tv U.S. House of Representatives CSPAN May 17, 2010 5:00pm-8:00pm EDT
the suns grateful to all countries that have accepted detainees for their willingness to support u.s. efforts to close the guantanamo bay detention facility. the united states has transfered 59 detainees. many have been tornadoes fierce to third countries. finally you have seen the statement from the white house regarding raun. in the statement the white house acknowledged statements made pie turkey and brazil and
calling upon the iaea to convey the results of this arrangement to them. that said, the united states continues to have concerns about the arrangement. the joint declaration does not address the core concerns of the international community. iran remains in defines of five u.n. security council ress resolutions-in colluding its-in willingness to suspend enrichment operations. iran has said they planned to enrich uranium 20%. public statements today suggest that the t t.r.r. deal is unrelated to its ongoing enrichment operations but they
are linked. >> to begin with the agreement that is said to have been reached, it describes the 1,200 kill grams that would theoretically be transferred to it turkey, that figure, however, referred to 80% of their stock of l.e.u. as of last october. presumably they have continued enriching since then. why is this even remotely acceptable? why don't you just resecretary this given that it doesn't address the additional l.e.u. that it has presumably gonen from its enrichment. >> let's take this step by step. we do have ongoing questions. what is crucial is what iran actually presents in terms of a formal response in the coming days to the iaea. we have been calling on iran
for several months, in fact, since the meeting on october 1st, to in fact give a formal response and outline what it is prepared to do and how it plans to cooperate trance apparently with the organization. so you are right in a way. the t.r.r. was not envisioned as an end. it was envisioned as a means to an end to be able to build confidence between the international community and iran. but in the words of the joint declaration, it still leaves a lot of information unknown in terms of how it will work with the eaea were material to be transported out of iran, whether it is going to step up and actually address the core concerns the international community has. there is a phrase in the joint declaration that says that it
is willing to have discussions with the p 5 plus one, but iran has never acknowledged that in a prospective discussion, front and center would be to address the questions the international community has on its nuclear program. iran has suggested it is willing to talk to the international community, but not about its nuke program. that would be our point, to address the core concerns with regard to the iranian nuclear program. while we salute the efforts of brazil and turkey, there are still many remaining outstanding questions that iran has to answer in terms of what its true intentions are. >> since the deal is on the table, doesn't it effectively postpone your efforts for sanctions? >> our efforts for sanctions at the u.n. continue. >> it presumably postpones it for at least a week because the
iranians have a week to support their proposals to the iaea. it would be difficult to get anybody to approval sanctions in a week. >> our efforts on the diplomatic track, including our efforts on identifying prospective sanctions will continue. >> well, it was supposed to continue under the t.r.r., isn't it? the agreement you are looking for is suspend for spend. but the t.r.r. was to get you into those negotiation sns >> the t.r.r. was a means to a larger he said, which was to get iran to fundamentally address the concerns the international community has. and the fact that iran continues to enrich uranium and has failed to suspend its enrichment program as has been called for in u.n. security council resolutions, that is our core concerns.
now the fact that we might see the removal of some enriched material from iran is useful. but in the broader context here, the real issue is whether iran is prepared to come forward and address the international community's legitimate concerns about iran's nuclear program. we will wait to see what actually the nature of iran's formal response to the iaea is before we pass final judgment on this declaration. >> it sounds like even if you do withdraw or take out some of the uranium from iran, it sounds like the two tracks will go ahead. that you will go ahead with the resolution? >> as the first line in the joint declaration highlights, the core issue here is, is iran in come appliances with its internal -- compliance with its
international obligations under u.n. security council resolutions. iran has failed to pass that test up to this point. iran says in the decoration that it is willing to cooperate with the iaea, and yet we have been calling for cooperation with the iaea for several months. we will see what the nature of iran's response is. iran has said in its declaration today that it was willing to engage seriously with the p-5 plus one. but the real question is, is it willing to come forward, sit down and address the concerns we have with the nuclear program. there are a lot of remaining questions, and we will be guided by iran's actions, not just their words. >> what is in it for iran to sign up to this deal if it is not going to at least postpone any further movement on sanctions? >> well, the question here and
the burden is still on iran. is it willing to come forward and address the international community's concerns? if it is, then that actually starts the process of building confidence, and that an impact on the broader process -- >> so you are saying -- >> but there are reasons to believe that what is in this decoration is another version of what iran has said in public statements in recent months and yet failed to actually come forward and address our concerns. >> why don't you give them the benefit of the doubt and say that they are going to take the enriched uranium out to turkey. is that enough to postpone sanctions? >> no. [inaudible] >> pardon me? >> how much were you informed of the turkish and brazilian efforts? >> i think we had conversations
with the two foreign ministers prior to their arrival in tehran. i am not aware of any specific contacts with them over the weekend. >> can you double check that? some american diplomats are saying that secretary clinton and national security advisor jones have been feverishly working on that -- >> i can tell you that the secretary had conversations over the weekend with foreign minister lavroff updating our negotiations, and conversations with another foreign minister about the upcoming state visit. >> on her conversation, did she commit the united states to signing off on the deal if iran would get the uranium out of the country immediately and put it under the monitoring of the
iaea? >> they did not get into that level of detail. as the secretary said, there are clear concerns that the international community has. if iran is finally going to come forward and address those concerns, we would welcome that development. she expressed in the call with the foreign minister that she was skeptical that iran would actually come forward with a meaningful propsal, and we are obviously still -- proposal, and we are still evaluating what is in the decoration. [inaudible question] >> no. we welcome the fact that turkey and brazil continue to try to engage iran and see if iran is willing to come forward and address the international community's concerns. it remains to be seen whether this joint decoration passes that test. as i have outlined here, we have many, many questions about
whether this represents something new or representing a warmed-over version of what iran has put forward before. >> well, are you willing to -- >> one at a time. [inaudible question] >> well, we have been willing to sit down with iran for months to follow up on a meeting we had in geneva on october 1st. it has been iran that has failed to come back and be willing to engage the p-5 plus one in a serious and sustained way. >> it sounds like you are willing to talk to the turkish and brazilians because those countries have more confidence and trust in those countries than they do in the p-5 plus one. do you envision turkey and brazil becoming part of this larger process of negotiating with iran during their term? >> let me outline what iran has
failed to do. iran has even at this moment -- has failed to respond specifically to the iaea regarding the tehran research reactor proposal put on the table october 1. iran has failed to agree with a follow-up meeting with the p-5 plus one from october 1st because it has indicated in its public statement it is willing to talk about any subject in the world but the one the international community is most concerned with. if it says it is willing to engage the p-5 plus one, then it has to admit it is willing to engage them on its nuclear program. that is a fundamental demand of the international community. >> was there any message sent from washington to either brazil or turkey that they were making themselves essentially puppets for tehran on this issue? >> no. we have in our multiple
conversations with turkey and brazil going back a number of weeks -- we have reiterated what the core issues are in this process, and turkey and brazil i think have a firm understanding of what we were looking for as we approached this meeting. >> did they give washington any sense that if they thought they could make any headway on the core issues, that they would try to do so and that the u.s. would try to encourage them to go beyond the scope of swapping out the l.e.u.? >> we have said many times we seek a diplomatic solution to this challenge, but the burden is on iran. iran has to come forward and address the international concerns. iran has to come forward and indicate that it is prepared to cooperate constructivity with the iaea.
ran has to come forward ultimately and indicate it is willing per u.n. security council resolutions to suspend its enrichment program while we work with iran on how it can pursue its fundamental right to civilian nuclear energy. but it is iran that is defying u.n. security council resolutions. it is iran that has failed to engage the international community in a transparent manner. it is iran that has to affirmatively show that its program is for peaceful civilian purposes. but but are you ready -- >> these are on iran, if iran is willing to come forward, the united states, the p-5 plus one and others in the international community are prepared to respond. but the burden is on iran. >> are you ready to take yes for an answer? >> yes, we are willing to take yes for an answer if in fact this begins to address the
international community's concerns. as i said, we have questions, and we remain skeptical that this is exactly what iran is willing to do, to actually come forward in a transparent way. >> back to michelle's question. if you see the fine print and you see it is not everything, but there are some elements, are you willing to negotiate with iran offer this particular deal? >> we remain prepared to engage iran anywhere, any time, provided iran is prepared to address the international community's concerns about its nuclear program. it is iran that has failed to do that for the past montana months. >> the israelis seem concerned about this deal. has anybody in the state department been on the phone with the israelis? >> we are on the phone with the israelis every day. >> the secretary? >> the secretary has not had any conversations. [inaudible question]
>> that is one of the reasons why we continue to work this on two tracks. on the one hand, we continue to pursue diplomacy. on the other hand, we continue to pursue efforts to put further pressure on iran. we don't see these as either/or propositions. one at a time. >> apparently the decoration, you want to reserve the right to withdraw from whatever it is they are agreeing to at any moment in time? >> well, in fact the devil here is in the details. iran has indicated it is willing to send enriched uranium outside the country. on the other hand, the real question it has to outline to the iaea is does the iaea get to take control of this material and supervise the transfer of fuel for the t.r.r.? this is a role that we properly envisioned for the iaea.
yet there are some caveats in this document that say no, this remains something under iran's control, which is actually a detail that iran has offered before and been rejected before. >> the white house statement, not the u.s. position. what is the international position? >> i think there is strong union in the international community that iran is not in compliance with its obligations. iran is in fact in defines of several u.n. security council resolutions. well feel there has been significant movement and progress on efforts to make sure that iran understands that there will continue to be
consequences for its failure to live up to its obligations. >> are you wear of any specific efforts by brazil in that regard, that brazil is going to continue with its efforts on diplomacy in trying to engage iran? >> we will be consulting broadly in the coming days to determine how everyone views this document, on what we believe should be done in light of this document. it wouldn't surprise me if in the coming days we have follow-on conversations with brazil and turkey as well. [inaudible question] >> no. >> do you think they will delay a vote on a new resolution in the security council? >> that is a question i can't answer at this point. >> one more -- >> it is not going to deter us from continuing to work within the p-5 plus one and within the
security council on a u.n. security council draft resolution. >> one more on the role of turkey and brazil. these countries seems to be able to -- you might argue that they are stalling with turkey and brazil as they have with other countries. but some countries are arguing that iran was able to feel more comfortable to negotiate with these type of countries. does that say something about the role of the p-5 plus one in this? should it be expanded to countries that have better regularses with iran? might they be able to cokes more out of iran? >> you have in the case of turkey and brazil countries that are on the security council. they are going to be presented with a draft resolution at some point in the near future. they have assumed a responsibility to see if this situation can be resolved. we respect the efforts of turkey and brazil over the weekend. >> do you support it?
