companies to issue rebates for drugs under medicaid would cause increases for drug premiums. and then looking at the history of public presidential campaign financing. "washington journal" is next. . .

in the best interest of our country. i can tell you that it's not in the best interest of our country to raise taxes during this difficult economy and it's not in the best interest of our country to ignore the serious spending challenges that we face. >> and with that the talksos plan to deal with the debt and deficit in the words of many headlines in the paper have collapsed. president obama has called for leaders to go to the white house at 11:00 today to help from them about a plan to avoid defaulting on our debt on august 2, a collapse that is the subject of our talks for the first 45 minutes on "washington journal" this morning. if you want to give your

thoughts on the collapse of the debt talks as been reported and the leaders going to the white house today, here is how you can do so. >> "washington journal" and others reporting on on it this morning, the headline negotiations collapsed, as was mention third degree morning between president obama and boehner. late on friday, a senior gop aide said that house leaders had "no idea how to craft a plan to raise the $14.3 trillion debt limit that could win approval from the democratic controlled

senate and the republican-led house." talks were underway between boehner and leaders, but the house continued to -- raise the debt limit through 2013 without explicit congressional approval. mr. boehner was clear about the reason for his decision. the white house, he told reporters "insisted on raising taxes," the collapse of the talk provided the whirlwind week when boehner alerted officials he was ready to try again to do something big to control the debt. the ensuing days, the two sides forged common ground on the strategy raising the debt limit and cutting more than $4 trillion out of the federal budget that would take place through 2021. the speaker put out a statement in connection with the comments he made to the press yesterday. here is a bit of it for you. he said: in the end, he writes,

we couldn't connect. not because of different importants, but different visions for our country. the president is emphatic taxes have to be raised. i know that tax increases destroy jobs. the next page, mr. boehner goes on to say, the president is adamant we can't make changes to entitlement program. i know the programs won't be there for my daughter's generation unless significant action is taken now. i have decided to end conversations with the white house and begin conversations with the leaders in the senate in an effort to find a path forward. again, the leaders are going to the white house today to meet with the president. the minority leader also putting out a statement because of yesterday's action. this is from minority leader nancy pelosi. she says boehner's adult moment is long overdue. our nation's fiscal soundness

require that we act without further delay. democrats have prepared to support president obama's call for a grand bargain, which enables us to create jobs, protect medicare and medicaid beneficiaries. we are prepared to compromise consist went values, but will not accept the short-term extension. all the leaders will be at the white house today at 11:00 for a discussion that most say will take place during the weekend as we get into monday a few days before the august 2 deadline as far as defaulting on our debt. again, these will be the topics for the first 45 minutes. >> the democrat line, eric, you are up first, what do you think about the events of yesterday? >> caller: well, it's quite

interesting, but there needs to be a balance of support, there needs to be tax cuts, they need to pay for the debt, as well as the poor, that way we are paid less in cuts. i think that if we help the needy and not the greedy and that is what i say to the tea party and republicans, so-called christians, need to help the needy, not the greedy. we should cut things like 2642 in ssi to illegals and foreigners. >> eric, cuts were already on the table as far as revenue is concerned and mr. boehner saying $400 billion more being added to $1.2 trillion. >> caller: yeah, but refugees and foreigners are getting ssi payments. >> terry on the republican line. >> caller: good morning, sir. response to the first caller, i would like to point out facts here. under obama's current budget, we

have $1.7 trillion annual deficit. that boils down to $180 million per hour we are running up debt, that doesn't include the current national debt, sir. how are you going to get the money from the so-called rich? you could tax them 100% and you wouldn't cover the debt president obama is racking up now. they keep saying the rich are paying fair share, the i.r.s. states -- but they are paying 40 or 41%. if you are screaming for tax increases, to the first caller, let me remind you, all the tax increase necessary obama care that will hit in 2012 and 2013 and the bush tax cuts that will expire the same time. now you want a third round of tax increases? yep, the obama economy will do -- >> for all that you have laid

out, what should it mean then for leaders on capitol hill in the days ahead? >> caller: they are doing exactly, republicans no more tax increases. you cannot tax one group of people or any company that is going to cover the massive spending we've got. $180 million an hour that, means this topic on for 45 minutes that, boils down to how much money the government will borrow while you are talking about the subject, sir. >> grover norquist is a name you probably heard many time necessary this discussion. the american protect -- friday night republicans should let the debt ceiling go up and take the vote in 2012 n. an interview on cnn after speaker boehner announced he was abandoned debt talks, mr. nordquist says it is gambling to get that far, rather

than close the government down or go into default, go to the next election and fix things then. that is the statement from grover norquist. dick emery is weighing in on this topic. you can do so. what is president obama and the democrats not understand? how republicans are not going to raise taxes, period, with two exclamation points. stoelten, new york, tom, good morning. >> caller: yeah, your previous caller made a lot of misstatements in statistical spend. nobody is suggesting the rich is going to pay 100% of the debt. even if we taxed all the rich, no one suggested that they would cover every penny of the debt, but we've lost a trillion dollars through the bush tax cuts for the past 10 years that were extended a couple years ago. the rich have been paying the lowest tax rate necessary over 75 years when our country is short of revenues. it is a revenue problem and

basically we need to tax the rich and i've never seen a more responsible group of people than the freshmen house republicans. they would rather drive the nation over a cliff. i believe some of them, i think they hate government, the tea party backs people. >> are they the only ones to blame in this process in your opinion? >> caller: yes, basically the democrats, there are responsible republicans, but they are overshadowed by the desire of the tea party candidates not to lose the next election and would rather take us over an economic cliff. this is a fake crisis that the -- what do you call, the debt limit raised 70 times since 1960. seven times during the bush admin stragz. reagan created more debt percentage wise of the amount of debt he took in than any president, including obama, by all projections. >> off twitter this morning,

previous caller saying, caller, they are not asking for increases, they are asking for cuts to expire, two different things. kentucky, david, republican line g. ahead. >> caller: yes, i'm on social security, disability and i am scared what's going on here in the government and i was wondering how scared should i be right now? what's going on? >> are you afraid you will not get a check on august 3rd? >> caller: yes. >> how much of your monthly expenses are based on your social security check? >> caller: almost the whole thing. >> and have you been preparing as far as when you look at these events going on, have you made any preparations? >> caller: no, i don't. >> detroit, michigan, you are next. callers, if you would turn down your television set when you get on the air, you get feedback as you probably heard. that would make the conversation

a lot easier. detroit, michigan, independent line, william. >> caller: hi. good morning. how are you, pedro? >> fine, thank you g. ahead. >> caller: lch. i'm hearing this chatter from the hard democrat -- i'm sorry, republican way about obama and his perceived tax increases. i think it's a farce. i've heard some people state earlier under reagan, some of the people in congress were not with reagan and raise the debt ceiling 18 times and all of a sudden they can't do it. at the end of the day, if they don't cooperate, one send a message to the election that he is not playing around and he will take control and be a leader. the second thing obama needs to do in the second term, get a trade agreement with the african union because we're a nation of interest groups. most of that chatter that the

republicans reference decisions, but he has capital problem in charge of getting it in the hands of small business, specifically minority communities. i know 100,000 small communities that are ready to do a deal that would create $4 million jobs in the african community. >> damion poleta has a story in the "wall street journal" and this is part of the package reporting on the talks and the discussion. bracing for fallout if the talks fail, the story starts in the lower part of the column, in the following column. he says a key concern for regulators is treasury expected move to replace $87 billion in maturing debt on august 4. investors are expecting to lineup, but the government might have to pay more if the debt ceiling isn't raised. if the option fails because investors don't show up, it could trigger financial crisis.

the central bank wouldn't have the ability to lend the government money. it has purchased $900 billion in recent years as part of the effort to support the broader economy. but by law it can buy treasury on the open market, meaning from investors and not directly from the u.s. treasury. the treasury can turn to the fed from cash if it is restricted from issuing security to the public by the debt limit. i want to eliminate any expectation the fed through any mechanism could impact the government debt. mr. ben bernanke, head of the federal reserve told congress last week. the talks have collapsed according to the papers and those on capitol hill. leaders heading to the white house today to help the president about what they plan to do in order to keep that from happening on august 2. that is our discussion this morning. studio city, california, jane, republican line. >> caller: hi. >> hi. >> caller: isn't it interesting that the budget is being held up

by a group of people who want to continue to pay in to the wealthy welfare programs that come out to about $1400 a year for taxpayer when is welfare for the needy and homeless is only about $400. 3.9% of the budget, that's what is holding up these talks? corporations should give up their tax breaks and we should stop attacking the people who have no taking anything for the american people. >> what is the best way? >> caller: i think the best way for the democrats to stop dillydallying around and letting the republicans kick them in the teeth. they need to bring this information to the american people. the average person has no idea what is going on.

why are we squabbling over one, two, three percent of the budget when 50 or 60 percent goes to the water and the rest seems to go to corporate welfare? >> senator reid this morning put out a statement from yesterday's announcement. "republicans have proved unable to overcomide logical opposition to end giveaways for millionaires, corporate jet owners. i applaud president obama for insisting any deal be balance between cuts and revenues. we must divert the fall at all cost. it is time to reengage in bipartisan talks on an agreement that accomplishes that goal. i agree with president obama that short-term extension is unacceptable." chattanooga, tennessee is next, darline, are you there? one more time for darline on the

democrat line. we'll go to dallas, texas. jim, independent line, good morning. >> caller: good morning, sir, thank you for taking my call. >>you are on, sir. >> caller: i just wanted to say anything currently being tried in washington at the very best is only short term fix. until this country gets serious about tax reform and i'm talking specifically about the fair tax. our long-term outlook is pretty dim. >> and that is even before the august 2 deadline, i assume? >> caller: the august 2 deadline not withstanding until we have true tests, before doing away with all income tax and going to a national sales tax, so that we can not only tap into the people who are not paying taxes currently under the system, until we go to consumption tax rather than a tax on your income, this country probably will not survive long-term.

>> caller, these discussions over the last couple weeks have included various elements of trying to change tax code. what makes you think your way could be done? >> caller: well, first of all, it's not my way. this is something planned. there is a bill pending, but nobody has the courage in congress to even bring it to committee. the reason why i believe that nothing is going to solve the problem because everything being tried so far is basically nothing more than a stopgap measure. again, until this country decides to tax consumption rather than income, in fact fthey did that, did away with the income tax for everybody tomorrow and instituted a national sales tax, we would probably have to go outside of this country to look for people to fill the jobs that would come in our way, it would be that simple. >> and is there any proof to that assumption? >> caller: there was more than enough proof. if people would research the

fair tax, national sales tax that does away with income tax combshgs state right now who doesn't have an income tax is the model. texas, florida, they are doing it now. if it was done on a national level, texas, i live in texas and they do not have income tax thas sales tax of course. the policies of this state right now, we've put more jobs into place than any other state combined in the country. >> that is dallas, texas, jim on our independent line. carl walters adds this. president obama keeps taking his eye off the ball. i thought it was about jobs, jobs, jobs, taxes will create job losses. toledo, ohio, democratic line, bill. >> caller: yes, i'd just like to say, i believe if we would start supporting our own country and forget about this foreign stuff, we'd be all right. >> economically? >> caller: absolutely. >> what makes you say that?

>> caller: all we've ever got from other country system threatening us, going to destroy our economy and they are doing it. so we got to wake up and this is a problem. all the foreign cars and foreign products and everything coming in and they own our banks, it's ridiculous. >> political has a write-up and analyzing speaker boehner's role in the process. this is what they add: mr. boehner will likely be damaged in the eyes of the public. aides say it means little to the speaker. many conservatives see him as the problem in washington, he is close to lobbyist and doesn't apologize for it. he is nothing more than a bill of goods to avoid a government shutdown. mr. boehner is a conservative who can't say yes and publicly shutters at tax increases and controlled by conservative right party. in the capitol, that is what boehner needs.

