of the pharmaceutical industry and the safety of foreign-made drugs. and later, military times pentagon bureau chief andrew tilghman talks about the cost of military retirement programs. "washington journal" is next. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] host: president obama announces is deficit reduction plan today at a rose garden event and we will have that live on c-span. "the washington post" headline says -- obama tees up a clash on taxes. another says the president's approach is putting us on a direct collision course with house speaker john boehner. here are the phone numbers to respond to what you are here is so far and perhaps reading about the deficit plan.

a lot in the papers already and we will get you more details. a good bit of detail in the papers leading up to this 10:30 a.m. event. here is the lead story in "the new york times."

one more paragraph here -- so, with that set up in detail from "the new york times" we will talk first before we get to you with ken walsh with "u.s.

news and world report." guest: i think there are a number of factors involved. president obama has tried to accommodate -- accommodate the republicans particularly in the house where they held the majority for quite a long time now. this blueprint is much more of it. it towards placating his liberal base than getting an accommodation with the republicans in congress. if you look carefully at the details, some of these proposals, particularly the increase in taxes on the wealthy, it is not designed as a bipartisan out of reach. this is something that is liberal supporters have been wanting to do, to take on the republicans more dramatically, to take on corporate america, and they feel, the liberals do, that he has been too accommodating toward the conservatives. i think what you are seeing here is a shift toward really more of a document designed to gain

support in the democratic base. advocates -- than to get something accepted by the republicans. in that sense it is an important shift to president obama's approach. host: put this in terms of practical matters. a couple of months ago until this deficit reduction committee has to do its work. the president has put his plans on the table. how will they ever come to an agreement? >> it is going to be very difficult. if you see what the so-called super committee, the deficit committee, what they are doing, it looks like their positions are hardening in the way they have are really in the past two years. conservatives say no tax increases. the liberals or the more moderate members as saying there has been the combination of tax increases and cuts. i don't see really much compromise emerging from that committee right now. if you go to the automatic cuts that you mentioned at the top,

the provisions of the law that created that committee are that those automatic cuts would not really take effect for some time. some of them, not for a year. so it is really not as dire a trigger as people are concerned about. there will be time for the congress to work it out. but this super committee has a tremendous challenge to get something decided in this very limited time frame they have. so far it does not look like they will do it. host: back to politics, if that is the right way to phrase it. the term class warfare came out of the weekend. it follows the discussion of the millionaires' tax, the so-called buffett rule or tax. you have paul ryan here, chairman of the house committee. do you expected. the word class warfare a lot? guest: paul ryan, chairman of the house budget committee, he has had his own version of a

medicare proposal that calls the lot of controversy. last warfare is a be expected and predictable critique of the republicans this obama budget blueprint. their argument is that we really should not be talking about tax increases at all on anybody, including the wealthy. as congressman ryan said, the argument is the wealthy generate jobs and if you tax them to much, they will not invest, they will not increase their spending, they will not have the certainty that they might need to proceed with job creation. and this is the argument that republicans have made and will continue to make. if you have all where it -- already seen the volleys fired on that. why did that affect the all important independent voter? well independent voters be said that, as they seem to be in polls, that the wealthy need to

pay more or is that we tried the increase in taxes and it has not worked and we should not be doing it again. that is going to be a big argument in the upcoming presidential campaign and a lot of national campaigns would you will see the class warfare argument laid out really over the next year. host: chief white house correspondent for "u.s. news and world report." appreciated. one more passage from "the new york times" piece -- who said last week he would not support legislation that included revenue increases in the form of higher taxes.

they talk about the potential for classic -- clashing. louisiana. ron, independent. good morning. what are you making about what you are hearing so far? caller: republicans got guts to call this class warfare. in 1982 ronald reagan and general motors started shipping union jobs to mexico. there has been class war presents the 1980's. bill clinton put the death blow -- deathblow -- nafta. the rich don't do nothing except sitting on their money. it is time they get off of their money or get out of the country. host: here is the piece from paul riot yesterday on fox news sunday. it -- here is a the piece from paul y n on it yesterday on fox news sunday. >> the cisco commission -- which

a lower tax rates on investment and job creation by getting rid of a loophole so we can create economic growth. we think this is going in the wrong direction. do not forget under current law the president are ready past the top tax rate on individual and small businesses in 2013 goes to about 44.8%. we employees that pay the tax rate competing against countries that are taxing their businesses 16% in canada to almost 21% in england, 25% in china. and he is saying we are going to tax of these job creators at above 45 -- 44% but the new tax. it adds further instability, more uncertainty, and it punishes job creation and those people will create jobs. class warfare may make for really good politics but it makes for rotten economics. we don't need a system that seeks to divide people.

we don't need a system that plays on people's fear, envy, and anxiety. we need a system that creates jobs and renovation and remove the barriers of entrepreneurs to hire people and i am afraid these kind of tax increases do not work. host: more of the headlines and all of this. "wall street journal" -- gop opposes fresh levies -- that is a look at "the wall street journal" headlined as women. taking a look as we take the next call. michigan, a cafe, a democrat. caller: i can give you an example of taxes. i am going to be cashing out of my retirement. it is very little, from the state of michigan. 30% between the irs and the federal tax and then i am

probably going to be penalized for drawing unemployment -- illegal in the state of michigan. what it will do is amount to 50% tax. the current job that i have -- there are a lot of people will come into the store and buying, and a majority of them are well- to-do. if my employer is what to do. she does not share her wealth. i do not see any poor people coming into the store purchasing anything. and i will be heading off a bank to a food pantry in an hour and a half and i don't see what the people at the food pantry, either. -- will see people at the food pantry. -- wealthy people of the food pantry. there are a lot of well-to-do people in the county and i don't see any philanthropy to the most part. we need to close the loops.

in terms of other countries, at the very least they have health care for their people, which is a huge, huge financial risk when you don't have it. and it is a huge piece of mind when you do have it and it does not cause you an arm and a leg, which is the case in canada and the rest of the world. host: thank you for weighing in. julia, independent line. new jersey. what are you making about what you are hearing? caller: this class warfare idea of paul ryan has been going on for more than 20 years. the company i retired from in 1998, took a voluntary retirement, already started outsourcing jobs. the so-called job creators are holding on to money. they are not creating jobs. they are laying people off,

hiring temps for lower salaries are high-paid consultants for short-term. they are not creating jobs because they just do not want to. they are holding on to the money. that is the part that this bothering this botheringpaul ryan and the republicans talking about class warfare. if you make less than $106,000 a year you are paying taxes every day, every paycheck something is coming out of your check. the more money you make, the less taxes coming out of your check. it is just not fair. host: let us get over to the republican line. edward -- clinton, michigan. a couple of books are knocking on paul ryan on the comment. caller: it is unfair. if you want to go and attacks all of the rich people and all the rich people leave, all you have left in america are poor people. and the government says they do

not want to tax the poor people. so if there are no jobs -- so i would suggest all of these companies to move overseas to avoid their business tax, just put a federal tax out there so all the stuff coming in from china is taxed, and that is how you can eliminate the united states business tax, and then you can have a federal sales tax, so the 50% of the people who don't pay any income tax at all, they can pay their fair share. they can have their foot in the game. they can help pay for the defense of this country. host: appreciate you waiting in. that was "the washington times "front page in just below the fold. the lead story in "the washington post" --

the debt proposal will drop contact -- contrast with the gop. we will hear a lot about it this week beginning at 10:30 a.m. this morning. newark, delaware. caller: this is just a comment that i would like to make. as far as jobs are concerned, i think it is a good idea the president is trying to move the country forward, but every time he tries to do the good for the people there is always a problem with the republicans. i don't understand that. there are so many people in my area that are really hurting and every time he tries to do the best he can, there is a problem. i don't understand it. host: here is did their bit from the democratic side over in the senate -- dick durbin. >> warren buffett has been honest and other people i know who have been fortunate and might say, for goodness sakes,

you can raise my taxes if that will help the economy move forward. i wonder if john boehner knows what it sounds like if he continues to said the position of the republican party in america is the can't impose one more penny of taxes on the wealthiest people. i wonder it -- if he understands how it stands like in ohio for working people. 46 million people lot of work. host: as you can imagine, this story making headlines around the country. here is "the los angeles times" frontpage -- here is a front-page of "the atlanta journal constitution" this morning -- a little bit of the right up from of the "washington post" piece today.

he will make the presentation today and the rose garden and also called for adjusting cost- of-living increases, scaling back farm subsidies. the next caller -- mario, independent from washington, d.c. caller: this message is directed toward particularly -- the republican party is for the rich. they are not for your best interest.

the rich and do not need tax cuts -- i mean, the rich do not need tax cut. they need to start paying into the system so we can get this country moving again. and i think that people need to start gathering in front of the white house, in front of congress, and demanding that the rich pay their fair share because they are not. and the country is becoming so divided. the income disparity gap is becoming so, so why. we don't want this country turning into a place where you have the majority of people extremely poor and a few on top extremely rich. it will not work for our country. it will bring our country down. host: facebook.com/cspan is our facebook address. we are taking comments on this this morning as well. here is one --

columbus, ohio. mark, a democrat. caller: the republicans, to make, it should pay the same thing as everybody else. if that is the case, did they think about lowering the poor people's tax rate to the same thing the billionaires' are paying? on top of that, bush and republicans, they are the ones who got this world away it is now. he gave the millionaire's the tax breaks and see what happens. they have not created jobs. they took the jobs out of the country. that is why we are in business now. it is time for a change. host: thanks, mark. another mark on the line, on the republican line, from atlanta. caller: how are you doing?

i feel like that -- it has been stagnated for years now. i agree with that part. but the people need a job for just their self-esteem. i think the people are just tired of the government, dysfunctional to help and a group of people. i think all parties should be thrown out. if we could find somebody. but all the money given them the money to run it comes from corporations. we are in a lose-lose situation but i hope and pray god will straighten out and our president whether it will be this next time will do the right thing. we got a new congressmen and i hope the does right and if you don't we will get rid of him, too. host: say aye joe, missouri. mary, independent. -- saint joe, missouri.

it don't think we have mary. johnny and georgia on the democrats' line. caller: i agree with him. the rich and do not want to send their kids -- i went to one house and they told me to go down and get poor people to join in. they do not want to do backbreaking work. they all of the businesses where regular people do all of the work to support those businesses. i agree with them. i think it is time the rich people pack up and leave. if they don't love it, get out of it. host: here is senate gop leader mitch mcconnell from yesterday on "need the press" talking about the so-called warren buffett wrote. >> look, if warren buffett would like to give up some of his benefits, we would be happy to talk about it. i thing means testing benefits is one of the ways we are going

to have to solve at least social security and medicare problems long term for the next generations. with regard to the tax rate, if he is feeling guilty about it, he should send a check. but we don't want to stagnate this economy by raising taxes. it will not just individuals, david. there are over 700,000 of our most successful small businesses pay taxes as individuals. host: a tweet this morning -- twitter, you can send messages via facebook and we continue to take email and your phone calls. cspanwj is our twitter address. tysons corner. independent.

