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Former U.S. Comptroller Weighs in on Economy

Aired July 17, 2008 - 19:00:00   ET


GLENN BECK, HOST (voice-over): Tonight, America`s got a dirty little secret, and former U.S. comptroller General David Walker is exposing it in a new documentary.

GEN. DAVID WALKER, FORMER U.S. COMPTROLLER: We suffer from a fiscal cancer.

BECK: All right. Good, it`s not a secret any more. He says we have cancer. What`s the cure?

And from the Bad Idea Part Two file, why the Democrats think another round of stimulus checks will kick-start the economy. As our national debt sky rockets and solutions aren`t even close at hand, does disaster approach?

UNIDENTIFIED MALE: This is America. We don`t do anything until something reaches a crisis.

BECK: Honest questions, honest answers, tonight.


BECK: Well, hello, America. You know, back in my drinking days, I drank a lot. Used to run up quite a beer tab, you know what I mean? That`s until I started blacking out because I moved from beer to Jack Daniels. But when I woke up, not only had Mr. Jack Daniels given me a Tennessee-sized headache, but he also left a nice bill for me to pay.

The Democrats in Congress are having kind of the same problem with the proposal of a new stimulus package by Nancy Pelosi. Here`s "The Point" tonight.

I mean, Nancy, I can order another round of cocktails for you, but this ain`t on the house anymore. It`s time to sober up and step away from the bar, ma`am. We`re in for one hell of a hangover, and here`s how I got here.

First of all, let`s look back at the end results of the first stimulus package that Washington sent out. Considering that gas prices are now at record-breaking levels, the few hundred dollars that President Bush did send out, you know, didn`t go to the mall, where he wanted it to go. It went into the gas tank of a lot of Americans.

And considering that we still import most of our oil because of the Democratically-controlled Congress standing in the way of domestic drilling, your stimulus package basically went to Saudi Arabia. Which gives me an idea. What do you say we just start borrowing more money from China, which we`re paying the interest on? And you know, that way, we can afford this new stimulus package.

But why don`t we just tell Nancy Pelosi, you know, just call China. Have them send us the check. No, no, send it right to Saudi Arabia. What the hell? Let`s cut the middle man out. I mean, think how much we`ll save on stamps. The administrative cost of the last plan -- get this -- cost a billion dollars.

Tonight, America, here`s what you need to know. The national epidemic of spending more than we have has gotten us to the place we are. And it is a mess. It`s a nightmare. We need economic stimulus. Yes, yes, yes. Maybe in the form of genuine tax relief and incentives for business to grow. What we don`t need is another financial bender. Remember, the first step of getting help is admitting we have a problem.

David Walker is the president and CEO of the Pete Peterson Foundation. I should say, it`s the G. Peterson Foundation. It`s a little more formal than that. Former comptroller general of the United States of America and creator of a new documentary called "I.O.U.S.A."

You`re one of the spookiest dudes I know, David, because -- spooky, not scary. I mean, you scare the living pants off of me, because you and I were talking before we went on the air that, I mean, what they`re doing doesn`t make any sense at all. You`re the guy who kept the books for the United States for how long? How many years?

WALKER: Almost ten years.

BECK: OK. And you`re -- you had to look at them almost every day and go, "Uh, guys, doesn`t work," right?

WALKER: Well, there`s three rules of holes that Washington hasn`t learned. First, when you`re in a hole, stop digging.

BECK: Yes.

WALKER: Secondly, when you`re in a $53 trillion hole, which we are -- which grows $2 to $3 trillion a year -- you have to have a plan to get out. And No. 3, you have to have mechanisms to keep from falling back in when you start coming out.

BECK: Right.

WALKER: We haven`t learned the first one, much less the other.

BECK: And at the same time, as a country, we are not manufacturing anything -- we`re not making anything. We`re just a nation of spenders, not a nation of creators. How the hell do we get out of this hole?

WALKER: Well, we have four major deficits, and that`s the film`s about, "I.O.U.S.A." We have a budget deficit. We have a savings deficit. We have a balance of payment/trade deficit, and the biggest deficit of all, a leadership deficit. People are treating the symptoms of the problem. They`re not treating the disease.

BECK: Right. OK. So let`s go to the disease. The stimulus package. Do we need another one? Has this ever proven to be effective? Is this ever a good idea?

WALKER: Well, first, we don`t know what it`s going to look like, but the fact is this. You know, depending upon how it`s designed, it may or may not make any difference. It could just be a dig the hole.