240-person conference wants to see him walk away. gop lawmakers don't want an agreement with the president unless it is on their terms. they are unconcerned if democrats vote for their plan because it is a sign of weakness. they want boehner who will stare down default and narrowly avoid calamity with a conservative plan. buffalo, new york, frank, republican line. >> caller: good morning, how are you today? >> well, thank you. >> caller: okay, last couple months, i was the first that stated this, wake up, america. i will say wake up again and i see the air waking up with the tea party act. these guys are trying to run you off a cliff and don't care about the american people, period. they are silver spoon people. what they need to do is be in a combat zone for one year and maybe they would change their attitude n. remark to the talk and so on and so forth, just this morning, i don't know if you have seen the news, the republicans are so smart they

didn't fund the faa, those people have no money to work with right now. they are tending to business. so i agree with all the callers so far and i would say just this, there will not be a republican president elected this next time, very simple. i may not be republican, but -- >> what gives you proof of that? >> caller: i don't think they have a chance. they don't even have a candidate. nobody likes the candidates out there. the only one that would have a chance right now would be john mccain. >> the caller referenced the faa, and to his point ashley halsey, talking about with the adjournment of congress, parts of faa being shut down, the administrator said the furlough of workers would not affect the safety of air travel, but many agency functions and ability to collect $200 million a week in

tax revenues that fund the operation, will halt. funding projects for the projects will shut down and the faa funding for states and individual airports will halt employee necessary 35 states, the district of columbia and computer specialists and others will be furloughed and would affect construction projects at airports in all 50 states. orlando, florida, good morning. >> caller: yes, good morning. republicans, whether in power or out are bullies and that's why i left the party 20 years ago. it's obvious what is behind the driving force for republicans not compromising on raising taxes is that the republicans believe that the rich and the corporations will reward them with fat campaign contributions through 2012. they are forgetting like president lincoln said, there are more average than the rich and i'll vote numbers and our individual small donations to the obama campaign will outnumber theirs.

you can take that to the bank. >> later on this morning actually, caller, we are going to talk about campaign contributions and specifically the notion of public funding of elections and that's going to be in the last segment at 9:15. you may want to stick around for that. i also point you to a "washington post" story. despite tensions, the president's team attracts big wall street money. he writes that so much for president obama's wall street problem, a third of the money, top fundraisers brought in this year have come from the financial sector, suggesting strained relations with wall street have not hurt the president's ability to attract donations and the re-election campaign. florida, on the independent line. >> yes, how are you? >> fine, thank you. >> caller: okay, number one. i don't trust the democrats, i don't trust republicans, i don't trust the tea party. there should be a change in the

tax laws. that's the main thing, one of the worst ways to file and people don't even realize it, married filing joint with both spouses work because you are combining your salaries. i agree with the person from texas, we should have maybe a national sales tax or a flat tax for everybody based on gross. so people can't find loopholes. what's going on in this country is terrible. the other day president obama said we have to do domestic responsibility. what about foreign responsibility? take care of your house before you take care of other people's houses. >> to bring it back to the point at hand, we are dealing with the august 2 deadline and congress will be back next week and leaders meet at the white house today, which is our upon toic. what do you think should happen amongst the leaders to make sure

we don't default on the deadline? >> caller: i think they should extend it 30 days. they should all sit down and say i'm not republican or democrat, what's going on there is i want my way and if i don't, i'm going to take the ball and go home. it's so ridiculous and i blame the people of this country because they vote for the same people year after year after year. they've been in congress 30, 40 years some of these people. >> the paper is also talking about the twin terror attacks you probably heard about yesterday in nor way. other reports saying up to 80 dead between the shootings that took place at the youth camp and the car bomb that occurred. this is the financial times weekend section and i'm showing pictures this morning, as well, from the attacks. most of the papers making reference, most of them making it their headline, their top story. as far as the story we are focusing on as far as the debt talks are concerned, the president again talking

yesterday and talked in part about the deal he made with speaker boehner calling it extraordinarily fair deal. >> we're offering a deal that called for as much discretionary savings as the gang of six. we were calling for taxes that were less than what the gang of six had proposed and we were calling for modifications to entitlement programs would have saved just as much over the 10-year window. in other words, this was an extraordinarily fair deal. if it was unbalanced, it was unbalanced in the direction of not enough revenue. >> off twitter this morning, kara adds this to the discussion, congress should be paid by the work they do.

connecticut, good morning, thanks for waking. doug on the republican line >> caller: yeah, hi, how you doing? your callers are bringing up really good points. living in connecticut, i heard you guys say, not everybody is rich over here, but let's bring it back to reality a little bit. so on friday, this friday, gdp comes out, jobs numbers come out. if those two numbers come in bad after the debt ceiling doesn't get approved, what do you think is going to happen in this country? will there be a run on the rich, what exactly is going to happen? >> what do you think is going to happen? >> caller: i think the whole thing will be resolved sunday or monday and nothing is going to happen. when people talk about raising revenue, why don't they call it raising taxes? we need to cut the budget. last time i called my credit card company, they wouldn't raise my credit card outstanding

balance if i got a raise, so i'm confused as to why obama says we ran up credit cards, but we can't call the credit card company to raise our balance. >> there is know an article in the "wall street journal" this morning, laura saunders. preparing for d-day, when congress takes your deduction, here is what she writes. some ep 52el call them tax loopholes and other prefer tax breaks. in congress they are called tax expenditures. whichever term you prefer, hundreds of tax deductions, credits and exclusions taxpayers rely on every year are at risk of being cut. the debt ceiling debate cast this into highlight when tom calburn, a republican on oklahoma released a plan he called "back in black," and the senator's package of debt reducing measures include $1 trillion in reclaimed tax breaks. move to the last column of the

article, she continues to write, here is a rundown of the joint tax committee top 10 tax expenditures along with revenue cost. medicare doesn't appear on the list because parts a, b and counted separately. they would be in fourth place and include as far as tax expeend tours, they include health insurance which is employer payment for healthcare, health insurance premiums and long-term care insurance, mortgage, interest deduction, capital gain and dividend, pensions, earned income tax credit, charitable donations and state taxes, contributions for 401(k)and social security benefits and you probably could get more of what she is trying to say as far as what is considered tax expenditures, which is part of the discussion along the talks in the "wall street journal" that is the tax report section on the "wall street journal" website. senator coburn was the guest yesterday on "washington journal." if you want to get his thoughts

if you missed it, i would direct you to our website cspan.org. we have the video library, which keeps an archive of programs and things along the nature that you can pull up at any time. senator coburn's interview is on the site, if you want to catch it there. in alabama, go ahead, you are on, elvin, democrat's line. >> caller: hey, pedro, my comment directed to the multi-billionaire, and the conglomerate. they won't hold them to their promise for no more tax and more tax breaks. they get in there and make a deal. everybody is not multi-millionaires, this is a problem. thank you, pedro. you have a good day. >> twitter says, a bill was passed by the house, all the senate has to do is modify it so it can be passed. only the house has a bill. clarksburg, west virginia, cindy in the republican line. >> caller: good morning.

thank you for taking my call. listen to all your callers and it seems to me most of them are saying, you know, they are accepting the populous message that the rich are are getting away with not paying taxes and such. this is not true. i think both mr. boehner and president obama are very serious about trying to come to an accord, but i believe that we have to have the spending cuts first. they're not good stewards of the money they are getting now when they show that they can be, then let's talk about spending taxes. i think taxes do need to be reformed. let's see something on the spending side to show that they're serious about living within the means. >> the speaker yesterday during his press conference referenced the fact that discussions fell

apart because of the issue of tax increases to the order of an additional $400 billion. here is what he had to say. >> the white house moved the goal post. there was an agreement on some additional revenues. until yesterday when the president demanded $400 billion more, which was going to be nothing more than a tax increase on the american people. i can tell you that leader and i were very disappointed in this call for higher revenue. but secondly they refused to get serious about cutting spending and making the tough choices that are facing our country on entitlement reform. >> if you just joined us and haven't heard, formal discussion about debt and deficit have collapsed, according to the papers this morning. the leaders are expected at the white house at 11:00 today to come up with some type of proposal to prevent us from

defaulting on debt on august 2. that is the nature of our discussion for the next 10 minutes. again, you can call us on the numbers on on your screen or send an e-mail or tweet off twitter. gaffney, south carolina, you are next, george on the democrat line, what do you think leaders of congress should do now? >> well, this is the thing. you know, when we were attacked in 1812, nobody came over to help us build washington. when we were attacked 9-11, nobody from other countries came over and helped us build new york. so i believe our deficit is a big part of -- yes, i believe we should have gone to war, do what we had to do, we got bin laden, now bring them back. we get a lot of money for the troops to be over there. why do we have to spend money to rebuild countries who don't want anything to do with trying to help them economically or even

to be civil. they have been that way for thousands of years. >> do you think that was enough to resolve the debt issues? >> caller: it would be a big part of it. they say george bush put deficit 10, trillion dollars. people got to remember, obama took office, the country was in an oup roar, we had a great time and wall street busted up. and since that day he's had a hard time trying to get the american people to understand. then you got cancer in the tea party acting like fools, being up there the first time, thinking they are going to run everything. you know, boehner and obama were getting together and it has been in the papers, people got to muzzle some of the people and realize and learn on on how to run this country. >> the "washington post" and

they are looking at the collapse of the talks came after financial markets closed; but could usher in great weakness this week. the treasury could be unable to send out millions of social security checks on august 3 or make a big payment days later. mr. obama says he's been discussing plans with treasury secretary geithner who met friday with the federal reserve chairman ben bernanke. standard and poors has warned not reaching a large-scale deal could lead to unprecedented downgrade of the nation's triple-a rating, a move that could send interest rates soaring. nashville, tennessee, on the independent line, andrew. >> caller: hi, there, good morning. first of all, i'm calling on behalf of oneledger.org. yesterday senator tom coburn of oklahoma made very good points about he was speaking directly about this debt ceiling issue, but spoke about term limits. i hope you could find that

cliff, he said it so much better than i can try to say it in this short amount of time. i really think that would solve a lot of the issues down the road. not overnight, but no-brainer place to start. >> even the issue at hand? caller? do you think it would solve the issue at hand? >> caller: it's an underlying issue, it will not solve the issue overnight, no. >> what should we do about the issue at hand then? caller? we'll leave it there. dublin, georgia, republican line, jeff. >> caller: how you doing? you just touched on on something i wanted to speak about was interest rates. we go back to jimmy cart erra. interest rates started rising. i'm in the housing economy and i don't think people realize how many jobs one house, two housess, 10 houses create. okay. the interest rate when carter was in office started rising.

got up to 8 or 10%. people started flipping out and started buying and moving money. got to 12, 15, started buying again. got up past 15 and it stopped. got up to 21, shut down. started dropping. as it dropd and got below 8% again you started seeing massive refinancing, which started pumping massive amounts of money into the economy. massive amounts of jobs into the economy. and it's something now i think the government is threatening us with as far as the credit rating and interest rates, i personally think the higher the interest rates go at this point in time would probably be the best for the country. because once they start to come down and people start to refinance that debt that they

freaked out and went into, you are going to start to see millionss of dollars being pumped into the economy by refinancing and job creation. and that's my point. >> oversight of government and how our viewer chooses to identify him or herself off twitter. he or she adds: there is something else you are considering, are we ready to dive back and dive is in all capital letters, into a deeper session, also in capital letters, by taking big immediate cuts? and again, that's one way you can give us a -- your thoughts on it off twitter. cleveland, ohio, marsha, democrat's line. >> caller: yes, i believe that we as united states are in the situation we're in due to past president's decisions that has been made upon the americans due to the jobs i believe are not

coming back, meaning the real jobs and then also i feel that here we are as a united states as men and women that have worked to put in the system, which is social security medicaid. that is money that the people have put in the system. that should be something that they should not touch. they said that is surplus, so that means there is plenty of money there. then you have to look at due to past presidential decisions that has been made upon the u.s. where we have, don't get me wrong, i'm not discriminating against foreigners, but if you are going to live in the united states, you need to pay taxes within the united states. if you want to become citizens in the united states, you should be paying taxes to the united states. and with that, why do they get seven-year cuts versus we as united states people that are

born here and live here, why do they get to be able to have a tax break and we don't? >> you brought up taxes. taxes in your opinion should be part of discussions going on as far as debt? >> caller: yes, it should, especially if you are foreigners and you have big businesses, whether small businesses, but again there is always a tax break for them, but we don't get tax breaks. >> what about tax increases on everyone else, though? >> caller: i mean, the rich, it's time for the rich to realize that hey, you can only make so much money and you can only do so much with so much money. so the thing is, why is it they are not able to give to the situation of economic status, as well as the poor, middle class and everybody else? >> if you didn't know, our channel cspan 3 on the weekends turns into american history t.v. the title suggests it is completely devoted to events of american history, including the

civil war celebrating 150 years. a special event coming up this weekend, all civil war weekend on american history t.v. as we mark the 150th anniversary of the battle of bull run, the first major battle in the civil war. this weekend, american history t.v. will bring sights and sounds of the national battle field. you will hear from top historians, get to ask them questions about the civil war and the battle of bull run and that takes place tomorrow on cspan 3, starting at 11:00 tomorrow and will continue through 4:00 in the afternoon and you can go to sspan.org, to find out more and history is the website. plainview, new york, we are talking about the collapse of the debt talks. this is cy, on the republican line. >> caller: yes, good morning there is a few points i would like to comment on. first point is although i'm a republican, i think many of the republicans are guilty of

hypocrisy. speaker boehner, in particular, tried to get passes in his state at cost of $7 billion when it was considered redundant since engine his been purchased. it wasn't until this was exposed that he retracted this. so in terms of earmarks, this man is a hypocrite. also in social security, people pay into that system. it's not supposed to be part of general revenue. so when they call it entitlement, it's really not entitlement unless you consider it part of general revenues. and it wasn't intended to be that way in all the money has been taken out of social security and replaced by iou's.

