from about 40% at the end of 2008 to an estimated 90% in 2020, according to the calculations from the cbo. that is almost over the figures were at the end of world war ii. for the president to make his first priority a program that increases spending, even though in a technical sense, it pays for itself through other spending cuts and tax increases, seems to be irresponsible. those spending cuts and tax increases that are projected to cover the deficit, the cost of the program will not, in reality, occur. they will be repealed or modified by congress. the second issue is we are facing nearly $13 trillion of debt in that time. if they can of hot $13 trillion in spending cuts and tax increases, let us apply that to the existing debt before we have new spending. that was my fundamental problem. host: lafayette, louisiana. dexter on the democrat line. caller: i agree with one thing, people are not ready for change when change comes i am optimistic about the economy, however. i want to say, what mr. obama is doing, in terms of going back and drilling, that is going to put people back to work.

cbo estimated at 109 billion. it's been reported recently in the "new york times" article that i have your that some treasury officials, i think i named as i recall, expect a bailout program to quote eventually turn from red to black, end of quote that is treasury says that eventually they may not be as losses, does this excise tax make sense? before you answer that, with the amount of losses if any be more certain the year 2013 the year the t.a.r.p. losses the previous to propose a law to recoup. specs are to with more time to we more certain as to the extent of the losses. >> omb says the auto industry is responsible for 31 billion of all the t.a.r.p. losses. cbo says that they are responsible for 34 billion. doesn't make any sense to levy a tax to recover t.a.r.p. losses and then carve at gm and chrysler, the companies responsible for 30% of the losses? >> it is a difficult question, senator. and i know it is based on a structured of the way section 134 was intended originally. is it is a difficult policy quest

the cbo says that we're going to run a deficit of about $1.50 trillion.hat means we're spending $1.50 trillion more than we're taking in in taxes. the-you see accumulated deficits from all prior years plus interest, including fisher. when you looked -- including this year. it will give a scale of the ratio of the two and the country's capacity to carry that debt. host: christian weller, your thoughts about the relationship between the debt and the deficit? guest: at this point, the numbers are theory. we do not really have to run for the exit at this point. there clearly is a message here underlying what we get from the congressional budget office that we ultimately have to get a handle on the situation. we're looking only 22020, 10 years out. the picture does not get all that much better beyond that. health care reform helps a little bit. we have massive amounts of debt piling off and that puts the country before some hard choices. do we pay for the baby boomers' retirement or do we pay the debts in interest payments to the people web lead us the money?

the cbo has expressed a certain amount of skepticism as well. my objection would go beyond whether or not the bill pays for itself internally. even before the bill was enacted, the government was facing massive deficit as far as the eye could see. the debt was roughly $13 trillion. rather than enacting new spending measures, which is what this bill is, it seems to me the government first obligation would be to pay for some of the spending that it already enacted in the past. that the obama administration has not done. that is my fundamental objection. host: indiana is next. independent line. good morning. caller: thank you for your time. i would like your input and opinion on a couple of comments. if you would have thought, i never would have thought i would discuss economics. i think it is the number one issue that affects the future of my son. do you know that we are in a whole? we have no funds for our unfunded liability for seniors. our debt is owned by the federal reserve and china and japan. we cannot do anything to them. how does the deat

the cbo scores of the play in a solvent for 75 years. that is based on conservative contempt -- conservative assumptions. and if it looks like the secretary is going to be in a deficit position, then she has the authority to adjust the premium. in a 10-year budget cycle, yes, it is revenue without expense. in the second 20 years, the well never runs dry. because you, in effect, are pre funding it through premiums. host: what is your graduate degree index guest: -- your graduate degree in? guest: i have a doctoral degree. by a member of the clergy. you would think that in some ways i'm already a member of the insurance business. [laughter] caller: i have a very practical question specific to my situation. i am 82 years old. i have had several different health problems such as heart attacks, cancer, seizures. and right fairly healthy -- right now, i'm fairly healthy. but i want to know what will happen if i suddenly become disabled and have to go to a nursing a room for long-term care. but what are my benefits, if any? i'm sure i have some

it will prove more costly than the cbo as estimated over time. it may

cbo estimated that at $109 billion.it has been reported recently in the "new york times" that some treasury officials on named, as i recall, expect the bailout program to "eventually turn from red to black." if treasury says that eventually there may not be losses, it does this excise tax makes sense -- and before you answer that, wouldn't the amount of losses if any be more certain in 2013, the year that the tarp law says the president is supposed to -- supposed to propose a land to recoup taxpayer losses from tarp? >> in 2013, the will certainly be more certainty. >> 01 be says that the auto industry is responsible -- omb says that the auto industry is responsible. does it make any sense to recover tarp losses and then carved out the auto industry responsible for 30% of the losses? >> based on the structure of the way it was envisioned, it is a difficult policy question. >> in march 2009, and that was just 13 months ago, the president announced an initiative to use $15 billion in tarp funds to fund what is called sba

