minutes, the former michigan governor john engler on the president's and debates economic plan. then sheila bair. >> this portfolio morphed into something that created new and potentially larger risks. we have let a lot of people down and we're very sorry. host: that portfolio resulted in a multibillion-dollar loss four jpmorgan chase. ceo jamie dimon apologizing yesterday before members of the senate banking committee. he's back next tuesday before the house financial services committee if and another round of questions. the senate continues its work on the farm bill with lawmakers considering as many as 200 amendments to the legislation./

the president is headed to cleveland where he delivers a campaign speech on the economy and then to new york for fund- raisers. mitt romney in ohio today. tomorrow he begins a multistate bus tour that will begin in new hampshire. it's thursday, june 14, flag day. we begin with your calls, questions, comments, and observation of jamie dimon testifying yesterday. you can join the conversation online at . join us on facebook. or you can send us an e-mail. let's look at the headlines, beginning with "politico," available online --

he was treated like a friend among friends, for the most part, it says. and the new york times has -- in the washington post -- let's take you to the hearing that ran about two hours. it's available on our web site, c-span.org. >> we have led a lot of people down and we're very sorry for it. let me tell you how it went wrong. these are the reasons. we believe that a series of events lead to difficulties in synthetic credit portfolios. these are detailed in my written testimony. cio strategy for reducing the synthetic credit portfolio was poorly conceived. in hindsight, the trader did not have the understanding of the

new risks they took. the risk limits should have been specific to that portfolio and much more granular, only allowing lower limited risk on each specific risk being taken. cio, they should have got more scrutiny from senior management and i include myself in that, and the firm-wide risk control function. we have already taken a number of important actions to guard against any recurrence. we have appointed entirely new leadership cor cio. our team has made progress in addressing the analyzing, management, and reducing our risk going forward. while this will not reduce the losses already incurred, it does reduce the probability and magnitude of potential future losses. host: a portion of the opening testimony by jamie dimon. and this is from the wall street journal --

from the l.a. times, this headline -- the hearing focused primarily on how j.p. morgan sustained an embarrassing loss, the session and veered into larger debates over financial regulation and that put jamie dimon in a familiar role as wall street pros think savvy spokesperson. we will get to your calls and comments as jamie dimon takes the blame for this $2 biion loss. joe is joining us on our democratic line from pennsylvania. -- jo. caller: good morning. how unfortunate that an apology comes after a $2 billion loss and after what occurred in the financial center in 2008. he is a very good speaker for

his industry, but he really did not answer the questions of going forward -- he said his management team is going to do things differently. when we are on the present this, as we are throughout the world in financial centers, did you really help the people who lost all that money? the answer is no. we need firm financial reform to make sure this does not happen again. it has happened again since 2008 in 2012. host: let's go to our twitter page, from 7cindy -- and from our facebook page --

our phone lines are open as well, divided between democrats, republicans, and independents. let me share a couple of editorials, beginning with the washington post --

and from "usa today" there's this editorial --

back to your calls and comments. doug is on the line from illinois on the republican line. caller: good morning. i saw quite a bit of the interview. i thought it was interesting. two things i walk away with. number one, he suggested that we've got to get our act together in terms of simpson- bowles. second, businesses are using models which have money concentrated from the past and present to predict the future. we have to get a handle on these mathematicians and the questions they're using. the guy is really incredible. he threw great warning signals to control where the money is going and how to protect us

from where the money could incorrectly go versus where it should be correctly going. host: thanks for the call. from the business section of the new york post, this headline -- c-span will be covering that. and this headline from the new york daily news -- and there's this sidebar story at the bottom of the page --

at one point president obama called him his favorite banker, but it's not clear who gave him the cuff links. jonathan is on the phone from baltimore. good morning. he's on the democratic line. caller: yes, thank you for c- span. my biggest concern is mr. dimon, a mistake, i'm sorry, this does not satisfy anyone. sounds like even after all the laws have been passed to prevent this, the business institutions are trying to use ways to get beyond the law. some trying to prevent this from

happening and others trying to put us in a position where this can happen over and over again but in a different way. i am trying to figure out when we will get to this. we have too much to lose. we cannot do this over and over. host: daniel is on the phone in washington, d.c. on our independent line. good morning. caller:. thank you,: a couple things really need to be established. j.p. morgan did not commit a crime by losing $2 billion. this is something that happens regularly. they also had great profits. they have a net worth of over trillions of dollars and are doing very well financially. second, we have to understand that more regulation is not necessarily going to control or have any -- host: we lost that call.

senator bob corker a of tennessee and pressed jamie dimon on whether or not more regulations would change anything on wall street. here's more from yesterday. [video clip] >> the financial system is safer than it was today than it was in 2007. >> understand we have larger capital, but i am talking about the regulatory regime that congress put in place. has it made our system safer? >> i don't know. host: the testimony, by the way, is several pages in length. this is what it looks like as released by jpmorgan chase. it is available on a number of web sites including the wall street journal website. ralph is on the phone from kalamazoo, michigan. good morning to you. caller: yes, i was interested at the end of the questioning the

jamie dimon endorsed the simpson-bowles plan. i thought that was remarkable. that would have been newsworthy because the simpson-bowles plan calls for tax increases, spending cuts. i don't think simpson-bowles talks about tax cuts for the rich like the republicans. i don't know how you balance the budget by cutting taxes. i am interested that jamie dimon is endorsing simpson-bowles. paul ryan voted against simpson- bowles when he was on the simpson-bowles committee. host: thanks for the call. back to our facebook page, a couple comments --

and from our twitter page -- ron is on the phone from cincinnati, ohio on our independent line. caller: we have laws that regulate those guys. why don't we have lost for the people in business? they get to do what they want to do. they get to pay whatever taxes they want to. when they get taxed, they add that cost into the cost of the product anyway. until we get control of the people who do harm to us, what else do you expect? you have to bite the bullet. if we get people in there that are willing to work for the masses, not the people that have the pocketbooks, and after a

couple links to the big business and the money. host: here's the money section of usa today -- meanwhile, bloomberg news is pointing out that part of the questioning yesterday did not focus as much on what happened and also the state of the economy. that is one of the headlines we found on line this morning from bloomberg. jamie dimon sang the fiscal cliff may be reached before the end of the year. jpmorgan chase chairman testifying before the senate committee, saying the one thing to keep in mind about this is do not wait until december 31. he made the comments before the senate banking committee. he said that markets and businesses may start taking actions before that, but it

would create --a slowdown in the economy. tax cuts put in place under president bush would expire with social security measures expiring as well. that's online and bloomberg. roberts is on the democratic line from vail, arizona. caller: first, can you give me quite a bit of time, please? even though the subject is complex, the answer is a lot easier. i am going to start off by having your note that i notice i don't get represented.

your telephone on the other end, many times i stay on the phone like 15 minutes. by the time i get through, the subject has changed. in many cases. have severalwhy we ways to participate, like sending an e-mail. but please go ahead and we're glad that you got through. caller: what i'm getting at mainly is nobody picks up the phone. there will be a dial tone and ringing and ringing and then it rings about 30 or 40 seconds. if somebody does not pick up in a certain time, i don't get to be represented. you have a lot of power. host: please use your time. caller: people are not represented at all. what if all the governments in the world spent their money on

behalf of the people that are starving, people that cannot get by, and the people that feel screwed? even though i lost over $80,000 in the ann stock market, that was part of my retirement. i am one of millions. if money is so powerful and you have to negotiate for everything to try to prevent wars, look at why we need a big military, because people all over the world feels c scrwed. -- screwed. host: you are diligent for spending all this time trying to

get through. caller: people like me that are tenacious, they ultimately get represented. a lot of people in southern arizona notice what happens. what happens is big money all over the world has smashed opportunities for little people. the big people rule the world. host: thanks very much for sharing your comments, robert. we will move onto the republican line from florida. caller: one thing that is being lost in the discussion is not one dime of taxpayer money was involved in this loss. this was a business that made a bad investment decision and lost the money -- $2 billion or more.

nevertheless, jpmorgan chase is going to make a profit this year in excess of $10 billion. how much of a profit is our government going to make this year? i think we all know we are going to be in excess of $1 trillion in debt. we are presently $16 trillion in debt. businesses, like people, make that investment decisions. i have made them. i am an investor. i don't think we need to get too excited about investors losing money. host: thanks for the call. those involved in this transaction, the headline from the washington times --

and more from yesterday -- [video clip] >> we will lose some of our shareholders' money and for that we feel terrible, but no customers or taxpayer money was impacted by this event. our balance sheet remains intact. we held $190 billion of equity at quarter's end. we maintain extremely strong capital ratios which are far in excess of regulatory capital standards. as of march 31, 2012, are estimator it tier one ratio is at 8.3%. that's among the highest level in the banking sector. we expect these numbers to be higher by the end of the year.

all of our lines of business remained profitable and continue to serve consumers and businesses. while there are still two weeks left in the second quarter, we expect a quarter to be solidly profitable. host: testimony of jamie dimon. boca --il from - and there is this from new mexico -- next is doug on the phone from new york on our independent line. caller: i'm calling from long island. basically, i watched the hearing yesterday with the ceo of j.p.