it's like somebody has an ira, and the boss borrows the money and comes back and says, guess what? i have to cut your ira because i took the money out. >> from the twitter, sherise2011 says: the president of the united states has greater approval rating than congress, the house and senate are failing us. lac cruces, new mexico, don on the independent line g. ahead. >> you asked the question, what do we think or believe? my belief is we are irrelevant. we are irrelevant to this whole process of what is going on in washington. in polls done, people have come forth and said what they want in terms of social security or medicare or medicare tis not being listened to. we're irrelevant. the real point is we have from

my perspective, we have republicans who are negotiating with republicans. obama is a banker, he is not a democrat. he is not -- he does not address the democratic base and at the end of this whole discussion, what we're going to learn is we're still in the long depression. when this discussion is over, the major thing that we need now is jobs and there will be no jobs there. we will have made this worse, not better. so we're irrelevant and we're in for a longhaul of poor economy. >> nathan hodge talking about contracts laid out for war efforts. this is the report saying that the story saying new report that says there is 34 billion misspent in iraq and afghanistan over a 10-year period. the "wall street journal"

reporting they include $300 million for u.s. agency, agricultural development project with a "burn rate" of million dollars a day that paid afghan farmers to work in their own field, it covers subcontractors in eastern afghanistan, paying 20% of the contract to insurgents for protection and touches on cases where host government was unable to sustain a project like costly water treatment plant in iraq that produced murky water and lacked power and construction of afghan military economy that would cost $40 million to operate and maintain, far beyond what the afghan government could afford. 75% of the total contract dollars spent to support operations in iraq and afghanistan have gone to just 23 major contractors. the federal work force assigned to oversee the contracts hasn't grown in parallel with the massive growth of wartime expenditures. read more about that in the

"wall street journal" this morning. one more tweet, if i can, just to finish off the discussion. adding this from darrell price, saying: anyone who thinks default is not a big deal is dilutional. on august 3, no pay for congress. later in the program we will talk about medicare entitlements as far as discussion with douglas hotz-eakin. we will continue discussion about the status of the debt talks with manu raju when we come right back. >> the l.a. times call its required t.v. viewing and it solves mystery that even --

>> what would it have been like to meet these people when you didn't know the ending? >> devil in the white city author follows the

>> our guest, iran the president saying that he knew something was up when phone calls aren't being returned to him, can you expand on that? >> sure. the president tried to reach the house speaker thursday night. didn't hear back from him, tried him on friday and didn't hear back from him. unusual for a president not to get phone calls returned. by 3:30, the speaker's office tried to reach back to the white house and couldn't connect with the president. by that point, the word had already leaked around leadership offices that boehner was walking out, mcconnell was already engaged in discussions with harry reid about what should happen next and then by the time

that the president did finally connect with boehner, it was about 5:30, about the time reporters were being briefd that boehner had walked out. there was a lot of personal feelings that were hurt, but that may have some impact on the larger debt talks here. >> the republicans say they were ready to come to some type of understanding when it came to tax revenues, was that just the expiration of the bush tax cuts or more to it? >> no, they were looking at overhaul of the tax, get rid of tax deductions and tax credits, tax loopholes, things -- they said there was agreement of $800 billion to raise new revenue. the dispute was that apparently the white house wanted about $600 billion more new revenue and the speaker are said that was not going to happen. some of this was upset a bit when the gang of six, so-called

gang, bipartisan group of senators released a plan that would raise revenue by $1.2 trillion. the president knew he had to reach that amount, $400 billion they asked for. boehner said no and the president said, look, if you are not going to give us that, take entitlement cuts, $600 billion out of entitlement cuts, reduce that amount by at least a little bit. that didn't happen either and the talks broke. >> how much of the president's decision to make that increase was influenced by congressional democrats? >> quite a bit, i believe. thursday the white house budget director was briefing senate democrats when word had leaked there were reports coming out saying that boehner and obama were close to a deal, $3 trillion deal. that would not include up-front revenue. senate democrats were furious and they lit into him at the closed-door meeting and he didn't have manner answers for

them. they were mad the talks were going on without their knowledge, there were no revenue raisers and they felt they were giving into huge cuts and other entitlement programs without getting anything back in return. that certainly led him to do a lot of damage control, the white house, president obama had to call the democratic leaders of the white house thursday night and then of course by friday the talks had blown up. >> which brings us to today, more in the president's video release. he talked about the talks and where they would have to go. here is what he had to say. >> folks in washington like to blame one another for the problem, the truth is neither party is blameless and both parties have a responsibility to do something about it. everyday families are figuring out how to stretch paychecks, struggling to cut what they can't afford to pay for what is really important. it's time for washington to do the same thing. but for that to happen it means democrats and republicans have to work together. it means we need to put aside

our differences to do what is right for the country. everyone is going to have to be willing to compromise. otherwise, we'll never get anything done. >> which brings us to 11:00 today. what happens? >> well, the president says we need to figure out a way for the debt limit. that is the immediate crisis that is before the congress and before the white house. august 2 is the deadline to raise that debt limit. if it's not, it never happened and could lead to unprecedent economic default. we are not sure what that means, but it could be disastrous to the economy. the more immediate concern before the august 2 deadline is to calm financial market when is they open on monday. there needs to be some sort of -- markets need a signal washington is moving toward resolving the debt ceiling issue. the president will bring in the leaders today and say, how are we going to do this? >> any chance of a clean-up vote on raising the debt limit? >> it's doubtful because the

republicans put so much into cutting spending with increasing the debt limit, it's hard to see how there could be clean debt ceiling increase. there was a vote in the house earlier this year and was overwhelmingly rejected. there will have to be some strings attached. that is what they have been negotiating over the last several weeks and months and haven't gotten closer to agreement. >> if the republicans talk about taxes and president concerned about entitlement spending, who blinks first? >> it's hard to say. it appear third degree week the president was blinking and giving in on revenue and would have a trigger option if would -- if they could not cut spending by a certain amount, it would lead to some sort of effort reform of the tax code and lead to revenue. that's -- there are a lot of creative suggestions being looked at. one of which would create a commission of lawmakers to

recommend cuts and new committee would essentially have some sort of -- it would lead to expedited process, compel congress to actually vote to cut spending to potentially raise taxes to overhaul entitlement programs. these are some things they may have to do, sort of punt the decision to later because it's going to be very hard to make substantial cuts, changes to government programs on such a short period of time they are going to need to raise the debt ceiling and say, we are going to try to do something at a later date and we promise this time we will. >> our guest with us until 8:30 this morning. if you want to ask questions about the current status of the debt talks, they have collapsed as many papers are putting it and leaders are heading to the white house today to talk about it. >> again, if you want to reach

e-mail go to cspan.org. up first is ed on the republican line from lawrenceville, georgia. go ahead. >> caller: i would like to ask the reporter to please tell the american people or at least do an article on this at politico. the biggest lie that i keep hearing, that i've been hearing -- i'm 63 and i keep hearing this lie that the rich don't pay their fair share. now i -- you get online and look at the worksheets for the tax code and you see the more money you make, the more money they take. so i don't understand if i am paying more money, the rich are paying more money than the poor, but yet they keep saying the rich don't pay their fair share.

why don't you do an article because most people out there are not looking at the tax code. >> that is debate between the two parties over the last several years, increasing the top income tax bracket, bush tax cuts set to expire in december of 2012 and that's going to be the big thing into the election. there will be a lot of coverage about that. one thing they are looking at right now in terms of overhauling the tax code, maybe increasing the upper income tax bracket, certainly republicans don't like that. >> fortbragg, north carolina. >> caller: how are you all on this beautiful morning we're having here? please bear with me. i'm 100% disabled veteran from the vietnam war and i got a couple things to say. the republican who called in, one of the first call from

kentucky worried about security. suck it up, you are considered malfunctions unit to republicans, they don't care, they just crafted you. let me get to my thing here real quick. it is my understanding the budget is $14.3 trillion. with the war in afghanistan, iraq, pakistan, with the veterans cost and all that, tax cuts, medicare part d, which none of those are paid for, $6.3 trillion, cutting the deficit down to $7.6. last thing here, if the viewers would go to the "wall street journal" january 9, 2009, bush on jobs, you will see where a man wrote an article, look down at the bottom and there is an actual chart that says what the president's job performance from 1945 to 2008 and it only reason i didn't include obama, he has not completed his full term. i have five more seconds.

six republican president necessary control for 36 years and created jobs, which is $980,500 an average. >> put a lot out there, what do you want to respond to? >> $14.3 trillion is the national debt ceiling right now. we have exceeded that and that is what the fight is and on congress, whether or not to increase the national debt ceiling that has never, we never not increased the debt ceiling and look, there are a lot of drivers to this. there is increased cost in medicare, there is defense spending, there is lower tax revenue, there was tax cuts instituted in 2001 -- in 2001 and 2003. all of this is leading to the situation we are now, but of course the bad economy isn't helping either. a story talks about speaker boehner's role on this and here

is a paragraph. ...

and boehner knows very well he is going to need democratic votes to get this out of the house. it's a very narrow line. and like the report said which is very clear in washington, boehner is not a top-down guy. that is not his leadership style. >> that's the influence of eric cantor in this process. >> well, of course subject of a lot of media speculation. he has taken a very hard line. sometimes harder line than boehner has in these talks. boehner had been open to new tax revenue. that's something that canter really put his foot down. a lot of people think that undercut boehner's ability to -- but that speaks to the larger divisions within the conference makes it very difficult to get his team united behind the plan that the president can also support. >> is there at least what the plan that is have been proposed

that is a viable option right now? i know there was talk about plan b but that's fallen by the wayside. the grand bargain seems to have fallen by the wayside. a short-term extension doesn't seem to be on the table. where do we go? >> that's a great question. the plan b plan that you were referring to, that is a non-starter in the house. that is something that mitch mcconnell put out there a couple weeks ago. and he said we need to give the president the debt limit increase but we don't want to be any part of it. we're going to create this process vote against his ability to do that and it will be on the president for increasing the national debt limit. folks, on the right, really rebled against that. even lot of democrats didn't like that. it could probably get out of the senate, probably won't get out of the house. that's why boehner said i want to talk to senate democrats the way forward. they don't want to go the mcconnell-reid rout. whether it has a hort-term effect who knows because the

president and reid said we don't want short term. >> and in the spirit of returning phone calls? >> the president has to be involved and that's why you're seeing them come to the white house today. there has to be something. and i doubt you will see reid go his own way from the president. especially at this late date. so the president is going to have to be involved. and everything of course the constitution requires that taxes spending issues have to start in the house so it's largely up to boehner and at the end of the day the president has to sign it. the senate is in between. but it's going to be down to becamer and obama again. >> our guest, north carolina republican line. go ahead. caller: you're on the air. go ahead. caller: you all were saying the plivens this and democrats that. but when you had all congress

democrat, senate democrat, they never did nothing. that's why bush couldn't do anything. i just say it's all messed up. nobody is doing what they should do. >> what should happen in the next few days? caller: well, i don't think it's going to happen. they're not going to get that deficit raised. they shouldn't. i don't mind giving up a little bit or a lot to get our country back where it needs to be. but that's why -- there's only one person working in my family and i have three sons, a daughter, and a wife. so i'm the main bread winner in my family. and you say unemployment is not important. i think the unemployment is about 20%. and it's just ridiculous. i don't mind paying taxes. i have been paying them since 1964. i used to pay my social security within six months. now, it don't get paid. but my biggest gripe is you

hollar about the deficit, about medicare, and medicaid. all the mexicans can get medicaid and medicare. a lot of your blacks on medicaid and medicare, a lot of your single girls are on medicaid and medicare. host: i think the danger the caller talked about that is the danger for both obama and the republicans. one of the real risks is they have been so intent on raising the debt ceiling that there hasn't been a greater emphasis on jobs and job creation. to some extent that depends on who you talk to and which party but that is really what is going to turn this election. it is really what the parties know they have to focus more intensely on and something that's sort of been lost here in washington. host: one of the callers, the next week new job numbers are supposed to come out. guest: and who know what is they are going to say but

probably not be good. and that can't come at a really worst time. look, if the debt ceiling isn't raised it could have a major economic g pact. some folks don't agree with that. but most virtually every economist and business community, wall street folks in both parties are worried about the fact that they don't raise the debt limit the markets could be scooped number one the very unpopular bank bailout was not passed initially by the house in 2008. there was about a nearly 080 point drop in the market in the largest single day drop and who knows if that can happen again but there is definitely some concern that there could. host: good morning. democrat's line. caller: yes. i have had a burning desire to find out how and why rover nor

quist can have so much power within the republican party. can somebody give me a reason why this has happened and why this is not a terrible thing to have? somebody like this that is not elect kd dictate to the congress what to do. i don't understand why this is not illegal. could you please just give me some answer because this is really bugging me. guest: one of the real fascinating story lines throughout this debate has been his power, his influence over the party. that's something that's been looked at pretty closely. grover nor quist required that -- he didn't require. he asked candidates running for reelection whether or not they would sign his no tax pledge. basically what that says is

that if you refuse to raise taxes. and if you were to increase taxes you would have to offset that increase in another place in the tax code. therefore leading to no net increase in taxes. it had to be revenue neutral. now, throughout the years republican primary opponents to candidates who have not signed that pledge have been hit with the charge that they were going to go to washington and they were going to raise taxes which of course the republican primary politics is a big deal. so a lot of folks, virtyullly everyone on capitol hill who is a republican has signed that pledge. now, they generally stick to it pretty closely. we saw a break from grover nor quist earlier this year in the senate when they voted on the tom coburn amendment to repeal the ethanol tax subzis that was viewed by some as breage breaking the pledge and he did some creative way to show this

was not a tax break. regardless, he does have this pledge. republicans have adopted it. they have adopted this anti-tax policy and that of course has contributed to the stalemate that we have here. host: louisiana on our republican line. jeff. i'm sorry. jean from monroe. go ahead. caller: i would like to ask why -- i'm a republican. but why do republicans and the democrats expect the people that are on social security -- i worked all my adult life. i make $652 a month after they hold out $100 a month on my medicare part b but yet none of those politicians want to sacrifice any of their cushy salaries and their cushy retirements that we pay for.

