tv Washington Journal CSPAN January 4, 2015 8:45am-9:31am EST
both parties have always coordinating on messaging, that is nothing new. you look back at the 1980's, at the end of the day, when elections were over, we sit down and say, how can we get things past. people will work together, and passed bills. i think we saw a little bit of this on the cromnibus bill. i think what we have lost here is that campaigns never stop. it is always about winning the next election the day after the previous election. that is why nothing is getting done. it has almost become more important to win points for the next election that actually govern. host: our next call is from iowa. good morning, david. caller: i would like to ask the democratic strategist __ what
was the unemployment rate for african americans when obama took office? what is it now? what has the democratic party done to help since then? also, you are telling me that the unemployed people that we have in this country are too damn dumb to do the jobs that are being required. we need an educated foreigners coming into this country to do the jobs that dumb unemployed people are too stupid to do today. i do not understand your theory of thought. guest: i cannot quote the exact unemployment rate. i think it was about 16% and maybe at 9% now.
this goes back to my bigger point __ how things are phrased. if you look at a lot of the work that undocumented immigrants are doing. when it comes to dishwashers in restaurants, migrant farmworkers __ literally these are jobs that people in this country do not want to do. it is not a question of smartness, dominance, anything like that __ it is just too is willing to do the jobs. people are not coming here just to hang out. they're coming to work so that they can send money back to their families. i think the one thing __ we're moving, and have been moving for a while towards a new economy. yes, manufacturing jobs are moving away.
that is just the nature of the economy. yes, workers __ just because you were gathered auto plant, pputting one part of an auto together, does not need your necessary qualified to put computers together. these are things that we can be doing as a country __ pproviding training. ensuring that people are able to move into new types of manufacturing jobs. that is how we move forward as a country. it is a zero sum game as to who is winning and who is losing. host: can mitch mcconnell put aside his differences to work together with president obama? guest: i certainly think so. he said he has a good relationship with vice president biden and others.
there is a real opportunity there. i think he is willing to do the work. one other note about the passing of mayor cuomo __ he bypassed both elections, whitey think he didn't decide to run for president? guest: i'm not sure why anyone would want to run for president. it is awful. this is almost like the modern catch_22. if you are smart enough to not run for president, you are smart enough to be president. do __ i think he considered if you wanted to do this, and the answer was no. host: think you both very much for being with us. happy new year.
radio talkshow host roben farzad will be with us to talk about the year ahead. but first, a portion of our "newsmakers" __ with ken buck. [video clip] >> mitch mcconnell said the u. s. would not default on its debt. one of the issues he will face in february and march is raising the debt limit. under what circumstances would you vote to raise the debt limit? >> i think we have to make substantial progress on balancing the budget. if we do that, i will take a serious look at voting to increase the debt limit. i am not at all __ i do not
believe that the consequences of failing to raise the debt limit are what the president and others in the united states congress has said. i think we have a lot of room to cut our spending. if we do that, we will in fact avoid the catastrophic consequences that others talk about. >> do support the so_called baynard rule __ dollar per dollar cuts? >> i think that is a minimum threshold that we have to meet. and real cuts, nnot cuts that happened 10 years from now were 50 years from now when another congress will inevitably change those cuts. i think we have to have cuts that happened now. unfortunately, they will hurt. but, the pain is caused by a history of irresponsible spending in the united states, and by the united states government.
>> if not, could we face the possibility of a default? >> i hope that we don't. i hope the congress and the president act responsibly, aand balance our budget, or at least moved toward the direction. >> "washington journal" continues. host: roben farzad is a talkshow host. where can people hear you on the radio? guest: on some cloud, on twitter radio, and wrir. host: we want to talk about gas prices __ now down. the stock market continues to reach more highs. what can we expect in 2015?