But what we need to realize is we have serious structural problems that are getting worse with the passage of time. No matter what you do in the short-term, with regard to stimulus, we need to start dealing with the disease. And the disease is we`ve got large and growing structural imbalances and we haven`t started to deal with it.

BECK: OK. And you`re talking about Social Security and Medicare and everything else. There was a story this week that I, David. My head hurts when I start listening to all this stuff. And most people, I think, do. They`re like, the Medicare thing, what was that? The government wants to screw doctors. And George Bush wanted to do that, and Congress didn`t -- and they don`t even understand. Can you explain the Medicare bill to them?

WALKER: Well, first it`s a little bit confusing because what happened was, was that there were automatic cost-control mechanisms that were supposed to be in place, and that unless Congress acted, doctors were going to get cut quite a bit on their reimbursements.

Well, the question was should that happen? And then secondly, how do you pay for it? The bill that was vetoed by President Bush pays for it by cutting back on reimbursements to providers to Medicare part C, Medicare Advantage, the Medicare Choice plan.

BECK: OK. That`s the private thing, right?

WALKER: That`s correct. Bush didn`t really want to cut the doctors either, but he didn`t want to pay for it through cutting the Medicare Advantage plan. But nobody is dealing with out-of-control health-care costs, and nobody is trying to figure out how we`re going to get out of our $34 trillion Medicare hole. And it`s true that Medicare Advantage costs more money than it should. That was supposed to save money. It costs more money than any other program.

BECK: Why? Why?

WALKER: Because there`s adverse selection. Because they`re not designed properly, if you will. Because the pool that`s covered is not properly risk-adjusted and because the amounts that were getting paid...

BECK: Why can`t -- why can`t government get the hell out of all of this stuff? It`s never -- tell me. I am asked this on the air, well, defense. Not really, because defense farms it out to other companies to do it. Tell me where the government is successful when it comes to spending money.

WALKER: Well, actually, the government does a pretty good job on Social Security. It`s probably the most successful program that the government runs. It`s the most popular program that it runs. And it actually has pretty low administrative expenses. OK?

And -- you now, but I think what we have to recognize is that the government has over-promised. And on some programs, not only are costs out of control, but we`ve got middle- to upper-class welfare going up.

Look at Medicare. Medicare Part B and D: B is position payments; D is prescription drugs. They`re voluntary. You don`t have to sign up for them. But guess why people sign up? Because 75 percent of the cost is paid for by the taxpayers, not by the premiums.

And guess which taxpayers? Kids, grandkids, and generations unborn. The big thing that`s going on right now is taxation without representation. We are spending today and wanting our kids, grandkids, and generations unborn to pay it. And that`s immoral.

BECK: OK. Social Security, you say that this is probably the most successful. Isn`t it going bankrupt, like 2018?

WALKER: Well, first -- it depends on how you want to define the word "bankrupt." No. The answer is no. Not on (UNINTELLIGIBLE).

First understand, there are no real trust funds. Put a quote around "trust funds." They should be trust-the-government funds. OK?

BECK: Right.

WALKER: There are bonds, and they`ll be honored, but we go negative cash flow in 2018. The trust funds go dry...

BECK: That`s when a company goes out of business.

WALKER: They go when they run out of cash, not when they go negative cash flow. When they run out of cash.

BECK: When do we run out of cash?

WALKER: Well...

BECK: Wait a minute. How do you not run out of cash?

WALKER: They can print money.

BECK: How does --that`s the problem. That`s the problem. That`s what they`re doing with the banking thing this week. They say the treasury -- people think that you can just print out more money.

WALKER: Let`s talk about that. That`s a real concern. Let me tell you, that`s a huge concern.

BECK: Look, the dollar is -- people have to think of dollar as the stock of America. That`s our stock. That`s our share of stock.

WALKER: It`s not doing too well lately, Glenn.

BECK: It`s horrible. When I saw this bail-out with the treasury stepping to the plate and they said the whole faith and credit of the United States government, I said, "Who the hell has faith and credit in the United States government?" You might today, but not very much longer with these kind of things.

WALKER: What I don`t understand with the GSEs is why aren`t we following a Chrysler type of loan guarantee model with an equity kicker, you know, for taking the risk? The idea is if they`re adequately capitalized, if there`s no real problem there with the GSEs...

BECK: What is a GSE?

WALKER: Government-sponsored entities, Freddie -- Fannie Mae, Freddie Mac.

BECK: OK. So a capitalist/socialist hybrid monster.

WALKER: Well, it is a hybrid, OK?


