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tv   U.S. Senate  CSPAN  August 9, 2011 5:00pm-8:00pm EDT

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too much wavering from black immigrant communities on president obama in this upcoming election. >> i only have -- i only have an anecdotal survey. and judging by the taxi drivers and the other people i see on the street and many are educated immigrant africans who recognize me from television, they are like foursquare 100% behind barack obama so we'll see what that extrapolates out. >> it's very scientific. [laughter] >> one of my friends wrote whistling past dixie and how the democratic party could basically win without the south so i'm obsessed with writing a book called whistling through dixie because if you look at the trends where african-americans are moving to, migrating to south carolina, places like texas and places like georgia
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and i was wondering in any of your studies and what you've been reading on not in this cycle but maybe in the future but places not just with the african-american vote in the states. >> the new immigrant destinations are the places where the proportions the of the
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latinos in that place, much higher undocumented proportions than you have in a state with long standing latino communities like los angeles or something like that; right? >> well, we are seeing this growth of population. i mean, looking at north carolina in particular which, you know, now has 140,000 more african-americans in the state today than it had before the 2008 election. if you talk to people who do president obama's politics, they say, look at north carolina, virginia, the numbers are better for us in terms of african-americans this time than last time. add a state like georgia, you know, which is not -- president obama lost georgia by 5% without spending really very much money in georgia last time. if the numbers have changed enough, there also are -- we can't take out the coalition moderate whites. specifically white women in a lot of these places, a lot have
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moved to charlotte, north carolina to work in the baking industry which is growing again, and georgia, atlanta which has a huge economic output. it's tougher. it doesn't mean it's going to turn this time. texas really when you look at the latino vote, we look at arizona without john mccain on the electorat and you have more in arizona. there are states out there, a little further out there, but take some work which makes republicans have to spend money if they want to compete for them to hold on to them. >> one thing i want to add is, you know, a lot of these things that we're talking about in kim and jamal have touched on this, these are changes that aren't going to happen in one year or two years, and i think a lot of people whether they are wildly enthusiastic for president obama and thought he was going to change the world in 100 days, a lot of people need to remember a
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lot of changes he talked about that need to happen in this country, that need to happen through dixie in order to turn georgia purple and keep north carolina and virginia blue, it's going to take more than a few election cycles, and i think far too many people have a short term horizon when they care about issues that require a longer term horizon. >> uh-huh. that's a great point, and a great point to end the conversation before we take questions. pleads join me in thanking our panelists for a great discussion. [applause] okay. you know the drill. wait for the microphone and stand, state your name and your organization, and in the back, a woman in, i think that's white. >> i'm representing myself today. the issue which i think you closed out with, the question of you hear a lot of friction
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between, you know, we're so disappointed, hasn't achieved this or that, we had all these high hopes. you hear that, and he hasn't stood up strong enough versus all the things that someone said he's been smacked up on the head since day one, and these are like the two separate issues. please comment about that. you know, in other words, he's not running the country by himself some people say, and they forget the al gaiter -- allogators that he's up to his ears with. some people in the community feel strongly about that, are critical, and say give him a break. >> i started it. i'll try to be brief. i think the big problem that the president has is what every candidate has, and that is the difference between campaigning and all the things you say on a campaign, all the things you promise on a campaign, and then if you're successful and you win, then you actually get in
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the door and you get to look in the inbox and see all the information you didn't have as a candidate, and suddenly campaign promises smack right up against governing, and you suddenly realize that what i said as a candidate by myself and, you know, my team telling me, coming up with these policy ideas, suddenly you realize, okay, if i'm going to do this, then i have too deal with that person, that group, these thing, and suddenly, it's not the campaign anymore. you are governing. whatever you promised at 100%, maybe you can get 70%. sorry about that. maybe you can get 70% of it, and people get angry about that, and it's understandable, but i do think there's far too many people, and i'm focusing this on supporters of the president who are disillusioned who don't really appreciate that fact, the fact that he's gone in and he's discovered that things are a whole lot more worse than anyone
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could probably imagine and not, you know, cutting him just a little of slack because he's taken three weeks, three years longer than you thought he would to, you know, address an issue or take position on questions, and last point i'll make is that i think far too many people focus too much time on the marquee issues, and the marquee concerns, and not taking the time to look at, okay, what is -- what's he really doing? he, meaning his administration. what are they doing? if you go and do a deep dive on a -- in a lot of areas, you'll find some things that you had no idea that the administration was doing, but, you know, help a lot of people. jamal hit on one of them. the money that the president sent to historically black colleges. i mean, i can't remember the last time i saw a story about it. maybe the day it was announced, but ask someone do you know what
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the administration has done at historically black colleges, and see what kind of answer you get. >> okay -- go ahead. >> just after that, jonathan's position, but -- closed mouths don't get fed and squeaky wheels get oiled. people who want policy positions have to push for the policy positions they want, and yet understand when it comes time to elect somebody, you have a choice between two scrijs and which one -- individuals and which individual helps you achieve your goal the most, but cut him a little slack, but not too much. >> it will be easy when he has an opponent that's named. >> yeah, for him, i don't know if it's easy to make decisions, but i do think the pressure on him has got to stay on to make sure they know people care about the issues that he promised them. >> right. one here in the green.
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>> hi, i'm george walker, and i'm going to be for george today. [laughter] my question was more to something you said, jamal, about what he can't say, and i think you all immediately nodded your head and when it comes to race, he's not going to be able to touch this. i feel like what can he touch? what can he say? how do you respond to that? obviously surrogate can say things. i have my opinion about what he should say, but i'd be curious about what he can say. >> i think -- i think he can always talk aspirationally. everybody in america -- nobody in america begrudges anybody else in america for wanting to get more out of america, for wanting to have, you know, have a home, have a job, put your kids in a better school. we don't talk about race to the top and the billions of dollars put into education. those things are things that, i think, he can always talk
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about. it's a little tougher, you know, as other people said, we didn't elect a civil rights leader to be president, but a politician. his job is to push for what he can get done, but i think when it comes it to issues of race, you can talk aspirationally without -- without getting yourself in too much trouble. >> gentleman in the back there. >> good afternoon, i'm edgar cookman, a recent graduate from the university of alabama. i have to say i'm concerned about the efforts in the state to suppress the vote. i say that because i was part of the key generation vote. i was in undergrad during the 2008 vote and was inspired by then candidate president obama and saw mr. simmons on cnn. i was watching it full time.
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my question is how does someone like myself -- i came to washington because i was inspired in public service, that i wanted to serve for non-profits similar to american progress and work for the federal government. we are now seeing a contraction in our society now with the federal government cutting back on spending and things like that. how do we as young people, our generation get our voice heard because, like i said, the vote is now being suppressed and the voter id laws will affect our portion of the electorat disproportionally. how do we get the vote back and have our voice heard in 2012? the red carpet that swept in 2010, they are trying to take us out. how do we take that back, and what's your reaction to that? >> that's a great question. anyone? [laughter] >> i'm trying to think. i don't know, that's a pretty -- that's a tough question.
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i'm a -- i don't know. >> most of my career as a political operative, and i think about these things how you motivate people, and ultimately, we as voters have also got to be adults about this, and there are things we would like to have, but we're not going to get everything we'd like to have. for people who care not just about fad and fashion and it's cool to be obama and you can wear the t-shirt, you have to then say, okay, things are tough. electioning is hard, and people have to show, back up, and participate and continue to push. it's hard for people who, frankly, you know, i grew up in detroit. i go back home. so many people are out of work, fields of houses leveled because of foreclosure, lost 25% of the population in the last ten years. it's hard to have that
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conversation when there's so much economic devastation in so many communities. the african-american american is 16% unemployment rate. state unemployment rate. what's the alternative? it's that we don't do anything, and i'm an optimist. you always have to get up to the morning and do something. >> i would add, i know i wasn't going to say anything, but i'm going to say something. >> okay. >> you know, voting is, i mean, it's the franchise people fought and died for the right to vote, you being a young person. you know, young people by and large, they don't vote, and the idea that so many of you came out in 2008 to help put this man in office was up spiring. come 2010 like everybody else, folks didn't show up again. voting is -- it's an activity. you have to keep going back to
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the polls even when the marquee person isn't on the ballot. if there are people within the party that you care about or people on the ballot that you care about, you and your friends and your generation have to show up. that's the way you get your voice heard. that's the way you stay involved, and while it might seem like nobody's paying attention because probably they're not, they are, and if you want to ensure that, you know, the history that you made in 2008 continues, then that enthusiasm you had then, you better carry it over to 2012, or the disappointment that you think you feel now, you're really going to feel. [laughter] >> okay. we have time for one more question. all right. this gentleman right here. >> bill, retired army physician. i gist wanted to say in passing that being white, i claim
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sometimes that obama is io riesh-american -- irish-american. you have the right to claim him as african-american, other than the lingering racism, it's not an issue. i have been sensitive of people not voting. i'm from a generation that votes 100%. i haven't missed one vote, and i'm concerned with the comments here. is there any traction to be gotten from politicians shaming voters to say if you think you're an american, you're not a good american if you don't get out and vote. who do you vote for, and if you don't, you don't have a right to claim you're an american. i feel strongly about that subject, but also just my age and my generation feels strongly about it, and it makes me disgusted people don't vote because they are too lazy. finally, the question to reenforce something said, along
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those line, people have obstructions put in front of their voting, have the ability to overcome the obstructions. don't wait until some politicians entices you to. it's your responsibility. is there any traction or if i'm just an old idealist. [laughter] >> let me say that i think your comments certainly ring true. they are -- there is a story about what the voter dots or doesn't do, and in your words, you know, get your lazy butt off the couch. yes, there's that, but at the same time there's structural issues to take into account. i mean, as the congresswoman mentioned, i mean, same-day voter registration, why does voting day have to be one day rather than a couple weeks, mail-in voting, interpret voting, why is that off the table; right? voter fraud, for example, but i can do banking transactions on
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the internet, so it's okay to transfer my money, but we're not talking about voting on the internet? i think it's not just about -- certainly, voter motivation is one aspect of it, but i think it's worth looking at a broader array of issues that are preventing or sort of discouraging people from participation. >> i think, oh, sorry, go ahead. >> no, go, go. >> there's an structural issue about younger people voting to acknowledge which even at the height of the vietnam war when 19 year olds were carted to southeast asia, still, the voting age -- i mean, the voting percentage still was low. if you look at -- there's real issues here. most people vote when they start to have children. most people vote when they start to own property, and so you start to have an investment in the society. you dare about schools, your taxes go up, you have a home that you care about,
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neighborhood that you want to have certain things happen, and when you are younger, you are just starting out, focused on, you know, immediate concerns, you are still eating ramen noodles. you know, if you look, most people the closer to 30, the more likely they are to vote, and after 30, they will keep voting. >> i would just say you should go surrogate speak for someone because the message that you -- the message that you deliver delivered is probably too blunt for president obama to say or principle candidates to say, but for surrogates to say, it's your patriotic duty to vote. it's a very important one of the you know, i was an adviser to mike bloomberg on his first campaign for mayor. 9/11 happened during that campaign, and we, i think, we took a week off, all the campaigns took a week off from
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electioneering, but when people called during that time, you know, mike told us, and we felt it, told people that no matter what you vote for on the revised primary day, it is your -- you must go out and vote. vote for us, the other guy, we don't care. just show up at the polls to vote, and i think that's the message going forward. i'm serious when i say you should go and be a surrogate because it's such a strong message in the way you delivered it, i think, many more people need to hear it. >> i agree, and that is a great note to end the panel on. thank you, audience, for sphiking with our -- sticking with our panel. thank you very much. it's been a great presentation. visit our website americanprogress.org and see the projects we are doing. thank you, all, have a good
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afternoon. [applause] blpg >> with the u.s. senate adjourned for the august recess, watchbooktv all this month.
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>> now a round table on standard and poors downgrading and the state of nation's economy. from today's "washington journal," this is about 90 minutes. >> host: we're back with christian weller, senior fellow and diana furchtgott-roth, director at the hudson institute. welcome, both. >> guest: thank you for having
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us. >> host: beginning with a question that a lot of people are wondering, and two economists here to help us with it. panic is the headline. mr. weller, is this a double-dip recession? >> guest: i don't think so. there's enough good stuff in the economy with investment and the housing market. that's just the good news. the bad news is what we have in the economy is not enough momentum to carry us forward to much lower unemployment. what that means is we need in order to get to fuller unemployment and stronger growth, we need policymakers, the president, congress, state lawmakers to start paying attention to jobs and growthment i think while we can avoid a double-dip recession, i think the biggest threat to us is that we're going to keep lumbering along at low growth and high unemployment for years. >> host: do we need it in the coming days to have the markets react in a way that -- in a
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positive way, or is it something to wait until congress is back in town? >> guest: i don't think the policy should be drip by what wall street thinks one day to the next. we have to pay attention to jobs sooner rather than later, and that has been sort of missing much of the energy has been out of the air because of the debt ceiling debate, and the debt ceiling debate was never connected back to economic growth and jobs, and that's what a lot of economists and policy analysts are looking for, a conversation about how this all fits together to jobs and growth, not just about spending or taxes in an abstract form, but how it relates to the sort of reel economy, how to create jobs, and that needs to happen sooner rather than later, but it's necessary necessitated by the reality on the ground. high unemployment, slow job growth, not what wall street thinks. >> host: turning to you diana furchtgott-roth, double-dip recession?
