prices, oil and gas tax credits, and the keystone pipeline. new york university officer looks at the impacts sequestration could have on contractors and federal services. ♪ host: good morning. welcome to the "washington journal." on this monday march 4, 2013. the so-called sequester remains in place for now with both sides sticking to their principles. house republicans plan to pass a bill to keep the sequester in place, but avoid a government shutdown. in "the wall street journal," there have line -- headline -- we turned all of you to get your thoughts, your financial future, are you pessimistic or optimistic? we will start there. for optimism --

if you are pessimistic -- you can also send us a tweak -- a tweet @cspanwj. let me begin with the "los angeles times, courtesy of the museum, -- "los angeles times," courtesy of the newseum --

that is the "los angeles times." how about "the new york times"?

what are your thoughts this morning? your financial future, are you optimistic or pessimistic? optimistic -- pessimistic -- we posted this on our facebook page, a little poll. let me show you the results so far. it says here that 27 people so far on our facebook page are optimistic, and about 20 are pessimistic. what are your thoughts on this morning? we want to get your take on your financial future. washington is talking about sequester, whether or not it will have a negative impact on our economy. ohio,go to start in pessimistic. caller: good morning. i am not very optimistic. i am on medicare, social security, disability.

i was an rn, and i made quite a bit of money each month. now make $854 a month. they have cut my food stamps. i am disabled from work. that is my financial part. i do not mind anybody who makes a lot of money. what i do mind is, what can the two parties not get together? the republicans offered a compromise. harry reid, he will not do anything. i am a democrat, but i voted for john boehner. it is like they hate the word compromise. they do not seem to care about the american people at this time. host: what you want to compromise on? caller: why can we not go ahead

and adjust the age of social security and medicare and go ahead with some republican ideas, as far as cutting some spending? i would like to see republicans close-up of these loopholes that they have. they cost us money. i do not care if somebody is rich. why can they not go along with those two ideas? yester day they called in and said, what word would you use to describe the sequester? i would have said, psychotic. host: here is the front page of the new york times, with the story -- let me show you the front page of the washington times and their story about optimism.

does that make you more optimistic? caller: little bit. where is the chuck hagel with wanting to cut the defense department? why is he not standing up?

we need our defense to be good. the world watches what we do. i do not understand why they don't think of a bigger view than their own little wishes and demands. why cannot look at the overall view? host: on that point, politico is reporting -- that would avoid a government shutdown. let's hear from brian in myrtle beach, south carolina. you're optimistic, why?

caller: here is my take. i think that the republicans in the last election, partially in the sense that they did stand up for what needed to be said, for deficit reduction. they got their vice-presidential candidate who had never done anything through before -- i think this has revolved. ron paul and everything -- here -- there was no lobbyist reform, election reform, and we finally got something done. raising taxes can help.

it is never going to get us in the solid financial condition. do the math. spending is out of control. finally we have done something, and we are starting to see who really wants to do something and to really doesn't. -- who really doesn't. host: do you think sequestration should stay in place? leave: yes, well -- the reasl's sequestration unless something else comes into the fact. the lobbyists run the government. people think it is about the personality of the candidate or this or that issue -- once they

get elected, generally speaking, we start to see how lobbyists and big businesses and work. if i am not mistaken, england did not cut across the board. did they not get their house in order? host: steve harrison says is on twitter -- speaking of sequestration, gene sperling, the white house economic adviser, was on "meet the press to go yesterday -- "meet the press" yesterday. [video clip] >> you and i both know that the key to eliminating the sequester for the next 10 years is exactly the kind of balanced agreement

that the president has called for and has kept on the table and that speaker boehner was willing to consider just months ago. host: "meet the press," gene sperling on their talking about sequestration. people are questioning the impact it could have on the economy. we are turning to all of you. your financial future, are you optimistic or pessimistic? the rate in new hampshire, optimistic. -- ray in new hampshire, optimistic. caller: is that a window behind you or a tv screen? there is somebody in washington. the world and not and when they signed the sequester agreement. , a little optimistic pessimistic about how much the deficit is going to be, because you say $3.90 trillion in reductions, but that means instead of 20 four dollars trillion, we will only have --

$24 trillion, we will only have $20 trillion. the sequester, it is not cutting, but cut in the growth of government. -- cutting the growth of government. depending on the dollar and what the government is spending, i'm pretty optimistic about my own personal financial -- we were able to refinance our house. that cut our mortgage payments down. i am able to put more money into my 401k. we're saving for our retirement more. we have a small business. we're starting to see it stabilized. last year was a little bit off, but i am hoping this year, we are seeing back to a couple of years ago level. i am pretty optimistic. i think things are improving, slowly but surely, and if

washington could get their act together, i think the economy could take off. host: what you do for a living? caller: my wife and i own a small store, a small business. we saw sales of little bit faster. -- off a little bit last year. a lot of people were holding back on spending. hopefully this year, the stock market keeps going up. we are seeing a rise in housing prices. i think people are feeling a little bit better, not great, but a little bit better. host: what you make of this story --

caller: yea. usually this time of year, we see people coming in with their credit cards they got back from their tax refunds. we're just treading to see that now. -- starting to see that now. walmart said that february was the worst february ever, a couple of weeks ago. yes, definitely we see a broad range of income from our customers. we see an impact on the low to middle income customers. either we are not seeing them, or they are not buying as much.

host: larry in howard, ohio. pessimistic, why? host: i am older than to go dead trees. consequently, seeing a lot of things come and go in this world -- one of the primary reasons i am pessimistic, i equated to a pot of boiling water. every time it starts to simmer down, and even though i voted for change, the things that president obama has to jump into the mix and get his big stick in there to stir the pot to start it boiling -- i have a problem with that. the other thing i have a problem with, where is god in our nation anymore? there was a time in this country when the people of this nation, regardless of what their

religion was, when things started to look so bad, they would get on their knees, they would go to the lord god, the creator of this universe, and they would get themselves on their knees, pray to god to help them, to help this nation rise above the things that we see happening. host: how would that help politics? caller: god can do anything. anything. host: this is "the new york times" with the headline --

we received this from the white house, the president will make a personnel announcement around 10:3:00 pm eastern time. good to c-span.org -- 10:30 eastern time. go to c-span.org. john boehner on sequestration. [video clip] will hurt know if it the economy are not. i don't think anybody knows. >> is the president exaggerating?

>> if you look at the fact that the claimed that air traffic controllers would be laid off, and it turned out they would not have to, and when the secretary of education went out and claimed that teachers in one county of west virginia repeating laid-off as a result of the sequester, that was not quite true. then they released thousands of detainees down in arizona before the sequester takes effect -- there are a lot of questions about how the white house is handling it. >> you call the sequester dangerous and it would threaten u.s. national security? >> i am concerned about its impact on our economy and its impact on our military. we've known about this problem for 16 months. we've known the sequester was coming. that is why the house acted twice last year. why didn't the senate dent -- democrats act? where was the president's plan?

why did not pass something? here we are, beyond the 11th hour, looking at each other without having acted. host: speaker john boehner on the sunday talk shows, talking about sequestration and the impact it could have on the economy. here is the headline in the wall street journal -- we are turning to all of you. given all this talk in washington about the economy and sequestration, what is your financial future? are you optimistic or pessimistic? dug in maryland is optimistic. caller: i am optimistic. i lost my job in 2010. since that time, i have sent out over 1000 resume. about a month ago, i started getting phone calls. i started interviews for resume

its ascent out almost two years ago. -- resumes i sent out two years ago. i watched john boehner yesterday. i swear to god, every question that was answer -- asked of him, he dodged it. he was like an f-16 tried to dodge a missile. he needs to get his party in line. the republicans refuse to compromise. yes, we do need more revenue. as far as entitlements, i have been paying social security taxes, medicare taxes all my life, and i am almost 60 years old. all this is an entitlement? i have been paying for this. i wish they would stop using the term entitlement. host: on twitter --

we will go to darryl in mobile, alabama, pessimistic. caller:, for taking my call. good morning. -- thank you for taking my call. good morning. i'm very pessimistic. i worry about the sequestration and its effects on the economy in the near term. i worked for a defense contractor, which is located in the virginia area. it has been pretty bad. i am kind of pessimistic about our future. host: do you think they should fix sequestration, for lack of a better word? caller: basically, it is like this -- president obama and the tried to passy've their own whatever, which

appears to me to be more on the balanced aside, as opposed to the republicans who depend basically on cuts. while i am all for fiscal responsibility, i am all for not having a 4% of gdp defense department, i really think republicans need to get a little bit more -- give a little bit more in terms of coming to the table, giving a little bit on the cuts-only approach. host: york for defense contractor. can you tell us who it is? caller: i would rather not. host: what are you hearing about your job? caller: things are on a glide path. we have not gotten any contracts in. we are hoping with new

partnerships, we may be able to weather this coming storm. host: that was darrell in mobile, alabama, pessimistic, working for a defense contractor. fred in oklahoma, you're optimistic. why are you optimistic? caller: i was talking to a young man earlier, and the problem we're having -- we have more than one problem. the first problem we're having is that a lot of loopholes for the rich we had to cut that out in the 1980's. we would be more profitable. when they outsource our work areas to foreign countries, it creates a big problem. the reason i say that is because india and the philippines -- i did not even

know my service was outsourced to them. i am saying, what is going on? the outsourcing that is going on in our country, the rich can go to other countries, we want to pay them big money, but we have more protection over here than they have over there. we have a lady in oklahoma where the russians got into her computer account and drained it and they finally found out. we have a lot of ongoing problems here. host: other things that are happening in washington today, the homeland security department marks its 10th anniversary, and secretary janet napolitano will be taking part in a breakfast discussion hosted by politico, live coverage at 8:00 this

morning on our web site c- span.org. also vice-president joe biden will be addressing a packed -- aipac. we will have coverage of that on c-span2. "the new york times" has this headline about the role of the vice president in foreign policy. his role is expected to expand -- the article talks about the role the vice president played in the chuck hagel nomination.

that story is in the "the new york times" this morning. former adviser to the state department is going to lay out a new book in which he criticizes president obama over the afghan war. the book is called "the dispensable nation." a lengthy excerpt is being published on foreign policy magazine -- and foreign policy magazine on monday. "the washington post to go reports -- "the washington post" reports --

also, the financial times reporting that congress will raise pressure on iran. the u.s. congress is proposing new measures to put more pressure on iran, including a resolution that calls on the administration to support israel if it were to attack iran in self-defense. that is the financial times this morning with that. also on c-span.org on monday we have started our new series, taking a look at first ladies and the image and influence they have had. tonight we focus on abigail adams. you can go to our web site c- span.org, click on the picture about abigail adams. you can see biographical information, pictures of her, all of that tonight at 9:00 p.m. eastern time. leonard in ann arbor, michigan.

