Transcripts For CNBC Squawk Box 20091007

his committee is investigating the acquisition of merrill lynch. coming up at 8:00 a.m. eastern time, a bipartisan conference that l see only here on "squawk box." we'll be coming up with six different conmen, guys, three democrats, three republicans. you've got barney frank, paul ryan, eli ya cummings, jeb hensarling, paul kanjorski and kevin mccarthy. they'll be debating the issues that matter the most. we'll be talking about the economy, the unemployment rate, health care and talking about regulatory reform that is coming to -- very quickly. >> it seems like every issue in front of the street originates from this city and we'll talk later on, john, to the degree to which it all gets diverted somehow, if at all, derailed by afghanistan and the way that has stolen a lot of the thunder hoop the. >> that issue all of a sudden has taken over the agenda and the white house near term. the president had this huge meeting with congress yesterday. it appears he was trying to make clear to them that he's not going to pull out pleatly about afghanistan, but he has a choice about how much do you double down and increase the size of the force there. a lot of democrats have miss givings. >> what is your sense about which way he's leaning right now? >> i think the president is likely to go with the smallest possible force. it's a guess. but vice president biden, who he hired as vice president because of his expertise on national security is looking for a somewhat smaller foot print than general mcchrystal has recommended. he's very, very well aware of the misgivings of democrats and the history that lyndon johnson experienced in vietnam when you put more troops in, you don't get the results and afghanistan has broken the efforts of surpt powers before. >> a lot to get to. earnings season does open for play today. alcoa will get the first nod, the first component to re-lee results. overall, the s&p is expected to drop nearly 25%. >> 25%, which would be about on par with what we saw over the last quarter, too. >> in q, 73% of the s&p components saw upside surprises on earnings, but i think on revenue, beck, about half beat. so the question will be can the market tolerate another quarter where a lot of companies beat on earnings, but revenues continue to be a troubled spot, top line growth. >> but no need to wait until alcoa after the bell for the interesting numbers already. we've gotten a few names that are out this morning. costco reporting better than expected fourth quarter earnings and revenue. the wholesale giant is posting 8 cents a share ahead of consensus. the retailer says september same-store sales rose by 1%. analysts were looking for a drop of 0.7%. yum brands is expected to get a boost today. they posted a better than expected 18% just jump in third quarter profits. talking about strength in china as a big t driver. u.s. sales dropping 5%, but that was offset by lower commodity expenses and general cost cutting. >> other headlines this morning, fannie mae and freddie mac are preparing to provide short-term the credit for mortgage banks which is needed to the make home loans. the wall street journal says the two gsps will provide advanced commitments to purchase mortgages that meet certain quality standards. and we stim talk about fannie and freddie. >> they're basically the only market at this point. we would like to see other companies pick up some of the that slack, but it will be a tricky road to get them to that place. charlie gasparino reporting there are two key candidates. we're talking about greg curl and the head of retail praises there, brian moynihan. there are other names out there, as well. sally krawlcheck is now considered a long shot. they're talking about at this point whether anybody internally, somebody in charge of the chief risk would be somebody who can run things. today we have adolpho, who has been on the forefront with pushing to find out what happened to ken lewis behind the scenes. >> and we know from ken feinberg that whoever takes that job will be subject to -- his pay is not going to be what he thought it was. >> hope you like stock, long-term stock. a consortium managed by capital group has won the bidding for corus bank. >> there is a yield alternative and if you're patient and you can take a longer term view, if we buy this portfolio of assets from the fdic, this bank fort fellow, you'll be buying this real estate at 25 cents the original cost. and with the proper financing and the right structure, you just didn't wait. as an alternative to the other asset classes, to me, it looks compelling again. >> the start of capital leg group is buying a 40% stake in the course for $554 million. the fdic is going to hold the other 60% stake. we think barry knew about this knew about this when he talked to us, but couldn't talk about it until the bottom line was signed. >> it was interesting to see him tap around it yesterday. >> he wanted to tell us. >> he did. it's too soon to start withdrawing the fed's massive report according to thomas hoenig. he warned that it will be vital for the central bank to pull back from its ultra low interest rates and draw and withdraw the cash put into the system before igniting inflation. >> there's another one, where you have kevin warsh. you have dudley saying don't worry about rates jumping, then you have kevin warsh, hoenig saying you have to move sooner rather than later. it's hard to know which part is the job owning and which part is the policy. >> i'm sure that's true, but i'll tell you what the obama white house is leaning towards. that is go slow in withdrawing that support. they're looking at the unemployment rate. they see an economy that's recovering, but people aren't feeling it and they're going to be very, very deliberate about when they pull back their intervention. >> and in the past, what has happened if you look back to the great recession? pulling it back too soon slowed things down. ben bernanke obviously is very -- >> in the 1930s, fdr pulled back too quickly. >> that's one thing they'll be watching closely. >> and the sounds like this new yorker piece earlier this week that christina romans was at least on the same page in bernanke in that you want to flood the zone. >> there is no question about it. i think she's also on the same page as president obama on that issue. >> right. let's talk the agenda today. theback of england begins a two-day policy meeting. also this morning, we got some bulis numbers yesterday. check on the markets, futures behaving relatively well. the big story yesterday was the dollar and how much it got punished. as a result today, we have futures steady, not extremely strong, but steady. oil jumped in the second quarter. >> and we talked to boone yesterday who said he's looking forward to a hedge against average of $80. >> the 10-year note, 3.253%. it has stabilized the yen at an 8 1/2 month high at 88.11, which is pretty astounding. a lot of pressure on the japanese to intervene or not intervene. check out gold. it hit a record high of 10.43 and is adding to that today, 1,047.90. let's find out what else what happened oversea these morning. chloe cho is standing by in singapore. first, we'll go to london and check in with steve. >> very interesting session, actually. we've had a couple of days of very strong gains on all of these markets. the european indices up 2.3% to 2.7% over the last two the days. they basically pulled the plug today and stopped and are waiting for those alcoa numbers later on. stocks slightly, insurance stocks, media, construction, these are the ones trading to the upside today. in terms of data, we've had uk consumer sentiment, so important in our economy as indeed is the u.s. because 70%, 80% of the know is directed towards the consumer. we had the hottest figures in 17 months, so maybe the uk consumer is getting more bulis about their situation despite the fact we have our own unemployment problem. quite exciting news, actually, on both sides of the atlantic. banco santander brazil, not only the biggest brazilian ipo ever at $8 billion. it's also the biggest ipo on the new york market for well over a year. this has american deposit shares on the u.s. market and is a sign of health perhaps that we've got a decent cue building up in the ipo market. but banco santander itself is going to book a $2 billion gain on this deal. the biggest deal for a long time, they bought ing swiss private banking operations. julius bear is the number two. that's the european story. let's speak to chloe about what's going on in singapore. >> strong session out here in asia today. it was really the resources that drove the broader market higher. no surprise that australia was a standout winner, up by 2.3%. we had the big miners, the likes of bhp and rio tinto given how high gold prices are now 1,047 as i speak. and north asia at 8.5 month highs. investors decided to shrug that off. the nikkei ending up at .1%, slightly different story in south korea. the won pressurizing some of the top exporter names such as samsung electronics which closed down 3%. that is the bluest chip on the board. plus, mother worries about a possible interest rate hike later this friday. what the bank of korea made that decisi decision, as well. earnings worries, have they gone too far too fast? plus interest rate worries, as well, in india. on top of that, the currency strength. indian rupee is at its highest level of the year. we had the financials on high hopes, as well. now the expectation is that that could happen as early as the first quarter. the shanghai composite is still close. >> chloe, thank you. we are trying our best to try and look very congressional today. we're going to give it our best shot. >> i think you can definitely pass as a congressional woman, thank you. >> thank you. and we're going to take the pictures to make it look like we are. but chloe, thank you. we'll check in with you again tomorrow. joining us right now is the chief income strategist at morgan stanley. david, this has been a huge, huge week for the treasuries. we have been watching massive auctions that have taken place. we saw a $10 billion auction yesterday. you have the $.billion one on monday. you've got another $20 billion ten-year treasury auction coming out today and 12 billion more and 30 years on thursday. so far, it looks like demand has been pretty good, right? >> absolutely. it's 78 billion of treasury securities over the course of the week. they both went pretty well. i think the next couple of days will go reasonably well, also. i think that going forward, we have a looming supply and demand balance, but we don't have a catalyst for that. so i think this week's options will go okay. >> isn't the big question what happens once the fed and the treasury move out of the auction place, once you get them start pulling back? at one point, the fed was going to say that they would buy $300 billion. once they use up the rest of that, then what happens? >> well, they're pretty much down at this point and they've been phasing down for the last month or so. so the fed is no longer an important factor in the treasury market. but the fed is pretty much out of the treasury market at this point. >> where is all the demand coming from? >> the demand is coming from a number of different sources. foreign investors continue to be big buyers of treasuries. i'm not sure how long that's going to continue at the same pace it's been running. i think foreigners will continue to buy, but it's the margin, i suspect, that some of the central banks will pull back. commercial banks have been big buyers of treasuries of late. that's a reflection of weak loan demand. i think as loan demand begins to normalize, it's not going to go back to where it was a few weeks ago. but as it begins to normalize a little bit, you'll see banks move out of the treasury market and back into lending. the household sector has been a buyer of treasuries. i think that's largely a reflection of the flight to quality trade. it's reflection of activities of nonprofit organizations, liken dowments and foundations as opposed to traditional household investors. but i think there, too, you run the risk of seeing pullback in the demand for treasuries. again, some supply demand and balance lies ahead, but for now, the big increase in issuance is being met with good demand. >> david, do you want to weigh in on where the dollar stands, not just this morning, but in this overall trajectory of decline. and what is gold telling you this week? >> well, i think obviously the two are related. i think the dollar is likely to continue to drift lower. i think the signal from australia in raising rates. australia was in a much different place than the rest of the economy. i think the u.s. will continue to lag, though, much as the rest of the world in removing policy accommodation and that will continue to put some downward pressure on the dollar. >> so when you have these other economies, like australia that don't have the excess slack that we have, right, they're going to start hiking probably the number of those countries are going to rise. we're clooerlg clearly not going that direction. how much farther would you say the dollar has to fall? >> i think the dollar could test the lows that we saw last year. i think somewhere down another 10% or so. but i don't think the fed is going to raise rates any time in the near term. we don't look for a rate hike until the second half of 200. but i am very interested to see what they do with their quantitative easing. quantitative easing was implemented last september or october. we had a big build up in reserves and we've been drifting sideways since that point for the last year. now you're on the cusp of another leg up in quantitative easing, another leg up in the fed's provision of excess reserves because the programs that have been helping to offset some of the purchases that the fed has been doing simply don't have that much more room to decline. so you're going to see another leg up in decline. it will be interesting to see what the hawks have to say about that. i suspect that the fed will let things lie for now and they'll accept more quantitative easing, but there will be pressure to mop up some of that excess as we move forward over the next few months. >> david, you brought down your growth estimates for the second half. now you're at 2.75%? >> yeah. we made slight changes this week. we now look for growth in the third quarter and gdp to be 2%. on average, that's a quarter of a point lower than where we were prior to the forecast that we issued yesterday. >> but at the same time, you're saying don't fear the double dip? yeah. i think that we are entering a sustained recovery phase. i think it will be a sluggish recover by subpar standards. and so the unemployment rate is going to be pretty high. overnight, we heard murmurs from our contacts in washington about potential job credit programs for businesses, a program that hasn't been tried in the u.s. since the 1970s. b. >> but you think that is something that could be helpful? >> it could have an impact. john can tell you there's a lot of deficit concerns in washington that may limit the flexibility of policymakers at this point and i think those deficit concerns are warranted. i think that certainly programs that add more debt will help to push rates higher and reinforce that supply/demand balance that i mentioned the did that help