WALKER: And it`s a private sector entity where it`s benefited from the fact that many people think that the government will step in and bail it out if it has a problem.

BECK: They`re wrong.

WALKER: But my point is the taxpayers could get, as you know...

BECK: Yes. Screwed. He`s too nice to say it, screwed.

OK. So here is the question I have. I read from S&P -- I guess these are the people that give credit ratings. Right? So they give us credit ratings. And it`s just like our credit rating. If I`ve got a bad credit rating, it costs me more to borrow money and it`s harder to get a loan, et cetera, et cetera.

They say that if -- if Fannie and Freddie go bankrupt or go down the tubes, which we don`t know, could be a possibility now, that our credit rating, S&P will bring our credit rating down, which makes the problems that you`re talking about how much worse?

WALKER: Much worse, because we`ll have to pay higher interest rates. Look, here`s the deal: the factors that led to the mortgage-based subprime, quote/unquote, crisis are the same factors that exist for the federal government`s finances, and we`re not doing anything for it. And yet, the scale of the problem for the federal government`s finances is 25 times or more greater than the problem with the subprime.

So let`s get real, Washington. Let`s wake up. Let`s not spend money we don`t have. Let`s think about how we can do things that end up dealing with a short-term problem about exacerbating a long-term challenge. And let`s start getting on with dealing with the real problem, which is the $53 trillion hole.

BECK: OK. Back in just a minute with more with David Walker. I want to explain the pin that he has on his lapel. Because I think it has great meaning. We`ll be back in just a minute.


BECK: We`re back with David Walker, former comptroller general of the United States of America, current president and CEO of the Peter G. Peterson Foundation, the creator of a brand-new documentary that`s coming out when, David?

WALKER: It`s coming out August 21st nationwide. Nationwide unprecedented live simulcast from the central part of America and into 13 cities after that.

BECK: OK. It`s called "I.O.U." -- "I.O.U.S.A." We`ll give you more details on that as we -- as we get closer to it, because it`s -- David, I want to start, I guess, by showing the pin on your lapel. When you first sat down, I said what is that? I have never seen that before. And you said?

WALKER: Sons of the American Revolution.

BECK: So you`re a great, great, great whatever?

WALKER: I have several direct -- direct ancestors who fought and some who died in the revolution. So I care a lot about getting this right.

BECK: Yes. And David, I have to tell you, to the depths of my soul, I love this country. I think we were -- I think the people who fought in the revolution were divinely inspired. This is a nation that is here for a reason.

I don`t believe all this bull crap that people say, "Well, gee, I don`t know. We`re pretty darn bad. We`ve done some bad things." You know what? Everybody has done some bad things. This is a country that can make the world a better place, and not on my watch are we going to destroy it.

The significance of that pin -- I keep hearing people in Washington say the same thing, doing the same things over and over again. And it is destroying us. Are we going to be able to change this without revisiting the Declaration of Independence again?

WALKER: We won`t revisit that. We might have to revisit the Constitution before it`s all over, quite frankly.

BECK: What do you -- what do you mean?

WALKER: I mean, we may need some constitutional amendments. We may need some constitutional amendments with regard to fiscal issues, with regard to political issues or whatever.

Let me tell you. Let me give you some examples of how far we`ve strayed. At the beginning of the republic, the government represented 2 percent of the economy. Now it`s 20 percent, and it`s headed towards 30 percent plus.

At the beginning of the republic, the Founding Fathers said the federal government should only do things that the states can`t do or won`t do or -- if you will. And now, what do we have? Sixty-two percent of the federal budget is on autopilot. The 38 percent that`s not includes everything the Founding Fathers intended the federal government to do. The national defense, homeland security, foreign policy, federal judicial system, treasury, postal service, executive office, president, Congress of the United States. All the major functions.

We have lost our way. But in addition to that, we`re in a situation where we don`t know which programs work, which tax policies work, which ones don`t. We`re in a $53 trillion hole, getting deeper, $2 to $3 trillion a year. And we face major sustainability challenges, fiscal, health care, energy, environment, foreign policy, immigration, Iraq. Major challenges, taxes, our tax system.

None of these are sustained in the present form. So it`s time that we wake up, in particular, Washington. The American people have to wake up, too because they...

BECK: I have to tell you, David. I mean, I -- I know there`s a lot of people out there that are like, yes, give me more free stuff. There`s a lot of people, but the way our politicians are structuring this, I don`t know if you`ve seen both politicians. They keep giving tax cuts deeper and deeper and deeper, so the wealthiest 10 percent, 20 percent, are lifting the entire load right now.

