we begin with david walker, founder and c.e.o. of come back america. we will be back with us to talk about the end game of the talks. and winni e stachelberg and wrap up with megan scully. she will be here to talk to us about the pentagon hasn't audited it's books and "over paying billions for items it doesn't need." and a brief reminder on c-span today, starting at 11:00 a.m. and running until 4:00 p.m.. you will see the 150th commemoratation of bull run. that's it for this edition of "washington journal". see you tomorrow morning at 7:00 a.m. eastern.

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morning. i realize that anything that we say right now could be leaked. but there is a lot of talk in washington about revenue and how may be in the end it could have revenue, but not right away. there could be revenue six months from now. you could direct a committee to have revenue down the road. do you want immediate revenue increases? or will you settle down the road? >> i think that what the democratic caucus has been focused on its balance. balance would include cuts in revenues. i think that every economist that has had an opportunity to take a look at the debt problem recognizes that that is what we have to have.

if we do both cuts and revenue strategically, we will be in a better position. that is not what is happening in washington. the debt ceiling is created even though economists have said we have to deal with the debt ceiling. traditionally that has been done without taking hostages. doing it in a way that demonstrates to the world great stability. also, maintaining our superlative rating around the globe. this comes at a time when europe is struggling. we have seen states that have had problems. from greece to portugal, ireland as well this is a difficult time. you have the american people saying, essentially, what is

this all about? why can they not get something done? why do they not act? in that context, we are suggesting that we do this in a balanced way. personally, i think that we should pass a clean debt ceiling and have at that. dealing with both of the debt and the issue of growing jobs to enhance revenues. grover norquist, i think, whether or not he misspoke, he tipped his hand to what we think is obvious. you should end the subsidies with respect to oil drilling when you have companies that essentially come forth and say they do not need the money. also, with regard to exporting jobs overseas, these should be things that are pretty easy for people to do.

the short answer is yes, we would like to see those things done. the machen nations here in washington, between the house, the senate, the president, it has the public wondering on one level -- geez, what is going on down here? and then you have people in the congress going -- what is going on down here? >> would you expect a pratt -- package that only has a promise of higher taxes down the road? or would you insist on seeing that balance right away? >> being in the minority we are not in a position to insist. certainly, we can suggest, although it has been our feeling and understanding from the outset that we do not think that speaker boehner has the votes within his caucus to raise the debt ceiling in deal with this

issue directly. perhaps, as you pointed out at the outset, things will change over this weekend. i hope, no matter what happens over this weekend, we will be able to vote to raise the debt ceiling. it is that important. the other mac and nations depend on what is in the package. to be honest, it is a package du jour. whether it is the gang of six, reid, the owner of the next day, it is confusing to people on the outside. i dare say that it is equally confusing to members here. i did suggest a couple of paths for word. a couple of scenarios will be laid out as we speak. the senate, as part of an agreement, took up a bill that

the house passed earlier that they called cap, cut, and balance. it fosters, in boulder's caucus at least, the idea -- in boulder's caucus at least -- least, theaucus at idea. if we can believe what we hear, it is a bill that contains $3 trillion in cuts. no revenues that we know of immediately. that may be something that speaker boehner feels that we can get 218 republican votes on. they are in the majority, with

243 members and only 218 required for passage, they can pretty much do what they want. the question is, do they have the will? >> how are you doing? >> great. >> this week the union said it drew two lines in the sand. a much different approach from what mr. obama has taken. he has said that everything is on the table, including entitlement cuts. how significant is that difference? if not the policy difference, the approach coming to the table -- is that a concern for house democrats? >> the biggest concern for house democrats, as you pointed out, is the core values that we stand

for as it relates to the great programs for social security, medicare, and medicaid. that has been the position of our caucus and of democrats since these conversations began. notwithstanding, everyone has said that everything needs to be on the table. here are the parameters. the president, wisely, said he was the president of the united states. this is about governance. i will have to govern from the center. he has consistently reached out to the other side, in an effort to compromise. consistently, they have walked away. democrats feel that he is negotiating to much away. the president says he understands the feelings, but

that we have got to come up with a package and we have got to govern. this is the climate that i am dealing with. we cannot wish away the tea party or the republican majority. he is dealing with those issues. that is what creates the kind of freak -- three-dimensional chess that those of you in the media have to sort through on a regular basis. frankly, so do we. >> following up on that, eric cantor is drawing a similar line in the sand. >> let's go back to what they are drawing a line in the sand around. they are holding hostage the debt ceiling and the nation's economy.