i don't understand that. why has nobody asked them to give up something. guest: that's one of the things that if the debt ceiling is not raised that president obama warned that there may not be money to actually give seniors their social security checks and that has been part of the partisan debate up here whether or not he could do that. but the president says the money just may not be there. that is one of the very stark warnings early on and could have a really magecombr pact on both parties that does not, if those checks do not go out. remember, we borrow as a country 40 cents out of every dollar. and if the borrowing limit is not increased eventually there are going to be v to be a lot of painful cuts into things like social security which could prompt an enormous back lash from voters. host: there's a story that because of what's been going on there's a partial f.a.a. shutdown now. aside from that e what else is

being affected by the concentration on debt limits and those discussions? guest: virtually congress is at a stand still. the only game in town is the debt limit increase. there has been hardly any legislation moving through the sfat for the last several weeks as the focus has intensely focused on, as the leadership and everybody has been trying to get away around this debt limit increase. even libya. remember, we have a military conflict going on in libya that caused a lot of debate in congress. there hasn't been a vote on an authorizing legislation yet in the senate. that is one of the many issues. energy and specific job creation initiatives. those are thing that is are generally being held up because there is a -- there is this immediate crisis that is facing congress. host: congress typically takes off in august. is that still the plan? >> guest: who knows.

sounds like there's a different plan. aides have been warned that the first couple of weeks of the august recess could be scrapped. it could cut into that. and if you don't have a deal by august 2, i think that there's virtually no way that these guys could go home and these lawmakers could go home for their breaks. host: hoy ohio, jeff on our democrats line. caller: i got kind of a solution here to this problem, at least i feel i do. and i'm not really sure if many people know about this. i've been kind of spreading the word here. and this is kind of a small town and my idea to this is back to when during world war 2, president roosevelt had a second bill of rights that he tried to pass. now, in today's world i would think that everything we're going through it almost exactly

put this way into that same situation. you know, because he had on there every american has the right to a job and that of course, you know, decent home and medical care and economic protection during sickness, accident, old age and unemployment and a good education. now the thing i'm saying about this is i feel that as far as taxes go, and i might be wrong but i'm not sure where the republicans are coming from on this or maybe the president. i voted for the president last year. my father was democrat. my base family was. he died.

host: we'll leave it there. guest: well, there's a lot out there. look, the i think the caller is getting to the point that he voted they voted for obama in 2008 and may not now. i think that's the risk that he of course faces any president does when you're faced with especially an economy like this that is hurting a lot of folks and you are trying to improve things and things aren't working the way that you anticipated. look, that is going to be the debate going forward which party will make things better for this economy. host: gainesville, florida, matt on our independent line. caller: thank you for taking my call. good morning to the guest and you, sir. i have one comment and two questions. i think the debt problem is like solving any problem. the common sense says if you

need to solve a problem you need to find the route cause and i'm not finding anybody -- i'm not seeing anybody have, either party. clearly telling what was the route cause of this economic meltdown. though my feeling is, and not my feeling. it's evident. but bush was the cause of the economic meltdown. his policies, i mean, a few of them of course. iraq war which is unpaid. and he repeatly, bur repeatedly said this war will be paid by itself. what it means, you know, i know i don't need to explain it. and also, his privatization which is proposed but didn't -- he couldn't -- of medicaid d. but still he introduced medicare plan d which was unfunded gren adding to the

debt and his private contractors, different contractors who drained out so much money though nobody has ever amounted the figures. but from during the war there was some cases coming in front of c-span was holding some talks about it and at the moment these days when the debt talk is so hot nobody is talking about the tax particular thing. host: caunching. guest: democrats will certainly remind voters that clinton had a surplus and they say that bush had a surplus and that then huge debt and that basically the president has inherited and the debt has increased under obama as well. there are a lot of drivers to the national debt problem. there is was of course the caller mentioned the medicare part d that was enabilitied in

the first term during bush very costly program. there was a 2001-2003 bush tax cuts which led to less revenue. then we're looking at the wars. there's 9/11 which led to afghanistan and eventually the conflict in iraq. and all of which of course unpaid for. but what of course didn't help was the fact that the economy has struggled substantially. there is far less spending, consumer spending, business spending not as much money coming in. it's an unsustainable solution. those aren't the only issues. since then, the government have enact it had economic stimulus program, they have been taking a very aggressive activist approach to prop up the economy that has led to a lot of spunding you should the obama administration all of which is a driver, a huge -- you add all of those factors that i just mentioned and we're in the

problem we're in today. host: delaware, republican. caller: i've been talking to a lot of people and my issue is this. i think that president obama and the senate congress and so on and so forth should all take a pay cut. i think that they go home every night to their cushy little pads and obama, he's for the rich always and forever. and us, there is no middle class. all there is is the rich and the poor. and if they say one more time middle class -- we used to be middle class and we are living off of social security. my husband is doing as much as he can. and we have a small house. it is decent. and we paid in everything. but what did obama do?

obama tried to bail out the banks, bail out this, bail out that. do you know what the banks did? they spent the money on themselves. and then they went under anyway. guest: the bailout happened in 2008. it was a bipartisan initiative that both president bush supported, obama supported. john mccain who was running for president at the time. it was overwhelmingly supported in the senate. in the house it was a bipartisan support as well. that is the -- the sequence, the auto bailout is one of the initiatives that happened under the obama administration. they claimed success to that. you know, this is a very, very difficult issue because there is so much intense focus on it. and there's a lot of blame to go around. and -- host: what about political liability then?

especially next year. guest: the republicans ran successfully on this in 2010. they were able to use this to really attack the president and for not doing enough to control spending and to control debt and deficits and they have been banging the drum on this since they came in. you saw the president last night in his news conference say very clearly look you ran against it and maybe you're walking away from the table because you don't want to take -- you don't want to get rid of a key campaign issue. and then this turned very personal last night and boehner shot back in his press conference and said the president wasn't serious about actually cutting spending. so you have already seen the contours of the presidential debate. congressional debate play out. and if they don't get a deal to raise the debt ceiling or they don't get a deal to cut the deficit which seems increasingly unlikely then this will of course be the major issue, one of the major issues going into 2012. host: then the vulnerability of the senate then, especially

since tea party activists have targeted that. guest: there are 23 democratic seats up in 2012 compared to only 10 for republicans. there's a much more difficult issue for democrats in the senate. harry reid knows he has to protect his majority. that is his biggest concern. and that is one of the reasons why he does not want a short-term debt limit increase. because if you keep having to vote again on this, this is going to be a political liability for a lot of his guys who are up. they are going to have to vote to raise the debt ceiling again and that is going to be used against them in a political campaign. so they want to have one long-term increase that would increase the debt ceiling and through the elections it won't have to deal with this again. host: 2013. guest: beginning of 2013 and then they can have a bipartisan agrement to cut spending, cut the deficit so everybody can take the blame and take credit. so it is evenly deflected the back lash.

and i think to some extent that john boehner wants the same thing because the house is up every two years and they know that they don't want to keep taking this vote again and again either. host: we heard from is the president, here is jeb hence erling talking about the decision yesterday. >> the democrats who are in washington are pretty good at telling us what they are against but they have yet to tell a plan on the table that tells us what they are for. speeches and press releases won't do the trick. it's time for some action. senator reid if you don't like our plan to deal with the debt crisis, where is your plan? mr. president, if you don't like our plan to deal with the debt crisis, where is your plan? if we are going to avoid any type of default and downgrade, if we are going to resume job creation in america, the president and his allies need to listen to the people and work with republicans to cut up the credit cards once and for all.

host: anything you can add to that? guest: it's certainly what you are hearing from republicans is that the president has not actually laid out exactly how he would increase the debt ceiling and cut spending. of course the president did lay out his budget earlier this year. he later made a big speech back in april i believe that past spring and said that he would cut entitlements by even more that actually has not been a formal legislative proposal on that. republicans have tried to accuse him of not actually putting something on the table. what the republicans have offered of course are two things budget rezzlution, the ryan plan which is extremely controversial includes a major overhaul of medicare especially for future beneficiaries turning that program into a quasi private system in which government subsidies would help provide for private insurance. and as well as they had what you saw this past week this so-called cut cap and balance

measure to raise the debt ceiling. what that would do is cut discretionary spending, it would place hard caps over future levels and impose this constitutional amendment requiring a bludget. democrats said that was way too draconian because it would write in the constitution that you would need two thirds majority to increase taxes and it would make it easier to cut spending in spending programs like medicare and other entitlements. that had no chance in the senate but republicans pushed that through the house. but that remained really the only plan to increase national debt limit that has been formally unveiled. so we'll see where we go from here. host: any indication that that there is some type of plan out there to make things happen by next week? guest: there have been a lot of meetings. yesterday you saw that both in the senate that harry reid and mitch mcconnell were having numerous meetings because i think they sense that the boehner talks with obama were

falling apart. that they needed to figure out some sort of plan b. they knew that the mcconnell plan that they talked about earlier really had no shot of getting through the house so they needed to find a new way forward. nothing has been unveiled but they've been trying to figure out that exact path. they actually briefed about the reid and mcconnell yesterday to try to figure out how to incorporate some of their plans, their proposal would cut 3.7 trillion over 10 years. but a lot of it, it would punt a lot of those decisions to the congressional to find a specified level of safings including through the tax code and but getting that into law is going to be impossible before august 2. they haven't had actually formally presented or released any sort of legislative language. host: tell us about that because even if something came up monday what's the shortest time frame that something could be voted on? guest: boehner has said that he needs to have something in hand

by monday so they could have a vote by wednesday. because the senate is a slower moving body and you're going to need about a week to get something through the senate. host: and that would have to be score bid the cbo. guest: they may have to forego that because the cbo scoring could take a long time. so that is probably what you are going to get is some unofficial estimate because they're going to have to pass something before august 2. so while reid and obama have said we're not going to pass short-term increase, you know, i tend to think that they are going to have to end up doing something like that at the end of the day because there's not enough time. host: would that be subject to also being on the internet for three days so the -- guest: of course that was one of the big pledges that the republicans came in on. they have haven't always lived up to that and it's far from clear whether there will be enough time to live up to that now. host: thanks for waiting. steve, democrat's line. guest: caller: thank you. republicans say that america has the highest corporate tax

rate or one of the highest corporate tax rates and yet general electric i think made billions and paid zero corporate income tax. they got a $3 billion tax credit or break. so my question is, can you explain why they got, what they got in the form of a tax credit and why did that? but more importantly, is that issue being addressed the inequity there? you had callers earlier talking about the rich paying their fair share. in the corporate world it doesn't seem to be the case and you know where the negotiations are going in regard to that. thank you. guest: really what you've seen is sort of quite the opposite in some of these debates over tax reform. it's not to increase taxes on corporations it's to actually lower the rates of corporate and i come taxes. and what they would do to increase revenue instead of get rid of a lot of these deduckses. corporations and the credits and what they say.

clean up the tax code. get rid of a lot of these so-called tax expenditures that contribute to a lot of revenue loss for government. so corporations would see some of that i but but they would also see their overall rates decrease. so you're seing the business community generally support some sort of tax reform to lower their overall rate but when you get into those nitty-gritty, when you get into those specific tax credits that companies get there's going to be a huge fight over getting rid of what and how to do it. host: new hampshire, independent line. brandy. caller: yes. i wanted to make a quick comment. we helped get these people there and they're supposed to fight on our behalf. and it seems that the first thing that happens is they make all these promises and these campaign promises for all these large sums that get them into

office, and they want to keep those promises but not the promises to the american people that they are going to take care of the american people. because the first thing that they decide that had they needed to cut was medicare and social security which are two programs that are already paid for because the american people already paid for it. so you are going to cut and cap programs that are already paid for and they have already borrowed against. how are they going to fix this? guest: two things. the caller talked about how that these members of congress don't fight for their voters. look, i think that washington looks terrible right now. if they can't get a deal to raise the debt ceiling, if they can't cut the deficit and we're getting warned by ratings agencies our aaa bond rating may be decreased, our credit ratings may be decreased and

that could lead to a surge in inflation, that could, that would make things, make the lors look even worse. i think both parties come away looking terrible from this fight. on markede and social security the caller asked, that was part of the debate, too. there is both boehner and obama had agreed to hundreds of billions of dollars worth of cuts over 10 years to both medicare and also change the cost of living adjustment for social security as part of these talks. now, those fell apart last night. host: by monday morning, what is the headline you may write about this whole process? guest: as i said, 80% now, could be 20% by this afternoon. these talks have been incredibly fluid. the last few weeks have been a whillwind because one day looks possible, the next day looks impossible. one hour changes after the next. i think that in order to move to calm financial markets the

leaders know how important it is to send the signal that we are going to raise the debt ceiling. you know, a long-term decrease in the deficits and debt, i think that is right now looks very unlikely. of course that could change. but it doesn't look so good but the likelihood that they are going to have to at least show they are going to raise the debt ceiling, i think they realize they have to do that and i think that's probably the direction you're going to see. host: our guest writes for the politico and you can see his work along with others especially during this weekend as the process continues. thank you for your time. guest: thank you. host: coming up we're going to hear from the former congressional budget office director as we talk about an event from yesterday. also proposals in changes to medicare part d. we'll have that conversation when we come right back. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

s >> c-span is airing supreme court argument. today, a 1994 case on

discrimination and jury selection based on gender. >> the fact that this panel ended up being all female. >> listen to c-span radio. "washington journal" continues. host: our guest for the next 45 minutes to talk about issues, talk about entitlements but let's get your take on what happened yesterday. guest: probably predictable in the end. it's awfully difficult on this kind of timetable to have an agreement on big issues like tax reforms, social security reform, medicare reform, markede reform. they're all necessary. they are inevitable if we're going to do these but to do them on the compressed time

frame i think was just too ambitious. they need to turn to the task of getting the debt ceiling raised and go back to dealing with the underlying problem which is the size of the programs and the fact that they are leaving so much debt. host: how much of a factor was entitlement programs and what led to the end? guest: well, i wasn't in the room so no one knows for sure but i think there really is an imbalance in what i have heard between the time and attention spent on reforming entitlements, white house pretty much adamant against changing their basic structure. they won't survive in the current form so that's not going to help versus the time and attention spent on raising taxes which in the end will not solve this problem. we can't tax our way out. so it was a mismatch and mr. boehner finally decided they need to try another approach. host: from your previous stafmente do you see just a cleanup or down vote on debt ceiling being raised? guest: no. we don't have the luxury of that. the real problem is the debt.