So the bottom 80 percent, at least the bottom 49 percent, don`t give a flying crap about taxes or whatever it costs -- give me more free stuff -- because they don`t pay it.

How do you get people to wake up? Franklin talked about once the -- once the people know they can vote money from one person to another through the government, the republic is over. How do you survive? How do you change it?

WALKER: First, the people are a lot smarter than people give them credit for. If you state the facts and speak the truth, they can understand it. But you need to talk more than numbers. Numbers can make your eyes glaze over. You need to talk about values.

How about the value of stewardship? It`s leaving this country better off and better positioned for future generations. That`s at risk for the first time in America`s history.

Secondly, how about people? It`s my grandkids. I`ve got three grandkids. I got married at 19. We have two children, young. We have three grandchildren young. Their future is being mortgaged, and they`re too young to vote. And that`s what`s going on.

And so you need to put a face on it. We need to wake up. We need to start having some conversations around the kitchen table to make sure that we can work together to deal with these problems.

BECK: Don`t you think -- do you think that the American people -- I mean, the people I know, they don`t know all the numbers. They don`t know, you know, the year of collapse, which is 2040.

WALKER: How about 2041?

BECK: OK. They don`t know that.

WALKER: In 2041, we still have 73 cents in revenue for every dollar of promised benefits. OK? So it`s not like it`s nothing, OK?

BECK: Yes.

WALKER: But we`ve got to restructure. And the real problem is Medicare: $34 trillion hole.

BECK: David, most people know in their guts, we`re in trouble, man. We are making bad, bad moves. At the same time, nobody is telling them the truth. And it`s also -- but it`s also convoluted. You don`t know what the -- I mean, look, I`m a guy who reads five newspapers a day. I`ve got researchers that just research stories for me. I couldn`t tell you what the hell that Medicare thing was about. I mean, I was like, OK, I think I get it, but I don`t really.

WALKER: Well, sometimes people don`t want you to get it, quite frankly. People that are invested in the status quo, people that are supporting the do-nothing plan, and the do-nothing plan is not good for America. It`s not good for American families.

Let me give you a history tidbit. The Roman Empire fell for four major reasons. Political instability at home.

BECK: Yes.

WALKER: Immorality at home. Overconfident and overextended militarily around the world. Fiscal responsibility domestically, and inability to control one`s borders. Does that sound familiar?

BECK: Yes. Yes.

WALKER: Wake up, America.

BECK: Thank you. All right. Back after a quick break.


BECK: We`re back with David Walker. He`s the president and CEO of the Peter G. Peterson Foundation, former comptroller general of the United States of America. He was the guy who watched our books and was screaming help for a very long time. Creator of a brand-new documentary, "I.O.U.S.A.," which will tell you about in the next coming weeks.

Let me -- let me say to you here for a second, global confidence. We -- we have -- and I`ve done my homework here a little bit. I mean, I hate to bring this up to you, because I`m going to look like a nursery school kid.

But we`ve convinced ourselves that we could just become consumers. Before, we were the great builders. And we could say, "Our dollar is gold because look at us. Nobody better than us."

Then, in the `70s, when everything started to fall apart, we were like, "Oh, no, but OK, we still -- we`ll consume, so people will need us."

Now, we`re not going to be the biggest consumers very long. I mean, China and India and everybody else is growing up. At what point -- where`s the global confidence in our dollar and how close are we to people saying, "You know what? I don`t trust the dollar anymore," and unpeg from it?

WALKER: The dollar has already declined, 30 to 40 percent in value in the last several years. One of the reasons that oil costs are so high or gasoline prices are so high is because crude oil is transacted in dollars, and 70 percent plus of the cost of a gallon of gas is crude oil.

Therefore, if the dollar goes down in value, all these countries have to charge more dollars in order to maintain purchasing powers.

BECK: So we have, if I may explain the dollar falling 30 or 40 percent. Basically, the treasury and Fed have given us a 30- to 40-percent across-the-board tax.

WALKER: Increase in gas prices...

BECK: Yes.

WALKER: ... is because of the decline of the dollar. And there are other reasons that gas prices go up.

BECK: Yes, yes, yes.

WALKER: Here is the problem: Americans are great at spending, whether it`s at the federal-government level or at the household level, but not very good at saving and investing for the future.

BECK: OK. What is the average person -- what are they supposed to do?

WALKER: What the average person is supposed to do is, first, from an individual standpoint, have a budget and stick to it.

BECK: In your own house?