in the '70s? >> it did help for a period of time, although there's a lot of debate and disagreement about whether the jobs would have come about in any event without the credit. so we can never know what the impact of the credit was. the job growth picture did improve on the implementation of those credits. >> david, thank you very much for joining us. it's good to talk to you. >> very good. thank you. the lead story in the times today, the jobs credit story and the idea that it's getting big bipartisan support. >> madam chairman, if you don't get hopping quick, you are in big trouble next year. >> remember, you're up for re-election. >> i hear you. think about the lobby job. >> she would be good, wouldn't she? i can see, quick. >> no, no, no. >> when we come back, we're going to take you on a tour of our home for today, the hearing room for the committee on education and labor. we'll talk about the big washington issues of the day, developments wall street cannot afford to ignore. as we go to break, take a look at yesterday's winners and losers. we're back in a second. >> there is nothing so satisfying to the spirit, so defining of our character and giving our all to a difficult task. xxxxxxxxxxxxxx welcome back, everybody. we are coming to you live this morning from the house education and labor committee room. carl, we've done this once before. john, you joined us the last time when we were in the senate. but i have to say, guys, this room has a bit of a majestic feel. it's bigger, it's deeper. >> and some of the names you might recognize. they put -- i don't know if you can get tight on some of these name plates, but here is mr. frank. mr. kanjorski is somewhere else. mr. ryan is down there. this was one of the rooms where hr-3200, the big health care wab because this committee is one of the three in the house, this is where they hammered it out overnight. >> since this is my home place, can i give you a tour guide? >> yeah. >> okay. this is the kind of seat where i have to decide between my ideals and money to raise campaign money, okay snm. >> okay. >> then i move down here, a couple chairs down if i can take this wire off of me. this is where i can best wink at my lobbiest friends in the office. and down here is where i praise my good friend in the other party before ripping him a new one in the debate. >> i'd like to take back the time, take back the remainder of your time on inspect. >> you don't have it. >> the interesting thing, the committee on education and labor started back in 1867, right after the civil war when they were trying to find way toes make sure that there was a growth for american industry and things that were going on. and if you look through some of the names that were going through, james monroe used to be a chairman of this back in 1873 do 1875, later went on to the presidency. >> in other words, our next guest, george miller, could be the president some day. >> could be. i noticed william randolph hearst was here back in 1947. and john boehner has a picture on this wall. >> he was and now he's the leader trying to keep his republicans together and doing a pretty good job of it in opposition of the president's agenda. >> and some things were born right here in this room, education, minimum wage, head start. and we'll talk more about whether or not they can add to that agenda with health care. >> i can hear joe in my head right now. >> i know, i know. >> big society room and that's going to happen again with government. >> do you think it's killing joe not to be here right now? >> yeah, yeah. i think this is a show. >> even though we're on the house side, all eyes are on the senate side with that health care bill. what is going on this morning? >> they're waiting four a price tag for their bill. they expect it to come in around $900 billion. once that happens, then they're going to go and vote. they've done all the talking -- not all the talking. you've never done all the talking in washington. about they've most of the debating of amendments and then they're going to vote. i think what is going to happen is they're going to send that bill to the floor. one of the questions is going to be is olympia snow going to vote for it because they may need her. when we come back, we'll get to some top stories, as well. also this morning, the chairman of the house education and labor committee, george miller. squawk is in session at 8:00 in his hearing room. if you're taking 8 extra-strength tylenol... a day on the days that you have arthritis pain, you could end up taking 4 times the number... of pills compared to aleve. choose aleve and you could start taking fewer pills. just 2 aleve have the strength... tdd#: 1-800-345-2550 i want everything right where i can find it. tdd#: 1-800-345-2550 anything that makes trading easier. tdd#: 1-800-345-2550 i want to be right in the middle of the action-- tdd#: 1-800-345-2550 you know-- i have to see what's going on. tdd#: 1-800-345-2550 and when i pull the trigger... tdd#: 1-800-345-2550 ...i've got to get the best price out there. tdd#: 1-800-345-2550 (announcer) try the new schwab.com tdd#: 1-800-345-2550 for yourself. tdd#: 1-800-345-2550 call 1-888-4schb tdd#: 1-800-345-2550 or visit schwab.com/trader today. tdd#: 1-800-345-2550 'course a trade doesn't always work out my way. tdd#: 1-800-345-2550 but when it does... tdd#: 1-800-345-2550 ...man... do i love that feeling. more than just money moving across markets. it's about exchanging ideas across cultures, opening up to the world- continuing to innovate. you need to have a nimble organization that can innovate rapidly and constantly is willing to learn. speed has become so important. every aspect of business has to be able to demonstrate flexibility and agility. collaboration is the name of the game. we have at least half a dozen relationships giving us new products, new opportunities and wonderful new therapies. a great place to be is at the intersection of content and technology because from the creative side-- the possibilities are endless and the ways you can reach people are extraordinarily exciting. our partnership has a long history. the new york stock exchange is where people look for companies held in high esteem around the world. nyse euronext powering the exchanging world good morning. welcome back to "squawk box" live from the carl d. perkins hearing room. the house committee on education and labor, i would never do that. joe, maybe. not me. >> i'm carl quintanilla along with becky quick, john harwood. joe is off today. we are coming to you live from the house education and labor committee hearing room. quite a show for you today. our guests include education committee member george miller sitting right next to me. he'll be with us in just a moment. at 7:30, george dingle squares off against republican whip kevin brady. ed towns will be with us at 7:40 and at 8:00, six congressmen, three democrats, three republicans. barney frank, cummings, kanjorski, and we should mention that dinglle is no longer the chair. >> first, let's check this morning's top headlines. earnings season opens for play of the day. alcoa gets the nod. it's the first dow component to release its results. we'll be hearing from them after the bell today. matt nesser had pointed out today that this is the smallest capitalization. but still it's one people will be watching closely. also, though, overall earnings for the s&p 500 companies are expected to drop by about 25% for the second quarter. but for the second quarter last quarter around, we saw 73% of the s&p components with upside surprises. we'll be watching the revenues numbers because a lot of those companies that beat earnings the last time around, they did it by beating costs. the question is, when will we start to see top line growth? we'll be watching that closely throughout earnings season. >> in the meantime, we are watching health care reform and the economy. we could not have pick a better place to do it than the committee on ed and labor room. joining us is ed miller, the chairman of the committee. thank you so much for joining us. >> we're glad you're here. >> what is the most pressing thing on your agenda right now? >> health care. it has such a strong tie to the economy and what happens to health care, we have no option. when we go home to on our districts, small business people and large businesses are putting off health care on their employees and now they're talking about meeting the field. >> what about the whole process since the ledgis lafb move has got going has surprised you the most? >> how complicated it is. we're taking a 60, 70-year-old system that's grown by fits and starts and a lot of dibbling and dabbling back and forth over the years and to try to make a coherent comprehensive system out, it's taken a lot of work. we've spent hours and hours and hours on this with the experts, with the economists, with the business community across the board because this is a system. it wasn't coherent when it was born, and to try to put that into a national system is a real challenge. but we're there. i think we're very close to being there in the house. we've been meeting with our members on a daily basis, morning, noon and night we've been the caucuses. we met with the individual cauc caucuses, the blue dogs, did dems, and i think we're arriving at a consensus. >> i have thought you would have said the surprising thing was the degree to which democrats have fish yours within the party has been a problem. >> it's been a problem but it's been a part of a healthy debate has been a problem. >> it's been a problem but it's been a part of a healthy debate. many of them had town hall meetings and we have been debriefing them since august and i think august put a lot of steel in passing this bill. they already took the beating. >> did you have any constituents in your face? >> oh, yeah. of course you have them. this has been a very traumatic year or two years for the american public. and the concerns about deficit, the concerns about government spending, those are real. and so i think people are starting to understand that. if you look at the polling data, people are learning more and more. they learned a lot in august. they're surprised about what turned out to be true and what turned out not to be true. so actually, the atmosphere has gotten much better for the passage of this legislation. >> mr. chairman, you bring up something, saying the complexity of this has been the most surprising thing for you. i'm glad to hear you say that on one hand because when i try to figure out what's happening, my head spins a bit, too. but at the same time, when you look at these decisions that's likely to impact the economy for decades to come, what's your biggest concern that we may be getting something wrong? >> interestingly enough, the people who we rely on, in the health care community and, you know, in the economy generally, most of them think we have it about right. these are the pieces that you have to move. whether they like the way we moved them or not, sometimes they're getting guards, so they're not happy. but the fact of the matter is, these are the pieces. you have to get universal coverage. you have to put in place value-based medicine. you have to get away from fee for service and all of those are set in motion. >> there's still the articles that you see in the front page of the "new york times" i think it was earlier this week or was it the journal talking about how quality health care is still a huge issue because when it turns out good quality health care is a lot cheaper. >> that's what you're trying to drive. if you read this bill, people with quite stunned how many game changers are in this bill. when we came back in august, we said we want to do more though lower the cost, we want to do more to drive value medicine. we want quality medicine. and, you know, so many people came back and said, you've already done so much in this bill, the cbo is not able to score additional benefits. i mean, this is a very interesting ledgis lafb process. i've been doing this for 35 years. there's a great intensity on getting it right. >> madam chair, the reason your head is spinning around about the detail is you haven't read the darn bill before you vote on it. >> they won't allow it to be up on the web for 72 hours. >> it's been on the web for months and interestingly enough, the amazing number of people that downloaded it and read it and have sent xhendz comments to our offices. it continues all the time. this is a ledgis lae y ledgis g. >> let me ask you a question. you're close to the speaker and it's something that our audience wonders about. across health care, regulation, energy and climate change, the charge is out there that the speaker is not just a liberal, she's a radical, she's pulling policy to the left, pulling o bam ma to the left and hurting investors and process in the process. what do us to that? >> there's no evidence of that. what's the big debate here in health care? if you put in a -- >> the public option. >> that's a phony debate. if you put in a public option to create competition, you save $110 billion. $110 billion is real money. it's about real competition. those savings come from increased competition. they don't come from anywhere else. >> do you kill the insurance industry? >> of course not, you don't kill the insurance industry. it has to be a level playing field, they have to live off their premium webs they have to run it like a business and they'll either sink or they'll swim. but the fact of the matter is, without that competition, the taxpayers and the rate payers, $110 billion in the next ten years. there's a more productive use for that money. >> there's a line of thought that not passing some of these elements like public options is disappointing but not passing anything would be more disappointing. what do you think about that? >> i think this democratic caucus is as diverse as it is. they're committed to passing a bill. i think it's settling in on the members. you cannot go forward in this economy without addressing this issue. you lived through 1994. >> but mr. chairman, again, just to go back to this, there's a lot of people that we have on this program that we hear from the republicans and even some democrats who say they very worried about the private insurance industry if the public option goes through. >> i'm sure they've done pretty well over the years. and the fact of the matter is, they competition can be handled by them. i appreciate their angst about it. but if you don't have a benchmark in this business and you have regions in the country where you have one or two insurance companies writing 80% or 90% of business, something is very wrong. >> before we go, mr. chairman, are you comfortable with these deals the white house has cut with the drug companies and the hospital? >> i think they're a little premature, but we've -- they'll be incorporated in this and they're helpful. they're beneficial. >> can you change them? >> to some extent, we will change a couple of them. talk to mr. waxman about that. that's in his committee. >> thank you for hosting us. where do you keep the candy? >> gosh, you've turned this and turned it into a capitalist -- i don't know. you couldn't get joe to come down, thou, could you? no. >> no, no, no. >> thank you very much for being here. >> if you have any questions about anything you see here on squawk, e-mail us. we're going to take a quick break right