caller: i was watching over the weekend. i saw the reserve gentleman with this key -- this qe they tried to go through with the senate and the assets they are helping with in the european countries, i think it is time the american government looks at its own country and isolate from the other countries. we cannot afford, like you just said, $40 million in infrastructure for another country while that money should be here for the american public. that is what our tax money goes for. host: the money for egypt? caller: i know they have their economy problems, the same as we do, but why should the average

american person ascended to there for them? he meant -- send it there for them? host: we're talking about your financial future. asking the your pessimistic or optimistic and why. our caller from maryland. caller: sequestration, the $86 billion, that is not the biggest problem. the problem is they're trying to do twelvemonth's worths -- 12 months worth of cuts in seven months. we should not be giving our corporations our tax money to ship jobs overseas. i do not know who thought that up or when they thought that up. the other thing to add to that is that the money we are

sending to large oil companies. they are going to drill anyway. they have been doing it for 200 years. we should not be spending my tax money -- we should not be giving his corporations billions of dollars a year to do something they are going to do anyway. that is all i have to say about it. host::we'll go to mark in oregon. pessimistic, why? caller: i am pessimistic because for the last 40 years at the working class has dwindled down. the unions have been broken up. most kenyans do not have a backbone anymore to stand up to the corporates. -- most unions do not have a backbone anymore to stand up to the corporates. grain workers at a harbors are picketing, and yet they let other workers come in to do their job. this has been going on for a long time. what i cannot understand is the

federal reserve is what our government owes money to. the federal reserve holds the protection of the u.s. government, and yet, they pay no taxes. they do not pay for the military or fbi investigations. there really do not do anything except set rates and take the american taxpayer money for loans that have some interest charge. there are a lot of shenanigans from lobbyists. it has been going downhill ever since. host: with the federal reserve, do you think what they have done has helped keep our economy out of recession and help this recovery? caller: i do not think so. the only reason clinton made the deficit reduction to where they had a surplus is because he signed off on the glass-steagal act, a swap with the federal

reserve, with alan greenspan, representative of the texan -- i cannot remember his name -- all of the cronies out there at the federal reserve. that is the only reason clinton balance the budget. host: will continue to get your take on your financial future. mitt romney was on "fox news sunday." here is the "boston globe" -- his son's wife recently gave birth to twins. the governor was asked about his campaign this past election cycle. [video clip] >> it was a very unfortunate statement i made. it was not what i meant. i did not express myself as i wished i would have.

when you speak in private, you do not spend as much time thinking about how something could be twisted and distorted and could come out wrong and be used. i did. it was very harmful. what i said is not what i believe. obviously my whole campaign, my whole life has been devoted to helping people, all people. i care about all the people of the country. that hurt. there is no question. it did real damage to my campaign. >> just before the election, hurricane sandy and chris kristi -- christie embraced president obama. how much did that hurt? >> heading out think that is why the president won the election. we were in the last week, and we were trying to hammer, hammer our message. we had to stop. chris did what he thought was best for the people of his state. >> sitting here right now, do you wish he was a little less

defuses in his support for obama which made him seem more presidential -- a effusive in his support for obama which made him seem more presidential? >> tell us my election because of my campaign, not because of anything anybody else did. -- i lost my election because of my campaign, not because of anything anybody else did. host: that was mitt romney, and the first part of that clip was about the 47% clip. we have about 10 minutes left. we're talking to you about your financial future, whether you are optimistic or pessimistic. we will go to bob in plymouth, ohio. caller: good morning. i am a long time watcher. i asked about susan when i first called, and they said she was promoted. she was one of my favorites. i am realistic. this is something that most of

us have to come to grips with. we are in a world economy. we're not just in a local -- a local economy. there are things in business that a lot of us do not like. we opened our markets, and we cannot negotiate for good market returns in other places, just like japan. he did not see chevrolet's or ford's in japan. the same in europe. we let our market wide open, and we do not do things that will help us become more competitive and productive society. our society is not that bad off. we talk -- what is the word -- we advertise to the press how bad we are, and we are not that bad off. seriously. it is too bad we feel that way. a lot of callers calling in are too pessimistic. i understand they may not be as well off as i am or a lot of the people i deal with on a daily basis. america has a fabric that is

very resilient. we need to work at it. host: a pessimistic color in colorado. why is that? caller: i am pessimistic, but i agree with what a lot of the person before me said. i think we have opened up to very bad things, expose ourselves so much to the world. he may be well-off, but a first -- but a person making $40,000, your 401k does not make up with inflation, and even if you do not have kids, you're using all of your disposable income. i am 30 years old. social security for me will either be raised to 70 years old or be cut to such a level that it will not be real pension or program for us anymore. host: what are you doing? if that is your take on what is

going to happen, are you preparing another way? caller: i have of 401k. that is what i have. i try to save money. most of my money goes to bills and disposable income. it is hard. i am very pessimistic. i do not know what we're supposed to do. generations were shielded from a lot of this. i feel like my generation is opened up to the world and market it is hard for us to play the investment gains -- games. host: "the new york times" story and talked about rather -- earlier talked about the gap twin corp. -- between corporations and individual incomes.

if you're interested, the front page of the new york times. ashley judd makes the front page of usa today, whether she might run against mitch mcconnell for his senate seat. then next to that is aside story that you probably heard about. doctors cured the first child with hiv. -- also on the front page of usa today, a story about guns --

in other news this morning, here is the washington times, also on gun control. --

larry in ohio, you're optimistic, why? caller: well, i'm a first-time caller. i am a little nervous. i am optimistic because i feel in 2014 that common sense will prevail and we will get rid of some of these people in the two- party -- the tea party. as for my own financial future, i am hiv-positive, i am on retirement, and i will make it no matter what. i am very concerned about everybody else. it is out of control. there is nothing but negativity on the other side. it is really disgusting. host: the money section of "usa today" --

andrew in pennsylvania, you're pessimistic, why is that? caller: with just two year technical degree in education, you end up getting $1 million more earnings potential over the lifetime of your career. by the time these kids get out of school, pay for their education, and be able to pay for that education, it is astronomical the amount of money

that the kids have to pay back for schooling today. by the time they are done with school, the jobs that are out there right now in united states are just not there. it is very difficult for kids to find work. if we do not to something, i do not care if york republican, democrat, independent, if they do not come together to find a solution and bring jobs back to the united states, make the epa and all the things more friendly for jobs, we are going to be in a situation where it is going to beat -- going to be very difficult for these kids to pay back loans and make sure there is work for these kids to do. host: what you think about the cost of college? what should be done about that? caller: is astronomical. what it for my 4 year college degree, these kids take in one year. host: what did you pay?

caller: back then, it was about 12,000 for the entire cost, 16,000 to go through. now they are paying that in a semester. host: can you tell me the years you're in college? caller: back in the very early 1980's. host: private college? caller: know, university. -- no, university. host: we should do mitt romney on the sunday shows. the "usa today" says -- he will be in washington for cpac's annual conference. you can look for coverage of that here on c-span. that is in mid march. also this morning on

sequestration, here is robert samuelson's piece in the washington post --

let's hear from margaret in marietta, gaeorgia. caller: i just feel that the economy is becoming less and less stable. over the past decade where congress has picked the winners and always chosen financial institutions instead of jobs, because it made sense to them, but it really did not help the working people. it is dividing everybody because if financial institutions, i believe, made the economy more unstable, i am

more pessimistic. i taught for 18 years. now work for the federal government. are we going to go into sequestration over the next 10 years where people want to make cuts, and i agree with that, but you know, they are not making intellectual decisions about who benefits. they've chosen a winner. it is not my kids. it hurts my feelings grid -- feelings. host: we will keep the conversation going about sequestration. we will stick to the union group that represents federal workers. later, the industry group representing oil and gas companies will join us to talk about energy policy and rising gas prices. first, a little break. ♪

>> i was fascinated by her feminist views, remember the ladies, or you are going to be in trouble. i and her freezing obviously. -- paraphrasing obviously. she told her husband, you cannot rule without including what women want and what women want to contribute. this was 1700. >> abigail adams, tonight on a c-span kos new history series -- c-span pozner history series -- c-span's new history series.

she provides a unique window into colonial america and her life with john adams. join in the conversation live tonight at 9:00 eastern on c- span, c-span radio, and c- span.org. >> do you find that washington and silicon valley are on two different planets? [laughter] >> i think that is probably fair to say. the thais are probably getting closer. there is a lot more interaction these days, was before. in many ways and for a long time, folks in silicon valley did not really want to care about what was born in washington. likewise, the folks in washington have sometimes been turned out to what was happening in the technology industry. follow our tour of the consumer electronics show, tonight on a "the communicators"

at 8:00 eastern on c-span2. >> "washington journal" continues. >> joining me is frances rhodes with federal news radio. i want to talk about the logistics of sequestration. what is happening in washington? guest: right now does a lot of confusion. agencies are trying to figure out how they will present their plan to employees. we have only heard from a couple of federal agencies. the defense department talked about how they would work the logistics' a couple of weeks back. last week, the internal revenue service and the environmental protection agency -- agency talked about it a little bit. i was struck by how many people still do not know what is going to happen. they do not know how these cuts will affect them as employees and how it will affect the programs of their work on. host: -- they work on.

host: have they been told how they will be notified of any furloughs? guest: it most likely will be by e-mail. it is possible some employees will be notified face-to-face. so far, pretty much all the contact we are hearing about for sequestration possibilities for that agency heads are acknowledging sequestration, that has been by e-mail because these agencies are organizations where it is not practical to try to communicate this information face-to-face. host: doing and how the federal government will determine furloughs? guest: each agency will do that itself. each agency will decide, is it mission critical? what people have to stay on and to keep the government functioning? what people have to, or would be able to be out of work for a period of time? that is the big difference

between the way employees are approaching it this time around, and the way they approached the shutdown. the shutdown means, come in tomorrow morning, give us your blackberry, and do not expect to be yes -- be here for a while. the sequestration situation will be different. it will not be happening for at least 30 days because that is a period of time by law that federal employees need to be notified that their subject to furlough. that is casting little bit of a different feel about this. host: here is the baltimore sun -- the social security administration said it might shoulder across-the-board spending cuts without spending habits -- sending any of its full-time employees home. guest: that is a good example of how agencies will determine on a one by one basis of how they will deal with this. you heard the defense

department saying that it was a lot that as soon as it was possible, they were going to furlough employes one day each week. that is a 20% pay cut for civilian employees at the defense department. each agency will have autonomy in how they implement these cuts. each agency is going to release their plan on an individual basis. host: what about benefits? guest: this will affect -- will not impact retirement plans or insurance. for employers -- employees that received a match, if you're not putting as much pate, you'll not be contributing as much to your retirement plan. you will not receive as much of the match. that will have an effect. that is a much more long term effect. for things like health insurance

and so on, those will not be touched. host: what is the difference between federal workers and contractors for the federal government when it comes to sequestration? guest: the main difference is that contractors, contracted employees do not have the 30 day protection that federal employees have. if contractor decides because of sequestration the expect to see business godown, and they decide today there want to perform layoffs, they are free to do that. another difference is that the dollar value of sequestration will not necessarily impact contractors for some period of time because any money that the federal government has obligated, any money they have already signed deals for with companies, will be honored. that money is essentially already spent. that is not affected by sequestration. one side effect i am hearing from some people in the business, the contracting business community, is that they

may look at sequestration as an opportunity to do cuts, layoffs, furloughs that they were going to do any way or that they wanted to do anyway and be able to call them sequestration cuts. they are looking at now to sequestration cuts, but the prospect of smaller government budgets for the foreseeable future. they're thinking, this is a time we need to start thinking about reshaping our businesses. host: we heard a caller asked about the image behind me, the capital, saying, the sun is out in washington. it does not look like sequestration had an impact. if people are looking for a visual, what and when might they see one? guest: the way to look at would- be however it impacts of a particular citizen. as you mentioned the social security administration, that is one of the key agencies in

government. look at when you try to do business with those agencies, or their hours cut back? are there fewer employees? there is the old line about the washington monument, whenever the park service was facing budget cuts, they said, well maybe we will close down a national monument. it was a high-profile way to show it. when you see longer lines at the airport because there are fewer tia say screeners -- tsa screeners, those are the ways we expect to see it manifest itself to the average person. host: francis rose, thank you. represent federal workers.