what do you think of the president's plan? caller: it kind of reflects what i heard a lot this morning. it seems like we have this resurgence in this country of failed marxist thought. these sort of clichéd terms -- the rich, pay their fair share, and some of these class warfare strategy is that this is really shocking to me. i think everyone out there needs to pick up a copy of "atlas shrugged the" today and read it and look at the parallels and see what is happening in this country. it is really surprising. if you want to talk about warren buffett -- first of all, warren buffett, doesn't he owes something like $8 billion in back taxes and then he talked about the difference between his income and his secretary's, it could -- but it is a misnomer is his capital gains tax, he already paid income taxes. comparing that to his secretary -- who is paying straight income

taxes. there is a huge difference between wealth generation taxation and income tax generation. there are so many myths flying around and i think people need to educate themselves before they start spouting off at the mouth. host: thank you, a young member. a warren buffett photo in "the wall street journal" today. his april annual meeting. the headline says -- millionaire tax to be a tough sell.

the next caller -- syracuse, new york. don, republican. caller: good morning. i would just like to say that, you know, we need to start actually voting our interests. when you see their ads -- say that there is a class warfare and you are not the class you are talking about and defending, it does not make any sense. if you are making less than $250,000, you should not be voting republican. that is what i am looking at. we have turned the debate into

ideology and that is not making any sense of the country. the wealthy does need to pay more. if you make more, you need to pay more. host: let us hear from ann online for democrats. north carolina. is it greensboro? caller: good morning. what i would like to ask all of the persons who are listening this morning, to name one thing that the republicans have done up for at the middle class and the lower income earners sends the president has been in office. if they could just name one thing that the republicans have done that would help the middle class or the lower income, since the president has been in office, or as well, for the past, even when president bush was in office. if they could give one thing, that is what i would like to

hear. host: let us hear from the republican. stephen, republican from houston. good morning to you. are you there? caller: i am here. i am more of an independent but i am a republican. but i have a counter wasn't a woman speaking. name one thing the poor and the middle class has done for the country since obama has been in office. all i hear this morning is class warfare. i am 56 years old. i will work in the oil and gas industry. i guarantee you i have worked hard my whole life. and now i am getting where i am crossing over into an upper income brackets and all i hear is people wanting to take my hard earned money away. when i say hard earned money, 12 hours a day, 150 days a year away from my family doing things those people would not do in order to make a living. the difference is, they have no skin in the game. a 35% of the people of this country do not pay taxes. if you want to talk about

people pay in taxes, let them pay taxes and then we will discuss where we are at here. because so many people don't pay taxes in this country, and all they want to do is tax somebody else. let the union members, the people don't pay taxes, pay taxes, and then we will discuss what we have to discuss. host: here is the right up in the politico on all of this -- one more short clip from the sunday shows yesterday. this from "face the nation"

former president bill clinton. >> if you look at the group that has had the biggest income increases and the benefits of the most of the tax cuts of the previous eight years before the obama administration took office, those of us in that income group, we are in the best position to make a contribution to changing the debt structure of the country. but right now -- and i and the president is doing the right thing to put out a budget plan. i don't know when the timing kicks in on these things. but i think we need to focus right now on putting the country back to work. and i would like to see the economic plan that we talked about in his address to congress enacted first. then when the economy starts growing again in the year two that i would like to put the hammer down on this deficit problem. host: "usa today" puts it this way --

the deficit plan puts the name on average. caller: good morning, america. we have a problem. we have to go back to the three r's -- reform, retrieve, rebuild. reform of the pro-government, retrieve the military -- and not retreat, retrieve, and rebuild. if this is not done it, america is over. we have had $4 trillion stolen from us by the global elite banker is. multibillion those are individuals that have learned how to use money to make money, and make money to control the masses. we have got to get these people stopped, or america is over. we have got to work together and

get these global delete bankers stopped, or we are in big trouble. host: "the new york times" on this. "$800 billion of the $1.50 trillion would come from allowing the bush-era tax cuts to expire. the other $700 billion would come from a combination of closing loopholes and limiting deductions among individuals making more than $200,000 a year and families making more than $250,000. a bipartisan congressional committee is charged with coming up with its own cuts by december 23, other was $1.20 trillion in cuts to defense and entitlement programs would go into effect automatically. mr. obama is showing them aware that they could find the savings, it says one administration official."

caller: commenting about a call where a gentleman said that the portion get the same tax breaks as the rich -- poor should get the same tax breaks as the rich -- i am all for that, except at the port anatexis -- but that the poor pay no taxes. zero, zilch. the rich, whatever that means, pay something like 40% of the taxes, the federal taxes in the country, already. as to the infrastructure projects the president talks about -- i live in new york, a stretch they call the bel parkton, and they have been working on the infrastructure products since 2008, since the

problem started. i used to be able to go from point a to point b in 15 minutes. even on sunday, when there is nobody there, it takes me an hour. it has been four years and they cannot get the project to dine. where is the money going? the same place where the solar panels are going, in the toilet. host: judy, independent. caller: good morning. they should renew the depreciation and the loopholes the rich have. in the 1970's, i knew a family who was making over $1 million, and with all their loopholes, their children qualify for free lunches. it is time for free lunches to end. at the same time, i don't think they should eliminate the home

mortgage interest. the young couples that are just starting out, that is the only thing that helps them. they should continue that. host: caller, on the mortgage interest, should they have a certain threshold? caller: yes a, if you make over $250,000, they should eliminate that. the middle-class is just dying right now. gas so expensive, groceries spokesman of, health insurance so expensive, we are just drowning. it is difficult to make ends meet. it is time for the rich to start shouldering their responsibilities. host: 1 at viewer focuses on the war aspect of our president obama's deficit plan being announced today. they write via twitter --

johnson, south carolina. melvin, democrat, you are on of the line at. caller: good morning. a gentleman called and said he would like to hear one thing to help the country. i have a sign that -- i had a son who was pulled out twice -- that is one of the things. second thing is, when obama tried to get this money out in the stimulus, he gave that to the banks, but they held onto it. if the they hold on to it, they all got to gather and and they have this conspiracy. we are learning a lot about

government, but the bottom line is, they at done got together it is aa conspiracy against obama. if he killed a mosquito, they would get him for cruelty to end .nsects host: we will have this, live outside the rose garden. tulsa, okla., independent, you are on the air. caller: tax raised on a 5% of income, the way it could be a fair share. a 5%. thank you. host: one viewer writes via facebook --

florida, john, republican, good morning. caller: thank you for c-span. i've been in the finance business all my life, and i hate to hear people demonizing people that have money. people that i know that have money, they are up figuring out what they are going to do today to profit. i get off and it is sometimes -- i watched c-span every day, the people that call in from 7:00 to 9:00 that don't have a job -- the way i grew up, if it was 7:00 to 9:00, you should be getting ready to go look for a job. thank you. host: 1 e-mail this morning.

lots more economic the stories in the papers today, including this one about jobs. they talk more about bill clinton, the former president. he is having an annual summit this week in new york, coinciding with the u.n. meeting. "he will push corporations and nonprofit groups at his philanthropic a summit to create jobs. unemployment hovers at 9.1%. pour nations worry that the economic crisis will stall labor market growth. more than 50 heads of state, including president obama, are among the estimated 1200 business leaders, humanitarian and celebrities expected to attend the seventh annual clinton global initiative, which

starts a three-day run on tuesday. this year the meeting will focus on 3 areas -- job creation, sustainable consumption and programs for women and girls." illegal, kentucky -- louisville, kentucky. good morning, richard. richard is on the democrats' line. caller: a question about barack obama and millionaires, but first, i want to ask -- you hear that they want to raise taxes on those who make $250,000 a year or more, and republicans call them "middle-class." well, i don't think i and middle-class if that is the criteria for being middle-class. i know it is probably a relative to where you live in the country and everything, but could someone to show me -- could someone showed me a scale of what is considered poor, low or middle class, middle class,

and of course you know what a millionaire is. but my main question, and this is to president barack obama -- how many millionaires are there that you think is going to make a big deal by raising their taxes on? you hear all these -- you would think that there is 50 million aires in the country. i would like to know how many there are. host: vincent in new hampshire. caller: i cannot believe what i'm hearing here. host: what is it? caller: the prior caller made a good point about what is the impact going to be a they raise taxes on millionaires? first of all, i don't think $250,000 is a lot of money anymore if you have two folks, husband and wife working, putting their kids through college, paying taxes.

there is a major disconnect about how much money is too much. the last point i want to make is, i don't think anybody in america would have an issue with paying their fair share a little bit more at all different class levels. the issue today is we are wasting so many billions and billions of dollars on all kinds of programs that i don't think anybody has any faith in how we are spending our money today. is that changed, obama -- if that change, obama would back off of class warfare, because all i see is using the political game for the next election. host: a couple of other pieces before we run short of time. in case you have not heard, 4ere will be no new f-16's

taiwan, but the u.s. will upgrade its fleet. "it is prompting criticism in congress that the united states is buckling to pressure from china. a decision, which could be announced as early as this week, is a consolation prize for taiwan, which wanted to buy 66 f-16's to replace jets it bought in 1992 during the administration of the first president bush." that is in "the new york times" today. in "the washington times," " israel sees up to 70 no votes on this resolution. the deputy foreign minister is predicting that as many as 78 countries will not vote for a u.n. resolution recognizing palestinian statehood.

70.'"en 50 and if the vote takes place this week, we will have coverage from the u.n. as the big meeting transpires. last couple of calls here. scott, independent. good morning. caller: i would like to first thank our military for protecting our country. i don't think that the democrats or republicans can fix what is going on with these plans they have got. we need to be patient and content. maybe we will go back to 1- income households for a while. i live in paul ryan and's district. it is just terrible here. i've been unemployed for three years. unemployment is 13%.

host: anything else, scott? caller: no, that is just my opinion. i appreciate you letting me make it. host: appreciate you calling. "wall street journal" has this piece on the website. "u.s. as a record number of millionaires. now comes news that america has a record number of millionaires. according to the annual world will the report from merrill lynch, the u.s. had 3.1 millionaires in it 2010, up from 2.86 million the year before. they define millionaires as individuals with $1 million and more in investable assets, not including primary homes and

collectibles and consumables." there are a record number millionaires in the country now. columbia, maryland. brad, republican, good morning. caller: good morning. you know, taxes, to my thinking, and i am not making $250,000 -- i make much less than that -- but raising taxes and putting it in the hands of the government has squandered so much of our wealth over the last many tickets, not just the last 10 years. i know this is the answer. i, for one, was ups -- i don't think it is the answer. i, for one, was upset with george bush and the republicans before i was upset with barack obama and the democrats. i would like to ask the democrats, if the president's new plan includes many aspects of legislation that wasn't passed by the democrats until

-- when the democrats had to ask the republicans what they thought, they would not pass it. is this just political gamesmanship so that they can call the republicans the do- nothing congress? if you look at our cities controlled by the democratic party, following all of these same programs, i would like to suggest they become progressive prisons, trapping people in big cities, driving away opportunities and leaving people with no hope of any change in their pocket other than what politicians put in their pocket. host: that was brad from columbia, maryland. appreciate all of your calls. coming up, we will have a discussion on the fda's greater oversight of a pharmaceutical products, the pieces that make up the drugs made in this country. coming up next, and a couple of

minutes, we will have a roundtable on the republicans jobs plan to fall on the discussion of the president's jobs plan last week. and the c-span is studentcam a documentary competition is under way for 2012. it is open to middle and high school students, grades 6-12. this year's theme is "the constitution and you." the videos must be 5-to-8 minutes in length and must include c-span programming. the deadline is january 20. grand prize winners will get $5,000, with other prizes totaling $50,000. you want more information, go to studentcam.org. we will be right back.