guest: who would've thought when we are so low in 2008 2009, people said oil will never fall below $100 per barrel. people thought the united states would never look comparatively well vis_à_vis other markets. here we are, the most desired stock market. host: what does this mean long_term? especially as far as gas prices, many expected to stay low. guest: no one really expected this gusher of shell oil to come out of the midwest. north dakota is bigger than the smallest member of opec __ ecuador. who would have thought. host: what does this mean for
the keystone debate? guest: if you're flooding the plane with all these cheap fuels __ you do not need this artery heading up to canada. if we have it here in the united states, it will open up an argument thaat we have so much natural gas as a byproduct of drilling for oil __ that we should build an infrastructure to export. it is about further weakening opec, and make yourself indispensable. host: how do you gauge consumer confidence? guest: consumer confidence numbers are substantially higher. it is like an immediate tax
rebate when you go to the pump. that gives you as much as $25 they can spend each week __ back into retail, entertainment. the idea is that will be course back to people being employed feeling more comfortable in their jobs. the employment number is of utmost importance. host: the other number the dow. an indirect impact for those who have 401(k)s or pension plans that are tied to the market. guest: that is right. no shortage of people opened up
their statements for the first time in years to start the year. it's funny, you have to think, what is my login? we saw many people liquidate their accounts, had held on, now we see the market at a record again. host: where does that put the economy? guest: you would think it would strangle the economy more. traditionally, if that is so crippling, it would crowd out other forms of investment. what is really change the time __ the federal reserve flooding the plane with 0% interest rates in 2008, and monetary policy.
everybody is benefited. companies have been able to borrow for pennies on the dollar. this idea that americans could refinance their mortgage if they were eligible. host: the final news conference of 2014, giving some indication on where interest rates could be heading __ [video clip] >> employment is rising at healthy rates. the u. s. economy is strengthening. of course, inflation has been running below our goal of 2%. we project that gap to close gradually over time. as progress in achieving
maximum employment continues, at some point it will become appropriate to begin increasing policy accommodations. host: policy accommodations likely going up by the end of the year. guest: i love that fed speech __ you move markets so much. i do not envy her task. you have the economy that has been encrypted to 0% interest rates. take money from people close to nothing. the question is __ what is our memory to bond hits. to certain extent, we had a bit of it in 2007.
many people do not remember 1994 when alan greenspan had to slam the brakes. we've never seen this magnitude of monetary stimulus. imagine taking away $4 trillion in terms of interest rates. it is not an easy thing to do. host: the possibility of a market correction. guest: we have not had a market correction in a long time. certainly, many people are trying to repress the memory of 2008 and 2009. in two dozen 14, then it it did not even hit the 10% threshold.
i think it speaks to how short_term our memories are. into the stock market recovery, many people were traumatized by 2008 and 2009. now, it seems like many people do not remember that markets can correct. the question is does the bubble burst when they just rates go up. the question is __ is another black swan moment out there. nobody last year predicted oil prices getting cut in half to. we do not know.
there are known unknowns, unknown unknowns __ host: i think we understand your point. a tweet from one of our viewers __ but we know in a period of stagnation? guest: there's no evidence of inflation. you have seen it in certain years as far as food prices. spiral inflation, what we saw in the early 70's, it has not been there. something a broken record __ people do not have wage power vis_à_vis their employers. there's so much slack in the labor force.
we cannot compete with wages across the ocean. american makes the best profits __ tthat is why the other countries by our cars. that is why they seek out our products. we make it with the best material. we make it the right way. i cannot tell you how many times i bought something from china or another country that is made out of an incredibly bad material that falls apart within years.
yellen is manufactures wares chiefly in china. wall street enabled it through massive debt deals to bring off-shore cash home in a synthetic way. what apple did was plow that into stock buybacks. could you possibly structure the tax code to see say we will give a tax holiday in the united states if you promise to reinvest that money in human capital. i just don't see that happening. >> this is from another james, james ard in a twitter question the baby boomers will start demanding the government give them higher interest rates on their savings. who knows where that will lead? guest: you should be able to walk out of a bank indignant right now. are you kidding me in? these guys put up a poster saying there is a jumbo super safer cd for .2%?
