crop -- you and i have spoken about the 2008 crisis. i looked at past recoveries -- by the easing of credit. but the high number -- is this the best recovery we could have expected? secondly, given those persisting problems, are their policies that can create a stronger recovery with many more jobs? >> i do not see -- what we are

trying to do is to fulfil our mandate. on the fiscal side, i recognize there are some real tensions. there would be a spoke for targeted programs to help some of the issues that we have in housing and elsewhere. i understand also the concerns on both sides of the aisle about the long-term fiscal stability of the country. it is a difficult situation. we do not have any substantial unused capacity to increase the recovery. , , . .

>> this is what the elected officials are supposed to be determined. i cannot make those decisions for you. >> i am not looking for you to do that. i think we have come to a point in which it seems the tax code, whether it be large corporations. they are entitled to keep those tax breaks. middle-class working families seem to be called upon with the burden of a resolution of this problem. it is a moral issue and it is also a fiscal issue. >> thank you, mr. chairman. thank you for being here.

moody's, in their recent all looks, at said that a credible agreement on substantial deficit reduction would support a continued stable outlook. it could prompt -- do think that is indicative of the entire market? >> to navigate this debt ceiling issue without any kind of disruption. it would not be successful the that we kick the can down the road in terms of our fiscal situation. i very much supports a strong fiscal deal. >> right. i asked you previously how quickly this lack of a

sustainable fiscal path could have serious consequences and i believe that you said you do not know, but it certainly could be sooner rather than later. it is not necessarily years off. could you make a comment on that now? >> that is correct. markets are forward looking and they are likely to assess the likelihood that they will get paid years down the road. we see it in other countries around the world that there is a loss of confidence in the country's fiscal stability and its political resolve to address the fiscal issues that interest rates can start to rise and you get a vicious circle. >> if the resolution of this present showdown and negotiation is increasing the debt ceiling with no significant change in terms of our fiscal path, how do

you think the markets will digest that? >> i am sorry that the two things got linked together the way they did. i would very much like to see both parts of this work. both addressing the debt ceiling and addressing -- it seems like an opportunity that we have not had for a while to address longer-term fiscal issues. i do not know how quickly the market to respond, but they are looking to watch participants showed that they can manage their spending and control deficits over a long period of time. >> what you said a minute ago was part of my point. we have been talking about this event for months. it has been built up as an opportunity to do something. would that the buildup in that context, but my gut is that if we extend the debt when it and do nothing, -- the debt limit

and do nothing for fiscal sustainability, the markets will have some sort of meaningful reaction as reflected in the moody's statement. would you agree with that? >> turning to other policy and talk of qe3, i agree with the senator's comments. i am sure that that is not surprising. what would you point to in terms of success with qe2 in terms of suggesting and convincing us that a third round is advisable? >> qe1 came in march of 2009, which was at a very weak point in the recovery. the stock market was about how far it is now.

the first round seem to restore confidence. it seemed to strengthen financial markets and it seemed to help the economy grow quickly. it came about here. on a missing it on the same direction. employment was very weak. this started to rise again. inflation was actually falling down toward a very low level. we know that people have not in spirit state -- have not experienced it. our policies which are admittedly different from the

other once lower interest rates. they have addressed the inflation issue. we thought it would be more less on target in terms of where we want to be. although job creation has not always been like that, it is not fit with our expectations. we declare moving in the right direction here we are trying to

main flexibility in both directions. we recognize monetary policy is not a panacea. >> if i could just add one more question to figure out -- finished out. in that framework of promoting growth and recovery, what do you think the impact would be if we announced letting the bush tax cuts expire at the end of 2012? it is a tax increase. >> i cannot really assess that. it would have some effect on higher marginal rates. it to have some effect on incentives. higher rates would also take some consumer spending out of

the economy. we talk about the importance. this did work and the other direction para these policy decisions have to be worked out. hong >> thank you. thank you for your testimony. thank you for your hard work. i search for tinners in the state senate. we did everything possible to keep a aaa credit rating in the state. we knew the consequences on the debt. i knew the american people deserve better than what you are seeing. it is the lack of the ability for them to come together and

solve this. i'm extremely confronted. failing to raise the debt ceiling to create tremendous problems that you have been discussing today, problems that might require accommodative monetary policy. but i understand the federal funds rate cannot be lower. one of the responses to an economic weakness whitby to initiate more security purposes. can you help me understand what they would do, how they would respond if we went into default? they had defaulted. >> on that last question, that is really a an interesting decision. i would have to leave it to the broader group.

i want to eliminate it. it could offset some of this. it is not fair to have any expectations that we could offset the impact. >> how would this unpack their -- and pack their policy? >> it would affect the state of the economy.

it to be countercyclical. >> what happens to the income tax if the treasury stopped making timely payments? >> are greater concerns should be the impact on the financial markets. it is important to understand that treasuries are not a buy and hold assets.

>> i cannot tell you how long that was on friday. there are over 430,000 people unemployed in my state now that are looking for work. there were a high unemployment rate among veterans. we have a serious problem in the short run when it comes to unemployment. i believe it is a problem that we do need to separate from the longer-term. what can be done in the short

term to boost demand and help get the citizens back to work? i would be interested to hear what you have to say about the policies? >> we think it is partly temporary. we hope it will be better going forward. we have to think of fiscal policy as a whole. it is complicated. we tried to maintain several objectives. we want to achieve a long-term stabilization of our fiscal policy. we want to do that in a way to promote growth. i want to have investments done. i want to be a little bit careful. the recovery is still fragile. there are very sharp cuts in the short term. if the pose some risk.

i hope that the differing goals can be combined and try to solve this problem. if the fed is doing what it can to support the recovery. congress might want to look at some targeted programs. one of the issues we have talked about is the effects on skills of long-term unemployment. veterans have been out of the labor force. one thing to look at, they are in many ways to do this. we help the unemployed workers refresh their skills. they would be eligible for employment. >> i have a bill on that. >> thank you. >> thank you for year testimony.

i think a number of us on both sides of the table there is a question on the mind of americans. it where is the recovery. whether they are not doing any better? they have continued depressed housing. they still have limited access to credit for limited households and businesses. that have all levels of government. it a fact that another

headwind affecting our economy and hoping to cause this slowdown is the daunting salute of regulatory requirements? there are examinations. there are multiple new regulations under dodd and/frank. has any attempt been made by the fed for some other entity to add up the cumulative costs of these regulatory burdens?

