they boxing you in, in terms of saying what should or should not be on the table? >> no, they are exercising their constitutional rights. it says in the constitution petition of government is what you have a chance to do. we listen to them and then we make our decisions. jon kyl, our number tworanking republican in the senate, is our representative in this discussion. we have a lot of confidence in jon kyl. we have decided to not send him a list of instructions about what or what not to do. we're going to wait for him to recommend what we're going to do and then we will make decisions. >> as the summer goes on, and there is no grand deal in the works, are republicans willingly to do this in a piecemeal manner and have a series of debt limit votes before the next election? >> i suppose anything could happen. but rather than trying to answer hypothetical questions, here is what we ought to do.

we should make sure we always pay our bills, that we do not default on our debt, and make sure we do something significant to reduce our long- term debt, including entitlements. that should be our goal and we ought to act like grownups and get it done. >> do you think that taxes should be part of the solution? if that is what it takes to get to a $4 trillion deal, to have revenues do part of the job of paying down the debt, would that be acceptable to you? >> i'll wait to see what jon kyl comes back with. i believe the problem we have is a spending problem. we have gone for spending 20% of the total growth output of this country to about 25%. if we get closer to 20% on spending over a period of time, we would be a lot healthier as a country. i'm going to wait to see what he brings back. >> would you consider eliminating popular tax deductions -- mortgage interest,

that sort of thing -- that denies the treasury revenue, would you consider that as part of the deal? >> i think tax expenditures ought to be considered. we have $1.2 trillion every year which are a variety of tax rates. many of them are socially desirable tax breaks. they encourage conservation, they encourage home buying -- others encourage ethanol and give tax breaks to people who invest in windmills. it is time that we took a look at those. the former chairman of the council of economic advisers said about $400 billion of the $1.2 trillion ought to be gradually eliminated. if we did that, that would help balance the budget. >> so you would be willing to listen to that -- even though people like grover norquist said that those are tax hikes? if you eliminate those, that's a tax hike. >> it is not a tax hike overall, if the total amount of money is revenue-neutral. so the question would be, would

you spend that money to reduce the debt? let's wait and see what the kyl group recommends. >> how much longer does that group have? you said it has to be some time in advance of august 2 to get it through the senate, but the markets are watching what you're doing. is there some concern of getting right up to the end, like what happened with the 2011 budget talks? how long do you have? >> the sooner, the better. we can work backwards. i think there is an informal agreement that we need to have our action done by the first of august. to get it considered, we need to get it some time in july and that is about a month away. >> and you have not seen the progress yet toward actually getting to something? >> there may be a lot of progress. but they are not giving us a running commentary on what they are doing. otherwise, they could not have the confidential sessions they need to have. i think they are having good discussions. they are good people.

they trust each other. i'm looking forward to a result within a few weeks. >> we have a little more than 10 minutes left. >> senator, the white house explored an idea this week of a new payroll tax cut, giving the economy another jolt, given the unemployment numbers. would you support that? are you concerned in these debt talks, you might end up with a debt deal that becomes a drag on the economy? >> many economists feel that almost any action that we take to reduce the debt will in the short term run the risk of hurting the economy, and in the long term, almost certainly will help the economy. that is unfortunately the medicine -- that is what we are dealt with. as far as a payroll tax deduction like we voted on last year, any proposal like that ought to be a part of the vice- president's debt group. let's see how that fits into the overall effort to reduce the debt. the numbers that we keep

hearing, we're talking over the long term savings trillions of dollars. that is what we are trying to do. any taxes, any debt, any proposals ought to be a part of that. >> if i could twist gears and ask you about the presidential campaign getting under way here, you had a campaign like that at one time. i am wondering how you think republicans are feeling about the prospect of taking on president obama right now. who do you see in the field has the best ability to do that and win in 2012? and what the process is that people like yourself go through when you think about, i am on the sidelines, should i jump into the fray? what are they thinking about right now? >> they are all irrational people or they would not be thinking about it. if you're thinking long and hard about whether to run for president, you probably will not. my rule of thumb is, number one, requirement for a well