WALKER: In your own house. Make prudent use of credit. Plan, save and invest and preserve your savings.

BECK: What do -- what do you invest in, in today`s market?

WALKER: You need to diversify, and you need to try to be able to look for the long haul. But the other thing they need to do is they need to register. They need to vote. They need to be able to vote for people who care about the future of the country.

BECK: Who do you vote for with these two people? They`re both saying similar things. You know this is not a Republican or a Democratic problem.

WALKER: This is an American issue.

BECK: This is an American issue.

WALKER: An American issue, and the fact is, is we are staunchly nonpartisan and non-ideological. I`m a political independent. And so I`m not going to say who you ought to vote for. But I will tell you this.

BECK: Just say this, because I`m an independent, too.

WALKER: Right.

BECK: Do you see a guy out there that -- you don`t have to say who. Is there one of these candidates...

WALKER: It`s too early. It`s too early to tell. They haven`t focused on it, but they need to focus on the general election campaign, and you and your colleagues in the media need to try to make sure that they do.

BECK: I`m doing my best, brother.

WALKER: Keep it up.

BECK: David, thank you very much. OK.

We will -- we will keep you up to speed on when that movie comes out. And please, please alert all of your friends and drag them to it. It`s not boring, is it?

WALKER: You`ll love it.

BECK: All right, good. We`ll be back in just a minute.


BECK: Last week, I received an e-mail that, surprisingly, was not about cheap Viagra, which you can buy it in bulk now, or giving my checking account number to a Nigerian royalty for a change, which I have done and I`m expecting to be wealthy soon. It was actually sent out by Delta and it was signed by the CEOs of 12 of the largest U.S. airlines.

The e-mail said that the high oil prices are costing them thousands of jobs and hundreds of flights; things we already know. But what was unusual about this e-mail -- I don`t know if you got it, too -- it was actually, they were singling out who is allegedly responsible for all this mess. Wait for it. The oil speculators.

The CEOs claim that the nation would just band together, we could stop these evil traders, and oil prices might drop $30 to $60 a barrel. Okay, that`s good. Like that. Is it true?

Well, I might not be an economist, but I am a thinker. I understand business a little bit. I understand supply and demand. I understand the idea of getting reward when you take a risk.

That`s why I`m pretty confident that tonight`s "Real Story" is that the only people who are complaining about the speculators are those who have speculated incorrectly. If speculating was a license to print money, why aren`t we all doing it?

The truth is, like a casino, more people lose at it than win. For example, CEO of Southwest Airlines likely doesn`t have anywhere near the issue with speculators that Delta does, that`s because Southwest speculated. They locked in 70 percent of the fuel costs at $51 a barrel. They now pay $2 a gallon for fuel. That`s pretty good.

How did they do it? By speculating correctly. They took a risk. It turned out Southwest was right. Now Southwest is being rewarded for it. Isn`t that how capitalism works?

The truth is that while market speculators may play a role, they`re not solely responsible for $140 oil. We are. Or let me be more specific, the small-minded politicians in Washington are responsible, and nothing has changed. Instead of looking for solutions, Washington is still looking for villains.

There are no less than 12 different bills targeting speculators that are floating around Congress right now, and Congress has spent untold hours and millions of your dollars debating them. They don`t need to debate this. They need to look back in history.

Back in 1958, farmers thought speculators were driving down the price of their onions. I can`t believe I know this crap. So they got a law passed banning all future trading in onion. Now, onion prices, soaring 400 percent in under a year then crashing 100 percent, then climbing another 300 percent. Now farmers, pretty sure they want the speculators back. Why? Because they play a vital role in signaling future demand and evening out the price swings.

Today, finally, President Bush has done something other than simply point a finger at the shadowy, evil speculators. He`s done something concrete. He has removed the executive ban on offshore drilling. Welcome to the party, George.

This is a ban that was as antiquated as it is idiotic. Unfortunately, no more oil is going to flow, from the Atlantic, at least, until Congress does the same thing and lifts their ban as well. And they`re too busy blaming speculators and people like my next guest to do that.

John Hofmeister is the former president of Shell Oil and founder and CEO of Citizens for Affordable Energy. John, how are you, sir?


BECK: Let`s just start here. The role of speculators, where do I have it wrong?

HOFMEISTER: Well, some people call them speculators, but a lot of people call them traders. Traders, as you said earlier, are the people who get barrels from one part of the world to another part of the world.

They just do their jobs. They try to make a little money on the margin. I think speculators are sometimes an irritant, but they are hardly the cause of $140 oil, as you said.