the rating agencies have put the u.s. on notice about its fiscal outlook. so if you merely raise the debt ceiling and say we can't deal with things driving the debt they're going to view that as very negative so there has to be some real progress made. and i think the quality of that progress is more important than the size. real progress is raising the debt ceiling and then back to work . host: from somebody who spent time in the bush administration, some of the statements that has been said has never had to come through this. in this case it was -- guest: not quite true i think. raising the debt ceiling is always a tough vote so there are some thing that is are very typical. we go back to when president clinton was in office he was using the same measures that tim geithner is using right now. so raising the debt ceiling is always a nasty business. there was always a lot of finger pointing and blame cast about. i think there are two big differences now. difference number one is we

have a real problem with the debt. so it's not just a matter of raising the debt ceiling. that's a symptom. it's we have an underlying problem. can we solve the problem. everyone agrees we have to raise the debt ceiling. the other big differs is that the house used to basically use the parliamentry tricks so they didn't have to vote. they left it to the senate. and in the senate there was a will spirsy if you were up you vote no and if you weren't you voted. we're in unchartered waters and you see what you see. host: from the financial person's perspective is there a combination of cutting and tax revenue that needs to be addressed as far as when it comes to raising the debt? guest: i think if you look at the commission you learn an enormous amount. this is a commission the president appointed. it's a commission that was constituted with sitting members of the house and the senate. republicans and democrats. it was support bid a majority. maybe not a super majority but a jirt of members supported the

plan and it had four real lessons. this is a big problem. so no more we're just going to cut off and pretend it's fine. we need substantial changes. it is fundamentally a spending problem and the dominant changes have to happen on the spending side. so you republicans that are accepted defense is going to be scrutinized, you have to realize that entitlements are going to have to be looked at. when you get to revenue touf have a tax reform. we can't simply jack up the rates or use something out of the current system to raise the ref new. so inn looking at solutions i think should look to that box. that's the box that passed bipartisan muster before. it's not inside that box i don't think it flies. host: our guest until 9:15. and you can ask him questions by the phone lines. the numbers are on the bottom of your screen. for we brought you here in part

to talk about that. let's talk about discussions this week about markede part d. there was a hearing that took a look a lot of issues in it but one of it dealt with prescription drugs and changing the formula that is used for how they are rebate. from a novice's perspective what is the proposal? guest: if you step back, the setting is one in which the debt's crucial threat to our nation both national security and economic perspective, the driving force in that debt is the entitlement programs medicare in particular. so proposals that affect medicare deserve very close scrutiny. this proposal was to move into medicare mandatory government rebates from drug companies into the medicare program for every low income participant. this is a formula that has existed for a while in medicaid and which has been subject to a

lot of scrutiny. and what has typically been conclude sd that this raises prices elsewhere. the money has to come from somewhere. in medicaid it raised drug prices for private payers. our analysis of how this plays out if you stick it into the medicare program is that seniors bear a disproportionate burden. their premiums go up 20 to 40%. their out-of-pocket costs go up between $200 er year, a total of $4 billion. i think it's a lesson about the right way and wrong way to fix an entitlement program. this is the wrong way. medicare part d operates on having drug companies compete for the business of seniors, 18 million seniors out there, big market, there's a lot of money. competition has been so fierce that it's much cheaper than i for example predicted when it was passed in 30. 40% cheaper. medicaid is uniformly perceived to be our least successful.

so we're going in the wrong direction. and our estimates are it will be damaging to seniors and we don't want to be balancing the budget on the backs of current seniors. this will affect people immediately and we don't want to do it in a way that affects innovation and i think medical science in the united states is widely perceived to be the successful innovators. so this is the wrong way and it gets ticklingish because the president gets very clear because you cannot balance the budget on the back of seniors. but his proposal is now doing exactly that. host: so for medicaid, is the negotiation as far as rebates are concerned between the person or who gets the drugs and the drug companies directly and for medicare part d it's between the drug plan and those who provide the drugs? guest: so in medicaid it's a law. it's 40%. whatever the lowest price is we get 40% in rebates, send us a

check. medicare, the way it works, they negotiate on average you get about a 20% discount off list. one of the thing that is happens is if you say you must provide a 40% discount they stop giving away the 20%. so you're giving up something that was got through voluntary. you are layering another tax. so it's got to come from somebody. it's going to come from private payers or research and development. host: so the president why, what's the driving force between changing it from one stream to another so to speak? guest: from my perspective, i'm mystified. the medicare program has worked really well. they were worried it cost more. it's cheaper. they were worried plans wouldn't participate and we've had a remarkable amount of participation. it's our most successful program. so i think it looks nice on the

surface to say that's very successful. that's not going to happen. host: as far as the political appetite to make cheese thanges, how would you engang that? guest: part of the politics is we need to get medicare savings, we know that. let's get them from the drug companies. they're easy political target. and demagogue them. they're big rich corporations. we'll take their money and it will be painless to everybody else. in the end, the money has to come from somewhere. it's going to come from seniors, very damaging to them and it will probably be damaging to the innovation in the pharmaceutical sector. so when we do entitlement reform it has to be something which is thoughtful, which understands the unintended consequences of the type that we've identified and i don't think you do it in a budget deal in a week. this is a serious issue for the future of these programs. every one of our core safety net programs our social safety net is broken.

social security is running in red ink. that's a disservice. medicare is running enormous amount of red ink. right now it is borrowing 280 billion a year from general revenue that seniors pay and the kinds of come from the tax don't come close to paying the role. medicaid is entirely debt financed. in many cases they are not serving the beneficiaries. medicaid beneficiaries a end up at emergency rooms. they can't find primary care physician. 70% can't find specialists. so that's a program that is a disservice to our goals in serving america's poor. and all of them will not serve the next generation. so we need to reform them in their own right so that they serve their intended purpose. and at the same time they're ballooning the debt and the debt is threatening the economy. from any perspective where we are now is unacceptable. so we do need to get entitlement reform done and

done quickly in a thoughtful way but you can't say we're going to get companies to pony up. it won't work. host: indiana first up for our guest mike on our democrat's line. caller: good morning. i've got some solutions to solve the national debt. number one is congress and senate take a pay cut. and also pay for their own health and life insurance. we have to. why don't they have to? another solution is to take all these women that are having tons of babies and limit to how many kids you can have being on welfare and also put them to work. host: can i add something off of twitter? guest: i think what you hear is

first of all part of our problem. as the commission said this is a national moment of truth. small changes won't solve it. so whatever you may think of them in terms of their fairness are not going to solve this problem. and medicare in fact is part of that problem. she is right that health care costs are the core of this issue. but medicare feeds the health care costs. it is a big payer of physicians and other providers. it pays on the basis of volume. fee for service. do more, get more. it feeds the fragmentation that makes health care expensive in the united states. it pays hospitals, doctors, the drug companies. pays some particular inshurens companies. canned find a beneficiary in there anywhere. it's fragmented, uncoordinated care that ends up being expensive. so we misuse the american science. medicare is part and parcel of that problem. host: kansas.

up next. republican line. caller: i listen to all this but it seems to me that that's the very thing you people want to do is attack what we have paid in to. what we expect. and they borrowed from social security many, many times never paid it back. it doesn't make sense to me why we can't get it solved with this bickering fwack and forth, that is all they are doing, whether you are republican or democrat. host: we'll leave it there. guest: so let's stipulate there's been a fair amount of bickering back and forth. i think we can accept that as a state of affairs. it is always tough to discuss these entitlement issues but one of the thing that is gets lost in this is no current retiree need be affected. social security for current

retirees no plan that i see seriously touch that is. even for those near retirement. the same is true in medicare. but the programs themselves for those who are not yet in retirement do need to change and that is an ineye scapeable fact. host: are we talking age lilts them? guest: there are many things you can do. you can change the progressivity of these programs, where the moment the affluent get less and do that progressively. in america, the affluent pay more premiums. they could pay more. i don't see why we need to subsidize an affluent person like bill gates or warren buffett. there are a lot of thing that is could be done but nothing would affect those currently retired and the septment that i paid into this program, i deserve everything i get out is a fine sentiment but doesn't add up. most people will pay in a fraction of what they get out

of these programs. medicare gets 75% of its funding from general revenue. that means that most people are going to have their medicare paid for by their children and we have left enough burdens for our children. host: mike for our independents line. massachusetts. go ahead. caller: good morning. i'm wondering about this health care system of ours. it seems that we pay so much more than the rest of the countries around the world. as much as twice as much and sometimes more. i'm wondering what the cbo numbers are on the single payer system. it seems to me i think we pay about 60% of our budget is spent on health care. it seems ridiculous to me. why don't we go to a single payer system which would be so much chearp and is it just because it would cost socialism or something like that?

guest: i don't know what the cbo numbers are and i won't speak for them. but i don't think this is a promising route for the basic problem. for the following reason. single payor is a way to finance a health care system. it basically says we're going to have one km that pays the bills. our problem isn't the insurance aspect of it. you have two costs in the health care system. you have the use and delivery of medical services to americans. it is a very big bill. on top of it you have the payment system. you have insurance you don't pay the full cost of your care, someone else does. most estimates are that the layer on top of the underlying health care costs something like $200 billion. so it's a couple of years. our problem is the cost of care zefts. so i've never thought that single payer was the route to stolving the underlying problem. host: this is off of twitter.

guest: legally, no. the supreme court has ruled that in fact these do not have the force of a contract that is been true in social security, true in medicare as well. they don't pay the bill. sure, you pay a tax and you will see it but as i said, the financing for medicare comes in part from hi taxes, those are those exclusively into the hospital part apart from premiums paid for doctors and for drugs. but in the end, this is massively subsidized by general revenue. this is really being paid for by the income and other taxes that are collected and at the moment, it's really being paid for by the kids. host: are there models you can look to and how they finance and operate? guest: i think the part d program is a tremendously successful program. it harnesses the best aspects

to compete while providing a benefit to seniors. that's always been the goal and that is why i don't want to mess with it by imposing these price controls. the biggest thing we need to do is to acknowledge the fact that we have to have a budget. these programs are breaking the budget and they are breaking the budget because we built the contradiction that says you the beneficiary may have all the finest medical science america can think of for low or no cost. that turns out expensive. then we turn back and say stop that. or we're going to cut your payments. we threaten the doctors all the time. we're going to give you a 23% cut. they're doing this now in going forward for all the providers. we're going to give you these cuts. and then they say, we can't afford to do business this way. we're not going to see any more patients. and 70% of medicare practices have thought about whether they should take on new practices. medicaid we have a big problem already in that. so then they go back and they pour more money into it. so we have to say this is the

amount of money that is available for medicare and medicaid this year. you the providers better get some efficiencies and serve these ben firries. you get good service for the money. until we do that we're not going to succeed. >> host: social security? guest: structurally easier to fix. this is not nearly as difficult. so it's been mystifying to me why we can't get the politics in order and do this. you can fix it through any number of combinations of retirement ages, the change in the progressivity of the formula i mentioned, the way we measure inflation. and some will want to add more taxes. you can get the system to come into balance relatively easily. it would affect nobody retired right now. no effect on current government spending. so take that off the table. it would send the sf signal that we could get it fixed. to my eyes the number one thing you should do is do it tomorrow. host: next up, washington. democrat line. keith, good morning.