>> it remains to be seen -- and this is what we will be working through in the coming days, what does this action represent. there are those who have characterized this as a break through, we remain skeptical. >> you say you respect their efforts. do you support their efforts? >> the real issue is what is iran prepared to do, and any diplomatic effort that gets iran to change course, we support. the real question is whether iran has offered anything new today, and we remain skeptical. >> you don't agree with the international community? >> again, the fundamentals here, the details, count. so what is iran prepared to do? if iran is prepared to address the international community's concerns, if iran is prepared to engage transapparently with the iaea, if iran is prepared
to suspend its enrichment program -- because remember, it was iran that said it was enriching to 20% in order to provide few for the tehran research reactor. if iran is now prepared to accept the fundamental deal offered as part of the t.r.r., then what further justification does it have to enriching to 20%. in fact, it has no justification for enriching to 20%. just the other day, the foreign minister reiterated to ambassadors in new york, that regardless of whether there was a t.r.r., they were going to continue to enrich to 20%. that is in defines of the u.n. security council resolution. >> but you have a t.r.r. as a separate confidence-building measure to get you into the negotiations. you never kind of said well, this t.r.r. isn't going to be -- well, because you were the
one that proposed the deal. >> along with france and along with russia. >> no, i meant the p-5 plus one. you never said that the t.r.r. wasn't going to be enough, and you didn't poo-poo your own plan. you thought it was a great plan, and you were hoping that iran would sign on to it, and it would lead to better negotiations now -- let me finish. now is virtually the same plan, although iran has a little bit more uranium. now you are totally poo-pooing this plan, which is virtually the same plan as before. >> there is an assumption there that i am not sure we share. it depends on the particular details. the first thing iran has to do is respond formally to the iaea. iran has to outline how it is going to engage with the everyone iaea and what role the international community will play in this prospective transfer. this could be progress, but it
will depend on iran's formal answer and what iran actually is prepared to do. iran has made a number of public statements in recent months, but those public statements did not actually address the core elements of the t.r.r. deal. so it's unclear based on this decoration that iran has yet accepted the fundamental t.r.r. arrangement that was proposed on october 1st. we will see. are we done with that? mexico. >> you said that someone has spoken to the secretary. what is the perspective of the state department? what do you expect from this visit and how this can help to reinforce the struggle against organized crime? >> well, first of all, the united states weather the visit later this week of president calderon and his team to
washington for a state visit. the secretary and the foreign secretary talked about preparations for the meeting. it is possible that the two of them might get together before the president meets president obama. but they went through just the broad agenda for the meeting. a lot of the meeting will be focused on economic issues between two close neighbors. i'm sure that the ongoing security challenge will be discussed in detail, and i wouldn't be surprised if mexico's concerns about the arizona law are also part of the discussion. >> i understand that secretary clinton was trying to get more money from the congress to support the struggle against the cartels. do you have something new in
that regard? >> i think we will take note of our ongoing cooperation under the merit initiative. as we have announced, there is proposed funding for the 2011 budget that congress -- i keep getting confused because we are about to start working on the 2012 budget internally. we are shifting the emphasis from the purchase of heavy equipment to training and strengthening of mexican institutions of government. i am sure this will be discussed in detail. whether that involves more money or just making sure that congress fully funds the administration's proposal. i think it is the latter. >> the former presidential
candidate has been kidnapped. do you think this is a new level in the violence, and what do you think about this kidnapping? >> we are obviously concerned about ongoing violence in mexican society broadly, not just any one incident. i know it is being aggressively investigated by mexican authorities. we continue to cooperate with mexico as it needed. but this underscores why it has been important and why we have valued the commitment of president calderon to try to eliminate this scourge that has challenged mexico but also a challenge to the hemisphere and the united states. >> a question on france and iran. there is a report that france plans to extradite what is described as an iranian assassin out of prison there,
and the iranians would release a french spy. do you have anything to say about that, and is there a warrant out for the iranian released? >> we don't think those things are connected, and france has said they are not connected. >> iran is kind of trying to reintroduce the idea of swapping the three hikers for some iranians they said were arrested in third countries and brought to the u.s. was there some discussion on this? did the iranians bring this up in new york? >> not to my knowledge. we have indicated on a number of occasions publicly and through channels that if iran wants to arrange consular visits with those who are in many cases imprisoned in the united states, on a case by
case basis, either facing charges or convicted of arms trafficking in violation of international law, we will be happy to arrange consular visits. we have no connection between those who have throughouted international law and have tried to procure arms for the iranian government and three hikers who wandered across an unmarked border. they should be released on humanitarian grounds. >> what about visitation for their families? >> again, we are more than willing to cooperate in consular visits or family visits, whatever iran wants us to do. >> was there anything that happened during his most recent trip that indicated the need for these two days of talks, and basically what is going to happen wednesday and thursday? >> these are proximity talks.
now that they are underway, that implies that george will meet with israeli and palestinian officials on a regular and ongoing basis. he indicated when he left the region that was leak -- last week that he would return, and he is returning. >> are they still talking about the agenda there? >> both sides have agreed to begin to address core issues. i can't tell you where we are in that process. but in doing so, we hope -- our objective here, just to remind, is to begin to make progress and as rapidly as possible move the parties into direct negotiations. >> is this an effort to talk about what the no-go zones are? >> this is doing what we promised we would do, moving
through proximity talks, build momentum, and get them into direct negotiations. george is playing the role we envisioned under the proximity talks. >> on pakistan? >> there are several -- i will come back. >> sure. >> do you have any information about the secretary's visit to japan? >> well announce the secretary's travel tomorrow. [inaudible question] >> we will tell you tomorrow where she is going, i promise. >> on pakistan, is it true that pakistan has denied the visas of several d.o.d. employees? i am not sure if they do that directly or with the visas for ause u.s. officials? >> well, i can't talk about that specifically. i would tell you that as we
work with pakistan, as we continue to build up our capabilities in consulates around the country, as we increase our cooperation with pakistan on a number of issues, including counterterrorism, we have been pushing and prodding pakistan to increase the number of visas available to u.s. employees at our embassy and at our consulates. and while there have been some improvements recently, i think that still remains an issue. we just need more visas to put the people in place to help work with pakistan and to make progress on economic issues, security issues and agricultural issues. >> how many more visas -- >> i don't have a number. this is an issue that we have been working with pakistan for
a number of months. it is not something new. [inaudible question] >> probably. yes. [inaudible question] >> i'm going out on a limb here. the two of them will be testifying together on the hill tomorrow on the new start agreement. i can't rule out any particular should issue, but i know -- issue here, but i know part of their discussion today was to prepare for tomorrow's testimony. >> thank you. [captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute] >> tonight on c-span, campaign events from two candidates running in tuesday's special election in pennsylvania's 12th congressional districts.
a get out of vote really in johnsontown, pennsylvania, and a rally for republican tim burns with massachusetts senator scott brown, in washington, pennsylvania. the candidates are running to serve out the remaining term of the late representative john murtha. that is tonight beginning at 8:00 p.m. eastern on c-span. >> defending the united states against cyber attacks. tonight, homeland security future undersecretary philip reitinger on the department he is work, and the role of private networks in cybersecurity. "the communicators" on c-span 2. >> the cato institute recently held a public policy forum. here they will discuss the global economic situations, including the future of the financial markets, including president obama's approach to
combatting terrorism. this is just under an hour. >> i was proud of our event last night at the washington hotel, and i hope you will be to to see what we have built here. i couldn't be more proud to work here with these colleagues of mine, many of whom you will hear from this morning. i hope you are proud of the role that you -- and for you who have been supporters of the cato institute, have played in making sure that a strong and intelligent voice for liberty, peace and civil rights is available in washington, where all too often it is not. let's move right along with the program. there are a number of different speakers. our first speaker this morning is a senior fellow here and
focused on globalization, entrepreneurship and other things. he is the author of several books exploring liberal themes. including his latest pack, "financial fiasco." his book in defense of global capitalism has been published in 20 countries. he is the author of "when mankind created the world." , and "global justice is possible" in witness e 2010. all of these are available in swedish and also available on line at his website. his articles and opinion pieces appear regularly in swedish and american numbers. he is truly an international presence. he is on the president of course on tv, radio and in print.
he was the head of a swedish market think tank from 2007- 2005, and he received his master's depree from stockholm university in the history of ideas. please join me in welcoming our guest. [applause] >> thank you, jerry, and good morning to you all. i hope you all had a good night last night. as you all know, the hangover is not the problem. the party was. that really relates to the topic of my speech here about the next financial crisis. we are in the middle area. as we are reminded, the recession is not the problem. the boom was, and all the bad
investments we made when we thought the good times would just keeping rolling and rolling. and that gives us a clue as to why the market are a little bit turbulent right now, because we never really did solve the problems that led to this crisis. we never really lived with the hangover. instead, we just tried to take another couple of shots of liquor and get on with it. hangover that we can believe in is not a good election slogan. we will deal with it, build a bridge over this recession and then we can get on with our lives is much more popular. that is why i've written this book on the financial crisis. also a film called "overdose," which will be screened here on monday about these problems we are still living with, and we
might see that the worst is yet to work. the recession is a time to rid ourselves of bad investments. the bad ones in the mortgage markets, the bad risk we took on when we thought they were good risks. the recession is the time for creative zrugs, to make sure we dismantle the bad companies and failed investments, and to make sure that work, labor, resources are transferred to more competitive businesses that can create the new products and exports for the future. that is not what we did. the government in the united states, europe and all over the world have instead tried to protect and bail out the bad investments. in the mortgage markets, the car industries, the banks and the financial markets, so we are still living with them. we are still living with those bad decisions, and that will have a tremendous effect on our growth in the future as well, i think. and worse than that, we are also creating new bad
investments in the market. because just as we encourage new bubbles in the housing markets after the fall of the dotcom bubble, we have now created new bubbles by lowering interest rates to nearly zero percent, where almost everything seems like a good deal, until interest rates move back to their normally range. so we have created new bubbles everywhere. around the world in emerging markets, you know when the interest rate is low, it means that you are not interested in holding capital. you are interested in borrowing into -- someone's he is capital and leveraging a return. l.ou might think this is not a good time to hold capital in a bank account because there are no rates of return there, and that is why no one does, why nobody is buying anything. stocks, resources, that dream
apartment or just about anything out there on the market. then we will see a boom in the marks even though it is far ahead of the long-term profits of the industries. we see that especially in the emerging markets around the world right now. and when we do this, when the central bank, when the treasury department, when the government steps in to bail out practically all the bad investments we can see, what we create is more moral hazard in the market. we reinforce the interpretation that financial bets are one-way bets. if it turns out all right, you get to keep the profits. if not, you can pass on the losses to the taxpayers. if there is one quote that i think sums up the problem of this 2008 financial fiasco that we've seen, it is one of the heads of the deutsche bank, who said no, i'm not worried in a
fall over asset prices, because i think that the fed is our friend. any time that we will see a problem in the market, they will step in and supply us with more liquidity so that prices will stay up. they will practally bail us out. and that is what is happening right now. it is not just the fed that is our friend, it is the european central bank and governments all over the world. they give us more shots of tequila, more loans and money to deal with the risks that we have already taken on. as a banker told me recently, times are great because now people are borrowing again massively because interest rates are so lonnyt isn't that a big short term? what happens when the interest rates begin to climb again? well, then the government will step in like they did the last time. isn't that great? well, it is great for some time. a crisis that was at least partly the result of too low
interest rates, too much debt, too many bat investments and a safety net for the financial industry that made too many people take excessive risks have been dealt with now with even lower interest rates, with even more debt, with even more bad investments and saving the ones and bailing them out that we already had, and a stronger safety net for the big companies, big banks, the big financial institutions. no lender is ever going to be in doubt that they are g gong t be given the money back from the taxpayers if the worst happens. the solution is the problem. that is why we had the problem in the first place. as economist veteran smith says in our -- vernon san th says in our film. in a way, we are back to where we were in 2003-e in04, when we see oh, gos4, that's great.
at last, a sigh of relief, because now we are out of the worst times. the worst storm has passed and low interest rates and a lot of stimulus has helped us get past the problems. the difference this time is now we have taken on much, much more debt. no one has paid his debts after this crisis. what has happened is a bizarre ponzy scheme where the next person, the next institution with a larger pocketbook just steps in and takes on that debt. and when they can't pay it, the neche person d ones. when we had european banks and european companies ready for bankruptcy, the european states, governments, they stepped in and paid for it. now the european countries, states and governments are in a crisis because they took on so much debt. then the european union had to step in with a $1 trillion bailout package last week. we see the same thing here.