>> less than rate of inflation. if people take pitch forks and be ticked off about interest rates, there is lots of time to do that. there is this overwhelming desire tofor return of capital on return of capital until you see where people feel like they can safely and prudently earn a higher rate elsewhere, there will be this push for the u.s. government to push up interest rates. moreover, what looks bad is the readout of safety the world over. when there is instability in japan, europe international invest orders park trillions in u.s. bonds. >> brings daughterown our yields. host: we welcome viewers and listeners on the parliament channel. matthew is joining us from the u.k. good morning. caller: good morning to you sir. back on the charges for 2015
here in the u.k. the point i would like to put forward is i think that, you know, a lot of people especially in what i call the pa.p petro dollar countries, they have seen year on year, the rich getting significantly richer. i know the word you hate in america is "austerity." but they are under austerity measures as well as the u.k. and much of europe. we don't seem to see any policies, not just in the u.s. but, also, in our own countries where we would see a balancing act or at least a rebalancing between the rich and the poor. for example, there are massive increases in the u.k. of banks and people having to go hand --
hat in hand to charities and other organizations. >> that's hamming in the united states. i know that, you know the media on both sides of the atlantic we see movies like downtown abbey and you showing the white picket fence and the successful american family and doing good. at a time is for millions for tennessee of millions of people in the western world. i would say hundreds of millions of people. the money is not there. people's debt is increasing. and i am just wondering whether or not it's about time that we actually see policies from leadership in the western hemisphere to actually deal with what seems to be this crushing debt that people are facing because, you know, it's not, you know if the rich just keep on getting richer, something is going to break. and, you know, there is already talk in europe about people simply refusing to go to work
national days where people just refuse to pay for transportation and things of that to really put the squeeze on government and international institutions. i am just wondering what the american "viewpoint" on that would be, please. host: matthew from berry, eke land, thank you for the call. go ahead. guest: there is no monoli. hic viewpoint in the united states over the last six years. it has been the federal reserve, record monetary stimulus and the expansion of the balance sheets. there is lots of evidence that is disproportionately helped people who own financial assets. >> if you were able to afford to ride out the stockmarket, the junk bond market able to buy property the fees would swell vis-a-vis labor costs which have not gone up significantly. >> that's just the nature of the beast. the federal reserve has certain blunt instruments and floods the
map with capitalists, force people out of the safety of safe assets and cash. and that on the margin does not help the employment outlook as much as they thought. you see janet yellen talking about the measure and if it were to hit 6% or 5% or closer to a natural rate, i think a lot of people would argue it's significantly worse than that. you have a record number of veteran employees who have dropped out of the labor force. they are not exactly saying but i lost my job but the dow broke 18,000 so my 401(k) will be okay. i am not getting income but capital appreciation. you are not seeing that. you are seeing more evidence of income inequality and the have did having more and the have-nots having less than we have seen in thesince the 1920s. there has not been a populist backlash with this. there is still this sense of
learned helplessness across the country. people who have jobs want to hang on to the jobs. host: the issue of under employed, left the marketplace, but let me share this one tweet from a viewer who sends this comment a lot and it's recommend vant to what we are talking about today with $18 trillion in fed debt. servicing that debt paying interest rate at below 1% interest eating up 6% of the budget he says. guest: 6% of the budget but imagine if rates were higher, the prevailing interest rate of the 1980s or 70s. there is no way we could afford that debt load. we are subsidized by foreign invest orders, chinese, european institutions that don't trust their institutions. if rates are lower here, the fact that the european central bank has effectively neutralized all of these rich countries that brought rates closer to zero forces more people in the united states treasuries and that is a
connundrum for us. a lot of people think it's a great problem to have if you are going to be, you know the easiest borrower on the block, you might as well borrow up to the hilt and build a high-speed train, have a second tennessee valley authority. i think the window for significant fiscal stimulus has since past. there isn't much unani. y between the congress and the final obama two years in. so again, i just don't see the ground groundswell saying guys, figure it out. we had a debt ceiling crisis and a debt debacle that forced interest rates lower. when people freak out, when they panic, suddenly, the united states is unique. or borrowing costs start to fall host: he has written for the boston times "wall street journal," bloomberg businessweek and now heard on
fulldisclosureradioed.com as we look ahead at a time economy. pauline from knoxville, republican line. good morning. caller: good morning, c-span. happy new year. i called in because of the economy situation but mostly because of scal partners and i was reading in national geographic january 2014 issue on this program and it focuses on dubai. i would like to read something because i am nervous about talking on the phone with you but it's better opportunity is as hold as human history. today, it's likely more people are living outside their countries of birth than ever before. at every hour of every day, matses of people and money are in motion. a global flux is shipping and nations with fewer resources off
loading their working poor and relying on the money that comes back in their place remittance is what economists call these family transfers. by electronic banking services or hand delivered by cure years. host: do you want to respond? guest: that's an important part of the economy right now. it seems like people countries who do have goodress "united states you see service industries especially like you look at the cruise ship industry, the nursing industry in the united states." i think this is understated. how much is dependent on filipino expat tree yacht labor and people who come here from man ill a sebu and send dollars back to the philippines workers who end up in dubai, you know, there is al flip side to that though, and that countries that are seeing a brain drain.