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>> guest: i can forecast the past, the future i have trouble with. we have serious economic problems and that's because the dow falling. it's not the rating downgrade. a week ago friday there was slow gdp numbers, completely unexpected. that was a downgrade from a growth rate of 1.8% in four tenths of a percent in that same quarter. that caught people by surprise, and the second quarter growth was lower than people throughout around 1.8%, and people thought it was going to be higher e so we have serious problems as christian said with the economy, with jobs, with gdp growth. these need to be fixed right now, and i think is president is capable of doing a lot himself, fixing them without waiting for congress to come back to the town. >> host: what could he do in the immediate? >> guest: there's many regulations set by the cabinet agencies. he has control over those.
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he could call the epa minister and say lay off the new ozone rules putting 57% of the counties out of atapement meaning they have to cut back on e emissions, factories, and industry. he could call his secretary of the interior and say move more drilling permits through in the gulf of mexico. he could call his acting general counsel of the national labor relations board and say, hey, lay off boeing for building a new plant in south carolina. we need plants in the united states as opposed to ge that has moved its spray facilities out to china, and a lot of people have criticism. >> host: here's what the president put forward yesterday, a plan for recovery. he put entitlement reform on the table when the supercommittee is named and starts doing their work under the recent debt deal. he's also calling for a payroll tax cut, tax reform as part of the joint committee, and
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unemployment insurance. take payroll tax cut and unemployment insurance. christian, beginning with you. what is the impact of that? how does it help our hurt? >> guest: well, what people have to understand is we already have under the tax deal struck last year between the republican congress and president obama, we have an extension of unemployment benefits, and we have a payroll tax holiday. those two are expiring at the end of the year. the fear is that if they expire with nothing to follow on, there's a severe cut of income to low-income family at this point when they get the money, spend it immediately and boost consumption. they thought within one year the economy would be strong enough and create jobs and there'd be a catch up to that that we would not need the extra boost. at this point ring we know that the economy is weaker than
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expected for 2011, that the labor market is weaker than expected, and these additional measures are necessary especially since long-term unemployment is at a historic high. when people lose jobs, they are on average out 40 weeks before finding a new job, and that really requires some measure of support that they don't have, people exhaust their own savings, so extending unemployment benefits will boost incomes for low-income families. >> host: diana, your take on those two things? >> guest: unemployment benefits are the longer they've ever been, 99 weeks. that's why we have an unemployment rate now. move back to the traditional 26 weeks. many people say that people wait until the last moment until they find -- to find a job until their benefits are about to ceo pyre, but that's not the right place to focus. what we need to focus in on is how can we get employers to
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create more jobs. we need more jobs for people out of work, and there are many things we can do about this right now. all the regulatory burden we have now that's presenting small businesses from creating jobs, the new $2,000 co-worker penalty under the new health care law that begins in 2014. if there's more than 50 workers in a firm, and the firm doesn't have the right kind of health insurance, they have to pay $2,000 per worker per year. there's a lot of uncertainty how they effect costs, and we need to fix those. >> host: so -- but what about the payroll tax? is that a good idea to help employers? >> guest: i don't think we've had the cuts in the payroll tax. it hasn't been helping employers. it hasn't been giving employers insentive to hire workers. that should be ended. >> host: okay. it sounded like, diana, s&p made
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the right call. is that true? is that the right call to downgrade the united states? >> guest: i think the united states has substantial fiscal problems. i would not say s&p made the right call in that we are going to continue to pay the interest on our debt. there's no danger of us defaulting. moody made another call. i don't think the problems in the market are due to the s&p downgrade, but the fundamental economic problems. if the s&p today said, okay, we made a mistake, giving you back your aaa rating, i don't think markets would go up. the problems were caused by the gdp downgrade and the poor employment report last friday. >> host: okay, s&p make the right call? >> guest: it didn't do favors with this decision. there is nothing new here. the economy is weak. we have fiscal problems. we have to focus on jobs and growth, and we know the policymakers have to have a plan in motion to reduce the long
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term deficit, the structural deficit, the lack of revenue, the health care inflation costs, sort of the driving factors for the last 10-20 years. that has to be addressed. nothing new in s&p's decision and it's not like they opened a vault and found new information we didn't know we had. the way they made the announcement, they bungled the whole thing and the story has become over blown, and rather than what are the real problems for the u.s. economy. >> host: headlines today, the senate banking committee is going to be looking into s&p's decision gathering information right now about how they came to that decision to downgrade the u.s. rating. steve, a democrat in florida. steve, you're on the air, go ahead. steve? >> caller: hello, i'm there. >> host: all right. we're listening. >> caller: all right. i have two questions. number one, ms.roth, you're
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referring to a lot of cutbacks on federal regulations on business, on corporations. >> guest: yes. >> caller: what if we were to cut the corporate income tax rate down to 14% because much of the larger corporations don't pay more than 14% anyway, and as a counterbalance, repeal the law that enables the corporations to take their operations overseas. i heard that the reason why they do this is to prevent double taxations. you know, if a corporation is not providing jobs for americans, why would that be our problem, and the other thing i wanted to ask is when the market was going down yesterday, i was listening to a show that was saying that a lot of people are taking their money out of stocks and purchasing u.s. treasuries
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because that was the, i guess, at least equals. wouldn't that be a good thing? i'll go offline to listen to your comments. >> host: all right, steve. diana? >> guest: an excellent question. thanks for asking it. the united states corporate tax rate is the highest in the world right now. it was second highest to japan in january, but then japan lowered its tax rate, so we have the highest in the world, and top tax rate of 14% would be a substantial improvement. unfortunately, it's not possible to repeal any laws that prevent u.s. corporations from going abroad. companies can locate wherever they like. as i just mentioned, general electric just moved x-ray headquarters to china. we, right now, have a big impediment with the high corporate tax rates of countries repatriating the funds and bringing them back. when they are back here, they are taxed at 35% on reentry, so corporations lose billions of
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dollars immediately. we should even lower the tax rate further on repatriation of funds. that would give us the stimulus right there, and your other question? >> host: about treasuries -- >> guest: oh, the treasuries, exactly. >> host: look at the "washington post," dow plunges 35 points and pouring money into treasury bonds. >> guest: that's right. treasuries continue to be a safe hatch, and that's an odd thing about the s&p downgrade that people still look to the united states dollar and to treasuries as a safe haven. >> host: given that, the federal reserve meets today, christian weller, there's headlines that they have to dig deeper into the pocket of arsenals to try to do something. what can the fed do at this point? >> guest: well, the fed -- there's a number of things the fed could do. they could institute a new buying program, buying up securities and providing more liquidity. that would relay fears that the
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turmoil in the markets then translate to the credit markets, and people wouldn't get the credit. the other part is the fed could simply announce that they will do whatever's necessary if the economy weakens further to help the economy. that would be contrary to the statements that bernanke made so far, and we're looking that from both the administration and federal to some degree to have reassurance that policymakers are paying attention and ready to step in if necessary, and i think that sort of is one of the things i'd look for. let me also address the corporate tax issue. we have the highest statutory tax rate in the world, but we have so many loopholes and exemptions and deductions and credits that the effective tax rate is actually fairly low. it's in the middle of all the industrialized countries. all economists tax professionals agree that we need to streamline and simplify our u.s. tax government. the deal here is to lower the tax rates, but close a lot of
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the loopholes making it simpler and easy and ultimately meaning the layoffs of accountants and lawyers, but they can have employment elsewhere. in the end, it's easier for corporations to operate in the u.s.. we know from all international tax studies, that tax simplicity is something corporations value. we cannot just look at the top marginal top tax rate for corporate businesses, but the effective tax rate which is low because the gamet of tax loopholes. we started the conversation about closing loopholes during the debt ceiling debate, and so far, republicans have been somewhat reluctant to start the conversation. >> host: we're having an economic round table here on the "washington journal" until 9:15 eastern tim. christian weller is senior fellow for the center progress and diana furchtgott-roth is at the hudson institute, and two
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perspectives about the economy, how wall street is reacting, what the fed might do at the meeting, and also what president obama said yesterday and republican leaders on how to spur economic growth. here's president obama on payroll tax cuts and unemployment. >> specifically, extend the payroll tax cut as soon as possible so workers have more money in their paychecks next year, and businesses have more customers next year. we should continue to make sure that if you're one of the millions of americans who is out there looking for a job, you can get the unemployment insurance that your tax dollars contributed to. that also puts money in people's pockets and more customers in stores. >> host: let's hear from bill, a republican in little rock, arkansas. go ahead, bill. >> caller: yes, good morning. every time i say "obama" remembers book, "the peter
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principle," and he's over his head. this lady got something here. this is what i wonder -- we have all these minds in washington and you folks in these think tanks, what about some leader, the president won't, but some leader saying to the chamber of commerce, i want you to come to the white house, labor unions, i want you to come to the white house. we are going to have a conference. we're going to have it public. we're going to brainstorm every chance and every opportunity, and we are going to find a way -- you talk about repatriation? forget the loopholes. if you need no tax rate, unions, you got to give up something to get some of these jobs. business, you have got to want to take care of americans. you got to want it in your heart. yes, it's a business. yes, you got to earn money, but this is nothing we're playing with here. get to the white house, both sides give up. i mean, if unions with ocean and
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all the environmental regulations, it's no wonder the businesses had to go overseas. >> host: bill, on that point of regulations, one diana brought up earlier. here's a tweet, the lack of regulation adds to the financial markets caused a huge hit on the economy. true. that led to the taxpayer bailout. ugh! >> guest: i beg to disagree, and i think that the overregulation of dodd-frank are making it more difficult for countries to operate in the united states. a lot of financial firms are no longer hiring here, but abroad. just to take one example. the dodd-frank bill sets up an office of minority and women inclusion to be sure banks and financial firms and their subcontracts like the janitors and paper sledders who work for them have fair inclusion of
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women and minorities. that means the presidents of our banks have to be thinking do i have enough pacific islanders even if none applied. there's many other bureaus making it difficult for our companies to oater here and other companies find is easier to operate overseas, so i would say that dodd-frank could have immeasurable obstacles to locating here that other countries do not have. >> host: going on to mark in michigan, independent caller. >> caller: yes, ma'am. the fundamental problem that our system has, i believe, the taxation act of 1920 was supposed to offer the public a non-burdensome tax, i believe the words were temporary and voluntary. the supreme court never honored this attitude nor does the politician on top of that one. the concept is we in heart,
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michigan, or whatever, we are authorized $40,000 of taxpayer money from the federal government to -- the economy was gracious enough to put in $20,000, to build an alzheimer's building bond fund for alzheimer's patients. they collected or projects either a $3.5 million facility or a $6.5 million facility. you really can't tell. the billionaires, they donated $3 million to the building bond fund and now it's down to $3.5 million. we all vote for it. after two or three years, they collect too much money, they claim they cannot pay the bond fund off early without facing penalties. they are lying. they could pay it off, but they don't have a process to. the concept is they collect too much money, they give money back to the rich businesses and whatever because they are to help us prosper, and from that
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stand point there, it's a taxpayer funded mandate, it's unsustainable, and they don't pay for the building itself. >> host: christian weller, what's your thoughts there? >> guest: when we hear taxes and spending, the important piece really is sort of, you need to look at what's the role of the government? what do people want? then the taxes come after that. if you don't collect taxes just for the fun of it. the important piece is when you look at what the government, the federal government, and i can only speak to the federal government here, what the federal government does is often very popular. the federal government provides in terms of the largest programs, social security, retirement benefits, disability benefits, the second one is medicare followed by medicaid, and then defense. that eats up federal spending followed by benefits of veterans, but education, and then a whole host of other smaller programs. most of the programs that we have and much of the federal
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government spending is actually very pop popular. it's sort of the notion of government spending that is unpopular, but each individual program has enormous accord and is popular, and once you go through this and say, well, these are the programs we want to keep, then you have to find a way to finance them. that requires additional revenue measures given where we are at this point, but also ultimately means more efficient spending, and that's particularly relevant on the health care side. we have unsustainable health inflation expected for the next 10-20 years. we can handle this now, but it's something to address. health care inflation meaning health care costs rise faster than overall costs and income, and ultimately something we have to address. the health care law put in place in 2009 is a first step to increase competition, increase transparency in the health insurance market to reduce the costs, but that's one small step in the right direction, but in the end, it is -- we have to ask ourselves, do we like what the
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government is spending its money on, and once you move below the sort of e mori miss notion of government spending to the government programs, you find the vast majority of voters support those, and then the taxes, you need to naturally follow and we have to have a conversation on how to raise revenues necessary to finance those programs. >> host: a tweet from house speaker john boehner about economic growth. time to scruff the failed stimulus policies once and for all democrats and republicans must come together to cut spending and save entitlements. >> caller: i think the so-called job creator and entrepreneurs are cowards. business is always faced with uncertainty. if you get into business, you get the lie and share if you succeed, but imagine if the wright brothers said the laws are too oppressive, i'll never be able to fly.