fannie mae and freddie mek can take on a lot of mortgage debt, and then the federal government can step in and take on that debt. but who is going to save the united states, who are is going to save the european union? we can sweep problems under the rug. in the end, we are going to need a really big rs u. we are focusing now on greece and portugal, the countries that seem to be the most shaky for the moment. but they are not alone, far ackom it. the british government that now takes over power in britain, they feke a budget deficit that is almost greek. and the american public debt within two years will have the same level as portugal, and i ost sure dan mitchell will sca you most about these problems ahead. but that isboust the beginning, because then we have all the
unfunded liabilities for retirement, for health care. if we were to -- if we are not going to refo st these sith ste then we are g gong to have to pay in the european unand united states about 8% of fwpped every year to dome -- g.d.p. every year to deal with that, and that is for obama-care doesn't add a penny to those liabilities. as margaret thaor her put it, the problem with socialism is that sooner or later you will run out of other people's money. right now we are running out of our children's money and grandchildren's money. for the moment it an ght feel safe because of a reserve currency such as the dollar. people are still interested in in buying some government debt. but that is what they c13 sid at lehman brothers as well on friday, september 12. the markets were still interested in lending them
money. they still believed in them. it took lehman taothers 158 years to build that credibility. it took them a weekend to lose it when people understood that they would not be able to put their financial hold-out in order. to sum up, we have trying to bridge this recession, but the bridge that we built was so expensive that we will have problems with the growth rates in the future. it will be a problem to build something more out of this bridge. it's a brim ue to nowhere, in other words. basically, i am an optimist by nature and because of my historical studies, partly because i realize that people alwaith s make mistakes. in every generation we make horrible mistakes, and yet we have created the rtaihest civilization ever. so we will probably be able to deal with these problems as well. and to put it in perspective, the reason why last year was so horrible was that it was only
the second best year in mankind's history when it comes to the total production of goos and services in the worl economy. it was so horrible because we all thos uht that it was g gong to be the best year, so all of our calculations and prognosis was built on that. we can do it. we can deal with these problems, but it takes a lot of creative destruction. it takes real investment, c13 svings and hard work, and it takes take lot of reforms to make the econotal more healthy, ready for more growth in the future. this is the problem, of course. as thomas edison said, opportunity is missed by moat people because it is dressed in overalso and looks like work. well, the road to recovery is an ssed by most people because it is dressed in overalso and lo that if we can get the mes c13 sge through about the difficulties
and the possibiliis i soulution and the road to travel on, then we can do it. but time is of the essence, especially with the debt we are building right now. and time is not working in our favor, and the clock is ticking. so is my clock now. i ost done now. thank you. [applause] >> we have a few minutes for questions, which we will try to provide for each of our speakers. if you have a question for him, raise your hand and we it for the mveratai mtairophone to rea you and speak up. who would like to start? l> on monday you are g gong to try to lift the veil on what you think the next econoan c crisis is g gong to look like. could you give us a little previgoi of thapth si sisi
it is not the government. it is the whole european banking system. because who owns the greek debt? it is the banks. it is the german and french banks. the problem last week is another post lehman brothers story. banks began to lose trust in one another. they stopped lending to one another in europe. what the european government said ok, let's give ourselves a bailout. when the germans finally accepted to sort of ok, $1 trillion. that is basically $1 trillion to german, french and other banks. greece is tiny. it is the tiniest of countries. if it was an american state, i wouldn't even have heard of it. the problem is that this continues with portugal. italy looks like it is in bad shape if we look at the total debt. and if this begins in one of these countries, it will continue with others. if britain didn't have the
history, the track record that it has, we would have seen the same problem in britain. so we really need politicians who are ready to explain that we are going to see some difficult years ahead, but we've got to plan on how to deal with this and regain the confidence of the market. i think government debt is the biggest story right now, but i also think that emerging market bubbles is an incredible problem right now. there is a lot of capital out there in the markets, but we have been worried about western countries, so we still have the story about emerging markets and how this crisis really showed that they are in good health. in a way, that is true. they made a lot of bad decisions and strange stimulus packages as well. at least they have the money in reserve, meaning they can spend a lot of money for some time. resources have been going there and really built bubbles in their asset markets, and they
are going to unwind here and there. the chinese government, they really decided we are going to be the motor of the world economy last year by really having a congressman and control lending spree, telling banks and local governments to just keep lending to anything, just build and lend. they are starting to deal with that right now. we have talked a lot about this gargant one-and-one stimulus package in china. it is not only this unwinding right now, but local governments and banks lent probably eight times more than that entire stimulus package over the last year or so. now they are telling them we had better back off because all the things we have done to make our banks helter in the last -- healthier, we are about to ruin
that in the next couple of months. we have these debts and bubbles, and we have to deal with them precisely at the moment this bridge is about to come down a little bit, and that worries me. >> thank you. [applause] >> our next speaker is dan mitchell, who is a senior fellow here. you probably know him as the strong advocate of a flat tax, and he is in the media promoting those ideas and supply side economics properly understood. prior to joining cato, he was a senior fellow with several committees. he served on the 1988
bush-quail team. his articles can be found in publications as the "wall street journal," the "new york times" and print outlets, and his videos promoting things are on youtube and elsewhere. he has a maryland -- maryland in economics from george mason. today he will be talking about america's impending financial disaster. let me introduce to you dan mitchell. [applause] >> thank you, jerry. of all the introductions i have had, that is the most recent. i only have 10 minutes to talk about a topic that needs 10 hours, america's impending fiscal disaster. yo hasan covered some of it. i hate going off him.
i have this annoying new york accent, and he has the suave danish -- no, swedish. i do have an important topic. let me throw out a couple of numbers to give you a sense of where we are right now. when bill clinton left office, the federal government spent $18..2 -- 18. pert of g.d.p., our economic output. most of it of course in a very inefficient and harmful way. and we thought bill clinton was the big government enemy. after eight years of bush, with republicans in control of the house and senate for three-fourths of that time, whht happened? the federal budget virtually doubled from $1.8 trillion to
$3.5 trillion, and it went up to about 24% of g.d.p., an enormous and unprecedented increase. obama comes into office, promising hope and change, and what does he do? he gives us exactly the same spending policies as bush. bush gave us a so-called stimulus in 2008 that didn't work. obama gives us a stimulus in 2009 that didn't work. obama gives us government-run health care. bush gave us a prescription drug entitlement. it made my job easy because i went back into all my papers, i crossed out bush's name and wrote in obama's, and i got to pretend i was working hard. all this bad news we have seen in the last nine and a half years is actually just the tip of the iceberg. if you go to the congressional budget office website, which i don't actually usually recommend and you look at
something called their long run budget forecast. they do something going out 75 years. let me give you a giant caveat. the government forecasters usually don't even get next year right. so have a huge grain of salt about whether or not their 75-year forecasts are right. a lot of it is just based on demographics, what we have in terms of entitlement programs, what is going to happen to the population, how fast is it aging, how many younger workers and taxpayers are coming into the system. if you look at those long-run conscience budget office forecast, which certainly are probably wrong, but we don't know whether they are too optimistic or pessimistic, they he was mate that federal government spending, which today is around 25% of g.d.p., by the time we get out 50, 6 or or 70 years is going to be between -- they do a range -- between 45% and 67% of g.d.p. that is just on the federal
level. 45% to 67% of our economic output will be consumed by federal government spending, just the federal level. you add in state and local, which right now is 13% of g.d.p., and you can see that we are going to be somewhere between 60% and more than 80% of g.d.p. consumed by government. even yo hasan -- yohan's country does do that. we will be eating cod, and herring. we will all be swedish if that happens. what does that mean? if we have a federal government that big consuming that much of our economy, that means we are going to have a giant tax burden as well. i want to talk about what comes along with this impending fiscal disaster, a value-added tax. this is our armageddon battle.
we lost warelieu -- waterloo. we are who have gone to look at what they are going to do to finance all this giant government spending that is coming down the pike. if you look at the evidence from europe, they put in value-added taxes, oftentimes claiming they were just replacing inefficient national sales taxes, claiming they were going to reduce, lower or get rid of other taxes, oftentimes claiming this wasn't a plan to increase the burden of government spending, just a plan to make the tax system more efficient. all the rhetoric we are seeing out of obama's so-called deficit reduction commission, all the rhetoric we are seeing from paul volker and others on capitol hill, they are making the same arguments we saw in yerp 25, 30 or 40 years ago.
what you see when you look at the burden of in com taxes as a share of income in europe? they have gone up, not down. the overall burden as measured by a share of gdp has gone up. if we get a value-added tax and america, i can say with 99.95% confidence that we will see exactly what happened in your. the giant, bloated, federal government that we will have will be matched by at nude disturbingly dangerous tax collection method known as the value-added tax. then we will be in a position where there will be no fundamental fiscal difference between america and europe. what does that mean? there is a reason why today america is about 30% richard and europe when you measure per- capita gdp. there is a reason that america
is 40% and you're looking at measures of average individual consumption, which looks at disposable income, which means they have a higher tax burden in europe. we're richer and more prosperous because we are not made the same mistake that europe has made. now we're doing that. the bush-obama policies of big government or a down payment on this economic tsunami that will sweep over america and the value added tax is a way to let the politicians know go hog wild. you have a new source of revenue. spend your heart's content. it will happen over the dead body of the cato institute. that is my pledge to you. thank you. >> if anybody has a question, just raise your hand. mike will come around. i would be happy to hold court. any questions? did i depress everybody too
much? back there. [inaudible] >> repaid the money that they were led by the government. david had set out a pretty good blog about it. i would like to hear your comments. >> the question is about general motors running an ad saying that we pay back the government and full. that of course was one of the most cynically dishonest things i've ever seen in washington. the chairman of the ceo of washington urging of general motors lied worse and more than a politician, which releases something. they did no such thing. they access the different pile of government money and moved it over the supposedly pay off another government liability. not change the total amount of money that taxpayers were in voluntarily forced to put into general motors. it did not reduce the government
ownership of general motors. he did not reduce the subsidies going to the autoworkers' which was the ultimate purpose. it was a spectacular level of dishonesty and it shows the dangers of going down this path with crony capitalism, where government and business are in government -- are in bed together. you get some really nasty offspring. >> 99.99% certain that they will raise the tax. can we apply out what experiment for a moment? what if we actually eliminated the income tax and the corporate tax completely? every tax lawyer would lose their jobs. would that be a more efficient way of raising money?
the blurred there is no question that the value-added tax per dollar raised is less productive than the current monstrosity that we know as the internal revenue code. but as a single consumption based tax. it is a flat tax in different ways. a flat tax captures your income at one time at the point that you learned. i national sales tax catches your in, at the time when you spend it. i have no problem with it as a theoretical construct. some people fantasize about supermodels, i fantasize about a world with the single consumption-based tax. if we could get rid of the personal and corporate income tax, then i would take the vat instead. i would rather have the cayman island model.