if you look at the cbo numbers, these deficits are fairly large, even by 2020. we have to think about, what do we want in terms of revenue? what do we want on spending? host: andrew biggs of american enterprise institute, if we do not start addressing the situation now, how much is it going to hurt us in the future? tesco 90% of gdp is an interesting crossing point -- guest: 90% of gdp is an interesting crossing point. they looked at debt crises and fiscal crises throughout the world are the lot history print 90% of gdp was a crossing over point for countries tended to feel the bite of higher debt. for years, which could borrow and borrow and we would not see the effects of the economy. at around that level, you start to see higher interest rates, higher inflation. that makes it all the more difficult to get on top of these problems. it is a difficult scenario. what worries me is not that we have a deficit today, we would have that regardless of who was in power. what worries me is this budget projecting enormous debts and high annual deficits even to 2020, 10 y

we also believe we'll reduce the cbo numbers because the of the most residency in this town. i hope we can agree on a set of numbers. that we have to explore these options. these two guys that came, the former head of the ceos and there's lots of options out there. you guys have great ideas. let's explore the great ideas and leave everything on the table until the end and then we have to make the difficult choices. we have agreed we are going to make those choices. we are cui to work together. we are not a republican democrat we are just americans but we have a big problem in the american problem and i am excited about working with each of you on it. thank you for serving and for being part of it. we have a couple of issues to bring up before we leave. the next full commission meeting will be on may 26 o'clock to 11:30 up on the hill and we will announce we're in between that we will have working groups that will deal with the mandatory spending, discretionary spending and revenue reform and we will have each of those on every wednesday going forward. the subsequent meetings

according to jerry 2010 cbo background paper, cbo "police said the belgian government's turn operational relationship with fannie mae and freddie mac warrant their inclusion in the budget. by contrast, is outside the federal budget. the of this management and budget of the u.s. government fiscal year 2011 states that " under the approach in the budget, all of the transactions with the public are non- budgetary because the gse's and not considered to be government agencies." cbo has included it in the budget baseline but does not include their debt in the competition's of debt. cbo to a narrow view of debt. -- the treatment of the entity's debt does not constitute a statement about whether or not it should be considered federal debt. palin light of the decision to back decisions, we should have correct and accurate budget by including the debt operations. >> what did he say? bu>> let me say that the leadership of the budget committee in the house in the senate had previously concluded that freddie mae and fannie mac should be on the books. what is not is their previous accumulated debt. i

they are zipping around and we can make lists of those and cbo and others have. have strong protectors and they don't have huge visibility among the public so it's difficult to catch them. we are, however, feeding another shark, and that shark is the interest on the national debt. and over time if we continue on this current path, you know, it's going to be an equal competitor to health care costs and the big problem of course is interest on the debt from the public's standpoint is in a sense worthless. health spending, you are getting health care, you are getting something for it. interest on debt is payments that go out for goods and services but via public has enjoyed in the past but it gives them no benefit now and were we to run up huge debt and seek a balance of the budget people would be paying large amounts of taxes for which they saw no services in return because the services had been enjoyed by their parents and grandparents. >> thank you, mr. chairman. i think that one thing the witnesses agree on is that the status quo has been sustainable all the way

what did the cbo report say? by 2010, under the budget, the deficit will reach 5.6% of gdp and never dipped below four. -- 4% to the entire budget window. under the president's budget, the debt held by the public would grow from $7.50 trillion or 53% of gdp at the end of 2009 to $20.30 trillion or 90% of gdp by the end of 2020. about $5 trillion more than the assumptions in the baseline. if we do nothing but maintain our current posture, we would be $5 trillion better. that interest would more than quadrupled between 2010 and 2020 and swell to 4.1%. there will be more spending. government will grow. i see virtually no entitlement reform. none. the amount of discretionary spending reform, as has been indicated, is represented by a $4 billion reductionin international accounts. there is talk about the freeze in the budget and i appreciate the fact there is a proposed freeze. i hope as we see the mark up the that this will be backed up with caps on spending that will be enforced procedurally. the freeze is a freeze

cbo projects $273 billion more than the $300 billion in the budget resolution already provides.transparency than the previous administration. simply disclosing anticipated costs in the budget is not the same as paying these costs. i think we need a more comprehensive global strategy to enhance our national security. a al qaeda is not 82-country franchise, but a nimble, global threat. my amendment requires that we pay for those costs, rather than continue to add them to the budget deficit. it permits them to be offset over 10 years to lessen the immediate fiscal impact but it does require we enact policies now that ensure deficit neutrality for any additional spending on the wars. congress and the administration could decide not to offset -- certainly these two wars do not meet our current definition of emergency. it is hard to argue that the spending is somehow unforeseen. in a little more than a year, the war in afghanistan will beginning its second decade, and the war in iraq is not far behind. i hope my colleagues will support this amendment regardless of whether they support