BECK: The cause -- again, tell me where I`m wrong -- is that we have all of these gigantic resources, and we are -- you want to talk about the role of speculators, try this, tell me I`m wrong on this. We have all of these resources.

We`re sending a message to the market in the world, we`ll never tap them, and that is causing the speculators to say demand is going up. They`ll never tap these resources. So the price is going to go up. I`m betting on higher, where if we sense the other message by going in, it would go lower.

HOFMEISTER: That`s exactly right. In May, when I was still working at Shell, I testified in Congress. I said just about the following, if we could increase domestic production in the U.S. by 2 million to 3 million barrels a day, produce 2 million barrels a day of ethanol or bio-diesel and destroy demand by about 2 million or 3 million barrels a day, we could hit these oil futures on the head, and the speculators would have some convincing now that the U.S. is serious about solving the supply/demand crisis.

But there is no interest in the proposal.

BECK: It would happen overnight, would it not? If we convinced the world we were serious about energy, that we had a policy, the price of oil per barrel because of the speculations would drop overnight. And the fear in the Middle East that, "We`re going to lose a customer." Right?

HOFMEISTER: Oil has less value if the great American machine, people, ideas, and technology, is put to work doing on other parts of the other continental shelf what today we do in the Gulf of Mexico. It works.

BECK: Let me show you an ad from Obama where he says no more oil is coming our way. Watch this.


UNIDENTIFIED MALE: On gas prices, John McCain`s part of the problem. McCain and Bush supported a drilling plan that won`t produce a drop of oil for seven years. McCain will give more tax breaks to big oil. He`s voted with Bush 95 percent of the time.

Barack Obama will make energy independence an urgent priority, raise mileage standards, fast-track technology for alternative fuels. A $1,000 tax cut to help families as we break the grip of foreign oil. A real plan and new energy.

SEN. BARACK OBAMA, (D) PRESUMPTIVE PRESIDENTIAL NOMINEE: I`m Barack Obama and I approve this message.


BECK: I can`t believe it. I`m going over his whole energy program on tomorrow`s radio program. It`s unbelievable. There`s no place where he says more oil faster than seven years, or even more oil in 70 years. These people are not looking for oil.

HOFMEISTER: No, that`s part of the problem that has to be addressed, which is why I formed a new company called Citizens for Affordable Energy. It`s not Republicans for more energy; it`s not Democrats for more energy. It`s Citizens because we have a short-term problem, and in this industry, short terms mean 10 to 15 years.

250 million cars on the road, all of the drivers of those cars are paying an exorbitant price where public policy, if we changed it, as we said earlier, knock the oil futures on their head by producing more domestic.

Where is the economic and social justice for the citizens of this country when elected officials aren`t paying attention to their own bosses? The bosses are the citizens of this country, not the elected officials. I think we need to turn the tables here.

BECK: We do. We do. And I tell you, I said this before I went on vacation. And I still haven`t received one. Somebody in America, I can`t buy them in Manhattan, I need a pitch fork. Okay.

John, I have talked to -- I have talked to people who are at the top of the world banking situation, the highest levels of the financial institutions. I talked to the highest levels of transportation, whether that be trucking or airlines or just automobile construction at GM. I have talked to people like you. Everybody is saying the same thing. Then they can`t get government out of the way.

You were on my radio program two months ago, and you said, "Glenn, I listen to you and the thing I like about you is you call them like it is and you`re frank." You said you were going to model yourself after that when you were no longer the president of Shell. Well, you`re not. What is it that you -- go ahead.

HOFMEISTER: I said I was going to sharpen my tongue. So I could speak at least come close to speaking as sharply as you. I just said it in part. It`s time for the bosses of this country to turn the table on the elected representatives and start instructing our elected representatives on what the people of this country, the consumers of this country demand. That is more energy of all kinds, including more oil and gas.

BECK: So John, how do we do it? Because we keep telling them this. When is the last time you read the Declaration of Independence? I bet it`s probably been a long time. You should read it again.

It`s like it`s alive today. We keep telling them, and they continue to re-injure us. What do we do besides pitch forks and torches?

HOFMEISTER: Well, I think that`s the reason -- you know, one of the most successful organizations in this country is AARP. You know why? Because they have the power of 20 million members behind what they say when they say something. Citizens for Affordable Energy is determined to do the same thing, we don`t just limit ourselves to age 50 and above. It`s the whole population.

If millions of Americans start saying the same thing, that is, you work for us. Remember that, please. We need more energy, we need more affordable energy, I think we can move forward.