but one single consumption-based tax would be an improvement here is the problem and i say this to my friends and a fair tax community all the time. if we were go down that path, you have to make sure that the income tax is buried 6 feet under the ground and output of salt put on the ground so that nothing can spring up again. that means not just repealing the 16th amendment, because you may remember that in 1895 the supreme court all liberal that and come tax unconstitutional by a 5-4 vote, and that was backed up by what the constitution said -- we got rid of the 16th amendment, we would probably have a supreme court saying that the incoming tax would be constitutional by a 7-2 vote. will have to not only repeal the 16th amendment but we would have to replace it with something so ironclad that even justice
sotomayor would not be able the read in her tea leaves that the income tax was constitutional. that very strong language would have to pass by a 67% vote by the house in the senate and have to be ratified by 75% of the state's and how many states to we have with free-market legislatures? what are the odds of that? we cannot even pass the balanced budget amendment to the constitution. so late at night when i am tossing and turning, i will fantasize about this world of no corporate and personal income tax, no irs, but it is not going to happen. we have to stop the vat and save america from becoming a welfare state. we are halfway there, but we do not want to go further down the path that we want to save an american exception allows them. -- if we want to save american
exceptionalism. >> because the corporate tax rates are lower among most of our industrial competitors, that somehow they're being more efficient. but the fact that they are paid at every stage of production, added those contract? are we at a disadvantage or not? >> we read it disadvantage in the sense that european nations have lower corporate tax rates than we do. every single european welfare state, even johan's sweden, has a lower corporate tax rate in america for the average corporate tax rate in the european union was 24.2%. we are 35% at the federal level, almost 40% when you include the average of the state levels. we're shooting ourselves in the foot and that is just one layer of tax. when you factor in personal income tax, capital gains tax,
debt taxes, you can be attacked as many as four different times. you have to add these rates together and you wind up seeing that we have marginal effective tax rate on capital income sometimes of more than 70% or even 80% 3 you don't have to be wild ride to realize that that is not utilizing the americans productivity. what do we do about it? some of the politicians are saying that is a good reason to do a vat. then we will use some of the money to lower corporate taxes. do not believe it for a sack it. even in the unlikely on possible -- possibility that they did it, it would only be in the short run. what did they do about corporate tax rates in america "aren't encumbered redistribution. how many times have we said, if we do tax policies a, a top 10% will have this effect and the
bottom 10% will have this the fed. we have to make sure that we're penalizing the entreprenuers the most. if we do a value-added tax, you're going to see all the politicians and washington say that this is going to cap for an income consumers. we need to balance that out, and how we balance it out? we will tax those evil, that rich people. so if we get a value-added tax, that will be the political mechanism that will lead congress to increase tax rates on work, saving, risk-taking, and entrepreneurship. will that help your people? of course not. then we will have a weaker economy because people will not have much incentive to save and invest. in every economic theory, and this will be my final message, every economic theory known to
man even woman, they all say the same thing, you have to have capital formation 3 the marxist and the socialists had this idea that the government could do it. you've seen what fannie mae and freddie mac have done. everyone agrees that you have to have saving and investment what is it in our tax system that is subject to the most onerous, it discriminates, and in judea's taxation? saving and investing. those of the taxes that go along with the value-added tax, because heaven forbid we do not maintain that existing distribution of tax by income class. it is going to cause america to continue down the slippery slope to welfare stateism. that terrifies me and that is why we're fighting against it. like you very much. >> thank you, dan. as you can say, a number our policy staff are quite
passionate about the policy area they were can and what they do. an aide said it's his passion and a certain way. hours next speaker does so at a slightly different way. chris preble works on my for which i used to dominate with my booming voice and my ransom 19. i been completely superseded by chris whenever he sees an editorial or reference, he will be off to the races for a good 20 minutes and i have to put close my door. chris care is a good deal about what he does and he is a very productive member of the team. his most recent book was published by cornell university press and documents the enormous costs of america's military power and proposes a new grand strategy to advance u.s. national security. is also the author of "exiting are rack."
-- "exiting or rock." -- "exiting iraq.' in addition to his books, chris is published over 100 articles and major publications including all the major newspapers and magazines that we are all familiar with. he is on television and radio and one of our more popular speakers in the national press. before joining paygo, he taught history at st. cloud state university. and before, he was a commissioned officer in the united states navy. he served aboard the uss tightened ticonderoga, so we take no guff from people like me. chris holds a ph.d. in history from temple and he will be talking about america's
combating terrorism. please join me in welcoming chris preble. >> thank you, gerry. thank all of you for coming today. dan mentioned about hating going after johan. i hate going after dan, because it dynamic even when the subject is depressing. he was less funny today. a.b. that is because the subject is really, really, really depressing. that is where we are. i am always dealing with the press of topics 3 today is no different. as we approach nearly a decade of aggressive u.s. policies to combat terrorism the result that the shop policies should obtain still and do this. americans do not fill as secure as they should be, nor did they feel that their lives and liberties are well protected.
instead, terrorism is very much with us. the they pale in comparison to 9/11, new attacks both successful and the failed remind us that terrorists continue to seek to do less harm. meanwhile the nation's politics remain in thrall to by the specter of and terrorism. alarm is a man fear makes it nearly any reaction to terrorism same of viable and politically palatable. including reactions that we needlessly spilled american blood and treasure it rather than dispassionately address this topic, our national leaders often hype impossible threats and jockey for political advantage by anticipating terrorist rights in the future. this struggle that we are engaged in to address this problem of terrorism exists for good reason. policymakers, the media, and the
public lacked a strategic understanding of terrorism. and they lack therefore, an awareness of the appropriate response to it. terrorists have many different motivations, and we should not assume that they all approach these issues in the same way, but there is often a common strategic logic, and understanding this can help to reveal some strategies to frustrate and dissipate their efforts. consider for starters the obvious -- terrorism is political violence, that is, violence that is politically motivated, directed at civilians primarily, and typically used by week, non-state actors. the intent also is to raise the cost of the state's policies and to convince that state to take actions that ultimately harm the state and help the terrorist group. they also hope to increase their
power and prestige. and their goal again is to elicit a response. these are very weak organizations by the nature. but they count on a very strong country like the united states to lash out, to respond and poorly directed or misdirected ways, and a lot of times that violence is directed inadvertently at the communities in which those terrorists operate and hide. by doing so, they elicit additional support and draw new recruits from that group. so we know we have -- they have these great ambitions but they lack the means to achieve them on their own. on less -- and this is the key -- unless their target, be it the government or people of a particular state, alter their behavior in a way ecoterrorist benefit. this is the essential theme of a new book that just came out, of
volume that i coedited with my colleagues, of a quite terrorizing ourselves if you -- "terrorizing ourselves." the central theme is that by addressing terrorism dispassionately and kant finale weekend take control and train power from terrorism as a tactic and make it effective. which is pretty ambitious but we think it is doable. i have to say that the outset that this project is the culmination of a three-year initiative that we launched and funded very generously for with additional support from the open society institute and we of organized and other meetings -- a number of meetings. we've been talking about this before. and the book draws on many of the people who have participated in this initiative from the outset. it includes chapters on a whole range of different sectors about
homeland security spending, communication strategies, thinking about the nelson peltz and root causes of some of the misconceptions about what drives people to engage in terrorism in the first place. i am not going to go into detail unless you have specific questions. beyond the specific terror -- proposals, terrorism -- the book documents the way that this climate of fear mongering that we exist under today exacerbates the strategy. again this should be obvious but is sometimes bear responsibility -- terrorism is named that for reason. terror is thereir coin, and they benefit enormously from the self-defeating concepts of horrible things that can happen to us and they see the way in which our actions have been so self-defeating, bringing on needed wars, wasted well, and less freedom. we'd look at all of these
strategies in this book to build support for constructive approaches. the specifics that we go into in the book document what a better counterterrorism strategy would like very providing better defense against all attacks is impossible, right? a government tried to protect everything is protecting nothing. and they are not as cunning as they are made out to be. they will buy their time and stage dramatic attack. all we can expect to do is to prevent what can be prevented and to recover well from what cannot. that means that we have to prioritize, right? counter-terrorism strategies must include policies to infiltrate and destroy a terrorist organizations, deny
them access to nuclear material, we can rely on technologies to do that in an efficient and lawful way that does not undermine our liberties. and we also need to take reasonable precautions against certain factors of attack, but we really need to think about this carefully. the federal government cannot secure thousands of bridges, sports stadiums, airports, bus stations, subways, and shopping miles, skyscrapers, electrical substations, i could go on and on. think about all the different things that we could classified as critical nodes of infrastructure. and yet the federal government merely a sense that they have of it the ability to do these things and that they are well- suited for dealing with these challenges and can do so in an efficient way. one last thing as i am running out of time. policy makers who promised
perfect security are committing leadership malpractice. likewise, for an exaggeration is demonstrably harmful. pandering to people's fears about terrorism should be a political liability. the alton an outcome we should seek is a political climate in which fear mongering is virtually absent and people are punished at the ballot box for exaggerating the threat that is posed by these weak and ineffectual groups. this will occur naturally, we believe, and we talk about it in the book, if we disseminate information about the groups, about their likely ability to carry out attacks, and to dialed down the rhetoric. i will close with this. in conclusion, the approach that we've seen here in washington since 9/11 is counterproductive and should be abandoned. the counterterrorism policy must
be resettled on the idea that a response of terrorism does most of the work of terrorism. the nine terrorists the upper hand that they say and that they cannot achieve on a room. strategic counter-terrorism will deny the false perception among the groups in which the organizations and audiences of which they are appealing that they are powerful. because they are not. instead of overreacting to remotely possible or impossible apocalyptic scenarios, the nation to address real threats while exiting the confidence and resilience befitting a great and powerful nation like the united states. a new world with communication that makes information's essentially as a available is intentionally would convey this continent's very quickly and terrorist will learn that their approach cannot be successful. to the extent that we can ever say that we have truly defeated terrorism, it will occur when we understand that terrorism
cannot defeat us. thank you very much. jerry was very good with a cue cards and that means i have lots of times for a question. i would be happy to take questions. >> [unintelligible] >> the number one cause of terrorism is injecting more troops into another country. like putting troops into saudi arabia had something to do with 9/11. was that not a prime cause of terrorism? >> i know the book very well. he has been a participant in our discussions from the very beginning third he published a paper for several years ago. we have focused on the concern going back to the late 1990's, the role of the placement of u.s. troops on foreign soil and
the extent to which it can and gender support for terrorism. it's almost in controversial -- incontrovertible that the presence of foreign troops on the soil, especially troops that are perceived to be of a different culture, religion, outlook is particularly conducive to generating support for terrorism, including transnational terrorism. in other words, not just directed at the troops themselves but terrorism directed at the country from where those troops come. i think that bob is right. it's interesting -- one last point -- it gets interesting when you consider the way that people who have not lived under foreign occupation themselves to sympathize -- do sympathize with
their brethren in some sense of the term. that is how you can have british citizens born in the u.k. but whose parents came from pakistan, for example, receive some kind of repression by a second order of that. that is where the interesting work is being done, to take bob's initial insights and apply them to the second and third generation type of terrorism that we see. it comes not from people directly affected by the foreign troop presence but are sympathetic to the plight of those who are. other questions? it puts us back on time. thank you very much. >> tonight on c-span, campaign
events from two candidates running in a special election in pennsylvania's 12th district. our rally with bill clinton, and a rally for republican ken burns with massachusetts senator scott brown in washington, pennsylvania. the candidates are running to root -- to serve the remaining term of late senator -- late representative john murtha. that is tonight on c-span. >> the chief economist of the national association of realtors. news is that home foreclosures are down nationwide. that is a good sign. what about the housing market itself in terms of sales? are people able to get back into the market?