morgan, jamie dimon. i think he came to washington to do exactly what the republicans wanted and that is to put down the dodd-frank act and to get the volcker rule repeal. he was a perfect spokesman for the republican party. it will less false back with gramm-leach and other laws repealed under the republican party. host: another story that has an impact in the u.s. on wall street and in europe as voters in in greece blowback the polacks. angry and desperate voters headed to the polls on sunday for the seventh election in six

weeks, a make or break poll tha. -- voters head back to the polls in greece. in the new york times there's a story that broke yesterday --

next is cynthia in arizona, republican line. good morning. caller: good morning. what i did hear with regard to the unfortunate incident that will not happen again, that mr. dimon said regarding housing and all of that, it sickens me that millions of people have lost their homes because of their unfortunate mistakes. people out there are homeless because of their unfortunate mistakes. i pray for the united states and the banking and all of them out there, citizens that really need

to stick together and not let this ever happen again. host: thanks for the call. next is rick from avon park., park florida.ark, caller: i'm calling about his comments about the capital requirements for banks. he mentioned an agreement which specifies the bank has to have a ratio of 20%. well as it is less in switzerland. it is important. the bankers get together in switzerland and they determine what the rules are going to be. host: are you talking about the world economic forum? caller: anyway, i think this is

an important issue. even if we implement regulatory changes in the u.s. but the rest of the world has loose requirements [unintelligible] at any rate, i would like to see more news about the davos agreement that the rest of the world has to play by. host: now this on our twitter page -- last night at the white house, president obama honored is really president shimon peres at a dinner and also the ceremony where he was bestowed the presidential medal of freedom. this is the scene from the state

dining room, the president joined by a number of leaders of israel and jewish americans in this country, honoring the longtime president and close ally of the u.s. the event is available on our website at c-span.org. coming up later in the program, former governor john engler will be joining us. and robert reich, labor secretary during the clinton administration, will talk about jobs and the economy. we will get your reaction to jpmorgan chase ceo jamie dimon, testified before the senate banking committee yesterday. he is back on capitol hill next tuesday. we will also cover than during before the house financial services committee. we're on the phone in norwalk, conn with mickey. -thanks for taking my call. i want to support jamie dimon because i think with all these

different people that are being called into testified, a lot of times they don't even show up, including the obama administration. i have a 40-year registered democrat but i have not been happy with a lot of the people running obama's administration. with this jamie dimon, i feel that he is trying to be as honest as he can possibly be. maybe he is trying to make money and people are going to get hurt. but i think he is being honest about the whole thing. and so, i appreciate his testimony and being honest. honest. he looked very honest on tv. anybody who believes otherwise is totally wrong and they are feeling like banks are ripping them off.

but j.p. morgan is doing the right thing host: front page of the new york times has this photograph just before the hearing began -- that hearing and about two hours. jan on twitter - -- don is on the phone from wyoming. caller: as of yesterday, obama made a comment last week about the private sector doing fine, but as of yesterday i am still hearing the echoes. a company lost $2 billion and it sounds like the republicans are saying it's fine, everybody's doing good, so maybe he was

right when he said that the private sector is doing fine. maybe they can get over it and move on. host: british prime minister david cameron testifying before the leveson inquiry, live on c- span 2 and also on our website. we will have highlights in a couple minutes. from the washington post, a story involving u.s. tax dollars --

back to your calls. cooper is on the phone from manassas, virginia. welcome. caller: i could not have been more ashamed of our congressional leaders, to sit there in washington and kiss their campaign donors' green. they have the world's largest moneychanger in front of them, one of the guise of responsible for the economic mess. what was our decision? j.p. morgan holds more than $20 trillion locally. but we decided not to ask him about anything important about the mortgage foreclosure mess or the international banking or the global financial crisis. they sat there and talk about

something inane as investments. it was shameful to see the level of camaraderie they had with one of the guys who caused the crisis. we have civil servants doing things for other people and we decide to treat him like he stole something. host: there was an interview of jamie dimon on cnbc. they indicated tougher question is likely next week before the house financial services committee. we are committed to covering the hearing on the c-span networks, including radio and live on c- span 3 and on our website. log on to c-span.org. a couple other headlines, courtesy of the newseum --

the globe and mail has -- that vote is scheduled for sunday in greece. from the chicago tribune -- the miami herald, lance armstrong facing new doping charges, the headline. finally, a story getting a lot of attention in virginia, looking at the ouster of the president of uva, only on the

job the last two years, as the board of governors is looking at the decision that led to teresa sullivan resigning her position as the president. on the phone now from wichita, kansas, on the democratic line. good morning. caller: thanks for taking my call. i just want to add my. my. watching that yesterday, i have not been able to understand why don't they asked any question of any pregnancy? they never asked him where the money went. we know the money was not lost. it was distributed between the ones who don't want to pay taxes. if you put $10,000 in the bank, you are going to have to pay taxes on it. that is what this whole thing was. they don't want regulation, because they don't want anybody watching over them to make them accountable for what's going on with this money. thanks. have a good day.

host: thanks for the call. on twitter -- a lot of comments on jamie dimon's testimony yesterday. in the new york times editorial -- here is one of those exchanges with an oregon democrat on the issue of regulation and what needs to happen next. [video clip] >> numerous executives from your company testify that ed your direction they were to invest in higher yielding assets rather than traditional government- backed securities. yet when those bets go bad, instead of taking responsibility for it, you blame it on the units that you set up. should you not take personal responsibility since they were

following your game plan? >> the portfolio is conservative and has an unrealized gain of 7 billion. we made a mistake and i am responsible, the book stops with me. host: the testimony of jamie dimon. on "politico" -- and from the hill newspaper -- mitt romney is also in ohio and will have a bus tour that c-span will cover. on the republican line, now to chicago. caller: do you notice the resemblance -- host: we will move on to other calls and comments. from inside the new york times --

we have been airing the leveson inquiry looking into the relationship between rupert murdoch, the media, and british politicians all this week. the british prime minister david cameron, netting a series of high-level individuals speaking before the committee including former prime minister tony blair and gordon brown. here's a portion of what happened earlier today in london. [video clip] >> for the politician, this relates to the issue of the 24 hour news cycle. there is a difficulty in politics that you are fighting a permanent battle of issues being thrown at you hour by hour where sources are demanded very quickly. it can take up all your energy if you're not careful. that is hopeless. you will never reform our schools, cut our deficit, solve

our economic problems and all the rest. the politicians, and particularly the prime ministers and cabinet ministers, have to get out of the 24 hour news cycle, not trying to fight every battle and focus on long-term issues and be prepared sometimes to take a hit on a story that they responded so quickly. i tried to do that. i'm not sure it has always been successful. host: david cameron testifying earlier today. is is a story in the new york times --

if you want to watch the entire hearing, the leveson inquiry today and all this week on our website, c-span.org. it is trimming live right now as more questions are being opposed to british prime minister david cameron. back to your calls. a few more minutes left before we move on to the former governor john englert. the chair of the senate banking committee is tim johnson, a democratic senator from south dakota. [video clip] >> whether bonuses or generating profits, will you seek clawbacks from managers involved in this trading

debacle? >> we don't -- we have not had a special severance packages for executives over the past five or six years. there was no one in cio paid on a formula. the management of that portfolio, they were not allowed to do what they wanted. they cannot take too much high- yield exposure. we pay everyone, look at their performance, the unit's performance, the company performance. their performance includes liquidity, training, integrity, sharing with senior management, all the things we do to make it a better company. so i don't believe that the compensation made the problem .orse., none of these folks were paid on

formula. >> when the board finishes the review, you can expect we will take proper corrective action. it's likely to be clawbacks. host: jamie dimon, testifying before the senate banking committee over two hours. on our facebook page -- next is arlington, texas, on our independent line, greg. caller: good morning. it is a matter of buyer beware. he did not lose $2 billion.

you cannot legislate against cupidity. against stupidity. those are private dollars, so forget about. host: and this in the wall street journal -- the stock was up yesterday for jpmorgan chase investors. beverly is on the phone from harrisburg, north carolina, on the democratic line. caller: good morning. this whole thing was for him to beg for no more regulations, after the biggest catastrophe since the 1930's, caused by wall

street. the republicans were rallying around the flag boy. now you see who is in the pockets of. wall street. of now this now this story -- the front page of the financial times has the headline -- next is marcia on the republican line from new york. caller: good morning. i would like to say, i believe

it was just a show . show ow i don't see an -- a for television. this is private money that was lost. if anyone should be upset with be thetit should shareholders of the company. there's no public money, no taxpayer money lost. that is what happens. there are wins and losses. you contrast that with president obama playing fast and loose with public money and losing it that, that's another story. i would also like to mention that jamie dimon, a lot of the democratic caller is say that he thehe poster boy foor republicans, and he was a big

obama booster in 2008. they need to hold back their comments regarding his republican leanings. host: suzanne on our facebook --e has and from our twitter page -- the conversation continues on facebook or twitter. we would like to hear your thoughts and comments about the testimony of jamie dimon. it's available on our web site, c-span.org. he will testify next week on tuesday before the house financial services committee and we will cover that on c-span. next, our focus on jobs, the economy, and presidential politics with a former michigan republican governor. he's now the head of the business roundtable where mitt romney spoke yesterday about the economy. the president and mitt romney both in ohio today. later, robert reich, former

labor secretary in the clinton administration, his thoughts about what it means for the democrats, the president, and the economy overall. it is flag day, thursday, june 14. back in a moment. >> >> one of the quotes from the white house staffer, that was exceptionally expire -- inspiring. "once you realize what you can