those in venzuela and argentina who are really worried about their money being ex propoperated by the government or moving it to miami and storing it in real estate. you see people in russia worried about the situation. there has been a huge brain drain out of iran. when you have intelligent people who used to be able to earn a living wage seeing 30 or 40% inflation, they are doctors in the daytime and have to moonlight as taxicab drivers, there is this push to get out, i think, into a marketplace where there is their skill set is valued more. >> that's an argument that you are seeing a lot of tech companies, the back tos of the world, goolingz of the world seeing we need better immigration policy that allows motivated, high-tech workers to come in from india pakistan russia on special visas. a lot of that has been gummed up by national security concerns. good luck on capitol hill . host: hot speaking of tourism
as we try to normalize things with cuba, what impact would that have on the cruise lines if they look at cuba as an easy jumping-off .90 miles off of the coast of south florida for tourism? guest: uest: there is a great book about how the mafia won and lost cuba. pretty much cuba in the 1950s was just this playground of this hemisphere casinos, drinking gambling, all manner of hedonism. that's kind of bet shut off since castro came to power. all of these multi-nationals have been raring to go back. governors and senators in the midwest saying we need to get our grain to cuba. cuba needs our rice desperately. there is a lot of fruit. virg exports apples for cuba. there is this demand out there for it. tourism is going to be a huge jump-fall up for grabs if you can imagine. going to miami, fort lauder daily, there are shingles
airlines are hanging for havana that looks surreal. there isn't that infrastructure there. you are going to see hotel companies, marriott the hiltons, the, you know, the middle eastern and international leisure companies jump on that opportunity. there are hotels that have not been significantly retrofitted on the waterfront in heavy anna now for 60 years. so that's an enormous opportunity. i think in a broader sense, it could suggest this enticement that any part. administration of the united states can dangle until front of a rogue nation. if you play ball if you come back to the league of nations these are some of the fruits that, you know we can unleash on your economy. host: some speculating whether iran may be next. carolyn in san antonio, texas. good morning. caller: good morning, and happy new year to you gentlemen. i have one comment: usually, about two weeks before the end the year, my husband and i go through our finances. and we came to the unusual
conclusion that a little over 50% of our fixed income is being spent on taxes. >> that's a lot. i was wondering if your guest could comment on the tax rates, both corporate and individual and i will hang up to listen for the answer. thank you. host: could i add to that also, the debate over tax reform this year but first to carol's point. guest: you could argue it's the fact that rates are down and companies and governments can borrow for so little that you are getting a little in the way of income. there is there isn't much evidence i think these tax rates are accelerated over, you know rolling 10, 20, 30 year history. there is a lot of evidence rates have not been held this low for this long for a long time. and people get sticker shock when they open up their statements and say is that all we are getting when in the back of your mind, you are used to a 4 or 5%. yield. before the crisis, i think the fed funds rate the main interest rate was at 4 and a
quarter %. it's been at year zero since december of 2008. >> affects everything. there are companies out there that can borrow for 30 years and pay you 21/2 %. i saw a sign for a chase bank cd, you know 10 years will give you 2%. you don't know what's going to happen over 10 years. so, i think that this actually this illustrates how the situation is in fixed-income land. if the short-term rates are liked, are people ready for the possibility they can lose money in bonds. forget the fact that you are not making much on it. have you ever seen the par value of this debt fall into the low 90s or something like that? a lot of people out there don't remember a time when they lost money in bonds. there has been a 30-plus year bull market in bonds since paul voelker was ratcheting up interest rates in the early '80s. there has been this great moderation of interest rates. there was a shock back in 1994, a brief hiccup in 2013 with the