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now we fly from continue innocent to continent because they didn't take no for an answer, they succeeded and what's more oppressive than the laws of gravity? that's all i got to say. >> host: al, republican from alabama, go ahead, al. >> caller: good morning. >> guest: great to be with you. >> caller: good to be with you. there's a point that i think needs to be brought up, and that is that the fire economy, finance, insurance, and real estate, 40% of corporate profits # and 20% of the economy. it was built on the backs of securitization and has proven to be solely fraudulent. i would submit to you that that 40% profits and 20% of the economy needs to revert to cut it in half and go back to manufacturing that slunk to 8%. short of that, i don't see a recovery. >> host: diana
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furchtgott-roth? >> guest: well, it used to be many, many americans were employed in agriculture, and then that sector shrank, and the same is going on with manufacturing as lower wages abroad takes some jobs out of here and move them elsewhere to china and india, but our financial sector is making profits right now. we should be glad that we do have profitable sectors in the u.s. economy, and to go back to the previous caller about entrepreneurs, john kerry and dick lugar have the startup act giving visas to foreign entrepreneurs to come here and collect and create jobs, and if they created jobs, for native born americans, they get a green card. these are the policies, low cost that we need to be looking at to increase innovation and intrerpship and growth here in the economy. >> host: gentleman from
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vermont responds, diana to your comments about repatriating overseas profits. when you mention repatriating overseas profits at a lower tax rate, that's providing immediate stimulus. i almost choked. didn't we learn from the profits in 2003? they enabled stock buy back projects. even google, the biggest lobbyiest, said they would not tie any job creation to this tax holiday. >> guest: it's unfortunate that most of the jobs american companies are creating now are offshore, and that's because of the lower tax rates offshore. we have to do something to fight that, and not just a one-time fix, but a permanently lower tax on repatriates funds so the funds continuously flow into the united states, not just a one-time tax holiday, and perhaps that makes them more annoyed, but i spoke about something permanent rather than
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temporary. >> host: if you want to e-mail send it to journal@c-span.org. also, you can have the conversation if you like with with each other on the our facebook page, facebook.com, c-span is where you post your comments. who allocates credit rating agencies, the power to make the sort of downgrade s&p did? who oversees the rating agencies? is it congress? >> guest: it's private institutions funded under the new law they will be supersized by the fcc. we go through this every crisis. the rating agencies do not have the best possible track records. they missed the mortgage crisis, the emerging market crisis, missed japan, there's a number of crisis they missed or
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misinterpreted. let me get, though, however back to a bigger question that we sort of circle around, and that is what drives job creation. when you look at all employer surveys, what employers are missing at this appointment is customers. they think their sales are low. they don't -- they are worried that the consumers have maxed out on too much debt. the consumers do not have enough income to spend. it's not a question of companies not having enough cash on hand. companies are profitable, they build up cash since the early 1980s. they are sitting on cash, in the spending or hiring it. it is not a matter of regulations. we know job growth is stronger in countries that are heavily regulated with stricter regulations than we do. germany and other european countries are doing well. it's not a tax issue. at this point, companies are sitting on cash. they are holding on to that cash. there's a number of economic reasons why they are doing so, but primarily, they are not
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investing and hiring because they look at the consumer side and they see consumers not getting jobs, consumers running essentially into a wall with income, the payroll tax holiday, the unemployment benefits ending, but at the same time, the consumers are overburdened with debt. >> host: diana? >> guest: what is christian proposing to do about it? get out, get them out of debt, give them more money? more stimulus? >> guest: well, at this point the order is to extend the unemployment extensions to at least do no harm, to the extent they extend the payroll tax holiday and a number of other things to do. we need to continue the mortgage reworking. we need to continue to deal through the banks, through the government, through the hud programs to make sure -- >> host: no more spending cuts? >> guest: well, i think spending cuts in the short run will be harmful, but, again, going back to the debt ceiling
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deal, many of the taxes -- the spending cuts were back loaded. now they would happen in the future, and much of what will happen in terms of long-term deficit reduction is unknown yet. we don't know what the supercommittee will do. that's an opportunity to do the right thing. both on deficit reduction and job creation, that is, at this point protect the weak economy, ensure that we have job creation, don't cut spending in the short term, but put the deficit reduction and through spending cuts and revenue increases on the table for the long run. >> host: diana, before you weigh in, i want to show the viewers what the president had to say yesterday about no more spending cuts, and then we'll come back to you. >> our challenge is the need to tackle our deficits over the long term. last week, we reached an agreement to make historic cuts to defense and domestic spending, but there's not much
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further to cut in either of those categories. what we need to do now is combine those spending cuts with two additional steps, tax reform that will ask those who can afford it to pay their fair share, and modest adjustments to health care programs like medicare. >> host: so you heard from the president there, diana, not much more we can cut. >> guest: the president when we have a problem has the tax increases. that's the wrong thing at this time. that takes away more funds from private individuals. it's going to adversely affect small businesses who have the individual tax rates, and it's interesting when the president called for more taxes on millionaires and billionaires, this refers to the states out of the bush tax cuts which affect people earning $200,000 and more a year. i think that's the wrong prescription. i think we need to be looking at entitlement cuts down the road,
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not necessarily now. we are right now borrowing 40 cents from every dollar we spend, and it's unsustainable situation. >> host: house speaker boehner spoke yet no what the president said. republicans demonstrated this can be solved without job destroying tax hikes. difficult work remains and over the next few months, members of the joint select committee has to make tough choices on what is driving our long term debt. >> guest: the debt is driven by two factors, low rev new and -- revenue and health care steanability in the long term. we need a conversation about how to spend health care dollars efficiently, but at the same time, we have to have a conversation about the lack of revenue. now, much of the debate over taxes centers around the bush -- the extense of the bush tax cuts for the top 2%-3% of taxpayers. the important piece to remember is when the tax cuts were
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enacted in 2001, they were followed by the weakest employment creation on record and by the weakest investment record. they didn't do much while enacted. taking them back should not do anything for economic growth, and it's a small group of people who did well in the last few years despite the crisis. taking them back is a stanceble approach, a balanced approach because the alternative is to cut in the near term programs that benefit a broad swath of americans such as the unemployment insurance extensions, but also to have deep cuts into social security, medicare, and medicaid. >> host: linda tweets, suspect it fair to say s&p's overratings that fueled the 2008 crisis is a factor in the current status of the u.s. debt and deficit? next to marie, independent in madison, wisconsin. >> caller: good morning. i just want to say i do agree
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with mr. weller on these points. everyone seems to neglect to mention a couple key things where a lot of where our money goes, and that is into the billions spent on three wars that quite frankly have not proved to be nation building for the united states in any way. the second point is when you look at the overall economy of the united states, quite frankly, the priorities of the majority of americans have nothing to do with playing welfare to corporations, particularly some who are international. perhaps we need to stop foreign aide. perhaps we need to tax completely for social security all the way up the scale of people making the money. if they don't want to pay extra taxes, find. start building the fund. let's collect everything that's been completely robbed from social security by the government for all kinds of nonsense the last -- since it
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was created. >> host: all right. diana furchtgott-roth? >> guest: well, the attacks of 9/11 did mean that we went and we defended our country, and we could have just kept going like we did in the 90s and not reacted at all, but getting rid of al-qaeda or bin laden, al-qaeda, and the taliban unfortunately are still very much alive, and we mourn the deaths of those servicemen who died over the weekend. we need to protect the united states from further attacks. by attacking these people abroad, there's less chance there's another 9/11 here in the united states, but we do need to make substantial cuts in entitlements, not just health care, social security, gradually raising the retirement age, perhaps increasing contributions also to bring the funds back into balance. it's -- we're fortunate that americans are living longer and longer and longer, but it means
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the cost of the entitlement programs continue to grow, and we need to be restructuring those. we also need fundamental tax reform, and i agree with christian we have to rid of loopholes, lower rates, make the tax system efficient. >> host: go ahead. >> guest: i add something to entitlements. it's the catch-all, and it doesn't help our debate. i think we really need to separate health care from social security. social security right now still has a surplus. it takes in more rev new than it spends. we need to have a national conversation about what to do about social security in the next 75 years, but social security can pay -- it's full benefits until 2036. it's tanked money. we have to have a comprehensive discussion on streamlines benefits, how to improve them. there's bipartisanship support on disability benefits, divorce benefits, creating poverty benefits, something democrats and president bush put on the
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table. there's a number of things, but that's a separate discussion. social security is not the driver of the long term deficit. it's on the health care side. we need to have a conversation on how we are going to reduce health care inflation on medicare and medicaid. the patient protection and american care act, the health care reform bill of 2009 started this, the increasing competition of the health insurance market between the states, and thereby increasing transparency, lowering costs by all estimates, but that's just one small step in the right direction, and we need more of that. >> host: continuing taking the phone calls this morning, but joining the conversation now is lawrence yun, the chief economist and vice president at the national association of realtors here to join us to talk about the downgrade of fannie and freddy yesterday by s&p. what impact does this have on the housing industry? >> caller: certainly any time there's a downgrade of a company that is not a good news and the
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borrowing cost of that company would lie, but what happened right now the mortgage market is essentially nationalized. the fannie and freddie are the children of the government, and begin that the government has been downgraded, naturally fannie and freddie will be downgraded, but given the uncertainty in the economic world today, people are seeking safe havens. what we noticed yesterday intlessingly is the boring we cost for the u.s. government and as well as fannie and freddie dropped on the news of the downgrade. >> host: yeah, we saw it was the lowest it's been in 2011, the interest rates. >> caller: interest rates, the mortgage rate last week at 4.4% average on a 0-year fixed rate and that's considered a historic low, 50-year low, most favorable, but not surprised if this week already lower begin
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the situation and the chaotic market condition in the stock market where people are seeking out the safe instruments and people are turning towards u.s. government debt even with a downgrade, and i think another thing we should keep in mind is sometimes the dog that did not bark, and you have other rating agencies such as moodies and fitch which are keeping the u.s. government at aaa ratings. ..now? >> certainly i think the overall macroeconomic pressure is for rising rates. we have high budget deficit and will continue. if there are signs of a respectable economic recovery the rates will rise. so, certainly from a consumer, who are very comfortable in their finances, have secure jobs, it is a great time to lock in these low rates. host: we had a viewer earlier who said, you know, when you drive off the car you -- when
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you drive off the car lot a block away your car is worth 20% less. it naturally tkraoerbts. -- depreciates but he says hold on to the howls. but what security can you give to people that their house will continue to appreciate? >> i think in some markets -- you go back to the supply and demand situation. i think that during the bubble years clearly prices were way off the handle and you had to see them come down. now prices are now overcorrecting, slightly below the fundamentally justifiable levels based on price to rent ratio or price to income ratio. also in the u.s. we have a growing population, that means there will be a steady demand for housing at some point. it is not occurring right now but at some point it will be
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growing demand for housing. so i would think from a national price point of view that the are right now bottoming long. we are not seeing any measurable declines. in fact, some price measurement in the past few months have shown increases. so the declines are probably over. but the recovery may take some time to get back to normal. historically one would about four or fi five percent and we may be a couple of years from reaching that steady 125eu9 state. host: the president said one way he would like to help is have fanny and freddie rent the homes that are now foreclosed upon. do you agree with that strategy? what would be the outcome? >> certainly less foreclosed property on the market will help stabilize the market but the key is whether it is better for private investors to purchase
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and they have -- they would have their own private incentive to rent or whether there should be more government intervention it delay some of the homeowners who are going through the painful process. it is a tricky call. but one thing we have noticed in the past 12 months is there are an active number of buyers who are willing to buy foreclosed properties provided the price is right. in places like las vegas, miami, we are seeing heavy cash transactions, meaning people are bypassing mortgages and going straight cash and cash makes up close to 70% of transactions in these depressed markets. nationwide one-third of transactions are cash. host: fear returns is the headline of the "wall street journal." what does that mean for bank of america and others that hold mortgages? >> the situation on the bank is
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that they have been making profits. the cash reserve had been rising. they have easily passed the stress test. and we have been hoping for the lending standards to return to normal given that they have plenty of cash reserves. now, the latest news where they are feeling additional financial pressure could mean that there is overly stringent underwriting standards that could be in place. because one thing that needs to occur for the economy is for the housing to recover and the housing to recover. for the housing to recover, we need the buyers to enter the market with the u.n. -- with the normal underwriting, but the stringent underwriting is keeping buyers from entering the market is not good news that the banks have to reexamine their overall balance sheets. host: before you go, the federal reserve meets today.
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what are you watching for? guest: i think they will try to say something about extended -- the quantitative easing, not a new one, but just to say that if there is no -- but just to say there is no immediate rise in interest rates anytime soon. i think the federal reserve needs to be very careful not to just come out and say they will print more money. that could be more psychologically damaging for the investor community. host: lawrence yun, thank you for your time. christian weller, what are you hearing? guest: i think much of that is wishful thinking. when it comes to the housing market, what we have to news -- what we have to realize is that many homeowners are still underwater, about 23% of homeowners zero more on their homes than their homes are worth.