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political history. he is one of the 14 men featured in c-span's weekly series, "the contenders." friday at 8:00 eastern. learn more about the series and our upcoming programs at c- span.org/thecontenders. >> "washington journal" continues. host: this morning, it is more about jobs, specifically what the congressional republicans put forth. this is a follow-up to our chat on the president's jobs plan we recently had dean baker is co- director of the center for economic and policy research. we are also joined by james sherk of the heritage foundation, a senior policy analyst in the area of labor economics. first broad question for each of you. dean baker, how would you describe what republicans are trying to put forth on jobs? guest: essentially a do-nothing

position. we have been hit with this calamity. the housing bubble collapse, we lost an annual demand due to losses in construction -- lost $1.20 trillion in an old man due to losses in construction. republicans say do nothing, don't have regulation our taxes, and i hope that somehow, out of whatever, we will see businesses create jobs. herbert hoover tried this. it is not really work. you have to create demand, and it does not really happened. host: james sherk? guest: what you have to be doing is reducing barriers to business. you have to remove them so that you have a better business climate. guest: we had them in place in

the 1990's when we are creating 3 million jobs a year. obviously, those areas don't prevent the economy from growing and creating jobs. in terms of the stimulus, it is a matter of proportion. we are trying to counter $1.20 trillion in lost demand, and some professors at dartmouth did a good analysis of the stimulus and in their analysis shows there was more effective than the obama administration projected. guest: that is not what the administration projected at the time but they said if we passed it would be around 7% unemployment right now and obviously it is not the case. japan tried this for decades. stimulus package after stimulus package that make our packages look like to change. they are still stuck in this slump. obviously, if you have something like the tech bubble going on, it is not an issue for the economy, but when the economy is taking a body blow, you want to make sure you are not doing anything to slow down growth.

that is what the proposals coming out of the house are aimed at. host: let me get the numbers on the screen for our viewers. james sherk, senior policy analyst with the heritage foundation, and also joining us is dean baker, center for economic policy and research. let's get a take of what john boehner is saying about jobs. >> the president's proposals are a poor substitute for the pro- growth policies that are needed for job creation in america, the policies needed to put people back to work.

host: any defense of the president's approach to jobs? guest: the problem is that it was not big enough to james referred to the prediction that unemployment would be at 7% and of course it is not. the problem is projection. they thought if we did nothing, the unemployment rate would not get above 9%. to 10% and it went o it would have gone to 11% absent this to be listed the problem you can blame on that projection, but that was not the fault of the stimulus. guest: look, deficit spending just has not worked. is the slowest recovery since the great depression. not that we have history on the great depression, hoover was activist on boosting government spending and intervention. roosevelt was building a lot of hoover's policies.

it at length in an extended the great depression. we would have recovered sooner had not been for these interventionist policies. why are we having the slowest recovery we have had in basically living memory? the recession we have had with the most government intervention since the downturn. guest: the slowing recovery is due to the fact we have a different sort of recession. postwar recessions were from raising interest rates. we have a collapsed a bubble. it is a qualitatively different type of recession. it is much, much harder to get out of it. i take issue with your reading of the great depression. if you look at what happened with the new deal, the economy grew at 10% a year until 1937, when roosevelt got the fear of god and said that we have to

balance the budget. we had a very rapid economic growth, and the unemployment rate fell from 25% to 10%. nobody will be happy with 10% unemployment, but that is a very sharp fall. guest: the civilian conservation corps, the works progress and an assertion -- the works progress administration -- the unemployment rate was never below 18%. the supreme court upheld the national labor relations act, which, whatever you want to argue for the merits, is very well established that unions are essentially chopped cartels, whose purpose is to restrict the supply of labor in the industry. it has a negative affect on the companies they organized t. you could argue that there are benefits, but this from professors and researchers at the minneapolis fed, this was harmful to the recovery. host: let's hear from the house

speaker as he talks about the recent nlrb action on boeing. >> the boeing co. recently completed a plant that will create thousands of new full- time jobs for american workers, only to be sued by a federal agency that wants to shut it down. let me make sure i've got this right. american companies are free to create jobs in china up but are not free to create jobs in south carolina. host: dean baker, your response. guest: we have to understand what is at issue. the question is whether boeing deliberately used the threat of moving to north carolina as an anti-union int whether this was an anti-union threat. it is inappropriate, it is illegal, to say that if you x, y and z, we will move it elsewhere. companies do that all the time. whether or not the facts support that are not, that is what nlrb is trying to determine but let

me get back to the issue of unions and the unemployment rate. you have countries with high unionization rates, much higher than the united states, countries like sweden, germany, denmark, norway, that have a very low unemployment rates, much lower than ours. there is a lot of research on this, and most of it shows that there is no correlation at all between unionization rates and unemployment. host: i have got to get some calls in. brookfield, massachusetts, you are up first. what, you are on the independent line. caller: thanks for taking my call. i have a question for the fellow from the heritage foundation. we keep hearing that we need to remove impediments for investment. it seems that there is a lot of cash around waiting to be invested in corporations right now. i know you are going to tell me they are not investing because there is an environment of uncertainty, but there is always uncertainty in business. that is not an excuse to sit on

your hands and not make investments. you have assets to invest. maybe the problem is they don't see any productive use for the assets in this country, and that is a scary thought, too. guest: i would largely agree with that. the problem is that the businesses don't see investment opportunities, and that is why they are not investing. if they thought that they could profit from these investments, it would of course do that. that is what businesses do, they try to make profits. you cannot centrally plan the recovery, citing we will invest in this company or that company. we don't have -- the government does not have the information. we saw this with solyndra. what we should be doing is removing the barriers that raise the risks to businesses, raise the cost to businesses, thereby encouraging that companies take the risk themselves. we should not be raising a

needless barriers to business success. host: steven, welcome to the program. caller: i would like people to keep in mind that everything comes from the earth, and scholars can shuffle money around here and there and do all these things and talk about -- everything comes from the earth, and you have got -- we have got to create wealth and jobs -- everything has got to come from a mining, from farming, from drilling, it has got to come from the earth. you cannot just robbed peter to pay paul. you have got to take the wall from the earth and bring it up, and that is the only way we are going to do it. you cannot keep shuffling money around. host: thanks for calling. dean baker, let's go to you for this. i wanted to dig into some of the details of what the republicans

are putting forth. this is from the house republican conference, the ideas that they suggest will create jobs. a 25% top tax rate for people and businesses. they want a congressional review of regulations, something house has started doing and will continue to do this fall. they would like to see the columbia, panama and south. trade deals enacted. and also, expand domestic oil drilling and a reaction to what the caller was saying. guest: there are few jobs at stake with this idea of domestic drilling. we're not going to have energy independence. if you drill the oil out of the ground today, it is not there tomorrow. if we are concerned that at some point the bad guys are going to cut us off, the most foolish thing we can do is to drill in out today. why on earth would you rush to drill out? i cannot understand that.

of course, there are great environmentalists. those of us who remember the bp spill, we know what those are. second, the top tax rate -- we have done this before. how many times, do the same thing? president bush awarded the tax rates and we had a horrible -- lord the tax rates and we had a horrible job growth. you go back to the 1950's, 1960's, 1970's, we have the top tax rate to 70%, very good job growth. at the idea that is the key to job growth does not make any sense. host: let me discuss what "national journal" says about this. they would like to see at delay in epa standard for cement farm does, from bes -- greenhouse gases.

guest: the problem is that what these regulations are going to do is massively raise costs in industries. we have had three decades of improving quality. there is cleaner air today than in decades. at a time when we have already made great progress but the economy is weak, you do not want to raise additional areas to businesses and sink money into investments that don't help them expand and grow the economy. in texas, just a few weeks ago, and energy company announced they would have to shutter two power plants to comply with these regulations. company was planning and investing millions of dollars and creating construction jobs at a new plant in alabama. they announced they had to shut that down because of the regulations. when the economy is this week, we don't want to put barriers up into businesses that want to expand. another problem with these regulations is that because they are going to raise energy

prices, that affects everyone. consumers hahave less money in their pockets. it is not a sensible strategy. host: david, independent, you are on the air. caller: i am a high-tech robotics and information executive engineer. the conversation left and right does not seem to deal with the causes. everything is focused on the symptoms. we have put together a different paradigm shift the week of the redistribution of work. -- that we call the redistribution of work. if you look at things in america today, what we do for a living forces acting in our economy -- there are not as many jobs for an educated people any more. to read this edition of work -- the redistribution of --work

-- which put out of it that describes the paradox, what we can do in the short-term and long-term to deal with this factor. i encourage these gentlemen and viewers to go to redistributework.com, watched a short video, and see if it changes their perspective. host: redistribution of work -- what does that mean to you? guest: it is an interesting question, because one of the things that is striking about this downturn is the difference with other countries. germany has an unemployment rate today that is half a percentage point below what it was at the start of the downturn. it is that because germany has at better growth than the and -- and it states. it is not because germany is that -- it is not because germany has had better growth than the united states. it is because they have a better work-sharing policy. they reduce work hours.

that would make a lot of sense here. we have unemployment assistance in 20 states for the take-, rate is low, but if we could promote the jobsd adopt proposal includes work-sharing -- a government in germany that is a big promoter in this is a conservative government. there is no obvious public interest encouraging people to be unemployed rather than having them work short hours. guest: the problem is, most of the studies published in peer review literature on his work share programs showed that they are relatively ineffective in reducing unemployment. i do think the caller has a good point in terms of what is happening to manufacturing. in 2007, up with a downturn, we were producing more manufactured goods in nine the u.s. than

ever before. the move from the firms into the factories was good for the economy. the question is, what do these workers do? one of the problems we have in the economy is occupational licensing, where 1/3 of the economy is off limits. you need a license and is several years of education to apply for these jobs. studies even by liberal economist say that this is bad for job growth. we need to focus on workers displaced by new technology rather than shuffling jobs around. host: james sherk joined the heritage foundation in 2006. educated at lulzsec college and the university of rochester. we also a -- joined by dean hillsdaleducated ant

college and university of rochester. we are also drawn by dean baker, who was a professor at bucknell university, worked at the world bank, educated at the university of michigan. has written several books, a long list of books. .uest: keeps me busy host: democrat, good morning. caller: i have one question that i keep hearing over and over again from republicans, the tax as corporations pay, if we could just get it down. i would like to know from the man from heritage, the name of a company, just one, that actually pays 35% in taxes after deductions in loop holes. i want an aim of one company. if you cannot give me the name of one company, everything you say is disingenuous. host: put you on the spot here.