welcome, thank you very much. your reaction to what you heard from a francis rose. guest: a pretty much agree with almost everything he said. one thing in particular which is a widely -- widely held misconceptions -- i do not mean to criticize him, because contractors have tried very hard to disseminate this misconception -- it is not true that money once obligated can be de-obligated. the government only incurs a liability for the contract ones work has been performed. we have a memo we are sharing with agencies and lawmakers. a distinguished law professor who was on a wartime contract in commission on iraq and afghanistan wrote a memo

describing all the ways in which the federal government can legally cut spending in service contracts. it is very important, especially in the context of the department of defense. in the last 10 years, spending on service contracts in the department of defense have more than doubled, from $72 billion a year to over $200 billion a year. during that same period of time, and house personnel costs have been flat. he estimates a government-wide, 70-90% of spending cuts could very easily come from service contracts. not exercising options, termination for convenience, negotiating with the contractors not to continue with every option in their contract. it is not true wants money has been obligated to a contract that it is required to be spent. it is only when the work has already been done. host: i assume that is the

argument you're making towards the a administration, to renegotiate contracts before you furlough workers. guest: absolutely. there is no rationale to have furloughs' be the first response to sequestration. it should be a last resort or not have them at all. as mr. rose was saying, there are a number of agencies that have made tentative announcements that they will observe the cuts without resorting to furloughs. the social security administration is a special case of like to talk about. we have the smithsonian, office of personnel management, the small business administration, the national institutes of health, they have all come out and said, not definitively, but they are basically planning to make the cuts without resorting to furloughs to their federal employes. host: the size of the civilian

workforce, according to the bureau of labor statistics, about 1.9 million. let me go through the numbers to give our viewers context. at the pentagon, 766,000. the agriculture department, 92,000. hhs and education, 87,000 civilian federal workers. at the moment the trade department, which marks 10 years today, 192,000. what do those numbers mean to you when it comes to sequestration? guest: just announced furloughs by state, 90,000 in the state of virginia. 13,000 in washington, d.c., 46,000 in maryland. that's the d.c. metropolitan area. virginia has a lot of department

of defense employees throughout the state and not necessarily in the washington area. 22,600 in alabama. 29,000 in washington state. 24,000 in oklahoma. so it's not just inside the beltway or the beltway and its environment being affected. a lot of people have a misconception that all the federal employees working for the government are concentrated here in this area as paper pushers. we are talking about people in depots, arsenals, military installations around the country, hospitals, schools. we have transportation security officers, meat and poultry inspectors, people who are very modestly paid working across the country. it's going to be devastating to the workforce. host: we just showed the breakdown by agency of the civilian federal work force.

how many of them are union presented by you or other groups? guest: we are the largest edible employee union. are others that represent federal employees, particularly when and the treachery department and irs. we represent over 650,000 federal and d.c. workers. concentrations of the department of defense, veterans affairs, homeland security, department of justice, bureau of prisons, hud, we are all over. host: what is your role in sequestration? who are you talking to at the administration -- and this administration and what are you trying to accomplish? guest: a lot of things. we would like to see sequestration end. a repeal of the budget control act. it was a terrible lot. horrible circumstances. it was a gun pointed to the

president's head with a debt ceiling and for reasons we will never appreciate, i suppose, he agreed to this terrible law that really had the super committee, with a deal that probably would've been a bad deal. the alternative was also bad -- sequestration. it will be with us another decade unless it is repealed. that would be our preference. short of that, and in the context of sequestration, you have the possibility for what the administration calls balanced deals, which includes new tax revenue that would offset some of the spending cuts. and spending cuts that would not necessarily be across the board in approach. the contents of some of these deals, even some of the proposals the administration has made will also be very bad for our members. anything involving cutting social security benefits for medicare benefits, which proposed just as vigorously as

we oppose furloughs. there are so many bad options once you get past the option of appealing the budget control act. who are talking to? everybody. we are talking to the administration, we're talking to management at every level in the agencies where we represent workers. we are talking to lawmakers. friday's news was really disspiriting, the notion that maybe there's nothing to be done and we will just let it go. i comfort myself -- spoke about optimism versus pessimism. i remember a lot of people to appear hands with health care reform and nancy pelosi and harry reid said we're not going to throw our hands, we are gone to come up with a deal. i would like to think about that when i want to feel optimistic, that something good could be done. we are talking to agencies about alternatives to furlough.

we have labor agreements, collective bargaining agreement that gives us the right and the opportunity to sit down and talk about the furloughs and if they happened, how they will be implemented. host: what do you negotiate? guest: we negotiate the scheduling of the furloughs. if we fail to stop them and they do occur, we have bargaining rights over the impact and implementation. although it its management's right to decide to do the furloughs -- host: you cannot stop that. guest: no. but we can talk about how they will be implemented. it is the agency's response ability. and not criticize the agencies for saying they want to put mission first. their responsibility and their position is they want to minimize the impact on the public. in that case, they probably want

staggered furloughs, certain employees would not come on mondays and others would not come on thursdays and so on. if at least on most days, 80% of the workforce would be there. host: what can you negotiate on behalf of the federal worker? guest: impact and implementation. we can say, if monday is considered the most desirable furlough day not to come to work, having access to monday as your furlough day might be decided on the basis of seniority. that is something we would do. host: are you negotiating for one federal employee or for all the federal employees union and nonunion at that agency? is this a one-on-one? guest: it's not one on one. we have a bargaining unit. at some point, employees in a bargaining unit voted to have union representation. everybody in that bargaining

unit covered by our collective bargaining agreement would be subject to the terms that we negotiate for impact and implementation. if you are outside our bargaining unit, then the supervisor or manager gets to decide unilaterally when you're furlough days are, how many you get, and how you will take them. host: jackie simon, public policy director for the american duration of government employees. we have a fourth line for federal employees. we want to hear from you as well in this conversation. on twitter -- guest: i think that the federal workforce and almost every agency is extremely lean. what people might not realize is that most of 60 increase in the number of workers performing the

government's work our private contract workers. one of the things we're very concerned about in the context of sequestration is that agencies not break the law and don't really replace furloughed employees with either military or private contractors. recall that direct conversion of work to the private sector. that is always more costly for the government. it is an ironic effect of agencies if they decide to break the law. we will be watching that and being vigilant about making sure agencies don't take advantage of this contract for work out. host: what is the law? guest: the law prohibits direct conversion, generally. absent another law, before you would contract out work currently performed by federal employees, you have to perform a cost comparison to try to make sure that the decision to

contract out is in the interest of taxpayers. that process right now is under consideration because of such a flawed process. basically, agencies are predicated right now from converting work performed by federal employees to privatize government employee work. host: 80 in massachusetts, republican. -- eddie. caller: i am pessimistic when i hear the l.a. times say they're happy to lower the deficit spending. going from 1.5 trillion to 1.3 trillion, a big deal. federal workers going on in four-the workweek. that's fine. but regarding the pensions, there was a guy in california, a manager who retired, gave himself for a raise, $850,000 per year. he has 90% + $850,000, that

gives him $800,000 in pension per year. would you please address spiking intentions? guest: i have read about some of these cases in california. these are not federal employees. these are municipal managers who are quite corrupt. i cannot really comment on that except that kind of skin is impossible to happen in the federal government. can you respond to that sentiment? guest: i think everybody has the same reaction when they hear about these lavish conferences. the grill a despicable ones are in the contractor's " these big parties and tabbies retreats at these luxurious resorts and

bring in the very people who are negotiating contracts with their host. those are the worst ones. but the training conferences, again, who is benefiting from the training conferences and accept the contractor's who have the deal to provide training? we would be delighted to see these spending cuts coome from the travel and conference budgets rather than for los. furloughs.han what can i say? the people who attended kind of conferences are not the people i represent. believe me. my people don't go to these lavish conferences. host: in providence, rhode island, a democrat, gayle.

caller: good morning. i read the paper and i am convinced that extreme austerity is not going to help us grow economy, certainly not calling to help any of my friends have a financial future. my husband and fire very fortunate. we see our savings and we are able to save every paycheck. we see our savings grow and grow and grow, because if you have money, you make money. the focus on austerity irrational thing to do? guest: it is not a rational thing to do. best case i said scenario is the repeal of the budget control act. there is a mania that seems to be controlling both of our major political parties with the idea

that deficit-reduction is a rational policy right now and will somehow magically produced the economic growth that has eluded us in the last few years. europe provides a great example of why and the opposite is the case. right now we should be spending more and have a bigger deficit rather than smaller. when people talk about the future of social security and retirement, that has nothing to do with the kind of policies we are pursuing right now. social security, the amount of misinformation out there about the future cost of social security and the finances of the social security system is mind- boggling. the social security system is not in crisis. there's no rationale whatsoever to cut benefits now or ever. i wish lawmakers and the administration felt the same way, but right now we should be

having expansion as a fiscal policy needs rather than an effort to contract the economy. host: on twitter -- guest: i think ebony the union, whether their employer is oppressive or not. -- i think everybody needs a union. workers don't negotiate over pay and benefits. it is set by law. -- federal workers. we don't have the right to strike. the kind of things we do give them a voice at the workplace so you don't have a dictatorial decision. the supervisor does not always know best, believe it or not. sometimes the supervisor -- every time a supervisor since down and in a respectful way gets input from the affected employees about all kinds of decisions at the workplace, a better outcome is produced.