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23% of homeowners owe more on their homes than their homes are worth. what that means is that we are going to see years of high foreclosure rates. about 4% of mortgages are in foreclosure, about 8% or 9% of mortgages are delinquent. we have an oversupply to potentially enter the market, that are all on the market. there is not that much turnaround because people know they live in these neighborhoods. they know there are lots of homes for sale. they know that prices are not rising, possibly falling, especially in the weakening labor market. in that world, nobody really wants to invest. it is a symbol deflationary spiral. if you think the prices are -- is a simple deflationary spiral. if you think prices will be lower tomorrow, you will wait until tomorrow. the oversupply of existing
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homes, i do not think we'll see a quick turnaround in the housing market. host: diana, your take on the housing industry? guest: it is very regional, places where people have purchased a lot of second properties, they're doing a lot worse. we need to look on a regional basis, but the product -- but the prognosis overall is not good right now. host: we have retweet -- "he has called for tax increases, but we have not had any, is his point. and yet the unemployment is up, gdp down. why? guest: we have had $1 trillion in stimulus. we started off in january 20,009 2009 and we have been sucking money out of the private sector.
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the government has attempted to step in thinking it can spend money better than the private sector can. this just has not worked. that has seen a lot of uncertainty. taxes were about to go up last december. this is not a good environment for investing in creating jobs. the president went on national television yesterday, and frequently over the last couple of months, calling for tax increases. there is a lot of uncertainty as to regulations, taxes, and that is one reason why americans do not have more confidence. they are not going out and buying, and businesses are not treating jobs. host: on that point, if fox says, "the market was plunging while the president was speaking. how does that speak to the company's the market has in him? guest: the market is reacting to fundamental uncertainty of what exactly the downgrade for s&p ultimately will mean.
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it is a technical aspect, to some degree. the s&p downgraded the u.s. debt from aaa to aa-plus. depending on how regulations are written for by financial markets, banks, insurance companies -- some pension funds have to get rid of u.s. debt. u.s. regulators have said they cannot hold on to the u.s. debt, it is still as good as cash. others may not. the market is trying to figure out the technical consequences of this downgrade. we will wake up in a few days and realize this was all turmoil. that is one part of where the market went down. other point -- and that has hinted at this before -- we are at an inflection point at the economy. some economists say we will get faster growth in the next six months. some say we will get a double- dippers session. the market swings are rightly --
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the market's swings vary widely as it always does during these times. to reaffirm the markets, to say that we are going to do whatever is necessary to avoid a -- dead recession. we are going to create the jobs recession.-dipp so that we have a track record of boosting confidence in the private sector, boosting job growth in the private sector. i think we need to continue those efforts by extending unemployment insurance, not enacting spending cuts in a rash fashion as the economy still weakens. host: ryan has been waiting patiently on the democratic line in arlington, virginia. caller: when the s&p downgraded, they were absolutely right. nobody wants to admit it, but
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they were absolutely right. and i would like to ask diana -- diana, you keep saying when are they going to lower tax rates for corporations? well, g.e. got a $14 billion tax break, $5 billion domestically, not abroad. tell me, how could we help a corporation any more? tell me what other loopholes we can close. >> well, as kristin mentioned earlier, there are many loopholes but they just a fact -- as christian mentioned earlier, there are many loopholes. lower tax rates in a revenue neutral manner so that we have a more efficient and fair tax system as to the point that we
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save jobs, maybe we did, but the unemployment rate is two percentage points higher than before we started this whole stimulus exercise. the s&p downgrade i think reflects the views of the economy as a whole. gdp is a lot lower than we thought it was going to be. the employment news came out, only 117,000 jobs were created. the labor force participation rate, americans choosing to participate in the labor force, went from 64.1%, 63.9%, the same level as january, 1984. we have one of the smallest percentages of able-bodied americans working in the labor force in a very long time. so the economy is not doing well, and that is why the markets are going down. the s&p downgrading is perhaps tangential, but it reflects what is going on in the economy. that is what we need to fix.
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host: diana furchtgott-roth and christian weller, all this talk about economic news and indicators, what it means for you. tim, from michigan. caller: good morning, greta. i feel like i hit the lotto today, a kid. i actually got through while you are hosting. host: what is your question or comment? caller: my comment is about this class war that the republican party has been waging, especially since -- that president reagan started but especially under president george w. bush. it was said that when social
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security, when it first started -- you can tell me what the ratio was to people contributing to the people collecting. i think he said it was like 30 to one. when you tie it to the advantages where they are eliminating jobs, corporations should still be responsible for a portion of the gross domestic product. even though there are not workers, that it will be taken out of, they will not be paying someone a salary, but they should still be responsible to contribute to social security. one other thing -- the way they have taken over the lexicon job creators, it is more like job exporters. as far as entitlements go -- when mitch mcconnell and john boehner and that ilk refer to
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medicare, social security as entitlements, that is ridiculous. what really scared me is when mitch mcconnell, about three weeks ago, they were talking on the news about trying suspected terrorists in american courts, and mitch mcconnell said, "i'm sorry, terrorists are not entitled to american justice." how dare he used the entitlement word when referring to terrorists, and referring to entitlements when it comes to senior citizens in this country. i don't see how you can refer to terrorists and americans. >> we did not need a rating agency to tell us that the gridlock in washington over the past several months has not been constructive, to say the least. we knew from the outset a
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prolonged debate over the debt ceiling, a debate where the threat of default was used as a bargaining chip, could do it burke -- enormous damage to our economy and the world prosper that threat, coming after a spring of economic disruptions in europe, japan, and the middle east, has now dampened consumer confidence and slowed the pace of recovery. host: here is "usa today" with the headline, reaction from republicans after he gave his address yesterday. the gop rebuffed tax push. and the "financial times" has its headline, "obama seems to have the upper hand in the deficit debt talks." inside the store, it says, "some analysts see the trigger as a democrats' best option. if they cannot come together,
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automatic spending cuts, half to domestic, half to defense, has to go into place. from being -- that is because the domestic cuts set out by the trigger largely exempt the programs that are important to democrats are being slashed. without revenue increase, there is no reason for democrats to compromise. there are the best cuts they're going to see, says tom davis, a former republican congressman from virginia. at the same time, shifting party dynamics from rank-and- file republicans and isolationist views from the tea party mean there will be internal divisions of bond many about how far the party should go to protect the defense budget. eric cantor said there will be renewed pressure on republicans to give in to tax increases. but remember to resist that pressure." christian weller, the you think
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democrats have the upper hand? is there no reason to compromise? guest: it is very difficult to say who has the upper hand. i think the politics on the debt ceiling debate are shifting all the time. we should not make a pronouncement at this point on how the super committee will react. there are priorities and needs to be addressed. the first one is to strengthen economic growth, strengthen job creation. and the supercommittee will discuss that the president is pushing in that direction, some members of congress and voters want to see action on jobs, on growth. we will have the conversation about what should happen on the spending side and tax side to help growth, to help jobs. that will dominate increasingly the debate over deficit reduction. that needs to be traded off, the short-term emphasis on job growth needs to be traded off against the long-term challenges of massive deficits, especially the lack of revenue and the health care inflation problem we
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face over the next t 10 to 20 years. but we should not assume anything about the supercommittee at this point. it has enormous power and opportunity here to do the right thing for the economy in the short run, for the deficit and economic stability in the long run. host: here is the latest week from republican tom price. "house report and put it before back in april that outlined how we can get this nation back on sound fiscal footing." what about the differing factions within their own party? guest: we really need to get a handle on spending. later this month, we are going to get the mid-session review, the new numbers put out by the office of management and budget and the congressional budget office. it will downgrade u.s. growth from the projections they put out in january, and they may
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wait -- they may well wipe out all the deficit is by increasing the deficit through lower growth. the growth the projected for this year was 3.1%, and it will probably go down to about 1.5%, 4.2% next year, and we will not get that next year. taking three or four percentage points off gdp growth increases the deficit. it will basically wipe out all these savings they're having so much trouble over $1 trillion with the special committee in savings over the next 10 years. we will have to come up with a lot more just to keep even. host: let's go to rob, republican, from rochester, new york. caller: for mr. weller, he keeps referring to revenue, an increase in taxes. i'm a real estate broker in rochester, and the market shot.
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i sold one house here. they're hiding all these houses in foreclosure already. there are hundreds of houses in foreclosure that day are not telling anybody about. if you go to hothomes.com, if you live in rochester, there are four houses. that is a bunch of hooey. there are hundreds of homes in foreclosure. you keep referring to it as increase in revenue, you mean increasing taxes. maybe last year we made $60,000. you cannot increase my revenue anymore. it is like taking blood out of a stone. host: we will get a response from the christian weller. guest: throwing around these buzzwords, if they mean it -- they do not mean anything to
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real people. important point here is that there are ways to generate more revenue without taxing somebody who makes $60,000. that is clear. when you look at what is on the table, you need to close loopholes for corporations, taking back some tax credits that simply do not do anything for economic growth, treating income of hedge fund managers and private equity managers the same as my income and your income. those kinds of measures would not hurt you, they would not hurt 99% of america. they would not hurt economic growth, but they will ultimately allow the government to maintain the programs that people value. they will maintain social security, veterans benefits, medicare, medicaid, education, and so forth. we need to be very mindful about when we talk about spending and tax increases, we're talking about real people. there are ways to be smarter
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about spending and there are ways about being smart about the tax side that do not hurt the economy and most people. that ultimately is the conversation we want to have, because we need stronger economic growth, we need more jobs, and we need ultimately to have the budget that protect the recovery right now but reduces the deficit for the long term. host: "companies are -- diana, companies are themselves sitting on record amounts of cash. i wish to misspending keeping them from that cash? guest: a smaller percentage of it gets taken out, and we need to be encouraging them to bring it back here to the united states. guest: i would like to jump in on the cash issue because we have talked a number about it. the companies have been building
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up cash since the early 1980's. when you look through the data, they are largely using it for things other than productive investment of hiring. they are using it for mergers and acquisitions to buy other companies. they are using it to defend themselves against takeovers. they are using it to defer buying back of their own shares and to pay dividends. there are a number of things companies are doing with the cast that does not necessarily translate into more investment and hiring. at this point companies do not need more cash to do things that are not productive. at this point -- and they say so. they need customers. we need to boost jobs, incomes, and those things are what companies need. they need customers. host: diana wants to jump in here. "u.s. workers were less
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productive in the spring and that does not bode well for future hiring." guest: the short-term numbers are fluctuating widely, and they go along with -- they are often subject to revisions, but there is a lot of noise and that data. long-term, if you look at the last three years, productivity has gone up at a reasonable rate. guest: it is difficult to say that we think emersion acquisition deal or dividends is a productive use of company kaspar they're trying to do the best they can -- of company cash. they're trying to do the best they can, and they think it is a good use of the funds. how can we say that it is not? guest: it is not a productive use. they're not investing in productive capacity. terms of net investment beyond depreciation of the lowest levels. you ultimately see that translates into productivity
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over the long term. will we are not investing today it will ultimately come into -- from a policy perspective, that does not mean we should encourage those activities. the dividend tax cut that we enacted in 2003, it led to more dividend payout, but it did not lead to more it best man, growth, and hiring. -- into more investment, growth, and hiring. guest: the dividends were double taxed to begin with, so the change was getting rid of a double taxation. the whole problem in washington, we think we can tell companies what the most productive way is to organize their assets and the finances. it is possible that new companies emerging into more companies separately? i do not know, i should not say. these are decisions that maybe we should have low
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corporate tax rates come and take away some of the decisions rather than trying to second- guess. >> we know from the literature that is not boosting innovation and economic growth. there is a vast literature that shows that. we also have to be mindful that we have spending programs in place that people want, that the country wants, that needs to be financed. we cannot simply lower taxes on corporations and let them get away with keeping a few people their shoulders happy to dividend payouts, and at the same time burdening the american middle-class more and more with higher taxes. host: we will have to leave it there and get back to our viewers. go ahead. caller: i do believe that there is an inability to realize that we have been had. we have been fleeced by our political classes, the elitists in our country. george bush, when he left office in 2008, pardoned one of the
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biggest housing scammers. the guy stole $30 million from h.u.d. and other programs. they used strong buyers, and it seems to me the political classes in this country produced nothing. it it was not for equity in the housing market, they would have had no money for their campaigns, and so on. it was silverado savings and loan with the bush brothers, neil bush. it was real estate scamming. on long island, there was a man named john mcnamara who stole half a billion dollars from general motors acceptance corp. in mortgage frauds, and he got away with it. he never did a day in jail. even this other gentleman, he stole $30 million from h.u.d. in one year alone, did not pay any taxes. you can follow the trail and see he paid every executive in my
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government -- and even my current government, steve levy, my county executive, he has had to relinquish millions of dollars of campaign cash. he cannot run for election because of some federal probe. host: got your point, anthony. we go to nebraska. caller: i'm curious why we do not go back in history on the trade problem. back in 1860 week passed a tariff to fight cheap imports from britain. why don't we do the same thing? even mckinley did that, and it increased employment and decrease the cost of labor. guest: it would cause a trade war, and other countries would -- what we really need, speaking of trade, is the free trade agreements to be ratified by congress. we have outstanding free trade agreements pending, but not ratified, with colombia, panama,
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south korea. this would give more market to our export, and a substantial number of americans work for companies that export. it would be against world trade organization regulations. guest: i agree with diana to some degree that we do need to focus when it comes to trade on exports. we have been doing fairly well on exports since 2004. even last quarter, export growth was much stronger than our imports. clearly, we're doing right on exports and trade. we do need to keep imports coming because what happens is we are importing intermediate goods, we add value, we put them into cars, machines, airplanes. then we export them at our high profit for u.s. manufacturers had not think the solution is passing more trade agreements. what we do need is to help
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smaller companies, small manufacturing companies to really gain access to the market. jeff insel, who heads the president's competitive this -- jeff immelt, who has the president's competitiveness -- we need to build on that momentum that we already have on the manufacturing side, by bringing in small manufacturing companies into the game. host: diana, there is the situation in europe as well that is playing into what we're seeing in our economy. explain your take on that. guest: we think we have problems here, but it is nothing compared to what your past. the eu has bailed out ireland, greece. now they are needing to bailout
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italy and spain, and this is taking a tremendous amount of resources. the bank's there have real solvency problems >> this is going to affect us. it means they can buy fewer of our exports. and some of our banks are also invested in europe. >> to some degree, that's right. i don't think we're going to talk about bailing out i'llly. >> no, the eu. >> yeah, when it comes to the eu, the largest part of the eu, especially france and germany are doing very well. i agree there is sort of the worry could it spill over into the banking systems, you saw it during negotiations early where france and germany were pushing to participate more and the banks especially, but others have said if we do this our banks will go under. that certainly raises red flags for me and a lot of other observers, how stable is the
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european banking system outside of the bigger countries, especially germany and france. and how could the ripple effect create in the world financial and international markets? >> host: do you think there will be or should be a coordinated response? >> no, i think the eu should deal with it on it's own. i also think that french and german taxpayers are going to get tired of bailing out. if the eu decides to do it with the european stability mechanism. >> host: here's another tweet from the fewer that wants the two of you to debate the bipartisan infrastructure bank proposal. christopher, let me begin with you. it's something that democrats are touting as their solution to unemployment. that could create jobs, infrastructure bank, why would it work? >> we're talking about a national infrastructure bank. often the way the proposals are structured, they are not a bank.