now. when we come back, we'll get to some of the morning's most interesting headlines. welcome back to squawk live on capitol hill. burger king getting a chance to push for more restaurants globally. it's pushing for sit down rather than drive through. the eu will mark the tech giant's proposed browser remedies. amazon.com lowering the price of the kindle by $40 to $259. the company also introducing a version that can wirelessly download books outside of the united states. >> jason roney of charmac capital is standing by at the cme. jason, we're looking at futures just barely above fair value. the bad news is, it's been in large part because of the weakness of the dollar. what's happening with the dollar? >> there again, overnight, the commodity currencies that are leading the weakness in the dollar, the aussie, the kiwi and the canadians, those are higher. last week was the first sign of really continued data points that were much worse than expected. and we come in from the weekend and what happens? stocks rallied over 3% low to high monday/tuesday. that was the best two-day rally we had had since july. and it's really a function of the dollar. stocks are caught in the -- sure, maybe some of the headline data is weaker, but we're heading into earnings season and the reality is the weaker dollar is going to help substantially the multi national earnings. >> the multi national earnings, that's going to be the big question. what's happening with the earnings pirg this time around? do you expect to see any revenue growth or is this another story of cost cutting across the board and that's the way these companies make their numbers? >> i think the bottom line will still be the story. the key will be the forward guidance. i think coming out of any recession, it's generally been the case that analysts get way too conservative. we are in an upward revision cycle. when that happens, that puts the floor in stocks no matter what the data shows. so the key will be corporate guidan guidance, how confident are companies for the fourth quarter in going forward. my suspicion is if we're getting a pullback now in the economic data, that could be quite a bit of trouble as we get into the december/january period where i suspect the consumer will spend quite a bit less over this season. so it will be most interesting to see, this quarter will be okay, but how do corporate ceos see that playing out? jason, thank you very much. it's always good to talk to you. >> thank you. >> when we return, we'll have some of the stories that are catching our attention in the washington papers this morning. then coming up at the top of the next hour, a man who knows the nation's capital and wall street very well. we'll be talking with former white house economic adviser, larry lindsey. we'll get his take on everything from stimulus to health care reform. ♪ at the end of the day in sitka, alaska, everyone awaits the return of the fishing boats. ♪ their safe arrival is highly anticipated, ♪ as is something else. a shipment of natural sea salt from cargill, essential for preserving the catch. we deliver the salt on precise schedules... and ship it efficiently all along the alaskan coast; saving the fishermen money, and their catch. this is how cargill works with customers. how can you get your investments heading in the right direction? at oppenheimerfunds, our fund managers' perspective on the numbers helps uncover opportunities no matter which way the markets are moving. ask your advisor about oppenheimerfunds. call your advisor for a prospectus with complete fund information. read it carefully and carefully consider fund investment objectives, risks, charges and expenses before investing. mutual funds are subject to market risk and volatility. shares may lose or gain value. oppenheimerfunds. the right way to invest. welcome back to this very special edition of "squawk box," everybody. even when we leave the building and travel, we do the chairs just the same. this is no different. our chair segment for the morning. guys, like back at home, the lead story, even in "the washington post," a big story about how gun consumers are moving toward their debit cards. credit card companies say this, in fact, is the case. mastercard say changing stories of debit and credit say how transformed in consumer spending. >> you're always saying don't use your debit card because of the security concerns. >> you can use it as a credit card a lot of times. they're saying it's because consumers are gun shy and doesn't want to use their credit cards. it may because consumer credit is dropping. you may have no choice if you're in a situation where federal reserve says that credit cards dropped by $6.1 million. >> we need to change our economy, rebalance or not? >> i think you're very concerned. people say the financial system is fixed. it's not if you're a consumer who has been on the cusp or bubble. you very may well have had your credit cards yanked back, because many millions of americans have had them yanked back, and you're talking about a situation where maybe these people are continuing to pay their debt except the leverage is yanked back. >> we want the consumer to pull back in the long run because we're trying to shift to a savings investment economy. >> in the long run. it's just overnight those are changes that are hard to face when you're a household who has these expenses and thinks you can use this $5,000 or $10,000 credit and has been using it. >> if joe were here, he would make fun of the left wing agenda of "the times," great economic reporter writes how some republicans are beginning to look back at reagan-era policies, george 43 policies, bruce bartlett has a book, worked for reagan, saying he doesn't think a lot of the tax cuts put in place long ago resulted in very much growth. as a result, republicans maybe are having second guesses about their overall thoughts on how to make an economy grow. we also have people like bill frist, arnold schwarzenegger, tommy thompson saying they have to vote for health care in some way. are republicans turning over a new leaf? >> we haven't gotten out of circular firing time within the republican party. any time you get hammered in two elections in a row, people question each other, they question people who have been holding power and try to figure out the road ahead. that's going to continue until they have a nominee for 2012. then you'll see more coherence about the party. >> it doesn't signal the shift in republican thought, you don't think? >> i don't sense republicans are moving away from tax cuts because they think they're a bad idea. they're certainly questioning the deficits from the reagan and bush era, some of the spending under president bush. i see no evidence that the republican party -- we'll hear some from paul ryan later today, later this morning -- i see no evidence that republicans are turning away from tax cuts. >> when we return on "squawk box," more of the top stories. plus "squawk" is in session. we'll be talking about health care, the economy, the potential need for a second stimulus and much more. welcome to the now network. population: 49 million. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com. in this hour, former national economic director larry lynndie, congressman kevin brady, john dingell. health care, financial regulation, unemployment, the deficit and getting our nation's economy back into tip-top shape. john harwood, becky quick, and carl quintanilla are live from the halls of congress. drop the gavel as the second hour of "squawk in session" begins right now. >> all right. good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with carl quintanilla, and john harwood. the mouth is not working today. >> you go to congress and forget your buddy there? >> i'm a little nervous because i'm sitting in the chairman's seat and i've got the gavel. >> you do have the gavel. >> "squawk" is in session. >> you are one dangerous woman. >> are you voting with her on everything she wants to do? >> yeah, probably. we've been friends for so long. >> we do tend to agree on a lot of things. >> we're a block. joe would be, what, the minority opposition? >> yeah, although he's a very forceful minority opposition. >> very persuasive at times. >> carl and i sometimes call us the wonder twins. wonder twin powers activate. >> that comes from knowing each other for decades. >> john is with us. big show is coming up. we're in at capitol hill. our lineup is a full one, ten different congressman are joining us throughout the course of the show. the latest on the probe into the bank of america merrill lynch deal. that's with congressman ed towns, leading the charge in trying to find out what happened with the merrill lynch deal. he will be joining us to tell us what he thinks about the potential successors to ken lewis, coming up at 7:40 eastern today. >> larry lindsay, we always love having larry on the program. so much good insight. we'll talk to him later on in the show. >> let me ask you a question. if you're looking for clarity and insight, is more congressmen better than less? >> i think it is. >> wisdom of crowd. >> very charitable of you guys here in my hometown. >> if you only talk to a couple people, if you talk to a couple of top leaders, you're going to find ow the talking points they're pushing down on you. when you start to talk to a greater number of congressmen or senators, you'll realize there are very diverse opinions out there and you can't define everything based on what party people are in or what state they're from costco reporting better than expected fourth quarter profits. september same store sales jumped by 1% and were expecting a drop of .7%. reporting the two front-runners have emerged for the spot vacated by ken lewis at year's end. greg curl, who has been with the company 31 years and was most recently a global executive. before the merger with merrill, ran the banking part of v -- b of a. working on the sale that could raise hundreds of millions of dollars for the company. controversial for that star trader's large pay worth over $100 million. markets today aren't looking too bad. we've add a couple of days in a row of big gains, which you might not have expected last friday. futures just turned slightly negative, have been moderately positive much of the morning. asia did pretty good overnight as well. crude up 20 cents based on bullish data yesterday. we'll see what they say today. ten-year, 3.244. dollar stabilizing after the pounding it got yesterday. reports about the arab states supposedly having secret meetings, losing the peg to the dollar. that turned out not to be true, we hear. and with the weaker dollar, we're seeing gold awfully close to the record at 1047, up $4.35. >> "quauk" is in session from capitol hill to talk about the economy, health care, all kinds of issues front and center right now in washington. joining us from his office in fairfax, virginia, is larry lindsay, the president and ceo of the lindsay group. larry, always a pleasure to speak with you. >> great to be here. it's great to see you in the chair, too, becky. >> oh, yeah. congressman miller told me, as he was walking out, don't let go of this chair. it took him 35 years to get t i'm heeding his advice and gluing myself to this thing. let's talk about the economy and what you're seeing. when you talked to us in the past you said you think this probably will be a u-shaped recovery. is that what you're looking at? >> a good third quarter print, but then at or close to zero, maybe on the negative side of zero in the next few quarters. the consumer balance sheet still isn't fixed. we saw the unemployment situation, which is going to drive household cash flow is still in lousy shape. consumers have to save more. real incomes are going down. and so i don't see how you can get self sustaining growth until you get the consumer balance sheet fixed. >> you are the one who has been warning us for a long time about the concerns in the credit market. i think it was about a year ago, maybe longer, when you first started telling us that you were concerned about what you saw in the auto markets, that they would not be able to continue funding all of that. when you say you were worried about the consumer, it makes us sit up and pay attention. what's your biggest concern? there's just not enough credit out there? >> well, there's not enough credit. >> no jobs? >> the credit situation is still locked up, both consumer credit and also seeing eye loans, commercial loans are continuing to drop. on the household side real incomes are going to be lower in the fourth quarter than they were in the third quarter. if you have a falling real income situation, you still have to save money for retirement or whatever that's been wiped out, it will be pretty tough to increase spending. we'll continue to see a very weak household sector. inventory bounce. if there's no one there to take the inventory off the shelves and buy it, i think we'll find ourselves back in the proverbial soup. >> john harwood, larry. i wonder what you think about an idea that's gotten some buzz over the last couple of days as something under consideration by the administration. and that is this idea of some kind of a tax credit to spur new employment, new job tax credit, concerns about whether employers would gain that, and how do you make sure that people -- you actually get an incremental increase in jobs? what do you think about that idea? and can it be made effective? >> well, of course they're going to gain, right? that's what people do. put the rules out there and people find a way to use the rules to their maximum advantage. the same thing happened, by the way, with the first stimulus bill. >> is it worth doing anyway or is it not worth doing? >> oh, i don't think that jobs -- we tried it under richard nixon, just like we tried giving money to the states under nixon. it failed then. it's failing now. i don't think it's the right approach. we're reaching the stage where we really have to start paying attention to the quality of what we do and not just the quantity, the money we're pushing out the door. we are having a major credit problem. the government is sucking up most of the world's savings. and we have to start to be very, very careful about what we do next because there is not an unlimited supply of credit out there. there's not an unlimited well of trust in the u.s. dollar or in the u.s. treasury. >> so, if jobs are your concern, what do you recommend? >> well, the main thing that we should do is focus on transferring money to individuals and businesses and not transferring money to other politicians through various programs. i know we're now considering the health care bill, now considering a cap and trade bill, which sends 80% of what we take in out to the polluters in order to buy them off. the same thing is happening on the health care bill. most of the special interests have been taken care of. that's not a good allocation of money. when you're in a hole, you should stop digging, and you should start paying attention to how you get out of the hole. and fixing the problem on household balance sheets and small business balance sheets, i think, should take priority over, you know, brand new schemes. >> larry, obviously, it sounds like you're calling for at least a small case w in terms of the economic trajectory from here on out. i wonder, though, we have market bulls come on the show and say we're