the other big issue, not because anything is so oppressive, is that conflicts arise in every workplace. they always do. we know that. anybody who is ever worked a week in their life those conflicts to arise. if you have a collective bargaining agreement, if you have a union, you have an opportunity to work out a constructive solution to the conflict. when there's no union and no collective bargaining agreement, the worker has pretty much one option and that is to quit if the conflict cannot be resolved. so the union is a very productive thing especially -- not especially in the federal government but everywhere. host: under what laws bar federal union workers protected during the sequestration? guest: they're not really protected. i would say they are protected in the laws that i talked about earlier, protected from having their jobs basically eliminated in the context of furlough by

contracting out if that law is enforced. host: what caan't the federal government do? guest: as of friday, the federal government cannot simply furlough you without sitting down and talking to you about how that will be implemented. they have to give notice, 30 day notice. they have to negotiate impact and implementation. for the 22-dayn ceiling at the department of defense. there are other things people and not been talking about. if you go beyond 22 days consecutive or not, it becomes a reduction in force. then another set of rights kick in for federal workers covered by union contracts, more extensive rights. host: bruce in lansing, michigan, independence. caller: i'm confused about

unions, because i am being represented by a union in lansing and they keep telling me they cannot tell the business itself how to run the business and how to treat their employees. to me they don't have a voice and the union keeps telling us over and over that we cannot tell the business how to run their business, we cannot tell the business how to treat to the employees. with the 401k plan and they have big shots running around saying we don't have to pay the pensions, you guys just put your minimum wage dollars in this 401k plan and these guys cannot even feed their kids. then we have all these people

coming across the big pond and crying over here trying to be u.s. citizens and they are lowering the wages. we have all these federal employees crying because they're going to lose some money. they're making a helluva lot more than the rest of us. host: let's get a response. guest: i'm very sorry to hear about your situation and your situation is shared by millions of other american workers. i think probably a lot of people are aware of the fact that union membership has declined terribly in the last few decades because of free trade agreements and , outsourcing, losing production from places where unions have been able to organize, to southern states where the right to organize barely exists, and employers take advantage of that by

mistreating workers, by lowering pay to the point it's almost impossible to keep it together. unions operate within a legal framework. they do the best job they can. it's very few examples i have ever -- i've been working in the business more than 25 years -- unions tried to do the best job they can. they have so many forces against them that it's very, very difficult sometimes to provide the kind of representation and improvement and standard of living that our members expect and deserve. and so, i'm sorry about your situation. the issue you brought up, wages, crappy retirement plan, mistreatment at where, if these are all problems that a strong labor movement could actually be successful in solving. right now, because of laws and politics, unions are very weak

and have a very hard time fighting all the things decided. i feel very bad about. host: on twitter -- are those numbers accurate? guest: i think they might even be little low. the federal government has cut back in support to the states. the about an irrational policy. a lot of public school teachers, firefighters, police officers, corrections officers have lost their jobs in the states and cities across the country. it has contributed to the rise in unemployment. i have seen various serious economic forecasts of the job losses that will likely result from not just this year's sequestration. remember, we have this for 10

years. it's likely to cost anywhere from 750,000 jobs to 1.5 million jobs in this country. private-sector and public- sector. so it's a disaster. host: andrew in virginia, republican. caller: you misrepresented the facts when you said that the federal government is lean. there are numerous bipartisan and independent reports that show the federal government especially is full of redundancies and 4 or 5 departments doing the same job and the same for the agencies. there's so much overlap in the federal government. there is evidence from several employees of them sitting around doing nothing, having nothing to do, four supervisors for group of seven employees so that they can all be moved up to the next

pay category. you are so misrepresenting the facts. the fact is in the sequestration, the cuts that it gives could be replenished by the democrats and president, except for in the ability and to cut differently. this is not even a cut in what everybody else thinks is a cut. this is actually a reduction in the spending growth. we will spend more this year than we did last year. almost everybody admits that. that's not cut. host: we will have a response. guest: i think there were a couple things you said i could agree with. the supervisory ratios in the federal government could certainly be pared back. there aren't too many supervisors. -- are too many supervisors. as one of the things we try to

talk to lawmakers and the administration about. that was part of bill clinton's reinventing government, to get the government-wide average down to a 15-1. it certainly has cropped up over the years. in the georgia of the bush administration it skyrocketed and has been maintained in the obama administration. -- in the george w. bush administration. i would invite you to go to a va hospital where one rn is taking care of 21 patients. this is an acute care facility. i would invite you to go to an office where benefits for veterans are processed. and you can see the assembly line and immense pressure and a support -- pace of work to do

the backlog. social security administration, the numbers continuing to go up and up and they have not increased staffing and are closing field offices. in arsenals, the wars are winding down, but the pace of pork for repairing weapons so they can go back into the war theater is extremely intense and there's a tremendous amount of overtime work. so the image of bureaucrats sitting around wasting their time, at taxpayers' expense, is a very useful kind of thing for people who want to bash government. it bears no connection to reality. host: on twitter - why not have that on the table in the negotiations to avoid

sequestration? or to repeal? guest: it's not surprising that many people believe it could be true, because pick up a newspaper any day and you will read things that are false about social security and medicare. turn on your tv. with the exception of this show. any given day you will hear very false things about so security and medicare. health care costs generally, not medicare or medicaid, are completely out of control and for a lot of reasons. i don't thing we have time to go in to talk about why health care and how will pare costs could be restrained and why they're always rising so fast. private health care has its own incentives and is very costly. medicaid and medicare are fairly efficient. if we get stephen more -- if we get even more tools, we could restrain medicare and

medicare even better. social security is another story altogether. if you can say it is completely ridiculous to cut benefits now because of the possibility of of having to cut benefits in the future. the caller from providence was said she had four sons. one of the things that is important about whether or not social security will have enough assets and resources to pay full promised benefits 40 or 100 years from now is whether one of those four sons gets a good job and makes decent pay, because social security finances are directly tied to wage growth. it's a payroll tax that funds social security. when wages go up, the revenue into social security goes up. when wages go up faster than inflation, which is the rate of growth of benefits, which affect the rate of growth of benefits, then you have a virtuous cycle

for social security financing. right now, social security can meet all its promise obligations for the next 30 or 40 years. whether they will be able to meet all other obligations without a tax increase or benefit cut through 75 or 100 years is a function of whether we do something about job growth and wage growth. host: we're learning the president this morning and caught 15 will make three personnel announcements. he will announce that sylvia burwell will be back at the white house. he would like her to be omb director. she was deputy of staff under bill clinton. she will be in tapped to be the new director of omb. he's expected to nominate his epa chief. as well as a new head of the energy department. he will make those announcements

today. i don't know if you have any thoughts about these people or the agencies they are running when it comes to sequester? guest: when it comes to sequester, i was on to say something else about them. i don't know that that will have any impact. host: give us your reaction. guest: i don't have any reaction denominations. one of the things i did want to mention that was not raised by any of the callers -- the budget control act exempted the department of veterans affairs from sequester cuts, but that does not mean veterans are not affected. that's another balance. we have talked about the irrational nature of sequestration. we can talk about the morality of sequestration. 44% of the civilian work force in the department of defense, which is 350,000 of the workers who will have a 20% pay cut unless this is averted, our veterans. about one-quarter of the employees of the cuts in border

patrol and customs, that's the people who are guarding the ports and borders, putting their lives on the line every day,. a quarter of them are, a large number of federal law enforcement generally, including the people who are working in our federal prisons, last week one of our agents was murdered while working in a prison in pennsylvania, murdered by an inmate. part of why he was vulnerable was because he was alone on his shift. it's very dangerous inside a federal prison. the bureau of prisons has announced furloughs. they will cut back staffing and it will get more and more dangerous for corrections officers inside prisons. so sequestration, you can sit there and say they had it coming to them.

people have a misconception about the risks that federal employees take every day to keep us all safe. dees are very, very compelling reasons to call the whole thing off. host: on the personnel announcements that the president is going to make it 10:15 a.m. eastern time this morning, our coverage if live on c-span. so tune in, kevin in syracuse, new york, democrat. go ahead. caller: my question, i just wanted to put this in perspective in terms of how much the furloughs and laying off federal employees is going to have on actually reducing our budget. if you laid off every federal employee and you ran the percentages of its impact on total budget and deficit, it's minimal. i think it's less than one-tenth of a percent. it's very small. it's unfortunate that they take federal workers that are out working in the communities in

doing a lot of things for people that they don't realize and using them as an example and politicizing this and doing the furloughs -- in doing the furloughs. so if you laid everyone off, i think you could see the impact and realize it's really not that big. the other thing, this is a big strategy from corporate america and republicans to demonize the unions, unions, the teachers' unions. i think they would like to drive us back to a pre-fdr period. that's my perspective. it's unfortunate. host: we will leave it there. guest: i agree with just about everything kevin said. there's no question that the idea that you had to go to furloughs first is an effort to undermine the federal workforce. it is clearly true that although

the furloughs will be extremely painful for all the people -- the individual workers and their families and communities affected, it's a drop in the bucket in terms of the overall size of government spending and the deficit. it will hurt some communities and will hurt many individuals, but its,-- it's a macroeconomic impact -- and i'm talking about furloughs and not sequestered. i think the american economic impact of the sequester will be considerable. it could reduce the growth of the economy overall by a half percent or 8% and will affect unemployment. but it really does not do much of anything overall to the fiscal condition of the country. host: jackie simon, thank you very much. >later in the program will turn our attention to contractors with the federal government.

and next, the american petroleum institute talks about energy policy and rising gas prices right after this news update from c-span radio. >> its 8:32 a.m. eastern, international news. the united states and saudi arabia have issued a joint warning to syria and iran. the two countries warning the syrian president bashar al- assad that they will boost support to rebels fighting to oust him, unless he steps down. they also tell iran that time is running out for a diplomatic resolution to concerns about its nuclear program. the head of the united nations nuclear agency is again calling on iran to provide more cooperation with his organization. he says otherwise he cannot guarantee that all of iran pose a nuclear activities are peaceful. he's urging iran to grant his inspectors access to sites where nuclear weapons development may have been carried out. back here in washington, more and president obama's expected

announcement this morning to nominate sylvia burwell as ofector of the office a budge management and budget. she served under bill clinton. and the president is considering nominating an mit scientist to head the energy department. and an epa veteran to run the environmental protection agency. that announcement at 10:15 a.m. eastern on c-span radio or you can watch it live on c-span. those are some of the latest headlines on c-span radio. [video clip] >> i was fascinated by her feminist view. remember the ladies or you are going to be in trouble. i'm paraphrasing. she warned her husband you cannot rule without including what women want and what women have to contribute. this is the 1700's when she said

that. >> abigail adams, tonight on c- span. first ladies: influence and image. she was outspoken about her views on slavery. as one of the most prolific riders of any first lady, she provides a unique window into colonial america and her life with john adams. joining the conversation live tonight at 9:00 eastern on c- span, c-span radio, and c- span.org. >> "washington journal" continues. host: joining us on the phone this morning is a writer who was in new orleans last week at the beginning of the trial for british petroleum, looking at the issue of the gulf oil spill. by simply, who are the players in this case? u.s.: on one side it's the

government, the justice department. the u.s. gulf states that were affected by the oil spill. most importantly, louisiana and alabama, which had the most effects of all the gulf states. a number of plaintiffs that did not participate in the settlement that bp struck last year, estimated to be $8.5 billion, as well. on the underside, a number of companies, but mainly bp, which owns the oil well that burst and leaped all the oil, trans ocean, and halliburton, a service that made this a man that was put in the oil well that was supposed to help stabilize it. host: what is to be decided in this case? split in's a big trial three different phases, because each will be about air for months. the main thing to be decided in