qualified person is, 90% of it is actually announcing. actually finishing the race. if you'll think about it, we have this great big complex country of ours, of more than 300 million people, and on the republican side, we will only end up with two or three people that people take seriously as competent to be the next president and likely to do that. and that is already about the case. i had dinner with one of the candidates last night. he and his wife were up in dixon, new hampshire where they had the midnight voting. he saw my red and black shirt in a museum up there, so i knew something about it. >> can you tell us it was? >> it was governor huntsman and his wife. i think he and governor pawlenty and governor romney all are three former governors with strong prospects in our party. and there may be more who have a chance to do that. >> do you give any advice to governor huntsman last night? >> no. if i were so smart i would have been in the white house. [laughter] >> what about the prospect of

taking on president obama? his approval ratings have been up and down lately. but he is a sitting president and the record of defeating a sitting president is not as encouraging as one might hope. >> no, it is not. but no one should underestimate president obama. i went with him to booker t. washington high school in memphis about a month ago. he made a beautiful talk to the students there who come from families who are among the poorest families in the country, really, and a great example to them, and he spoke directly to them. he will not be easy to defeat. but i worked for a very good president one time, the first president bush, who lost after one term. he lost because the democrats said, it is the economy, stupid. the vulnerability that president obama has is that the republicans may be able to say, by a year from now, he made it worse. 9% unemployment, food prices,

gas prices, health care mandates, health care costs, slow walking trade agreements, undermining right to work laws -- all of that is throwing a big, wet blanket over private sector job creation in this country. if republicans say, we will not blame you for problems that you inherited, but we are going to give you credit for having made it worse, then he will be vulnerable to a strong republican nominee. >> on labor issues, he national labor relations board filed against boeing for putting a second plant in south carolina, a non-union state, rather than creating it in washington state. what is your reaction on that? darryl issa said that he will hold an investigation on the house side -- a hearing on it. what would you like to see happen? >> along with senator demint and graham, i have introduced legislation with 35 senators to put a stop to that. this says that it is a prime facie case of a labor violation if a company like boeing, our

largest exporter, that's in a forced unionism state, expands in a right to work state. that completely changes the law in our state. it makes it harder to create new jobs. it discourages companies from expanding and makes it more likely that they can go overseas. boeing sells airplanes all over the world. today it has most of its employees, 160,000, in the united states. it can also make airplanes all over the world and we want people to make here what they sell here. tennessee has benefited greatly from having the right to work law. auto plants have come here because it was a competitive environment in which they could succeed. >> the board has said that because of past comments made by boeing and the fact that there was a strike in 2008 by washington workers, that this is retaliation, it is discriminatory that they want to open up a second plant in south carolina because they are also saying, you're not going to strike in the future. >> companies have always made

decisions about where to locate based upon the labor environment there, among other factors. i'm sure that when nissan came to tennessee 30 years ago, it looked at things like our central location, and, second, we have a right to work law and kentucky did not. we were both in the center of the market. we did not have an income tax, we had a good road program. you look at all of those things. usually when you need to prove labor discrimination, you have to show that the union was hurt. in this case, boeing added 2000 jobs in washington state. in practical terms, boeing announced this nearly two years ago. they spent a billion dollars building the first new airplane production plant in 40 years in the united states. they hired 1000 people, they are going to open the plant next month, and here comes this acting general counsel of the labor board in to stop that. boeing has to be competative because it has competitors in europe who can also make and sell airplanes. >> i want to go back to

politics because politico is reporting that gingrich's top staff has resigned en masse on thursday. what do you make of this? can he continue? >> i do not know. newt is one of our most durable idea men in the republican party. he is filled with visions and ideas. but presidential campaigns are difficult undertakings. there is often a lot of turmoil in the campaign. we will just have to see. >> we have about five minutes left. >> i would ask you about the political part of the boeing issue. do you think it will play a role in the campaign? do you think regulatory issues and issues like the boeing case, will they be an instance of republicans increasingly point to to talk about whydemocrats have the wrong economic prescription? >> the answer is yes. if i have one little phrase that i hearas i go around tennessee, and my fellow

republicans -- too many regulations. the obama administration is throwing a big wet blanket over private sector job creation, all those things that i mentioned a moment ago, from undermining right to work, to the health-care mandates, to the environmental regulations, to the proposals for extensive energy taxes -- we are getting smothered by government regulations at a time when we need to be liberated from those and make it easier and cheaper to create private sector jobs. so the answer is yes. too many regulations. even in the area of higher education where i spent a lot of time, we're vastly over- regulated. i even had to vote against the last higher education law because it was as tall as i am and it would double the size of the regulations. that just cost money, limits innovation, and takes money away that ought to be used on teaching students. >> senator, you mentioned nissan. the administration is taking