look at the cbo projections forward.se of the deficit where bequeathing the next generation, we are giving them a lower standard of living. this is doing what we need to do to make sure we can grow and prosper and have opportunity. the big difference in philosophy is that we have is what size of government we are going to have. from my perspective, that determines how much individual opportunity and achievement we are going to be able to have. >> you are late, so we are putting you in the deep end of the pool. tell us about this. the difference in philosophy is what we are talking about, whether what the problem is, whose responsibilities of and the problem is. we touched on health care and social security. how would you define the problem? >> the problem is not the immediate deficits which are necessary to deal with the most severe economic downturn since the depression. i think we go in the wrong direction when we start saying things like we cannot afford to extend unemployment benefits, which we need, even for jobs, s

what did the cbo report say? by 2010, under the budget, the deficit will reach 5.6% of gdp and never dipped below 4% to the entire budget window. under the president's budget, the debt held by the public would grow from $7.50 trillion or 53% of gdp at the end of 2009 to $20.30 trillion or 90% of gdp by the end of 2020. about $5 trillion more than the assumptions in the baseline. if we do nothing but maintain our current posture, we would be $5 trillion better. that interest would more than quadrupled between 2010 and 2020 and swell to 4.1%. from 1.4%. there will be more spending. government will grow. i see virtually no entitlement reform. none. the amount of discretionary spending reform, as has been indicated, is represented by a $4 billion reductionin international accounts. there is talk about the freeze in the budget and i appreciate the fact there is a proposed freeze. i hope as we see the mark up the that this will be backed up with caps on spending that will be enforced procedurally. the freeze is a freez

retired cbo people and stuff like that.ould be one of the biggest stories of the decade. this thing -- this thing in greece -- >> yeah, and this is more from the "usa today"/gallup poll. you can see what voters say is extremely important to them in congress for this year for the votes they'll cast. economy, 57%. health care at 49%. unemployment, below health care, that's surprising given what we've seen in past polls. look at the federal budget deficit, it's very high. this is something voters say continually the white house knows they've been vulnerable on in polls before. >> and it's very high with independent voters who make up a significant portion of this group that's swinging back and forth that's angry with the democratic party. one number i noted, the head of the cbo noted, that the debt is going to go from 7.5 trillion at the end of 2009 to 20.3 trillion by 2020 if president obama's fiscal budget is implemented. $20 trillion? >> how do you run on this issue in any intellectually honest way? because everybody can co

the american people have lost confidence in cbs, cbo's, synthetic cbo's, and their aftermath. it lost confidence in the words and in the trustworthiness of the institutions creating these instruments and whether there's really any purpose behind these instruments. other than gambling and other than opportunities to try to take advantage of someone else or some other organization or some other country. transparency and trustworthiness are needed. they are a big part of the effort being made by this committee and a look for to this hearing. thank you mr. chairman. >> thank you very much. now we will hear from our first panel, mr. robert johnson, director of the global finance institute. mr. johnson. >> good morning. mr. chairman, ranking member garrett, members of the committee, thank you for the opportunity to address the issues related to credit defaults swaps and government debt. as congress considers legislation on financial reform i applaud your efforts to explore the implications of financial practices, financial innovation and particularly the practice in the areas of der

that is cbo's analysis. you are saying we have to use their analysis.very act has preventing unemployment from being much higher. >> i would conclude that you made the argument for his amendment because he represented that the recession is over and the snap back as the fastest in history and we are on a strong economic upturn and all of that being said, i would say we did not have to spend any more of the stimulus money and put it toward the debt. >> if i may briefly point out, the cbo has also said that it is impossible to determine how many of the reported jobs would have existed in the absence of the stimulus package. given the lack of a verifiable and demonstrated results from the stimulus, if we can recover one seventh of it and ordered to pay down the debt, i think this is a great opportunity to do so. thank you, mr. chairman could of course i understand we need to move on. i feel i need to respond specifically as it relates to michigan. because, and only because, of the recovery act, we have nine new companies that are manufacturing or going to b

they are zipping around and we can make lists of those and cbo and others have. but the have strong protectors and they don't have huge visibility among the public so it's difficult to catch them. we are, however, feeding another shark, and that shark is the interest on the national debt. and over time if we continue on this current path, you know, it's going to be an equal competitor to health care costs and the big problem of course is interest on the debt from the public's standpoint is in a sense worthless. health spending, you are getting health care, you are getting something for it. interest on debt is payments that go out for goods and services but via public has enjoyed in the past but it gives them no benefit now and were we to run up huge debt and seek a balance of the budget people would be paying large amounts of taxes for which they saw no services in return because the services had been enjoyed by their parents and grandparents. >> thank you, mr. chairman. i think that one thing the witnesses agree on is that the status quo has been sustainable all