accomplish in public life, everything else --" clucks he said "choose carefully and execute relentlessly." too many we don't focus on one thing that should be our top priority. but the u.s. senate brings students to washington every year for a week of government and leadership education. this year brian kamoie made an impact. >> i started with the mindset of what is it like to be them? and what could i share with them that either i wish i had known along the way or that they will remember when they leave washington. it's a very intense rapid-fire experienced. if you leave a few key encouraging messages at a time

you know it is very easy to be cynical about politics, it is a good thing to encourage young people to pursue a public- service. >> more on sunday at 8:00 eastern and pacific on c-span. but the story behind the star spangled banner, the invasion and burning of washington, d.c., this weekend american history tv. the bicentennial of the start of the 18th of war, from fort mchenry. historians, authors, and your calls, live saturday at 11:00 a.m. eastern. also, the political figures who ran for president and lost but changed political history, sunday a 7:30 p.m., this sundaywith william jennings bryan. american history tv this weekend on c-span 3. >> "washington journal"

continues. host: welcome back. former governor john engler, the president of the business roundtable. thanks for being with us. guest: greathanks for having me. host: what was romney's message yesterday on the economy? guest: it was a strong message. he laid out a critique of the economic performance, 40 months of high unemployment and he talked about regulatory reform, when he wanted to do on taxes. the thing that resonates is the idea that he said we have to get the government on the side of job creators, people who want to create opportunities to help us go back to work, you do that through certainty. that was something that throughout his remarks you could see heads nodding.

today in the country there is such risk and uncertainty as a result of tax laws which are not certain, regulatory policy, which the party is uncertain. there's health care and environmental policy. uncertainty of the fiscal cliff that is looming, the debt ceiling extension again, sequestration. all this creates an environment that it's hard to make investment initiative. host: something the president has said, which is the republicans plan to attack everything on the president. who is to blame? is it the president's fault? is it because we have a divided legislature? is there dysfunction in washington overall? guest: there is dysfunction in washington. there's no question. i was a governor in the 1990's

when bill clinton was president. i was coming in as he was going out as governor. but watching him as president, he ended up through much of his presidency working with a republican congress. we did welfare reform, at the end of last century, probably the most significant social overhaul of a major program, it was trial and error, because price we passed bills that went to the president's desk that were vetoed. the reason was the block granting of medicaid it. at the end of the process in august of an election-year we had an incumbent president running for reelection in august of that year the president signed welfare reform and the rest was history. i think you have to be able to work across the aisle. romney had an interesting observation yesterday it. he said that when he was elected

in massachusetts, 80% of his legislature was democratic, both houses. he had a practice of meeting every week with the leadership and he would go to the speaker's office one week and they would come to in the next week. we're not getting that level of engagement today for whatever reason. i think, having been in the legislative and executive branch in my career, if you have to have the lines of communication. communication host -- lines of communication open. host: do you think that speaker boehner and mitch mcconnell? like mcconnell president's because they're not talking to each other. guest: i certainly think there is inexperience on the president's part. he has gained experience by virtue of being in office, but there was not a lot of

legislative history coming. into coming there are not close personal relationships. it is also true of the president in his own democratic leaders. there are plenty of stories that it's not the warmest set of relations. i do think that it is not about liking or being themselves with one another, but they have to talk to each other, institutionally. i heard speaker boehner being interviewed a few days ago. he said when the phone rings i'm going to respond, i will be there. if the president wants to meet, i will. i don't have a sense that there's an ongoing engagement. i thought the vice president joe biden would play much more of a role because he is somebody who intimately knows the congressional process and how to get things done. for whatever reason, that has not been in his assignment. i am just surprised.

people have criticized senator mitch mcconnell for saying that president obama should only serve one term, but the reality is that is probably always the goal of the opposition leaders, to defeat the other guy. that aside, they all raised their hand to take an oath. the country needs decisions in washington today. we'd questions answered. given the backdrop of the global economy, the profound weakness in europe, questions about rates of growth in china and india, the u.s. needs to be strong. i think we have that potential, but we cannot do it against a backdrop of such significant uncertainty. that needs to be swept off the table. yesterday even jamie dimon was talking about some of that in an interesting way. host: your calls and comments to the head of the business roundtable. mitt romney spoke yesterday and.

you can send us an e-mail or join us online on our facebook page or our twitter page or give us a phone call, the numbers on the bottom of your screen. the president traveling to cleveland for a campaign speech, talking about the economy. what do you want to hear? guest: ever speech probably ought to be about the economy, because that is the dominant issue this year. i have seen some of the data that indicates half of americans are concerned about jobs and the economy. 8% on taxes. 8% on deficit. 7% or 8% on things like health care. so that dwarfs everything. i would like to hear the president say, while we have long-term differences and i have a different approach than speaker boehner and mitch mcconnell, i think it is important in the short term to answer some questions, so let's get the taxes extended the way

it has been suggested. larry summers suggested this and bill clinton for a while, let's create certainty for the rest of this year and maybe for stability into next year so we can have the election and we know who the leadership will be for the next four years, then we get at fundamentalists. i think any conference of tax reform. they cannot do it in a lame-duck session. sixty provisions of the tax code already expired. this year ini december. we need to get that resolved short term. we should not have the debacle like we had last time with the debt ceiling. let's get that extended. i don't think national security can allow for the damage that sequestration would do. so let's get beyond that and let's not have every defense contractor thinking about how many people might potentially have to be laid off if the cuts became reality. the secretary of defense says there's no way they can become reality. let's have a strategy to resolve

some of the uncertainties short- term. long-term, let's have the debate during the campaign of romney versus obama on how they see the tax structure and what they do to resolve the long-term fiscal situation. as part of that, we need to have a big health care debate, regardless of what the supreme court does. the long-term entitlement costs are driven by health care costs, medicare and medicaid. host:. let's get:. robert from chicago on the democratic line for john engler. caller: good morning. i heard you say a few minutes ago that governor romney had an idea about the economy. when he made the statement after the president said the private sector is doing fine, he came on a few minutes later saying did not get the impression from

wisconsin that we don't need any more teachers, firemen, and policeman, that we need to get the american people back to work? these are the people, i say. he did not do anything in massachusetts. i would like to know when mitt romney is one to contribute, other than to put working people and poor people in a deeper hole? uest: the romney campaign -- our direction as a country, we have private sector under plummet, over 8,-- underemployment. we have not seen people coming back into the workforce.

work-force participation remains at historical levels, we would have an even higher unemployment. i i have three daughters. we spent a massive commitment on education in this nation. in wisconsin, one of the things they did to avoid reduction in education spending was to simply compete for the price of health insurance. as it turned out, it saved tens of millions of dollars. there are opportunities to run public systems bettors. >> your staff -- host: your staff on twitter --

if you extend tax rates, you reduce revenue that would offset the revenue. how do you bring down debt while keeping taxes at the current level or lower? guest: there is tax revenue, spending, and growth, and we know a 1% increase in gdp is about $1 trillion in tax revenue. there has to be balanced. we have to have a gdp performance of more than 1.9%, which is where we were last quarter. we do a survey each quarter. the last time we did that, the ceo forecast was about 2.2% for the year. that is a meager economic performance. we need to be 3%, 3.5% to see

job creation. i would not say there is no role for government. there is a big role for government, but it is not the driver of the academy. host: what is the business roundtable? guest: it is an association of chief executives of leading companies in america, 210 of them, representing more than $6 trillion of revenue. the supply chains include thousands and thousands of small and medium-sized business es at the health of procter and gamble and caterpillar is important to many companies. we also, interestingly, and i think this is important because in the 21st century we need to be an innovation economy, we do

more than half of the private- sector research and development. we are passionate about education, science and technology. we are a leading voice, i would say, for the american economy to be the leading economy in the world, a voice for job creation. in march we put out a ceo plan for jobs and economic growth. we want these companies, virtually all of which are headquartered here, to be growing, to have an investment climate where you look to the united states and say "boy, this is where i want to invest there, there are global companies in africa, -- invest." there are global companies in africa, they want to be in russia in the future.

host: we welcome visitors on c- span radio. our guest is john engler, former governor of michigan and the current head of the business round table where mitt romney spoke yesterday. texas. republican line. good morning. caller: good morning. i would like to say a lot of things never seemed to get addressed. i've run a prosperous pawn shop and one of the reasons i went into business is i met sam walton years ago and he told me you had better figure out what you're going to do so as a manufacturer's representative i did well and i sold that business. i decided after retiring in my

early-40's, that i should get into the pawn it would be a growth business. my question is i was one into which i was at a shop -- i was at a shop, and i heard about all of these fees, and it made me sick. i just thought that i would not -- stop hiring and take my vacation. there is obviously so much more than meets the eye. a lot of these people in these round tables i do not think they run the business is currently. host: mel, before you hang up, has business increased? caller: it has increased tremendously. our worst year has been 25%.

a lot of middle-income people are brought into the situation. host: what are you selling, what are they selling? caller: we are diversified. we did gold, jewelry, laptops, flat screen televisions are also a big thing today. they are light enough that a neighbor does not have to help you bring it in. we see a lot of stuff going on. we are noticing it is not getting better. it seems they are streamlining. more and more corporations are cutting back and making more use of their current employees. it is a sad situation. especially 50-year-olds that used to have a good job, i hate to see that. i have been blessed, but i cannot put more people to work. i am not going to give $66,000

to anybody. guest: this caller makes a good point. he is talking about permits and approvals. i was speaking with a builder in montgomery county maryland which is close to washington, d.c., and he said when you add up the county requirements, if you want to think about starting to build a house, you are probably $35,000, $40,000 on the front- end. it is amazing how much of a bird and we put in place. one of the things we pay attention to is larger companies clearly have capacity. the have people and resources to cope with that, but the supplier does not. you are looking at the cost rippling through the system.