guest: thank you for having me on your show. we have seen the buyers back in the market as a result of the tax credit. ices are stabilizing and increasing in markets across the u.s. consumer markets are experiencing a price decline, but oe there is stabilization we can anticipate the foreclosure rate to help out. the foreclosure situation is still unacceptably high. we have a long way to go back to normal but it at least appears we are going in the right direction. host: is it too early to tell the impact of the new home buyer tax credit? >> it is no longer available. -- guest: it is no longer available and i would have to say that it was a really successful program, bringing in in our calculations roughly 1
million additional buyers. creating a huge reduction in inventory. making a price swing of about 5%. in some markets where there was a small decline there is now stabilization. host: people in the pipeline still taking advantage of it, but basically ended, looking three months out what does it hold for people coming into the market without the benefit of that tax credit? what do you see the market looking like? of guest: the housing market has got to get back on its own feet. this may be the perfect timing in terms of when theax credit expires. what is needed for a sustainable recovery and job creation over the past fe months, it needs to continue for the remainder of the year into 2011. the other factor -- given that
prices are stabilizing, that translates into an increase in consumer confidence amongst home buyers. usually in economics people come in and buy. housing, prices declining, why buy now or later? with that those prices removed, it will increase customer confidence in the marketplace. host: lawrence yun is here until 8:30. we wl take your calls on housing and home foreclosures. for democrats, 202-737-0002. for republicans, 202-737-0001. for independents, 202-628-0205. we will get to your calls momentarily. in terms of inventory, housing watch reports from last week rights that while the rest of
the economy is moving on from the great recession, the housing backlog is still filled with property that has entered the foreclosure process. is this a good thing to have these extra properties available? guest: from the past lending mistakes still dealing with distressed properties, the interesting figure is the mortgage delinquency amount. people that are 30 days late. these people that are entering the pipeline is declining. people are undergoing foreclosure from all of these past lending mistakes going through the system. there is a program from the federal government to affect th process in a short sale, giving financial incentive to the lenders and homeowners to expedite short sales. host: how can a first home buyer
-- how is a new home buyer today different from the beginning of the recession? guest: there is a much higher percentage of new home buyers in the most recent cycle. we have seen 57%, historically it is 40%. it is a combination of the tax credit and the fact that prices have declined so much in some markets that people that were priced out during the boom recognize a great opportunity to step into the market. these days people that are entering now have to financially qualified, a big difference -- half the financially qualifiey,- have to financially qualify,
a big difference. host: what is the average down payment? guest: many first-time buyers are relying on fha, they require 3.5% down payment. some people might say that that is low. what we are finding is that if people spend within their budget in a way that leads to a good long-term performance, veterans of the long term programs find they are the best performing loans out there. mortgages with large down payments have higher rates of delinquency. host: what percentage of mortgages today are bacd by the government? guest: 90%-95% are matched by -- backed by fha or fannie and
freddie. we cannot leave it at this high government level. at some point the rest of the market needs tget back in. host: historical what should the number be? guest: around 50%. some people of classified fannie and freddie in the past as private but we know that they are government back. h-- backed. host: russell, texas. good morning. independent line. caller: we are in tennessee. ho: yes, i apologize. go ahead. caller: with all respect to mr. yun, i have been in my house for two decades and it has not been paid for get. we are on a sinking ship.
a compound fracture. i look at the compound interest as an open wound in this economy. things are not going to happen very fast on this recovery business because compound interest on these loans for these houses that we need to shelter ourselves with, the compound interest is leaving ourselves drive. -- leading ourselves and dry -- thebelieve leeding ourselves drive. host: what is the interest rate on your house? caller: 6%. host: people at higher levels got into trouble -- guest: people at higher levels got into trouble.
today because of the resetting higher benmark rate from t federal reserve, some of it will be less painful. when we find people that are taking adjustable-rate mortgages contrast against 30% fixed, different regions of the country have different cycles. tennessee, that part of the region was the last market to go down. it is struggling to get back up. we have seen other areas turning around already on an upward path. tennessee was one of the last markets to go down and it could be the last to come out. host: frank, northridge. republican line. go ahe. caller: good morning. i appreciate what you are doing for realtorand for the public.
as a realtor, and i have dealt in bank foreclosures for 25 years, i think that the incentive given by the government', $9,000, that is a goodhing that should have been continued. we are not out of it yet. especially in california. fortunately our governor has given an incentive of $10,000 to new buyers. we need to continue to keep the market firing a little bit. we still need that $9,000 incentive to the buyers. guest: the $8,000 home buyer tax credit has been a very effective program. given the large u.s. budget deficit situation, we must understand that this program cannot last forever.
right now it looks like the housing market can get back on its own feet. but there is still uncertainty out there. in the state of california there is a state tax credit on top of the federal tax credit. the gentleman is correct. there are places in california where houses have tumbled by 50%. those people are deeply under water. it may take many years for them to fully realize the price action. what people are realizing now by purchasing atuch lower prices, the question is what about the people that purchased at the peak? this is where the lender's need to recognize that one of the key ways to reduce the default rate is principal production. what about the neighbor that paid in cash?
market. this is milton on the democrats' line from georgia. caller: i was wondering, i have worked in construction and things like that. when realtors are involved in building a home and putting $50,000 in labor and materials, we are tphnot seeing houses sel for $150,000 but didn't drive a nail or lay a foundation and the prices are tripled. and it is amazing how prices of material and labor and everytng in construction of a home and it is turned around and sold for outrageous prices by people that don't doing anything as far as the building is concerned. guest: the construction industry has taken a big hit. the overall home sales have fall been 30% from peak but new home
construction has fallen 80% so that is a huge reduction. and it is a new home construction that is the general big driv of the economy as people hire construction workers, buy materials, it generates the secondary spending. but that has halted. it is stabilizing at a very low level so we need to see bounce back in construction. we have high inventory so we don't want to add additional new holes where there is an oversupply. but among some builders realize there is a market opportunity and they see buyers that can sell their home and they are having difficult times getting construction loans from the banks and can't build homes. as i do my analysis in looking at the u.s. population grth, how many new homes we are constructing we may potentially encounter housing shortages situations two or three years from now if the building activity remains at this low
level. host: even with the glut of foreclosed houses you think this could be an issue two or three years down the road? guest: one looks at the population growth and how the formation has been suppressed. when the economy comes around it begins to rise proportionate to the economy so you will see more seeking their housing unit whether for rental or ownership. but if the housing construction remains oppressed i think that the distressed sale property will be the first to be absorbed but afterwards the could be lack of housing. host: where is the biggest growth going to come from, sile family homes, town homes? condominiums? guest: in terms of the mix of homes, we have seen trends toward more urbanized areas where cities are trying to revitalize the walking communities. the multifamily housing unit
near transport stations. so there could be a shift toward more multifamily constructions. but americans have the desire to have green grass in front of them. host: let's go to glen burnie, maryland. caller: i'm a realtor and i have a comment about some of the statistics that are out there about the housing and a question about an f.h.a. mortgage. to give national housing statistics and forecasts and even state statistics is very misleading and it create problems in areas that are not as distressed as others t. is like giving a national weather forecast. there is no way a guy onhe tv a guy can give a national foreca forecast. you can't say this is what the housing situation is in t united states because it is not
even a state issue or county issue. the zip code stats you gave would be more indicative. i happen to work and live in an area that has not been impacted nearly as much as other areas, yet the people in my area think things are worse because they keep reading in the newspaper stats put out not only by the national association of realtors but by news media bus it is sensational to say how bad it is. host: during the housi bubble didrices in glen burnie rise as quickly as the rest of the country? caller: yes, we had increases 20%, 25% per year was typical four or five years 2001 through 2005. then people don't realize that what started the collapse for us when katrinait and gas went up people started having a little problem and in maryland it was a unique situation the gas and electric company announced after
katrina hit the increase would be 72% in electric bills and that was the tphebnext punch in stomach. then the national economy went to crap and that was the next one. so, it is different in offensive area. and to give national numbers is very misleading for one and can be damaging for areas that are not impacted as much as other areas and gives people an impression that things are worse than they are. i do have a question for lawrence yun about f.h.a. mortgages. maybe he can get an answer for this. f.h.a. mortgages are the only ones that we you pay them off and refinance or go to closing that you have to pay interest once the first day of the month hits you have to pay interest for the full month, which means the banks could be raking in up to 30 days of extra interest and it is costing millions and probably hundreds of million of dollars a year to consumers.
why is tt set up that way and why does the national associatio of realtors not put the campaign out to get the money back to the people? guest: first, the analogy on the national weather and local weather forecast is a terrific one. i love that because without a doubt all real estate is local. there is so much variation between local communities. from the national data, just like the dow stock marke one reports the dow and individual stocks there is a different movement but from is a national figure. for some companies they need that national figure, for example, the u.s. government needs the national figure to compute g.d.p. as part of the economic activity. some of the large firms, whether it is a lending firm or the brokerage firm, want to know what the overall lines are. but we emphasize these are the national figures and there is a tremendous local market variation much different from
detroit, say, to dallas, texas. we emphasize those points and hope the media picks that up. on the f.h.a. i'm not quite clear on the question but i will check it out. you may be referring to the insurancpremium for people who take out the f.h.a. mortgages. there is an insurance premium to cover potential default among some of the borrowers. the f.h.a. program since its inspgs never requested a single dime of taxpayer money. the reason is the insurance premium wasble to cover defaults in the f.h.a. but that is more of trying to balance the risks versus the availability of mortgages. but if you are saying somehow the banks getting the whole month of interest on a single day, that is clear not fair and we will look into that to assure that, if that is going on, something is not right.
host: next call indianapolis. carol, good morning. caller: good morning. i just have two questions. i want to know do they get a separate check for t $7,000 for the taxpayers? and if that is true i would like to know how much money times the one million people that have gotten new homes, i want to though how much that comes to. guest: the tax credit program, one would get it from filing their income taxes. so normally for april 15 people final their tax and say i owe the government $2,000, for example. they say they purchase a hem and qualify they say here is $2,000 that i will pay the government but since i have a home i have an $8,000 credit. so on net i will get $6,000 become from the governme. now,here was a one million
additional induced buyers but in terms of the total people that purchased it is closer to four million people. so, four million people getting the credit, we estimate that as about $30 billion at the $35 billion price tag for the u.s. government. but this spending for the u.s. federal program has been a big success from my perspective because it stabilized prices. the roughly of -- the swing of roughly five percentage points which realized $1 trillion of housing wealth and that is mostly for middle class americans. so, i think that the program has been a huge success. host: dem from pennsylvania on t the democraline. caller: good morning, mr. yun. thank you for the information you gave us. that realtor that called in was excellent. i'm not in real estate but i
hear the constant hammer iing a freddie mac and fannie mae and all of this. i read in several places that a corporation named countrywide was responsible for 80% of theed about loans. is this true or not? fox news people keep hammering and just regurgitating what they know on fox and it is so far from the truth it ridiculous. may i have your response in >> freddie mac and freddie mac do not directly originate the loans. it will be countries like countrywide, bank of america and those who originate the loans and sell to freddie and franny. franny and freddie is another institution created during the time of the great depression -- freddie a little later -- but their job was to borrow money cheaply bus they have government -- because they have government ties and pass it to the
consumers. but from about 1990 franny and freddie pursued other activities which was in essence they created this gigantic portfolio or hedge fund and bet on the housing market. if this hedge fund turned out well it was a huge profit for the shareholders and managers. if it failed, and we know it has failed, taxpayers are on the hook. so what we recommend is frann and freddie gradually have critical role in bringing down the interest rate and they need to get back to that without worrying about the portfolio investment. host: a twaoeplt by john -- a tweet by john. host: here is a call from
vancouver, washington. caller: i wanted to make a couple of comments before i get cut off. first i would like to say this gentleman seems to be well informed and i really wish you guys had him on last year. hello? host: mr. yun has been on several times with us, jim. caller: i'm kind of an old fashioned kind of thinker and what i think in terms of buying a house i look at my annual income and tithe that by three and figure that is the house that i can afford. that is really good common sense. i kind of saw a lot of that going through the roof. i worked in the air force the past 10 years and i had people yelling at me if you don't buy now you will never be able to afford to. and i thought they are telling me i can afford a $250,000 and i'm onlyaking $40,000 a year.