caller: i feel that republicans are overplaying their hand like they did back in 95. they have people out here fighting about the debt or people arguing and talking amongst themselves about the debt ceiling and all that. i think that america is getting what it deserves because tough democrats and the republicans and they don't care about the people at all. and i think we're going to get what we deserve. i think they're going to drive the car into the ditch and not only do that. they might even drive off the host: you're breaking up so we'll have to lee it there. guest: history will decide whether republicans played their hand beautifully or poorly. to my eye, we have these two

threats, threat number one is the near term destruction that comes new don't raise the debt ceiling. leaders have said we have to get the debt ceiling raised. the bigger problem is the cataff if i that comes if we don't deal with the rising debt. that scares me enormously. it is a threat to everything that we value in this country. prosperity, our national security, and at the heart is the need for fimet and tax reform. so what comes out of this is ultimately some real cuts in spending in the near term and an agreement to raise the debt ceiling and a path to getting the serious problems solved. host: is there a reality is that if august 2 comes and goes that social security checks won't go out? guest: er payment is at risk. the notion that somehow there is a farde class among the people who deserve from the united states is a very misleading statement.

we're collecting about $2.3 in revenue and $300 billion payments. so you've got 2 trillion left. we owe 2.1 in social security, other so-called mandatory programs. so a $100 billion hair cut. make most of those somehow. and that leaves you zero for the troops, other national security. education, roads, you know, health programs. it's a fantasy to think that there is a way to not raise the debt ceiling and to continue to honor anything like our obligations as a nation. host: back to health care issues. this is peter hibbert saying guest: among the many things you can compare across countries, germany-u.s., canada-u.s. or compare across regions in the u.s. vastly different outcomes for the same cost or sometimes high costs worse outcomes.

all of them are an indictment of the efficiency of the u.s. delivery system, which is not orienting around high value, high quality for low cost but is instead oriented around volume and the delivery of services. so that is our problem. fee for service medicine is dangerous to our budgets and it's turning out not to be good medicine. host: baltimore, maryland. caller: hi. i was reading an article last night by paul crugeman. and it was originally published on 9/14/03 and he talked about a doctrine by the republican party called starving the beast t. it was coined by david stockman who was ronald reagan's budget director. and due that taxes should be

cut precisely. and grover nor quest at that time told national public radio, i don't want to abillionish government. i want to simply reduce it to the size that i can drag it into the bathroom and drowned it in a bathtub. he also said to u.s. news and world report, the goal is reducing the size and scope of government by draining its life blood. and edwin full never of the heritage foundation president said implied that he and his organization want to do away with the institutions of franklin roosevelt and lyndon johnson. host: so your question, sir? guest: well, this is set up, it's purposefully set up for this to happen. host: we'll leave it there. impltsdz there's a clear disagreement about the scale and scope of the social safety net and really the role of government. yomping inn's made any defense

otherwise. if you look at some of the things that were done in the house passed budget they were deeply different approaches to trying to provide a safety net in the united states. that's a legitimate and important debate to have. there's a second aspect of the gentleman's remarks which is that somehow there is a deliberate desire to have the public finances not add up and thus endanger the country and i find it hard to believe that in good faith over several decades that either party would have wanted us to come tot this situation we are now where things are so rad cliss out of balance and so dangerous to the next generation that we have to really get serious about fixing them. . .

that's what fee for service medicine looks like. >> host: charlton, massachusetts. judy, democrats line. go ahead. >> caller: yes, i'm concerned about the cost of drugs. way back when they were before congress the bill for negotiating the cost of drugs with the pharmaceutical companies in the wee hours of the morning they allowed

lobbyists on the floor and after three hours the vote came and congress was not allowed to negotiate the cost of drugs such as -- as they do with the veterans and ultimately what happened is the pharmaceutical companies had a free rein with the price of drugs going up. thank you. >> guest: so the events that came with the passage of the medicare part d program, particularly in the house of representatives i think do represent an all-time low in terms of conduct of the house and passage of a bill. i can remember i was cbo director at the time thinking i'll watch for an hour, they'll vote and i'll go to bed and i was up at 4:00 a.m. and it was a mesmerizing and appalling sight. i don't think that's what we should expect from our legislators. on the other hand, the substance of the notion of having the secretary of health and human services negotiate with the drug companies for better prices,

then could the prescription drug plans the cbo looked at this several times and concluded there isn't a negotiating advantage. if you've got 6 million customers in your drug plan you have a lot of leverage and there's not much more the government can bring to bear. >> host: for instance, for instance,, if some legislation came up to deal with the debt ceiling and it had revenues and taxes as far as part of that, would it end up going to cbo for a score? >> guest: absolutely, yes. >> host: how long would that take? >> guest: you know, i'm just laughing because what they will undoubtedly do is blame cbo for not giving them a score. congress' famous move when they take make -- can't make a move they'll blame cbo. if they invent something radically new cbo hasn't seen before it takes time to understand things. the prescription drug plan, for example, there did not exist in nature and financial plan for out patient prescription drugs. we had no idea how the drug companies would respond to it,

what seniors would enroll, it took a long time to analyze. on the other hand, if it's something that says we're going to take $10 billion out of, you know, a program somewhere in the system those are well understood. that's going to depend on the mix. the timetable right now i think really does argue for a messy process. you're not going to give cbo much time, you're not going to give congress much time to read. so that usually leads to reliance on things you pretty well are known, grabbing things you understand, putting into a bill. >> host: good morning, donna, independent line. >> caller: hi, my name is donna from baltimore, maryland. number one they have caught entitlements, not too long back a senator from one of those northern states introduced it, i'll get back to that in a minute. what i'd really like to know is go back to what caused us to be in this position and i don't think it's healthcare costs, i don't think it's drug costs,

because there are millions of drugs that are very cheap and -- or they eventually becomes cheap after their patent wears out, that's between the drug companies. i'd also like to know if you go back to the reagan, or, i'm sorry, the bush years and how -- how much it will add up to the tax cuts for the wealthy and add that amount up and make the people pay for this deficit that caused this deficit, being us giving the money to the banks where with no um, no reasoning behind it or how they had to change any of their behavior that got them in that position in the first place or when they gave theirselves all those giant um, you know, um bonuses or whatever they're called. >> host: let's let our guest answer. >> guest: so there are two different issues. there's where we are now,

deficit of about 1.15, 1.16 trillion and where we're going. and the where we're going part is the terrifying part. for example, if you use the president's budget and roll the clock 10 years from now that budget assumes the economy's back to full employment, the financial crisis is a distant memory, we're fighting no wars overseas, it's -- it envisions, you know, a pretty good state of affairs and despite that and despite the fact that the president will have raised all the taxes he's proposed and i think this is informative revenues are much higher than they are traditionally, almost 5% of gdp. the lesson of that to my eye is this isn't a tax problem, this is really a spending problem, the core of it are the health problems and that's inescapable, the politics of it might be ugly and people's desire to wish it wasn't true might be profound but the numbers are what the numbers are. then there's the question of how we got to where we are and the cbo recently put out a paper that said, you know, go back to -- to 2000 and the famous surpluses seminars the eye could

see, go from that to where we are now, deficits as far as the eye could see, what happened, and they roughly say, i don't have the numbers off the top of my head that the tax cuts and the wars certainly contributed, that's about a third, and about 2/3 are recent things, financial crisis, response, stimulus bills, those kinds of things. so there's an accounting there. but the notion that somehow it's all the tax cuts for the rich really is not supported by the numbers. >> back to medicare, dierdre harmon says -- >> guest: again, i think that's what happens when you build this contradiction when that says you can't have a budget it turns out to be expensive. you start adding things procedures to ajude indicate whether services should be denied or not. that strikes me as unproductive. >> chapel hill, north carolina. bob on our republican line. >> caller: hey, thanks for taking my call. a debt limit question, quickly.

since mr. obama started talking about the grand scheme we've seen both s&p and moody's come out with threats to a downgrade if that isn't forthcoming. do you think -- think our treasury secretary has prompted the rating agencies to do that? and if that doesn't happen and we get a clean -- some sort of clean debt limit increase and there is a downgrade, does that not reverberate back on mr. obama? >> guest: well, i'm not privy to any discussions that secretary geithner may or may not have on the rating agencies, on the substance, if they're doing their job they have to be looking at a fiscal picture that just doesn't add up and at some point it will be their obligation to say that quite clearly in the form of not just a negative watch or a negative outlook but they will actually have to downgrade the united states. we're not immune from the laws of arithmetic or economics.

we're perilously close to the edge that looks like greece and other sovereign debt crises. they're doing their job when they say you've got to get your house in order. we shouldn't let that happen. the consequences are, in my view, simply catastrophic. we've seen dwight, what happens when financial markets melt down. a downgrade either because of a failure -- failure to raised debt ceiling or failure to deal with the problem is something that means higher interest rates for everybody in the united states and higher costs for the government forever. the economy's weak. we don't need that kind of negative impact. it's the only thing in my view, that would guarantee a double dip recession and, you know, we have millions and millions of americans out of work. so i find it inconceivable that any policymaker, knowing the stakes, would fail to address both the underlying debt and get the debt ceiling raised. >> host: ratings agencies don't offer grace periods? >> guest: i can beg you suspect

not. the serious issue is suppose we don't solve the whole problem between now and august 2 and we will not. and we will not. the nation has deep decisions to make. you have to make progress. rating agencies have always been about making sure the trajectory begins to look on a sustainable course and that's what we need to do. >> host: green bay, wisconsin, good morning to pat, democrats line. >> caller: good morning. i think that you're not really addressing the fundamental problems here. and when i worked for a hospital in the 1980s under reagan, and at that point what they did was they had the american medical association come up with a billing code system for medicare. and they developed this system that they would charge by these codes for each treatment that a person had under medicare. and they had to use the ama

codes in order to be paid back for these billings. and the american medical association had proprietary rights over those billing codes and they got a kickback for every time those codes were used. so unless you address the fundamentals of what's going on in this country, and number one, they should be looking at lowering the retirement age to 55 so people like me, who are 60 and have a good-paying job, that i could retire and pay into medicare for insurance rather than paying a private insurance company for insurance, if we had universal healthcare, that would open up jobs, all of our companies in the united states wouldn't have to be tied to paying for insurance benefits, that that would be handled through the united states

government -- >> host: let me leave it there. >> guest: the -- there are these codes. i view them as part of a problem, not really a part of the solution. hospitals get paid based -- as the caller said, based on the diagnosis, a fixed amount. and so a hospital's incentives are do as little as possible and treat that particular diagnosis. and no particular incentive for high-quality. just do as little as possible. doctors get paid as i mentioned before on fee for service so they want to do as much as possible again with no particular interest in quality, doctors practice in hospitals. we've built a schizophrenia into the system, where the doctors are doing more, hospitals do less, they work in the same place. the doctors hate the hospital administrators and vice versa. we've set up a system that breeds bad incentives and bad medicine. that's why i think a thorough going reform of this is necessary from the health aspects of it, not to mention the budgetary aspects and that's

central. on the other topics, i think there's little appetite certainly from me to lowering retirement ages. people are living longer. all of these programs were built in an era when people were not expect followed into their 70s, 80s and 90s and we have to realize them for realistic life expectancy and the last point is one that's been observed for a long time which is our insurance system is tied to employees and there are lots of reasons why, a, that's an accident of history, and b, it's not the best way to do insurance and something other would make a lot of sense. >> host: such as? >> guest: portable insurance. just take a policy that goes from job to job, job to home, you know, every family has been through this awful experience of saying, all right, who's going to work full-time and who's going to stay home with the kids and how we going to get the insurance? that means we're wrapping our linessic lives into pretzels for insurance, the insurance ought to fit our life-styles. there are lots of things wrong with the way we're set up. >> host: for medicare and medicaid what happens to them as

the relevance of the president's healthcare system kicks in? >> guest: the vast reliance on expansions of medicaid to cover additional -- half the coverages expansions are in medicaid 16 million americans put into a system that i view as financially unsustainable and delivering bad care. the states are also painfully aware of this, they can't afford the medicaid bills they have right now. that's one of the troubling aspects of the affordable care act from a quality of care point of view. the remainder of the coverage expansion comes in the form of this new entitlement program, insurance subsidies and i'm terrified of the cost of that at this juncture in our history. we need to put it on a sound footing not less. >> host: east lake, ohio, go ahead, jackie, independent line. >> caller: good morning. i think what you have to do is take the profit out of -- out of medical care. for decades our hospitals were nonprofit. our blue cross was nonprofit.

then everything was privatized and profit was built in. and what we have now are insurance companies that take 15-21% profit off the top and that doesn't heal anybody. so what we're looking -- what we should be looking for is a single-payor system that everyone else has and improve on it with -- and medicare for all would have been the best way to go. and i can't understand why we're all so tied up in knots about a single-payor system when medicare shows that it -- it -- for outcome purposes, is probably better than some of the insurance programs that we have. thank you very much. >> guest: well, medicare and the private insurers use the same doctors, hospitals and delivery systems so the quality of the outcomes is not really dependent

so much on that payment. and i guess the only thing i'd say is, you know, people may or may not like insurance companies but there's no 15-28% profit margins out there, these profit margins are relatively thin by u.s. commercial standards and that's not where the money is in our system. >> host: one more call, silver spring, maryland, republican line, chris. >> caller: good morning, gentlemen. is it true that medicare becomes insolvent in less than 10 years? and one thing, is social security, medicare, maybe every adult should have had two kids to pay for it. it seems to me that we have a lack of taxpayers, and that's 19% of gdp. when the government takes less than that that seems to be a good formula for us having a thriving economy and a surviving economy pays for social programs, i'm hang up and listen you to thank you. >> guest: on solventsy and insolvency, only one part the

hospital has a dedicated payroll tax and accounting system, that will go bankrupt, but i don't think that's a particularly meaningful metric. the reality is as i mentioned earlier medicare as a whole expense 2 -- spends 280 million more than is brings in, that's a problem, that's a very big insolvency. so we need to address that. i would agree with the gentleman that we need to have robust economic growth in order to fund all of our national needs both in the government and private sector and we don't see that right now. i think a premium should be placed on all things that produce greater economic growth and we ought to design our entitlement systems to reflect both that growth and the demographic reality that we don't as many children per retirees as we did before and the old farm last simply won't stand up through that time. >> host: thank you for your time, douglas holtz-eakin. >> host: we'll look at the public financing of campaigns. particularly as we look at 2012.

we'll be right back.