in the sweet spot. this now elongated sweet spot because money is cheap. we know the fed will not let any more banks go under. can markets rally in the face of all this weakness that you see on the economic front? >> well, again, what we have in place is a monetary policy that's designed to reflate prices. it's succeeding. if you can borat 25 basis points and buy a long-term yielding you're going to do it. that's why the bond market is going up. that's why people are reaching for yields, because access to the money to borrow, to buy those risky assets is very, very cheap. it makes perfect sense why the fed is doing that. on the other hand, this is a sugar high and that's exactly what it is. at some point we're going to have to find a way of ending it and focusing on real demand, improving household balance she sheets, improving business balance sheets, business cash flow. that still isn't happening. and as long as the money is going into treasuries and not into commercial loans or consumer loans, the economy is not fundamentally going to recover. >> alarium e-mailed us this morning, and he said we should be asking people -- we worry about sustainability of social programs, medicare, health care, social security. now he argues about the suitability. are our social safety nets, larry, strong enough to withstand a period of long unemployment, the likes of which we really don't have our arms around yet? >> well, you know, i think they are going to be stressed. and that's another reason why we should start focusing on the quality of the legislation we're passing and less about how much money we're throwing out the door. we really have to be now careful in washington of how we spend each and every dollar, a care that has not been exhibited in the past candidly by either party. quality is now job one of this congress. >> all right. larry, great to talk to you. we appreciate your time this morning. >> thank you very much. pleasure to be here. >> okay. we'll talk to you again very soon. by the way, if you're at home and have comments or questions about anything you've seen here on "squawk," e-mail us at squawk@cnbc.com. up next, both sides of the aisle on how to create jobs, reduce the nation's deficit and, of course, the questionable strength of the dollar. what does that mean right now? republ republican congressman kevin brady and john dingell. we are live from washington. we'll be right back after this break. >> what did the u.s. forest service initially call its cuddly mascot before changing his name to smoky bear? 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>> i think it's got to be. we have a massive problem on our hands. health care costs today now will go to $25,000. by the year 2080 or thereabouts, we will find that the curve of health care costs and the gross domestic product will cross. we'll be spending every nickel we've got. by the year 2020, the health care package or insurance policy will cost about $25,000. the bankruptcies in the steel industry and more recently in the auto industry were largely connected with this. when dad began this process, the idea was that this was a humanitarian concern. that remains so. but today, it has become an economic necessity. the automobile you see rolling down the road has $750 worth of steel in it. $1,600 worth of health care. that's the incredible thing. and one person -- two persons every minute are dying for want of health care. and four every minute are going into bankruptcy. >> congressman, you just heard that argument about cost and you know that it's a legacy issue for him. his dad, back in 1943, was pushing this. are you really going to try to stand in the way of the congressman realizing his dream? >> actually, we're big supporters of john dingell, an snoo incidence contusion he-- h institution here in congress. this won't lower the cost of health care, which is what everyone wants. it won't cover enough americans. we would like to really focus on the truly uninsured, those who work for small business, those who are in between jobs. often times because they're so mobile, we are so mobile as a society, and those who have pre-existing illnesses, covering the truly uninsured. i think we also ought to focus, too, on affordability. lawsuit reform does work. squeezing the inefficiencies out of this system. $3 out of every $10 in health care is wasted in paperwork, overhead, regulatory burdens. it's one of the reasons we pay more and get less for health care than other countries. these plans before the house and senate really don't address those issues. so, we want health care reform. we just have a different vision for it. >> congressman dingell, this is something we hear from a lot of guests we speak to. they're all in favor of lowering the cost curve on how expensive health care is getting. many of them are in favor of catastrophic care for the uninsured at this point. is there a way to continue to do this if you don't have a public plan, if you don't have the government involved as the health care insurer? >> the public plan is an absolute necessity, i think. and the reason is that we have found that the current pattern of state regulation does not work. there's no way whatever that we can control the costs and the behavior of the insurance companies. and so we've got this substitute for that competition. and the ohm way we can get them competition that will work is by seeing to it that we do have a public plan. the nonpartisan and bipartisan joibt joint committee on internal revenue taxation and congressional budget office say we can do this with reasonable cost and that it is possible for the health insurance plans to compete with it. in fact, it is said that there will only be about 3% of people who will go under the public plan. >> that's according to some estimates. if you ask the lewin group, unit of u & h, they'll say it's a much bigger percentage of people who will lose their existing health care benefits because their employers will pull them back and push them into the public plan. >> well, the congressional budget office says there will be an increase in the number of persons receiving employer-based health insurance by about 2 million people. that's a very significant change. remember, we have 46 million merps who have no health care now. and that will make a big bite out of the health care costs. >> you're a legend because of your ability to arm twist, for lack of a better word, to reach deals in the crunch and the final days of legislation. >> tough guy. >> yes. what's harding, martialing republican support or getting democrats on the same page? >> i'll take any vote i can get. >> especially on this one? >> the hard fact of the matter is that for reasons that i'm not quite sure we can discuss at length here, this has become a very partisan question. we hope to get our republican colleagues to join with us. secretary sebelius will be meeting with the republican members today. and mr. hoyer and mr. cantor, leadership types on both sides of the aisle, will be meeting shortly to discuss what it is we can do to bring our republican colleagues in. >> you mentioned partisanship. let me close with a question to both of you. first of all, congressman brady, do you think democrats are sincere, have been sincere and have shown it about taking republican input and ideas into their health care legislation? and do you believe that the republicans want to improve the legislation or are they trying to kill president obama's agenda? >> absolutely not. democrats have not spent an hour sitting down with us, to listen to our ideas. here is the last minute after months of our requesting meetings, they're going to give us sort of for show. two young children have help set the dinner table, then praise them for cooking dinner? it doesn't really mean anything. that's what we're seeing today. >> plead guilty to that? >> the hand to friendship is out on this side of the aisle to our republican colleagues. you're talking to a guy here who has been able to get unanimously bills of great complexity out of the committee. i just got a food safety bill out unanimously. last year, we got a very comprehensive consumer product safety bill out of the committee. so, i do have a history of working with my republican colleagues. we're going to try to do it. we are trying to do it. one of the problems that exists, and this is a very real one, is that we are engaged now in the public drafting of legislation. this leads to all matter of unfortunate misunderstandings as to what it is that we're doing. but we have done the regular process in the committees and we will continue to do the regular process. >> don't tell me that's posturing. >> but you say doing this in public, you mean under the light of day where people can actually see what's happening? >> you're seeing the unfortunate consequences of public drafting of legislation. and it makes a fine mess because people don't understand the complexities of this. >> so, it should be done behind closed doors? >> if you like sausage or legislation, don't watch either one made. >> we're watching it get done this time. >> i don't know. i always thought that the openness of something was a good thing, though. the more people involved, the better. >> but that's assuming people really understand, have time to pay attention to the detail. right? >> i guess it depends if you trust what's happening behind closed doors or not, though. >> i'll tell you, we held over 51 town hall meetings. the people who came to our town hall meetings were knowledgeable, read the bill and knew health care issues. their problem is that too much of this has been done behind closed doors. they want it open and they want their ideas had heard and it's not. >> congressman brady and congressman dingell, who has made more sausage than anybody. >> we poles make great sausage. latest into the probe of the bank of america/merrill lynch deal. education and labor committee hearing room, "squawk box" will be right back. when we return, we get you caught up with today's top business stories. find out what's moving the markets before you make a trade on "squawk box" on cnbc. we are first in business, worldwide. people think that honda is always the most fuel efficient choice. well, this chevy cobalt xfe has better highway mileage than a comparable honda civic. the all-new chevy equinox has better mileage than honda cr-v. and chevy malibu has better mileage than accord. however, honda does make something that we just can't compete with. it's self propelled. introducing the 60-day satisfaction guarantee, buy a new chevy and if you don't love it, we'll take it back. (announcer) we call it the american renewal because we believe that ideas are limitless. that's why, everyday at ge, thousands of scientists and researchers at our global research centers and throughout the company are redefining what's possible by creating the advanced technologies that create jobs. the american renewal is happening right now. welcome back to "squawk box," everybody. we are keeping our eye closely on what's happening on wall street. shares of young brands, keep an eye on them today. taco bell, kfc, pizza hut. right now it is posted a better than expected 18% swrump in third quarter profits. we're talking about strength in china being a key driver of those results. >> fdic has won the bidding for assets of chorus bank. on the show yesterday at the time he did hint at that deal. >> there's a yield alternative. if you're patient and can take a long-term view, if we buy this portfolio of assets from the fdic, this chorus bank portfolio, you'll be buying this real estate at 25 cents the original cost and with the proper financing and the right structure, you just sit and wait. as an alternative, to me it looks compelling again. >> buying a 40% stake in the portfolio, fdic will hold 60% stake. he didn't want to tell us yesterday. comments or questions rs drop us an e-mail this morning. eer getting a lot of them, i think. squawk@cnbc.com is our address. hot button issues. a lot of that going on. investment ideas with a capitol hill expert when "squawk box" returns. >> as we head to the break, a look at widely held stocks. "squawk box" returns after this. welcome back to "squawk." futures pretty steady. not moving around a lot. pretty tight range. decent action in asia overnight. footsie has largely been flat. seeking comments from consumers, computer makers for microsoft remedies for competition concerns over that internet explorer browser. microsoft says it welcomes that step, bringing the issue closer to some resolution. retailer costco, worldwide same store steals jumped slightly in september. 85 cents for the latest quarter, 8 cents ahead and people are looking forward to same store sales as well. new purchases and refinancing, double-digit increases in the average 30-year mortgage went to 4.89. >> folks, if you are just joining us this morning, we are coming to you live from the education committee room. this was first set up in 1867 after the civil war to try to focus on expanding american business. and expanding the economy through that -- through the american business and it's an historic room. we've shown you several different areas of the room today. we also want to show you the pictures and paintings that are up around the walls. off camera, we were speaking with congressman dingell and he made some interesting points. >> i said you look much younger in person than this portrait. and he says gus did that. i said who is gus? his father-in-law did four portraits of congresspeople here on the hill. john behner has one. i believe one of the first, if not the first chair, female chair of a committee here on the hill. >> becky talked about the post civil war period when you had the gilded age, growth of american business and manufacturing. a lot of things about washington are different. a lot of the things are the same. high-powered lobbyists in that period as well. in fact, there was a guy -- he had a house on pennsylvania avenue called the house of fortune where members could come in and gamble for free, basically. and edward pennelton was his name, big-shot lobbyist for the railroads. that was the way people got it done then. it's not gotten done the same way now. people raise campaign money instead of gmble. you still have special interest. >> would you say rooms like this are mostly a theater stage ors does real arm twisting happen in these rooms? >> theater. what congressman dingell was talking about was most legislative deals get cut in the back room, they make speeches and we all watch it and they have a debate that doesn't change any minds. once in a while you have an actual public debate that matters, that changes votes, but that's rare. >> interesting what congressman dingell was saying in terms of the sausage getting made without people watching. something we dp back to. i thought we were more about open disclosure. that's certainly what we're pushing on wall street. isn't what's good for the goose good for the gander? >> but think about human beings operate and the way you make deals and compromises. think about any workplace. does the actual decision get made when the boss has the staff meeting or does the boss come to the staff meeting and inform the business what he has worked out? >> vast maneuvering. i like people seeing exactly what they think, when they think it. >> or is everything in tv transparent and out front in the open from the get go? >> sometimes