credit for the resurgence of the domestic auto industry. is that going to be a problem in 2012 for republicans who voted against it, in states like pennsylvania and the midwest? >> i think the president was exactly wrong to go to the midwest and said that the auto bailout saved the auto industry. what saved the auto industry is the right to work law. it kept 22 states in this country that have an environment in which manufacturers could make here what they sell here. nissan and now volkswagon coming to tennessee and thousands of suppliers have been able to make cars and trucks in the southeastern united states and really force competition in the midwest that kept the united states as a place where you can make cars and trucks. if we had not had right to work laws in states that have adopted them, those plants would probably have been in mexico or still in japan. and those jobs would have been overseas. >> senator, you're the no. 3

leader on the republican side, in the senate. the senate has not accomplished much this year. >> that is a -- that is an understatement. >> a nobel laureate cannot be confirmed by the united states senate. the gang of six has not been able to cut through the partisanship and some of the procedural hurdles in the senate which is what they were formed to do. i wonder if you could talk about whether you think the senate is broken, is there some dysfunction there that it is impossible to break through? you were involved in trying to revamp the rules earlier this year. did it make a difference? >> it has made a difference. the problem is that the democrats have not brought up anything to talk about. the way the senate works is, when you're the leader, when you have the majority, you set the agenda. the republican leader cannot set it. it is up to harry reid to set an agenda every week. he could bring up any single thing he wants to bring up. he brings up some small business bill and we will stay on it for three weeks.

i'm not sure why they are doing that when we have 9% unemployment, health care law that is running and causing people to lose their health care, we've got a financial regulation bill that needs to be reformed, we have free trade bills that we ought to be passing in order to open up this do country, we have plenty that we could be doing. but it is up to the democratic leader ane the president to set the national agenda. in the senate, they're bringing nothing up. >> there are a lot of nominees that republicans have not allowed to go forward for various reasons. some of the agenda items that democrats have had, have stalled on the vine. >> occasionally we, with our constitutional advise and consent responsibility, have helped slow some of them down. we said do not send us a nominee to be secretary of commerce until you send us the three trade agreements that we need to be dealing with.

in colombia, there's a situation where they can sell here but we cannot sell there. and that is our own doing. we just need to pass a law that permits us to do in their country what they already are allowed to do in our country. we want to use our leverage to do that, but i will place the blame for a slow walking senate directly where it belongs, and that is on the majority leader, because he has the the sole responsibility to set the agenda in the senate. >> can i just wrap up by tapping into your experiences as education secretary? there has been a lot of discussion about the expense of college and how much that is. some have said that it is the next economic bubble, questioning whether or not college is really worth it. do you get an investment on your return? those parents who have kids graduating and now they are living with them. what are your thoughts? >> it is always hard to pay for college, but here are the facts. you can go to a good public university for tuition of $8,000 a year. that is a bargain. you can go to a community college for about $3,000 a year in tuition.

that is a bargain. half of america's college students have a federal grant or loan to help pay for college. there are plenty of opportunities out there. we can help if we would stop sending health care costs to states. this will not sound like it has anything to do with education, but as a former governor, i know that it does. we send states new medicaid costs and they have to use state dollars for that instead of for the community colleges or the state universities of california or tennessee. that drives up tuition. it is the federal government's fault, really, that state college tuitions are going up. but that is still a pretty good bargain. >> senator lamar alexander, thank you for being on "newsmakers." >> thank you for inviting me. >> we're back with our reporters. julie, let me begin with you about where the debt talks, the deficit talks stand. you have vice-president joe biden leading a bipartisan bicameral group. where are they? >> they met again this week on capitol hill. they are talking. everyone says the meetings are

productive, they are making some progress -- we have not actually seen it yet. we heard senator alexander allude to that. even their closest collegues are not getting a real time report on what is being agreed upon and what is being left for later. i think the reality is that there is very little common ground right now on the big issues like entitlements, whether tax revenues will be part of the deal, and there's not a sense of how large the deal is going to be. but you did hear senator alexander acknowledge there is the possibility that it will be about a $2 trillion debt savings deal, not the $4 trillion or more that was initially envisioned by president obama's debt commission, that they might just agree to some of the lower hanging fruit and leave a longer range agreement until after the elections. >> so a smaller package than people had envisioned. >> right. >> joe schatz, what did you hear om