guest: i think she actually has a good point. if you are -- there are different carve-outs and deductions that get stuck in it the tax code. the actual effective rate is closer to 18%. you are paying the full rate, more or less. it acts as a disincentive to job growth. speaker boehner and president obama said that one of the things they would like to do is motivate the tax rate, the highest in the industrialized world, but eliminate these deductions and credits so that there are fewer barriers for companies. host: we will put up more details regarding healthcare on the screen. the republican health care proposal, this from "the hill,"

wants to exempt health plans in 2010tence before the 20 health-care law from the law's requirements. any reaction? guest: this is kind of making a joke of the plan there was ample opportunity to change the plan. 50, 60, 70 republican amendments were accepted. you want the insured to spend more than 20% of what you are paying them on administrative the fees on the process. it hardly seems like a very harsh conditions to say that they have to spend at least 80% actually providing care for customers. host: anything on health care you want to add? guest: just that obamacare has been a disaster. there was a poll recently done up small business owners showing what is it most harmful to hiring? the health-care law is the first greatest or second greatest obstacle. what is the health-care market going to look like in five years? you don't know if you are a

business owner. what are your costs going to be? you don't know. how you plan for the future if you have this enormous risk over your head? host: chris, rohrbaugh again, thank you for waiting. -- republican, thank you for .eigaiting caller: mr. baker, can you explain why the government must be a business partner with everybody who goes into business? how is the government so smart that they can pick winners and losers in the marketplace all the time? remember, ronald reagan said that the scariest words someone can say is, "i am from the government and i am here to help." i want to ask both guess one thing, when did millionaires and billionaires start at $200,000? from my math, that is far below $200,000. i'm from new york, so i'm used to a lot of people promoting a

redistribution of wealth and fairness and all that stuff, but my main point is that the government is not a business partner with us, should not be, i cannot be if we are going to be successful. guest: i am not sure workers means in the sense that government is a business partner -- i am not sure what chris it means in the sense that government is a business partner of president obama and others say they want to support business environment and you have things like the small business administration that has been around -- i would have to go back and look how long it has been around, but it has enjoyed bipartisan support. i have mixed feelings about it, but in any case, it is out there to support business. i am not sure if that is what the caller is attacking. the government in general is not great at picking winners and losers. we have great technologies like the internet that came from the government, so the government can play a useful role in promoting technology. the government spends roughly $30 billion a year in biomedical research at the national institutes of health. republicans, conservatives, the

pharmaceutical industry, they all seem to think this is money well spent. the government can do things in terms of creating a good environment for business, the good economic groundwork. i don't know anyone who is suggesting that government will take all the winners and losers. guest: you might want to talk to the president about his green jobs proposals. we spend tens of billions of taxpayer dollars on these countries, which, if they were a viable, the private sector would have happily invested in this technology in the expectation of bring profit. the reason they were not attracted bwas because investors were looking at these and said that there were no way that fees, is the secret as we've seen with evergreen is solar at this past week with solyndra, these companies have gone belly up. it was not a good use of taxpayer dollars. the caller is right. the government should not be picking what its investment because it is politically popular technology.

guest: you are opposed to the small business administration? guest: i think the small business administration probably does a lot more than it should. host: question via twitter. guest: not necessarily. i'm actually from canada, and in canada to have nationalized health care. if elected business in canada, you hav -- if you look at business in canada, much higher taxes and then in the u.s. is not free. somebody pays for it. as milton friedman once said, there is no such thing as a free lunch. use the thehost: headlines about the debt reduction plans. "the wall street journal" -- nearly half of the $3.60 trillion proposal will come from

taxes. john boehner says that tax increases are off the table, while it, if you look at headlines, tax increases on the president's standpoint are very much on the table. >> it is a simple equation. tax increases destroy jobs. the joint committee is a jobs committee. mission is to reduce the deficit that is threatening to operation in our country. we should not make its task harder by asking it to do things that will make the environment for job creation in america even worse. i hope the president will meet this standard. when he puts forth his recommendations for the joint committee next week. when it comes to producing savings to reach the $1.50 trillion target, the joint a select committee has one option, spending cuts and entitlement reform. the joint committee can achieve real of a separate action by reforming entitlements and taking real action to preserve

and strengthen social security and medicare and medicaid. host: dean baker, connect all this, if you can, to job creation. guest: the idea that tax increases will kill jobs defies volumes and volumes of economic evidence. we had much higher tax rates in 1970's, we 1960's, had stronger growth. we have countries that have high tax-to-gdp that strong growth. this idea that you can never raise taxes is just silly. guest: even keynesian economic theory says that if you raise taxes you reduce demand. america has had the strongest economy in the world for a very long time to read part of that has been because there are those taxes and more attractive climate for investment and risk- taking. --erica as starkly as a

america has a historically at far higher rates for entrepreneurial start-ups. when you raise taxes faceplate entrepreneurs -- faced by entrepreneurs, you have fewer start-ups. if the government takes more and more of the world, there is less incentive to take risk, which can be costly if the company goes under. host: maria, new jersey, independent. good morning. caller: good morning. i just want one of these, to tell me what we will have honesty about the dragon in the room -- globalism. what we're getting is window dressing. president obama said he has no silver bullet. he has at least three i can think of, and i am a person. -- a layperson. he will aggregate all the trade agreement unfavorable to our country, get the consent of the

senate, and he would have immediate results. the second thing is, he could agree that the federal reserve, which has been gambling with our money and paying foreign banks, should be investigated and, if necessary, a botc abolished. the third thing is that he can call all the troops back from these wars of adventure and put them on our borders. actually, it is common sense. we have to be self-sufficient. globalism and the idea of international gangsters and fascists is ruining our country. buddy roemer and other people, even ron paul, have addressed it, until everybody agrees that this is madness, we are not going to get anywhere. host: let's hear from our guests, beginning with mr. baker. guest: i want to jump back to a point at james made about tax rates and business creation.

tax rates don't seem to have help all that much. in terms of the color bang's comment, i think of -- it globalism is that -- the caller's comment, i think global is and is a mixed story to the fundamental imbalance in the economy -- if you have a large trade deficit, as we do, somewhere around $600 billion a year, 4% of gdp, you either have negative public savings, the budget deficits everyone is so unhappy about, or-private savings. the savings rates we had at the peak of the housing bubble. there is no alternative to. i am very concerned to get the trade deficit down and the way you do that is to lower the value of the dollar, make u.s. exports more competitive, domestically produced goods will be purchased instead of imports. if we got our trade of is that close to balance, that would create over 4 million in new manufacturing jobs. that would be a really good policy and i would love to see

president obama embrace it. first and foremost, you want to balance trade, making u.s. goods more competitive in the economy. guest: herbert hoover tried this with the smoot-hawley tariff spirit and terms of shutting down trade with the world, very destructive to the economy. that is one thing that economists look back and say we should not have done that. the smoot-hawley tariffs were terrible for our economy. economists agree of all stripes. what did paul krugman get his nobel prize in? showing the benefits of trade. shutting down trade would not work any better now than it did in the 1930's. host: doris on the line for democrats, thanwalk into the program. caller: thank you for "washington journal." it every week you have that

heritage foundation on. some weeks you have the heritage foundation and the cato institute. are these your new best friends going here? host: [laughter] caller: heritage guy said that 1/3 of businesses was health care. 2/3 said lack of demand with the rich to not invest in america. they invest in "emerging markets." those are in china and india. and then and they want to say they are not many class warfare. they refused to take away the subsidies for corporate jets that would bring in $3 billion, but stathey cut nutrition progrs for infants and children by $830 million. who is committing class warfare? host: james sherk, you want to

respond? guest: there is a lot of room in the tax code to eliminate some of these deductions that are less efficient. that is, again, something that both of the speaker and president at they are interested in doing. that could be quite helpful. in terms of the broader point, look, who is it that creates jobs? entrepreneurs and investors taking risks in america. there's an awful lot of investment that takes place in this country, and we want to encourage more of that. to have a policy that has the government redistribute wealth and take money away from a successful entrepreneurs and investors, you can do that and that will have economic effects but it will not encourage more people to invest. you can do one or the other, by doing both and bonds, you are pushing and pulling a -- at the same time it -- but doing both at once, we are pushing and pulling at the same time. host: we try to get a balanced opinion, so keep watching and

you will find that out for yourself. dean baker, we will get your response to what "the washington post" is reporting. something called the reins act. "regulations from the executive in need of scrutiny" act, that is what they are calling it and putting it together. "the post" reports that 50-100 "major" regulations are enacted annually hear more from a speaker boehner. >> we will pass the reins act, which will require congressional review of any regulation that has an impact on our economy. house committees have identified dozens of the job-crushing regulations that are keeping our economy from producing jobs. we will appeal the 3% withholding rule, which serves

as an effective tax increase on those who do business with our government. we will stop excess of the federal regulations that inhibit jobs in areas as varied as cement to form dust. host: "job-crushing" regulations, he calls a. guest: there is a history of the negative impact of the regulations, most of which serve important purposes. my fear was the clean air act, passed in the 1980's. before it was, you had all these people who said it would cost over 1 million jobs. someone did a study of that, and they look at the industries who had to be affected could they had more job growth than the industry cannot affected. the epa just did an analysis of the gains from the bill and found that the gains were in the trillions of dollars in terms of better health. we have over 1 million people alive today because we have the onerous regulation, the job- killing clean air act, did not

kill a lot of jobs. it kept a lot of people alive. host: james sherk, explain what the speaker said with the holding room. this is from "a little bit." -- this is from "the hill." this would be effective as of the start of 2013. as we read, the president wants to delay this, the republicans want to eliminate it. why is this going forward? guest: the problem is is essentially forcing small businesses to get a loan from the federal government, you perform services and you have to pay workers and pay for materials. of the government only gives you 97% of what it said it would pay you. at the end of the year, you get the final three%. in fact, you borrow money in the interim. it is a great deal if you are the government, but we should

not be turning to small businesses to get forced financing. guest: we have a problem with non-compliance with taxes for small businesses. this is a way of getting a foot in the door. we know that they have to pay their bill brought by the way, most of us pay taxes every two weeks with our paychecks. host: frankfurt, frank. republican, good morning. caller: we need an industrial policy. do you think if apple computer had to pay $10,000 a year in health care, they would have the hundred thousand jobs in china? -- i can remember -- they would have a 300,000 jobs in china? i can remember when ge -- i worked for them and we did fight health care. today, they brought 20,000 jobs

back, or what put them out of business. -- we do need an investor -- health care would put them out of business. we do need an industrial policy. on the deficit, i am old enough to know that you pay 70%. we did not have a $30 trillion deficit after world war ii. eisenhower and fdr would probably have warren buffett and dick cheney waterboarded. the country is too important. we should have national interest. it is not about making money. i made plenty of it and i paid taxes. i just had $15,000 for my quarter. guest: the reason we have large deficits today is because the economy collapsed. we did not have large deficits in 2007, 2008. that is really clear, and one of the things that amazes me is how

much distortion there has been, with both parties. president obama says he inherited a trillion-dollar deficit paid he inherited that because the economy was collapsing. our per-person health care costs are more than twice the average of other wealthy countries. take the average for germany and canada and whoever else, we are taking twice as much per person. that is the same thing as a tax. how was it different if money goes out the door for health care as if the government taxes it? guest: there really isn't anything the government can do that will bring back the manufacturing jobs. it is automation, technology. because we have these new computers come we can do the same work with fewer workers doing it. if you are one of the guys on the assembly line -- if you are one of the guys who operates the machines, great for you. if you are one of the guys on the assembly line, not so much.