>> it is required by law. we publish. we do our best. in minimize the costs. we are doing what we can to assess the this. -- to assess this. we have credit flowing. we have a strong financial sector. the financial system almost collapsed. we are seeing the damage from that. we are trying to apply rules in a way that will be minimizing the risk of another crisis. it would still permit good loans

to be made. >> you can see the credit is not flowing as it should be. >> they have the value of the house. they have tightened some of the areas. >> small businesses where the jobs are created. >> they are important. you do cost-benefit analysis on individual regulation. how about looking out at doing a cost-benefit analysis of the key

much of that? it suggests is the benefits of 2008. it becomes such a burden that the cost is too great. >> we have to understand the interaction. this is difficult. i understand your point. >> we want to take that into account. >> a d.c. any particularly

negative aspects of a short- term increase in the debt ceiling? -- do you see any particular negative aspects of a short-term increase in the debt ceiling? >> it has occurred so far. would it be advantageous to our credit rating if we put it to the ceiling glass into next year? >> it would certainly be advantageous not to put this to a situation where threatening to default. >> they still have the other part of this. we want to make substantial progress.

if we felt they were abandoning it, it would not be so good. we want to make a convincing case that we are finding solutions. >> we would continue that. rather than dig in, it should be there. >> it'll be a real solution for longer-term the fiscal problems. >> thank you. thank you for being here. real quickly, i think we all understand have a fiscal problem.

memo to predicted. we what the markets to react. i want to talk about housing. one area of concern continues to be the housing market. they will take the role in creating it. it does not seem very interested. the result has been. is notnd of attitude

healthy. one bank recently announced 20 billion parent >> they have made the housing market far worse than it has to be. the market is tied in a massive not. banks had made little progress. they will stand tough conditions. what is the magnitude of this problem and the challenge

opposes for the market? if the second round have indicated whether they really have the ability to get their act together. >> the stress test actually bore on the broader capital levels of these institutions, not specifically on the servicing part. they were joining with the other banking agencies. as you know, we found many bad practices. i agree. it is very poor business. they make sure that consumers were contacted. they were appropriately treated. all the illegalities were observed. they have been posed in order. they can fix of that act and to

go back and let at every foreclosure. we will be imposing. how can you help and wind it? >>, we are trying to keep mortgage rates below. we are trying to encourage lending. they are making sure loans are

safe and sound. they are pulling down prices. this is hurting areas that are worth looking at. they are trying to convert them. it is one of the main problems.

>> this is the overhang you are talking about, right? >> that is the reo. >> what do we typically have normally? >> probably a third of that. >> de have any idea what percentage of homes are under water? >> about a quarter more. >> not homes. mortgages. >> all right. thank you. >> let me talk about deficit reduction. it is without accomplishing any

debt reduction. many of us have conflicted feelings about this approach. on the one hand we dealt default. on the other hand, it does not make any headway. sooner or later it will cause problems. if we keep walking in that direction, we will fall off. >> was one need more reassuring. >> one is to avoid the problems associated. the other is to make meaningful

reductions in the long term. we certainly should. that is the best outcome. >> that is the outcome some of us are working toward iran now. i appreciate that. to do one without the other does not make much sense. we can prioritize interest rate payments. there are the guys in the towers. our airplanes can go. if we do not raise the debt ceiling, that would require us to stop paying almost half.

is in this call by another name? wouldn't a likely downgrade our credit rating anyway if we missed payment on their other obligations tha? >> i think it is downgraded. i do not know of a have -- that they have stated it specifically. this is not a direction we want to go. there are payments to social security recipients. it seems to me that senator

toomey is way off base. there are obligations pare. i am surprised at it. in today's wall street journal i think it stated that standard and poor's said there would likely downgrade u.s. debt if we miss other obligations. >> next, short-term extension. leader cancer has been pushing this. they have advocated shorter- term ones. markets would relieve that it is off the table. it is better than not doing anything. do you believe they would start to get nervous that we cannot

find a political will? >> it is important to raise the debt ceiling. it is important to show that we make progress. >> i am talking about renewal of the debt ceiling by such a little amount that month after month we will have to come back. is it preferable to do it in a large amount as possible? >> they get a big of a deal. we will do it in a long term. >> it is a 1 month extension of the debt ceiling compared to doing it until 2012.

>>, the risk is that you lose credibility in the markets about your willingness to experience a few did that, it would be important to send signals somehow that you have a plan. >> better to do it now than ever did in 2213 than a month at a time? >> thank you. >> thank you. thank you. i just have one question. in view is the largest holder of our treasury debt? is it the chinese government? is it the chinese institution? >> they have a lot of it. >> the reserve holdings is

there. >> effectively, it became our debts and not paying this. we would be paying the chinese central bank. it would a probably raise the debt ceiling. there is used for the deficits that we face. we are trying to do that. ironically, when you do this, the irony and the priority is to the chinese central bank. it is lower on the pecking order. it would practically be seniors and social security recipients. that is the reality.

>> the hearing record will remain open for seven days. with that, the hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> our guest was the president of americans for tax reform. l. host: grover norquist, president of americans for tax reform. what was your message yesterday? guest: i asked michelle bachmann

to speak. we had a discussion certainly people from boehner's office and mcconnell's office came by to talk about the various proposals back and forth. people don't want tax increases, they do want spending restrain. negotiations are a little built of a black box. host: what do you think of mcconnell's proposal? guest: it's an interesting thing that brings us back to something people don't understand. the government has passed the budget. at's the one that says on taxes, they will take the top rate to 25%. at the spending level, it takes

$6 trillion of additional spending. takes $6 trillion off the table and puts us on a path of a government that's smaller as a percentage of the economy. obama to date has taken us to historical levels up to 25. the democrats have gone two and three years without passing a budget. democrats didn't do a budget this year or last year. what mitch mcconnell has asked is for the president to actually put in writing what his speeches

have been about. really? write them down, show us. and tax increases will be by nobody and they'll be painless. >> really? some of us may think that those taxes would actually hurt the economy forcing the president to co up with a budget, which he ha't done they want to run for office based on speeches, the way obama did in 2008. they don't want to run bas on what they plan to spend for the future. mitch mcconnell says you don't

get out of this roomithout writing what you plan to do. what you are talking about stead of just giving speeches obama has spept the last two years running for president instead of being president these speeches are cute and funny. when you are president of the united states, you really ought to do something. i'm a fan of hispproach as one piece of the puzzle. what do we want to have happen? have a dollar of debt ceiling increase, mr. president. then we can have a deal and not raise taxes. it's been clear six months now so the president can write his own budget. host: does the debt ceiling feed

to be raised? is it possible that they could reign in spending and not do it? if you start it a couple years ago. the president has increased spending $1 trillion a year. each and every year if the president hpt wasted $800 trillion, we wouldn't have to do this. we are hitting the debt ceiling. in the last of the previous years, they added a trillion to the discretionary spending. they added a trillion. trying to bring some of that down is important.

maybe in accepti the cost down temporarily raise the debt ceiling? that's likely. the president doesn't understand. we have nine plus percent of the american people unemployed because he's damaged the economy so muchith spending. germany is spending less chinese are spending less. when the government spends money, it doesn't make us richer, it makes us poorer. host: between democrats, republicans, you can always tweet

>> candidates who signed pledges, u.s.a. today writes, these sorts of pledges are receipts for grid lock. the vows stop politicians isn't th how democracy is supposed to work. officials owe their allegiance. not interest groups the only pledge we'd like candidates to support is simple. don't sign any pledges. if you go to theebsite we have

the copy of the pledge we ask all to sign it is not americans for tax reform. it very simply we wept through this a week ago they are some what confused. this is a pledge to the voters, not to me. it says, i promise we won't raise taxes. the constitution is a collective dockment. we are saying, you cnot tell us which church to go to. you promised not to steal anyone's guns. you promised not to use the government what to read or what

religion to have or what to say the public square. previous guys have spent a lot of money. my job is not going to be to steal enough of your money to pay for their mistakes we are not going to come and blame obama for your overspending. we are not going to come pick your pocket because he has no

self control. there are other pledges. i think there is value to a questionnaire where you say here is my possession. national rifle association. where are you on obama's efforts. he spends 9 a.m. to noon getting tax money and spends the rest of the afternoon trying to steal guns. fz hard at work messing with people rather than running the government. what's the alternative? >> vote for me and i'll do

whatever i g. d. want. we promise we won't let trade go through. the pledge is a public commitment to voters those are private promisewe never saw. everything trial lawyers want they get that. those are private promises >> our guest. james a republican from lakeland, florida.