hooters cbo kobe brooks featured on series "undercover boss" is joining us next.t's $10 90-day generic prescriptions... don: ...no matter where you live. don: plus get free shipping on over 3,000 other prescriptions. don: call 1-800-2-refill for your free home delivery. save money. live better. walmart. >> mike: reality television show giving the heads of major corporations a real dose of reality. >> the first girl that finishes her plate of beans will go home. you cannot use your hands. okay? so, go! come on, girl. who wants to go home? oh, look. okay, doggy. brianna, how are they, baby? they look tasty. who doesn't want to spend the rest of the afternoon with me? >> mike: the ceo of the restaurant chain hooters was one of several executives who disguised themselves as entry level workers to get an idea of how things really are deep in the trenches of their companies. we will see it unfold on the new show called "undercover boss." ladies and gentlemen please welcome kobe brooks. [ applause ] >> the look on your face when the manager of one of those stores asking

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hooters cbo kobe brooks featured on series "undercover boss" is joining us next. be right back. now back to the sauce. add a little bit of seasoning, just a little bit of seasong. rachel. ( door slams ) well, today's lesson-- the importance of durab kohr cast iron sinks. and honey is the best policy. welcome to progressive. nice calculator. i'm just trying to save money on my car insurance. you know, with progressive, you get the option to name your price. is that even possible? uh, absolutely. trade? and i still get great service? more like super great. oh, you have a message. "hello." calculator humor. i'll be here all week. i will -- that was my schedule. the freedom to name your price. now, that's progressive. call or click today. paid invoices go right here. that hasn't been paid yet. what? oh. there's a better way to run your business. try intuit quickbooks online for free. it easily organizes your entire business in one place. it's easy to set up, learn, and use. you can start creating invoices in just minutes, then print them, e-mail them, and track them s

guest: the cbo is an independent group that does this work for congress. i do not have any other numbers for you right now. host: we are talking about the immediate effect of health care. louisville, ky. caller: police did not cut me off. you gave that dr. a lot of time. julie, thank you for accurate information. i wanted to ask you a question. i am on medicare. i treasure it and i monitor it very carefully. i get a statement every time i go to the doctor telling me exactly what medicare paid. it has always been on a timely basis. i am pained when hundred $43.50 a month to united healthcare for a supplement. -- 4143.50 and month to united healthcare for a supplement. -- $143.50 a month to united healthcare for a supplement. medicare paid $78. medicare paid $78. my sup my supplemental paid $14 in the difference. i was livid. i have to call them every time. host: what is your question? caller: i want to know if there is going to be any control on the supplemental insurance companies. host: julie. guest: not that i know of. the doctor has a certain charge and

the actuarial soundness of it was judged by the cbo to say that it is solvent, is sustaining, solvent for 75 years. there is plenty of actuarial science that says it is a good program. there are also mechanisms within the bill so that the secretary has to, in effect, assure congress regularly and that it is saratov out 20 years periodically. -- that is ceronsound out 20 yes periodically. there's nothing wrong with private long-term care insurance. it's just that most people can afford it or would be screened out because of pre-existing conditions. host: you think that government walter richards is going to be much less expensive than -- government long term insurance is going to be much less expensive than private? guest: 0 think about medicare supplemental insurance. it has been highly successful. we believe that some of these companies -- in fact, we have heard that some of them are already thinking of supplement of products to help everyone. host: when is this long term insurance, to be available to everyone? guest: as soon as possible. there are certain milestones that have to be

it will prove more costly than the cbo as estimated over time. it may not swing in the democrats' favor. some have been saying this is not what we should be doing at this time when we have deficits and other problems. they hope that this will swing in their favor and they will gain some seats. some are saying this is what is. to happen in the next few years. they hope that public opinion will swing in their favor. host: what takes effect immediately in this guest: healthcare bi healthcare bill? guest: some of these changes to insurance, but initially, the first couple of [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> tomorrow , will talk about current federal spending projections indicating a rise in the federal debt. michael jacobson talks about food labeling and whether products are what they are advertised and food safety. james klein explains which health-care law provision and a one of president obama to repeal and why it would cause a drop in corporate profit and discourag

entitlement in the middle of the time that the gap is increasing, and in the absence of health care, the cbo is estimated at $10 trillion increase in the debt of the next 10 years, 90% of gdp, which makes us like greece. when that happens, everything collapses. that is in the absence of the new entitlement, which will be at least $1 trillion. >> some of the stimulus is actually starting to pay off. we made money and some of the bailing out of the bank's. >> that is not stimulus. >> that is the tarp. but the symbol of having hedge fund managers make on average $1 billion a year is the kind of thing that just sticks in people's throats. >> i understand, but how to you avert what gaza talking about? -- what charles is talking about? >> you cannot just to shake things about unemployment. you have to confront it centrally and directly, and make americans aware of the central trip, which is that you will have to both raise taxes and cut benefits. >> the only answer will be eight european-style vat. if we want european-style entitlements, which we are now getting, we will have to have european-styl