far too much of it is. we've seen that the last couple of days here on this program. but that's okay. it's out in the open and we appreciate that too. we have a big show for you this morning. in a few minutes we'll be joined by congressman ed towns, who chairs the house committee on oversight and government reform currently in the headlines right now, investigating bank of america and its acquisition of merrill lynch. we'll be talking to him more about that in a moment. coming up at 8:00 eastern time, a bipartisan conference you will only see here on "squawk box," six congressman, three democrats, three republicans. they'll be debating the issues that matter most to your money. a check on futures, plus what washington wants to know about the b of a/merrill deal. what he wants to know and what he thinks of ken lewis retiring. we're counting down to the start of another hour of "squawk in session," including barney frank and paul ryan. stay with us. goodwrench... we roll out the blue carpet for drivers of these great gm brands. we can do the small things, the big things, just about everything... right inside your gm dealership. find out more at goodwrench.com. gm drivers.. it's goodwrench & go time. three great services: all in one place. all at one time. all for one price for most gm vehicles. but it's only for a limited time. at participating gm dealers. if you take a look right now, you're going to see that those features of the dow are below fair value. you're talking down about over three points right now. we had been higher this morning. we're also keeping a very close eye on the dollar today. dollars off its lows. still putting in a mixed performance over the major currencies. the dollar under pressure keeping stocks higher the last couple of days. it's also been sending gold prices to record levels. fan f fannie mae and freddie mac, purchase mortgage that is meet certain quality standards, reducing the risk that the bank lbs stuck with loans rejected by the gses and can only be sold to other investors at a significant discount. "squawk" is in session this morning. democratic congressman from new york, ed towns, chairman of the committee on oversight and governmental reform, joining john and becky and me here in the committee room. glad to have you here. >> good to be here. thank you very much. it's a pleasure. >> we had you on the program the morning after we learned ken lewis would be step iping down. since that time, looks like they might be narrowing candidates. does that alter the way the investigation will be going? >> not at all. it's not about ken lewis. it's about the fact that $20 billion was put into a private deal, and we asked some questions about that. who are is in charge, you want them to answer these questions we have. that's the issue. regardless to who heads it, we want to make sure that these questi questions are answered. $20 billion into a private deal, the people have a right to know. of course, because let's face it, it's taxpayers' money. we want to know what happened. there's a lot of unanswered questions here. >> those being, why did they disclose this in january, right? >> that's correct. actually, they knew about it, the board, in the last of november, first of december, they were aware of it. but the stockholders did not find out about it until january. >> why not leave it up to the stockholders to punish the bank or ken lewis? he lost his chairmanship and certainlily now has lost his job. >> we didn't have $20 billion of government money in it, then maybe we would not get involved in asking these questions. but the moment you put $20 billion into it -- and we want to know in terms of what happened. let's face it. if a private deal and you get $20 billion and nobody can answer the questions, that doesn't make a lot of sense. >> we spoke with neil barosky earlier, the special inspector for t.a.r.p. we asked about how much money we'll get back. are you concerned about that? >> yes, and when we'll get it back. these are questions that need to be answered as well. unusual for $20 billion to go into a private deal. >> it's unusual, but people will say those were extraordinary times. there again in hindsight a lot of people are judging -- looking back and judging what was happening at the time. but do you think we were on the edge of a cliff at that point, when it came to the economy? do you think that we would have seen bigger struggles through the american financial system if the $20 billion hadn't been put in? >> i'm not sure of that. that's the reason we want to get this information. because the other thing we're looking at is trying to reform the financial system. and in order to do that, we need to make certain that we know exactly what was wrong. we need to know whether or not the fdic was left out purposely. we need to know that. if we're going to reform the system we need to get as much information as possible to make certain this never happens again. that's the issue we are now looking at this, to see in terms of where we go next. we are going to talk to anybody and everybody that we think might have some information, some insight. once we get this information, we'll turn it over to financial services and hope they'll be able to come up with legislation that will prevent this from ever happening again. this situation is something that we just can no longer ignore. >> financial services committee will be marking up some of that regulatory reform, some of the positions in the bill starting next week. do you think you could get this information to them before we get this legislation passed? >> the process takes a little time, as you know. and as they begin the markup, we would begin to give them information, hoping they would be able to use it. and even after this happens, there's another process in terms of once the senate does something, then tlas a whole conference. in the meantime, we'll continue to look. we're able sometimes to get information a little faster than they can get it. >> safe to say you may be in the last innings of this whole b of a investigation? >> yeah. we want to talk to the fdic. we want to talk to the s.e.c. >> at a hearing later the month? >> that's right. get the information from them. we want to see where the roads might lead to be able to get information to make people feel comfortable again. because that's an issue. >> mr. chairman, you talked about financial regulation. and the consequences of putting taxpayer money into private enterprises. when that happens, as has happened in a bunch of big firms, what's the right thing to do in terms of executive compensation? should there be hard limits on the executive compensation? should it be a shifting of the incentives, which is what the administration seems to be thinking about? what do you think the right answer is? >> if you're going to use federal dollars, i think we should put a limit on terms of the income. >> what's the limit? >> that's something we need to work out. that's what we're doing now, trying to collect information to find out. when you look at the baseball team now, and basketball teams, they are now coming up with a structure that brings about a limit as to how much they can pay a team. i think we need to do the same thing. my problem here with a lot of this is the fact that people who have failed are being rewarded. >> don't you worry about messing with the market and the private enterprise system, to that extent? i understand taxpayers are exposed. fundament fundamentally, isn't the working of the private market generate american prosperity? >> right. but if you're going to take federal dollar, we have a role. once you take federal money, i think you just can't take it and do anything you want to do. >> as taxpayer, we are shareholders in these companies and don't you want to see them succeed? are you worried you won't be able to get the best talent, people who are in the best position to make those companies successful? >> that's a possibility. that's why we're looking now, to see if we can strike that balance. that's what this is all about, not in terms of wanting to get into anybody's affairs. we want to make certain we have the stability, that people have confidence, and, of course, if you're getting government money we don't want you to take it and give it to people who have failed. >> salaries as to what congressmen make? >> no, we probably have to do a little better than that. we don't want them on food stamps. >> congressman, thanks for coming in. good to see you. >> good to see you. >> congressman ed towns. when we come back, we are counting down to our one-hour special, bipartisan conference you will only see right here on "squawk," six congressmen, three republicans, three democrats. they are names you know very well. take a look at the players on the board. they are all going to be here in a few moments, talking about the issues that matter most to your money. up next, a check on the markets. you are watching squawk box on cnbc. tom, "squawk box" kicks it into overdrive. who's who in the auto industry. business icon wayne huizenga, plus wall street legends mario gabelli. where news makers and news breakers turn first. welcome back to "squawk box" on cnbc. i have the mike for about four minutes here. so, keep that channel exactly where it is. you know, kevin, i thought yesterday was a super interesting day. australia raised rates a quarter point. let's put this in context. do you remember what their high rate was before they started? >> well over six, twice as much. >> right. when we end up with is a country who bottomed out at 3%. we bottomed out at basically zero. raising rates a quarter of a point. what was the reason they gave? >> they started to add assets into the mix, rick, and started to get in front of the possibility that things were bubbling up. >> housing prices are going up. >> right. >> how similar is their economy to the u.s.'s? >> in one word, varied or not varied? >> not varied. >> two words, i guess. which makes yesterday that much more ironic in my opinion. i will go to the grave saying most of the action yesterday was in direct response to what was a six-hour old article. but before it hit the presses. and, of course, that was the independent article talking about secret meetings and whatnot. even though most countries denied it. we all know if you were in an economy that had the weak dollar coming into your fold on a daily basis, you probably would have certain meetings, too, wouldn't you? >> right. clearly, the dollar is the kurpsy that people are funding these trades with. but traders look for things that are going one way, then start to go in a dimp direction. dramatic new low in the dollar index yesterday. not even approaching -- >> but in order to profit, we have to know why the move happened yesterday. i don't think it was as much australia as the notice that we are looking to compare ourselves with countries that have better outlooks and they're tightening and they're not trying to micromanage. would you agree with that? >> you have to bring it back home and say what does that mean for the fed? more importantly, what does it mean here in the states where asset prices are starting to rise but there are still strong structural problems in the economy that don't exist. >> are these structural problems being addressed at all by the low interest rates that will fuel a lot of sins down the road? >> slowly, at best. >> what we're really doing is making a commercial together, kevin ferry and i, that central bankers probably ought to take note of australia. not because they're going to get fixed better -- although maybe they will -- but maybe a little tightness in monetary policy will garner less sins down the road than medal value is today. would you agree with that? >> right. i would put it this way, rick. the real center is the capital markets, not capitol hill. and reemergence of the capitol market in america is stabilizing the financial system. that's where the power structure has to remain. australia is more in tune with that idea. >> the perfect segue. the gang for "squawk box" is on capitol hill. one would think maybe they would take this notion there that repealing various bumps in the road in an economy is a far different scenario than trying to fix a crisis. >> that's right. get the policy right. markets will take care of themselves. and i think that that's really what we should take away from australia. who is the head of the australia central bank? >> pretty tough guy, apparently. >> very few people even knew before yesterday. everyone knows the head of our central bank. they need to take a lech from our friends across the pond. >> speaking of sermt banks and fmoc, mr. bernanke firing after he was on capitol hill where the gang is, you need to get your fiscal house in order if you want to take care of the greenback. that's interesting. we have 20 billion reopen tens, today's supply hasn't made a huge difference. kevin is there any risk being out the curve, things like tens and 30s at this point or is all the dire move and higher rates down the road? quickly. >> i it still think it's amazing every time. another option, we just wait patiently to see a bump in the road. so far, america has no problem getting this debt off and that's been critical to the success of the market. >> critical to the nonsuccess, assuming that will be the driver forever and a day. >> correct. >> that's the warning here. of course, we'll have so much fun today. our gang, the "squawk box" gang is on capitol hill today and will be giving us valuable information to try to strat enjoys our trading. as we go to break and get ready to go to capitol hill, watch some of these stocks. the widely helds. get ready to alter that portfolio, because joe, becky and carl are going to be here shortly. fithe same tools the pros use, so you can be a disciplined trader. by selecting from eight advanced triggers, your order gets executed, even when you're busy. and with trailing stops to help you lock in profits and minimize risk, you can be confident in your strategy, no matter which way the market moves. find out why more and more active traders are turning to fidelity for a smarter way to trade online. trade like a pro. trade with fidelity. 