china has fewer manufacturing workers today than in the mid- 1990's, because they have had the same process of bringing in productivity improvements. the goal should be, how to be open up additional jobs for workers displaced by technology? one place to look at that would be on the occupation licensing, removing the domestic barriers to competition we have erected in the country. there's not much the government can do to roll back the process of automation. guest: well, again, i think the main issue, i mentioned before, with the trade deficit, we don't want to roll back automation, but we can create 4 million manufacturing jobs if we add something close to balanced trade. most of our deficit is in many record goods. jim and i were talking before we came in here. we don think b -- don't think barbers have to be licensed.

host: go ahead. caller: my question is for james. i spent 26 years in the military. i want to know how clinton created 22 million jobs during his time. he raised taxes. bush reduced taxes and lost 8 million jobs. can you answer that question? you are talking out of both sides of your mouth. thank you for your service to our attention. president clinton took office when the economy was recovering from a 1991 recession. president bush took office at the peak of the attack bobbled as it was collapsing. those job losses were at the start of his watch. at the same time, you have a slowing down of the job growth.

the issue was you did not have as many workers entering the workforce so you did not have the same number of jobs being created under bush and clinton. host: we have more from speaker boehner as a look at republican proposals for job creation. the speaker is talking about tax credits. >> there are two other components. one is the current tax code that discourages investment and rewards special interests. at a time when is clear of the tax code needs to be reformed, the first instinct to come out of washington is to come out with a new host of tax credits that make the tax code more complex. host: dean baker, let's hear from you first on the idea of tax credits.

guest: there are a lot of things you could do that would make it more efficient and fair. the vast majority of the benefits go to high income individuals. it seems like you would want to cap it at a lower amount around $450,000. make a credit rather than a deduction. if you are in the 36% bracket, that is picked up by the government. naked a credit -- make it a credit and cap it. i think it would be much fairer and cheaper. guest: i agree. we should be removing credit deductions and lowering the overall rate. in terms of the broader point of the tax credits, europes has

had 8% unemployment for the last generation. i think we should learn from their experience. if you offer a tax credit, it affects who gets the job. it does not affect the number of jobs that it created. they may pick one person over another because one has a tax credit attached. guest: the record of europe is next. germany has 6.5% unemployment. the northern european countries like sweden and denmark have less than 5%. they generally have lower unemployment than the united states. europe has had some countries with high tax rates that have still had good productivity growth and low unemployment that is better than the u.s. host: james sherk, you are from

canada. this person says high taxes with national health care. guest: can get is a resource- based economy at a time when we did canada is a resource-based economy at a time when prices are rising. you have the mineral resources. their economy is doing quite well. they did not have the same housing bubble we did. they do not have to recover from that. some credit is due to the conservative government. i think most of it is the big fortune they have had of the way their economy is diversified. host: john, a democrat, good morning. caller: i wonder if you are

having a hard time explaining this because you are fighting against the american public's lack of understanding of the issues. an example is talking about with our currency auctions. i imagine all lot of people still imagine we live on the gold standard for our currency. then they have political discourse and talk about just printing more money like it is the end of the world. well, that is what the government always does when you have a fiat currency. i wonder if you feel like you are struggling against the lack of understanding of economic issues to explain your position. >guest: that is a big issue. it is the job of president obama to explain to the american people. i think he has fallen down on the job. with his original stimulus package, he made some effort to

save this is the issue. we had demand with the house and bubble that has disappeared. the government has to fill the hole. then he started talking about balancing the budget and how the government is like a family. it is not like the family. it is like a corporation. they will probably barrault forever. at some point, they may go out of business. -- they will probably borrow for ever. at some point, they may go out of business. the idea that the government is like a family is wrong. it is a difficult thing to explain. someone spent -- semi-speech from roosevelt where he is laying out that argument in 1936 -- someone sent me a speech from roosevelt where he is laying out the argument in 1936. host: go ahead. caller: last tuesday, there was

excellent testimony given before the house committee on job creation by a man named peter scheff. he had a book that predicted much of what is going on in the economy today. he is brilliant. he just started a radio show on the internet. if you are interested in what is going on in our economy today, tune in to his show. it airs at 10:00 eastern standard time. it is free. schieffradio.com host: richard is on the line for independents. caller: president obama's policies have been poisonous for our economy.

the tax policies will not work. president obama lost their gory presented a budget to congress -- president obama last february presented a budget to congress. it was voted down. every democrat and republican voted against his budget. the health care bill needs to be repealed. there are over 3000 companies right now on waivers because they cannot do business with the health care bill. president obama said his bill would make it energy costs go through the ceiling and they have. when he came into office, gasoline was a $80 cents a gallon. now it is $3.50 a gallon. -- when he came into office, gasoline was $1.80 a gallon.

now is $3.50 a gallon. we are losing business is overseas every day. guest: gas was $4 a down one president bush was in office. you can -- gas was $4 a gallon when president bush was in office. you can play games with gas prices. i think it is silly. in terms of small businesses and health care, there is the survey of businesses for decades. they asked about the major obstacles. overwhelmingly they say is demand. one of the choices is regulation. roughly the same numbers save regulation under president bush. -- roughly the same numbers said regulation under president bush. maybe when it is time to vote for president obama, they will

say that. that is for political purposes and not the way they conduct their businesses. guest: 25% say that is the greatest obstacle the next one is regulation. 25% of businesses are picking what the government is doing to them. they say that is the single greatest obstacle. 25% are picking poor sales. that tells you it is time to roll back some of the red tape. host: let me jump in and get one more piece of tape from speaker boehner. he talks about spending. >> i am not opposed to responsible spending to repair our infrastructure. if we want to do to support long-term economic growth and job creation, let's link the

next highway bill to the expansion of american energy production. removing unnecessary government barriers that prevent our country from utilizing the vast energy resources we have and creating millions of american jobs along the way. host: let's hear from james sherk 1st. guest: want to be increasing domestic energy production. we have 800 billion barrels of oil we could be recovering but we are not because of bureaucratic obstacles on the gulf coast. i think it makes a lot of sense. we will repair bridges if they are falling apart. i do not think it should be viewed as stimulus. you are taking money from one part of the economy and moving it to another. you are not improving things. a lot of the infrastructure projects were hiring away from

other companies and not hiring the unemployed. the skills needed for infrastructure are different from those needed in general construction with the unemployed. guest: the study found it did reduce unemployment substantially where the stimulus was spent. you have stories of people jumping around that would have been hired anyway. this is a very skilled occupation. there is a limited number of people with those skills. it poses enormous and our mental harm and does not create a lot of jobs. think of the bp spill. it will take thousands of years to repair the damage in the arctic zone. i would like to leave something for our kids. it does not do a lot for the economy and does a lot of potential harm to the environment. back let's look philosophically. let's get in response to this

question. what is the job of the corporation? to create jobs or grow? guest: they are there to make money. it is our responsibility as policy people to insure the ways they make money are going to be good for the country as a whole. guest: more or less, i would agree. corporations produce goods and services. they do it because of the competitive marketplace with the fewest resources used. there is more to produce other things. we want to reduce unnecessary barriers to creating the wealth. we do not want to be putting up roadblocks for businesses that can create wealth. host: the next call is from florida, michael, a democrat. caller: mr. boehner said something about a cement plants

-- va cement plants shutting down because of regulation. i am a retired truck driver. they are having so much trouble because the chemicals in cement never die matter how long a building has been up. the dust and chemicals from the planes for what they are suffering from. the bush tax cuts are still in. bush said the war would be paid for by the oil that we went into iraq for. small businesses will not give health care. thank god for the health care plan. you can work in a small business. it will ensure some people and not others. host: we have time for one final comment on the path for job growth. guest: you want to give the government out of the way.

the definition of insanity is trying the same thing over and over again expecting different results. we tried the stimulus. it did not work. i think we should be trying a new path of reducing the barriers to business success and reducing the risks job creator space. guest: i was going to say the same thing. my reading of the evidence on stimulus is that it worked. you cannot contract loss of demand with the stimulus. it is not the right size. host: thank you to dean baker and james sherk. we appreciate your time. coming up in about 30 minutes, a segment about your money. it is on military pensions and what is afoot in congress in that area. coming next, in a discussion on

foreign-made pharmaceuticals, specifically the ingredients in pharmaceuticals coming in from around the world. we'll discuss what is being done to watch over those ingredients. i want to give you an update on a new feature we have here at c- span. you can get updates on all three networks by following c-span now on twitter. here is a look at what it looks like. you can go here any time. roughly every hour, we are updating it. it is easy to sign up. just go to twitter.com/c-span. we will be right back.

[captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] >> which part of the constitution is important to you? that is the question in this year's competition. make a video documentary and tell us the part of the constitution that is important to you and why. be sure to include one more than one point of view. entries are due in january. there's $50,000 in total prices. there is a grand prize of $5,000. >> watch more video of the candidate. track the latest campaign contributions with the c-span website. it is easy to use. it helps you to navigate the

political landscape with candidate biographies and the low-lying -- latest polling data. it is all at c-span.org /campaign2012. >> the c-span networks provide coverage of politics, public affairs, and american history. this month, look for congress to continue federal spending in to november. keep tabs on the deficit committee as they formulate a plan to lower the debt. follow the presidential candidates as they continue to campaign across the country. it is all available to you online and at social media sites. cher and watch our programming any time. we are on the road with local content vehicles bringing our content to local communities. it is washington your way. the c-span networks were created

by cable and are provided as a public service. >> "washington journal" continues. host: joining us now is allan coukell. he is here to talk to was about foreign-made drugs and the ingredients to those drugs. there is a figure out there of 80%. what is that? guest: this may surprise a lot of people. you are used to going to the store and buying a t-shirt made in china. when you get a prescription drug or over-the-counter product, it does not tell you where it is made. manufacturing has shifted dramatically offshore in recent years. about 40% of what we call finished drugs come from overseas. about 80% of the active ingredients originates overseas.

increasingly, that is in developing countries. the fda was created seven years ago by congress to deal with quality after a tragic poisoning in the u.s.. it has been a domestically focused agency. they do a lot of inspections in the u.s. and have oversight of u.s. manufacturing. they have little footprint outside of the u.s. where a lot of drugs now originate. host: talk about the actual footprint. is there anything being done about it? guest: it has been talked about a lot since 2008. heparin was contaminated during manufacturing in china. its second -- it sickened a lot of patience. since then, there has been a lot of concern about manufacturing

to make sure that the products are safe. host: let's put the phone numbers on the screen for our guest, allan coukell. we're talking about prescription drugs. 80% of the components are foreign-made. there are lines for republicans, democrats, and independents. we welcome your phone calls. our guest is the health and science reporter for various tv stations and other outfits around the country. he is currently medical programs director of pew health groups. how many countries are we talking about? who are they? guest: we're talking about dozens of countries. a lot of the drug supply is coming from canada and europe. an increasing share of the growth is coming from india and

china where so much manufacturing now occurs. host: explain to us the fda's pursuit of this. what resources does the fda have? guest: the short answer is not enough. the fda has to respect domestic manufacturing facilities every two beers. they do it pretty well. the fda will come in and expect the premises every two to three years. if you are manufacturing in china for the u.s. market, the fda on average will get there every nine years, is thought. -- if that. host: what are china and india doing to make sure the ingredients are safe? guest: both countries have been increasing their quality standards. there regulators have been getting more serious about the issue. in china, they take the position

that the manufacturing in china for china is the principal focus of their regulator. if the u.s. is buying from manufacturers not accredited by them, that is not their concern. host: how has congress addressed this particular part of the drug issue? guest: there is bipartisan recognition of the problem in the house and senate. we have had a house democratic bills -- house democratic bills. in the senate, the chair of the health committee and the republican ranking member of both focused on this issue. they are signaling this may be something they take up next year with a big piece of fda regulation.

host: recalling up on the gao report about prescription drugs in this region we are following up on the gao report about prescription drugs in this country. the first call is from richard, an independent. caller: i am familiar with the drug situation because my childrens foundation deals with it. there are restrictions about buying drugs from overseas where i can ship them out. luckily, i fell into a foundation in amsterdam called iba where i bought all of my drugs now. they're like 20 cents on the dollar. the expiration days are long. you cannot go into most countries unless you have a 01- year expiration date. about half of the drugs that hit the stores here come from overseas. they do not come from china.

they come from amsterdam. i am not real familiar with how the drugs are made there. but they have been in business for 30 years. i would like to hear a comment on why our drugs are so cotton picking high here. guest: richard makes two points worth clarifying. one is whether you are talking about the u.s. drug supply we get here locally in our pharmacies or you are sourcing it somewhere else in the world. the actual manufacturing is done in india and china. it does not matter where in the world you go now. i take it the caller is purchasing drugs that will be used outside the u.s. in other countries. i think that was the implication of what he was saying. the focus is on the u.s. supply and the drugs we get an hour pharmacies and stores.

the vast majority of them are based on what they should be. we do need to be aware of the risk of rare but potentially serious problems if you have a quality problem or deliberate contamination. host: ray is on the line for democrats. caller: i am a first-time caller. i buy my drugs overseas. i have been doing that for the last six years. the cost of those drugs is 4400% cheaper than you can buy them here. host: the purchase them over the internet? caller: i purchased them over the telephone with a credit card. it takes two weeks to get them. i get a lot of my drugs from india. they are all packaged with serial numbers and everything. the federal government needs to

leave that alone. it is none of their business what i do about them. host: do you have any concerns about those? caller: none at all. the american drug companies are cronies. the prices are ridiculous. you are forced to join a drug coverage program. if you do not have a program after you turn 65, a fine you each month. host: he is speaking to prices. he orders his drugs from overseas. get to the components of the drugs made here. does it make prices cheaper than they would be to have some of the ingredients come from around the world? guest: part of what is driving the shift of offshore production is reduced cost. when you buy a high-price brands

pharmaceutical, the biggest part of the cost is probably not the cost of manufacturing. it is the r and d that goes into discovering the drug and doing the clinical trials and so on. >> let's hear from the gao talking about fda hurdles to inspecting foreign factories. >> inspections are an important element of oversight. the fda is far from achieving foreign inspection rates comparable to domestic inspection rates where the agency is required to conduct inspections every two beers. in 2008, we reported it would take fda about 13 years to inspect the foreign establishments on its inventory. since that time, fda has been increasing the number of foreign inspections, reducing the estimated time to inspect all establishments to about nine years. however, while the agency is

trying to face -- catch up, is facing an increasing number of foreign facilities. fda has been working to develop risc information to help prioritize before inspections. the risks of the products being manufactured have not been the real drivers of which facilities are inspected. rather, a foreign establishments have generally only been inspected when they have been named an application for a new drug. host: you mentioned congress will make this more of a priority. what are you looking for from them? guest: we just heard her talk about the disparity in inspections between domestic and international. we need to do more international inspections. we also have to do them in a smart way given that resources are limited and the fda budget will not increase infinitely. we need fda to be doing risc- based inspection is going to the

highest risk facilities -- to be doing risk-based inspections going to the highest risk facilities. we do not want to use our resources during the same inspections the europeans are. that would be one piece, fixing the inspection regime. we also have to rely on manufacturers for safety, and the supply chain is only as strong as its weakest link. we have to have standards that make sure that every manufacturer is auditing suppliers and knows where the drugs are coming from and the quality standards there. host: question via twitter. guest: good question, and in

most other countries, that is the case. it may be that congress will move in that direction. there may be an agreement with the generic drug industry and the active ingredient members to for the first time and inspection speak out of the fda a lot of resources to inspect the facilities. host: james on the line from damascus, virginia. you are on with allan coukell. caller: i am here. host: you are on the error. caller: i wonder if the fda inspects every individual kind of medicine. and -- i'm sorry -- host: let me stop you there, and gather your thoughts for the second question. let's hear from our guest, first. -- from our guest first. guest: they don't inspect every

medicine. they do in most cases operate- approval inspection. the fda will do the inspection. they will go back every -- if it is made in the u.s., they will go back every couple of years. if it is made overseas, there i -- the fda will not be back. you can go into the business of making over-the-counter drugs and importing them into the u.s. without ever having an fda inspection. host: james, second thought? caller: i got it, man. appreciate it. host: donald is on the line for independents. caller: from january 1, 1997 through the end of june 2005, there were deaths from 17 fba- approved drugs. there are still over 500,000

years of youths and zero deaths in canada. why does the fda continued to lie to us? host: a bank, where are you getting your information and statistics -- caller, where are you getting your information and statistics from? caller: procon.org. guest: cannot speak to the specific data. it is worth making one distinction, which is that people develop side effects aren't drugs and die from time to time. that is part of the risk benefit with any drug. what we are talking about is not the side effects that happen as a result of the pharmacology of the drug and the way it acts in the body, but a potentially serious risks of what happened if the drug is contaminated or

adulterated by the manufacturer. host: kelly, democrat. good morning. caller: 90% or more of our businesses, including prescription drug coverage -- they cannot get mad at us -- as far as the stock being checked every nine years -- as this stuff being checked every nine years. guest: we are in a global world where, as you say, we have extensive trade. it is in everybody's economic interest to keep that going. nevertheless, there are people who take the national security approach to this issue and said if we don't have the right quality systems in place, there is the potential for a deliberate acts, not of government, but some went to a

bill to raise the drug supply. -- of someone to alter the drug supply. >> globalization has fundamentally altered manufacturing and supply, greatly increasing risk to consumers. it demands a major change in the way fda fulfills its mission to promote and protect the health of the american people. based on almost 20 years of professional experience, i have witnessed the expanding gap between the globalization of a pharmaceutical manufacturing and fda's antiquated domestically focused statute. this gap represents an immediate and ever-growing risk to the safety of the american drug supply. it provides an opportunity for criminals to introduce dangerous, adulterated, counter for insulin products into the supply chain at great risk to patients and at great cost to pharmaceutical companies. host: our guest in the

background of that particular, speaking to the issue of globalization. guest: one of the things she mentioned is the incredible increase in foreign facilities we have seen in recent years. a few years ago, we surpassed the number of international facilities -- surpassing the number of domestic facilities fda is responsible for trade that is a challenge. fda has begun to respond within the limits of the current resources, but it will take legislation to release update the food and drug law for today's world. host: are again -- oregon, republican tide thank you for waiting. republican. thank you for waiting. caller: i was watching a few months ago when you had a health reporter, and he said there is with cancer drugs a very short supply in america.

i call white senators and congressmen as saying -- i called my senators and congressmen saying i will not give you a pass on this, because this is life and you are playing russian roulette with a bid they say, "no, we are having this inspected." i said, but not according to this reporter -- "not according to this reporter to read what happened to the tainted dog food?" how are we going to get our medicine? when i called ron wyden, i said, "sir, you have made yourself to be apolitical grew over the citizens." i called greg walden and i said, "i will not give you a pass on this either." one of his staff members said, "yes, greg walden is very concerned, because people in his district are calling him and are

saying that they cannot get medicines they need in the district." sir, i will not give anybody a pass. you are not representing the american people and doing the job you said you're doing to protect if you cannot even tell us that our medicines are correct and will not make us sick and we can get them and we need them. host: i think the caller is referring to howard gardner of "the new york times." guest: shortages is a related issue that is an extremely important help issue right now. we have shortages of a number of essential medicines. some of the drugs -- more than 100 essential medicines. some of the drugs seem to be .elated to quality problems some of the other part of

the shortage problem is economic. you have one manufacturer making a product, and for whatever reason, they decide to starstop making it. it is a real issue and something that congress is looking at to understand what is going on and see what the solution is. it is partly related to the quality issues. she also talks about melanie in dog food. that is an example where someone in china took something that looked like protein but was not routine at all and put it in dog food. -- but was not protein at all and put it in dog food. there was a similar thing a few years ago or somebody put a substance we're in the standard test it looked a lot like heparin. that is what caused all these adverse events in american patients. host: 1 person speaks via twitter.

can you speak to how that works? guest: that is a big problem and a bigger challenge. one of the things that went wrong with halperin is that the fda thought they inspected the facility, the database could used two different facilities -- but the database confused two different facilities. we needed databases that are accurate and have long into an attitude so that the names don't get confused. we also need smarter technology so that the fda has better risk- based systems to know when to intervene, building on things like market knowledge and the history of the product and that sort of thing. host: macon, georgia. jerry, independent caller. caller: i cannot remember how long ago this was, but a few

years, that on the news i heard a loud about towner for drugs in this country -- i heard a lot about counterfeit drugs in this country. i could have been watching c- span -- i cannot remember. even the veterans administration, va hospital, had bought counterfeit medication. they said it was as much as 50% of the drugs on the market today are counterfeit. could he comment on that, please? guest: gerry, it is a very important point. until now we are talking mostly about the manufacturing, the wolfe street supply chain and the risk -- wolfe street supply chain and the risk of contamination.