by law, the cbo must make their estimates based on what is in the bill, whether or not it thinks the provisions in the bill are realistic. the skepticism arises, not because the bill does not pay for itself on paper, the skepticism arises because we wonder whether or not these provisions will actually occur in practice. cbo has, in its own to crack way, expressed a certain amount of -- technocratic way, expressed a certain amount of uncertainty. my question is whether or not this pays for itself internally. the government was facing massive deficits as far as the eye could see, escalating deabt -- roughly $13 trillion. rather than enacting new spending measures, which is what this bill is, it seems to me in the government's first obligation would be to pay for some of the spending that it already enacted in the past. that is something that the administration has not done. that is my fundamental objection. host: indiana. tony on the independent line. caller: i have a couple of comments. i would like your input and opinion on something that quite frankly scares me. i would have never t

honest accounting of obama care we never got from the congressional budget office, i'm not bashing cbo>> congressional budget office. but the ten year spread, which is jargon went negative this week, or last week after the passage of obama care, what that means, investors around the world thought that american companies were a better credit risk than the u.s. treasury so this is a strong signal from the market saying stop spending. >> paul: it's come back a little bit. >> it's bounced back and corporate debt issuance this week. this is a tough call. the u.s. treasury has the ability to print money unlike coca-cola. >> paul: if you have a hit or miss send it in. that's this edition of the editorial panel.

and i am on a panel of economic advisers to the cbo when these numbers i will give you a ermine not theirsbut i would say that their numbers are moving in my direction as advised, my estimate would double debt to gdp and 40 to 80% as a result of this crisis and all the measures that the government was forced to take in order to reduce the likelihood of a massive depression and make sure it turned out only to be a great recession. if a world recession. but i think it would have been worse without those counteracting measures. that's a big increase in debt. that's not enough to sink the country, that's not enough to cause a crisis, it doesn't turn us into greece and goodness, but is completely unnecessary, unwarranted and the bigger picture and we haven't fixed the problem. we have not fixed the financialp company in september 2008 as a way to save it from collapse. it has access to the fed discount window. in his private equity investments to well, i can assure you they will make out like bandits. to use a technical term. [laughter] if it goes badly, whose problem is that perhaps it is a ba

we have $148 billion that cbo says will never be used, ok?and the number that you have here, as i read it, is $22 billion. is that the difference we're talking about here? >> the amendment says that there is $44 billion in the tarp loan authority and that cbo says will be used by october 3, but has not been used so far. the subsidy rate on that remaining loan authority is 60%. >> all right. >> [unintelligible] >> let me just circle back. i get it now. thank you for that explanation. >> you're welcome. i am glad i was able to help. [laughter] >> is jim on your staff, too? i personally believe that it is appropriate that we take off the table tarp money that will not be used. i have an issue with the calculation here. my understanding from the treasury is that this money will be used, but there will then be $148 billion that will not be used. before we end this mark up, i hope we will be able to address that spirit is really a larger number. i don't think we should interfere with obligations that have already been made. that is what treasury te

what i hear is it's going to take four to six weeks for the cbo and the various department agencies at the white house to actually analyze with this bill when it is unveiled. so that's plenty of time when they cut the deal on financial regs for them to go ahead and move that piece of legislation. the notion is perhaps they could squeeze in immigration in between. but nobody sees the supreme court until the very end of july. so that does give us, you know, almost a three-month window in which these -- these pieces of legislation supposedly are going to come before the full senate. gwen: we're going to have to go and leave it on that. but there's so much more we can talk about. we're talking about all of this on the air but there's so much more we can talk about online, including the discussion about immigration. just watch our "washington week" webcast. that's at pbs.org/washingtonweek. we'll talk about everything we didn't get to here. plus we'll take your questions. while you're there, also check us out on facebook and twitter. why not? next week promises to be a big news week, so kee

and the estimates you got are much higher than what cbo has projected the increase will be for the medicaid rolls nationally. the difference seems to be that your actuaries estimate that nearly everyone who become eligible for medicaid will sign up. that's not happening now. about a third are not on medicaid and half of those people get coverage through their employer. so why do you think that under this system that will change, that everybody who will become eligible for medicaid will sign up for it? >> of course, if they don't it would expose another falsy of this bill. they claim everybody is going to be inshurd under this bill. so i think our act wary simply took the administration at its word. if they want to confess failure, then the bill should have said that. we think we've made, unfortunately, conservative estimates at this point, we're continuing to discover new costs. it's not just the costs that will be visited on some future governor to pick up hundreds of thousands of new people on our medicaid system. we've already been hit with 25 million dollar bills because the federal gov