>> host: our guest is meredith mcghee, the policy director for the campaign legal center. our topic for our last segment until 10:00 a look at public financing of presidential campaigns. meredith mcghee, how did the last campaign that we saw affect this campaign in terms of public financing? >> guest: well, i think you're certainly going to see that really no viable candidate is going to appropriate in the current system. as you know in the last campaign president obama opted out, raised an enormous amount of money that shocked everyone from both primaries and the yes or no.

senator mccain did participate in the general to get the money. and i think in this campaign, because changes have not been made in the system that was financing presidential campaigns with the public financing, it really has become, to some degree, out of date and it's an understandable selection given that the system hasn't kept up with the changes and the costs. >> host: give an example. >> guest: well, you have, for example, limit by state in the current presidential system. so if you go to iowa, which is somehow an important state in the presidential race, there's actual a state-by-state limit and they kind of treat the system was designed originally back in the '70s to say we're going to have every state pretty much treated the same and given the same weight. well, that's not how the system works. if you're going to run for office you're going to go to iowa and maybe your strategy is to spend a whole lot of money in iowa. so what happens, the candidates

go to the quad cities area which has a television station that broadcasts to both illinois and iowa and they spend a lot of money in the illinois section to get to iowa so they game all of the numbers. so it's a system that has a number of things that should be changed. the good news is it's not rocket science about what needs to be done to update the system. and there have been efforts to do this for a number of years. and they've been blocked in congress. >> host: all right, let's talk a little bit about the limits that are put on you if you're a candidate who takes public financing and this is from the fec. limit your campaign system in each date to $200,000, limits spending from personal funds to $50,000, and you have to raise more than $5,000 in 20 states. only individual contributions are matched. individuals may give up $2,500 to primary candidates and only the first $250 of a contribution is matchable. with all that in place who would take it?

>> guest: actually, for many years every candidate participated in the system, all except one candidate for about 25 years during all that period because it was a good system. look, right now, given what's happened with the supreme court, certainly given what's happened with the citizens united decision public financing is needed more than ever because you need to ensure that with all of this money flowing in from the outside the voices of candidates are heard, candidates don't become bit players in their own campaigns, but the system needs to be changed. the old system that relied on spending limits and these state-by-state limits, for all intents and purposes it's gone, it's not relevant to the current day. but this was a system written 30 years ago, can you -- >> host: campaigning has changed. >> guest: nobody envisioned the internet or the cost. and i think if you also look, think of if you had let's say even tax law and say okay, we're

going to write the basic tax law of the country in 1974 and not change it for 30 years, well, gosh don't you think people may say maybe that law needs to be updated? that's where we are now. we need a new system for public financing for the presidential and hopefully for the congressional. it's a system that would not have the same kind of spending limits, absolutely not, because you can't with the citizens united's decision, it makes no sense. but that does not take away the fundamental argument about why the way we finance our elections needs to be substantially changed and significantley revised and the option to ensure that candidates are not beholden to their special interest-givers and their bundlers remains i think even more compelling today. >> host: our guest is meredith mcghee, she'll be with us until 10:00, we're talking about the public funding of presidential

campaigns, (202)624-1111 for democrats 202662. and journal espn.org and twitter espnwj. the funding mechanism on the tax file for you, is that correct? >> guest: yes, there's a checkoff. a lot of peoples misunderstand it. it's one of the few opportunities, maybe the only opportunity for when a taxpayer is given their bill and say this is how much you are going to owe on your taxes based on everything you've told us, here's an opportunity for you to decide what to do with the money you already are going to have to pay. and you can check that and it would go toward the presidential public financing fund. and that fund is then used to help finance the candidates that are running for presidential. now, a lot of people think this adds to their tax burden. it doesn't. it's saying the money you

already are going to owe regardless of what happens, you have an opportunity to direct that. what we're really looking at now, given what the supreme court has done in several cases in the last several years is a system that provides what i would call floors instead of ceilings, where you would be able to go and say for every small donor that you get, the money you get from a small donor we're going to match at that four to one, five to one levels, something in that area so that that donation, that small donation, has a much greater impact. and we're also, i think in my view would be a great thing is to be able to say a lot of this money that the candidates raise goes toward trying to get on television. and, you know, so they raise large amounts of money to hand over to the broadcasters who get their license for free, and so we should be able to say these are the publicly owned air waves and that candidates who proven their viability and who raise

small donor money should be able to get better access to the air waves. i'm not calling at this point to say every candidate should get free air time, that's not what i think is a really workable system. what we're saying is a system that if you proven yourself to be a viable candidate that has strong small-donor support, you can use that to leverage your ability to buy time to get on television so you don't spend all your time raising money and i think as bill bradley once said you raise all this money and basically hand it over to the broadcasters to get on tv. >> host: how much is in the pot, so to speak, when it comes to -- when it comes to public financing? >> guest: well, you know, in the past the levels have really been sufficient to fund whatever the candidates raise. and, you know, it's a system where, in the primary, you got a max in the -- match in the primary when you were running so you got the match for the small donor money and got the spending limits and then, in the general the major party candidates got a

grant, an absolute amount. that amount in the last was 60, 70 million, somewhere in there and basically from labor day until the election, the republican and the democrat would have the same amount of money if you were both in the system. and that took the candidates, the major party candidates that are competing for the most powerful office in the world out of the business of fund-raising during the general election. so what they could do is make sure we had an election based on the value of their ideas as opposed to their ability to go out and raise money from a very small percentage of americans. i think most people in their gut know that when you see the facts it's somewhat shocking that less than 1% of all americans give a contribution of over $200 to begin with. so right now we have a system in which less than 1% of americans fund the elections. but when you hear your viewers and others complain about

politicians being beholden to special interests or not listening to the people, you know, the reality is they're listening to the people they most care about, that's the people that got them in office. >> host: mount joy, pennsylvania, is up first on our republican line. harry, go ahead. >> caller: yeah, i admit the current system is flawed in a lot of ways. but i just think -- i just think that if you get public finance, i'm just concerned that people aren't going to run serious campaigns and fleece the donors and i think the real problem is we, the national primary, not these regional primaries that take up way too much money and way too early and ignore a lot of the voters outside the given primaries like i'm from pennsylvania, and we don't have a -- we don't vote until i think april. so by the time all the money's spent we're basically ignored. and i'd like to know what your comments are on this issue.

>> guest: well, thank you very much. yes, i think there's probably little disagreement in anyone that doesn't have a stake in iowa or new hampshire that the current system that was the way the -- the primaries are run for presidents really doesn't make a lot of sense. you have two states that really don't necessarily reflect the way the united states votes, the demographics of the united states. i will say one point in their favor is it's great to see in some of these states where the candidates actually have to do retail politics. they have to go out and meet the voters. i think that is one benefit that these initial states have. and i think that's a great thing other than having to go to a state like pennsylvania or california, where it really is a contest of how much money do you have to get on the media and then, to, you know, really run ads. i would just want to take very quick the first point you made because i think there is very strong proof that this question about fleecing of taxpayers will

not occur. from the time the financing system for president went into place till the 2000 election, every candidate, ronald reagan being one i would note, every candidate from the major parties participated in the system until 2000 except for connolly, who was the governor from texas. it was a system that worked very well, they were very happy, republicans won, republicans lost. democrats won, democrats lost. incumbents won, incumbents lost. so it was a system that was working quite well. it's like an engine that needs maintenance. you can't expect a system that was an engine or a car that was built in 1976 to be able to run without any maintenance for more than 30 years. but there is great proof, 30 years of proof, that the system works very well. >> didn't president bush forgo public funds for the primary? >> guest: the primary. but he did participate in the

general. >> host: columbus, georgia, jerry, independent line, go ahead. >> caller: good morning. >> guest: good morning. >> caller: i'm cure yes, i have a perplexing question, hello? >> host: go ahead. >> caller: ok. i have a perplexing question and that is why do we have so much campaigning? in england i understand it's 90 days before an election they can start campaigning. here we get it 24 hours a day, 365 days a year. isn't that a bit much? >> guest: well, actually, this comes up a lot. and i think some of it's the result of the negative campaigning that you see, the attack ads, and i think in this election we're going to see even more because with the citizens united decision that's bringing outside groups use corporate and union treasury funds i think you're going to see a lot of campaigns turning to these outside groups to do their dirty work. but the reason you cannot limit the campaigns, this campaigning

like you can in brain is that the supreme court has made -- britain is that the supreme court has made it clear the ability to raise and spend money is really a first amendment right and that is -- doesn't mean that you can't have some constraints, but i think they've made very clear and rulings throughout the last 34 years that you cannot put constraints on the ability to go out, talk about politics, run your campaign. now, one development has been that a lot of candidates now do supposedly testing the waters, you know, they start running for president within days, it seems, after the last election. and what happens is they have gotten very coy about when they actually form their presidential campaign exploratory committee. they actually test the waters before they actually test the waters. and it does make -- you have this feeling of the perpetual

campaign. but given our court system, given our -- the way that campaign finance and laws have been interpreted by this court over the years, i don't think there's really any constitutional way to say you cannot raise money and start competing. and the reason that people start running so early is that the name of the game is not only raising the money, that's first and foremost, but it's also name recognition. just the fact that people know your name is a big, big advantage. and so a lot of candidates that want to be president have to spend a lot of time getting that name recognition. >> host: ann arbor, michigan, greg on our democrats line. >> caller: hey, good morning, how are you. >> guest: hi. >> caller: i was listening about special interests taking over government. how is that the alcohol and tobacco commissions be in charge of drug laws. go to our u.s. surgeon general's website, ma'am, 400,000 americans dead last year from

tobacco, over 100,000 dead from alcohol, over 150,000 dead from prescription drugs. zero dead from marijuana overdose. how is it that the tobacco lobby can come before congress and complain about marijuana being legal -- >> host: i think you're offtopic and i apologize. let's go to savannah, georgia, barbara, republican line, savannah georgia, you're on. >> caller: ok, thank you. i want to know why would they allow one candidate to opt out and the other one not to opt out? that certainly makes an uneven playing field and that certainly gives these people that's behind the candidates that's trying to run the country a chance to just put everything they've got in to elect somebody for president and tell advice over and over on tv and everything else. they had to vote to live within the same means we wouldn't have

these same problems. >> guest: well, the reason that you have an occasion, this situation where one candidate agrees to participate in the system and the other doesn't is that the supreme court has said that you can have a voluntary system of public financing where a candidate agrees to give up some ability, for example, to spend unlimited amounts of money in return for accepting public financing but the court made very clear back in the '70s and has reiterated that and certainly with this court that you cannot have mandatory public financing. that it is a voluntary system. so therefore every candidate that's in the presidential system has the right, according to the supreme court, to decide whether or not to participate. i think even if you have an updated system, a system that has the floors, make sure at least it can be a viable candidate that encourages small donor money, that provides

candidates access to television if they're viable without having to bankrupt themselves and kind of indebt themselves to special interests. even if you devise a system like that that i think can help a candidate, maybe not spend as much for match dollar for dollar another candidate that's able to raise money i think what you've seen over and over, again, in elections is that you don't have to spend the most, i mean, there have been example after example where candidates who spent a lot of their own money to run for office and have lost, so it's not a matter of being able to spend the most, it's being able to spend an amount that makes you a viable candidate and get your message out. now, all that being said, i think you could go to most politicians and most candidates and you say, ok, which would you rather be, the candidate with the most money or the candidate with just some left and they would all pick to be the candidate with the most money because every campaign that has that kind of old story of they

know 50% of their money was wasted, they just never know which 50%. >> host: even if you were to change the system,s as you were talking about, could you ever raise or at least get enough funds to be competitive against those who don't take it such as we saw in the last election the figures that we saw? >> guest: i think in the presidential level you're in a very different situation than you are, for example, in the congressional. you know, let's take the current example of president obama who did not participate in the system even though he supported it as a candidate and as a senator. but he made the choice that he could raise more money without being in the system and he was correct, he could do that. but he's also -- so being an incumbent now he has great advantages. he has all of the pomp and circumstance of the oval -- of the office. he has kind of built-in personnel in many ways that can go, the cabinet secretaries and others. all that being said, and lord knows he's going to -- he's