then when the interest-only loans came out i realized this is at the top of the pyramid scheme and i tried to tell my friends that and a lot of my friends in the military are being told they didn't have the credit to get a better rate but they cou get there and in a couple of years it could be transferred over to a better rate once they had a better established credit rating. i saw this shell game and sure enough i was right. but i just wanted to say i think maybe the federal government shouldn't have bailed anybody out. i think they should have let it all crash and let the market f self bus every time the market gets involved the market never does quite fix itself. there are a lot of people right now who are out there who could afford to make their payments and they are walking away basically fr their mortgages because they are taking too much of a hit and they realize it.
guest: the common sense, the income to price ratio or price to income of three or four times, those are good metrics. and if the lending had abide bid that we would not see this problem. but that metric was thrown out and one of the problems was all these people on wall street that were doing the technical analysis and they said somehow that they could create a utopian society with subprime mortgages and that was based on somehow the prices always rising. we know that prices do not always rise. one of the financial market reforms which we're very supportive of is the reform of the credit rating agencies, because the moody's, standard & poor's, they sell the subprime mortgage products and they are of triple a quality and all the money floated into the mortgage companies and for the mortgage companies there was a financial incentive to originate the align independent of the income
ratios. so, it led to this condition where we didn't have the norm checks and balances. checks and balances are consumers want to buy a home but the learned would say show me your income and documention. let's make sure tt the ratio is well within the normal rate. that was bipassed. -- that was by passed. host: the former country wiwide facing legal action. how have they survived as a mortgage lender? guest: the bank of america purchased countrywide so the burden of all the bad mortgage origination from countrywide is on bank of america. the specifics of the c.e.o. i don't know if there was any specifics to mislead the market or consumers. i don't know that specific. host: we go to roanoke,
virginia. katherine. a republican caller. caller: i want you to know i just love c-span. i have quick question. host: go ahead. caller: i want to know why an f.h.a. loan takes six weeks to two months to go through. especially this day and age with internet. guest: the f.h.a. perhaps need to adopt the latest technology platform to originate those loans much faster. i think one of the reasons is in light of the fact many bad loans were made during the bottom years, people are looking over the documents much more carefully and going through the process. and also the appraisal rules have made it a little longer in terms of trying to move t system through. that could be one of the hiccups in the system. but you are right, in today's high tech environment where we can use the computer to send quickly that things should be a hrelittle faster.
host: call from oregon, a call from peter. caller: i have a tough question four. i'm a citizen lobbyist in oregon. i represent manufactured home park residents. currently we have a huge sacred cow which involves the mortgage deduction, the interest deduction. and it represents about $600 billion every four years. and, given, that we know that over 70% of that goes to people who own homes and make more than $10000 a year. my question to you is this. why don't we stand that on its head and if we e going to do that kind of subsid rresent the people who are under $100,000 because we know home ownership makes good sense and economic sense, and that is my
question. thank you. gut: the mortgage interest deduction was in place when th income tax was created in the early 1900's. so it has been over 100 years. through that the budget situation has always been able to manage the mortgage interest deduction so you cannot blame the current situation on that. furthermore, one cannot blame the mogage interest deduction for the housing bubble because it has been in place a long time. the mtgage interest deduction was in place because fundamentally i think americans believed owning a home is preferable to renting, other things equal. we want to have successful ownership policies so people who are not yet qualified need to save for the down payment and wait. plus the ability is providing more to own their home. from a societal point of view
what one finds is various academic studies show families of tkwl circumstances, one is a homeowner, one is not, and their children do better on test scores, there is less incidence of juvenile delinquency and lower teen pregncy. so something about owning transforms some of the mentality among families. perhaps they are tnking 30 years out rather than trying to think week to week. so, there is large societal benefit. so this $600 billion you mentioned the past four years, yes, that is a tax break for the american homeowners, yet i is providing a tremendous societal benefit externalities. host: tampa bay, jerry on the independence line. caller: how do you to, mr. yun? i would like to ask you a few questions and see if you agree with me.
firstly i presume you are a licensed broker. and during both my college years and during my college training we were taught that new consucti construction, the entire economy depended on new construction. how does that work? of course, you have cemt that goes into a home, you have wood that goes into a home, you have a tile roof that goes into a home or you have a vinyl roof that goes into a home. you have tile floors. people tend to buy new furniture that goes into a home. people tend to have cement for the driveways and new lawns are landscaped. new construction is, would you agr agree, tied to our entire economy? first of all, would you agree with that statement? guest: well, all the past economic cycles that the u.s.
economy underwent was generally led by the housing. if the housing market went down it dragged the rest of the economy down. when it picked up it brought the economy become out of the recession. so, the housing is a big driver of the economy and no doubt as you mentioned, hiring of construction workers, buying lumb lumber. so all the secondary impact to the economy. furthermore, one thing that is left out in in your equation is the housing wealth. if the housing wealth is stabilized that is a source of stability for many americans and they feel comfortable purchasing an automobile or purchasing cloth clothes. so their financial stability is another driver of the housing market and how it interacts. host: jerry, do you have a follow-up? caller: yes. what i'm trying to say is without a viable new construction industry, new
construction, this economy wil never recover, it is not going to recover. with an unemployment rate that is not paying a living wage, here in florida we are in a situation where we have -- well, nationwide, would you agree, mr. yun, there is still somewhere between two million and five milli foreclosures to be resolved? guest: this area could be about 2.5 million foreclosures which would match last year. next year could be less but that is still higher than normal so we have a long way to go in terms of the foreclosures that need to be absorbed. host: just following up on jerry's comments, a tweet. following up on the construction
being the driver of the economy, a front page article in yesterday's "new york times" wrote about the housing construction industry on the rise in las vegas, nevada. home prices there are down 60% from 2006 and one of the steepest stkaepbts -- descents. there are 9,500 sitting empty. builders are putting up 1,100 homes and they are buying lots for more. focusing on las vegas in particular, can you tell us what is going on there? guest: the new home construction aa in areas like las vegas has tumbled at about 90% so they are at rock bottom and they are beginning to increase somewhat. but it is still a very low electrical of activity. but it is up to the builders to regnize that some of the oversupply inventory needs to be absorbed before the builders can kick into the market system.
there are always buyers just like there are buyers who say i want to buy a new car only, i don't want to consider a used car. there are people that say existing homes are fine but i really want to have my own tastes, my own features in the new homes so there will be buyers who are looking for the new home construction. and from the rock bottom levels it is only one direction where it can go, which is upward. but still the home billers need to very cauous about where to build. but as i mentioned earlier in the program, some of the home builders are saying they want to build, they see a demand, they see a buyer but can't get the construction loan. host: here is steven from new windsor, new york. caller: good morning, mr. yun. i have a couple of comments. you were talking about that man who just called or he was talking about jobs important. that i was going to follow up
on, but there is one other thing. i knew a person who was constructing homes in 1970. what happened with him is he went into the construction business and he was building 10 homes a year up to around 2006. in 2007 and 2008 he was unable to sell and had two homes left. he's gone out of construction to find other jobs. but the point is he told me it cost like $40,000 to $50,000 to build a hometoday. the point was he was selling the homes for up to $300,000. at is a real big increase in price. people were willing to pa he made a lot of money. but now he c't sell homes. all of these homes, when i bought mine in anyone 70 -- 1970 it was $30,000. i was thinking of selling it and
it was $240,000 they said it was worth. i have heard the stories where people would buy a home and they would say well, you can afford that even though it is way above what you can affor because of your type of job and how much you are making. guest: many mall builders have had a difficult housing cycle. but with the housing market appearing to stabilize hopefully this provides work opportunities. but the construction loans, now that banks are making decent profit, they should be looking into the areas where they do normal business, which is lending for construction loans, lending for jumbo mortgages, lending for second home purchases. those are private mortgages without think government backing and they need to flow. and given that wall street appears to be stabilizing, the financial market is raking in a nice profit i think there will be more lending into purely private sectors and hopefully
this will turn around the sector. host: he was the second one to mention the difference 2010 the cost of building a house and the sales price of the house and the large increase i price. is that percentage much different than it was 10 or 20 years ago? guest: there is always -- the builders will be responding to the profit margin. and during the downturn the prof margin disappears because it has to compete with distressed properties. but now buyers are willing to pay the price that is bringing the profit margin so we are returning to that more normal lev level. we are far from being normal but the direction on the way things are improving. host: one more quick call, tammy in pope county, florida. caller: you are talking about people buying new homes and getting in debt. i would like to explain something right quick. we build our homes. it took us fiveears to pay off the property that we ar on right now.
we got a mortgage and built our home. we put $150,000 in building our home. our bank, we have been dealing with them since 1994, talked us into doing a refinance. if we had said like we were we would have been fine. but the refinance, predatory steering, our payment went from $1,300 to $2,700. they didn't explain that. it was a 30-year fixed interest rate at 5.25. that was the end of 2007. right now currently i don't know if you realize it, 500,000 homes in florida are clogging up our court systems that are in foreclosure. it is not only people that ught homes but people like me and my husband in our 50's that refinanced that we were not told about the the debt ratios. they said no problem. they called us in and sign this, initial, initial. th didn't explain that we had a balloon or an adjustable rate.
gut: one thing that we need to get in this, the financial market reform and transparency. we need to assure what stkaourpls sign they fully understand. because one thing in the footnote and as you know signing the document particularly for home purchases or refi are s many pages to sign it can be easily overlooked. we need to assure there is a as earlier today, president obama signed a press freedom act into law. it is named after a reporter who was kidnapped and murdered in pakistan in 2002. the new law directs the state department to include press freedom issues in featured human-rights reports. this event is about five minutes.