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(announcer) on the nation's fastest 3g network. at&t. now get 50% g touchscreen phones after mail-in rebate. only from at&t. at the end of the day in sitka, alaska, the fishermen bring in the catch. and cargill brings in the sea salt to help them preserve it, shipped in an efficient supply chain to save the fishermen money and their catch. this is how cargill works with customers. cnbc special preparation, "squawk in session" live from capitol hill. creating jobs, revamping financial regulations. liepup for the democrat, congressman barney frank, elijah cummings and paul kanjorski. for the republicans, paul ryan "squawk in session" begins right now. welcome back to "squawk box" on a wednesday morning here on cnbc, first in business worldwide, live from capitol hill, coming to you live from the house education and labor committee room. i'm carl quintanilla along with becky quick and john harwood. joe kernen has this morning off. talking health care, the economy, the need for another stimulus package, financial regulation and a lot more to come over the next 60 minutes. first, becky, you have some top stories. earning central begins today. alcoa, very first to release its results after the bell today. we already have results from costco, retailer reporting better than expected fourth quarter earnings in revenue. that's something we're watching very closely. that retailer says september same store sales rose by 1%. analysts had been looking for a drop of .7%. two front-runners emerging to replace ken lewis as ceo of bank of america. chief risk officer greg curl, head of retail operations, brian monyhan, to two most likely internal candidates and sally krofchek, whether that would be an internal or external candidate. fannie mae and fredie mac, wall street journal reports the two will be providing advanced commitments to purchase mortgage that is meet certain quality standards. the commitment reduces the risk that banks will be stuck with loans that are rejected by the gses and could only be sold to other investors at a significant discount. we'll be talking about that more as well this morning. futu futures this morning, you'll see right now dow futures are a little below fair value, down only by about 13 points, but again you've been talking about gains over the last two sessions of better than 240 points for the dow, as we've seen significant weakness in the dollar and strength in the commodities as a result. right now, it is time for our roll call to kick off "squawk in session." barney frank, paul ryan, paul kanjorski, kevin mccarthy, elijah cummings and jeff hentserling. we appreciate your time here today. we have a lot of things to get to, including what's been happening with regulatory reform, where you plain plan to be looking at things on health care. gentlemen, if we could start talking broadly about the economy and jobs, give us your take on what the most important issues facing congress are now. chairman frank, could we start with you? >> becky, before he answers questions, can i point out i think this is the first time in history that the witness table is questioning members. >> we told them before they may have a position to push back from this. >> also, congressman frank, kanjorski and cummings are on the right. >> from our perspective. >> camera wise. >> chairman frank, broadly can you tell us the most important issue facing us right now? >> the most important issue, i believe, is the need to try to promote jobs as part of a broader issue. we're in a short-term crisis situation but we've had a problem for a long time. much of the '90s as well as the first part of this decade, of a problem with the way in which wealth is not so much created as distributed. we've had a tendency -- alan greenspan and ben bernanke both agreed we ran into a serious situation where there was too much of the wealth being created going to a smaller and smaller number of people and the problem with the great majority of americans not participating in that. that's the social problem. but also it becomes an economic problem, because consumption is such a large part of the economy. people complained about the low savings rate and i understood that. part of the problem, people couldn't save. in the current situation, jobs are an issue. we are coming out of this recession, but with job creation lagging, it always lags in a recession, appears to be lagging now than before. cyclical matters we would have to discuss. >> congressman ryan, a huge issue, i'm sure, on both sides of the aisle. how do you address it? how do you take a look at what's happening in terms of the jobs picture and the potential for additional stimulus spending? >> very simply, jobs are the issue. lost 1.4 million jobs this year alone, 7.2 million since the recession started, 9.8% unemployment rate. serious economists, alan greenspan for one, are telling us, we'll have high unemployment, around 10% all of next year is what these economists are telling us. what we should do, in my opinion, is not push through the kind of fiscal policy being proposed here in congress. they pass a budget that doubles the debt in five years, triples it in ten years. new tax increases on capital, labor, small businesses, cap and trade tax, about $140 billion on energy. fiscal policy is exactly the opposite kind of fiscal policy we need. as evidence of that, the signature fiscal policy for jobs, stimulus program, was meant to keep unemployment below 8%. it's now at 9.8%. only 80% -- 20% of the stimulus has been deployed. for me, stop this bad fiscal policy. the federal resf is out of bullets, and put good fiscal policy together. we've done that. i would be happy to tell you what that would be. >> can i follow up about one idea that's being discussed in the administration? the idea is some sort of new jobs tax credit to get employers to spur hiring. we heard larry lynndie on this program a short while ago saying dumb idea. it's a low-quality idea. not what we should be doing. but eric cantor, one of your leaders, is in "the new york times" today, saying there's bipartisan support for the idea. what is it from your point of view? >> certainly a better idea than anything else we've seen out of the administration. it doesn't necessarily mean it is the best idea. >> you like it? >> obviously it would be to give permanent tax relief to small businesses, job creation engine of america, because ultimately their ability to expand is going to be baesed on long-term tax policy not short-term tax credits. larry lindsay's right. some gaming of the system can take place and always takings place with these government programs. it's certainly a better idea than we've seen out of the administration. since we passed their $1.2 trillion government stimulus plan, what do we have? 3 million more of our countrymen have lost their jobs, 9.8% unemployment. the highest level in a quarter of a century. i mean, clearly, obama-nomics is not working. >> good idea? >> i think it's a reasonable idea. i think we have to be pragmatic as our response. optimistic view, think where we were one year ago from today. we were talking about the destruction of the entire world economy. we've come a long way. you know, i don't want to see this denegrade into a partisan discussion. the reality is, we should compliment our friends on the other side. practices, economic policies we're practicing today, to a large extent, have worked for the last year, were from the george bush administration and secretary paulson and chairman bernanke. and they weren't all that bad. let's compliment what those folks did. have we made it all the way down the field to a touchdown? hell, no. are we going to try? i think we should. first and foremost, i think what the american people would like us to do, join hand and get the best thoughts and processes and go together. not going separately. this is a fight to save america, not to save the republican party or the democratic party. >> is that a sentiment that is agreed by all six of you here today? >> i think we'll have to have a combination of solutions, no doubt about it. the tax credit, i think, is a good idea as long as we're very careful and in making sure that there is no fraud there. and i say that very -- as a member of the oversight committee. we've seen all kinds of problems with these kinds of tax efforts. but the other thing chairman lahood, secretary lahood, good republican friend of miep, came in the other day and talked about the stimulus. he pretty much was a little bit upset with the republican members of our party and basically said, look, the stimulus is working. it's made a difference. it's what mr. kachlt njorski was just talking about. we had a problem and we have slowed the problem down. when we look at the jobs numbers, no, they're not beautiful. matter of fact, they are upsetting to probably everybody on this panel. the fact is, it could have been a lot worse. so, i think that we are now in a position where we're going to have to have a combination of things. just today, the president is talking about an urban policy. we'll have to address that. a lot of higher unemployment is places like my district. places in my district where the unemployment rate is maybe 25%. and so we've got to address it. and i think, again, kanjorski is right. we have to join hands and work together. this is an american problem. >> are you feeling this joining of hands taking place? >> this is the first time i've heard it since this year. i would reach out and join hands. the difficulty is, you talk about a stimulus bill. the only bipartisan vote was a no vote. the president said he was more concerned about the time of when the bill passed and unemployment would never go up over 8.5%. 80% of it is not out there. it's not working. let's redirect that money and focus on job creation. you look long term. look at the amount of debt we're accumulating in less than four years. interest on the debt would be $1 billion a day. in ten years, the interest will be higher than how much we spend on our armed forces, a fundamental problem that will take away options to have job creation. >> in response to your question, when all six of these guys join hands in a huddle like a football strategy, pigs will be flying. >> i think we better pray first. >> congressman frank, is a second stimulus package, given what we just heard, is that a nonstarter on the hill? and, absent that, can things be done piecemeal like job credits? >> they're always done piece meal. talking about $1 billion, $1.2 trillion, that adds together several pieces. economic recovery plan specifically was about $780 billion. a couple hundred billion, by the way, which were tax cuts. that was not all spending. i agree that the deficit is a problem and -- but i don't think you can look although it by continuing to act as if america, as the world's military policeman, is a free good. i voted against the war in iraq. it is the single biggest contributor to our deficit we have had by any single action and made us worse off, to boot. the open tap that's given for america to be the world's law enforcer does more harm than good and costs money. secondly, with regard to the stimulus, republican colleagues, contradictory argument. there were different policies. bipartisanship is good when we agree. there are some areas of difference. that's right. insistence on bipartisanship all the time is literally anti-democratic with a small d. the people choose. that's why, of course, you have them. the fact is that what they're saying is that the democratic administration's approach to getting out of a recession, that the bush administration got us into isn't working fast enough. i agree. but it was the policies of the bush administration that left president obama with this great problem. yes, the recession is longer than we thought, deeper than we inherited. job creation isn't as good as we want it to. but all the evidence is that it's better than it would have been, if we hadn't done what we did. >> let's get to where we're going then. what do we do about these job problems? where do jobs come from in america? most come from small businesses. what is this congress proposing? raise taxes on small business, raise taxes on investment. raise taxes on labor. raise taxes on people for health care. what else is the government doing? we're talking about taking our fiscal direction, not getting our debt under control, but exploding our debt, creating a new entitlement that will probably dwarf the size of the medicare. that's the fiscal policy coming out here. >> both having a flashback, adding entitlement, he's talking about that prescription drug program. that was the last time that hundreds of hundreds of billions of dollars were added without any offset. >> mr. chairman, with a trillion dollars. >> you mentioned the war in iraq. afghanistan is a foreign policy, military question for president obama. it's also a money question. what do you want to do with the request for more troops? >> i'm still looking at that. i voted against the war in iraq. i voted for the war in afghanistan, but i am troubled by that election where president karzai does not appear to run a fair election and i would like it to be the case that military action would be able to be successful. we have to be realistic to see whether it is or isn't and be very cloer. our objective was and is to precht haven for terrorist against the united states. north korea, zimbabwe, i am not for dispatching the american troops to be the election police in every case. we have to look at afghanistan. certainly i want to reemphasize, the time has come for us to get out of iraq. i'm sorry the arabs and the kurds in the north don't get along. i'm not willing to spend tens of billions of dollars to referee it. >> we should budget for afghanistan. this is where the president and his budget advisers have been right. past administration didn't do this the right way. we should put the cost of the war inside the budget, prioritize within that. clearly, unforeseen emergencies you can't pay for. a lot of this stuff, we know what it's going to costly and shu should budget for. >> is it afghanistan a winnable war we should commit more troops to? >> if you read the mccrystal report, yes. >> does paul ryan think it's winnable? >> i'm still reviewing it. >> gentlemen, let's leave it here for right now. we'll come back in a moment and continue this conversation. we'll have much more of our "squawk in session" when we come back after this very quick break. we'll talk more about the economy and more on whether that second stimulus is needed to give the economy a boost. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 i want everything right where i can find it. tdd#: 1-800-345-2550 anything that makes trading easier. tdd#: 1-800-345-2550 i want to be right in the middle of the action-- tdd#: 1-800-345-2550 you know-- i have to see what's going on. tdd#: 1-800-345-2550 and when i pull the trigger... tdd#: 1-800-345-2550 ...i've got to get the best price out there. tdd#: 1-800-345-2550 (announcer) try the new schwab.com tdd#: 1-800-345-2550 for yourself. tdd#: 1-800-345-2550 call 1-888-4schwab tdd#: 1-800-345-2550 or visit schwab.com/trader today. tdd#: 1-800-345-2550 'course a trade doesn't always work out my way. tdd#: 1-800-345-2550 but when it does... tdd#: 1-800-345-2550 ...man... do i love that feeling. more than just money moving across markets. it's about exchanging ideas across cultures, opening up to the world- continuing to innovate. you need to have a nimble organization that can innovate rapidly and constantly is willing to learn. speed has become so important. every aspect of business has to be able to demonstrate flexibility and agility. collaboration is the name of the game. we have at least half a dozen relationships giving us new products, new opportunities and wonderful new therapies. a great place to be is at the intersection of content and technology because from the creative side-- the possibilities are endless and the ways you can reach people are extraordinarily exciting. our partnership has a long history. the new york stock exchange is where people look for companies held in high esteem around the world. nyse euronext powering the exchanging world the owner of taco bell, kfc and pizza hut likely to get a boost after posting better than expected 18% jump in third quarter profits. u.s. sales jumped 5%, offset by lower commodity expenses and general cost cutting. u.s. economy is clearly rebounding, but quick to caution how soon to begin to withdraw the fed's massive support. speaking at an economic conference yesterday, he warned it would be vital for the central bank to pull back from its ultra low rates. 