when we are saying is even if we could deal with it, why is that the thing we should be doing? why should it take -- i had one example of a company building a similar plant here in this nation, and they were building one in belgium. literally the plant in belgium was permitted and built prior -- and functioning, prior to the time you could get one built in this country. i had a ceo in a few weeks back. there was a show in germany with technology on display, for sale, been sold in europe that was still not approved in this country and did not expect approval for more than a couple of years. we are depriving ourselves of the benefit of new technology, putting research locations at risk, all for an approval

process that i do not think can be argued is dramatically safer than what europeans used in the last example. host: the front page of "the los angeles times" about home prices going up. have we turned the corner? guest: we had the acting head of the federal loan finance authority, and there is a good news, bad news story. there is some improvement, but a significant percentage of americans are holding on to mortgages that are technically under water. we felt that this is one of those things that has truly then overlooked from the beginning after 2008-2009. the housing sector is normally a significant contributor to any recovery out of a recession. this time it has been dragged for the most part. there are certainly a lot of bargains to be head.

there are pockets better starting to come back. there are other places still languishing. much more needs to be done. the point mr. demarco made, which was an excellent presentation, what are we doing to fannie and freddie? what is the role of government going to be? what is it not going to be? how do we have assurances private capital is going to be there? what can we expect for our citizens when they want to buy that first home? what is the down payment going to be? we know the application process has been tough enough. there are enough anecdotal comments from people about all of this documentation. we've gone from no documentation to massive documentation. how does that settle out and what is the path ahead? host: independent line. good morning. caller: you appear to be so

concerned about the economy, however when you were governor is my understanding that you were instrumental in selling the fresh water rights to nestle corp. for $100 a year. in essence, michigan citizens were cheated out of -- they have $100 a year for water rights. guest: water rights? caller: the freshwater lake michigan water rights for $100 a year were sold to nestle corp. host: we will get a response. guest: first of all, michigan has a great fortune of being of the water, but what she is talking about is nestle, which

produced and sold bottled water. they drilled wells, brought water up, bottled it and sold it. in the process, it created a few hundred jobs at the time. i am proud to say that during my tenure as governor we had five consecutive years with unemployment below the national average, below its 4% for awhile. in the 20 years prior it had never been below the national average. we had job growth and job creation and governmental reform. it is interesting to note to the question -- there was no sale for $100, but nestle was a company that invested in michigan and created jobs -- she raises a point that i will make. today, if you look across

america it is interesting to me how different the performance is among states. there clearly are states that have sort of got it together and are making progress, and there are places where they are really struggling. i think there are lessons to be learned when one looks at that approach. the other point about states is i think in washington everybody understands how states do complete -- compete, whether it is the nestle plant or any other, but what is not so understood is competition has become global and nations are competing the way states used to compete. i would argue the united states is poorly positioned. we do not have a mindset that we need to compete and we are not organized in such a way that we need to compete and that is why

the round table has been adamant that we have to get our tax rate in order, the corporate rate must come down, and these kinds of things. they help to get the playing field more level. there is still not a strategy. host: one of the areas president made it is if the structure. that is one of our twitter ques. guest: i think those are huge national benefits. today, just power, regardless of fuel -- some people like generating plants if it is not cool or nuclear, or whatever,

but i would say regardless of the fuel source if you generate a kilowatt and you will transmit data over a transmission line, the process ought to be as efficient as possible. clearly, there is a return on investment if you upgrade the transmission line, and then there are security concerns about the security of transmission and the generating security of a cyber attacks or other types of threats. we believe that could all be done and paid for with private capital. you do not need government to do that. you need government permission and sometimes that is hard to get. this is also cooperation among states, but i think that can also be achieved. with roads and bridges, when i was governor we passed a gas tax and used 20% of it for and

bridges. we had bridges in need of repair. congress is debating a two-year extension of the transportation bill. they should have gone that long ago and we need to be serious about a long-term transportation strategy in the country. infrastructure is an area where there can be private/public partnerships. a lot more could be done privately. -- host: you can join the conversation on facebook. tom, illinois. caller: i am on the county board and on the bridge and road committee, and every time we have to build a bridge we have to pay the epa a $10,000

permits. one of the things i noticed as i by truck licenses -- it is just incredible. i have to buy insurance. i do not want to employ anybody because it makes more hassle for me. the other day i was thinking about it, and it has nothing to do with communism or our democracy, but what it has to do with it is when the soviet union went broke they said you had to buy a permit to leave the city. what we are doing it is our government is broke. in all cases it is broke. we are making all of these fees to prop the thing of all of the

time. i do not do any business. i have an audit this year by the irs and i go "i do not know why anyone would want to do business in the united states." i did not done my taxes in such a long time. it is so complicated. host: let me take that point and add that to john in north carolina with his comments -- does anyone think lack of taxation is the problem? guest: there were a lot of issues just raised i think tax rates -- we know on the corporate side, they are the highest in the world. that is not the problem. corporate revenue is a small percentage of all of the income in the federal treasury. i think the real problem is lack

of income and lack of income growth and jobs. if you have more people working and higher income you will generate more taxes. that is really the way to raise tax revenue. it is not raising tax rates on a declining number of participants in the workforce. that is a short-sided strategy and ultimately self-defeating. i cannot summon that says you cannot have any taxes to meet someone that says you cannot have any taxes -- summon that says you cannot any taxes. we are at the point where we should say let's have tax reform and steve forbes has been an advocate, let's have a flatter rate and get rid of special provisions. the last caller said it is so

complex that he cannot do his own taxes. we could get most americans do it on a postcard if you clean up the tax code. the other point on permits and why would anyone to business here, we are still a vast market. we are a smart market. we are a leading market. so, the opportunity is great, but we are continually burdening. there is a role user fees. -- plate. we have seen that people are getting a benefit, and maybe they should pay more for that, but we have become creative to the point where there is a debate raging where they want to put a fee on the device in the car that allows the car to go through the toll roads, the ez

pass, and everywhere you look around people are trying to come up with a new fee. host: about the housing market, this is from guest: they do supply the cement workers and the people that make steel and build a road graders. economic activity has different consequences, and what we are saying whether it is houses or road repair, i think it is hard to argue going around the country that our roads and infrastructure are in a-plus condition. they are not. one of the exceptions might be in indiana where the governor's least the toll road and took revenue in.

governor ed rendell in pennsylvania tried to do the same thing and was shot down. host: cliff, saginaw, mich.. caller: thank you. you made mention of the housing debacle and freddie mac and fannie mae, did not your wife said on the board of one of those institutions and what qualifications did she have that allowed her to sit on that board given to my knowledge she was the former first lady of michigan and an attorney in texas. [laughter] guest: in the old days, the boards had presidential

appointments, and my wife was appointed to the freddie mac board has a public member and then was the first public member to be elected as a board member. she served on the board because of her financial background and expertise and was somewhat helpful, but the end of the day it is an interesting story to follow the collapse of those agencies. what happened was there are a lot of policies that are still being reviewed that played a role in that. host: what policy needs to be changed? guest: the decision as to what is the role of public finance in the housing market. in the freddie and fannie debacle, one of the things that led into that was a decision on the part of the government that this was to be extending and lowering as part of their community reinvestment approach

-- how do we get more homeownership in the hands of people that are more marginal in terms of their capability. i remember michele been upset if it was upside -- was upset when they were said to have too much in reserve. in hindsight, we would have needed a lot more in reserve. host: you have to love twitter because it is less than 140 characters. [laughter] guest: would that not be fun. then we would have a lot of user fees. host: will go back to presidential politics. the latest ad from the obama campaign, aimed at mitt romney. the issue, job creation. [video clip]

>> i am barack obama and i approve this message >> 1 mitt romney was governor, massachusetts was number one in debt and fell to 47 in job creation, one of the worst economic record in the country. first in debt, 47 in job creation. that is romani economics. did not work then, it will not work now. host: thereeems to be a similar emphasis on jobs, job creation and the economy, whether it is massachusetts or around the country. guest: the president heads record -- has his record. there will be an effort to find something in mitt romney's record that will be disqualifying. we will let the campaigns fight that out.

when businesses and citizens care about is who will provide the leadership to get america moving? will we stay on the path that americans care about? will it return us to something that is even less successful? i do not know. this should be an issue-driven campaign. yesterday at our roundtable meeting one of the suggestions was that one of the presidential debates be focused specifically on what we do for debt reduction, that the fiscal house in order because everyone acknowledges that is a massive elephant in the room. what happens long term there? the economy is part of that. that is a good idea. host: will your group indoors? -- indorse that?