first up. good morning. caller: hi, james. i voted republican every insurance icen however and bush one. bush two the first time. when he ran up the deficit and putting in a prescription care plan they didn't pay for and fought two wars that wen't paidor where were we on that? the republican party then, they voted to raise t debt ceiling the same time. guest: glad to have the guy calling i on the republican bel using democratic party

talking points. that's one of the reason the tea party movement is an important corrective for the modern republican part post reagan. when gold water came in and began to make it the principal conservative party. all you knew was that they were born north of the mason dikson side. beginning the process of turning the modern party into a limited constitutional party that wanted to have lower taxes on you less regulations ofow to run your life. spending continu to drift up. the government is always to spend more money.

going back to the last $4,000 years of history, governments tend tdo so because they have the swoerds and spears and guns to take everybody's money and do just that. you had independents. that's why you see i different party. i agree that bush spent too much he increased spending. president obama increased total spending each year in two years should we be unhappy that bush in eight years increased the

spending? yes. should we notice obama did it in a more permanent way. it is not fair to bush. still, the modern republican party would never tolerate the size and amount and approach that the bush years took towards spending. that's not what woe want to go back to. we want to go forward to less spending than obama and bush. next call, georgia, you are on the line. >> i do have two quick comments. i wanted to know who do you

think you you are where you are basically holding our elected officials hostage as to sign pledge going against the ameran people i don't remember being elected to any official seat whe you can do that. i was wandering why anybody should really be listening to you or why you should be on tv. you should be in jail for what you did for the indians on the reservations on. host: do you think grover norquist has heard those comments before? caller: i think he has from many people. what i fear in this country. i feel what the american people are experiencing right now is a

1% of the country. my fear is that the republicans are privatizing things in the country now. it means that the public did not have the ability to see who is running these entities and how they are getting paid people are paid, it is usually elected positions. we can go in there, see the books. don't like the job they are doing, we cannot elect them again. host: we have who do you think you are, privatization. guest: susan, you may not have been listening to the previous few minutes of the show when you said i ask officials to take a

pledge to me. i'll say it again slowly. a pledge elected officials sign saying i commit that i will not raisthe taxes. it is a commitment to the people of their state it is not a pledge to me. whether you are not hearing it correctly or you you are making it up to try to make a political point, it's kind of silly here's what we are going to did, if you send me to washington, step one. i'm not going to raise your taxes. obama wants the republicans in office, they ran for office making a commentment.

you may want taxes raise but you lost in the last election. your team was smacked hard. not just on rich people but all the american people. the first tax president obama signed, passed a tax increase on cigarette smokers. the only american in the united states that earns more than $250,000 and smokes cigarettes is named barack obama. they want to raise taxes and get more money and spend it. republicans are not go to be allow them to raise taxes. the pledge allows them to do that. look at the candidate who takes the pledge and says i won't vote for you. you are free to do that. millions do choose just that

subject. that's an interesting one. i'm sorry you think i shouldn't be allowed to speak in public. you don't get to make those decisions. when the left gets frustrated and they want to shut down like fox tv, it is a sign of the weakness of their arguments. i welcome people le you speaking out. it helps to elect people on my team. host: jack abramoff. guest: i am sorry for all the

challenges he's had. that was unfortunate for him and his family. thankfully he didn't involve me in that. host: do you want to see more privatization? guest: it depends on what you mean. i'm not sure what susan is talking about. in the last few years, the administration nationalized all stu department loans. they are trying to pass regulation which would destroy for profit colleges such as university of phoenix and other for profit schools that tend to serve low income people trying to get job specific education the kind of thing that can get you an actual job that lower

income americans tend to do. the obama policy wants to nationalize or put into the state control higher education. one of the first things he did was to try to destroy -- we had to destroy. they reversed the school choice. their parents could take them to a private school with a fraction of the $13,000 or $14,000 a year that d.c. pays. obama wanted to destroy that idea. it got a little embarrassing. he looked at them and said i work for the teacher unions, not you. go to heck. then he was forced to give lower

income students in d.c. that opportunity. we've had obama looking to take away alternatives to government control particularly for poorest kids in school. the good news is obama can only destroy hopes for people in d.c. he can't do it in indiana, pennsylvania and wisconsin at the state level. they are giving the poorest kids in their states more school choice. both undergrad and mba from harvard university. going to the independent line. caller: my question is around taxes and the calculation. i need to understand that.

i'm an independent. i worked on the reagan campaign. i voted for obama. i will again. i believe the republicans are completely boxed in by the pledge they ok. you know my politics. my qstion is specifically, the republican argument says do not raise taxes on revenue side. if we do that, we'll crush the jobs we are saying democrats will raise taxes for that $50,000 on this $300,000 income. that person isaking $25,000 a month.

we'll raise their taxes $160 a month. are we saying if you raise taxes onomebody making $25,000 a mon month, ee kwif let of their cable bill, they are going to collapse? guest: no. there are tax increases in obama care. at our website, there's a list of all increase that's exist on part of obama' nationization.

there's a tanning tax on 20,000 different tanning sal ones. there's tens of millions the vast majority of these are women

now the president wants to raise taxes on gasoline and the production of oil. he says we are going to tax exxon. really? where does exxon get its money? from selling oil to people, every american in the country. they pretend they are taxing companies when they are taxing consumers. if you want to remember that whchlt obama took office, he said he was going to spend $800

billion of other people's money. since he said that, we lost 1.4 million. 9% of the country is unemployed. since obama left office, h policies have made americans poor poorer we have to stop the job killing. that's what the fightare about. they have said enough. ronald eets into you how many times did reaganaise taxes?

you had the president of the united states the tax cut the top rate down to 50 and then in 86. there were a number of tax increases. both of those were i talked to reagan, he said the biggest mistake he made was in 1982. adjusting for inflation, spending went up, not dn after that spending deal.

he p together americans for tax reform. i am very happy with where reagan was going. there are times he made the mistake in 1982 of getting cheated. host: paul from tennessee. caller: i'm going to try to get you tongue tied. i want to get this out. i am a republican. i think abortion is murder and gay is an a bomb ination. i am sick of all these parties.

when thi crook here took office. he said he was going to stop these wars. gedown these gas prices and do all this stuff. he's done nothing but put us in the home. i'm sick of the republican party too. they can't agree what's for us. they have this one poll arized part of the party. guest: i'm not here to defend the republican party. whe do you see them failing? are you for tax increases or against them i keep an eye on

them. they keep saying no. where then have they disappointed you? host: he is now gone. if your concern is taxes. this is so disappointing. we think we elected a guy that's one of the reasons why a taxpayer proteion pledge. they like politicians that come in promising not to pay taxes. they come in and go to cocktail parties. everybody is a spending interest lobbiest. overtime, they are supposed to become reasonable and grow in office.

the pledge tells peoe not to grow. it helps they to keep their roots in their town and home state. the good news is because of the pledge and as a tool. it made it easier for officials who wanted to keep their word when they got elected, to keep it. of all the spending interest, i like you. you have such great points. that's one reason the establishment left is so grumpy.