taper tantrum in ben bernadette's final days. but we have not generationally felt a true bond market blow-upbernaki's final days. but we have not generationally felt a true bond market blow-up. >> one of the issues we expect to hear from the president in his state of union address slated for january 20th, live coverage on the c-span networks. tax reform and streamlining the u.s. tax code. is that an area you think both parties can come together? guest: i am not opt mistic. i don't know whether there is leverage. i don't know whether the white house has leverage with congress. congress feels en boldened. could you reduced the earned income tax related, lower the capital gains rate? could we offer again, preferred taxation on dividends? what is the white house going to get in return? we have seen everything in this economic calamity cash for
clunkers, various tax rebates. we have done everything but kind of print out gift cards to appleby's to people. it has to be something creative to move the economic needle in this country. host: steve on the phone, republican line good morning. caller: yes. the first $100 billion stimulus project, of that 100 billion, 90 billion went to contributors of barack obama or actually lost 10 billion. we don't know where it went to. and what is in effect we have destroyed the value of the united states dollar by about 60%. i mean we can't really note inflation because it's just an assertion of the dollar and intrinsically affects the poor people. the rich people of course with making out like bandits. the government is doing, if you follow their dog whistle slogan is: do what is in the government's best interest.
guest: you know the weak dollar is an argument of the obama administration fiscal policies. but that's something that the bush 43 administration as well. if anything, the dollar had a huge year last year against international currency. gold had a bad year. come commodityies at as stored value they had bad years. they are in bear markets. so king dollar is far from dead yet. it is still looked at as the foremost currency reserve and redoubt of safety. this illustrates there is so much beyond the power of obama and his pen in the white house in fiscal policy. you have janet yellen the european central bank, which is moving orders of magnitudes huge trillions of dollars of euros of currency flows coming here. we have china. we have weak e merging market economies like russia and brazil. the united states treasury and
the dollar remains an indispensable conduit of currency. >> is linked to what we feel here at home. host: you mentioned markets, indonesia, philippines, the president travel to go india. are you follow that closely? guest: yes. this is a great, you know emerging story. pardon the expression but, you know emerging markets had a pretty bad year last year when you consider them writ large, russia and brazil china's economy is decelerating. certainly, venzuela is on the hook. argentina is in trouble. greece has issues. but there are these secondary and tertiary things called frontier economies such as the philippines, such as indonesia, which are really kind of coming in to their own. in many cases, they were fiscal and monetary basket cases a decade ago. now, they have demography on their side. they have the united states low interest rate policy on their side. when you are keep rates this low
for so long, every country seems to get the benefit of the doubt and capital poors to places like indonesia. you have heard of the brick construction, bralz i will, russia, india china as being the pillars of emerging market powers. there is a lot of argument now that it should be diic brazil indonesia, china. indonesia taking russia's place. russia is getting no shortage of criticism with policies in the ukraine and crimea. the cloud is falling as oil prices fall. there is going to be inevitably a shake-out. nobody dare put these four countries together when goldman sach's coined it in 2001, 2002. 2010 may call for a different organization of countries. i said it a thousand times who would have thought colombia would have been the economic envy of south america. things change r578d host: we will talk about india in the coming days.