an impact on a global economy, the nation's economy, and frankly an impact on everybody's nation -- on everybody's household economy. they know that under ronald reagan we increased the debt ceiling 17 times. seven times under george bush. there were no hostages taken at that time. they have upped the ante in a kind of high-stakes poker game. i guess you could say, texas hold them. it is the american people at stake. our line is simply pass the debt ceiling. then we will have these discussions. we are not taking any hostages. we are not insisting that one thing or another get done. we are saying very clearly that

the major programs, and we have had this debate with respect to medicare, social security, and medicaid as well -- these are important programs to people. they have an immediate impact on the economy and a long-term impact on people's lives. >> congressman, we in the media, the figures around discretionary cuts, $3 trillion. i know that the district that you represent is hurting. how do you go back to that diner in east hartford and say to these people -- i am supporting this, but here is how it affects you. how do you do that? >> i daresay, across the

country, stop the light beer commercial going on in washington. less filling, tastes great, deficit, debt ceiling. put me back to work. for seven months we have been here. there is no jobs agenda that has come forward in the house of representatives. the president has talked about how innovating the investment in the american people will create jobs. that is what they want to hear. explain to them, in the federal budget, what these cuts mean. who knows what is included in that money? talking about -- discretionary funding, i do not have to tell you how that will play.

this congress, especially, and the president, had better be about the creation of jobs and what the jobs program is going forward. if i see -- >> if i see $1 trillion in cuts, i will be thinking about how that comes back to me. it has got to affect me. the bus that i ride, the police protection. >> as you pointed out earlier, in a state that is already hurting, across this country more than 500,000 municipal and state employees have been laid off already. yes, they are already hurting. that is why we do not favor. just like people are saying that it is difficult to raise taxes during this recession, that he

is in fact true. the president has suggested that those tax increases take place in 2013. we think that with regard to cuts, as you pointed out, these will be very hurtful. how will this help to grow the economy, if that is the case? we could be cynical and say that one man wants to present the man in the white house from succeeding at any cost. whether it is driving the country to the press at this or making sure that under any circumstances the president's agenda does not get adopted. so, consequently, the public is very frustrated. something that is hard to sell. even harder when you do not know the direct impact of the package. >> senator -- rep john larson

joins us here on "newsmakers" this morning. >> two years ago democrats were talking about increasing public spending to increase jobs that way. now you are talking about a $4 trillion package in spending cuts that will create jobs. politically, how did democrats go from spending to create to cutting to create? >> i have to say, i have not been talking about the $4 trillion debt cut. but this is something that we look at back at home routinely. how did we get here? how did we go from a $5 trillion surplus on our way to paying off the national debt in 2009 only to find ourselves in 2008 in the middle of an economic catastrophe.

when we got here by not paying for and creating an awful lot of debt. not paying for two wars. not paying for big rates, big cuts to forma, medicaid. not paying for to act -- for tax cuts. the president found himself $10 trillion in hole in dealing with the worst recession since the great depression, as well as having to come up with money for a recovery. where did those moneys go? most of them went to help states and municipalities. many used that to stabilize states with a stimulus package that many, including myself, did not think was strong enough to sustain economic recovery. we saw it, no matter how

fragile, with the small recovery that we had. one-third of the money of a $1 billion package was utilized to help states and municipalities balance their budgets. one-third of the money, the largest tax cuts, went out in the history of the country. people did not really notice it. they started getting extra in their paycheck, but there was nothing in there that said -- this is a big tax cut for you. in one-third of it was used in infrastructure programs. not enough, in my estimation. certainly when we look at the construction work that needs to be done, that is what needed to happen. to get there, the president had to borrow money. so, that created the situation that we find ourselves in today.

$14 trillion in debt. interestingly, my colleagues on the other side have developed in each of with respect to the first $10 trillion. they claim no ownership whatsoever and are only attributing the reason obama spending in terms of stabilizing the financial industry and bringing back a key manufacturing component that long term is going to be an enormous success story for the automobile industry, vitally important to this nation. we are struggling with a fragile recovery that needs to be fuelled by money coming from the private sector. banks are not lending to small businesses, etc. people need to continue to tighten their belts. when those people are out of work and unemployment is at that level, how does cutting more get

us, help us put people back to work? i do not know if stieglitz has a frame out there after his name yet, but i would be inclined to agree with him in terms of what we have to do to invest in the american people. i think that the president's view of out-innovate, out- build, out-educate, that is exactly what the government needs. >> one-third of your caucus came out yesterday and said -- we do not want it. where do you stand on that? >> the president is saying that they are in a fragile economy. i am trying to do everything that i possibly can, given that i have a house of representatives that will not pass anything. from the first day we have had a