>> i am very proud to be able to sign the freedom of the press act. a piece of legislation that sends a strong signal about our core values when it comes to the freedom of the press. all around the world, enormously courageous journalists who at great risk to themselves, are trying to shine like on the critical issues that the people of their country face. they are the front lines against tyranny and oppression. the loss of daniel pearl was one of those moments that captured the world's imagination because it reminded us of how valuable a
free press is and it reminded us that there are those who would go to any length in order to silence journalists around the world. what this act does is it sends a strong message from the united states government and from the state department that we are paying attention to how other governments are operating when it comes to the press. the state department each year chronicles how press freedom is operating as one component of our human rights assessment. it also looks at countries that our governments that are condoning or facilitating this sort of pressure and singles them out and subjects them to
the days of world opinion -- gaze of world opinion. without this type of protection, countries and governments often times feel like they can do with the press with impunity and we want to make sure that they cannot. this legislation, and a very modest way, puts is clearly on the side of journalistic freedom. i want to thank the house and the senate and i particularly want to thank the pearl family, who has been so outspoken and so courageous in sending a clear message that despite daniel's death, his vision of a well- informed citize andnrnry and tht
conference today. >> today's white house briefing. among the topics discussed, the gulf of mexico oil spill and iran's agreement to ship some nuclear material to turkey. robert gibbs speeds with reporters for about 45 minutes. >> why is the white house pressuring democrats to back off from the attempt to bring back glass-steagall? >> i do not have anything on that. >> why is it opposed to glass- steagall? >> is the white house opposed to reestablishing glass-steagall? >> i do not have any information
on the amendment. i am happy to look at it. >> in the eye iranian uranium statements today, is there anything at all that changes the administration's position on the whole nuclear question? >> let's look at the totality of what this proposal is. you certainly have my statement that their shipping their low enriched raymond -- real uranium would be a positive sign. understand that the proposal does not appear to address ofran's recent announcements increasing its enrichment to 20%, the research reactor was used as the direct justification for doing so. that in and of itself would make them non compliant with
their obligations and responsibilities. first and foremost, a proposal should be submitted directly to the iaea, fine print and all, so the international community can take a look. but it does not change the steps that we are taking to hold iran responsible for its obligations and those include the state has been in touch and i have no doubt our representatives at the un through the p five + one continue to work on this. >> you are not concerned this is going to unravel the whole deal? >> there are certain steps that
would be progress. i think it is important to understand what this proposal signifies is less than what they agreed to last october, and understanding that the world's -- -- the boards and the deeds of the iranian leadership rarely coincide. so i think before we -- i think we have to have the international community see the proposal in its detail before it to make a final determination. >> president medvedev has suggested a small pause in the sanctions process. the turkish prime minister says there should be no sanctions at all. are you going to take time off or ease the pressure for swift passage of sanctions? >> no. we are continuing to work to the security council and to the p five + one.
we hold them accountable not just for their words but for their deeds. a willingness to live up to their international obligations or face consequences including sanctions. i would point out that medvedev also mentioned a concern about the 20% enrichment. done as a justification -- their unwillingness to accept this last october, that was used as justification for increasing enrichment. that in and of itself puts them in non compliance. >> has the president spoken directly to any world leaders or will he be speaking to leaders like medvedev or president hu the coming days about this deal? he talked with medvedev last week but i am not aware of any calls that have been made today. did the president speak with leaders of turkey or brazil as this proposal was being put together? >> i believe the state department has been in contact with them. the president has not talked
directly to any leaders. with the fact that iran appears to be agreeing to something, even though you want more information to be sent, is this a step in the right direction? >> i m reticent, even as i said, if they were to make good on this and ship out well funded kilograms of low enriched in uranium, that would represent progress. i think it is important to understand that this is less than what they agreed to last october. and understand that even though they agreed to this last october, it never came to pass because they changed their mind. so that's what is it the words and the deeds of the leadership in iran have rarely coincided. so i think obviously, while shipping out the low enriched uranium would represent some progress, we still have concerns about the overall thrust of the
nuclear program, and certainly the 20% enrichment is something that, as i mentioned a minute ago, president medvedev and others, including us, share great concern about. >> on the black farmers, john boyd, who is the chief lobbyist, has expressed concerns about the pace of getting them what they are owed. and his claim is that the administration, the president in particular, is slow in moving in this direction because this is a black issue, it has to do with race. is there any truth to that claim at all? >> i think precisely because this should not have anything to do with race is exactly why the president is involved in this issue. this is a lawsuit that dates back to the late 1990's, it also includes -- there's a separate case that includes native americans and that case was settled for discrimination
against the department of agriculture dating back many years. so the president's approach to this is not based on the color of skin but because of what is right. >> why won't you get involved more so? >> we are very involved. representatives have met with the staffers that the working directly on this in the west wing in order to bring this to win and. >> the reason i ask why he is not more involved, granted he put out a statement, showing strong support, but many have said that the president could have declared an emergency designation for the farmers to get their money and then you could -- >> again, i think, understand that if he had done that, that was objected to last week in the senate. >> right, but the way i understand it, nancy pelosi said early on that it could have happened and this was -- >> that seems like hypothetical
to go this administration was supposed to come back to find something to attach the monies to and the congressional black caucus -- >> i would say that the president and the team here continues to work on it. >> was the difference between foreign policy and bush's form policy? >> in what respect? >> in terms of rest of the world, afghanistan, iraq, and so forth. >> in afghanistan, we committed three times the number of troops that were there during the bush administration because we believe that was a central front on the war on terror. >> i do not think there is any doubt. possible planning of attacks and the possible providing of a safe and -- safe haven if the taliban were to come back in control as they were before 2001.
>> you are in their country. >> i'm sorry? >> who's the enemy when you invade a country? >> i think as you saw last week, we are working in partnership with the government of afghanistan to secure an area and ultimately turn it over to them to provide peace and security for their people. >> one other question. why do you not know your position of glass-steagall in view of the economy? >> i do not have any information on the amendment that might come up in the course that's to take care of all the bankers in the treasury department. >> i am sorry? >> as it wanted to have such a dominance of bankers in the treasury? >> if i think based on what the treasury department is doing on financial reform in the way banks are fighting us, i am not sure that that statement lines up with what is going on in terms of financial reform right now. >> on the oil spill, kind of a good news/bad news day.
the big news is it they did get a pipe down and there siphoning off what they estimate to be about one-fifth of the oil. one piece of bad news is that bp refineries according to a report for the center for public integrity, two bp refineries are responsible for well over 90% of all flagrant -- of all flagrant safety violations in the nine states over the last three years. the question is, does the president still have confidence in bp, and should he? >> i have to take a look at that particular report. i have not looked deeply into penalties for refining. i would say there's no doubt that as you heard the president talk about on friday, there are failings corporations and companies. transocean, halliburton and bp
all pointing fingers at each other and walking away from the responsibility that must be taken in this instance. but there's no doubt there's always -- there's no doubt it's been a failing of government in a regulatory approach which is one of the reasons why secretary salazar began reform at mms when he took over and that is why the president and secretary salazar agree that this department should be split. and that we should have a regulatory approach for safety and inspections that does not coincide with drilling permits and royalty checks. >> in the statement on friday, the president denounced all the finger-pointing but then seemed to point the finger at the bush administration saying that over the last decade or morph it was problems with the government. >> the last decade or more includes us. >> he was pointing his finger at himself, too?
>> i think the president was clear that there have been failings at a government level and certainly those include us. my guess is you guys did some stories in the previous decade on what was going on which is what caused secretary salazar, when he came in, to begin reforming that. >> in his statement, the president pointed the finger at the last 10 years but then he said ever since we came into office, secretary salazar has been trying to change this is those -- as though this administration was not part of the problem and the courts i think a which is pretty clear on that. i do not think there is any doubt. i do not have the story log in front of me but my guess is that your network and others did stories which is what caused secretary salazar to begin that reform upon taking office in 2009. >> one other question on a different topic. you have another state dinner this week. is the white house confident
that all procedures have been corrected, changed, whatever needs to be done to make sure you do have the kind of script problem you had last time? >> we are. >> can you elaborate what has been done? >> i am not going to elaborate on increased security procedures. that would invite people to try to figure out how to evade them. >> going back on the bp, there is a report that a top official at mms announced his retirement as of may 31. is this a firing or is there a forced retirement >> and mark >> i do not -- >> you do not know anything about this? >> i do not. i do not have my blackberry. this is an administration decision? >> let me check on it. i will check on it as soon as i get a black. up here or get off of it.
>> that is the last thing you need. we do not want to have a black. up there. >> they have a brick breaker appear. >> how does that work? guards at what point do you think the government is going to be able to know how much oil has been spilled? bp clearly does not have the answer. scientists are telling us one thing. where are you guys getting your information about how much oil has been spilled out there? >> noaa does projections on a whole host of things, satellite imagery on what has come up. we know the use of dispersants and is being investigated the degree to which we may have oil underneath the surface. i know there has been reporting.
>> our response was for a catastrophic event. there is not -- we did not employ a 5,000 barrels a day response for a 10,000 barrels a day accident. it has been always predicted -- predicated on what he said was a catastrophic event. >> as you guys are skimming oil, where is it going? >> i know certainly that what is being vacuumed up from the insertion tube goes into a tanker and i assume that the tanker and the skimming goes into when you collected item accommodate millions of gallons of oil water mix, that goes to a port and that is separated. >> tomorrow's elections in four states, do you accept the fact
that any of them have some bearing to the president's political standing, his agenda, and things like that? >> will assume i get a chance later on tuesday or wednesday to talk about. >> that says you are waiting to see the results to tell us what that means. >> it would hard to be tell you what it means until i know the results. it's unlikely to tell me what happens on tuesday before. >> that says something obviously if they go one way. a referendum on the president. >> if you are asking me to -- >> do you think it's fair that these democratic primaries, specifically in arkansas and pennsylvania -- >> what value would you give my opinion if i told you right now what it meant if it did not correlate with the results? i hate to be picky about. >> is it fair to say the president, he has endorsed to
incumbents. what does it say about the president if one of them loses or at both of them loses? >> i am happy to talk about the results when they happen. it cannot think it is breaking news to say that this has been, based on the election results that we do know, it's been a tough year for incumbents. everyone noticed that a senator from utah, reelected just six years ago with a 70% of the vote, got a quarter of the convention vote to be renominated. we will give you a chance to look at a whole host of primaries tomorrow. you've got interesting races in places like kentucky, as well. i am happy to spend some time on, like a said, either tuesday night when we get results, or wednesday, talking about what they mean.
>> the president and vice president are both traveling tomorrow. they will be in swing states but neither will be in pennsylvania. anything to read into that? " the president is in ohio to talk about the economy. i think we have done quite a bit for each candidate. >> how closely has the president been following these campaigns? >> not that closely. >> couple of timing questions. the deadline at one point for iran was the end of last year. we were going to see sanctions to go just in fairness, i think as to your first point, our government and the governments of those involved said that iran had a year-end deadline to change its behavior, yes. >> ok, and then you said fairly
recently that you thought that the sanctions could be moving by the end of spring. >> yes. >> i am not sure when you're defining spring but could you give us a sense to go when do you define spring? >> i kind of think of the end of may. >> are you still aiming for roughly the end of may or something like that? >> not to get cute with when spring starts but i think we're making steady progress on a sanctions resolution, yes. >> and the other timing issue was on financial regulation. at one point, the president hoped to get a bill to his desk by memorial day. is that still realistic? >> i think there is some reason to believe that the senate will conclude its business this week. we are hopeful. i think the bill is a very strong piece of legislation in changing the rules that govern
our financial system. obviously, the next steps will be working through those differences with the house. and i think we'll have a bill to the president's desk somewhat shortly. >> somewhat shortly -- by the joe -- by july 4th? >> that sounds about right. >> there was more to do in terms of jobs and stuff like that. will that be the president is certainly going to talk about the economic reform. through an investment in the recovery act, is greatly expanding its business and it is going to hire several hundred people. i think what was spoken about were many of the things that the president continues to believe need to happen sending legislation to capitol to
increase small business lending, the housing retrofit plan that will create jobs, all of those things the president believes, and the economic team, believe still need to happen as our economy improves and is on a positive trajectory. >> as anything new about? >> not that he will talk about tomorrow, no. >> the new york federal reserve says the pace of recovery may be slowing for and cites a couple of stats. does that trouble you? does the president intend to act based on that? >> i am not familiar with what the new york fed specifically said. i think the president was pretty clear the other day that if you want a job and don't have one, then there is still a recession going on. we have seen three quarters of economic growth, positive economic growth, for the first
time in more than a year -- that economic growth for the first time in more than a year. we have seen four consecutive jobs reports that show positive growth and the largest job growth in more than four years, the largest job growth in manufacturing in more than 10. next month economy will be stronger than this months. this year's economy is stronger than last year's economy. we're continually making progress. the president is concerned each and every day about our recovery and the strengths of our economy. >> on the primaries, arkansas and pennsylvania in particular, does he have less a stake in these primaries than he did say in the races in new jersey, virginia, massachusetts, that everybody wanted to make a referendum on him?