by law, the cbo must make their estimates based on what is in the bill, whether or not it thinks therovisions in the bill are realistic. the skepticism arises, not because the bill does not pay for itself on paper, the skepticism arises because we wonder whether or not these provisions will actually occur in practice. cbo has, in its own to crack way, expressed a certain amount of -- technocratic way, expressed a certain amount of uncertainty. my question is whether or not this pays for itself internally. the government was facing massive deficits as far as the eye could see, escalating deabt -- roughly $13 trillion. rather than enacting new spending measures, which is what this bill is, it seems to me in the government's first obligation would be to pay for some of the spending that it already enacted in the past. that so that is my fundamental objection to it. it gets beyond whether on paper the program pays for itself. host: indiana is next from the independent line. good morning. caller: good morning. thank you, mr. samuelson, for your time. i have a couple of comments and would

according to the president's own budget, the cbo says we'll double or deficit in five years and triple it in ten. by 2020, our national debt will be about $20.3 trillion. that's 90% of our gdp. we just simply can't sustain that. i've got to tell you, no questions taxes will go up. by 2019, there's an estimated almost 15 million people will be paying about $3.9 million more than taxes, 15 million people below the threshold of $200,000, which of course shows the president has not told the truth on that. >>> just to get the budget deficit down to 3% of gdp, not balanced, but 3%, first of all, they say if we that would be the marginal tax rate, but they go on to say, even if we raise tax rates on anybody, the bottom rate would go to 10% to 14%, and the top rate would go all the way up to close to 50% what's the plans to cut spending? otherwise we are going to tax ourself and our economy into stings. >> well, there's no plan to cut spending. i just got through voting against the unemployment insurance liftoff again today, because the democrats won't cover what the costs are. they won't pay

>> that we were short the good that you were selling cbo's, according to this mezzanine you were doing it, you basically packed them come sold them, and at some point, you were concerned about this and decided to short some others and offset the risk. do you not think that has the appearance of a conflict? >> again, i -- i do not no. if we have pools of security in our inventory and we are trying to reduce our risk, we are going to be selling those, selling -- >> you were not here. the last panel we talked about this. you decided you did not want to sell those. what most people do if they are in a position where you have a lot of stock that you now think may be risky, you did not sure them. people to short things. most people just cut back. if they have 500 shares, maybe they sell 100 shares. the previous panel said it was illiquid so you went out and goldman sachs sold short and the courts may i speak generally? the best way of reducing your risk is to sell what you have. sometimes you cannot because it is illiquid or it is unattractive. what people are doing sometimes is i am sure th

that is the cbo analysis. you are saying we have to use their analysis. their analysis is that the recovery act has prevented unemployment from being much higher. >> i will conclude a you just made the argument for senator cornyn's amendment. the recession is over. the step that has been the fastest in history. we are on a strong economic upturn. all that being said, i say we do not need to spend any more of the stimulus money. >> if i may just briefly point out, cbo has said that it is "impossible to determine how many jobs would have existed in the absence of the stimulus package." given the lack of verifiable results, and we have a chance to recover 1/7 of in order to pay down the debt -- i think this is a great opportunity to do so. >> i understand we need to move on. i do feel a need to mrespond specifically. only because of the recovery act we have nine new companies that are manufacturing advanced battery technology for the next generation of vehicles. it only happened because of the $2 billion that was put in. because of the expense of manufacturi

>> the cbo said medicare was going to barely inch up and it's exploded.care by a factor of 20 over the last 30 years. i don't think americans have confidence in a washington, d.c. group to tell them that. it doesn't hold water. >> when the tea party movement comes to washington are gou going to put forth a better governing model? we get the opposition model out there, but a better governing model or just no and in some cases hell, no? >> in the short term it's no. the fact is that the ideas we have like the ones i shared with you on health care are not going anywhere right now. we have to a pose the immediate threats and the biggest one now with health care legislatively over. it's not over as far as the american people sending a message to the guys and folks who voted the wrong way on health care. right now it's saying no to bad ideas that will kill freedom and jobs and raise taxes and spending. >> where in modern life can you say no without a fix? where can you say, no, no, no and not offer a fix? >> i just gave you two ideas on health care. paul ryan,

. >> >> greta: that's director of the cbo, emdoor of said last week the fizz -- elmendorf said last week fiscal path is unsustainable. five years from now, unsustainable is not a word that makes you feel good. >> what happens in the budget we are living unright now is our debt gets to p levels.gets to interest on the debt in the last year of the president's budget is about a trillion dollars, 914 billion dollars. >> greta: you blame that totally on him -- >> he inherited a good number of problems. but he took these problems and made them much, much, much worse. so much more spending.ç a new entitlement on top of it. there's a good statistic out by the tax foundation. very, very highly regarded think tank. this is what i worry about most. five, six years from now we are going to have a "tipping point" where there are so many people not even paying taxes living off the government versus people paying into the government. 20% of americans right now, 75% of their income from the government they are dependent on it. another 25%, 40% from the government relying on. according to the tack found