BECK: All right. So you have a website where people sign up?

HOFMEISTER: The reality is, we only got the Articles Incorporation filed today. I don`t want to build an expectation that we`re ready to go tomorrow. We have a lot of work to do over the next few months.

BECK: John, I want to have you on the program for an hour when you`re ready and I want to have you on the radio program when you`re ready.

I`m going to ask you tough questions like, how do I trust you? I don`t know who to trust anymore. I think the oil companies are just businessmen. I don`t buy into the, they have been crushing other industries, because there`s more coal than there is oil. What happened to big coal? They couldn`t seem to crush all the others.

But I don`t know who to trust. When you come back, will you talk to me and address that issue? Why should I trust your organization?

HOFMEISTER: I will. I`m not in it for profit. This is going to be a not for profit company. I will get a small, token salary to do what I intend to do. I`m not putting capital together to make myself wealthy. I`m putting capital together to try to deliver to the American people what benefits them.

BECK: John, thanks a lot.

Coming up, a man from Hollywood that is not a liberal. He`s the one. Andrew Klavan, he is the author of "Empire of Lies." he joins me next. Stick around.


BECK: Yesterday, on this program, I had a discussion -- we began a discussion with best-selling author and unabashed Hollywood conservative, Andrew Klavan. We ran out of time. I asked him to come back today.

His latest book is "Empire of Lies." It is in bookstores now. His previous books, "Don`t say a Word," "True Crime" have shockingly been made into Hollywood blockbusters.

I told you yesterday that I have never -- I don`t know what, maybe you can explain how it`s written. I have never been able to hear the voice, maybe it`s just me, the voice of the character as clearly. Is there a difference in your writing? Are you writing it differently? I couldn`t figure it out.

ANDREW KLAVAN, AUTHOR, "EMPIRE OF LIES": I have to say, this is my favorite book. The best book I think I have ever done by a long shot. I`m trying to get people to reach out and get people to read just the first 20 pages.

BECK: You do. You absolutely do. You had me by probably page 5. That doesn`t happen very often. You had me by page 5. Stephen King says you`re one of the best American novelists in quite some time.

It`s about a guy who is at home. And he is just sitting there with his wife and kids. He`s a normal guy. He`s had some bad things happen in his past. The phone rings. What happens?

KLAVAN: He gets called back to New York. He`s a Conservative Christian man living in the Midwest; living a good life in the Midwest. He gets called back to the scenes of his debauched past by an old girlfriend.

She asks him to find her missing daughter. As he does this, he begins to think that he has pulled the thread of a huge Islamofascist conspiracy, but he`s so surrounded by distorted biased the left wing politically correct media, that he begins to doubt whether he sees what he sees or is he going mad.

BECK: Ok. Like I don`t know, what gave you this idea?

KLAVAN: I have been writing thrillers for a long time. As you say, I have won some praise and success. I began to think that most thrillers are set with an honest man looking for the truth, surrounded by treachery and lies.

BECK: It`s Hitchcock.

KLAVAN: I thought with our media today doing what it`s doing, distorting the world the way it distorts the world, we`re all living in that world of treachery and lies. And an ordinary man could easily find himself in a Hitchcock situation.

BECK: You`re getting hammered by the liberal press; hammered by them. And I got to tell you, I would have their reviews made into t-shirts. They`re the best reviews I have ever seen. I would read this as a Conservative, I would read their reviews and I go, "I have got to get that book."

The book -- when you`re looking at the problems that the world is facing right now, because you write for the "Los Angeles Times."

KLAVAN: I do and a couple of other places.

BECK: Is that going to continue? Are you going to be able to --

KLAVAN: The "L.A. Times" will let me in there every now and again; every few months.

BECK: Really?


BECK: I work here. So let`s talk about some of the issues of today. Everybody tries to make everything so complex. It`s not. It is, right it`s easy.

KLAVAN: It`s simple, I don`t know if it`s easy.

BECK: It`s not easy because everything is fighting against it and trying to make it into something it`s not. It is simple, immigration.

KLAVAN: Close the borders. A country without borders doesn`t exist. First you close the borders then everything else is open for discussion, once you have the country secure then you can talk about everything else.

The problem is people are coming here for a reason. They`re coming here because this country embodies something unique and beautiful. That`s why they`re coming. If they keep coming in the numbers they`re coming, that will disappear. So the very reason they`re coming here will be gone.

BECK: I just try to imagine you in California saying this country embodies something great. I don`t know how you survive. Who is our biggest enemy?