next call from sierra from kentucky. caller: i have a few questions for this man. i haven't heard him say anyth g anything. they are not paying any taxes. ge didn't pay a penny in taxes. most of them are getting reba s rebates. middle class people are hurt more than anybody. our unemployment did not go up until the republicans came in and then the governor started laying everybody off

guest: ma'am, you are not allowed to make up facts. we can have a conversation about your feelings but you are not allowed to make up numbers. host: indiana. guest: what about the oil p accounts. you made that question and the other person started explaining was talking about revenues and taxes. if you raise taxes on a gcery store? who pays the taxes?

they are made up of workers and consumer that's paid by everybody. he bragged his policies would drive up the cost of heating because they would drive up tax taxes. groups are happy their prices are going up that's not what the

american people want. when you take the position, what you are really saying is why don't we treat consumers like they are idiots instead of taking money from them, which they'll notice, we'll tax carrots. you don't recognize when you tax things, you are taxing people. when you tax businesses, you are in fact taxing consumers

yesterday. i know -- we all kw you've been having a back and forth with senator coburn. this is a letter he sent to you backnd forth saying this is not the first time your organization has depend extortions. guest: i like the letter. he misunderstands. we've had conversations before

then we are for tax reform. he wanted to get rid of it and raise money i'm all for eliminati eliminating. all three members of the

republicans in the gang of six not only took the pledge but then wrote me a letter saying, look, we are not going to raise taxes we just want economic growth. the leadership in the house have made it very clear frank wolf of virginia says he is for higher tax taxes. he said i'd never raise taxes but i won't agree.

at the end of the day, senator coburn promised he would not vote to raise their taxes. it was an unfortunate incident he believed he could raise taxes and make it work. host: republican from riverside, california. caller: i don't know if you consider part of the religious rig right. you know it say if we take the mark of the beast, we won't be able to go to he haven.

i admonish everyone to keep their priorities straight. guest: people who raise taxes may b able to get into heaven, i just don't think they should be in office. get republicans to calm in on the republican line. i've had three democrats cling in on the republican line. participate guys. get on the phone. use the republican line, not the democratic line. the other team does that. don't you do that. call in and ask questions. it is not about cutting

government. look at the plan it is medicate and food stamps. let's reform government so every american can use any light bulb they want and use any kind of toilets. the government cannot run itself very well. host: two new stories.

rudy guliani is headed to new hampshire to announce his run for the presidency. and sarah palin will announce her plans. guest: great track record. sarah palin has great recognition. tim poe len ti has to introduce himself

the curtain had already gone down and you is going, no, no, i am ready. that is not terribly good buys on how to run for president. you know better the next time how to run. rick perry, rudy giuliani, sarah palin -- chris christi, the

present republican governor of new jersey has reformed pensions and is talking about reforming government rather than slashing it. of the next 30 years, the people of new jersey will spend $130 million less on the pension system. that does not reduce government services at all. it just means that the government services that the people of new jersey before will cost less. [no audio] his successes. the idea you had too announce

[no audio] including the original thomas jefferson library and presidential papers from george washington to calvin coolidge.

join us for the library of congress this monday night at 8 eastern and pacific. if you look at every photograph in this collection and spent one minute on each, it would take over 24 years to see them all. >> a decision on raising the debt ceiling needs to be made this week. also, house speaker john boehner said republicans may be willing to give president obama the power to raise the debt ceiling in anchorman's with congressional approval. that plan would allow republicans to vote against raising the debt ceiling without risking default. after meeting with senate democrats, timothy geithner encouraged congress to avoid a default say, "we are running a tighme."

ashima will talk with you about the security plan. >> this weekend, live from salt lake city, the nation's governors look at the lessons of 9/11 and thomas friedman talks competitiveness and the economy. look for live coverage saturday at 5:30 p.m. eastern and sunday at 1:30 p.m. eastern.

>> as the debate on extending the debt ceiling continues, congressional leaders, including house minority leader nancy pelosi, met with reporters on capitol hill. >> we are back on schedule. there is still not legislation on the floor to create jobs. that is the top priority of the american people. yesterday, we've met with college students and some who graduated from college to see what their take was on the budget talks. this budget is the 10-year budget that takes as well into the future. these young people are the future. they own the future. i wanted to know what they were thinking. it was inspiring to hear them talk about wanting to pay their fair share to reduce the deficit. it wasn't trying to hear them say how they were supportive

they appreciated the fact that medicare and medicaid enabled their families to help them get their education. of course, as i say, jobs, jobs, jobs. many of you have family members who are in college or who are in school. elementary, secondary command college and public institutions, their reliance on libraries along the way -- it was beautiful. it was an appreciation of our country from the young people

who on the future. i told them that they would take a message to the table that afternoon it was interesting to see the contrast of wisdom of use and how important the education of the american people is the only to their personal self fulfillment but to the competitiveness of our country. and to see the republicans fighting to increase -- they were fighting to increase by over $30 billion the cost of student loans to students. without charging 1 cent to corporations sending jobs overseas.

again, jeopardize in the opportunity for education. it is a stunning thing and people should know that. our young people will not approve of it because it hurts their prospects and our country's competitiveness as they volunteered to say we will do our share to reduce the deficit. we hope, they hoped, and we all do that, whatever is done at that table, will not impede economic growth. as you know, we are engaged in talks about lifting the debt ceiling.

191 days, no jobs bill in sight ,

by saying that what is happening at that table not only what you see by that one example, not one

red cent. that is not changing by one red cent. asomugha as discussed earlier this week it will take a heavy toll on women if they do not come out right. women need social security, they are beneficiaries and caregivers adn responsible for much of the care in their families. i want to commend the president. he does not begin -- this

president has demonstrated all locations not only during what if but has -- respectful of the suggestions that are made by both parties in his coming back to address concerns. the president has accommodated in the conversation,. the president is busy. i myself am almost too busy to continue to listen to some of the things that are going on so he must be very busy. he has treated everyone there with great dignity. driving down the street for these meetings is one thing.

i want to preserve a place where a president can go to renew and studied for the next week. where he takes heads of state that to close out all other concerns and stay focused on resolving global problems. i do not want it to be a place where he has to continue to listen to some of this stuff in. >> you do not like smores? >> they are big for us. i would rather have them at home. [laughter] so, who has not had a question in the last couple days? >> tell me about the mood in the room and some of the discussion. >> that the president has more patience than job who. >> hei am wondering if you can

talk about it off the mood of the meeting last night and what happened yesterday. >> i do not understand what the problem is. if the president stands up and says see you tomorrow. it had that is how meetings end. we do not leave it first. the president leaves first. that was completely it inappropriate. for unless someone got he/she should have a last word. -- he or she should have the last word. this is your third day in a row. >> he you ticked off moody's and the who impact to women and children.

do these things for you to write a sense of compromise? maybe go to camp david and not leave until there is a deal? >> that is what we're doing. we met thursday -- the idea we were going to the big plan. so much can be accomplished in that way. the certainty that the market'st the markets deserve. as possible as we had hoped and so the president still wants that.

he should still have that. " but if the republicans do not want to go, we are going over provisions, whether it is -- the house has put out the agenda. it is time to freeze the design. what is a mechanic groupon and let's get on with writing the bill. if we do not have to make it any decision today or thursday or friday and i i would be careful. you just said they are sitting drinking coffee. that is what we're doing.

what do think it is this? let me say this. this may come as a surprise. let's try it. iwhen you meet with the presidet for two hours or an hour-and-a- half each day, that means he and his staff, you and your staff are preparing. you act upon what you need to do to answer the questions. it is not about the time. that is the tip of the iceberg. this is a major commitment. that is why the president deserves tremendous credit for the time he has taken faugh and the rest -- and the respect he has given to everyone's ideas. almost to the nth degree.