already raising enormous amounts of money, people are talking about almost a billion dollar campaign at this point, he has to take responsibility, to some degree, or he will be given responsibility for all the ills that people identify. so the baggage that he has that no money can outweigh is just people look at the incumbent and blame him for whatever is going on. now, again, if you ask most candidates would you rather be the incouple bent and be able to raise a heck of a lot of money or the challenger i think most would take the position of being the incumbent. but this is why we need a system that at least allows a credible challenger to be able to run a competitive campaign, to be able to put on the table here are the problems i have with the -- with the incouple bent, here are the solutions i offer. and i would hope that in our national dialogue that what we can have, again, is a competition of ideas, not the fact that one candidate is able

to go out and buy the loudest megaphone possible and drown out kind of the ability to have that discussion. that's really the key here is that in some ways it's the opposite of the nanny state. it's saying if we can allow our politicians to go out and have a robust national debate and make sure that everybody has a chance to hear those views, they can make up their own minds. right now we have a system at the presidential level and certainly at the congressional level where i think the problem is much worse, i would note, because it doesn't get the same attention, where it's very difficult for challengers to be able to go and be heard by the voters so that they can at least a competition of ideas. >> host: en plano, texas, liz. >> guest: texas, state of my birth. >> caller: hello, good, i wasn't born a texan but got here as

soon as i could. that's the old saying. my concern is this, we have regulations in place, we did anyway, we had these regulations in place to sort of keep the playing field even, in fact, those regulations actually applied to all of those -- any lasting goods in the market like fuel and medicine, where here we now we have elections for people who have the power to regulate or deregulate these things and i'm wondering, now, citizens united, i believe, was won by the decision that a corporation qualifies as an individual. now, that is an oxymoron in its own sense, it's an oxymoron to say hi, i'm incorporated with someone else however i want to claim myself as an individual. this is bothering me. and i'm wondering if there are any works to have this decision by the supreme court of the citizens united decision overturned. >> guest: there have been some

campaigns started to pass a constitutional amendment. there have been a number introduced in congress. there have been a number of grass roots efforts that have put a constitutional amendment out there. you know, and i think i certainly understand, i think that -- that court case was very wrongly decided. this notion that the identity of the speaker, you know, doesn't really matter. i think is just wrong to equate a corporation with an individual. based on reality, i don't think that there's probably a lot of opportunity or chance at the moment for a constitutional amendment to pass. and that doesn't mean it may not be worthwhile. it takes a long time to do a constitutional amendment. but this court is really not going to take any opportunity at the moment given its current structure to change not only what it did in citizens united but, actually, in a series of cases. i do want to note one -- the beginning of your question, one thing that you laid out and that is kind of this idea of leveling

the playing field. the court, the supreme court, has, several times now, taken issue with that -- with that concept as a legitimate basis for creating a public financing system. there was a recent case that they decided in which the chief justice himself went on a website, those who had sponsored the public financing legislation in arizona, and said, ahh, on their website they say they want to level the playing field and that is not a constitutionally acceptable basis for having this law. you know, what the courts have done over the last 30 years has really focused on the idea of corruption and the appearance of corruption and so the notion here, while i think there is a certain kind of all-american feeling with most citizens that you want to have a level playing field when it comes to politics

and i think from my perspective as a public policy matter i think that's a legitimate desire, the court has been very clear, and this current majority, the five-to-four majority that decided the citizens united case called davis, a case involving public financing in arizona called mccomas, they have roundly, the majority at least, rejected this notion of leveling the playing field. and what they have said is the only basis for providing any restrictions on campaign contributions are the questions of corruption and the appearance of corruption. so if you go to the court with a system that seeks to say we want to provide a level playing field, at least with this court, you're pretty bound to lose. >> host: from the spoony 35 off of twitter ms. mcghee, contributions, what type are there? >> guest: could you say that one more time?

>> host: how will the internet affect election contributions? >> guest: well, i think in a lot of ways the internet is a great development because it provides a means for rather than the big dogs, the little dogs to actual participate in campaigns to give small donor money. the problem with the system now at the presidential level and at the congressional level is that the big dogs, the bundle letters and others who just less than 1% of all americans dominate the system something awful. i mean, they really are the ones that have the ability to get the access and the influence. and what the internet does, is provide a means, an easy means for average americans to both participate as donors and the candidates, actually, and i think obama's campaign found this and howard dean's campaign was really the cutting edge of this is you can go to the internet and really by the time you amass the small donor contributions it can be a significant part of your

campaign. i would not argue that it outweighs the role of the bundle letters and the large donors but it's still a new development and i think overall a healthy development. >> host: our next call, lowell, massachusetts. independent line. ann is next. >> caller: yes, hi, thank you for taking my call. i have quite a few comments, hopefully i'll get them all in. you talked about the court case and they said that the only thing that they really care about is corruption. well, there's such a conflict of interest that when you have lobbyists that are paying for things, actually doing the legislation, in fact, this ties exactly into what we're talking about with this debt we're faced. the congress has already allocated these funds, they've already voted for these perhaps and part and parcel what the lobbist have told them what to vote for. and also -- that was just one question. and what is the influence of the

media? you think what's happened with murdoch with england right now. if you're indebted to the media and giving them billions of dollars, is there some kind of comment you can make about that? and what states, are there any model states that have the best public financing, what are the levels, fields that you could look at as a model? >> host: thanks, caller. >> guest: i'll start with the last first. one of the models i think is the most interesting is new york city, it's not a state but it is a very good model. it has -- i think it's something like a five or six-to-one match for small donor contributions. it's been a fairly robust system. it's had a fair amount of participation. now, all that being noted, you know, you have a mayor in new york that spent i think it was something like, i don't know, $60 million of his own money or whatever. but at least you have a competitive system. and so i think that system as a model is one that i would point

to. as for the somewhat interesting relationship between politicians and the media, i have worked on kind of this issue of the nexus between particularly television and politics for a number of years. and i'm always kind of not surprised but always reminded that when you go particularly to talk to members of congress, they look at their local broadcaster as someone who can make or break them. you know, the only thing worse for a politician than being shown picking your nose on television is not to be shown at all. and so getting them to take on the power of the broadcasters, to be able to start a conversation about either getting better access to television at lower costs is very hard because there's such a dependent relationship between the politician who really wants the air time to get their face out there, to get their name

recognition up, and the media that has, to some degree, whether it's nowadays, such a conglomeration between cable and air broadcasts, that, you know, they have a great way, someone called a license -- it's a license to mint money. this is a very kind of interesting relationship. it means often the politicians are not willing to take on the media giants because they are really to some degree i would say afraid of what's going to happen to them. as for the role of lobbyists i will put in my -- my own transparenciy here, i'm actually a registered lobbyists, i've been a registered lobbyists in washington sinks 1987 whooshing on campaign finance reform and ethics and disclosure. it's true lobbyists have a lot of power in this town, there's no doubt. that's magnified when the lobbyists either through

bundling when they collect the checks themselves and deliver to the politicians or through the drafting of the money and being able to get credit for it because their clients delivered it. you know, you would love to be able to have a conversation about what the role of lobbyists should be in our campaign finance system. there's actually been some discussion at the american bar association, i participated in a task force that said let's talk about what the role of lobbyist should be when it comes to campaign finance, should they be able to be budders, should the contributions to be lobbyists be lower than for other individuals. this is not because lobbyists are bad, lobbyists are a healthy part of the system but it is recognizing that they are paid professionals, i am a paid professional to go up and try and influence the outcome of policies, decisions that are being made in the halls of congress. and it is at this point continues to be a somewhat uncomfortable and i think not

particularly constructive aspect of our system, whether at the presidential level or the congressional level, that lobbyists can wield such power. not necessarily by what they give themselves but by their ability to organize money from their clients and from the interests that they represent. >> host: beth from schenectady, new york is next. >> caller: i think that's one of the problems and she just said she's a lobbyists. these individuals, none of these businesses and corporations are being taxed as individuals and allowed to donate all this money so they basically own the government so my suggestion is this and i'm going to predict eventually it's going to happen. none of these campaign funds -- none of these campaigns for the democratic party or the republican and they don't start two years ahead, they never stop. they should be taxed on the money they take in. they are not nonprofits, they're huge businesses taking in billions of dollars and a level playing field means you give money to the poor candidates. so that is -- it's an outrage to

sit here and hear that exxon and all these corporations are freely donate to both parties and that they're basically -- they're basically puppets. so both parties need to start to pay taxes on these billions of dollars and that would help things out tremendously. >> guest: well, i -- it's nice to be -- to be accused of being too nice, that doesn't happen too often when i go up and talk to members of congress about campaign finance and their money and special interests or their ethics. you know, look, there is special treatment of political campaigns in the tax code. they are not subject to the same taxes as other entities. i don't think there's really any question for anyone that really has observed washington for a long time that those interests, the monied interests, whether you call them special or otherwise, the monied interests have a huge legup here. they're able to buy the biggest

megaphone, they're able to buy the best talent, they're able to gain the most access, they're able to organize the most money. and in some ways they are costing, you know, the cost of all of these policies is far outweighing the cost of any public finance system. we get into i adiscussion when we start saying we want to try and figure out a way to try to implement the public financing system. everybody says how are you going to pay for it, isn't it going to be expensive? really, the most honest answer to that is we are paying as a nation every day in just a panoply of breaks and subsidies and tax expenditures to those who can best aafford to speak in washington. having honest debates about ethanol subsidies, about the oil and gas industry, who's getting benefits in telecommunications policy, there's just a range of these policies and many times in washington you'll find these industries go before congress

and the president and they say we really want you to solve the debt crisis or, you know, we really want to be serious about this, but just but just don't move this one because we really need it and kind of like it's like a checkerboard and somebody puts their finger on that checker and says move all the others and not that one. agribusiness comes in and says we want you to solve the debt crisis but don't move this checker and pretty soon you have fingers on every checkerboard before congress. and that's the system we have. because they're able to take advantage of a system that puts candidates on the auction block or the highest bidder because -- and it's not because these politicians are, you know, any more corrupt than the average american. in fact, what i would -- based on my experience of 30 years in washington, the kind of the good and bad news is that these politicians up here are the same as the rest of us. and that means that they're

subject to the same kinds of temptations, that means that money buys access and money buys power. >> host: i'm a candidate, i took public funds, i drop out of the race, what happens to the money i've taken in? >> guest: well, it's -- if you haven't spent it on candidate activities, then you don't get to keep that. so no the money that you have received through public financing in your -- in your political action and, i'm sorry, not your -- but in your committee remains in the committee. and then, at the end of the time, you cannot just continue to keep that money if you haven't spent it. >> host: and if i've lost? >> guest: and if you've lost, then usually the problem is if you've lost you have a lot of expenses because you have -- rather than having that account replenished after having won, you know, everybody likes a winner, most campaigns come out and have enormous amount of expenses that they have to pay off. think of john glenn, a former senator and the famous astronaut, ran, and public

financing, and he actually spent a lot of time trying to erase his debt for many, many, many years, which people were kind of shocked that he was such a famous guy. so this is not a means of once you get the public financing you put it in your pocket and get to use it. it has to be used in the presidential race and then, as you see, in cases, for example, just recently, the f.e.c. turned to john edwards and said to john edwards, you owe us $2 million because you got some public financing that you really need to pay us back. so it is not money they get to keep. >> host: in florida, john on our democrats line, go ahead. >> caller: yeah, you took my thunder. i was going to ask her, i often hear the candidates say this is campaign funds that are left over, and i was wondering what happened to the money that was left over, can you make a business out of running for office and not get elected?

>> guest: well, let me make a clear distinction between the public funds that a candidate receives for president and the general campaign funds that many politicians have whether they're running -- whether they're in congress or whether they're, you know, running kind of let's say a sarah palin, for example, who is not really in the race for president at the moment, not in congress at the moment, but she has pac money. there are really different pockets that politicians have. they can have a committee that is for running for office, whether it's for president or for congress, and that can accept limited amounts of money from individuals and from other pacs. then they can have a leadership pac. that accepts even more moneys often from small interests, usually not small donor money, that's usually interested money. then they can have like mitt romney pacs from different

states around the country that have different limits so they have state pacs. then if you decide to run for president you can have another pac that's running for president pac. so you have a bunch of different pockets where the candidates can collect money. and then you can get in trouble you can have a legal defense fund and that can accept money as well so there are a lot of different pockets that the modern politician has where they can take money. >> host: chatham, alabama on our republican line. elvin, go ahead. >> caller: thank you, espn. we know that money has more influence in campaigns than ideas and we want to level the playing field and take the money out of politics. what we should -- if we reallied wanted to we could take the money out of politics, rather than giving millions and billions of taxpayer dollars to the candidates, what we should do is go the other way and limit the amount of spending candidates can do actually where it would make it available for anyone, i mean, make it a low enough limit that it would

depend on organization ideas and the candidate's ability to win the influence and imagination of grassroots organizations, ability to put together a campaign, the ability of the media, journalists to actually get out there and get out the stories, find out what's going to -- but instead of adding money to the campaign and the money influence let's take the money out of the campaigning, limit the amount. >> guest: well, i would have to say i know there are many americans that would agree with you, they would love to see, as we've heard earlier, shorter campaigns, they would love to see the money chase either ended or curtailed by having kind of these limits. the problem is, is that the supreme court has said that's not constitutional. that these limits on how much you can spend, the mandatory spending limit, is not constitutional. they have actually ruled on that question. so as much as i know it's attractive to many americans, this