. >> s the report is in conflict with the cbo report which says the bill brings down the cost of a healthcare over the years, especially in the second set of -- i'm sorry, in the second decade. i think that this -- >> neil: that is better than just a bunch of numbers guys, i asked my doctor for medical advice, not an accountant. this is a body within health and human services. >> correct. >> neil: submitting a report that the health and human services secretary had to say not quite. >> actually, i don't know it's weird. here's the issue. the report is not just full of bad news. it confirms, though, some positive things that it extends a solvency of medicare for an additional nine years, which was not the case prior to the report. it also talks about other cost savings in the report. here's the -- >> neil: you say it doesn't appreciate the cost savings. >> here's the flaw, it doesn't take into consideration changes to the tax code that are in the bill. if the report doesn't take those into consideration, the numbers will be conservative. >> neil: you can't pick and choose couple they picked an

according to the cbo, yeah. yeah. >> that's a big story,er too. >> mary thompson, thank you so much. >>> coming up next, iowa senator chuck grassley says the build the bonds program is great for new york and california and not just not so hot for the rest of the country. >> the program is another taxpayer bailout for new york and california. is that the case or is this really more of middle america just hating on wall street? we have opinions on the other side of the break. tdd# 1-800-345-2550 every online equity trade is now $8.95 tdd# 1-800-345-2550 no matter your account balance, how often you trade tdd# 1-800-345-2550 or how many shares... tdd# 1-800-345-2550 you pay what they pay what everyone pays: $8.95. tdd# 1-800-345-2550 and you still get all the help tdd# 1-800-345-2550 t you expect from schwab tdd# 1-800-345-2550 millions of investors. one price. tdd# 1-800-345-2550 at charles schwab... tdd# 1-800-345-2550 investors rule. tdd# 1-800-345-2550 are you ready to rule? not that long ago, many families wer

>> let me say those numbers are based on cbo analysis. they assume that a &t fixes continue to be extended. expiring tax cuts are extended, and that non-military spending grows as fast as gdp. there are some assumptions about policy. it is fair to say that deficit, structural deficit, longer term deficits of anywhere between 4% to 9% is not sustainable because it leads to add debt to gdp ratio which grows indefinitely. it is not stabilize. it leads to higher interest payments that feeds back into the deficit. it is important we consider how, not this year, because many economic conditions that are moving towards higher spending and lower revenues, but over the medium term, as we planned our fiscal policy, we need to find a sustainable path. that would require lower deficits then we are projecting. >> are we on track to have the same sort of problems as ireland, some other european countries presently? >> we are a much larger, diversified, advanced economy then greece and some of the other countries. at some point, we need to address those

so many members of congress love this concept, tried to get him into the bill through cbo, cbo what'soing. hell, they only scored wiring health care worth $12 billion over 10 years. it is the great enabler to get at a trillion dollars a year. are at least 700 billion of it. it's the great enabler yet it is scored 12 billion over 10. the others they could barely score. the private sector is needed more than ever to make real health care reform happen. we need 10% of this bill is around cost and quality, compared effectiveness studies, accountable care organizations studies, wired health care studies. by the way, there are $20 billion in the stimulus bill to wider health care. we don't have a blueprint to do it. my biggest fear is we will spend and put a pc in the doctors office so that that doctor can put his medical records into the computer. that's not wiring health care. has nothing to do with wiring health care. we have the building blocks. we know what to do but it will take the private sector to do something big enough of scale that it proves this works so you can score it. once

the things i just talked about to you have never been done at scale so therefore cbo cannot score them so that is why people often say the government cannot innovate. the best they can do is create a guard rails on libraries of the private-sector can do what they do well which is enervate and operate. so many members of congress love the concept and try to get them into the bill through the cbo and they won't score. they only scored by a ring health care with $12 billion over ten years. it is the great in a blur to get a trillion dollars a year. or at least 700 billion of it. the great ann boehler yet s-corp 12 billion over ten. the other things they could barely score. so the private sector is needed more than ever to make real health care reform happen. we need 10% of this bill around cost and quality care if effectiveness studies, accountable care organization studies, what your health care studies. by the we $20 billion in the stimulus bill to what your health care. we still don't have a blueprint to give it and my biggest fear is we are going to spend it to put a pc in the doctor'