a two-hour meeting -- that is what we're doing. if location is the issue, where accessible below eight. as far as i'm concerned what's decide one way or another.

the presiding officer: without objection. mr. reid: mr. president, there are some in the republican party who will not listen to the truth no matter who speaks it. this is my opinion. if we allow this nation for the first time in its history to default on our national obligations, it will not only be a black mark on our reputation but also a massive financial disaster will sweep the world in a global depression. it is not my opinion alone. i have come to that belief by

listening to the most respected voices in the business community. default, they say, and i quote, is a risk our country must not take. they not only -- they are not the only ones who believe that's true. the most respected bankers have said -- j.p. morgan chase, says default would be catastrophic. investors have said it. bill gross, one of the world's largest mutual fund managers sent us a warning yesterday. he said -- quote -- "there should be no question at all the debt ceiling should be raised and not be held hostage by budget negotiations. don't mess with the debt ceiling, washington." that's what bill gross said. economists have also said it. ben bernanke appointed by president bush as chairman of the federal reserve has said default would be a major crisis that would send shockwaves through the world financial markets. and yesterday, he said failure to avert default would mean huge financial calamity. even other republicans have said it.

this is what speaker boehner said in april. "not raising the debt limit would be serious, very serious. implications for the worldwide economy and jobs here in america." end of quote. and perhaps most telling of all, all three rating agencies have already sent warning shots across our bow. last night, moody cautioned us that america's aaa rating, the aaa rating, was already under review for downgrade. never in the history of the country has that happened. we're being reviewed to downgrade our debt rating. we have just three weeks left until we miss our first payment. they cited the -- quote -- "rising possibility that we will default." they said that we will lose this crucial rating which saves every american money every day even before we miss a payment. standard and poor's has told congress and business leaders that even if the united states keeps paying creditors but delays payments such as social

security or veterans' benefits, it would cut our rating. and fitch has said default would -- quote -- "threaten the financial stability of the united states and the world as a whole." close quotes. so why are some republicans in congress still saying that a first-ever default on our nation's financial obligations would be no big deal? when every financial expert, investor, business leader and banker in the country and even every reasonable member of your own political party is telling you the consequences of default would be catastrophic, it's time to start listening. why? because default won't just roil the financial markets, pushing interest rates higher and tank the stock markets, it will affect every american's wallet as well. there are a few things that will happen. social security checks and veterans' benefits and paychecks to our troops would stop. some of the most vulnerable americans would be placed at risk. our promise to the men and women

who would protect this nation so bravely and those who protect it today would be broken. we would not be able to make payments to our military. payments on our national debt would stop. american investments in retirement accounts would be decimated. millions of americans could lose their jobs. interest rates would rise, not only for the government but for ordinary americans as well. those americans will pay more for their mortgages, they will pay more to use a credit card or buy a car or finance a university education. they will even pay more for their electric bills, groceries and gas. a spike in interest rates and the damage to the united states dollar alone would cost the average american family more than $1,500 immediately. it would be the most serious financial crisis the country has ever faced. it would come at a time when our economy can least afford it. and in the long run, it would wind up costing the government not millions, not billions, trillions of dollars. a fact republicans shouting

about the debt failed to mention. for every 1% increase in interest rates, it will cost our nation 1.3 -- again, not million, not billions, but trillions. for every 1% increase in interest rates, it will cost this nation $1.3 trillion. there is so much at stake. even speak boehner and minority leader mcconnell seem to understand the seriousness of this situation. they are willing to negotiate in good faith which i appreciate, and the country appreciates. meanwhile, house majority leader eric cantor has shown he shouldn't be at the table and republicans agree he shouldn't be at the table. one republican told "politico" last night "he lost a lot of credibility when he walked away from the table. it was childish." end quote. that's what all about, mr. president? we had negotiations going here in a room, s. 219, a short jog from here, and he has walked out on the meetings with the vice

president of the united states. it was childish. another republican said cantor is putting himself first. he said this -- quote -- "he is all about eric." end of quote. the time for personal gain and political posturing are over. it's time to put our economy and our country first. the risks we face are simply too great. we don't need to take my word for it. more than 300 respected business leaders wret to congress night before last to make it clear how serious this crisis really is. quote again, "a great nation, like a great company, has to be relied upon to pay its debts when they become due." they further said this is main street, not wall street. this is a main street issue, not a wall street issue. we're listening. it's time for the irresponsible voices in the republican party that continue to deny the truth of this crisis

>> eric kanter, john boehner, and others spoke with reporters for 20 minutes. >> i have told the president this can only happen if it includes no tax increases and that serious reforms have to be enacted if we are to restrict

future spending, and i cannot think of anything that would do more to ensure such spending restraints then implementing a balanced budget amendment to the constitution. the ballot is common sense. this can only become a reality of enough of our colleagues vote for it. the american people are still asking the question. where are the jobs? the spending bill would keep unemployment around 8%. after three years of triple digit deficits, and job creators continue to be frozen with

uncertainty, so we need to stop washington's spending and create a better environment for long- term job growth. the balanced budget amendment will help us do that. it will help insure the cuts we make today are locked in for the future. the balanced budget amendment will also give real certainty. i hope the democratic leaders will join us. >> central to the discussions we have been having on the debt ceiling increase is how are we going to insure we are actually changing the system in washington, that we are actually going to change the way we spend taxpayer dollars?

we are very concerned about making sure that we can go home to the people we represent and tell them it has changed, that we are going to stop spending money we do not have, and we are going to live like the people in this country live in their homes and personal lives and businesses. the balanced budget accomplishes what we want, which is to change the system and to give the fiscal house in order. the priority of this country is to get the economy going again and back to work. >> 16 years ago, we were faced with the same question. we came one vote shy, and now we are here today having the discussion. gold is up, the dow is down.

had that one vote been different, we would not be having this press conference. i want you to imagine if it had been different, would we talk about this. we have the jobless report we have seen time and time again. now is the time to correct the mistake. we welcome everybody to join with us. it is not something democrats have not talked about. as of march last year, he welcomed it. think for one moment, 16 years ago. we would not be going through this mess. this is the opportunity to give the confidence back to this country and move forward to get past our discussion.

>> in his farewell address, president reagan said there were two things he wishes to accomplish, a line-item veto and a balanced budget amendment. in 1997 the house passed the balanced budget amendment and came one vote short, and one senator who voted for it is joe biden. whenever is running for congress i talked about the balanced budget amendment. -- when i was running for congress, i talked about the balanced budget amendment. i underestimated to what degree it was going to be difficult to change the culture and the center on spending, printing, and borrowing money. the balanced budget would force congress to live within its means and to set priorities. i believe this is so important

in changing the course we are already on. it is important to insure we pass on the american dream to the next generation. >> our president is currently presiding over the worst economy since the great depression. he is presiding over the greatest debt challenge since the dawn of the republic. these are not ordinary times. their extraordinary times. the president wants us to help pay for his spending binge. since we started this debate, our message has been simple. if you want our help to pay for your bill in time to cut of the credit cards, the debate dates back to the birth of the republic. when jefferson said it was not part of our constitution, but we

are on the verge of being the first generation in america's history with a lower standard of living. winston churchill once said americans can usually be counted on to do the right thing once they have exhausted every other possibility. the times are not humorous. we have spent decades exhausting other possibilities. the american family has to balance their budget. companies trying to create jobs have to balance their budget. why would we expect it to continue indefinitely without balancing it. it is time for a balanced budget amendment to the constitution of the united states of america. >> 16 years ago, we came this close to passing a balanced

budget amendment, and don't you get the sense we are approaching and national crescendo. the american people are looking at a washington, d.c., and they are gone begging for leadership that is clear and forthright and fixing this problem once and for all. we have seen what president obama is able to do in the past by turning on the high beams and giving members of his party to vote for very controversial pieces of legislation along the lines of the controversial health care bill. what we need is president obama to take a leadership role to engage members of this party and the house of representatives for to help pass this balanced budget amendment language. republicans alone cannot do that.