guest: i think we will. it would be debate. host: in terms of endorsing a candidate? guest: we do not endorse candidates. we want to get americans back to work and make america a better investment climate. we are nonpartisan in that respect. host: arnold, new york city come independent line -- new york city, independent line. caller: i am an engineer with more than 50 years experience in the private and public sector and we are not dealing with the real problem. i agree with the governor. i think he is making a

tremendous amount of sense. confidence is much more important than philosophy and when you are chief executive that is what you have to do. you have to make something work. we have competition with very low wages overseas who are as confident as we are and they are educated here also. technology is not an answer. even though ibm -- i am an engineer, part of my job is to cut down jobs and make things more efficient. the other problem is that. if we do not solve the problem of low wages overseas and the high debt, all the things we're doing right now is basically rearranging the chairs on the titanic. guest: a couple of important points just made -- there is no question technology has played a massive role in u.s.

productivity which is one of the ways a higher-cost united states has been able to compete with lower costs someplace else. he is right. i think technology will continue to play that kind of role. one of the other things technology has done is let the creation of a lot of businesses. that is part of it. regrettably, the old days of going someplace in been there for 40 years is passe. we do not have companies that last 40 years anymore. they are acquired, taken apart, this and that, but we need to have a robust job creation climate so people can start a new business. that needs to happen. the other point in that observation is that we are running out of unskilled, low-

wage entry-level jobs. they are vanishing from the economy. for young people, the brookings institution testified recently and said the most important thing is finishing high school, waiting until age 21 before you have a child, and you are almost assured of never being in poverty. on the other hand, you drop out, have a child early, all of a sudden your risk goes up. how do you changed things? we have a high dropout rate. we need to get that fixed. we need to get people skills. we today have 3 million jobs out there, not all in roundtable member companies, but they are there for people with skills.

they might not be engineering skills, but they might be technical skills to run a piece of equipment that caliber it's something down to a micron. -- calibrates something down to a micron. you need to have skills. host: former governor john engler, head of the business roundtable parent thank you for being with us today. guest: thank you for the opportunity. host: we will continue the conversation on jobs and the economy with former labor secretary robert reich who served in the clinton administration, and later we continue our series on agencies and our focus today is the fdic, and former chair sheila bair is at the table. first of all look at the latest news. >> here are some of the latest headlines. former presidential candidate

and north carolina senator john edwards no longer has the possibility of federal charges hanging over his head. yesterday, prosecutors dropped the campaign fraud case against him. march 31, after a six-week trial he was acquitted by a jury on one count of accepting the people campaign -- illegal campaign contributions. the judge declared a mistrial. a conservative group in virginia have started a two- week round of ads accusing democratic senate candidate tim kaine of selling of virginia to advance president obama's priorities in virginia. american crossroads, an independent group guided by republican strategist karl rove that does not disclose corporate donors is paying $1.6 million for the 30-second advertisement. lenders initiated foreclosure

proceedings against more homeowners in may, and setting the stage for the stage for foreclosures -- the stage for foreclosures, scenarios economics say could take down the value. the notices were filed against 109 thousand homes last month, up 60% from may last year. german chancellor angela merkel says europe's debt crisis will overshadow all other topics of the g-20 summit this weekend in mexico and she will defend her country's contention that a mix of fiscal tightening in reform is the only way to overcome the crisis. those are some of the latest headlines on c-span radio. >> kenya, indonesia, hawaii, kansas, washington, followed

david maraniss 4 "barack obama -- the story." also, a conservative blames liberals for an ongoing war on ideas using the tear in the of cliches. >> american politics has been destroyed by the idea that the further you move from the left the closer you get to bad things -- homophobic, sexist, racist -- that is close to a fascist in american life. >> this weekend on c-span to. "washington journal" continues. host: welcome back to suspend.

robert reich teaches at berkeley university and it is a former member of the clinton administration. he is also the author of the new the book. -- new e-book. but guest: it is called "beyond outrage." what i have understood is that the matter how good people are in washington, on the people outside of washington are motivated to put pressure on people in washington very good -- very few good things happen because organized interests get their way. i have been preaching to people that sometimes do not want to hear it that being an active citizen is more than boating or showing a ford judy -- jury duty -- voting or showing up for jury duty. host: i am your website you talk

about the latest job report, the anemic recovery, and getting close to the possibility of a double-dip recession. how close? guest: i did not think we will go into a double-dip recession the economy has been slowing. part of that is europe. everyone is concerned about uncertainty over the european debt situation. part of it is the continued problem of the american consumer's not having enough purchasing power. one thing i have been saying that has not really been acted on by this administration and certainly not by republicans is the very basic principle that if so much of the income and wealth in the country continues to go to the very top and we are having levels of the inequality right now the we have not seen in this country in over 100

years, than the vast middle class does not have the purchasing power to turn around and buy enough, and that means the private sector is not want to add jobs and expand. this is not rocket science. it is very basic. -- it is a basic economic principle. -- it is basic economic principles. it is not class warfare. some people accuse me of being class war. i am in class warrior. i worry there is not aggregate demand because one so much income and wealth goes to the very top, the very wealthy, the top 1%, they spend at most 50% of what they earn or what comes in in whatever form. those savings go around the world to where they can get the highest return.

that is understandable. i am not blaming anyone. average working people will spend a much higher portion of what they earn because their incomes are much lower. that spending fuels and economy. that spending gets businesses to make decisions to expand and hire more people. the problem of the american economy in terms of american consumers whose spending is 70% of american economic activity -- the problem has been with us for at least three decades but it was disguised for a long time by the fact that -- first of all, in the 1970's, and then again in the 1980's, large numbers of women went into paid work. that was not the case in the 1950's and the 1960's. then it was disguised by the fact that american households with deeper into debt using the

rising value of their homes as collateral. the housing bubble burst, so we are left with something we can no longer ignore, which is the inability of the best middle class to sustain -- vast middle class to sustain the economy. host: let me put this in terms of numbers that shows overall wealth on the decline. guest: debt 7.7% drop from 2007 to 200010, is likely to continue. the median wage has continued to decline. if i am compared to shaquille

o'neal, there is an average height of 6 ft. 1. the median wage figure is so important. when you see the median wage declining, and on top of that 23 million americans either unemployed or under-employed you have a good indication why there is not enough aggregate demand, why people do not enough money to turn around and buy what the public sector could offer. guest: i think there is in the following way. those tax cuts were sold to assess ways of treating a better economy, more jobs. they were sold to us as a form of trickle-down economics and one thing we have learned is that trickle-down economics does not work. nothing trickled down.

wages went down. job growth, even before the great recession, between 2001 and 2007 was rather anemic compared to the job growth under the clinton administration, of which i was very proud to be a member. those cuts had no effect other than in reaching the already very rich. so, when republicans say the way to revive job growth is to give more tax cuts to the wealthy and corporations, you have to scratch your head. it did not work before. there is no reason to suppose it would work again. corporations are sitting on over $1 trillion of cash. they are not investing in additional jobs not because there venial, but because they are obviously concerned about their bottom line. if they're not calling to invest

that money and expand capacity unless they have more consumers. host: this is from february 2009 to the past month. you can see the drop of private- sector jobs. it began to turn around in 2010, and a slow increase in private- sector jobs, and then a decline in public-sector jobs. this is an aberration because there was a census in 2010. what does this tell you? guest: all things being equal private-sector and public-sector jobs are slowly beginning to come back. we are still in first gear. i hope we stay at least in first gear. i do not think we will slide into recession. it also says much of the drag has been the decline in public- sector jobs. it is simple mathematics. some of these states and localities have had to fire some many teachers, firefighters and

police officers that so many private-sector contractors have also had to reduce force and you see where a lot of job losses are coming from. the claim that what we need to do right now is simply whack our public budget deficits does not make a lot of sense. undoubtedly, we need to get deficits under control in the future, but right now with such high unemployment and so much under-utilized capacity, this is the wrong time to cut the deficits. it is the mistake that europe is making. they have embraced austerity economics when they have. spain has 25% unemployment. they are lacking public budgets. the private sector will not expand employment people do not of money buy -- to buy.

host: sue is on the line. good morning. caller: good morning. yes, mr. wright, i saw you on msnbc, and i appreciate your book. i wish people would listen to you. you seem to know what you are talking about. every common-sense person ought to know that if people in the middle did not of money to go to restaurants and stores, is going to be a big problem in our country -- is going to be a big problem in our country. i was reading in our local paper here that said instead of buying gm of all bosses we bought international auto buses.

why are we not buying american? guest: i think a lot of people do not know if they are buying american or not buying american. almost every product and service is a combination of stuff coming from abroad and here. you buy and iphone and the design of the iphone is done in california. most of the inside comes from japan, china, southeast asia and all over the world. the same is true of most cars -- well, most everything we buy. many services are here because that is the source of the service, but even services to the extent they involve technology, some of that is being done abroad. it is very difficult in this global economy to separate what is us and what is them, and that is why it is so important in terms of national

competitiveness that we invest in our people, our education, our job training, early childhood education, our roads, bridges and all the ways we communicate with one another because that is essentially the american economy. if we have the right education, infrastructure capacity here to add value to this globalized economy, we will do better and better over time. not right now. we are facing serious head winds. i have heard a lot of republicans say every public dollar is bad. what we ought to do is to chop the budget deficit, except, they say, for national defense, but spending on education and infrastructure is critically important in terms of building the productivity for americans

to get good jobs in this economy . host: from twitter. guest: we have not seen -- i think we all ought to be concerned -- we have not seen this degree of concentrated income and wealth, by most measures, in over 100 years. some measures say it is the 1920's. i've seen many that saying is the days of the robber barons. host: why? guest: concentrated wealth and income is coming from a couple of sources. so much of our economy is dominated by finance and wall street, and that is where two- thirds of the growth of wages came between 1997 and 2007, before the great crash. you still have catastrophic

rates thereupon wall street. it is not because there -- there adding some much to the economy. they are paid a lot because they take a little percentage of every transaction and we have a gigantic amounts of money transacted on wall street today, which is like a giant casino. to some extent we have a winner-takes-all economy in 300s of ceo's being paid times what the average worker is being paid. 30 years ago, it was 40 times. we have seen a ratcheting up of ceo pay, and for that matter, also entertainers and professional athletes, but it is ceo's of big corporations and wall street that account for much of the extraordinary concentration of wealth and income in this country. i think it is dangerous for the

economy, as i indicated, steve, and i think it is dangerous for our economy because i have not seen so much money from, again, big corporations, wall street and wealthy individuals surged into our politics to the point where average americans really cannot be heard any more. the supreme court, the building not too far from where we are sitting, is today making a decision on whether it will reassess and revisit one of the most grotesque decisions the supreme court has ever made, citizens united against the federal election committee. host: that is the headline from "the chicago tribune" and i want to share one member with you, as of june 12, what was spent in the election cycle.