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it would be a loan guarantee, part of the commerce or business administration or treasury. there are banks that are alternative models that exist in other countries. typically economic development banks that get seat funding, some government subsidy, some back up. by and large, they operate like banks. they would be self-refinancing through the investments that they make. we need that. we know we have massive infrastructure needs when it comes to roads, bridges, school construction, greening of office buildings and so on and so forth. it would work because the way these banks loan guarantees would be structured is they would have to look for positive rate of return. now in some cases, the government would add extra with subsidized the rate of return to bring in the private investors. by and large, we would only finance profitable investments. it would be investments the
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private sector is not under taking because the payoff would be a long period of time for the investors which are short, often don't want to go there. so i think the idea is not to take over something that the private sector is already doing, but filling in the gap where the private sector is not yet going, or will never go. >> diana, why don't it work? >> just for the very reason, we'd be filling in the gaps where the private sector won't go. if the private sector won't go, it means there's no profits to be had in those areas. it'll be a question of infrastructure playing political favorites. there might be a lot of money in illinois or favorite areas. here we are talking about cutting spend the. we don't need an infrastructure bank when we have the private sector that can finance many infrastructure projects. also the technological capabilities that increase to the extent where now we can toll our roads, tolling means the
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private sector company would be interested in expanding the road and charging fees to be able to have traffic flow and get back the revenue. there are roads like that in orange country, one close to dallas airport. i think the main point is if there's things we are doing that are preventing the private sector for investing in the infrastructure, such as not allows on federal projects and roads, we need to look and see if we can roll those back. >> it's always been sort of surprising to hear diane speak like this. there's always been an agreement between conservative and progressive economist. even milton friedman said the government has a role. when the infrastructure bank would do, it would leverage public dollars, brings in private, but subsidizing. the reason why they aren't going there, the private investors have a short rate of horizon in
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terms of recooperating the money. they are meant to over come the problem and reensure private investors to get the money back and make a reasonable rate that private investors wanted. >> so as an example of one infrastructure of project is high-speed rail. the president wanted to spend $53 billion and fewer than 2% of americans use rails. it would -- the money would get funneled into projects such as that that are politically correct like mass transit. this is not something the private sector wants to invest in. our tax dollars shouldn't go in this either. >> it's a prime example. the northeast corridor, we know there are private companies that like to run rails. they just don't want to invest in the infrastructure on the actual rail which costs about $20 billion. >> because they think it won't pay off. >> no, look at the -- look at other countries.
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look at britain, germany, the privatization of the rail, i'm not saying we shouldn't necessarily privatetize amtrak, running others maybe an alternative. the companies said they like to run the trains, they want to invest in the rail capacity and neither do they in other countries. >> do you support president obama $53 billion high-speed rail? >> the idea is to start where the companies want to go. op the northeast odor where there is the demand. >> host: we have 15 minutes left to continue to debate and solutions for it. i'll show you what the president said yet about the super committee and what he will do to put the pressure on them to come to sort some of agreement. president obama: i realize after we went through, there's skepticism, that republicans and democrats on the super committee, the joint committee that's been set up thereby able to reach a compromise.
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my hope is that friday's news will give us a renewed sense of urgency. i intend to present my own recommendations on the coming weeks on how we should proceed. and that committee will have this administration's full cooperation. >> host: and the "washington post" editorial echoes what the president said and calls for compromise, saying the political market turmoil will be worth it only if the countries leader meet the challenge of coming up with full fledge solutions. that's "washington post" "wall street journal" says this, downgrade awakening. we are taking a step back to look at the larger picture. to wit, the current u.s. debt debate isn't a sign of dysfunction, despite what the s&p and chinese say. --
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>> host: christian weller? >> i think they got it right. s&p got it wrong. saying we have a dysfunctional system ignores the fact we got a deal. we got a budget deal and debt deal. yes, it's messy. it's not pretty to look at. in the end, we have a deal. we didn't default on debt. there is national over the right priority. that is how do we get growth back on track, how do we strengthen growth and create jobs and how do we address the challenges of a long-term deficit. the political system has shown despite the incredible divisions that it can come together at the last minute and mix the problem. the hope is that the super committee will do that. it will come together and address the nation's priorities. create jobs, promote job creation, and address the long term structural deficits in the long run. >> host: diane, your
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thoughts? >> i think we went through the battle and all we got is $2 trillion in cuts. our deficit is $1.5 trillion. the white house missession reviews are going to come out later and add right back the $2 trillion by reducing gdp growth. we need to look at the house of representatives where it passed a resolution that would cut $6 trillion over the next ten years. the house republicans also cut cap and balance that would cut spending and pass a balanced budget. we can't just cut $2 trillion over ten years and declare success. >> we also have to understand the cap, cut, and balance approach, the house passed it knowing full well the senate would never pass it. it was an easy vote that didn't mean that much. in the other hand,
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income in it's budget process is the step by step issue. it's not something one day congress will say we're going to fix all problems and never go home. every congress will face these challenges, especially in an economy that isn't as much as ours. at this point, we need to have a conversation about how we are going to start making a down payment in strengthening growth, building jobs, creating more, and at the same time, start thinking about how we are going to reduce. >> host: i'm seeing cnn reporting this morning. here's a tweet. >> host: dennis. >> caller: i was wondering about campaign reform? >> host: what about it? >> caller: is c-span
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supported by taxpayers? >> host: no, c-span is brought to you by your cable company. as public service and you pay on your cable bill every month. >> caller: why can't the nominees for congress and senate and presidential campaign to use that -- >> host: that's getting us off of topic. let's go to john, a republican in cleveland. >> caller: yes, i have a couple of questions. i've been working since 1976. since epa has came into the government, our government has shut down a bunch of different companies due to epa regulations. any way to get epa to relax and do a corporate tax on the companies that's from different -- pughed to different countries? >> well, diana addressed that. i want christian to take that. you can response, i'm just curious as to, you know, why you think epa should not relax the
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regulation? >> it's not just about giving the polluters what they want. we are a country of many, many people. environmental protections are necessary in many ways in order to protect the national resource and at the same time, protect the health of people. when it comes to the economy, when you look at other countries like germany, spain, and others, environmental regulations are double edge sword. they may raise cost, but often these regulations are phased in over a long enough period to prepare. they have done is made companies more fuel efficient and less saluting. they have used to really build green industries and when it comes to wind craft and solar and so on and so forth. that's where we are behind.
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the we could use regulation to prod and go where markets are. >> host: diana? >> why don't we announce in 20 years everything is going to be wind and solar. companies will have 20 years to prepare and invest. the answer is because wind and solar are not nearly as efficient as the power plants that we have now run by natural gas and coal and oil. these are the most efficient forms of fuel. wind and solar are more expensive. our air is getting cleaner. it would be relatively simple for the president to call lisa jackson and say let's hold off on the ozone regulars, all of which has been brought out in the past year until unemployment goes down to 7%. >> host: holding off, does that give them certainty? they want certainty that
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these will go away. even that these would go away? >> these are all optional. the epa doesn't have to put forth the rule. they are making any kind of factory usage more expensive. which is why so many plants are going overseas. >> i'm going to ask you to hold off. one more phone call. go ahead, richard. >> caller: yes, thank you. diana, there's a series of conservative think tanks. when was your voice during the bush administration? you had two tax cuts, two walls, and prescription drug at 800 million. nobody in the institute spoke out then. also, diana, when private sector is not hiring, it's the duty and responsibility of the government to create jobs. president eisenhower did
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it when the international highway system created many jobses. as a snowball effect, there were a lot of private suppliers that will help build or help supply these different projects. >> okay, richard, diana, what's your response? >> between 2003 and 2007 when the bush tax cuts were fully in effect, we created hundreds of thousands of jobs. i would say it's not the government role to create job, rather the government to put in place the system. the government is far less effective at creating jobs than the private sector. they could hire one group of people and one dig ditches and another fill them in. we've seen it with the shovel ready project and $1 trillion stimulus. we're less with unemployment that's two percentage points higher than what we started in january of 2009. we've seen it doesn't
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work. we need to make a different track. president bush did spend too much when he was in office, many people said so at the time. i was working at the council of economic advisors and the department of labor. i and many of my colleagues said congress should start. we innocent every year to congress with lower budgets. and she was called uncompassionate by congress. they made the money right back in. this was not just president bush's problem. >> well, i think the tax cuts of 2001-2003 are one example of how to squander money without getting a bang for the buck. they were followed by the lowest job creation and lowest investment since world war ii. important pieces going back. i agree with diane diane diane - diana, we should be creating structure where the private sector is adding jobs. look at the last few years, that's what we
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have. private sector creating jobs. look at numbers for july, the private sector is adding 154,000 jobs. it's not enough to reduce the unemployment rate. part of it is local government are cutting jobs, laying off teachers, laying off public workers. on all categories at that level. at the state and local government. education is the largest, public safety is the largest. what we see is going forward, because they have created and individuals do not have enough income to drive more forward. that's what we need. that means for the near future we need to continue the extensions of the unemployment benefit and the payroll tax holiday. >> we've run out of time. real quick in 20 seconds
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or less. >> i know you say the bush tax cuts didn't worse. five years ago, the unemployment rate was lower than 5%. how many people wouldn't want to have that back? >> unemployment rate is the wrong measurement. look at the job growth, doesn't matter if you measured 2001 or 2003, it was the lowest job creation, lowest investment since the great depression. >> unemployment rate below 5%, many people were 4.8%. >> a lot of people kept the unemployment rate artificially low. the job growth was the lowest since world war ii. >> host: all right. we got to go. christian weller, senior fellow at the center for american progress, for more information go to americanprogress.org. diana furchtgott-ross is the fellow at the hudson
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institute. hudson.org for her thoughts. >> thank you. >> host: thank you, appreciate it. >> in a private ceremony blocked from media coverage, president obama today joined mill tear and other officials at dover air force base to receive the bodies of the 30 u.s. service members killed in afghanistan over the weekend. the president spent more than an hour meeting with the 250 family members gathered there. and senate majority leader harry reid has announced he'll appoint democratic senators patty murray, max baucus, and john kerry, to the super committee. a task with finding $1.2 billion in additional deficit reduction. senator kerry will co-chair the panel. house speaker john boehner, house majority leader, nancy pelosi and mitch mcconnell each
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must name three members to the panel. that's a week from today. >> the ayes are 74, nays are 63. it is agreed to. >> watch the debate from the house and senate floor and see what your elected official said and how they voted. a comprehensive resource on congress. there's video of every session and complete voting records. and when members return in september, follow more of the appropriations process, including daily floor action and committee hearings at c-span.org/congress. >> the with senate adjourned for the august recess, watch booktv on c-span2. tonight family sports meet national history.