>> i want to thank the rest of our team for moving forward with a balanced budget amendment. resolution 1 i introduced and which has very strong support. fees not a new idea nine years after our constitution, thomas jefferson said, i wish it were possible to obtain a single amendment. i would be willing to depend on that alone for the administration of our government, and an additional article taking the federal government the power of crowing. this is what the dollar and budget is about -- cutting of credit cards. the american people understand this. 49 out of 50 states are required to do it. they expect us in washington. it is time we enshrine it in our constitution.

>> everybody has a different reason why we ran for congress. we have only balance the budget five or six times. it has not for 50 years. they have lost three or $4 billion. when they made the tough choices. i applaud the leadership.

>> as a former state treasurer ahoy -- as a former state treasurer, we do not have the discipline of a balanced budget, and i think the only way to do it is to have it in our constitution. they failed in the senate by one vote. as the chairman of the caucus in a house, with 70 members how

dedicated to taking a leadership role in the floor to push this forward, i look forward to this debate. >> i am only of freshman, and the gentlemen and lady behind me have been advocating this cause for much longer than i have, but as a freshman, i came here as a leader kantor said to structurally change the way this town does business, and we have a wonderful opportunity to do that by forcing this town to balance their books and

everything -- their books every year by structurally but changing this. i wonder if we can all take it vantage of his moment. -- take advantage of this moment. >> harry reid said today you can go to the negotiating table. are you the reason there cannot be a deficit of debt in the debate if who? >> i should return to the speaker and have him comment. the speaker and i have been on the same page of. it is just as he laid out. we are not going to raise the debt ceiling if we do not have the cuts. we do not want to raise taxes, and we want to structurally hall change the system so we stop this from happening again.

senator reid is as frustrated as i am. we are going to abide by principle. >> we have been in this together. we are in the foxhole, and what they are trying to do is resolve the problem. i am glad eric is there. >> mr. speaker. >> the balanced budget amendment, if you were to pass that at this point in the next 10 years? >> you would have to ask mr. bryan the answer to that question.

>> you would not have started in the same place. >> niche describe the proposal as a last-ditch effort hot. -- mitch described the proposal as a last ditch effort. i think it is worth keeping on the table. there are a lot of options, and frankly, i think it is an option that maybe was not simple. >> to you regret things? do you feel like it caused an obstacle to? >> we have always participated, and i have been in discussions for almost seven weeks prior to

the point at which they stopped. what i have done is the approach of those talks. try and ceassee and to garner te national support. there is a dose of pragmatism in all you do, and that is how are you going to achieve results. >> [inaudible] >> i have said before the proposals on the table given

their current state, and and what i know about where the members are, how we are not yet fair, and i approach it. we want to make sure we avoid default. >> do you -- they say raising taxes is bad for the economy, but ben bernanke is saying it will cause chaos. isn't a default worse than raising taxes? >> no one wants to see the federal government walk away from our obligations, but we have to do something about the underlying problem, and that is spending that is out of control. our democratic colleagues are still not serious about cutting spending. that is the issue.

we do not have a revenue problem. we have a spending problem. >> [inaudible] >> i have no idea. >> [inaudible] what do you think of the house passes legislation that does that famines -- does that hurt? >> we do not want to reach this point caught -- this point. all it takes is a little courage to put america on the right half.

whacks with the lack of -- >> with a lack of one vote, but there were surpluses common -- surpluses, so why does this need to happen? >> to make sure it never happens again. look what happened the last 10 years. a balanced budget amendment is in the constitution of 49 out of 50 states, and it is not by accident. having a balanced budget is part of the u.s. constitution to make sure of and never happens again. >> what has the president said about the balanced budget amendment? has he acted favorably? >> i do not recall what his reaction was, but i do make clear if we are serious about putting spending in place, there is no better thing than a balanced budget amendment.

>> with negotiations continuing, treasury secretary tim geithner mersenne the country is out of time when he met in the capital to -- tim geithner said the country is out of time when he met with reporters in the capital. this is about 10 minutes. [captioning performed by national captioning institute]

[captions copyright national cable satellite corp. 2011] >> we have just had a very good discussion and we appreciate very much. senator geithner came to talk about this. i need to ask your leave. he has to go prepare. senator geithner made it clear. august 2 is the deadline. we need to do something before august 2.

credit rating agencies have already warned us they are thinking about gambling our aaa status. they have said they will downgrade. it is a possibility. it is in itself is very frightening. this is about bills that are due for pre-existing obligations like social security, like the troops we have in the field. if we do not reach an agreement, we will have less than 2/3 covered. this will mean lots of things, and you can figure it out as

well as i can. seniors, sailors, soldiers, all our troops there, law- enforcement. we need to put us on a path for fiscal stability, and most republicans agreed with what i've just said. now there is a small group of republicans who are putting their extreme ideology over this country, insisting we cut seniors benefits instead of paying tax payer giveaways to billionaires, corporate jets, and things of that nature. they have gone so far as to say

we should doubt the words of the president of the united states and the secretary of the treasury. the secretary has told us he is fortunate to have a wonderful staff, but others have gone through things similar to this, and he knows all of what they have done. there is no wiggle room. moody's warning should serve as a wake-up call. the consequences we are talking about are real, so it is time for all republicans to put members sit of the american family ahead of this group of small ideologues. >> thank you for giving me a chance to come and talk.

we are a country that meets its obligations. we are a country that pays its bills, and we will do what is necessary. we have looked at all available options, and we have no way to give congress the chance to solve this problem, and we are running out of time. we need to make sure we stand together and send a definitive signal. we need to avoid default and taken advantage of this opportunity and make some progress in dealing with long- term fiscal problems. we do not have much time. it is time we moved. thank you very much. >> despite the protestations that the extension of the deficit ceiling does not matter,

and you have just heard from the secretary of the treasury it does not matter. the failure of the united states to extend its debt ceiling will be catastrophic for the creation of jobs in america. they have manufactured a crisis over the debt ceiling. i used to be a parent taking little kids into a shop, and i always look for the sign saying, if you break it, you own it. my message to the republicans who are stopping us from extending the debt ceiling, and if they break it, they own it. america cannot stand that political strategy. we need to extend this debt ceiling. we have to work on a bipartisan basis to deal with our debt in a responsible fashion. despite the patience is the intransigence of those who refuse to cooperate on a

bipartisan basis to deal with this serious economic threat. it is time for the good of the american economy and the future of business to put politics aside and solve this problem. >> republicans to deny the consequences of the faults are dead wrong. -- of default are dead wrong. there are only bad choices. should we pay social security benefits to protect the border? should we keep doing cancer research or preserve benefits? you cannot do them all.