KLAVAN: The Islamofascists. I mean, Islamofascism is our biggest enemy and it`s the biggest enemy of culture, civilization and everything. And a terrible thing that`s going on now is we have lost -- our culture has lost confidence in itself.

And this is why I keep telling people you can fill the Supreme Court, you can put Ronald Reagan back in the White House, we can have conservatives winning elections. If you lose the culture, you lose everything.

BECK: We have already lost it. We have lost it because it`s not being taught. Nobody knows. Did you ever watch that HBO special on John Adams?

KLAVAN: I did watch it. I loved it. Yes.

BECK: How many people walked up to you and said, I didn`t know any of that? Nobody knows it.

KLAVAN: I talk to English students all the time who never read Shakespeare and they only get the minority writers and these politically- correct writers.

And the Right has a lot to answer for here because we haven`t fought for the culture. We give up on it, we turn our backs, we complain about Hollywood, we whine about it but we don`t go out there and make films, fun films, reviews. Books, too. We don`t start publishing and buy those books.

BECK: I saw a radio research project that showed that Christian women that listen to Christian radio, their favorite television show -- this was like a year ago -- favorite television show was --

KLAVAN: "Seventh Heaven."

BECK: Nope. "Desperate housewives." It is -- I think the philosophy of your book that we don`t have -- we`re being pushed into these dual lives...

KLAVAN: Right.

BECK: ...where we want to entertainment. We can handle what life is really like. But yet we also have values that are different. We can look at the ugly culture. But we say, that`s not who we are.

KLAVAN: It`s not where we want to live.

BECK: Yes.

KLAVAN: And I think one of the ways -- sometimes some of these shows like "The Sopranos" is really a very good show because what it does is it shows you goodness by cutting it out of picture, just showing you the evil that men do.

There are some good things around. But I have to feel that all those underlying assumptions that America is bad, that housewives are always desperate, that corporations, those things eat away at the core. It`s like a slow poison dripping in.

We`ve had 40 years of that. The left completely dominating the culture and it`s showing. It`s beginning to show.

BECK: I think America is waking up and they`re about to stand up.

KLAVAN: I hope so.

BECK: Ok. The name of the book again is "Empire of Lies," it is a thriller unlike you have ever read before. Grab your copy. It is in stores right now. We`ll be back in just a minute.


BECK: Well, let`s go to the nation`s capital for more insanity. Washington, D.C., they just had that handgun ban that the Supreme Court said, uh-huh. So, District of Columbia decided to craft a new emergency law because you cannot have responsible gun owners walking around willy- nilly while owning guns responsibly. That would be great.

The new version of the law that they just enacted is -- it`s crazy; not exactly pleasing to the lawyer who beat the original ban. He said, "The semiautomatic ban is clearly unconstitutional because the overwhelming majority of handguns that people use in the United States are semiautomatic."

This new law -- to me it seems an awful lot like the old law. Meaning you can expect tons of lawsuits coming to a court near you. The law basically says that you can have a handgun in your house, but it has to be unloaded, disassembled or trigger-locked and you can`t go outside with it or on your porch or any outbuilding like a garage.

So just take a note: any murderers out there, you just want to make sure that you assault your victims by their car or in their front yard, in the garage, but nowhere in their house. In fact, they actually toughened the language from the original version. They say that the only time now you can have your gun loaded and assembled without a trigger lock, a.k.a., when it is actually usable is when there is a threat, quoting, "a threat of immediate harm to a person in the home."

So, don`t take that gun out if somebody`s just torturing your dog in the next room. You just wait until they walk into your bedroom, pull their arm back to plunge that knife into the chest and then you say, hang on just a sec. You bend down, open up your gun safe. You assemble the gun. Load, it carefully take off the trigger lock, cock it, and then you tell murderer, okay, now I`m ready to fight you.

What could go wrong? Oh these people in D.C., they`re brilliant. Already the brain trust that put this together is admitting, and I quote, "Because we really haven`t changed the storage rule from the prior unconstitutional law and because of other features, I do agree this is a lawsuit waiting to happen, but we`ll be prepared."

If you have an uncouth unconstitutional law and you really haven`t "changed," quote/unquote, an important part of it, isn`t it still an constitutional law? Perhaps that`s explained in other features of the law. Oh, I can`t wait to find out.

Remember, tomorrow I`m going to be appearing on movie screens, believe it or not, nationwide. That`s on Thursday. Get your tickets and all of the details at Believe it or not it`s a comedy show.

From New York, good night, America!