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>> standard and poor's cut the aaa rating of fannie mae and freddie mac following the u.s. downgrade. freddie mac's chairman discussed this in new york. this is an hour and 10 minutes. >> thank you very much. i've often thought with that checkered employment career that i thought she was going to
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introduce me as a guy that has a lot of different jobs, but somehow manages to always get another one. [laughter] >> when i was asked to come and speak at chautauqau, i decided you are my kind of people. you started at 10:35 in the morning. i always thought the early bird gets the worm is told from the bird's perspective, not from the worm. on behalf of those who like to start later, i'm delighted to be here. things sure have gotten more interesting in the economy the last few days. i must admit part of this maybe is my fault. if you hang around washington long enough and in the private sector, you get to know people. i thought it might generate interest if a few friends of mine could shake things up. i think they got carried away thursday and friday. before thursday, the deficit debate was obviously not democracy's finest hour
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as the old churchill saying goes, americans make the right choice after they've tried everything else. [laughter] >> now that the stock market has unsettled everybody's nerves, i know there are some here this morning who can't keep away from your blackberries or ipads. to help all of us keep us to date and keep down on the background noises of brokens and cheers. every time the market goes up by 100 points or more, it's thumbs up. when it goes down by 100 points or more, smack your head. all right. let's practice. people on this side of the audience are the happy people. they are going to be responding when the market goes up. people on this side are the unfortunately. okay, the market is up by 100 points. very nice. very nice. a lot of blackberry owners over here. on this side,
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unfortunately, the market just went down by 100 points. very good. very good. okay. for those who don't use blackberries or ipads, there will be salesman available afterwards to help you out. we also have made available teenagers who will help show you how to turn them into game boys. [laughter] [laughter] [applause] >> everyone knows we're in the middle of the worst economic downturn in 80 years. what surprised us is how long it's taken to recover. a combination of a slow recovery, and a deficit growing to unmanageable levels, coupled with an apparent inability or unwillingness to solve either problem has caused many american to worry about our future. after a career in the private and public sectors as a turn around manager, i'm optimistic we will make it. but in the interest of full disclosure, you should know that every crisis manager is
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optimistic. it's the only way to get through the sometimes seemingly unsurmountable obstacles. to understand, we'll start with a discussion about housing, it's historic role in the economy, the role it played in getting us into the problems that we face today, and the policy choices we have to make about the future role of housing in the economy. we'll explore the obstacle to economic recovery, presented by the deficit, and then talk about one the most significant factors that will not only positively effect housing in the future, and also the economy generally, population youth. the most stunning number i've discovered in preparing for this discussion involves population growth. so stay tuned. you'll know more later. a significant part of that population growth is derived from illegal immigration. while it's clear that educating immigrates and all of our children is increasingly important, a critical factor in our
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past economic success is a role that immigrants have played in the capital in this country. the question is whether we are taking it for difficult for this to continue in the future. let's start with the role of housing and the economy. the numbers tell it all. if you go back as far as 1959, you find that housing is typically accounted for about 15% of the gross domestic product. peeking at 19% in 2006, and falling in the first quarter of 2011. housing led the financial crisis and is following the recovery, not leading. it to understand the policy questions that we face about what support we want or need to provide to housing going forward, it's helpful to understand how it's financed in this country. years ago, you got a
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mortgage from the friendly local banker, savings and loan and they kept it as an asset, collected your monthly payments, returned your notes, and canceled your mortgage when you paid it off. the problem with this system is that it limits the amount of capital available to housing to the amount of capital banks and s&l available. to deal with the problem in the depression, fanny mae was formed, and then they turn around and raze cash by selling securities, secured by fools of the mortgages to general investors. they might not want your individual mortgage, but they saw a pool of mortgages as an attractive investment, because the risk was pooled together and diffused. it also helped they agreed to buy back any mortgage that was defaulted. the government stood
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behind because fannie was a government corporation. it was privatized in an attempt to cut the government deficit. to show how quaint they were, it was about $160 million. that's not the deaf set, it was the entire budget. freddie mac was formed in 1970 to provide competition. the two have competed for the last 20 years. now private, investors assume should either run out of capital, the federal government would support them. while the official washington position was oh no, not so, the assumption turned out to be correction. they still kept a large amount of mortgages on the book. by 1990, residential
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mortgage debt exceeded all of the banks deposits. at same time as the dot-com double was forming and bursting, the investors were looking for something else to invest in. housing prices began to expand faster than incomes. this is my favorite slide. if you ever wanted to be a bubble bursting, here it is. that's the problem with bubbles. they are always obvious after the fact. when you are in the middle, it's never clear if you are dealing with a bubble or economic progress. >> somehow people that looked at this graph every year as it unfolded thought it was possible for house prices to rise in total disregard to the income of the population. there were a few people that bet against the conventional wisdom. they made a lot of money. they are not giving it back.
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we're going to go on with the story. the apparent level increasing made mortgage securities look attractive. banks and wall street competed to establish them from the securitied provided by freddie mac and fannie mae for sale across the world. it will would in little or no loss since the house could always be sold for more than the mortgage. with prices escalating, houses had become a high return investment for many owners, rather than a vehicle for savings. when i was young, just a few years ago, if you lived in a house for ten years and sold it for what you paid for it, you felt like a champion, you got settler for ten years and forced savings to boot for paying down the principal on your mortgage. now with housing prices taking off, everybody wanted in the game. the increasing demand for housing was exceeded
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by the increasingly demand for mortgage securities. if follow the red line, you'll see the private label security market more than doubled in one year that 22 in 2003 to 46 in 2004 and peeked at 26% in 2006. it then declined close to zero and how has come up to 6%. to meet the demand from all street, for more product, you needed more people to buy houses to generate the marges. to = those people who otherwise had earlier, the standards to decline. you ended up with the famous no dot loans or fraudulent loans fed into the system. as the side that maintains all of this
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was brought on by fannie and freddie, they have the lowest rate of seriously delinquent loans among the large financial institutions. as of march 31st, the default rate on freddie's mortgages of 3.6, and the market rate was 8.1%. put another way, freddie andman -- and fannie has have of the mortgages. the other guys have the other half and 70% of the defaulted loans. in case you didn't notice, that was an unpaid commercial announcement. but i couldn't resist because there's important information. i should also made that while the over all quality of their mortgages were better than the banks, it certainly would have helpful if fannie and freddie hadn't lowered their standards. it's hard to swim
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against the tide and not losing market share or profit. either was able to do that. back to my house at the atm. the fact that to pay attention to here is that from 2000 to 2005 while wages were increasing modestly and the bubble was developing, housing wealth increased by almost 85%. it would have been a different story if it had stayed, and in the old days, it would have, because you could barely get a second mortgage, and if you got one, it was a sign of financial trouble or weakness and nobody advertised they were just taking out a second mortgage. as banks allowed buyers to refinance with a bigger mortgage in light of the increased value and take the additional amount of the mortgage out, someone said why require people to go through all of those complications. the home equity loan was born. under a home equity loan, you could treat your house as an atm and
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draw money down as prices went up. extensive use of home equity loans added to an increase of almost $600 billion a year. it was great fun while it lasted. then the music stop. housing wealth declined by 30% in 2005 and thyme which translates into a reduction of $240 billion annually and consumer purchasing. the lost is part of the reason the economy is having difficulty recovering. and for future planning, it's clear it's going to be a long time because houses are going to be able to provide people with excess funding for personal use. another thing that you need to know before looking towards the future is notwithstanding all of the numbers, it's a mistake to assume it's what caused the collapse in the world economy. the housing bubble was
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not unique to the united states. many eu countries saw greater house appreciation than the united states with the declines that were just as large or larger. denmark experienced a 103 administration rise in price appreciation and a fall of 20%. aye rand saw an appreciation of 162% and decline of 30%. some of those countries may ring a bell. they are the ones in deep trouble with the sovereign debt. the policy questions we face about what to do about housing in the future are important in light of the role that housing has played in the economy in the past. to begin, we have to decide how much support as a government we want to provide to our housing to attract capital to the industry. we provide incentives in a lot of ways. particularly for home ownership in the tax
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code. the deduction for mortgage and property costs us about $1.4 trillion. then years is the relevant because all of the debates is about what happens. talk about cutting or ending was always one of those third rails in politics, until the debt crisis came crashing down. dough the de -- now the deductions maybe on the table. the next question is whether we want to have the government guarantee at least some of the securities in the secondary market. the government guarantee of fannie and freddie which has moved after they were privatized, clearly attracts capital that the lenders cannot provide themselves. if we are going to have the guarantee, we clearly need to charge for it, which wasn't done in the past. without a government guarantee of some securities, we're unlikely to continue to have 30-year fixed price mortgages.
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investors are not willing to take the interest rate and default risk over that lengthy period of time. but that's not illegal or immoral. canada does just fine without a guarantee program and has home ownership rates about as high as ours. but in canada, you have 15-year mortgages with variety interest rates and significant prepayment penalties. people have talked about covered bonds as an alternative to the secretary market. for this product, the bank takes it's mortgages and sells bonds, secured by the mortgages that would stay on the balance sheet. while there's experience in europe with covered bonds, there's never been a covered bond market the size of our mortgage market. give you a feel for the magnitude of our market, the annual size of our mortgage-backed security market is about 1.3 trillion euros.
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as you can see. the size of the covered bond market in europe is relatively small compared to the 1.3 trillion number. even though in some countries covered bonds make up a reasonable percentage. those are much smaller mortgage markets than in the united states. there's also the question of how to resolve the conservatorships of fannie and freddie, some way to go to a private sector without any involvement or guarantee and we should simply wind down or end fannie and freddie. they would be known as republicans. [laughter] >> because the question is what happens during the next crunch? there's basically been no private market -- i'm sorry, there's been no private mortgage support of the mortgage market for the past three years. without freddie, fannie, and fha, there would have been no mortgages.
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they are now 90% of the market. this isn't a good thing. the question is how do we restart the private market? one possible move suggested that would be a good indication of what appetize for mortgages exist out there would be to lower the conforming loan limit that caps of size that fannie and freddie can buy. they are as high as $727,000. it's set to go to $625,000 this fall, and we'll see what happens at that time. because every mortgage above that side will have to be financed in the private sector. a final question is what support, if any, should housing entities provide for so-called affordable mortgages. there's a theory that it was the drive and the push for affordable mortgages that encourages freddie and fannie in particular to issue mortgages to people who are otherwise unqualified. some years ago, lending institutions were foragedden from red
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lining urban areas for mortgages and excluding them from financial activity. clinton administration, while i was there, decided that since increased opportunities for home ownership was an important social goal, why not require freddie and fannie to ensure that a given percentage of their purchased supported that goal. the initial supportive housing goals were in the range of 30%. the theory was 30% was good, why not 35 or 40%. since the goals were set by the administration through hud or the congress through legislation, it really was a free good since no one had to answer the question how much, if anything, does it cost? nobody ever delivered a bill. to its credit, the bush administration also supported a home ownership society and affordable housing goals suddenly were about 50%. as i noted, nobody ever sent a bill for this until recently. we've now sent one, but it's probably not the way we ought to do it.
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part of the problem has solved by the passage in 2008 of the legislation that gave the government to put fannie and freddie into conservatorship. it moves the federal housing goals from hud to the newly empowered regulator. this means that the agency responsible for the safety and soundness is also the one determining what affordable housing goals are consistent with the safety and soundness. barney frank last fall when he was running, pressure, for re-election, talked about the progress they have made with the election. don't say that. if you kept quiet about it, since we could then include this provision in whatever legislation is passed and point. if it's already in the system, you don't get credit for it. they will have to come up with some other way to change the requirements. some change is going to
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be required. but at least we ought to get credit for the changes that they had made. our position at freddie mac, since i started three years ago, all of the questions floating around has been not to have a position. once you have a position of what ought to happen, you then are discounted in any views that you have on it, any other options, because you are the supporter of option a. we will freddie, fannie mae have more information. we can tell you a lot about how mortgages perform in any economic circumstances in markets all overthe united states. but to be honest, brokers analysis of the various options proposed it seems to me we ought to be very careful not to have a proposal ourselves. so we are prepared and have been prepared in discussions with the administration and the congress to consider any option from one end of the spectrum of putting everything into a huge
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federal, to we go away and you have a private sector solution. thus far, it's worked well and people have been comfortable that we will give them a straight answer as to the pros and cons of any permutation on those themes across the spectrum. what's clear in the politics of washington and has been for some time, there won't be much movement on the question until after the presidential election. which means we have another two years to go. even the republicans talking about l.e.t. get rid of family and freddie have a footnote that says we shouldn't do it too quickly. everybody is concerned about the fragility of the housing market and everybody understands the numbers that we've looked at today about the critical role that housing plays in the economy. notwithstanding our no position, position, i think it's clear we will end up with a strong secondary and appropriate amount of capital available for freddie. the challenge is keeping them happy and
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productive while the congress and even the administration continue to talk about the need to wind down the companies and it's clear that the state of limbo is going to continue for another two or three years. the only reason the company hasn't folded is the dedication of the employees to the mission of providing and supporting housing for people across the country. and the fact that we keep them very busy and hope they are not paying close attention to this. even resolving the questions don't be enough. there's the $14 trillion challenge and the deficit growing as we speak. as noted, we know now a lot more about the deficit than we do a few weeks or months ago. we are also confronting that government spending is critical, but we can't keep spending at the rates that we are. government spending accounts for 20% of the gross domestic product. interesting enough, it's just more than housing. deficit spending, presently accounts for about 37% of those expenditures.