there is always the risk that somebody will make a deliberate counterfeit and selling into the distribution system. in some countries, the level of counterfeiting is very high, 20 or 30%. luckily, it is not that high in the u.s., certainly not 50%. but there have been incidents of people selling counterfeit products into the drug supply and ending up in pharmacies and so on. rare, but it has happened. in some cases, they are originate outside the country, in some cases domestically. we don't have a national system to authenticate drugs or track and trace them. there is a vulnerability in the system. host: couple more calls. tom in texas. good morning. caller: i would like to point out that a lot of manufacturers , drug manufacturers, only

understand what the fda wants, and that pertains to the active and inactive ingredients of each prescription dror drug. active ingredient means, according to the fda, that it gets into the bloodstream at the same rate as the brand name versus the generic brand. the problem is with the active ingredient. the active ingredient can be 15 to the plus or minus, if you are chemically inclined, as far as composite makeups of all medications and versus the amounts of prescriptions, brand names, those compared with generic brands. these sources are well known

as 15 to the plus or minus of generic brands, well documented through the mayo clinic, harvard studies, ucla, other places all -- host: having pointed that out, a question for our guest? caller: well, the article you just ran on tv showing the administration itself is trying to catch up -- are we still connected? host: we are. let's get a response from our guest. guest: let me address the distinction between active and inactive ingredients. when you have a vial or tablet, it contains ingredients which are also important. just a few years ago, we had a case in panama where the company made cough syrup using something

called glycerin, a sweetener often used in pharmaceutical manufacturing. they purchased it from a broker in panama, who purchased it from a broker in spain, who purchased it from a broker in china, who purchased it from a manufacturer in china. the problem was, it was not glycerine. it was something else which was toxic. thousands of people died in that case, because each time it passed through a new set of hands, at they never did any testing. it is important that we look at the ingredients in the drug. host: oklahoma city, christian, democrat. last call. caller: is basically being disingenuous, a hypocrite, these will the republicans calling in -- all the republicans calling in about the medicine. president obama wants regulations, but these teabaggers and republicans,

older republicans to take more medicine and then myself, you guys complained and complained and complained about regulation. but when it comes to this, now you want regulation. this is why the republican party are hypocrites. republicans, do some information, do some work for yourself, find out what is really going on instead of listening to tabloid fox news. do your own research. you complain about regulation and regulation, but now when it might interfere with your life or even kill you, you want regulations but you don't want to pay for it. host: one last comment from our guest about these prescription drug components and what might be happening at congress. guest: we are fortunate in this case that both parties want to see a vibrant, innovative the sector. we also all want to see safe drugs and ensure that consumers and patients are not at risk. there is a lot of agreement now

in this space about what are the steps we should take, and the fact that we do need to update the 70-year-old law. congress is looking at that now. host: allan coukell is director for the pew health groups. we will spend the last 40 minutes of our program talking about military retirement programs and the potential for significant changes based on the debt and deficit negotiations going on. we will be right back.

>> which part of the u.s. constitution is important to you? that is our question in this year's studentcam competition, open to middle and high school students. five-to-a-minutes long, and talk about what part of the constitution is important to you and why. there is $50,000 in total prices, and a grand prize of $5,000. for all the details, go to studentcam.org. the c-span in networks -- we provide coverage of politics, public affairs, nonfiction books, and american history. this month, look for congress to continue federal spending into november, including the funding for natural disasters. keep tabs on the deficit committee as they formulate a plan to lower the debt. all of the presidential

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host: every monday at this time on "washington journal" we have a special feature called "your money," a chance to find out about federal programs and what they do, how much it they cost. today we will learn about military retirement pay, the programs and how they are structured. our guest is entereentered andrewn -- > tilghman of "the military times." explain the structure. how does it work for retirees and the military? guest: right now, the current military retirement structure has not changed at all in the past 100 years. people who reached the 20-year mark and commit to 20 years of service at half their paycheck for the rest of their life. that is a real generous benefit, where it is possible

that you could retire at the age of 38. you could have half a paycheck with which to go and live the rest of your life, as well as lifetime health care. host: half of your highest paid? guest: half of the paycheck you are for the last three years of service -- you earn for the last three years of service. they can go into additional time if they can afford it, can get a job in the private sector. it gives them a lot of freedom. host: what if you serve fewer than 20 years? guest: that is one of the criticisms of the system. if you do not make it to 20 years, you could basically no benefit about 17% of the force reaches 20-year retirement, and the vast majority serves 6, 8, 10 years or so and moves on and goes to something else at least the service with no health care

or retirement benefit at all. host: what is the benefit of this to the stability of the fighting forces? guest: first of all, it serves as an extraordinary retention tool. service members make up personal decision as to whether they want to round the corner and commit themselves to 20 years. very few people leave the military between the years of 12, 15, 18 years. pretty much once you get to half, 3/4 of the way through, you are going to stay. that gives military real stability in terms of prison all they can plan on. -- in terms of personnel that .hey can plan on trad technicians, whenever they mean, they can plan on having them. host: military retirement pay -- how much does it cost in this

country? guest: it is estimated to cost about $2.70 trillion over the next 10 years. just a couple of years ago, the amount the government pays in retirement exceeds the amount it pays an active duty personnel. that is very unusual. even the most troubled companies and cities and states can keep their retirement costs below their payroll costs. the trend line is really troubling for a lot of people. life expended see increasing, the way the wars have brought people in an increased the size of the force. host: let me get the lines of four entered tillman of "the military times." militarytimes.com. we have three separate lines -- retired military.

hopefully we will hear about personal situations and decisions that they have to make. speak first to the potential changes. what is out there? guest: there have been changes discussed the past few decades and have not gotten much traction. the debt discussions have changed the equation on a lot of things, military retirement among them. the pentagon advisory group a couple of months ago put out a very detailed proposal that would basically transform this 20-year pension system that has been around for about hundred years into a very traditional corporate-style 401k, with the government would deposit money into individual service member's account and this of this number would have had to do whatever he chose with it. -- the service member would have

to do whatever he chose with it. host: i will repeat the phones for whoever wants to call. columbus, georgia first. preston on the line for retired military. go ahead, sir. caller: i have been reading in "army times" about the changes in everything. i have been retired for about 10 years. it is your base pay, not all the benefits that he would have gotten if you -- that you would have gotten if you were in the military. really, it comes out to maybe 1/3 of what you were getting when you are in the military. health care -- yeah, it is low,

but we do pay for our health care. a lot of things that are coming out, people are saying this is what is happening but they are not telling the whole truth. the war that we have had, even when the war started, i feel for the young veterans who are coming back, because i hate to put it this way, but earlier, they may have passed away, but now they are living here at they have prostheses and so forth. they are very young. i don't know how va is going to handle the load of young people coming back with injuries. it is sad. but i knew this prior to going into the war. a lot of things we did not plan 4. now all of a sudden we want to , thehe veterans' benefits ones who have put their lives on the line. host: thank you, preston. andrew tilghman.

guest: preston makes a good point, first about the base pay issue. it is very complex bid is not like people in the private sector who just get a paycheck and that is all but the military provides a housing allowance, stipends. it is a very complicated equation, which is why there can be a lot of confusion around these kinds of proposals. i think that preston brings up a point of the wounded warriors. there has been a much higher survival rate. it is a slightly separate issue. we have a veterans affairs and the extended health care benefits that are required. the bulk of what we're talking about is the rank-and-file people who are retiring and receiving pension trusts. host: this act in congress now -- what is on the table it for

this committee in congress now? guest: it is unclear on what date and are discussing behind closed doors. the secretary of defense has indicated this on the table, but he has sanded down the edges of it by saying that active-duty service members today would not be affected by it. military association in washington are very concerned that these proposals will get traction and there will be changes. host: here is secretary panetta on his stance on military requirement. >> it is important to look at all areas. every time i to a budget summit, my approach has been to say let's look at every area to see if we can make important reforms, etc. there is something to be said for young people who come into

the service and decide after four years to leave. right now under the present system they get nothing. there is some thought that maybe they are entitled to some retirement to be able to move those of funds to other systems. i think that is worth looking at. to respond to the question that i was asked, my view is that we ought not to break faith with those that serve now, and if there were any changes that were to be made in the future, it would not happen without grandfathering benefits. host: he talked about moving money to other systems, speaking to possibly the 401k style system that some have put out there. how might that work? is that a possibility? guest: that is the proposal that has gone so much attention over the past few months. the government or military would deposit -- the number they

talked about is 16% of your annual salary, relatively generous compared to the private sector, into a savings account that he or she would have if they left after 05 for 10 years, walk away with that savings account. it would reshuffle the incentives for the entire military career path if you removed the 20-year incentives. you would change the way everyone use their careers and all the personnel officials manage community spirit it would have an extraordinary impact culturally. it will have a devastating impact on retention. the 20-year incentive really encourages people who may be tired or burned out after to 12 years to really follow through to reach 20. if you remove the incentive, you will have people who are tired and feel like they have a better opportunity in the private sector who will leave after 10

or 12 years. he will not have those highly- educated senior leaders around in the future. host: jeremy is active duty military. caller: i am a navy veteran. my wife is active duty military. i want to reiterate some of the comments made. i believe this would devastate rural -- morale for those currently saving. i am not sure i believe that this is not going to impact active-duty military. we have about 16 years in. this would have a pretty big impact on those currently serving. the other idea that was brought up, if the institute these policies, you might as well reinstitute the draft. people liked us and our family will not serve 20 years. out of patriotism, we might serve five years, but we will go

on to another career after that. host: would you see this plan as a benefit? caller: you would see it as a benefit, but i do not think it is a benefit to our country. guest: retention is the number one concern among critics of the plan and those at the pentagon. retaining people for senior leadership positions is a top priority. jeremy said he was a navy veteran. the services -- the retirement system does not benefit all services equally. the air force and navy produce more retirees than the army and marine corps. the bulk of the marine corps may serve six or eight years and then leave. very few of them will ever get a

retirement benefit. the air force and navy depend on the highly-technical and highly- educated service members. a lot more of them reach the 20- year mark. caller: i was wondering if retirement benefits are paid through the dod budget for the va budget -- or the va budget. guest: most of them come from the dod budget. a portion of them come out of an alternative treasury fund. it is very complicated. it does not come out of the va. that is primarily health care and other benefits. this would be coming out of the pentagon's base budget. host: here is what is happening currently with military retirement pay. for those who became active duty before 1980, they get 50% base pay after 20 years.