for is the less an issue in a lincoln's race, less an issue in the arlen specter race? >> i do not think in either one of those races -- we have appeared in commercials but i do not think it's been a political -- i did not think the two sides have argued about that. we will have a chance to talk about the results and out comes and what they mean or may not mean. >> before the races last year, i sense the kind of animate white house insistence that the president was not an issue here. you did not seem to be arguing that strongly this time. >> maybe i am not following you. it's hard for me to tell you what results of tuesday mean on monday. i cannot tell you how the nba
finals are going to go and why just because they have not happen. >> not so much to tell us what the results mean as to try to get a sense of whether the president feels he has something to gain or lose. >> i think everybody knows that we've supported people in those races. we have supported incumbent democratic senators and we've done a lot on behalf of each campaign. again, there are races all of the country that we'll have a chance to look at from a democratic and republican side as to what it means. >> you want to handicap the kentucky race if you won't do the -- >> no. i am looking forward to the results and analysis of that just as much as anybody else. >> how about the nba finals? >> nothing on that. >> i would like to encourage you to find out something about
this resignation of the mms official when you can. >> you want me to go now? >> no. would you defer your question for me to go find out? >> west point at the end of the week, do you have some sense yet whether that is a speech that is likely to produce something other than the typical graduation speech? >> not at a point where -- we will get into that a little bit later in the week. >> mcclatchy has a story out of kandahar saying that key military operations have been delayed until fall and that nato officials who once spoke of demonstrating major progress by mid august now say the turning might not be till november. do you want to say anything about that? >> i have not seen that and i think that general mcchrystal briefed at the pentagon on this. the notion of major military operations, i would have to see
exactly what the writer means about that. this is not going to, as general mcchrystal said at the pentagon meeting and the situation room meetings, this is not going to look like the battle of fallujah. this is not rushing across the field in a d-day-type moment. those operations around kandahar have already begun. after general mcchrystal say that this is something, this is an operation that is likely to dominate our focus to the end of the year. the notion of august or the fall, i think in many ways would be a false deadline in the sense that this is something that is going to take some time and last through the duration of the year. >> the president karzai asked or
did the president agree to any changes in that timetable? it's not that i am aware of but i will double check. >> during the campaign, the president was highly critical of halliburton and the process of no bid contracts. >> i know the quotes. >> you know the quotes? >> yes. >> what is the administration's reaction to the news that halliburton has just been given a 5 and $68 no bid contract by the administration? >> on what issue? >> not sure yet what that was. >> will figure that out. do have another? >> note. well, yes. you will give me an answer on that when i find the reports on exactly what it was exactly? >> like as said, we will meet somewhere in the middle. i will find that one out. >> i was going to ask you about,
you did not discuss pensive in his 12th district which is a special election, not a primary, tomorrow. he said the president is not following very closely the campaigns. is he aware the democratic nominee ran against the health care program? >> yes. >> and he would have voted against that? >> i do not know if he is directly aware. i have certainly seen those reports. >> just two questions? the new york times reported that democrats said the white house is not eager to be embarrassed by having the president make a last-minute visit on behalf of the candidates who goes on to lose, as happened in the massachusetts senate and new jersey governor races. is that the reason the president has not campaigned for senator specter this month? ?
>> i doubt the new york times said democrats is but i will check on that. >> maybe peter wrote that. the president did not have plans to return to pennsylvania. >> why does the president believe that the people who wrote the obama health care bill were justified in exempting themselves from it? >> i think you have heard the president discuss and i think we have pledged to put the president into his own plan. i think that has been dealt with. >> quickly, any reaction to an immigration court in ohio that has just granted asylum to the president's and? was this is an issue that first came up at some point during the campaign. the president was clear that this is an issue that he was not aware of and should be dealt
with through the necessary legal proceedings. you are telling me for the first time what the decision is. we had no involvement in that and that is something that we have always said should be dealt with through the normal course of how these cases are determined. >> looking ahead to the ohio trip tomorrow, there have been several of these white house to main street trips at this point and i wonder if you have any measure of whether the president's project to sell his economic policies to the american people has been successful through these trips? >> i think more and more people, because of the economic news, are feeling more optimistic about the direction of the economy. i think that's both a result of -- i think it's primarily a result of the fact that three consecutive quarters of economic growth, four consecutive months of positive job growth, some of which is because of the actions
that the president took on the recovery act. >> can i follow on that? >> yes. >> eric holder came under fire last week for not having read the arizona immigration law. and knowing that the president clearly shares some strong views on that issue, i am wondering has he read the law? >> i will check. i believe when we first discuss this, he asked counsel to provide him information on that. >> as far as the cms nominee, he said that the decision is not whether we will ration -- ration care, the decision is whether we will ration care with our eyes open. since part of the selling point on health care reform that is not rationing to go what were the circumstances which he was talking about the law? >> he was speaking directly on
the health care reform. i'm suggesting what are the circumstances around the " he was speaking about? >> i think he might -- >> robert, the administration has emphasized its desire for bp to fully reimburse costs. there was a letter to that effect. bp has written back. i interest in what you push for. are you entirely confident that bp is good for whatever you guys say the money is? what are you prepared to do beyond letters? >> first and foremost, the letter sent by secretary salazar and napolitano late last week and reported on on saturday obviously was an attempt to understand the degree the responsibility that they have said they will take and we believe they should take. we are evaluating the response
to their letter from a legal perspective and understanding that we have asked for in legislation that the $75 million economic damages cap be lifted retroactively to ensure that the oil pollution act covers the type of damage that is obviously happening as a result of this bill, and that taxpayers are not on the hook for the damages caused by bp or transocean or halliburton as a result of this damage. >> does case law support the likelihood that they will be good for the money? >> we are of by winning their response to ensure that they will do all that is necessary. >> what would be the next steps if you do not think -- >> well, let me have them evaluate that and will have an update on that. >> one of the arguments you're
hearing from republican the leadership is that if you raise the liability is going to effectively eliminate the possibility that smaller oil shops can drill offshore. is there a white house response to that? you essentially creating a system that only benefits big oil companies? with somebody has to understand that if the projects that your undertaking has the potential to cause the type of damage that exceeds what could or may happen, that the law take that into account regardless of the size of your firm. quite frankly, a series of steps based on common sense to ensure that the protections are there for people in the event that something catastrophic does happen. >> how are you going to move this legislatively forward? it looks like you were at an impasse right up in the course there was an objection last
week. i think that the administration believes that senator rakowski was wrong in objecting to that and the only possible way to move forward is to ensure that there are a series of protections to take into account the potential size of a catastrophe. >> i want to find about two white house topics and two white house conversations on these topics, one on halliburton. what is the conversation with the white house and halliburton officials as it relates to the oil spill? we heard the president say he was very upset and frustrated about what was said on capitol hill, everybody is pointing fingers at one another and not wanting to take responsibility. what is the conversation from this white house with halliburton right now? >> i can check to the degree --
i can check the degree to which counsel or others are dealing with halliburton. the letter on friday dealt primarily with british petroleum. >> are you saying there are come decisions with halliburton? i would check on that. >> could you give me a to talk this weekend about this white house's efforts in trying to bring the civil rights community as a relates to elena kagan, when there were questions as late as friday about her record on affirmative action? we are hearing that the naacp is on board. the white house made some outreach calls. >> i think they endorsed the nomination. >> they did. the bottom line is could you talk to me about what the white house gave to these civil rights organizations so they could come on board? there was a dearth of information from this white house to them. >> i cannot speak to -- let me
say this. what we shared with that organization is what we share with any organization is her record on these issues. we saw it on the sunday talk shows. i do not know whether it is a dearth of information or a dearth of understanding but we are happy to provide information on what the facts are. >> or slow pitching. >> i am from the south. we do things a little slower. buckle your seatbelt and hold on. just let me -- she interrupted me -- let the record reflect that.
>> i understand lynn's frustrations. i have been dealing with that frustration for seven years. we provided information. i am happy to get josh and others to talk to you all about the process by which they contacted board members that would be voting in and weighing in on an endorsement for our solicitor general to be the next supreme court justice just as we've shared information via the blog and other places about her record on a whole host of other issues, some of which was misunderstood, like many comments to you heard over the weekend that were inaccurate about her involvement in the military. >> many of the civil rights leaders have come to this white house and had conversations and they felt that was a time to
have affirmative action letters laid out to them. many of them said that they laid the blame on this white house for the delay in their endorsement what say you to that? >> i cannot speak of any delay to the endorsement. the white house has asked that the clinton library speed up the production and the release of 160,000 pages of documents from her service at the white house -- letters, writings, e-mails, as well as the release of papers that she wrote at both princeton and oxford, despite the fact that they have not been asked for by the committee. and what you say to the fact that she was one of the ones in the clear demonstration at the time was fighting against the president putting out more of a civil rights agenda that had more teeth? she was one of the ones who
wanted to water it down. back then, there was a big fight of factions over race and she was one who allegedly wanted to tone it down. >> i think that the documents will show that she's a strong supporter of civil rights. she was a clerk for thurgood marshall. >> but that doesn't to go she works for eric holder and she was nominated by barack obama. >> some people would say that is symbolism. >> i dinthe naacp would endorse on symbolism rather than substance. i think they would endorse based on the fact that she has a very strong record on these issues. she has a strong record on these issues as solicitor general. that is why she is pleased to enjoy the support. say whether there
is going to be in represented from the social secretary office at the checkpoints? >> i will check procedures. >> it was said that elena kagan is a progressive in the mold of barack obama. is that something the white house agrees with? >> when describing her judicial and political beliefs, put her on the progressive side, yes. >> is that going to be the white house strategy going forward? >> i do not think it is a strategy as much as it is a belief in where she is. >> there's a new book that is quoting somebody from the white house on rush limbaugh telling him what he can do with himself. >> you are going to have to be more specific.
[applause] -- you're going to have to be more specific. [laughter] >> there is a book quoting a senior white house official responding to an invitation to golf with rush limbaugh saying that limbaugh can play with themselves. and there are some that have speculated that the sport -- that the source was the president via an aide. >> i do not know the answer to that. >> has the president ever said anything like that? what's not in my presence. >> the question is not so much
the overview that you gave but who met with who when and called, who had meetings. i think valerie jarrett had one meeting, i believe. >> let me find out from josh. i know mike strautmanis talked with people. eric holder is her boss at the department of justice. did the president get on the phone? it's not that i am aware of. >> let me check with josh. >> last october, you said in terms of afghanistan, we need to work with a partner that was free of corruption and transparent -- and transparent. given the conversations that happened last week between president obama and president karzai, how close do you think
the afghan government is to the standard that you set back in october? >> we have got more progress that needs to be made. i outlined steps that the government has taken -- had taken last week prior to the visit, whether it was on the electoral complaints commission, whether it was on the loss on so national government, whether it was on the high office of corruption, that there had been steps that had been taken, and we were watching the implementation -- the implementation of those steps to ensure increased transparency, increased accountability, as well as the promotion of fair and transparent parliamentary elections, which are upcoming. >> a lot of people who have been to afghanistan recently talk about corruption in historic terms, that people there and