house republicans need to wake up to the reality and smell the coffee. taking these negotiations past the deadline is not adoption, and it is time for eric cantor to make some concessions. he is only one that has not yet. even leader mcconnell has put one on the table that recognizes the need to default. >> secretary geithner made it very clear that we are at an

extremely serious time for our country. every business will be affected. we have said consistently we are willing to compromise and move forward. we do not have a partner to compromise with with republicans. it is time to step up. one thing i care deeply about is our veterans. the americans who have served our country so proudly, but to say they are not going to get their benefit checks because of the game at the capitol is

wrong. it is time for us to come together and solve this responsibly. >> [inaudible] >> i have sat with senator durbin at countless meetings, and unless he changes and starts picking somebody who contributes to a solution, the answer is no. >> we are out of time. what kind of changes do you need for the mcconnell last chance plan, and is that something that could save it? >> i am in discussions with senator mcconnell and others. we are negotiating. we are not there yet.

i am not in position to tell you where we need to go. >> the speaker expressed [unintelligible] the you think it might be the only plan? >> it is not the only plan, but as i said on the floor yesterday when senator mcconnell called me about this, remember this is not the first time he and i have talked about the problems relating to our situation. from a procedural perspective. when he called me the other day at 12:30 to work on this, i said i would do everything i could to be positive, and i have.

we do not have it worked out yet, but it is something we are working for to come up with a robust deal, but until we do that -- >> [inaudible] >> it is interesting. i have been to a few court houses. any time around here with the new tea party philosophy, they think they have all knowing wisdom about the constitution.

.

from my standpoint, i think my colleagues share my view. if you were really serious about attacking the problem, i think you would have been engaged months ago on a detailed basis. certainly if he were serious about it, you would put forward a budget that is serious, as opposed to the budget he did put forth that lost 0-97 in the senate. that is a stunning repudiation of leadership. one of the things i think we were most disappointed about is earlier this week president obama started directing our seniors on military personnel, saying if we don't meet this deadline, that he might start withholding checks. that is offensive to us. our letter that we are issuing today with all the republican freshmen senators signing is

requesting the president to step up to the plate and be serious. work with the republicans who are willing to work in good faith to come to a solution. let's prevent the bankrupting of america. please, as we are trying to do that, don't scare seniors or the military. we just ran last year, and i'm sure each one of us republican senators were attacked. we are the democrat party for decades used social security and medicare against us. as i talk to younger works throughout the campaign, for me young people are 50 or under. i asked what do you think you are getting out of social security or medicare. without exception, the answer is zero. they don't expect to get anything. that is not fair. that tells me that we have a

pretty receptive audience or group of people for structural reform. so i don't fear. but we first have to admit our problem. the way to do is is not by scaring seniors or members of our military. with that i will turn it over to the senator who called that meeting and help facilitate this process. >> thank you. i am pleased to be with my freshman class republican colleagues this afternoon to express our support unanimously, to send a message to the white house that in the process of sending this -- in my view, the white house is trivializing the concerns americans have raised in the campaign we just went through. throughout 2010, the conversation with kansans and americans was about the debt, our fiscal house, full instruction for us to get things in order. and even perhaps more

importantly, grow the economy is is a component of us getting fiscal sanity back here in washington, d.c. our class are supporters of cut, cap and balance. there is an additional component of that plan that we would add to that. it is cut, cap, balance and grow. that involves significant changes in the regulatory environment, a tax code that is fair and certain. my point to the president in signing this letter is that the vast majority of americans who spoke in the 2010 election were expecting us to do serious work to accomplish good for america. the idea that we can revert back to the politics of usual of saying that social security recipients have the potential of not being paid is politics as usual. that is what the american people rejected. the president, unfortunately, has fallen back into politics

as usual, and it diminishes the voice that americans spoke, the message they delivered, in november of 2010. i would yield to my colleague. >> age has some privileges. there were a couple of things repeatedly over the last kessler -- several weeks and months, have been said repeatedly. there are enormous implications. one is presidential leadership. we have been calling for months for the president to get involved, send us a wugget, -- a budget, his plan. get engaged in the discussions, which he has. secondly, the president needs to engage as a president, and not as a candidate for re-election in 2012. we need to rise above politics in the twofle election, whether

republicans, democrats or the president of the united states if we are going to successfully address the problem. if we are going to position our receive so we don't take -- ourselves so we don't take responsibility for what happens on august 2 or 3, so that we can best the other side, we are not serving the american people. it is a great disservice to the future of america, our children and grandchildren and to the people of the world. we will not become the leader of the world financially or any other basis if we don't step up to the plate and address this in a serious fashion. i am pleased to join my fellow freshmen here in the senate. i think we have just about everybody on board in sending this message to the president, that mr. president, you need to lead in a responsible way, not in a way that simply uses political scare tactics.

all of us have basically said we are going to put what needs to be done for this country ahead of political positioning. that is what needs to be done. >> i frankly think the president should apologize. i think the president should apologize for politicizing social security, for threatening not to send out checks. this would be his decision not to send out checks, and it is objectively false to say there wouldn't be enough money. we bring in $200 billion a month. our interest payment is $20 billion. social security is in the range of $20 billion to $80 billion. there is plenty of money to play the checks and interest and all of the soldiers' salaries. it is politics. the problems in our country are too important to make a political football out of

social security and soldiers' salaries. it is demeaning to the country and the president. he needs to lead or get out of the way. >> we will take questions. >> what is the probability in your mind that you won't get by the august 2 deadline? >> the probability is far lower than it should be. had the president gotten engaged like a serious individual would have been engaged. i am an accountant by training. i have had to produce a number of budgets on time for a variety of sizes of enterprise, from small to a little bit larger. and to think that the united states senate hasn't passed a budget in over two years, has continued to miss the deadlines that are enacted by law to pass a budget. the united states budget is $3.7 trillion large. stated another way, $3,700 billion.

stated another way, $3.7 million billion large. we have a process in this country that it seems acceptable not to pass a budget. that a few people behind closed doors is going to decide what the budget is going to be. they are going to decide the financial future of america? i think that is a disgusting process. it is bizarre. we have got to do things the right way around here, and it should be done in public. we should be debating these issues in public, and we should be talking about seniors and military personnel. that is wrong. [inaudible question] , i am an optimist, and we have been working hard. a number of us have been going over to the house and encourage the house members to pass the cut, cap and balance legislation. it cuts spending the first two

years and then caps spending. what we are talking about by capping is growth in government. nobody is really talking about long-term cuts. we are talking about taking a budget of $3.5 trillion and grow it to the president's budget would grow it to $5.7 trillion. it is just limiting the rate of increase. we need to seriously take a look at what is actually happening. [inaudible question] vr let me continue on the cut

cap balance. there is a piece of legislation we hope passes quickly. cuts and caps over a long period of time. it gives the president what he wants, an increase in the debt ceiling contingent on passage by both chambers of a constitutional amendment to limit spending and balancing the budget. we are willing to give the president what he wants as long as the democrats will join us in passing the constitutional amendment to the states and the people. let the people decide if they want to put that long-term fiscal discipline and impose that on washington. i think given that chance, they will agree to do that. >> we have a piece of legislation, and that would instruct the president to pay interest as a priority, social security as a priority, and soldier salaries as a priority. we have it submitted as an amendment. we also have it as a bill.