senate leader with senate rules and mitch mcconnell saying that he has one objective. saying that barack obama not be reelected. these other cards he is dealing with. in the process you can see the clash between policy and politics. on the one hand, the president, certainly in terms of stimulating the economy, it is a stimulant. from a policy standpoint, from the four -- preservation of social security standpoint, it raises concerns as to whether or not the money will continue to be there. for a program to remain solvent, you would like to reach that 75 your goal, but this suggests that this is more money that you have to make up. the caucus is split regarding that. so much of what is going on,

michael, david, pedro, is in the details. negotiations, for the most part, are taking place at the white house. with that the vice-president. and in smaller groups. there is not a lot of clarity coming forward in terms of what really is the flesh on the bones here. what are we really talking about? along the case of expanding the payroll tax position, that is fairly clear. >> 5 more minutes with our guest. >> do you support an increase in the payroll tax at the end of this year? >> it will depend entirely on the shape of the economy. i would not rule it out.

i would much rather see billions of dollars invested in putting people back to work. that is my preference. where we will be, in the position where we unfortunately have no say, this talk of raising the retirement age -- changing the way that the consumer price index calculation is made -- >> would you support a change in the cpi? >> i would not be in favor of a change the cpi. especially for the elderly who have currently not received cobra over the last couple of years. economically, a changed cpi may make macro sense over the long term. perhaps if you can look at posting it out in the future,

but at the end of the day there is a certain set of economic circumstances that is different from the rest of the country with respect to the consumer price index. they are dealing with a lot of essentials that impacts their life and, obviously, a certain amount of money as it relates to social security and medicare. >> retirement age? >> i think that people are living longer. that is a good thing. people are living healthier lifestyles. certainly this has to be on the table, but it does not lend itself to a yes or no answer. but, it has to be out there in terms of how you approach this from a benefits initiative. anything that you approached, with respect to benefits and social security, should be plowed back into those perspectives that are the most

successful. the most successful government programs in the history of the country. once people stop all of the nonsense, so to speak, there can be discussions around reform that makes sense from a macro economic standpoint when you take into consideration the immediate impact on the elderly. these matters can be worked out. this is not a time to draw a line in the sand, it is a time to be clear. someone who suffered through a disability. someone who had a different kind of line of work and said -- you or i -- might be more in need of social security and medicare. there may have to be staggering of those ages as well. all of which has to be done in a

practical, common sense manner. something that we do not get a lot of down here, unfortunately. >> you have said that raising the retirement age -- >> in a broad sense, michael, it should be. as i said before, in a policy discussion, it should be. in the back-and-forth, hypothetical battle over what is in a package, what you are for, what you are not for -- i am not. in terms of looking at the entire package, looking at this in a macro sense, i guess. these items are things that should be concerned as we go forward. you are asking me to say -- what would you vote on today? if you had to vote up or down? the answer would be no.

>> i guess i am still confused. it sounds like your approach is the same as president obama. i understand that you will not say whether or not you will vote on something, certainly it is not this yet, but when you raise the age to 67 -- >> that assumes, you are assuming. i do not see anything on the table, and nothing i have seen or heard about, that will be dealing with touching medicare or social security. medicaid, for that matter. not in the context of this current hostage situation in washington. the hostage is the debt ceiling that should be granted to the president without taking a hostage.

republicans are saying -- will you vote for the increase? no. when you get beyond that and say, let's talk about the broader policy, it is a broader discussion. in terms of the hostage situation going on down here in washington? no. there should be a " -- a clean vote on the debt ceiling. we should sit down and stay at the table, frankly focused on jobs and how, in their creation, we both grow the economy from a cut standpoint or strategic cuts that can be made in from investments. what are the revenues that we need to take in in order to create infrastructure programs, and infrastructure bank. to put people back to work. i do not think that it gets any more complicated than that.

down here with all of this three-dimensional chess, it becomes a parlor game. that is what has frustrated the american people so much. they cannot understand why congress cannot come together and pass a bill that puts america back to work. looking at the deficit in the long term. realizing that we did not get here overnight and it will take a while to get out of here. with regards to our social programs, doing so in such a manner that does not hurt the benefits that people received, but provide enhancement long term for those programs -- social security and medicare. >> will president obama be reelected? who'd you think will be his toughest opponent? >> president obama will be elected. he has