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when i was at omb in the mid 1990s, when we were confronting $200 billion deficits, we cut federal employment by $200,000, we worked to make the agency more efficient, cut nondefense, and none of it made much of an impact on the deficit. today we're in the trouble into some extent for the first time in history during the 2000s, we tried to run a couple of wars without paying for them for the first time. as the wars wind down, the expense will shrink. there's no easy fix. the simpson-bowles in december was an artful and balanced approach to the tough issues that no one wanted to touch. unfortunately when it came out, no one wanted to touch the report here. there are only six or eight things to do to deal with the deficits. you have to do them all. social security and medicare account for 33% of our government
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expenditures. defense is 20%, medicare is 8%. the short answer to the debate is that if you set aside social security, medicare, medicaid, and defense, and sell the rest of the government, you still have a deficit. and if you decide not to sell the rest of the government and only deal with entitlements, it's clear that you cannot realist click cut enough from entitlements and defense alone to solve the problem. you'll have to end up with cuts to entitlement, cuts to defense, and tax reform with improved revenues. the ticking time bomb, in fact, is the interest cost that has to be paid on our debt. debt. the biggest beneficiary, and they are abnormally low is the federal government. even with these interest rate that is are low and in some cases that are in effect paying the government opaque their money and keep it and give it back to them, because it's easier than putting it under your matress and making it
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lumpy. the cost is $200 billion. the cost could easily go up another $200 billion if interest rates return to normal levels, not exaggerated levels. i think the public is ahead of the politicians on this issue. when you read the polls, they are always asking the wrong question. if you ask me, would i like to pay more taxes, the answer is no. would you like to get less social security or get it later in life, the answer is no. but the real question is if we have a problem that needs to be dealt with, that can only be dealt with across the entire spectrum in which everybody needs to make a contribution, would you be willing to make your fair share of the contribution? the answer from the vast majority is yes. as long as it's fair. [applause] >> as long as it's fair
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and as long as everybody plays in the game. with a little luck, standard & poor's rate cutting will cause people to soften the rhetoric and work together to find a solution which i think the public will support. beyond that, why am i optimistic? because of the attention i mentioned earlier in terms of population growth. we will now find population growth. the census bureau projects that the u.s. population will grow faster in the next 20 years than in any other major economy. i knew we were doing better than japan in this area, because everybody is better off in japan in population terms. but growing faster than mexico, brazil, india, and china, i must say i find that really amazing. legal immigration is an
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important driver, legal in the decades of the 90s and 2000ed -- 2000s exceeded the immigration wave. without the immigration, we'd be more at risk looking like japan, italy, and europe with a declining population, increasingly asian with not enough people working to support growth in the economy. one the most important impact a population has, along with household information is the creation of a more dynamic and expanding housing market. the data shows that echo boomers, i love the way that people get generational names. why don't we ever hear about the baby busters in any event, they have delayed household formation for all of the obvious reasons. eventually they will form new households once they have more confidence in the economy and get tired of
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living at home with their parents. judging by the generation here, i assume those are parents who are applauding. [laughter] ironically, we'll also get increased sales when prices go up. i learned when i was the chairman in the downturn of the 70s, when housing prices decline, as they have recently, people stop buying to wait for even lower prices. of course, it becomes a self-fulfilling prophesy, that has fewer people buy, the price goes down further, and that's how you get to deflation. the problem for the last three years for the first time in history, house prices and origin rates have been declining at the same time. usually house prices decline because interest rates are ricing and mortgages are more expensive. so people have had two reason to defer a house purchase. and they've been
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rewarded for waiting. with lower house prices and lower mortgage rates. once prices start to price, people then want to buy to avoid having to pay more later. oddly enough, we should be rooting for not only higher prices, but higher mortgage rates to get people who have been waiting on the sidelines for a better bargain to understand that bargains are behind us. now is the time to buy. back to the increase. recent immigrants will account for about 1/3 of the new households in the decade. which will average growth of about 1%. to keep pace with immigration and population growth, housing starts will have to average about 1.7 million a year. to give you an idea of the impact, housing reached $29,000 annually to tell how far down we've been. at some point, we're going to increase housing starts by $1
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million which will provide a stunning increase in economic activity. the only things in our way are about four million homes -- [laughter] >> -- still in foreclosures or past due in their mortgage payments by 90 days. while the rate of delinquency is declining, the overhang continues to be a drag on housing prices and new construction. they are firming and the housing will move through the market one of these days. but it could be another 12 months before things begin notably to pick up. that may not seem like such a long time in history, we are very impatient people. pushing for things to be done faster is why productivity goes up. expecting or demanding the gang of economic downturn that dwarfs thing we've seen in 80 years can lead you to make more policy prices. there's risk as we gear up for the 2012 elections. this bring us to the role of education and the future of our economy.
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this country has always met it's economic challenges through the development of intellectual capital that allows us to lead the way in areas, such as building cars, planes, trains and electronic limit. as they caught up, we moved on. the irony is as education becomes more important, we are more challenged to provide it. we've all heard for years about the challenges of educating students in our inner cities. when i over saw the daily operations of the city of washington, it was clear that poor schools for a pipeline to crime or welfare for our graduates. either way, many of the studentses were lost to our economy in terms of becoming productive citizens. our economic future depends on more than solving energy problems.
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27% of degrees with the u.s. awarded in 2007 and 2008. 51% of math and statistics doctorates. historically large numbers have opted to stay in the united states and have made contributions. civil can -- silicon valley is full of them. they have made it difficult to come to the u.s. and stay here. in the inevitable that more fortune graduates would return home as economic opportunities expanded. as foreign universities get better, they will attract more of their st. s to -- citizens to stay home, rather than come to the united states. we have exacerbated the reversal of the drain brain, by pois -- policies in particular.
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when bill gates said they might have to open an office in canada to be able to hire the skilled workers he needs, you can see the problem. the intellectual ability needed can be kept by the schools, of course. they still produce bright, energetic college students that move into productive roles in the economy. as the irony is that as the need for more education as the age of technology grows, the cost of higher education is moving beyond the ability of many studentses to afford it. tuition growth has out paced inflation, growing at an annual rate of 7.9% since 1979 compared to overall price increases of 3.5%. when i was chairman of the board of trustees in the mid '90s, we worried because it was obvious even at this time that it was $20,000. we had a vigorous debate as we set tuition levels.
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arguing about whether we were giving away a product if the tuition didn't go up. on the one hand. and on the other hand, were we going to lose that provide not only through the university, but the economy, by foreclosures the possibility of an education. our debates got to be so regular, i suggested this we assign numbers as the joke went that people in favor would get numbers 1, 3, 5, and 7, and people against would have acts 2, 4, 6, and 8 and we'd have a speedier decision. the rate doubles in nine years. so in 2020 at this rate, private school college education that costs $50,000 today will lost already $100,000 a year. those are after tax dollars. change may not come in forcing tenured professors to teach more
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than one course a semester. [applause] >> i assume that laughter and applause is not from anyone in academia. there are developments going on in technology and web and information flow that are exciting and may prevent an revolution. there's a young man that's not a educator, he's a graduate from m.i.t., educating his niece. he was giving her advice and sending it to her by e-mail. he discovered it was easier to send it over youtube. everyone on youtube saw the lessons, 10-15 minutes solving a particular problem. and the audio began to grow and grow. there are now -- he quit his job, started doing it, there are now 2400 microlectures on the web for free from his site.
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he's had 69 million visits. at the same time, major europes are making videos of their best professors teaching important courses and making them available. with a little luck and continued growth of our intellectual capital and innovation, the education students need maybe as available as youtube videos. there will be appropriate concerns about quality, but my hope is that we won't let that interfere with the development of this new technology in way of pursuing education. ultimately, in the long run, it's going to be critical for us to provide as much education as we can to those that are able to absorb it. notwithstanding the people that maybe something their what happened, i don't see anybody. we must be all right. some the things we need to do in the country in the days ahead are clear. we need to support the return of a vibrant housing economy. we need to take realistic steps to solve the growing deficit
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problem, and we need to do whatever it takes to continue to develop the intellectual capital that will allow us to lead the way into the future. : he will let the ushers are what tom called mattingly a tight in their lovely mur moonves. they will bring your questions to emily who will bring them up to me. i must confess that i was a
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little questioning how you were going to tie housing, education and immigration altogether, you did. and in a wonderful package. but where do you start? >> where you start is -- and that works. magic. see, technology. we have to start across the board. as i sit, population will not happen unless we some how take some of the measures, and that will influence the housing market is effectively over time almost no matter what we do. again, we need to be patient and make sure we don't screw it up in the meantime trolleying to come up with short term solutions that actually aggravate the problem over time. the deficit obviously needs to be dealt with and is an important warning and hopefully this isn't a harbinger of things to come.
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this morning and got a note that freddie mac securities in the aaa and aa platform and the risk is the standard and poor's is correct, that is that we are unable politically to deal with the deficit problem at which point things will get much more difficult. and in terms education and the capitol, people have been dealing with that problem and we need to understand that it is a high priority. i used to find when i was running washington that everybody knew the schools needed to be fixed but we also moved on somehow something had happened. and my view was a few convicts one thing in the city of washington there were a lot of things that needed to be fixed i said i would fix the education system because the critical role that it plays in preparing young people to be productive members of society. [applause] i would say my philosophy and the question and answer sessions as the nice people bring them and there's no question is
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off-limits so feel free to ask any question you would like and i will answer it. now i've done that for years ever since i went into the government 20 years ago, and i decided that what happens is i've never gotten into serious trouble with an answer which leads me to conclude nobody is paying attention to the answer. [laughter] so until that changes, have at it. >> this person notes 71% of college students have student loan debt of $55,000 asks want this damned in the housing recovery since graduates have less money to pay for a home mortgage? >> we are all worried about the dead students have and especially at the graduate level if you incur a lot of it as an undergraduate and in business school kuhl law school, medical school you end up with a couple hundred thousand dollars in debt. not only does it impact your ability to have a house but in
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practice your ability to buy anything. so while universities increased significantly their financial aid -- deutsch is one of those that still has the admission -- the way that happens is because people take out a lot of loans. and i think is going to be a drag. there is no simple answer to that except i think having spent a lot of time on higher education we are going to have to figure out a way to make it a less expensive undertaking because if you measure it by the relative cost -- when i went to duke for four years i once on a scholarship and i can't close track because the a.d. $800 for four years. there was a long time ago but you could have brought for chevrolet's for that amount. now it's 200,000 you can buy a lot chevrolet's we have to come to grips with that problem. >> freddie mac and fannie mae have also just been downgraded by standard and poor's. can you comment as to what this will do to the home market? >> in the short run, it will increase incrementally our
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borrowing costs and therefore it may increase mortgage rates. a will not i don't think have in our analysis of a significant effect by itself. the risk is as i say that if we get another of the two remaining agencies that as a downgrade and investors start to not flocked to the treasury's but go elsewhere and rates go up, that in the long run is a problem. as i noted ironically, i thought that if we could get mortgage rates to stabilize and increase somewhat it might get people off the dime - talk eclectic. my daughter but her first home this spring with a mortgage rate of 8.5. she left the house and they don't think of it as an investment so they aren't paying attention. i hope they aren't listening. when their rates are back down to 4.5% your fault is i should have waited and bought a house with a mortgage rate lower. so we've really got to break that cycle of the people who are waiting on the sidelines, get them out of the habit of making them think they will go to 4%
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slide on wait another year before i buy a house. >> this person says i'm not planning to move for my home and i'd still working on my job. why should i be so concerned my mortgage is temporarily under water? >> you shouldn't be. there was a good question. all right. actually, most people -- notwithstanding their experience with the house as any team -- most don't calculate the value of their house every year, every week or every year. you get an assessment from the city every year and they tell with the assessment is because the people that bought the house are going to live in it, they live somewhere and understand values go up and down, so if you're going to be in the house a while, house prices will rebound over time. so i've always thought that the idea that men and somebody's house is under water they are going to walk away from it is a failure to understand human nature and how people respond to these things be big if you are way under water and there are condos in florida you might have a $250,000 mortgage on a $100,000 house some people have a legitimate question july keep
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paying on this mortgage when i'm going to end up owing the think a lot of money but we didn't see a significant increase in people walking away. those do terrible things to your credit. but most people are comfortable in their houses and are not going to in fact be microtimers and say i'm getting out of this house and then i will wait and get back into the housing market another time. >> this probably falls under that category of "ask anything." >> walz. i was just kidding. [laughter] >> is anyone going to be held accountable for the economic problems? [applause] >> for those of you that saw the documentary quote coat the inside job," -- [applause] which i thought, by the become a was a very thoughtful analysis of the entire suite of the problem. obviously everybody has this everybody ought to suffer. one thing to bear in mind is a lot of people have suffered who worked in the companies.