[inaudible question] >> what we are trying to suggest is there are some priorities that should. the emotionalism of separating out security and saying we are not going to pass the social security checks out. that is a calculated political football, a situation. nobody is in favor of stopping the social security checks. we have enough money for that, soldiers' salaries and interests. but not a lot of money beyond that. those three items is all we have money for. we borrow the rest. part of it is you have to get the economy going again. revenues are down because of the recession. four years after the bush tax cuts, revenues were still over 18% of g.d.p. they fell in the recession. the recession is hurting us,

but the president's policies are accentuating the recession. [inaudible question] >> i would like to talk about responsible leadership. a responsible leader wouldn't be scaring the markets or the american people. a spobsible leader would be rolling up shirt-sleeves months ago and working toward a solution, working in good faith. that? what has happened. in terms of the august 2nd deadline, do we have something to worry about? probably because it will be a self-fulfilling prophecy. because the administration has been scaring the markets for so long, yeah, the markets will be

upset if things don't occur. but i put that squarely on the back of this president, his failure to lead and leading irresponsibly by scaring the markets. >> what do you think will happen on august 2 -- >> well, i will tell you what, from my standpoint, and i am not sure if anybody else agrees with me. if we don't increase the debt ceiling, what does that mean? we have to look at what that means. according to the president's own budget, starting october 1st, we will be getting about $2.6 trillion worth of revenues. 10 years ago under bill clinton, our entire federal budget was $1.8 trillion. so that is more than we spent 10 years ago. it totally covers social security, $76 billion.

that leaves $1.6 trillion left to cover all essential vents and others. that is only $200 million less than we spent just 10 years ago. the problem here in washington is business as usual. business as usual is bankrupting this country. we have doubled our spending in just two years. that is the problem. that is what we need to attack. that is what the cut, cap and balance amendment solves. senator lee is here. go ahead. >> i would say there are consequences to not raising the debt ceiling. i would guess that none of us know exactly what those are. the other part of that is there are significant consequences to raising the debt controlling without addressing long-term fiscal problems in this country. ultimately there is going to be a financial crisis if we do not do the things that our class is suggesting are necessary. yes, there is concern about

what happens on august 2nd, but we would also have a similar concern about what happens next month, next year, the next decade if we just kick this can down the road one more time. >> we are walking a tight rope. anything we do can have dire consequences. i don't think any of us on this stand today disputes the fact that there are great risks associated with not raising the debt level. we also acknowledge that if we simply raise it and don't do anything with any long-term binding implications, that, too, will present some dire consequences for our economy and for our future. that is why we have presented a plan. it is not just the best plan. it is the only plan. it is the only plan out there that has substantial public support for raising the debt limit. but it has significant additions attached to it, most importantly a balanced budget

amendment to the constitution. which by the way, americans overwhelmingly support. that is why we were upset to hear the president earlier this ek tnser tt, notwithstanding the fact that americans support it, notwithstanding the fact that he himself has said we need to raise the debt ceiling level, and there will be dire consequences if we don't. that being something he believes in firmly, would would think he would be willing to consider it at least as an option for raising the debt limit. but no. he goes out and decides to throw social security beneficiaries under the bus and say they are apparently the first ones we are going to cut. why did he send out that letter? why are social security beneficiaries the first people for the president to warn about the consequences of not raising the debt limit? now, each month we bring in somewhere in the neighborhood of about $200 billion in

revenue. we borrow something in the neighborhood of $150 billion. we pay out about $50 billion a month in social security benefits. there are lots and lots of other federal programs we could look to. let's suppose that if we were facing an imminent and unavoidable debt-limit induced shortfall of revenue, why would the $50 billion that is used every month to cover our social security benefits, why would that be the place to start cutting? why would we have start there, united states the only intent were to scare senior citizens, scare retirees, who have come to rely on this. i think it is cruel and inexcuseable, and i demand an apology and retraction from our president.

[inaudible question] >> i am not sure i understand your question. [inaudible question] >> no. look, the balanced budget amendment is agnostic as to exactly how it balances. it is agnostic as to where cuts occur, and it doesn't foreclose or require any particular course of action. ultimately we have to come to grips with the fact that we don't have a revenue problem nearly as much as we have a spending problem. one of the reasons why i think we can't expect it to get our

way out of this deficit problem through tax increases is that historically we have discovered that we will collect an average of about 18.5% of our g.d.p. each year through our tax system. that remains true whether our marginal rates are where they are now or where they were 30 years ago, much higher than that. it has become known in certain cirque -- circles as hauser's law. that amount hovers right around 18.5%. if we raise taxes, what we are likely to do in the interest immediate and long-term is chile growth and end up collecting ress revenue in the

long run. in the long run it is going to be less than or equal to what we are collecting now. spending cuts are the solution, and i don't think there is a serious argument to be made rute now that we can get our way out of this very long-term problem with the very short-term solution that a tax increase would bring. >> what is your opinion on the back up plan? >> i think that was described as sort of a last resort. what we are trying to do is actually trying to come to a solution. i'm looking for success, not failure. so we are going to continue to push a real solution to this problem, talking about the cut, cap and balance. that has a real shot. talking about earlier, what i fear, far more what is going to happen on august 2nd, i really fear the real day, when we have

exhausted all of our options, when financial markets simply won't loan us anymore money. greece went from a 9.3% rate on its 10-year note to about 17.7% in a very short period. it is an 8% hike. if that were to happen in this country, that would add to $1.2 trillion to our interest bill. that is what i fear. let's get serious about this. we need presidential leadership. our nation hungers for leadership, and it is simply not getting it. that is what i fear. we are working toward a real solution here. working hard in the house. let's get that passed and hopefully the american people will put pressure on congress to pass a real solution. thank you very much.

[captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] >> the library of congress is considered one of the greatest photographs resources in the world. we are here in the civil war photograph exhibit. if you look at every photo in the selection, how long would

it take? you will find out in c-span's original documentary, "the library of congress." it airs monday night. we will show treasures found in the rare books and special collections, including the original thomas jefferson library, and presidential papers from george washington to calvin coolage. use the library to discover hidden secrets and preserve it for future generations. join us for the library of congress monday night at 8:00 eastern and pafpkt on c-span. if you spent one minute on each, it would take over 24 years to see them all. >> in a few moments, federal reserve chairman ben bernanke on possible effects of failing to raise the debt ceiling. in a little more than two hours, more about the debt ceiling debate with grover

norquist. after that, a discussion of the legacy of the late first lady, betty ford, followed by her funeral thursday in grand rapids, michigan. on "washington journal" tomorrow morning, we will discuss the ongoing talks over the debt ceiling and federal spending with texas aren'tive john carter, the republican conference secretary. we will be joined by democratic representative caroline maloney of new york to look at the consumer financial protection bureau, which begins operations next week. and "washington post" reporter, ellen nakashima will take your questions about the pentagon's cybersecurity program. "washington journal" is on every day at 7:00 eastern. >> several live events to tell you about tomorrow morning.

a house energy and commerce subcommittee is looking into pipeline safety. that is on c-span 3 at 9:30 eastern. witnesses are scheduled to include a representative of exxonmobil to answer questions about the recent pipeline spill in the yellowstone river. and president obama will hold a news conference on the debt and deficit negotiations. you can see that live on use at 11:00 a.m. eastern. >> this weekend on american tv on c-span 3, american artifacts visits the exhibit of civil war photographs at the library of congress. arthur christopher moran and his new book. and we look at civil rights in the early 1990's. you can see the complete