the first phase is allocation of blame, what percentage of blame goes to each company. and the severity of the negligence, whether it was simple negligence or gross negligence, to reach the level of gross negligence it means talking willful misconduct or reckless behavior, that they knew bad things were happening and did not do anything to stop them or they did not take measures to stop them ahead of time when they knew it was coming. that would be the level of that. the second phase would focus on the flow rate. that's how many barrels of oil came out of the oil well. the third phase, which would go into next year, if they get that far, would be the amount of damages. what's really at stake is the level of negligence, because if a judge determines that any of the companies are grossly negligent, if not only would they face certain fines under the clean water act and the oil pollution act, they would also potentially face tens of

billions of dollars more in punitive damages. if it's just simple negligence, the amount of money if they would end up having to pay would be determined by the ranges of those federal laws. host: why did the two sides not come to a settlement in this case? guest: great question. why cannot really answer that. there have been settlement talks that went on for months off and on. bp's history, if you look bag tax the texas city refinery explosion litigation, all those cases were settled. it was just a matter of when. but in this case, somebody did not come up with the right number and they decided to go forward. host: how much money are we talking? when it comes to the fines? guest: some of that is determined and some is not. under the clean water act, depending on what they determined the flow rate was, it

could be anywhere from a little over $4 billion to $17 billion. it would be more under a the natural resources damages assessment under the oil pollution act. that's not really that finite a number. if they get to the punitive damages level, you are talking about something that could be quite a bit bigger than the $5 billion punitive damage award that was put up against exxon for the exxon valdez oil spill, which exxon fought over a number of years and ended up being cut to half a billion dollars. host: the trial started last week and continues this week, monday through thursday is when they are hearing testimony. how did it go the first week? is there any talk of possibly coming to some sort of agreement? guest: like i said, that's hard to say. once a trial starts, a case can settle at any moment before or

after a trial starts. especially a civil case. so you have to assume that settlement sharks are continuing as the golan -- settlement talks. once they get started and to opening statements and start moving into testimony, at least the people in the courtroom, that is their focused. whoever the negotiators are, they may be elsewhere or may not even be in new orleans and. they may be in d.c. or elsewhere doing what they are doing, but the people that are in the trial, they are focused on the trial, the job they have an and. host: a staff writer with thompson reuters, kristen hays, thank you. now let me turn to the chief economist for the american petroleum institute, john felmy, here to talk about energy and rising gas prices. what was your reaction to the bp trial? guest: i don't know.

i'm not an attorney, so i'm not qualified to comment on this. i will have to pass on that discussion because they are members of api. host: do you think it could have -- whatever they decide, what is the impact on environmental law going forward? and is this a proceed and- setting type of trial that could impact these companies' bottom lines? guest: there's no question and it could impact the company's bottom line. as far as setting a precedent, i cannot comment on that. the minister notice limitations. host: i just want to let our viewers know that the washington post editorial today a, one of them is how much should be p pay? -- bp pay? klystron to gas prices, john.

we were talking about the economy earlier and whether or not people are optimistic or pessimistic. one article noted that middle class and lower class people are paying more for gas now. why is that? guest: 3 factors. what we have seen the cost of crude oil has gone up sharply. the cost of ethanol, which is blended about 10% in all gallons of gasoline. and demands is up. the 56 cent per gallon increase since december. host: there's one story in the papers that says they blame refineries. unexpectedly, refineries went offline, so therefore the prices are up and the supplies down. guest: i don't think that all cooling what i don't think that's what's going on. there's plenty of product out there. the question is how much does it cost to make. that's what's going on. host:? what is the: guest: we need to produce more

or demand less. what we have seen at a worldwide level in terms of crude oil, record demand. there's three big factors -- china, china, china. you're at a record level of demand, 90 million barrels a day. with limited supply a and opec production cuts, we have a tighter market. host: what you expect for the spring-summer driving season? guest: after we saw an increase in terms of the cost of crude oil, its decline. and we've seen gas prices starting to turn down. the question is what will happen in terms of all the factors that affect crude oil prices worldwide? it could be a worldwide supply- demand factors, that tension in the middle east, production cuts. it's cloudy crystal ball. host: the president will make a couple announcements on a deal with energy policy. a new head of the epa. a new and energy department leader as well. guest: those folks have been

around for a while. he has been in the administration before in terms of department of energy. mr. mccartney has been at the epa -- ms. mccartney. host: do you think the senate should confirm those two? guest: it's not my position to say. it will have a vetting process that's fair and we will see what happens. host: a lot of talk about sequestration in this town, the president has said that we could have avoided sequestration had deicide agreed to eliminating tax credits and loopholes. one of the areas he is focused on its oil and gas companies. guest: it's a mischaracterization to call them loopholes. in the oil and gas industry we get to deduct costs. we don't pay taxes on costs. it's just political spin in this town to say we're getting

subsidies. that's nonsense. what we need to do is reform the tax structure across-the-board, to broaden the base and move forward. that can really help. host: explain about the credits .nd how they guest: worwork guest: you don't pay taxes on costs. there is a manufacturing credit, it all industries get. the oil and gas industry gets less, in fact. it's things like being able to deduct your costs for exploration. it's just political spin calling it subsidies. host: what about leasing fees that oil and gas companies pay? how much are you paying for that? do you consider that the contribution to the u.s. treasury? guest: there's no question we pay a lot of money to lease properties from the federal government. that is really beneficial in terms of the amount of fallen gas that we develop and we get

royalties from those oil and gas developments, so it is a significant opportunity and we could do a lot more. host: we want to get your thoughts on energy policy and rising gas prices. that is also on the table. yesterday on c-span, a senator from oregon joined us. here's what he had to say about gas prices. do you have any plans to hold a hearing on that? [video clip] >> i have talked with senator murkowski on that and we will hold a hearing on gas prices. host: any more details on what the hearing would consist of? >> he asked a question of what is making the prices go up so dramatically now? the custom has always been that prices go up in the spring. we are still in the winter. trying to look at the history on this, this is the biggest increase in the last month that

people of seen in quite some time and maybe the biggest increase ever. there are lots of gas price increases. there's no reasonable explanation for this right now. the iranians are not rattling around this week in the strait of hormuz. we have not seen any kind of unusual developments. that's why i want to look at a host of issues. one that has not been on the table is refineries. host: your reaction? that the new chairman of the energy and natural resources committee. guest: it's great for. the cost of crude oil has gone up. you after understanding is 42 gallons to the barrel. just calculate how much the price increases in terms of since per gallon predellas about 29 cents. ethanol went up 3 cents. and demand increased. simple math. production is down a little.

inventories of gasoline. there's plenty out there. it's just a question of how much more it costs to make. host: mark is a democrat in ohio. caller: good morning. you just keep saying the cost of crude oil has gone up. i watch national business report every night on public tv. they cover the price of oil every night. 10 days ago the price of a barrel of oil was almost $100 per barrel. friday it was $91 and something. it has dropped almost 10% in 10 days. perverse,ens in he oil goes sky high as soon as the price of -- gwhy has it not

gone down to reflect the price of a barrel on the world market? host: go ahead. guest: it has gone down. i was talking about why the price increased. now you've seen crude oil prices have dropped about 16 cents per gallon and gasoline is down about 4 cents. you are seeing the normal relationship of gasoline prices lagging crude prices. caller: what he just said is not true. i am in toledo all the time and i was in fort wayne, indiana, over the weekend. it is $3.79 and $3.89 a gallon. how can he say it has gone down? guest: it has, according to aaa. the price nationwide has dropped about 4 cents a gallon. nationwide, it has gone down.

host: mary in pennsylvania, republican. caller: i am calling because i want to know wine is it's a political? when george w. bush was president, senator schumer did some grandstanding and with this phony outrage about $1.85 a gallon and he was at a gas station and he brought his film crew with him, what are you going to do about it, mr. president? now is twice as much, $2 more per gallon and i hear nothing from him. please explain. guest: we are disappointed. the basic facts on gas prices are pretty straightforward. in washington, politics is politics, so we expect any type of attacks. what we are committed to is talking about the reality. for those folks, you in warren,

it is an important thing to be considered. the average household spends about 5% or 6% of their expenditures on gasoline. host: independent caller in georgia, ronnie. caller: i was wondering how much does this country export, how much oil do we export every month? and how much do we import? and what does that do to the gas prices that we pay here at the gas pump? guest: in terms of crude exports, about 50,000 barrels or 60,000 barrels primarily to canada. in terms of exports, we export quite a bit of refined products like gasoline and diesel. about 3 million barrels per day. we import roughly around 10 million barrels a day of crude and products. we could reduce that significantly if we are allowed to produce more in this country. host: speaking of canada, the

keystone pipeline, here's the opinion section of the wall street journal this morning -- guest: i think that's absolutely right. what we need to do to move forward on developing the pipeline. opponents of the pipeline thinking that by stopping the pipeline they will stop oil sands development. that's not going to happen pretty oil sands are worth 10 times the gdp. you will bring the oil to the united states because it is lower emissions.

now that we have found there are no adverse impacts, let's move forward. host: this is the reaction in the washington times -- guest: nonsense. the oil is going to be developed for the oil sands are worth $14 trillion. 10 times the gdp of canada today will be developed. question is where it if they go

anywhere but the u.s., it will be higher emissions, higher production, transport, and consumption. all the things have said that keystone xl pipeline should be developed and let's move. forward move host: jeff and paul moreno beach, florida, democrat. caller: good morning. i would like to know if your guest knows if the keystone pipeline is completed, how much of that oil will stay in the u.s. and how much will be exported? i would also like to know was the u.s. government's subsidizing oil companies when they are making billions of dollars? guest: we don't get subsidies, what we get this tax deductions on costs. we don't pay taxes on costs. in terms of exports, there are no facilities to able to do that. most of the oil -- or rather all of the oil will be used to replace declining production from places like venezuela and mexico. these arguments against it are

fabricated. the key thing is if we bring the oil into the u.s., it means a significant amount in terms of jobs and improved trade, so let's move forward. host: michael in connecticut, independent. the price of gas has gone up and nobody knows why. i am thinking that of all the fracking they are trying to do and gas is not $4 a gallon, then they cannot afford to do what they're doing. just take the gas and pumping down through the united states and out of the gulf to ship it over to china just so you can make money prof? how are you justifying the price? the price at the pump is so high. it is not nonsense. i've heard you say nonsense too

many times or ready to believe anything you have to say. is that justified the price is high just so you can be able to pump it out from the fracking thing? and destroying the watershed in the process to make money. guest: i have no idea what you are talking about in terms of fracking. they extract natural gas and oil from deposits. oil from north dakota. natural gas from pennsylvania and so on. the key thing is oil sands development is what we are talking about. if we are able to develop the keystone xl pipeline, it would mean jobs for construction of the pipeline, it would mean trade benefits and all other positive things. in terms of why gas prices have gone up, it's the cost of producing the product and the demand. nothing more and nothing less. host: sheila in massachusetts, democrat. at the map looking

on your ttv. why can they not to ship all the gas and oil up into the upper part of the united states, because new england and across the country up in the north always have higher prices? so they could still process the oil but we would benefit from it more because it would come directly to us at a lower price. i would like to know why they cannot possibly do that. guest: the refinery business is not a great business. if you would build a refinery in the oil sands area, you still have to build pipeline capacity to be able to get it to new england. one of the main reasons the new england area has higher prices is because of higher taxes and more expensive gasoline? because of federal requirements. pri is a legitimate questions in terms of whether you build a refinery there and ship the products? it's not a good business