guest: that does not count the mitt romney and obama campaigns directly. you're talking about 120 two million dollars from super pacs -- 100 to $2 million from super pacs that are allegedly separate from these campaigns. the supreme court has opened a floodgate and the interpretation by the d.c. court of appeals by that decision completely opens the floodgate where there is no limit on the amount of money individuals can contribute. mitt romney's super pac has at least 16 individuals that have contributed more than $1 million each. >> sheldon adelson contributed $10 million. guest: in one jump, he contributed $10 million. what is a normal citizen going to think? what are we going to talk about with our children about how the

economy was -- the election was bought in a 2012? i am the chairman of the citizens' group called common cause that for the last 40 years has dedicated itself to get big money out of politics. host: from our twitter page. guest: and that case said money is the equivalent of speech, but even after that there were still limits on what people could contribute to campaigns. presidential campaigns, it was $5,000 each. what has happened, even after we had a fairly good piece of legislation coming out of washington with regard to mccain fine gold, those limits have been turned around by those

turned a blind eye to the super pacs and the so-called social welfare organizations that do not even -- even have to disclose who has contributed. we know the u.s. chamber of commerce is basically a slush fund. they are getting millions of dollars and their goal is to have something in the order of one engine million dollars or more from who? let's assume big corporations. corporations do not want shareholders to know who was injured in what, so they hide behind this notion of a social welfare organization that is a so-called charitable institution? who are we kidding? host: our guest is robert reich, former labor secretary in the current and administration. to you speak to president clinton often the clinton

administration. do you speak to president clinton often? host: -- guest: i talked to him a lot. he looks great. his lost a lot of light. host: you have known him since the 1960's? guest: i met him in oxford. host: your first impression? guest: in october, i retired to my cabin, i was seasick, and there was a knock at my door and there was this gang goalie guy with chicken soup in one hand and crackers in the other, and i heard -- he said i heard you're not feeling well. he did not say "i feel your pain." that came later. i was impressed with him in many

ways. when was his knowledge and enthusiasm for politics. he was clear he was going to be governor of arkansas and maybe more. at the age of 22, that is saying something. most of us had no idea what we were going to do in the next three years, let alone our lives. he learned and loved his politics and loves people. that was evident from our first conversation. host: charles, colorado. good morning. caller: good morning, mr. reich. you took my steam with austerity, and i was into paul krugman and he said name one country that came out of a recession or depression using austerity measures. that is one point i would like to make. host: let's start there and come back with a follow-up. guest: i think paul krugman is sensible the right. there is no country that came out of a recession or depression

by cutting its budget. i was debating someone from the cato institute that said dystonia. well, i do not know about the estonian economics. no modern economy, no rich economy, and no economy the most people have studied has come out of recession by cutting its budget. the united states in 1934, 1935, 1936, when starting to, the trough of the great depression, and in 1937 franklin d. roosevelt mistakenly listened to the congressional budget office that said we have to cut the supply and we were pushed back into the depths of recession. it was not until we have no choice but to spend huge amounts of money going into the second world war, mobilizing the entire country, that we've really had enough velocity to get out of the gravitational pull of the

great depression. right now europe is still using austerity economics and it is crazy. intuitively, it is obvious. if you're cutting your public budget at the same time you have high unemployment and you have a lot of factories, offices and storefronts a bill or vacant, which is when you happen? you have less demand, which means you have fewer jobs. you have less revenue coming into your coffers. that means that your entire deficit situation is going to get worse, not better. you see, it is a matter of sequencing. we want to get the long-term budget deficit down, but stage one is in need to spend enough. if you are the public sector, you are the spender of last resort. you have to spend enough to get the economy going again, and when the economy is going again the need to start cutting the budget deficit.

what i've said around this town, and nobody as listen to me, is we need a trigger. may be the trigger is 5% unemployment and 3% economic growth. we need a trigger for commencing major deficit reduction, but it has to be related to jobs and growth. host: charles, do you want to follow up? caller: speaking of triggers, and look at the history of america and during times of prosperity, is what i have found is when tax rates are 40, 50%, and even higher is when americans are doing best, and when tax rates are below 25% is when america is doing its worst.

guest: that is an interesting point. if you look at the 30 years after the second world war you see that tax rates on the top income earners are never below 70%, even under dwight eisenhower, who no one would call a socialist. the effective rate, once you get rid of the tax credits were still over 50%, probably 54%, 56% in those days, if the economy in those decades on average grew faster than the economy has grown in the last three decades, particularly after tax rates were reduced on top-income earners. the point is not the we need high taxes on income-earners, but if we want to get the budget

down and have enough money to invest in education and infrastructure, then the top- earners have to pay their fair share. host: this point from colorado. gee, i think we would be better off if those tax rates head up -- guest: i think we would be better off if those tax rates have gone to and the structure. temporary tax rates are saved. people know they are temporary. if they are in debt or are worried about having the money for the future, they will say that money. it is rational for the individual, but not for the country as a whole. if they are not stimulating economic activity if they are saving. generally speaking, and infrastructure investment

carries a bigger punch in terms of getting the jobs going and the economy growing. host: let me get host: let me go back to what you wrote. a privileged positions of the wealthy and powerful are entrenched. that goes back to what you said about government spending. the economy did not turn around until world war ii. it did not turn around the great depression. guest: the new deal programs started turning the economy around in terms of policy.

conservatives say the new deal would work if government spending -- to check this out of that. --- not recommending another war. concerns of the principal, government is the spender of last resort and such high unemployment. you just have to look at history. yet a point just raised -- the other point you just raised -- that is pretty strong language. i did not mean any billionaire that are pouring huge amounts of money into this election, i don't mean they are planning a coup de top.

with all this money coming in a relatively small number of millionaires and billionaires and big corporations, the effect of it is to change the government as we know it, to remove the capacity of government to respond to average people, average working people and forced the attention of everybody on that hill on who is going to pay for the next set of ads or who will pay for the next campaign. the money is coming from a smaller group of wealthy people. is brandeis -- louis brandeis in the gilded age of concentration -- he said, we can have either a

democracy or we can have a huge amount of the nation's income and wealth in the hands of the few people, but we cannot have both. he understood exactly what we must understand now because we're in a new gilded age. host: stacy is on the phone. good morning. caller: i'm wondering how you can take something that belongs to somebody else and give it to somebody else. i know what think you're wrong about. this is not a democracy, this is a republic. i'm not for supply-side economics -- communism. guest: this comes down to a

philosophical question. wanted to make this nation a great nation. the essence of patriotism is everybody do their fair share. we have had an income tax in this country since the early years of the 20th-century. state income taxes have been around even longer. income taxes are part of the price. oliver wendell holmes said tax is the price you pay for a civilized society. you have a civil responsibility to be an active citizen and to make sure the government is responding to what our citizens want and need. the big issue is not the size of the government but who government is for. is it for the people, wall

street, the big insurance companies? if the government is working for us, we will have a government that we will be proud to support with our taxes. host: the latest book is "beyond outrage." our phones are open for robert reich. guest: i do not know and i did nothing to keep federal spending and state spending. i have been an advocate of exempting the first $20,000 of income from payroll taxes for a couple of years. it is important to provide employers with some tax incentives to create net new jobs.

these are tax incentives. there are a lot of things that could be done. there's no magic bullet. we need to do them on a scale that is proportionate to the problem. i'm hoping the president today in ohio will reveal some additional ideas and bold concepts, even if the can i get through the republican house. he needs to come up with some bold ideas that americans can say, that makes sense to me and if we reelect you, we'll support you. host: here is what the president said on tuesday about the economy and the deficit. [video clip] >> this notion that somehow we cause the deficit is wrong. it is not true.

anybody who looks at the math will tell you it is not true. if they start to suggest it is true, they put this stuff into the cake with the tax cuts and the prescription drug plan. it is like somebody goes to a restaurant, order is a big steak dinner, martini, and as you sit down, they leave. [laughter] and accuse you of running up the tab. [cheers] that is what they do. host: is the accurate? -- is he anchoccurate?