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most of the people for instance which as i see participated were not necessarily a leader in this, had that compensation in their savings tied up in their company stock, which at one point was at $70 a share and is now about 70 cents a share. so a lot of people have had significant declines in the personal wealth because the invested in their 401k and pension plan and the company stocks and if they are in a financial institution, they got wiped out pretty effectively. the other problem the sec and the justice department has is not a crime to be dumb or ignore what's going on. you have to intentional we intend to commit, lead a criminal statute and so there have been very few successive prosecutions. tayler whiteaker is going to jail for clear fraud. his was not the question of just ignoring the bubble gum it was
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actually fraudulent beating at freddie mac and others. i think in some ways it's been aggravated by the fact that after the bailouts in the t.a.r.p. program which is making money for the government in the long run, bankers and investment bankers and wall street were tone deaf enough to decide the issue large bonuses. and i think people have actually paying a really large businesses and lobbying against the regulation and i think that's fair. [applause] estimate my advice would have been to keep the bonuses down and the argument is if we don't pay them somebody else will pay them it is not the most astute political move on their part. >> this person wants to know an irony in the title is a
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non-executive chief executive officer. [applause] >> good corporate government people have argued for years that the ceo of the company ought not be the chairman of the board at the same time. [applause] that's an investor and not a ceo who is chairman. the argument is the board ought to be independent and run by an independent executive. about 70 per cent of the fortune 500 companies have the ceo and the chairman has the same person and about 30% last 15 years or so have segregated the duties. fannie and freddie have a combined ceo chairman. so when zakaria calls and asked me to come in and restructure the board and to go for the company as they went into conservatorship, the regulator asked them that they wanted to segregate the title for the first time so you will see the determination and the chairman of the board the vana executive chairman which is i'm not the
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ceo, the executive leadership of the management is the ceo, chief executive officer. the, executive chairman is an independent board chair who actually controls the operation of the board of management. i've never seen the term either until i was one to be on was the chairman of the board which is what i normally see people and don't know we might the ceo or just the chairman of the board soon on executive is in fact diminutive and i am just the chairman of the board. >> what do you think about reverse mortgages offered to senior citizens? >> well reverse mortgages to the senior citizens are attractive, a little like the trademark phenomenon. you've got an equity built up in the house and you would like to rely on its for retirement planning to read it think the property is well structured they work well for people and i think they are an attractive way to
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enhance retirement. your children may not appreciate it that much, but it does seem to me all we have to do is be careful and some people did get caught. you don't get carried away and suddenly the government to create a mortgage significantly under water and at some point you created interest rates that are going to shoot up more of the equity in you plan on. >> what about the credibility? >> another discussion can be what about the rating agencies clacks as people discover the rating agencies, standard and poor's, moody's and fitch, all else this debacle and sold it were paid by people to read the documents and securities and that sort of sounds like a conflict if he says here is my security give me a reading and i will pay you would not lead you to expect you're going to get a bad reading. so as a result, she's very complicated securities, straightforward. i have mortgages it to the medical it's pretty easy to
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understand. it's when you start slicing and dicing them and leaving the securities on top of those securities it's hard to figure out what they are worth. clearly the rating agencies would tell you they didn't really understand the level of risk and clearly provided ratings that they quickly tried to unwind all through 2009 and 2010. so the question as how credible are the ratings. people noted much of the guys in new york who were they to say that the rating of the united states credit rating of to go down and there is a move by some people who say we should get away from credit-rating agencies doing that. in this particular case the reason it's thoughtful and sound and it doesn't tell you anything it doesn't know basically we've got this huge deficit that's growing at a rate that is unsustainable and we have a political system that seems on capable of dealing with the of the fed therefore, sooner or later the treasury securities are not going to be as risk free
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as they used to be so whether they are credible and other ways or not the reasoning was sound. >> apparently david brooks has written that fannie mae is the greatest political scandal since watergate. would you agree with that? [laughter] we competed vigorously for 40 years against them. so now is my chance. i think there is a book out that gretchen has that takes jim johnson who was the head of finney in the early 1990's who built the political machine to task and what they did if you haven't read the book is basically if they were purely a private-sector company and said what is wrong with because everybody else is doing it, you provide the financial support to the campaigns for legislature, legislators, you announce programs in the districts and try to ingratiate yourself with them and fight against stronger regulation of try to get people
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to leave you alone. you wrap yourself in the mantel of homeownership as the public good and try to preserve the bargaining advantage you have over to slightly lower rate because of the implicit guarantee. if you are a private sector company everybody would say that's what they all do. i think what discourages people that are not happy about fannie mae is there was an era in the kind of what we are really doing god's work, the ship is important people should leave us alone and the implicit guarantee of their relationship was such that people felt they ought to be held to a higher standard. so, i don't think it is the greatest political scandal since watergate. it's a little light penalties. when you have the president of the united states conspiring against the country that is when you call the scandal. what fannie mae was engaged in you might say was disagreeable, ana fortunate, and why is that it wasn't the watergate scandal.
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most of my friends appreciate the fact that i did not go forward. >> why are we talking about growth and the sustainability? [applause] >> gereed question. >> i think that's the right question. the way that we got out of the problem in the 90's was true growth the and in my years as a managing turnaround you can't shrink your way out of a problem you have to grow your way out of it so the question was right we ought to sustain where we are and not go backward if we can afford it but what we have to figure out is what is it that will move us forward and how well we grow everybody knows we've lost a lot of manufacturing jobs and we need an appointment to sustain that growth, and that's why i think you're going to hear a lot about -- you heard about job creation and you're going to hear more about it and infrastructure development and infrastructure banks but it's one of the reasons i feel strongly that the intellectual capital.
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we formed a lot of companies and a lot of jobs by being smarter and being the first mover in a lot of areas. and if we don't pay attention to that and lose that vantage that we are going to have trouble sustaining growth. >> some questions about unemployment. how can we look at growth of the housing market with so much unemployment, and what you equalize the gap between the minimum wage salary earners and professional salaries clacks spin a lot of questions here, all right. the problem with unemployment for hiring is not just the number. although it is larger and clearly over the last year, year-and-a-half the delinquencies we've had in the mortgage market have not been the subprimal and the lighter ones, those all got washed out some time ago. the challenge now comes to people who've lost their jobs or had some normal reason they can't pay their mortgage and the unemployment problem has exacerbated that. but my experience watching over the last 30 or 40 years as the
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the actual number is not what is important. what's important is not who was unemployed, it's how many people think they could become unemployed. and when you have going now -- there are not a lot of people very secure that they can guarantee themselves that six months from now they necessarily should have a job, because companies continue to retrench and continue to reorganize and continue to restructure. and so, until you can get people confident that unemployment is stabilized and coming down as a general matter, and therefore, they are more secure in their jobs, it's going to be harder to get them comfortable making a major commitment. so i think we don't have to worry about can we get on the planet from 9.2 to five before everything starts. all we have to do is start to show progress and growth in the economy where people feel, after comfortable and confident things are great to get better. in terms of wealth prosperity, we are back to wall street. and to a large number of companies where everybody says you what to measure the gap between the guy on the front lines or the woman on the front lines and whoever the ceo is.
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and clearly the last 20 years that gap first hatfield has widened substantially and if we take a harder look at what we are paying people of the entry-level do have to be competitive worldwide and the other issue is we ought to look at what the people are worth the multi millions of dollars they are paid costs and that is where part of the regulatory reform is getting investors say on pay and telling them to voice their views and hold them accountable because they set up the ceo pay and everything else follows underneath that. so my experience on the different parts is that directors are starting to take that more seriously, but likely to have more focus on that and again, the public needs to what people understand that it's hard to know who's worth $30 million a year. [applause] >> we have an announcement here with a thing to do half of the market has increased by 50 points since you started
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speaking. [laughter] >> well i will be invited back tomorrow. [laughter] >> the question is will you continue to speak for another six hours. [laughter] >> how should underwater mortgages the results from of the freddie mac prospectus? >> that's a good question. you've heard a lot of what can we forgive debt or should there be a way to recognize the debt goes down. there's the question on the moral hazard in that, and that is how do you distinguish between the people who are hard working and paying their mortgage even if it is under water and sustaining their obligations from the people what the reason the site to throwing the towel. one kind of behavior and not another.
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i've always thought, and we've done a lot of that and we can probably do more that equally important for people a lie for them to refinance even if they are under water as significance because we are exposed to the mortgage as it is now. you can refinance your mortgage to buy tickets now 120%, 125% under water. but there's no reason you shouldn't be will allow wider body to refinance if they are too wondered% under water because we are stuck with that on any way and might as well have somebody that has a stake in it. [applause] >> and the advantage of that when we have done literally hundreds of thousands of refinances under the president's program the average refinances saved people $200 a month in the mortgage payments which is a 2400 dollar and that is an ongoing stimulus for an answer to some extent if you want to get more money into the hands of people, you would in fact refinance the mortgages. the question is why doesn't everybody do that? the only people unhappy with the
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better the people who bought the mortgage securities and assumed there would be a certain flow of income out of the securities and if it gets refinance down their income goes down. but on balance i think we've moved to some extent in that direction and i think that is an easier way to proceed pish than trying to figure out how to write mortgages down and to get interested get the money back of the house goes back up. >> there are several questions about people who are being left out of the system and there are some disagreements about who they might be. whether it is the lower class, lower and middle class will citizens need fuel to have food and these questions are asking if the population increase really is a solution. you have said it is that people want a little bit more clarification. >> well obviously one of the issues about particularly immigration is the concern that immigrants come to this country
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from mexico in place great demand on the social infrastructure increase the cost of food stamps and other issues and at the expense of people who've lived here longer who have the same challenges and i think those are significant issues also historic plea the lesson and that immigration has been that anybody who has the wherewithal, the initiative and the strength to lead their home and leave all of their friends and families and move to a new place to start a new life generally make a significant contribution to the economy. and i think over the years -- over the years i always thought, and it's not coming true, we had a great advantage over europe because we were a much more open society. in europe immigration and citizenship have been much more tightly controlled. it's very hard to break into the system and therefore their
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societies stagnated in a lot of ways. we had a tremendous amount of energy flow into our economy with immigrants and the guy that does our yard is from central america and started to years ago and he has three huge trucks and seems to stick of the world. he's bought houses had made investments and he's the guy that came with nothing, spoke broken english but is a wonderful human being and has made the most of his opportunities and has hired now he's got i don't know, probably 30 or 40 people and seems he is kind of a role model flight that kind of infusion of energy will continue to help us as we go forward. >> these folks the que are very smart about the issues that you've spoken about, but you haven't spoken about the deterioration of the environment and health care. so i think there are folks who want to know everything.
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[applause] scud freddie mac is wonderful when you read each week the mortgages put together she's helped me with the information to read i told him i was going to have a slide that says the satchel information and the presentation was prepared by intelligence people if it got lost in translation it's not our fault. now what's the question? [laughter] >> they want your comment. >> i told frank tiahrt for here was to speak fast enough and get off the stage before people figured out how really delighted know. i actually know something about health care and on the positive about health care i grew up in ashlawn kentucky, a small town of 35,000 people on the ohio river which it had a huge rolling mill, six chemical
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plants and turn out to be a terribly unhealthy place to live, but on the other hand it was economically dynamic and all that industry has gone away. what saved the city is it has become the health care center for all the appalachians and what was once a half block castle has to get over two blocks and there's clinics on every street corner so health care has been a great job creator and it's not just an ashlawn kentucky but it's been in cities across the country. on the other hand, health care costs are obviously rising exponentially in a way that is not sustainable and that we have got to deal with and it's not again one of those if you ask anybody would you like to have a constraint put on what to do with health care the answer is obviously know if you ask somebody to see the whole system is collapsing and here's a rational way across the board you are more likely to get positive response. it clearly is a challenge. on the river had, what you need to understand is we pride ourselves on our health care system. it used to be the best in the world but if you look at the industry's, we are in the mid
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teens in terms of dealing with children's illnesses that generate the body politic and so it's not as if all the money we're spending has us number one in the world. all the money we are spending in the world has us in the midteens so there is a lot of work to be done. the environment on the board of a power company international power company in 29 countries so we spend a lot of time investing in or developing solar and wind power and a lot of alternatives to coal and gas there again looking for a quick fix if it were only that simple. a significant amount of power produced in the country by coal and if you shut it down everybody would actually get to sit with no electricity so you have to move in a regularly from here to there. a lot of power plants are now
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closing which out of the oil deposits is better than coal but still provides about half the amount of co2 but that's a lot better than the coal so you see a lot of closing of the coal plants if they are not closing just for a final reason their closing because they are no longer economic in the price of gas. so the markets to some extent are helping but it is clear if we don't do something about it and in an organized way over time we will live to regret it. the biggest problem is we got people to quit driving them all morning. we would solve a significant percentage of the environmental problem. one way to help it is to get the 50 miles down in 2010. all walk around rather than driving their car. but they are both big problems. the of the potential, tom friedman years ago talked about
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the environment and the potential to be sources of growth rather than decline if we are creating an imaginative and how we deal with the problem which means we need to support here development of energy and put more intellectual capital into the fields of those are both worth 50 minutes of row so we will stop there unless you are ready to go for the six hour version. [laughter] >> there are so many wonderful questions here. i'm going to ask to more by going to announce to the group that she will be of the women's club on wednesday so some of the questions that you have that didn't get asked can be asked that time. 3:30 on wednesday. a short question, how much money as freddie mac to lead to political candidates and lobbies? [laughter] >> zero. [applause] >> i was disappointed i told the ceo who was with me for six mo

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