proposition for many folks. host: what do you mean? guest: even when you make money in the refinery business, which was 2 since on the dollar last quarter, the oil industry and makes about 6 cents on the dollar, so refineries are like a risperidone pay for the cost of their inputs and don'ts of the cost of outputs and get whatever is left. we have declining demand, like last year, the margins are very low. host: farmington, new mexico, republicans. caller: you don't suppose the reason the price of a barrel of oil has gonna is staying high because all the money the fed is printing. the saudis are not stupid. they want $110 for barrel of oil instead of a hundred. the fed is not point to stop printing money. they are printing $85 million a month just to buy up stocks and

bad mortgages now. it has to have an inflationary effect on products. the products here don't go up. they jack up the taxes by a bunch on a gallon of gasoline. the government will not let the stations to show how much a gallon of gas -- how much taxes are added on to a gallon of gas. it's incredible what this government does and they blame it on the oil companies. thanks for taking my call. host: what do you do? caller: basically retired, but i do a little welding on the side and a few other things. i'm pushing 69. i'm slowing down in my old age. host: why do you call them at poor oil companies? some folks might laugh? caller: they make 6 cents on the

dollar? most businesses, if they're going to make money, are making 12 cents to 15 cents on the dollar. the oil companies, the government keeps making bad guys out of them and it's outrageous. host: what did you hear? guest: he is right. the numbers are big because the companies are big. in terms of international influences and the dollar, there can be an impact. opec does not like it when the dollar depreciates. you saw, for example, they cut output, because they want to try to keep the price higher because that is what they made money on. >> stayt fedor -- state and federal taxes, will we see the price at the pump, can you explain the different taxes that go into that? >> -- guest: york state excise

taxes and in some states that sales taxes on top of that. then you have federal taxes, which are about 18.4 cents. if you look at the average gallon of gasoline at a consumer pays for, it is about 50 cents per gallon in taxes. host: and is it true that the federal government does not allow these gas stations to put how much you're paying in taxes? guest: those, i believe, or state regulations. and i have seen taxes on some palms in some states. it depends on the individual states. host: bobby in alabama, democratic caller. caller: i would like to correct something that your guest implied. i watched the hearings on the pipeline. the question was asked him directly how much of the oil will stay in the united states, and the answer was, none of it,

because they have already signed a contract with exxon mobile to export all of it. the reasoning i have come down to in the united states is because they are blocked and do not want to cross canada to the west coast. one more question. the kalamazoo river, they had a big oil leak out there and i think that oil company said it would be cleaned up in a short time. i i think it went over two years and is not cleaned up. the but like to hear your comment. guest: in terms of spills, and these bill is one too many. the companies have been committed to cleaning of dennysville that they have. second, i've never heard what you are talking about as far as all of it going to be exported. for every dollar that we send to

canada, we get 90 cents back, compared to the middle east, where you get 30 cents back. it is a powerful economic benefit to be able to bring it to this country. host: here is a comment on twitter. guest: the market for oil is a world phenomenon. wherever it goes, it will be the same practical impact. the question is, who would build a refinery when the margins are so low? with crude oil, we have refineries that can handle it and it will replace oil that is declining from other countries. host: next call, democratic caller. caller: you characterize your deductions as not paying taxes on expenses. to me, maya understanding of a deduction for by that statement

is incorrect. to me, a deduction is you are taking that extends about from your income. you're actually not paying taxes on income. to me, your expenses -- a deduction is not paying taxes on expenses. it seems like you incorrectly defined what a deduction was. host: john felmy? guest: it is very clear. these are costs. you do not pay taxes on costs. when you have a net income system you do not pay taxes on costs. it is really that simple host: julie, republican caller. caller: can you please explain how the democrats in 2007, i believe, created a law that forced the oil refineries to use a nonexistent bio cellulosic seal.

for each gallon that was produced, i was told that these retirees have to purchase labor and it is a huge penalty. is it being levied -- being levied on the price of gas? and can you please explain how these mandates from the epa drive up our gas costs. guest: the renewable fuels data that was passed in 2007 requires the oil industry to use a product that does not exist, and if we do nautic -- do not use it, we are penalized. it drives up the cost of using full -- fuel. between that and the ability to blend ethanol into the gasoline pool, it is an enormous challenge. we need to revisit it immediately because the costs are. to continue to go up. host: ethanol subsidies should be done away with? guest: they have already been done away with. the question is the mandate. the mandate is to use something

that does not exist and we are penalized for using something that does not exist. it makes no sense. host: tom in burlington iowa. caller: i want to ask a couple of questions. when they bring the world stands down from canada, who owns that up in canada? what countries own it? and when they bring it down through here, why don't they stop in nebraska, build a refinery, take half of the oil there, make diesel fuel and things out of it for the midwest and everything, and then ship the other half down to louisiana, put on the boats and send it to china? because that is what they're going to to do, they have already settled this. i think there's $40 billion that u.s. companies made bass -- this last year. can you tell everybody about it? guest: first, in terms of the or

company's earnings, their large because the companies are huge, but they were charging 6 cents on the dollar. in terms of building a refinery somewhere, i would love to see a refinery in parts of the country, for example, the west coast, the southeast, the northeast, and so on. it has very little return and it is hard to justify from a business perspective. in terms of export to i have no idea where that argument has come from. it is basically dedicated to stop the development of the pipeline and has no basis in fact. i host: there is seems to be a lot of interest in refineries. there's one story that refineries have gone offline and that is causing gas prices to go up. but when they go offline, why and what is happening? how long before they come back on line? guest: first, there has not been that much of that boy on -- going on.

inventories are above average. the key thing is that you have to do required minutes or upgrade for environmental and safety reasons. they go down for a few weeks at a time, depending on what you're going to do. it typically happens during the low demand in times of year. but there's plenty of gasoline out there right now as far as i can tell. it is a question of how much it costs to make. host: in milwaukee, randy, republicans -- independent caller. caller: in 2003, 2004 from a pair of gas costs $140. -- a barrel of gas cost $140. why is it not so expensive now? guest: the last time we had a real peaked in gasoline prices was 2008. the average cost of crude oil was very high, $150 per barrel. in fact, everyone was told a gallon of gasoline at your lost

money on it. now we are seeing unfortunately that refiners are losing money on it. their margins are still not very good. you have to look at what the price of oil is,/42, and for example, up for west texas intermediate, the average cost of a gallon of crude oil is $1.16 and the new gadahn 6 said -- and then you add on the 6 cents. you up costs for all of your exploration, production, refining, distribution, marketing. all the things they ought to do to get it around the globe. when you break it down in terms of cents on the dollar, it is only about 6 cents. host: this is the headline on the american progress website.

one caller referenced $40 billion in profits for the oil companies. are you saying that the gas companies would like to make more money? that is not is not enough? guest: we have vast resources in this country have we are able to develop, between what we produce year and imports from canada and biofuels, we can become energy self-sufficient. that is what we want to do. the center for american progress is constantly attacking house. they need to be dismissed in terms of their arguments. we want to produce more energy for america. it will generate jobs, energy security, and improve trade deficit. host: on the keystone by, that has also been the argument, that it will create jobs if approved. do we know when that decision will be made?

guest: for some reason, the president has not consulted me on this. i cannot give you a definite answer. right now, i'd is clear that they have a 45-day comment timeframe. host: the report that came out on friday? guest: correct. host: and the gas companies and the ceos, have they had a point within the administration to talk about the keystone pipeline? our people from the industry getting access on this decision making? guest: we certainly are trying, but i do not have access in terms of just being an economist. we have been saying for a lot of years that this pipeline should be built and the economy will be it -- will benefit from it. host: going to nick in california, republican caller. caller: good morning. i've been watching c-span off and on for about five years and it's getting harder and harder for me to watch it, for various

reasons which i will mention because you will cut me off. -- i will not mention because you will cut me off. this gentleman has sloughed off all of the answers to all of your questions and the callers' questions. and this stupid old man has been around long enough to have a little common sense. it is all part -- for profit. they control the industry. they control the source of the oil. they control the conversion to gasoline. they control it all. when they want to make more money, they cut back on the supply and costs are higher demand. and because lower demand goes down, they raise the cost more to keep their profits up to satisfy wall street. host: mr. felmy, does the oil and gas control of those prospects?

guest: absolutely not. if you look at how much power the companies have, it is very little, if any. the key thing is they have hundreds of thousands of wells, 140 refineries, 170,000 gasoline stations all competing for your business. the notion that they somehow have control over it are simply not right. refiners have no control over their output price and no control over their inputs. host: william in arkansas, democratic caller. caller: i've got to ask mr. felmy one question. normally, people in the petroleum industry, they already know what projects are coming true. i want to know how much money he's got invested in the keystone provided a complete because through. and the same thing about the congressmen who want the stuff to go down. how much profit? how many millions will you make

off of your investments that require your pushing this pipeline so hard? guest: 4 at six reasons, i do not invested in the oil companies -- for ethics reasons, i do not invest in any of the oil companies or projects. what do you know it or not, you probably have an investment in the oil company. 50% of the equities of oil companies are owned by pension funds and higher rates and millions of americans own the -- and ira's and the millions of americans on the will companies. it is not a personal benefit. but it is a country benefit. we need to develop this provides a weekend build jobs and energy security. host: thank you very much for talking to our viewers. guest: thanks for having me. " host: we will go back to sequestration and talk about how it is a fact -- impacting federal contractors. but first, a news update from c-

span radio. >> homeland security secretary jenin paulick jerrick -- jenna nepolitano speaking earlier today said u.s. airports are already experiencing delays as a result of the automatic vendor of spending cuts known as the sequestered. -- federal spending cuts known as the sequester and they will get worse. homeland security and border security are sending furlough notices. she expects cascading effects during the week with we times expected to double during the worst cases. you can hear remarks later in the programming schedule. democratic senator bob menendez this hour, a report that he sponsors natural gas vehicle conversions that would benefit his biggest political daughter to his reelection. it is the same doctor whose

private -- political donor to his reelection. it is the same doctor as private jet he used. he is the subject of an ethics inquiry on capitol. and the foreign doctor is involved in a criminal investigation. and the vatican in rome says 103 of the 150 -- 115 card bills that will pick a new pope have arrived. -- 115 cardinals that will pick a new pope have arrived. those are some of the latest headlines on c-span radio. >> i was fascinated by her feminist view. remember the ladies, or you are going to be in trouble. i'm paraphrasing, obviously. but she warned her husband by you cannot rule without

including what women want and have to contribute. this is the 1700's. >> abigail adams tonight on c- span posing new history series. first ladies, and floods and image. koblentz as president by her detractors, she was outspoken about slavery and women's rights. as one of the most prolific writers of any first lady, she provides a unique window into colonial america and her life with john adams. join in the conversation on abigail adams tonight at 9:00 p.m. eastern on c-span, c-span radio, and c-span.org. >> "washington journal" continues. host: from new york this morning, paul light is joining us. we're talking about federal contractors and the impact of sequestration on that part of the federal government. let's just begin with the federal contractor work force. there are some people who say it

is hard to find out how many contractors there are in the federal government. is that true? and if so, why? guest: if your a contractor, you would not want people to know how many employees you have, perhaps. we know how much money they get. we are about $500 billion, more or less. we know that about two-thirds of the money we spend on contractors goes to service industry people, computer programmers, a lot of employees to sit side by side with full- time federal employees paid by an uncle sam. and the contractors paid through -- we just do not know. and the contractors do not want to tell. what i do is estimated total number of contractors based on a model of what we spend, we purchase, whether it is pencils or weaponry.