a few more minutes with our guest, robert farzad with bloomberg businessweek. doug from talorsville, kentucky. thank you for waiting. caller: good morning. happy new year to you guys. my question, mr. farzad now that we have the republicans in control and they slipped in on the new budget the, they stripped out the derivatives part and everything and mitch mcconnell even commented that when they do get on the first of the year that they are going to strip dodd-frank completely and everything. does people not remember back in 1998 when they did away with what they did that just gave the banks a freehand? and i am looking for an explosion again of our economy
if they get a republican president that goes right along with them and explode our economy again which is going good. and these policies that the president and our country has come back from falling off a cliff bointo agression and here we are today. would you please comment on that issue with the dodd-frank? host: thank you. guest: i find the pendulum swings between over regulation and under regulation in this country. and excesses then lead to a recursion of over regulation. there is a perception out there now with tarp and the bail-outs nominally repaid. general motor having paid, i think, all of its debt back to the government that corporate america is no longer morally beholden to washington anymore. it's not like obama's first 100 days where he could wag his
finger correctly at the ceo did of wall street and say you messed this up. it's time for you to be con try to. wall street got its groove back. people don't need to feel -- the sources i have on the street feel like they won, they have healed themselves. they are out there. they are too systematically important to be cow. owes and ex coriated like that anymore. there is going to be a push to bring, you know, to water down some of the regulations that you saw in the immediate wake of the financial crisis. and again none of these blow ups ever substantially resemble the previous blow-up. what did the united states learn from the savings and loan crisis that could have been applied directly, you know, in lockstep to the great financial crisis of 2008? i am not sure that there was that much. we are always kind of looking back at the last crisis. then there is something else for a momenting out of left field completely that will blindside us no one said the next blow-up
was going to come out of the united states. we were looking at china, vietnam. i mean could you imagine that all of this stuff was tied to kind of come placency with the real estate market in the united states? we always thought real estate would be real estate. there was so much more attached to real estate. the question is: does it become russia that has another blow-up like it did in 1998, when oil prices crumbled? is venzuela capable of bringing the entire system down? if there is indeed oceans of hydro car bons under the united states, is it something that could destabilize certain emerging markets, that major french or swift banks have loaned to? we do not know where those bodies are buried. host: peter in valley cottage new york, republican life. caller: good morning, steve. haven't spoken to you in a while. host: good to hear from you. caller: this is the thing that concerns me.
i never hear anybody talking about the agenda behind the oil situation. saudi arabia and the 130 pay check country-- opec current trees. here in the united states, we are obsessed with this free market situation with oil. but as far as our competitors are concerned, they do what's in the best interest of their country and themselves even though the saudis are pumping more oil because they don't want to lose market share. i think their main intention is to knock out the independent oil drillers with shale oil but, also, i believe there is an agenda here in the united states. our politicians want to raise gasoline taxes and also they want to eliminate the ban on exporting crude oil in this country. so, the low oil prices, i believe there is some co lucien. there is no evidence to prove that. i am merely speculating on this. i believe they want to eliminate the limits on oil the xl
pipeline will help to eliminate the glut in north dakota and colorado and will eventually raise the oil prices up. i believe the politicians are using this as their agenda to raise taxes and gasoline because these oil prices not going to last that long. i believe there is an agenda involved. i wish you would address that. host: thank you for the call. we will look at where crude is and has been going over the last several months. it's been on a downward spiral now well below $55 a barely. guest: it's amazing. i think it speaks to the strength of the supply side in this case. saudi arabia's motivation is not just to recap the players in the united states oil cap but it wants to weaken iran. if you look at the dialogue within opec and energy ministers pleading with each other for austerity and saudi arabia a looking back saying we are
comfortable where the price is now, comfortable with market share and everything getting cut and a half in the meantime. it's pretty amazing. there are current trees. i mean the thing is it cost saudi arabia maybe a couple of dollars a barrel to actually extract this oil from the earth. it costs these other economies, i think, a break-even price to their budget along the order of $8,090,100,100 plus a barrel of oil and they can't balance their books unless oil prices are that high sustainabley. this is a problem the world over when you are convinced and you have your advisors out there telling you that we are not going to see the end of triple digit oil against and that was plausible if you think back to 2008 when oil hit $140 a barrel and there were all of these cries of drill drill, drill in the united states. oil is suddenly $55 a barrel and is that a flash in the pan, or is this telegraphing that oil prices can fall even further? there