1,038, adding to that today from some $3 to 1,042.70. fewers relatively stable after a couple of good days in the marks over the past couple of days, below fair value by 10 points on the dow. squawk is back in session with congressman barney frank, kevin mccarthy, elijah cummings and jeff hensarling. everybody is watching to see how the balk us vote turns out, if we get it this week. over the past couple of days, congressman hensarling, likes of bill frits, arnold schwarzenegger, saying if they were here, they would likely vote for something. is that significant? >> i think most republicans want to vote for something. the status quo is unsustainable. we know that. but what we've been presented by the democrats is, number one, a plan that has over $1 trillion price tag to it at a time when we have our first trillion dollar deficit. we have an economic plan passed by the democratic majority that will triple the national debt in the next ten years, borrowing 43 cents op the dollar, mainly from the chinese, sending the bill to our children and grandchildren. yes, we have problems in health care. we want to make it affordable. we want to make it portable. we don't want bureaucrats to get between you and your doctor. there are, supposedly, according to the president, 80% of these issues we gre on. why don't you work on those that don't have a trillion dollar price tag on them and work on the other contentious issues later? >> we're waiting for a final score from cbo. earlier, they said the balk us will bill would reduce the deficit, more than paid for. >> if you absolutely believe that congress is going to cut physician payments by 25%. if you will suspend disbelief, perhaps cbo has it right. >> cbo when it's bad for the administrati administration, but criticized their reports when they say that they actually are deficit neutral? >> cbo scores what's been put in front of them. what's been put in front of them are unrealistic pay force. they've never followed through on it. you think congress is going to cut doctors by 25% in 2011? we're not disputing the accuracy of the score. we're disputing the reality of this bill. >> the bill -- tax increases start next year. the health care reform of what they propose. we don't believe it will solve the problem, doesn't start for another four years. >> congressman cummings -- zplt reality is -- >> putting stuff forward -- >> let me say this. we can sit around and do nothing. i have a feeling that when it comes to this bill coming out of the house, you'll have a very good bill. and we may not have wup single republican supporting it. may not. and i think that's a pretty good probability. that's sad. america is suffering. you're talking about a health care system where we're spending one out of six dollars for health care. people are not getting better. many people in my district don't have health care. recent report shows anywhere from 18,000 to 44,000 people, fellow americans that are watching us right now are dying. if there had been any moment for the urgency of now as the president says, it's now. we've come further than we've ever come. i listened to the pundits on various stations talking are we going to have the public option, going to do this or that? we're further now with health care than we've ever been, and we're going to get there, with the republicans or not. island aye would love to have them, i would like to hold hands with them. >> where is there? >> we're going to get a piece of legislation out which addresses the idea of choice, making sure that people are -- most americans, if not all, are covered, and making sure that we control costs. it's one thing to have a policy. it's another thing to be able to afford it. we've got to -- we're going to get that. and i hope that we can -- we'll have a bipartisan situation. as the president says, if we can't do it with our friends, we'll have to do it alone. the united states' population is depending on us. >> congressman kanjorski -- >> where is there? there is going to be a bill when the congressman says we're going to pay for it. we can't pay for the government we have today. that's why we have a trillion dollar deficit much that's why the national debt is going to be tripled in the next ten years under this economic plan. and if he says we may do this without any republican votes, yes. if you're going to ration people's helmet care, if you're going to make massive cuts to medicare. i doubt you'll do it with republican votes. >> what i could say -- >> i don't think you'll get one democrat to vote for us to do anything to rein them in and do something for defensive medicine. >> health care is being ransomed right now. he doesn't seem to get t health care is being rationed right this moment by insurance companies. we've had the testimony before our committee in oversight. come on now. let's not kid ourselves. this is a life and death situation. this is not a joke. >> we're in a parallel universities sometimes with my republican colleagues because the saviors of health care that is dispensed without any restriction comes from the private insurance companies. that's what they're talking about, stoutly resisting, most of them, any competition or serious regulation with regard to the insurance companies. we raised the top rate of income from 36% to 39% and in subsequent years, we had a wonderful economy with great job creation. what my republican friends have are mutually canceling out exaggerations. historically exaggerated the amount of waste in medicare, now exaggerating the difficulty of reducing the waste. the notion that there are hundreds of billions of dollars of medicare waste has always been a republican notion until we begin to do it. i don't think you should set a fixed number and say you're going to get there. reduce the payments to medicare advantage that will bring new that direction. it's been a republican mantra for years that it was bloated and could be reduced. when people talk about reducing it, they now flip over to the opposite position. >> let's go out to medicare fraud, medicare waste and solve medicare problem, not take that money and create a brand new entitlement, that will have 110 million people on it in ten years. >> it's not just the republicans who worry about the cost. it's governor ed rendell from your own state, who says he's worried, especially about the bill from the senate, saying these are unfunded mandates that will be passed down to the state, that the state will be left holding the bill on these things. >> since 26 states are already in negative budgetary conditions, it's something the governor should worry b i said i'm sort of distracted here, because i was putting my armor on, bipartisan. maybe we can all take a step back. >> are you surprised the young guns brought real bullets? >> i'm not surprised at anything, having been in washington this long. but i am disappointed. i think we have the opportunity for this hour to talk to a lot of the leadership of the american people. and they're asking us for honest, serious resolve to some very difficult problems. and for us to go back and forth and misstate facts and information and take partisan positions, i think we'll get through this hour, it's not going to be very helpful to give any educational value to your watchers, my constituents. >> bipartisan and express some disagreement with my colleague here. it is a denegration not to discuss differences. i admire paul for saying we're getting better. whether we should have spent that trillion dollars is an issue to be debated. it's not partisan to talk about it one way or the other. whether you can reach these cuts in medicare. i am not one that thinks you should -- problem with partisan, in those areas where there is agreement, you don't want the legitimate disagreements spill over and interfere with the ability to work together. central part of democracy. >> congressman dingell made the point this morning, that somehow in his view, i think, the dynamic has changed when you're debating something this public and this complex. it's difficult to twist arms. >> let me get to the core of this issue on health care. number one, we have a fiscal problem, medicare and medicaid going bankrupt. medicaid 14 trillion dollar unfunded liability. what are we talking about doing here? putting in place a plan that has the government take over the rest of health care from our estimation that's our opinion. we have a lot of actual data to back that up. what are we saying? the government will take over more of health care, already bankrupting our country? the only way to fix this problem then is to have the government be in a position of rationing care. we want a system where the patient is the center piece of health care, not the government. that's not the kurpt situation. republican bills call for -- i've offered one of them. >> do you not agree the private market is failing the american patient right now? >> yes. the market system is not working in health care. this third party payment system we have today is unsustainable. let's bring the market into the system. let's fix health care. let's fix insurance and make sure the uninsured get insured. let make sure it's fixed for people with pre-existing conditions. you can do all of that without the government taking it over, and without the root cause of inflation, which will help our fiscal situation. that is not what is -- >> paul, one question. >> yeah. >> when did you figure that out? probably for the 12 years that the republicans were in control, eight of which had a republican president. that hadn't occurred to you. i'm glad you now understand that. can you tell me at what moment the revelation occurred? you had control of the congress. why didn't the republican congress fix it? >> we should have fixed this under our watch and i'm sfointed we didn't. >> isn't it nice not to have to yield the floor? >> i'm sitting here with the gavel. >> let's hold it right here. when we return, more of the top stories of the day and we'll go ahead and reopen this conversation we're having with the congressmen. this is "squawk in session." trader's edge to washington and wall street. "squawk box" live from capitol hill will return in a minute. welcome to the now network. population: 49 million. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com. welcome back to "squawk" here on cnbc, first in business worldwide. what a show this morning, in session on capitol hill, set up in the house education and labor committee hearing room. having fun? we said it before. >> we did, but i have to say, you gentlemen are very lively. the mixing back and forth and the conversation here, we appreciate that. >> not quite as wise, but lively. >> it's been very wise, too. i have to say, this is -- >> if you want gravity and sensationalism go to the senate. >> in the house, we play rugby. they play golf. >> hour to the opening bell. meantime, top stories, citi may be on the verge of selling its fibro commodities unit. microsoft remains high hopes of sales for the window operating system. expecting to boost nands for pcs slightly. microsoft welcomes a move by the eu. burger king getting a new look for loeks worldwide. it will be more contrary and more futuristic. >> what does that mean? >> i'm not sure. they're trying to get people to sit in, dine in more rather than take out. >> i think jetsons futuristic, having to question members of congress. kevin mccarthy, jeff hensarling, paul ryan, congressman kanjorski, e barney frank, elijah kumgs. the obama administration has consistently said internationally, talking to our g-20 partners and in the context of the regulation here, they resist actual caps on compensation, but are trying to shift the incentives to try to curb some of the behavior they feel got us into this mess. ken fineburg is about to come out and say limit cash compensation. you can compensate as much as you want. but over a certain limit it has to be in stock. are you down with that or do you want to see those companies, general motors, aig, citi, that have gotten so much taxpayer money say you can pay your executives whatever you want? >> i don't like the idea of the governments coming in and telling people what they're going to make and what they're not. we're talking about government entities now funding all this. i think more power to the sharehold shareholders, more power within the feedback of being able to set that fee. i believe in the idea that they should have to meet goals to get it. that's the power of the shareholders to be able to say that. >> in the case of some of these government-controlled entities, we are the shareholders. >> we have a bigger say, 70% of aig. iffeer going to have -- >> so, is it okay to say not cash, but stock to make -- to give more skin in the game for the executives and put them in a long-term -- >> i like the idea from the standpoint that i'm going to give you a reward at the end if you work harder. that's something i personally believe in. >> congressman frank? >> an important distinction between those companies that are voluntarily accepting or saved from bankruptcy by federal government funding, taxpayer funding and can put caps on at that point. i kept urging the administration not government regulated but government shareholder. you don't set bad precedence. i am in favor of what ken fineburg is doing, difficult job on dispensing the compensation from the 9/11 tragedy. for companies not getting government funds, there's a broad international con sense very strongly held here by ben bernanke, chairman of the fed and others, that some action is relevant for those who are not -- take government funds. in two ways, the government should not be for private companies setting caps or limits, but empowering the shareholders. that's why the house did pass this say on pay bill. we borrowed it from england where it has had some effect. say on pay says when you have the annual proxy, you include the vote on the top number of people, depending how big the corporation is, to give bipartisan credit, chris cox, former chairman of the s.e.c., they did intervene and order companies to be much more clear about what the information was on competition. we've taken the second step to say, and then subject that to a shareholder vote. it's not a binding vote. if you had a binding vote and it went down, you couldn't -- secondly there was a view that the federal reserve is moving on, and the house passed this bill. not to set caps, but to require that companies and -- let me be clear. we're not trying to encourage risk taking, but discourage excessive risk taking, you don't want a situation where heads they win, tails they break even. risk taking is an essential part of capitalism. the people who take the risks ought to be accountable on the upside and downside for what happened. >> can you agree with some of what he just said, congressman ryan? >> engage in one of these rare bipartisan moments. i agree with chairman frank. there's something very different about using taxpayer money. what you do with your money is your business. what you do with taxpayer money is our business. i think it would be absolutely unfathomable not to have some type of reasonable compensation limits on these firms that took extraordinary taxpayer bailouts. i have a number of questions, though, because when i look at the larger financial firms that have ganled in what some believe