we think there are somewhere around 7 million full-time equivalent employees who work for contractors in one role or another. there are some that are full time. there are some that are only full-time on a project. and there are some that are just a small percentage of a product -- project. you build a tank, u.s. labor cost review program a computer, u.s. labor costs. and labor costs are going to bury, -- will vary, but when you add it all up, maybe 7.5 million. about three contractors, perhaps, for every one federal employee. host: here is a story from 2011. in it, the executive vice president of the professional services council, which represents business to the contract with the federal government, said his group regards your figures as

astronomically high and inflated by a methodology that counts the indirect as well as the direct .economic impact i want to throw that out. what is your reaction to that as we discussed the federal contracting work force? guest: i say to all of the contract industry representatives, ok, show us your numbers. they don't like my numbers, they think they are inflated, let's see yours. and if they say, we're not going to tell, or we do not know -- now, you've got to measure the total number of transactions that occur in the federal contracting process. that goes through contractors primes, as we call them, and then subcontractors and then sub-sub contractors. maybe 1% of the total, maybe a little bit less are indirect costs.

like the sandwich maker down the street who makes a little bit of money from contractors who come in for lunch. it is a very small number, but if you do not like my numbers, get some yourself. let's see full transparency on what the contractors do, how much they pay, how many people they employ. if the contractors are so proud of what they do, come on out. let's see the numbers. what i say that to them, they are saying, gee, that is proprietary information. take me on, but bring some numbers to the table. host: why isn't the government putting this information out? guest: again, we've gotten into a situation where what the government buys is done under proformance contract. we say, look, we want this many weapons systems, as much labor

-- this much labor. we will measure our performance and we don't care how you do it. we will measure somethings about cost, but frankly, the federal government does not want to know either. and that is in part because the contractor industry is so very influential. when you look at the largest contributors to campaigns, you've got contractors all over the place, defense contractors and so forth. and honestly, the federal government does not want to know either. when you add up the numbers and you say, look, let's put the full time equivalent feds who are paid by of assam, and let's put the contractors in you are paid by -- by uncle sam, and that's but the contractors in who are paid, the universities, the nonprofits and so forth, we have a total workforce of 12

million. with the postal service in there as well, and amtrak. and we got a very large government in terms of total labor. that is not bad. that is not good. it is what we need to and deliver this huge mission that the federal government has. if you want to reduce the total size of government, you've got to reduce the mission. that is just the way it is. nobody wants another totals. and frankly, i believe in full transparency. let's see what we have and whether those jobs should be inside government, outside government, what the transparency issues are. let's see it all. host: when it comes to sequestration, what is the impact on the contractor work force? guest: there are two impacts. one is that we are furloughing people inside the federal government you are overseeing contracts. that is plain ridiculous.

we have a furlough in place now that shows absolutely no sympathy or concern for we are cutting. it is just across the board in most agencies. and it could not be done more for the four most agencies. there are some who have done a terrific job, but when you have a furlough that affects everybody and you do not distinguish between the good performers and the poor performers, that is just nonsense. we will free some contracts. we will not let our group some contracts. the amount of money for future contracts will go down. yes, washington and the surrounding areas will be affected. the contractors will be affected. but honestly, as you see the world -- the federal work force go down with the furloughs, in some cases you will see more

contracts coming out of government to replace those workers. the notion that we will have delays and air traffic control, that is pure scare tactic. we cannot allow that to happen. we can put i -- we cannot put contractors in those jobs because they are not trained to them. but we will see more contractors in some ways, but not in a transparent way. very unsympathetic about all of that year is being shed by the contract community. they will be -- by all of the tears being shed by the contract community. it will be hurt, but not as much as the federal employees will be. host: we want to hear from you. the numbers are on the screen. paul light is joining us from new york this morning, a

professor at new york university talking about the federal work force and sequestration. on twitter, attorneys said this appeared contractors -- tony says this. contractors spend our money. they should be transparent to us. go ahead in new york. "free: i'm reading a book lidge" by david johnston and they talk about when the government outsources something to a contractor is cheaper for one or two years. and then they end up giving the government off. changing to going to all contractors is just more room for people to steal money pardon the government. -- money from the government. sequestration made washington look really silly and stupid. host: paul light? guest: let's take it in reverse order. the first is that the sequestration, to me, feels a

lot like dr. strange love. dr. strange love designed it and slim pickens is right in the nucleolar -- the nuclear bomb all the way down. it is a fool's paradise. i've never seen anything like it and i hope i never will again. it is plain stupid that we are doing it, and it is damaging the government's reputation. although lord knows, it's hard to imagine how further down in trust the government could go. david johnston's book is terrific. i honestly, i do not agree with your notion that the jobs come in low in the first couple of years. the bid may come in a little bit lower, but contractor jobs are actually -- you know, when you bring someone in, the contractor themselves, they will make a little bit less than the

fed. it is when you load up the administrative costs that these jobs go through their roof. if you want to read a wonderful study, wrote to a good website as gritty information on this, go to the project on government oversight pogo.org. they have one study that shows a profit based inflation, the full loading that the contractors put on each job. it is unbelievable. we can harvest a great deal of waste. if you really wanted to cut the budget and hack away a little bit, we have an $85 billion target over the next seven months. let's take 10% of what we're putting in a service contract in. and just after contractors to cough it up. that is $35 billion, $40 billion, half of what we need. but we do not have the authority

to do that. and obviously, the contractor community with its political muscle, is not quite to let anyone touch those profits. host: september, 2011, a report about what the government has found. the study found that in 33 of 35 occupations, the government paid billions of dollars more to hire contractors and it would have cost government employees to perform compare all services. nat in st. paul, an independent collar. caller: government should just do everything themselves. build their ships, build the roads, everything. guest: government has been contracting out since the revolutionary war. we should not be building certain things. we should not be building dentures. the veterans administration got out of the venture making business decades ago we are not

in the business of building tanks. we build some things like nuclear weapons. that is a federal responsibility. but we buy parts from contractors. let's not be naive about it. as i said in the beginning, two- thirds of all contracts are in the form of services. about 80%, maybe 85% of all information technology programming right now is done by contractors because we do not pay programmers enough in government. i will not make the case for increased pay drop the federal salary structure. -- throughout the federal salary structure. but when you get to the top grades, the pay is amazing. the fact that you could make so much more money if you just left government, went to work for a contractor, had that contractors are new to an agency and said you back to sit at the same desk used to occupy. you will cost a lot more money.

you'll make more money. i just does not make sense. we do not pay people enough in the federal government. and what we do these things like furloughs, we do them across the board. and you can bet that the federal debt -- the best federal employees are saying i've got to get out of here. what you're left with are mediocre and poor performers. the furloughs are so poorly targeted that you are basically sending your message to your best workers that if you can find a job with a contractor, if you can find a job with a private firm, now is the time to go. it is a silly way to do it. i cannot imagine what happened in these agencies that they did not prepare for the sequestered. maybe they were listening to president obama khan said, well, this is not going to happen -- president obama, who said, well,

this is not afford to happen. but i've seen agencies do pretty well in this process by not furloughing employees. we're going to get less service. we will get some problems coming out of it that nobody expected, but we're still not sure how it is going to work. host: we will go to lewis in elizabethtown, ky. a retired contractor, is that right? caller: that is correct. i want to thank c-span for the programs they put on and thank professor light. saying that it is impossible to know by asking the contractors. that is like asking -- by asking the contractors, that is like asking the fox what he's doing in the chicken coop. the federal government has a way to count this in a myriad of ways. whether it is the security system at your facilities -- the

government should ask the security people and get the numbers that way. another way if the contract administrators. they know who are there because they have to name each individual. they have to know who it is. they have to name them by the type of job they're doing and it has to be listed in the contract. the whole relationship between government contractors and the federal government in oversight of those contractors provided so incestuous that it is absurd. host: let's get an answer from paul light. guest: incestuous is to put it lightly. you look at these contracts and the way to get at this would be to look at labor costs. by job category. which is what the government oversight did, but they do not have the dollars to really drill this. and it is not believe the

numbers that matter. is the total costs. it is the total cost of the labor. we end up by all of this labor and we do not know how much of it we are actually buying and the true cost. and the contractors do not want us to know. they believe this is irrelevant. all i'm saying is, let's get to the heart of the matter. what do contract jobs cost? what do contract's cost? what is a fair rate of profit for the contractor? and how many of these jobs should be brought back into government? what should we be doing here? if the contractors want to engage in this debate, which they absolutely do not, they can bring some numbers to the table. but you've got contractors on one particular piece of work you are subcontractors.

other times, other pieces of work in the same divisions. new have primes reporting as subs -- you have crimes reporting as subs elsewhere. it is a mess and you cannot get at it the contractor community will for you to the death on it. host: that albrecht on twitter. the gao says 35% of contractors are minority-owned businesses. how many of these contractors will lose business from sequestration? guest: some will lose some business. here is some -- an interesting suppah -- here is an interesting statistic. 75% of all contracts, the actual paperwork, goes to small businesses. very large small business activity, but only 25% of the dollars go to those small businesses.

you've got a ton of small contracts going to a very large number of small businesses. the rest of the contract in goes to the very large contractors, often in non-competitive, sole source, neddick contracts, or what we call bundled contracts. and it is in those bundled contracts that you get this kind of turning of prime subs, a sub- subs, and all of these little contracts moving around. and the oversight of the contractor, the prime of the subs, is amazing. we have not increased the acquisition of the personnel, the people who oversee this and make the contracts for basically a decade and a half. it is just about the same number that it was in 1990 when the cold war ended. and the number of staffers who worked for the inspectors general in the federal

government to oversee these things have gone down, as well as the number of employees at the government accountability office, which is supposed to be looking at this as well host: speaking on twitter, we should change the definition of corruption to no bid, cost plus, no oversight, like everything we do. and another one, from laura, say something about contractors in afghanistan please. guest: my goodness, the amount of fraud, waste and abuse in the wartime contract is beyond belief we will never really know how much was thrown away, how much equipment we got that was wasted. how many buckets of dollars we sent to iraq and afghanistan to buy good favors, real dollars on pallets wrapped in plastic that have disappeared and will never be accounted for. christopher shays, the former

representative of connecticut, just finished with a colleague of his chairing a commission on wartime contracting. it is as horrifying report as any stephen king novel. the report a lot of money into those wars. i do not know what percentage was wasted. it could be 10%, 30%. who knows? but the noncompetitive contracts, it is a nightmare and we cannot get control of it. host: howard in columbus, ohio, a democrat. caller: you pretty much an answer the question i was going to ask. it was about the government's influence over these contracts, like in iraq for the military. and how much money was wasted on contracts to iraq. they had security forces there were getting paid more than our

troops were getting paid. and there were in the same country fighting the same battle. we have hired thugs getting paid astronomical dollars compared to the military people that were there. host: paul light, have you looked into that? guest: the blue ribbon commission on wartime contract in did an amazing job taking an inventory of this, and as i said, it is horrifying. we were just throwing money at the war because honestly, we had no contingency plan for a war like the one that emerged. so we are doing everything. contractors have the bodies. you cannot build an air base anymore. now without the contractor. you cannot serve food anymore without the contractor on that base. it is very difficult to do

anything now, because the federal government has this invested in the competition that used to in -- has disinvested in the competition they used to exist. we used to have several companies building aircraft. today, three. you do not have enough competition out there to get this auditory benefits of lower bids because people are fighting -- for these salutary benefits of lower bids because people are fighting for contracts. when you get is what is available and contractors step away in favor of the sole source. we're looking at huge amounts of waste in certain areas and there's not much to be done. host: maverick on twitter says contractors like raytheon, northrop, etc. of permanent lobbyists in washington.