guest: 52% blamed obama for not doing enough for getting us out of this mess. the bush tax cuts, most of the benefits went to the very wealthy. this set us on the road for a huge budget deficits. the stimulus package was necessary. the government was the spender of last resort. we would have been in a much worse place today. that contributed to the large budget deficit. joblessness -- people working part time that want full-time jobs. too slowly.bcaack

the reaso consumers do not have enough money in their pockets to spend. corporations arguing. wealthy americans have never done as well. they don't need tax breaks. average americans need tax breaks. a fair deal.te fair dea host: dorothy is joining us from texas. thank you for waiting. caller: i'm calling regarding the depletion -- hospitals and

police force. it has been my observation in taxes that illegal immigration is the backbone of the problem. we do not talk about it and i do not understand. guest: and natalie, undocumented immigrants -- undoubtedly, undocumented immigrants have caused some stress on some budgets. we're still in the gravitational pull of the recession of 2007. undocumented workers have declined. they come to the united states for work. we problem we're facing -- do have to come up with

systematizing and dealing with undocumented workers. that is not the core of the issue. the issue right now is on the demand side, inadequate demand. one of my great fears is there so much money pouring into these social welfare organizations and super pacs used to put advertising on the air that tells the american people a set of huge lies. the big lie told over and over again becomes the truth. "we will get jobs back if we give tax breaks to the wealthy." when they are fed a lot of economic nonsense but in such great dollops with such great

money behind it, you have a situation in which americans are being misled in a very profound and serious way. host: listen to what mitt romney said yesterday. [video clip] change you'll see him course when the speech tomorrow and he will acknowledge it will not go so well and he will ask for four more years. my own view is that he will speak eloquently but that words are cheap and the record of an individual is the basis upon which you determine whether they should hold on to their job. the president's team indicated if we pass the stimulus that it would hold unemployment below 8% . we have gone 40 straight months

with unemployment above 8%. host: he is referring to the president's speech today about the o'coeconomoy. y. guest: it is hard to figure out what mitt romney stands for. i almost had a chance to run against him. he was saying one set of things. now he is saying a third set of things. words are very cheap. the question that medtronic has to answer and i hope the president answers today, given where we are right now and that -- the question that mitt romney has to answer -- what has been

enacted is not enough to get us out of the gravitational pull of the great recession. what next? the president will not get anything through the republican house. they made clear that their number one goal is to get rid of barack obama. i think obama needs to say, " here's what i've tried to do and here's what they have stopped me from doing and here's what i'll do if you give me a congress tell will cooperate with me." host: robert reich, his latest book is "beyond outrage." people can fall you on twitter -- people can follow you on twitter. up next, a conversation with sheila bair, former head of the federal deposit insurance

corporation. sheila bair is joining us in just a couple of minutes. the latest from c-span radio. >> good morning. weekly unemployment benefit applications rose last week by 6000 to 386,000. employers added an average of only 96,000 jobs per month in the past three months. to sit down from an average of 253,000 in the previous three months. a key measure of consumer prices fell in may as gas prices continue to drop sharply. consumer price index was down .%

3% in may. house oversight committee chair darrell issa said there still was a chance to produce materials about the fast and furious gun-running operation. the attorney general did volunteer to compromise on the request for documents that the justice department has so far declined to hand over because it does not want to release details on internal discussion. issa responded in a letter saying, "if a serious proposal on how they will alter its proposal, i'm ready and willing to meet to discuss your proposal." polarizing positions on energy have divided congress and appear to run deep among the public, as

well. a new survey says 75% of republicans questions blamed limits on drilling as a major reason for energy problems compared with 34% of the democrats. 75% of democrats believe the industry does not do enough to support clean energy. the chief of the u.s. forest department says steps have got to be taken to prevent those fast-moving wildfires that have been consuming parts of the west. forests have been overgrown and areas facing the greatest fire danger must be thinned by 20% each year by the by prescribed burning or mechanical fitting thinnings. >[video clip]

>> we have confronted the russians about their arms shipments to syria. they have said that we should not worry and that everything they are shipping is unrelated to their actions internally. that is untrue. we are concerned about the latest information we have that there attack helicopters on the way from russia to syria, which will escalate the conflict quite dramatically. >> watch the rest of the discussion online at the c-span video library. >> "washington journal" continues. host: day four of looking at financial agencies. we began on monday with a look at the securities and exchange commission.

host: today, a look at the federal deposit insurance corporation because our guest is the former chairman of the fdic, sheila bair. welcome. guest: thank you. happy to be here. host: there is something new you're doing, systemic risk council. guest: another nonprofit entity that is dedicated to integrity and financial services. we have a great cast of wise men and women. it is getting bogged down. not a lot has been accomplished. we want to be an independent

voice and explain what needs to be done and perhaps provide a counter to some of the special interests. i think there are two problems. there's been a calculated effort to drag this out. they start losing interest and losing faith. the more you drag it out, they hope the rules get watered down. congress created an oversight panel that was designed to be a coordinating body for getting these rules done and making sure they are communicated to the public. we're not been given much leadership. you have a negotiated process. the industry knows that. you end up with a lot of

complicated rules. host: what voice do you hope to have? guest: we are going to prioritize. there are six issues that we need to focus on. there will be at high level pronouncement and we will follow that with commentary and identify additional priorities later on. our focus will be systemic risk. i never want to see something happen again like what happened in 2008. host: jamie dimon was testifying on capitol hill yesterday. if the rules were fully in place, would that have happened?

guest: that is a good question. i have a question about whether this was safe and sound. i think it violates the intent of the the volcker rule. it would address this kind of activity. they to provide more clarify that only hedges should be an exception to the local -- to the the volcker rule. host: sheila bair it will be with us until 10:00 a.m. you can call us. here are the numbers. 202-737-0001 for republicans. 202-737-0002 for democrats. 202-628-0205 for independen

ts. you can send us an e-mail or twitter. there were asking mr. dimon and we want to get your response. [video clip] we havetalking --- larger capital. i'm talking about the regulatory regime that congress put in place. has it made our system safer? >> i do not know. guest: a lot of these rules have not been completed yet. i have disagreed with him. no, i think banks to have more

capital now. the rules are not in place to make the system more sounder. host: sarasota, florida. caller: good morning. i have a comment and question regarding the bank closures that the fdic has been overseeing. have been over40 400 foreclosed. there are these lost share agreements. my question has to do with the lost share agreements. congress ordered a study into those because of the abuse that takes place oftentimes to those lost share agreements were performing loss are forced into

a nonperforming status because it is to the bank's and vanished because there will make advanoney-- the bank's tage because they will make more money. guest: i think there been some misunderstandings about lost share. the lost share acquire they are regulated entities. i do not know it would be in their economic interest to convert a performing loan into a non-performing loan. there is no loss for anyone. there's been some misunderstanding for lost share. it was used as part of the snl cleanup. if we try to sell the loans out

right, we take deep discounts because the buyer does not know what the loss will. these were loans originated by another bank. good study show it saved us about $40 billion, at least during the five years that i was there. you need good controls in auditing. maybe there have been abuses. it was important that we had scrupulous auditing. there is no economic incentive. host: our democrat's line from florida. you are on. caller: yes. , you're on.r

caller: there was a contract on my house without telling me. i went to the fbi. i told about the fraud. they said i had to go to civil court. they said, sorry, you have to go to civil court. i went to the irs and tell them about the fraud and they said you have to go to civil court. nobody is doing their job. everybody is saying to go to civil court. guest: you feel a broker give you a fraudulent loan? host: the caller is no longer with us. guest: the fdic has the

authority to investigate bank fraud. they brought a lot fraud cases against mortgage brokers. we do not have authority to get compensation for people that had been victimized. sometimes a celebrant can include compensation for victims. you probably need to have civil recourse against the broker. the fdic is not set up to adjudicate claims between private parties. i am very sorry that something happened to you. there are some good mortgage brokers out there but some have done some terrible things. host: carolyn from carolina. caller: sheila bair, thank you

for representing our fed. what affected the government printing all this money - - didn't that degrade the value of our dollar? is it controlled deflationary? guest: that is a good question. there is a debate that maybe we've gone too far with monetary policy. there was justification for policies when we have the crisis. the fed should stand down. this far outweighs any structure and benefit we might have. so, i would agree with you. it is a difficult decision to

make and the fed has been spending a lot of time on this. our problems right now are structural. you can put money into the system but you cannot deal with what is done with it. it is going into robert reiarbid into high-rish investments. the low interest rates have made it more difficult to make money through lending. i appreciate your bringing that up. host: what to be done with a bank that is classified as too big to fail? guest: i think dodd-frank is the fdic the tools to end too big to fail.

it will be going into the fdic resolution if they get into trouble. bondholders should note. the fdic has done tremendous work explaining how the resolution trust will work. you convinced the market they will not get bailed out again. host: a living will when it comes to a big bank. guest: the fed and the fdic draw up a living will and submits to . they need to show it can be broken up and result in an orderly way. i think this is a tremendous tool. we had information about insured banks.

activity was happening outside of insured banks. insurance companies like a.i.g. and investment banks. all these institutions are subject to this process. they have to show the fed and the fdic how they can be resolved. structural changes can be ordered. this can be a tremendous tolol. host: a better way to handle a failing bank in the resolution process. guest: thank you for bringing that up. jamie dimon was talking about the fdic process. he supported having a robust resolution process.

he was talking about the fdic process as a bankruptcy process. bankruptcy does not work for large financial institutions. you saw the horrible disruption after lehman brothers. these thousands of derivatives counterparties are basically able to cancel other contracts, dump their collateral on the markets. i think that was a primary driver. bankruptcy does not work. i saw that. there was another op-ed on the opposite page.