pooh-poohed it they said it wasn't that big a deal if you look at the health care overall and what the cboaid what the savings were, 138 billion over 10 years that comes out to roughly 13 billion dollars a year that's not a lot. when you have corporate write-downs they have to impact that savings number. >> they will say that is not real money just an an accounting number. >> it is not an accounting number. they are going to have other costs too. my big fear is some companies are going to say i'm just going to pay the fee. i'm going to stop giving health care to my employees. they can get it in the private market ultimately it is cheaper to pay the fine. >> it does matter more for small businesses. a big company could take that write-down and spread it out over a bigger balance sheet. small businesses are usually the engine of the recovery. for them not to be hiring now in a major way is scarring -- scary it shows how scared they are about these mandates. >> and they are not hiring. >> talk about what effect the stimulus had on this jobs market? administration you pass the stimulus unemplo

he said there's a lot of blank that went on in the heat, in the peak of the cbo market.id i'm not quite they're this is the blankiest of all of them. why did the sec pick this one? a feeling among some this might be a tough sell for the sec and gold man sachs said these are unfounded charge, going on the offensive, talking to clients saying this is politically motivated. it's going to be a hard case? >> the sec has certainly set itself up for a situation in which they can't afford to fail. it's a very high profile case. the sec announcing to the world it is prepared to take on the biggest of the big boy. goldman-sachs doing that, too. goldman did have an option to settle. and that's what normally happens in these cases. i mean, presumably the calculation in goldman is that it's such a high-profile case, to settle would be dangerous, but what i think is really interesting about this is the extent to which we are at kind of a cultural watershed, and i think people now are starting to ask in the wake of the financial crisis, with this case crystallizing it, what is all of t

. >> sean: medicare came in nine times higher than what the cbo projected. 2.4 trillion to start.ke the post office? do you like the dmv? social security is broke. why do you believe the government is going to run health care effectively? >> what i think so fun is the tea partiers >> sean: i didn't ask thank you. >> that's what i'm answer. they are protesting the government who is taking care of them? the police, the fire department watching out for them. >> sean: answer this question, social security in the red, medicare about to be bankrupt. why do you have confidence that the government can run health care when canada can't afford it, great britain can't afford it -- >> the government doesn't run health care. you have a privatized system of health care. >> stand unequivocally you want to do away with medicare and most social security. why don't you say it? >> unfortunately, they don't. >> unfortunately, most republicans in positions of elected authority are unwilling to look in the camera and say we have to pull back on [ talking over each other ] >> sean: there's some truth to

. >> did anybody at gold man sacks use thin files in putting together cbos? >> just to be clear, my job function had nothing to do with putting together cbos. i can't speak in terms of that. it is something i literally heard of for the first time last week. >> mr. swenson, as far as you know goldman sachs never used the thin file approach in order to make in organizing cdos? >> mr. sparks? >> again, i'm not flr with the approach, but i'd be happy if you'd describe it to me -- >> it you didn't hear it, you didn't use the process. you never heard about it goldman sachs anyone doing, it's thin files specifically. how about barbelling? mr. sparks, have you ever heard of barbelling? >> i have heard war barbelling majority with positions. >> that term could mean a number of different things. >> did you just read it recently? >> i'll go with that. >> mr. swenson? >> i'm not aware of that term. what is alleged, what happened was people would take advantage of the fact that rating agencies went with an average. so they would go out and pick up fico scores of 550, whic

by the fourth quarter 2007, at which point these cbo super you write off 18 billion. the home prices have only fallen 5%. so i guess what i'm saying is what was the stress test? was at number going down? they fallen from 90 to 91 at 3%. i know is that it does in california. so the question is, how stressful was the stress test? it doesn't seem like much. 5% apologize for the time you guys took an $18 million right off. >> when they comment on that because one of the things are referred to the commission earlier about the intrinsic cash flow model. and that was really the first quarter in october, i believe, that the initial loss, the eight to $10 billion estimate in the fourth order was disclosed. and based on this model, based on an assumed further decline in home prices, which was produced out of our economics and market analysis group, the book of the super seniors i believe all of the liquidity clothes which were backed by older vintage collateral did not break. in other words, they recovered a future value of car. but because we were required to mark to fill valu

we did a comparison of what was in the cbo report from more than a year ago of game changers, almost every one of those ended up in this bill. >> i want to ask you about a phenomenon that people are talkstion about this weekend that has to do with consumers, ap el's new product, the ipad. commerce in action. people are buying these products. but it leads to a question as to whether you think as an economist that consumers can actually drive a recovery that is sustained? >> i think this is going to be a different kind of recovery. i think it's not going to be one where consumers come roaring back as the engine of growth. they have been through a very rough two years. they've seen their house prices come down. so we see solid consumer growth. it's definitely coming back. their confidence is back up. this is not going to be a recovery that's fueled by people going out, maxing out their credit cards again. i think we've been -- i think we're in a different world. it's going to need to come from our exports. that's why the president is pushing his export initiative. it's going to need to