next caller, what are your thoughts? caller: i wanted to bring up the war and act. contractors knew this was coming. -- the warren act. contractors knew this was coming. however, they chose not to let them know that furloughs would be a possibility. these contractors did not prepare. no. 2, of personal experience kirby's companies to construction. -- number two, my personal experience. there are companies who do construction. there are some contracts set aside for minority and unions. we are neither minority-owned or unions. and in many cases we could be the lowest bidder, but we are satisfied in a separate category. our tax payer money is wasted

paying people who have a straw person at the head of the company was a minority -- who is a minority and they get the job at the higher price, and therefore money is wasted. that is our personal experience. guest: that could be true. it is worth taking a very close look. as i said before, we have 75% of the total contract paperwork going to small businesses. some of those are minority aunt -- minority-owned. are we getting good thing for the buck their backs are getting a good paying for the buck at all of this old sources? this notion that he did not know the furlough was coming, it boggles the mind. we have been through one of to the last second crisis after another.

we class -- we crossed the rubicon on new year's eve so that we did not get short of the fiscal cliff until after we went over it. it is crazy, the notion that any type of action forcing a crisis like the sequester would be dealt with. it just does not make sense. and to be honest, what i've heard on capitol hill is that the republicans were not in favor of the sequestered, but there were many democrats who said, look, we will pick up $1 trillion. we will get a lot of downsizing of defense. it is the only way to get to the downsizing. you heard some lettering on the democratic side of the aisle, well, maybe we ought to go ahead with this. and there's not much we can do to fight it. how could you be the secretary of transportation -- i have a lot of respect for former rep

ravenwood -- representative ray lahood. how could you not have done something about these delays? but the veterans were going to get disability reviews. right now, those are taking five or six months. on average, was an extra few days? the public is so fed up with government and our political institutions work that you cannot go any lower interest in government. -- in trust in government. i think this sequestered is going to hold. i do not think you will fix it. i do not think we were prepared.

host: here's a comment on twitter. when boeing and others by law tried to notify employees of potential layoffs size year, obama astin not to do it. -- obama asked them not to do it. this notion of the warren act, can you talk about that? guest: the furloughs and that the federal government will not begin until the end of this month. you have to send a letter and the president signs it -- signed it last week saying that furloughs are coming. you've got to give advance notice. and in terms of contractors, you got to give advance notice as well, at least as i am understand it. there is a lack of preparation all over the place. the notion that, oh, my goodness, no one would ever allow this kind of sequestration going to affect, that penetrated the consciousness in part because the policy makers were

saying it. it is beyond belief, right? therefore, you act at the last minute to get it done. but there are a lot of people who believe that the sequestered, bad as it is, foolhardy as it is, the best way to go. we pick up $1 trillion over 10 years they get as close to the mark that economists think we ought to be heading. let's let it happen. yes, i federal employees will get hurt. contractors will get hurt. but will pick up a lot of money here and perhaps we should just let it ride. they made no effort whatsoever to stop it. it really, none at all. host: we will go to jerry in hyde park, new york. he is a federal contractor. caller: i work for a contractor out of atlanta doing minutes on facilities.

host: main tents on what? caller: facility maintenance. the reason these contracts are overpriced is the davis-bacon act. host: paul light, can you tell us about the davis-bacon act? we're running out of time a little bit. guest: davis-bacon requires a certain wage structure that would not be in place if you did not have that law. it does inflate wages a little bit. but let me tell my friend here that davis-bacon is a tiny part of the problem. the profiteering is a bigger part of the problem. but we've got to put it all on the table. it is time to talk about what our mission is, talk about how much we ought to pay for it, have an honest conversation.

the contractors deserve a reasonable profit. but the amount of gouging is just too much. right now, it is time for full transparency about what we spend and how we spend it. that is true for inside government as well. get it all on the table and talk about it. we talk about $600 billion for federal and contract employees, procurement, and so forth. let's get it all on the table and see where we can save some money. host: paul light is a public -- is a public service professor at york university. you have written several books. you're coming out with a new book, is that right? guest: it is on the big-ticket investigations of the executive branch from 1945 through the present. it has been an eye opener. it is called "government by investigations." brookings and the government's institute are going to publish

it. lots of history in there. host: give us a little bit. what do you think will surprise people? guest: i just think that the amount of investigations that you do that do not work are pretty interesting. and the number of blue ribbon commissions that have worked, even though we think many of them are window dressing, is also surprising. but the stores have been wonderful to right. it is a blend of history and that hardcore political science. some people will be bored to tears and they should just enjoy the statistics. there were a joy -- -- this was a georgia wright. host: here is a, by twitter. barry in florida, democratic caller. caller: my comment is that the

general accounting office about three months ago, you talk about contractors, the general accounting office came out three months ago saying the kind -- the federal government spends $120 billion a year on purchasing of facilities or leasing of facilities that are for the most part baking or have not even been built yet. such as the world trade center, which the gsa was supposed to give back to congress because they signed a lease for $30 million a year for 10 years. they do not even know what they want to use it for and they do not even have a document yet. the outgoing got director of the office of management and budget, jeffires guion -- jeffrey zion. this has been an issue in

government. the waste on leases, the duplication, the overlap, we got all of these problems in the federal government that we can fix if we just write down on them. what is interesting about your comment is that the government accountability office that you are talking about is not going to make a single furlough because they thought ahead. this is 2900 people. they deliver everything through their own personnel. and they're not laying off anybody because the comptroller general of the united states thought ahead. they had worst-case contingency plans in place. you did not have to do this. you did not have to furlough to get this thing down. you could have done it thoughtfully by eliminating certain programs, by not hiring a in certain jobs, by targeting people to furlough who are in a poor performer category. but we did not do that.

we're letting go of some people here were very, very good. and their instincts will be, hey, i'm just not going to take this. i will go look for a really good job in the contracting community. i will get higher pay, better benefits, etc. we will lose some very good people out of this, someone to be in government, young people in places like my school, the wagner school of public service at new york university who would have gone to federal government and now say, really, this is how they run a government? the federal government emerges from its looking like a negligent employer, and a wasteful consumer. that is not the message you want to send to bright young people who might actually consider careers in the federal government. host: randy is a federal contractor in iron river, michigan. caller: i'm a certified custom

fabricator. i'm certified in mild steel, stainless steel, and day certified food grade inspector. in 1995, i was building a prison. we get our prints from whoever it is who is buying this. these are people that are not from the federal government. they are people who go in and buy a present from a building that, and we ought to -- and by a prison. we ought to build exactly as they say to do so or we do not get paid. and each state has different laws about how last to be built. as federal contractors, we know these laws. a guy from obama comes in and buys this property in stanley. after he does so, we get this contract to build this prison. we looked through the contract and saw what was wrong with it. we said it back to the guy in oklahoma and tallinn that the handrails are only 32 inches tall. we ought to raise them to at

least 36 inches, or is not going to be ok for a wisconsin law. he said the back to us and tells us that if it is not exactly how it is at 32 inches high he will not pay. it happened to be that his son, that with the very first thing that he worked on out of college. just because this rich guy from oklahoma wrote up the blueprints on this prison we had to build it up exactly like that. we had to do it according to what was that we did not get paid. is that the federal government's problem, or some rich guy knowing he will get paid one way or another? that prison got sold off by the guy in oklahoma who built it, bought it, and wisconsin had to come in and buy it out from it because we could not put prisoners in there because somebody from another state owned it. wisconsin had to go back in and pay us to raise those handrails

after it was done. we tried to take care of that problem, and it goes on all the time. it is because the rich guys the one who does the pain. -- paying. guest: do you see my reaction to it? i'm shocked that there will be plans floating around two buildings that have not been preapproved. what is interesting, i learned several years ago that contractors were out of the department of defense ride the specs for contracts for proposals because we do not have enough bodies inside government to do these jobs. it does not make any sense at all. you and i can sit together and over half a day can come up with hundreds of examples of

contracts ebersole saoirse, late in with weights, could not be audited because -- that were laden withurced, laten waste, could not be audited. we do get high-performance contractors, but this is a system that is highly vulnerable to abuse. we do not have the transparency we need. host: sean in washington, d.c., go ahead. caller: i work for a company that is federally contract in d.c. could you explain how contractors exercise their political muscle on capitol hill? and a related question, what exhibit lobbyists do with all of their money? guest: just go to

opensecrets.org and look at the lobbying page. look at how much the contracting industry spent on lobbying. look at how much they spent last year with washington d.c. offices. a lot of the lobbying does occur on capitol hill when you have legislation moving through, like the continuing resolution that we will get at the end of the month. that will be laden with contract influenced provisions. but you also see lobbyists in the department working on establishing priorities damache -- shaping regulations, getting in there and opposing new ingalls on contracts and so forth. -- establishing priorities, shaping regulations, getting in

there and opposing new ways of doing things on contracts and so forth. there's a lot of money flowing into government right now from outside. it is all designed to influence the course of policy. is to go up's job and twist arms to the extent that they can. and if you look at opensecrets.org, you'll see a lot of money trying to -- flowing into the campaigns. the big finance reform decision, companies are now allowed to provide campaign support that they were not allowed to before this decision. not a lot of money flowing into the system. host: you have written about decreasing the size of the federal government. one way you do that is you do not replace every single person retires from the federal

government. under sequestration, is it possible that we cease and retirements of baby boomers, early retirements perhaps? but under federal law, do all of those jobs have to be replaced 141? -- one for one? guest: you are not required to replace anybody. the problem here, you can probably guess that i'm a baby boomer. as the baby boomers are leaving, we will lose 50% of the federal work force in the next 10 years due to retirement. as the baby boomers leave, many of their jobs are filled by the next person in mind. the separation rates -- the next person in line. the separation rates at the lower level of federal government, those who will enforce the laws, they did the disability reviews. disability reviews.