haircutting other claimants and secured creditors. so bankruptcy can be abused. bankruptcy is inefficient right now. administrative costs are about $2 billion. bere's a lot that needs to fixed with bankruptcy. host: our guest is the former chair of the fdic. rob from tucson, hello. caller: good morning. i am rob. if you would bear with me. i am a genius and if you would bear with big you could probably settle this whole world prices very soon.

listen to be carefully. confiscates -- they say there are 400 families in the usa that got fabulously wealthy, but the people are generally not very smart. cattle feed, oil, the whole bit. let's say we confiscate all their wealth, about $10 billion a family. that would be about $4 trillion. that would be a lot of money. our government should be powerful to represent the people. the fifth point on the preamble to the constitution says to stimulate and to help the

general welfare. host: we will leave it there. guest: this is a free country with property rights. the government cannot confiscate at well. there are policies that should be tackled. one is the lower tax rate on capital gains. this is one reason why the wealthy pay lower income tax rate than you or i do. i would like to get rid of the lower tax rate. we have a tax that punishes work. they should be taxed at the same rate. the rationale is that it creates jobs. there is no credible evidence that it creates jobs. we read of it in 1986 -- we get

rid of tit in 1986. there is a problem with wealth distribution but you cannot confiscate people's wealth. host: a call from maryland. caller: good morning. i was looking at the coverage of mr. dimon. he continued to apologize. "i'm sorry for it. i take responsibility." blah, blah, blah. it amazes me how thoughtful they were. wasting taxpayer dollars. they had the slender trials and they were so mean.

i do not know why people cannot see it. it is an amount of money that republicans versus democrats are getting from wall street's. . this election to me cannot be more clearer. guest: you are right. i think there has been on the democratic and republican side, this is been a big player in making contributions to former members. it creates an environment where people question objectivity. another problem is some of the technical aspects of financial services. ttenncial services have go too complex.

there were surprised by the losses. it tends to intimidate members of congress sometimes. it has a chilling affect on them being assertive. i agree he got off easy and he did a good job. he was talking about the importance of having a strong capital standards. they do have relatively strong capital, jpmorgan chase. they can deal with these losses. some party agreement that will increase capital agreements. there were undertaking this strategy because they thought it would reduce their capital requirement. perhaps there needs to be greater focus on that. but you're right.

i think it is in the academic ccommunity. too much influence. we propped everybody up from the bailouts. host: this is from twitter. how many times did you go to congress to talk to relevant committees? guest: i testified quite a lot and i had a private meetings with members of congress. the regulators need to be the counter. banks are there to make money. when banks go up there and

lobby, they are articulate positions that will help them make money. congress needs to understand that. regulators will try to speak to the public's interest and that is the job. i have gone up 40 or 50 times when i testified before congressional hearings and as many private meetings. who approves of financial instruments? there's -- we have regulations over trading and regulations over conduct. there is no pre-approval process for a financial instrument before it can go to market. we do have a vulcanize regulatory system which impedes regulation. we do have a lot of regulators

right now. market regulation and they don't always coordinate as they should. we will try to make sure they are more consistent. host: 4 letter del -- fort lauderdale. caller: it is great to be talking to an adult. only in american can someone like me be asking sheila bair a question. does anybody monitor the mailings of the institutional banking people, the offers they make and how they are being made? i can remember running up to the financial collapse, i was getting things in my mailbox that were insane.

i was wondering how they know i did not apply to everyone of these at the same time. i would be knocked out financially. guest: that is a huge problem. part of that will be addressed by the new consumer bureau. they did have authority to write rules and they did tighten up on that but too late. i was getting the same kind of ads. i was with the fdic, my fax machine would get a fax from my mortgage broker teasing these rates. every month i would taken into my office and asked my staff who

is funding these people and they never could. the only thing that changed every month was the phone number. they just moved around. the rules have tightened. host: we will have it representative tomorrow. "usa today." guest: right. i think -- my priorities for the consumer bureau is to focus on the non-bank sector. that is a difficult task. that requires building a new infrastructure of examiners and getting into these shadow institutions.

ande's a lot of them sometimes they run around. that is a difficult challenge. i know they are struggling with margaret standards and a note that is difficult -- with mortgage standards. the rules were just too complex. it was so hard to figure out how to comply with them. they did not have the money to hire all the lawyers. consumers cannot understand what the rates were. making better disclosures, too. they are not as user-friendly as they should be. it is a brand new agency and they've had a lot of challenges.

the controversy about installing a new director -- godspeed to them. they have a big job on their hands. i would like to see that and i think you can do that. it would require legislation to completely break them apart. i do not think there is political support in congress to do that. they do have the authority to require structural changes. they can force the trading activity outside of insured banks. if you are taking insured deposits, he should make loans. the securities and derivatives markets -- i hope the fed and

the fdic will use their powers to accomplish that. host: who tell these guys there were no rules? rob on the independent line. caller: what happened to the old antitrust laws that were there to try to continue competition by not allowing businesses to get as large as these big banks have gotten? why can we bring antitrust laws back into the situation so we can have more control and break these banks up? guest: that is a good question. i am a bank regulator. that is a legitimate question without concentrated the industry has become.

you have four or five mega-banks in this country and they do compete with each other. if they get into trouble, what do you do with them to make sure they don't hurt the broader economy? i think that is a good question. bank regulators have a lot of latitude to put -- better to control. host: donna from maryland. caller: my problem might seem small but it is brother large. -- but it is rather large. i dealt with the fdic, the federal reserve, always up to

senator barbara mikulski -- all the way up to senator barbara mikulski. cordially i thought i was screwing up my bank accounts. it continued i kept calling. theft.it was identity fa i kept getting double charged. i falling figured out it was on the one account that was receiving social security direct deposit. it was only being done by the move in the social security direct deposit into bank's megafund, which i believe was illegal. but it happened at four different banks. i went to another bank.

i thought it would be ok. vendor.a television than ther guest: these are regulated banks. you should go to the fdic website. you can ask for an investigation. if it is a bank they regulate, they will investigate for you. i'm sorry you had a problem. bank regulators should be alerted. no, i think we do need the federal reserve system. there is a question about whether there should be less discretion. there are questions about whether the fed had too much of a mandate.

i did nothing they have performed as well in terms of the rule-writing. the fed itself, we need the fed. we need a lender of last resort to make sure the banking system remains stable. you put your money in a bank, you want to make sure it is is shared by the fdic and that the bank has enough cash. the bank can always turn to them. host: would you agree if they do something like the qe3? guest: the risk for high inflation is significant. i think pension-fund, banks are

starting to do some stupid things, trying to get better terms because the interest rates are so low. we saw this leading up to the sub prime crisis. people were looking for returns. it was a factor in the subprime crisis. there are definite risks with this policy. host: dan from annapolis, maryland. caller: i have a question about an unpopular subject. when i go back and read stuff of the code of regulations, what i see is a tremendous amount of

power that essentially said there are quotas of all of these loans, low-income loans. "we can stop be from expanding." they really set quotas. you put pressure on banks to make loans to people who did not qualify. i would say that banks had a lot of loans on their books that they could not sail into the market and they were forced to do this bundling to get rid of these loans. if you could address the role. anyone show what occurred and forced banks into that. guest: thank you for asking that because i think there is

misunderstanding in the subprime crisis. most of the bad subprime loans were made by mortgage brokers who were selling them on to wall street securitization vehicles. cra applies to the loans that banks are making themselves. i did not think cra was a driver in making these bad loans. i think greed and making money or the drivers. i do think regulators need to own up to the fact that there were instances where loans were given cra credit when they should not have been. greed was the driver for this crisis. host: tallahassee, florida. caller: good morning.

in reference to these regulations for these banks, he gambled with his own money, not taxpayer money. the federal government gambles with our money all the time. do the same rules apply? that would be my first question. three to one, the financial institutions -- three to one, zero to independents. i would like to see if the same regulations apply to everyone else when they are gambling with our money? guest: that is a good question. there was some commentary

yesterday about how the government loses $2 billion a day. you're comparing apples and oranges. banks do the same thing. they use a lot leverage. this is made with the bosses that were insured by the federal government. there was no government exposure. jpmorgan chase had plenty of capital, but it was insured money that was used in making these derivative bets. host: johnny from michigan. caller: hi. who controls -- who values the states currency?

guest: that is done by markets. it can be influenced by how much currency is being pumped in by the central bank. the market mechanisms determine currency rates but it is influenced by how much is being prompted by the central bank. host: a question by emma. ies.t: bank monopoly i there is a long-term record by the fdic, your money is always protected. your money is safe no matter where you have it. host: one more call. john from long island, new york. caller: i wonder if you could

answer a question about citadel broadcasting. is that regulated by either of these agencies? guest: not that i'm aware of. the lack of accountability has been disturbing. i am glad that shareholders are becoming more active. i of done a couple of columns in "fortune." shareholder value for the medibank is much worse than for the smaller mutual banks. much lower than 48 jpmorgan chase or boa or citi. shareholders should look at that. get active here. i think shareholders can be

assisted. more value can be achieved. host: there's a survey. 221 rule-making deadlines. 73 have been met with finalized rules. we have been doing this for several years. guest: some of the important rules have not been finalized. i think getting back to our decision and things that drove the crisis, they need to be fixed. host: how would you know if the systemic risk council