are questionable compensation practices, i see other firms engage in the same kind of practices that didn't seem to have to accept extraordinary government bailout. i'm still waiting to see the nexus between these compensation plans. we shouldn't put limits on the american dream. when our house financial committee was taking up the bill -- i don't recall the gentleman's name, but the head of deutsche bank said great, now all the great talent will migrate across the pond. if chairman frank, i suppose, unsuccessful in the administration reaching an international standard, there are still competitiveness issues and ultimately you cannot have capitalism without capital. without capital you're not going to have the jobs. >> one things we did do -- this is bipartisan, the secretary to the treasury in the bush and obama administrations urged these banks to take the money from the t.a.r.p. and then made it hard for them to give it back. we, in a bipartisan way part of the recovery bill said no we want them to pay it back and made it easier for them to pay it back. they can't now claim, leave me alone. you made me take the money. that was a legislative executive issue. >> one -- >> one quick point. flat wrong on the competitive fee. you have a major misstatement here. the fact is that the rest of the world, european union, france and germany are ahead of us. they want to put caps on. in fact, internationally there is no chance of us being tough erin terms of compensation. >> you're seeing a trend here. this majority wanting to emulate france and germany on everything they do. >> they're already beyond us. we're not going to where they are. that gets rid of the competitive argument. >> i'm shocked to be lectured by my chairman. >> congressman mccarthy, should taxpayers expect to get that money back in a real sensor redirected as some would like to do? >> it should be paid back. debate when it went forward was this was money put in, money will be paid back. it should be paid back. the amount of the debt we are accumulating is unheard of in this history. >> i know we have to take a break. did you enjoy seeing brett favre rip up the packers? >> we promised we wouldn't bring that up. >> this name is not familiar to me. denial is not just a river this week in my vocabulary. >> unbelievable game. the most watched events on cable television, like some 20 million viewers. >> he still has it. >> he sure does, at 40. "squawk in session" will take a quick recess. we'll find out what we're expecting ahead of today's opening bell. so, what's the problem? these are hot. we're shipping 'em everywhere. but we can't predict our shipping costs. dallas. detroit. different rates. well with us, it's the same flat rate. same flat rate. boston. boise? same flat rate. alabama. alaska? with priority mail flat rate boxes from the postal service. if it fits, it ships anywhere in the country for a low flat rate. dude's good. dude's real good. dudes. priority mail flat rate boxes only from the postal service. a simpler way to ship. they say imports always get the best mileage. well, do they know this malibu offers an epa estimated 33 mpg highway? they never heard that. which is better than a comparable toyota camry or honda accord? they are stunned. they can't believe it. they need a minute. i had a feeling they would. introducing the 60-day satisfaction guarantee. buy a new chevy and if you don't love it, we'll take it back. there has never been more reasons to look at chevy. time now for the trader's edge. ubs financial services joins us from the floor of the exchange. art, you said yesterday we might punch through some resiches. in fact, we did. we stopped short at some key levels, right? >> yeah. we saw some real resistance up at 10,060, 65 area. we'll see if we get a chance to test it today. the amazing thing, carl, is that it's all about the dollar. if you were in a cave somewhere and had to call out, you wouldn't be asking about everything from earnings or economic data. what's the dollar doing and you would know where gold was going, where oil was going and where stocks are going. >> kind of a directions lost. >> how much have the dlr's decline been aggravated by those reports about arab states holding these secret meetings? would the dollar be on such weak legs had it not been for the independent story? >> it joed a resurgens last year when it looked like the world was coming apart. people are looking at a slower than normal recovery in the u.s., looking at other nations beginning to see things firming up. it's become aggressions law, bad money drives out good and the questionable value of the dollar is beginning to weigh on everybody. they're using it to buy something else. you know, slopgs the shop keeper will take it, we'll buy gold. we'll buy stocks. we'll buy whatever. >> art, thanks for that. we'll talk to you soon. >> okay. >> art cashin. a few stocks on the move this morning, keeping an eye on earning central, even though it doesn't officially kick off until the opening bell today. costco shares are getting a boost after the wholesale jienlt came in with better than expected profits for quarter and revenue, same store sales as well. yum shares are higher, owner of taco bell, kfc, pizza hut, better than expected 18% jump for third quarter approves and raised their guidance for the existing quarter as well. take a look at shares with monsanto, agricultural giant. better than by a penny. revenue fell a little short. monsanto, bid ask is above that closing price from yesterday. closed at 75.36. bid up to 76.74. ask is at 76.83. recess is over. it is time to get back to our "squawk in session" panel. congressmen are here with us. we talked about the jobs outlook, the economy. we touched on regulatory reform, but chairman frank, we have not dug into the details. you'll be marking up some of these bills starting next week. can we assume we'll be getting some sort of regulatory reform this year? >> i know people talk about time, but the genesis of this in terms of the legislation we're dealing with goes back to april 2008 when hank paulson, secretary of the treasury in the bush administration, made a speech. you'll find a number of things that we've been working on. he said some things and he picked a fight with credit union, which very few members of congress ever think is a good idea. in general, he laid the outlines of this. subsequently, we thought we had planned to stop working on it. what happened during the summer, particularly late, was the -- we worked on things, take our play fire brigade for a while. so we have gotten back to that. i expect the house to have a vote on the floor of the house in november on the failing comprehensive set of bills, we'll be marking them up in a series of committee seconds. i told the leadership if we bring an overall bill to the floor i want at loose three full days to debate it. i don't want there to be any restriction. i've insisted when we bring bills to the floor, there's an open amendment process. and we'll have that. the senate -- senator dodd is working hard. he's been talking to his republican counterpart, senator shelby. the senate moves more slowly because the rules are different. they are trying to the something here. we will certainly get bills out on, i think, passed this november. the senator is trying to do the same. >> congressman, when you look back at your district, when you look back at everything that is happening, what are your biggest concerns right now and is washington addressing the needs in your district? >> well, that's a good question, becky. i think there's prioritization that's necessary. we can talk about a lot of issues. one of them when we have the discussion of executive compensation. that's important but that's so far off the radar screen in terms of what's really important. let's first start out, you know, exists the economy, jobs, if we don't have the economy and jobs solved over the next year or two years, we can't really get the cure health care, we can't get to these finer items, we can't even end the wars that we're spending or pay for them. first and foremost, i think we ought to put a first priority on the economy and what's necessary to move out there, create the jobs that average americans need. you know, it's very hard to pay attention to esoteric issues when you're hungry or when your children can't go to school or you don't have health care because you can't afford it. that's what we're faced with. so to a large extent i think we have to address the attention of the fundamental issue, the economy, jobs, and then move into the other issues, and hopefully don't pick them all. let's prioritize them for at least the next year or two. as chairman frank indicated, we've been working now in the house on our committee for about nine months structuring a set of bills that in the next month when we move to the floor, i think the american people will be very satisfied that we have unusual and incredible regulatory reform to provide the platform to move on over the next several years to make sure this disaster we've just come out of will not happen again. >> mccarthy, he seems to be the chairman of cumbayah on this panel. i thought i heard some hints of agreement with chairman frank on financial regulation. are we going to see a much more bipartisan process in terms of the votes on the floor than we're likely to see on health care and other issues on financial regulation? >> you can't on some of the bills coming forward. we still have a few hearings to go. we still have markup to go. one thing i will give credit to chairman on the committee, he does have a open rule when it comes through. he will sit down and listen to you and talk to you. we don't always agree. he will tell you he doesn't set out to have a bipartisan deal. i would like something at the end of the day. we are still a ways away from that. some of the bills that i have authored were put in mr. kanjorski's bill yesterday. there is an opportunity. i do agree with him, we should focus on jobs. small business, 70% of all jobs are created through small business. we should get america working again. >> one criticism of the president has been that he craves too much anonymity as these bills are being written. we're told he's leaning on congress more to bridge the divide. is he? does that practice extend to other areas of legislation? >> i think the -- i think the president has taken on a lot. and not too much, by the way, as barney frank said a few minutes ago, he inherited a true mess. but one of the things i would like to him deal more forcefully on is the whole issue of foreclosure. jobs are important, health care is important. i've got a lot of people and people watching us right now who are being put out of their houses. 200,000 foreclosures in the second quarter in this country. 9,000 in my state. we cannot have americans put out of their houses, losing their jobs, losing their savings, losing their health care. i've said it over and over again. we will get through this storm, this economic storm. the question is not whether we'll get through it, it's who will be in your house, who will have your job, or will there be a job and will you still be alive? will you be healthy? those are the kinds of questions we've got to address. i think the president has done a good job. he's got a lot. he's inherited a lot. we may have disagreements, but we've got -- we really do have to come together and address these issues because that's what the american people expect. >> congressman ryan, i see you smiling at that. would you like to add on? >> look at our fiscal policy. much higher taxes, more regulation, and a massive amount of borrowing and a massive amount of spending. it's on a collision course with our monetary policy. monetary policy has pretty much been carrying the load on economic stimulus. it's out of bullets. sooner or letter the federal reserve is going to have to mop all of this access up, raise rates. this administration is continuing the weak dollar policy, which they inherited, which is going to be very detrimental to us in the future. unfortunately with all of this massive amount of borrowing and spending that's occurring it's going to put more pressure on the the dollar and mess up our currency. in the medium turn, we're probably going to have an inflation problem. so what i see happening out of washington is rally bad fiscal policy which will make us have really bad monetary policy. that is why small businesses, investors, entrepreneurs, risk takers are sitting on their hands and holding back. if that continues we're not going to get out the 10% unemployment we've got. >> "squawk box" is coming right back. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 i want everything right where i can find it. tdd#: 1-800-345-2550 anything that makes trading easier. tdd#: 1-800-345-2550 i want to be right in the middle of the action-- tdd#: 1-800-345-2550 you know-- i have to see what's going on. tdd#: 1-800-345-2550 and when i pull the trigger... tdd#: 1-800-345-2550 ...i've got to get the best price out there. tdd#: 1-800-345-2550 (announcer) try the new schwab.com tdd#: 1-800-345-2550 for yourself. tdd#: 1-800-345-2550 call 1-888-4schwab tdd#: 1-800-345-2550 or visit schwab.com/trader today. tdd#: 1-800-345-2550 'course a trade doesn't always work out my way. tdd#: 1-800-345-2550 but when it does... tdd#: 1-800-345-2550 ...man... do i love that feeling. having to go in the middle of traffic and just starting and stopping. having to go in the middle of a ballgame and then not being able to go once i got there. and going at night. i thought i had a going problem. my doctor said i had a growing problem. it wasn't my bladder. my prostate was growing. i had an enlarging prostate that was causing my urinary symptoms. my doctor prescribed avodart. 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(announcer) avodart is for men only. women should not take or handle avodart due to risk of a specific birth defect. do not donate blood until 6 months after stopping avodart. tell your doctor if you have liver disease. rarely sexual side effects, swelling or tenderness of the breasts can occur. only your health care provider can tell if symptoms are from an enlarged prostate and not a more serious condition like prostate cancer. so have regular exams. call your doctor today. avodart. help take care of your growing problem. we want to thank our guests this morning, congressman mccarthy, ryan, frank, kanjorski and cummings and special thanks to the house committee and labor for their hospitality. did you have a good time, john? >> awesome time. i was waiting to see paul ryan to use that gavel. >> yes. >> that's going to make the wires right there. gentlemen, thank you very much. >> appreciate your time. >> join us tomorrow. "squawk on the street" is coming up next. live from the financial capital of the world, this is it, "squawk on the street" starts right now. good morning, everybody. i'm mark haines. >> i'm melissa lee in today for erin burnett. here's what is front and center right now. >> yeah, gold. hitting new highs again this morning. although it has backed off a bit. here's the chart. okay. i've got a different price down here but i'll go with the one on the chart. 1042. scratch that remark it has backed off. crude oil, 70.95. the dollar is up a bit after just taking a real pounding. >> absolutely. and, of course, the

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