they get 75% base pay after 30 years. current liability is $1.3 trillion. the future liability will be $2.7 trillion by 2034. those are huge numbers. guest: that is why it has been put on the table. at the pentagon, there is a concern that these costs will eat into the funds they use for active duty troops, weapons programs, and training programs. under the most aggressive plans, the pentagon could almost meet a lot of its current budget- cutting targets solely through major reform to the retirement program. caller: i am going to retire

from the navy on october 31. i have been listening to a tremendous amount of conversation coming out about wanting to change the benefits. i have been in since october of 1991. i have seen a tremendous number of changes in culture with women doing different duties and everything. the one thing that cannot be changed is the retirement plan. there is a reason people stick around in the navy and air force to 20. that is because the duties they have are extremely different. they are very diverse. they are not going into an air- conditioned office. they are not enjoying normal, regular office routines. they are going anywhere in the world that they are asked to go. to compare the work that they're going -- doing and put that in the same mindset as a traditional 401(k) is a disservice to the members.

retention is going to be a big issue. i disagree on even getting people in. they have reduced our medical benefits. they are looking to reduce retirement in a significant way. they are looking to turn it over to 401(k)-style program. they're already problems with greed and impropriety on wall street. now we're going to trust retirement to that? host: do you have a broader perspective on the funding long- term? what might need to happen? caller: what my need to happen is to start trimming fat in other areas. some things are over budget and can be funneled into retirement instead. guest: he talked about hardware.

that is something the pentagon is concerned about. he also brings appointed its to the heart of this issue. military service members take certain offense to the idea of comparing their service to a regular corporate-style office job when people suggest they should have a similar retirement system. this issue strikes an emotional chord in the military. it gets to the heart of the social contract they have with the rest of the country. they commit themselves to the service. they endure a lot of hardships and personal risks. they are away from their families for great lengths of time. they want some sort of incentive for doing that at the end of all this. retirement benefits are symbolic of so much to them. it is not just a dollars and cents calculation. it is really an extraordinary

thing that underpins their entire motivation for service. host: do those on the front lines get more when they retire? would they get more under new plans? guest: pretty much everyone gets the same retirement benefit regardless of whether you are a paper pusher or an intelligent -- infantryman in afghanistan. this would offer the opportunity to create incentives for people to take hardship assignments or for those deployed. it would increase the amount of money put into their retirement accounts. host: what is the defense board? guest: it is an advisory board. it is made of corporate executives without much military

experience. it has been providing advice to the secretary of defense about how to cut costs and make the pentagon operate more like a private business. that is the source of controversy. a lot of people think they are being counters -- bean counters and do not understand the underlying issues. host: what about the brass, leadership? guest: the senior officers would all be facing this new equation and system that would dramatically reduce their benefits. the percentage of officers who reached the retirement age is far higher than in listed service members. about half of officers to begin at the age of 22 will ultimately

serve 20 years and in return. the number of enlisted personnel who reach that 20-year mark is closer to 10%. it would affect them, but they have always done a little bit better. host: if you want to read more, there is a front-page "new york times" piece on this. it points out that if congress fails to adopt the deficit reduction recommendations that we are expecting, dod will be required under debt ceiling legislation to find about $900 billion in savings in the coming decade. there are some big stakes.

guest: there is a lot of concern at the pentagon about that. host: jerry is retired military. caller: over the last five years or so, every veteran's day when they pass a bill, they have been taking stuff away for the last five years every veterans day. the real problem is you have people who are building bridges and doing the plumbing and the skilled trades, these are the guys in the service. when they get out, they have these pencil pushers and people

who may have never been away from home except to go to college. you have people coming in from other countries. they do not even have to go in the service to get these scholarships and banks -- things. for 70 years, we have probably been at war for 30 of those 70. two wars for 10 years of peace, we have probably been at war for 30 years with korea, in vietnam, what we have going on now. we have the patriots to go into service and are accused of being somebody that might be a terrorist by the homeland

security whoever she is. anyway, it is sort of sickening that the people who are the real heartbeat of america -- we'd do it may be because we was drafted and we did not have no one to get us out. host: we do hear the points. thank you for participating with the program. guest: he has a good point about being at war for the past several years. one thing that is affecting the current numbers these days is that for the past 10 years, congress has been extremely generous with military pay raises and adding military benefits. every time you raise military

pay, that has a dramatic ripple effect on how retirement will be calculated in the out years. it has an impact on what the military retirement system will cost 20 years out. he brings up the point of the draft. one of the big concerns they have at the pentagon, a real priority, is the all-a volunteer force. -- all-volunteer force. it is only about 40 years old. it is a real priority for the pentagon not to have anyone going near the discussion of the draft. that is why the potential retention concerns are so big. caller: i want to point out to the guest that he is not telling the whole truth.

he started out by indicating that after 20 years of service, in military service member would receive 50% of what they were paid on active duty. you did put up a screen a few minutes ago indicating it is 50% of base pay. it is important to explain the caveat. the bottom line is after 20 years of service, my monthly pay is less than 1/3 of what i was paid on active duty. i do not complain about that. i knew what i would get paid. i am complaining about that you need to tell people this is what the money is going to and how it is being spent. tell the whole truth. if you think it is a sweetheart deal,, then so be it. but if we're going to have an honest conversation, it is important you be completely honest. host: a clarification from tom. john, go ahead.

caller: i am retired air force. i retired out of the reserves. i did not get my retirement pay until i was 60 although i retired eight years before that. i have a couple of points on this. everyone knows the retirees pay comes out of the dod budget. the rest of the retirees pay of all other federal employees comes out of the general fund. perhaps we need to get it out of that and get it where it is for all other federal employees. when the political winds are blowing, the considerable cut all federal retiree benefits starting at the top from the president -- they can say they will cut off federal retiree benefits starting at the top from the president down.

it is disingenuous. we, retirees, get military region benefits but not necessarily from the military. when i in 65, my milli -- might medical care benefits become medicare. it all looks at the 20% that medicare does not pay. -- it only looks at the 20% that medicare does not pay. i get benefits based on the fact that i am 65 eligible for medicare. guest: you bring up they did point -- a good point about the costs coming out of the military budget. it appears with a choice

between retirement benefits and current active-duty payroll and current military capabilities. it is a little difficult to move those over to the general fund. it would be an extraordinary policy change. they are very different retirement systems. the retirement system the military has is a completely different program than what federal civilian employees would have. as far as the health care benefits, you point out the facts about medicare. there is a supplement for military retirees that goes throughout your life. it is about 10 years old. congress has piled on benefits to military service members. the costs in the out years have really expanded.

host: we have about 10 minutes left with our guest. the proposed defined contribution plan is what they are talking about. it would be similar to the military personnel thrift plan that is available. the government would provide an annual contribution to the size of the contributions would depend on circumstances. the fully disabled would qualify for an immediate attention. here is a statement from the military officers association of america on all of this. do republicans and democrats have different viewpoints?

guest: most people on the hill have not touched this because it is some controversy. -- most people on the hill have not touched this because it is so controversial. republicans have been very supportive of pentagon budgets for many years. with the influence of the tea party, you have budget hawks squaring off with defense hawks. some are prioritizing budget cuts over defense concerns and capabilities. it will be interesting to see where the republican party comes down on this particular topic. that is another reason why people in the pentagon and services are concerned. things are shifting politically. host: neil is active military.

caller: i have two comments. i think all military people should wait until they're 60 to start drawing retirement. that is what i had to do. i am a korean war veteran. i had for years in the navy and 16 years in the reserve. if you really want to save money, you should look at the disability program they have going. there is a lot of fraud. there are a lot of people on military disability going tax- free. they are way better off than i am. host: can you give us any insight into the fraud comment? guest: certainly there are problems with the system. the va has a lot of problems. it is hard to quantify the

waste, fraud, and abuse element. some do not think there is enough of its to resolve it as a policy question. he brings up a good point. his personal situation is he had to wait until he was 60 to receive his. -- to receive his retirement pension. one proposal was to make them wait until they were at a traditional retirement age as opposed to now when you can start when you leave. that may be the ultimate results of this proposal. it makes some of the other proposals we have seen look far more modest. they may get new consideration in light of some of the discussions. host: the active-duty military caller is now on the line. go ahead, thomas. caller: i was a vietnam vet for

the eight years i was in. i was in the reserves. i was in heating, air- conditioning, and plumbing. i do that today as a contractor. you are talking about an individual with a job. you are dealing with individuals who have families who also suffer. they are doing the same time at the same time as the gis. it has an impact on the families. my family went everywhere i went. i go to the va hospital. i have 10% disability. i quit giving it the year after they give it to me. i did not fight it. i go there and seen many young boys. this country is in a war. when you say 30 years, that is a disgrace. the people who go in the

military are the reason why you have what you have today. if we take it away, we would look like the middle east. we would look like what was happening in china and other places. we would not have world peace. it is the gi that makes the sacrifice with their families. if we take that away, there's no incentive to go to college. it is said. take the money used in overseas helping to defend other people and bring it back. take care of your gi's. do not ruin what you really fought hard for. guest: tom makes a really good point about the families. there is a saying at the pentagon that you recruit individual but retain the family. the decision by a service member to decide to stay is something he makes with his wife and kids. i have talked to many service

members who talk about how the repeated deployments have been a strain on their marriages. there have been studies about how children can have an increased likelihood of the haverhill problems if their parents are away a lot. this is hard on families. if you remove the security of the 20-year pension, you will have a lot of wives or vice versa asking why we are doing this. caller: there has been a situation of when the soldiers are in the military and in combat, they get heart damage in their late 20's. recall its soldiers part -- we

called it soldier's heart. the 45-year olds are trying to stay in longer than 20 years. many of them have had heart attacks. many of them possibly when they try to meet the physical requirements. there are high rates of divorce, especially for the female soldiers. there are high rates of suicide. i think people are not looking at the current issues. we should be able to keep full retirement. guest: i cannot really speak to the heart problems she is talking about in particular. certainly, military service in the combat arms is really hard physically. at the end of 20 years, those who leave with back and neck

problems are the fortunate ones in many ways. the military is offering things because of that. there's a large percentage of the force that is not engaged in a kind of grueling physical work. host: critics argue that 83% of former service members receive no pension benefits at all because only veterans with 20 years of service are eligible.

they say the benefits are considered untouchable. where do you think this is headed in congress? guest: that is an interesting question. they have been untouchable for many years. there have been discussions to make changes to military retirement that have gone nowhere. in the 1980's, there was a serious effort to change it. it passed until years later when everybody realized it was about to take effect. congress pulled a 180 on it. it is a politically sensitive topic. these are unusual times in terms of what is going on in washington. we never know where this could get swept up in the discussions. host: glenn is retired military. caller: i retired after 30 years of military service. the entire 30 years were combat arms. marine corps, special forces,

82nd airborne division. that service in combat arms is much more stressful on the individual than 20 or 30 years in the air force or navy. i read an article from the "new york times." line noise concerned when we start looking at changing -- i am always concerned when we start looking at changing the current system. if you look of the images of our soldiers coming out of afghanistan or rock -- iraq, you can see the cost of being in the military. there is no way you can compare a civilian job to with the combat arms military has to go through. guest: he is