♪ and they called it puppy love ♪ ♪ oh, i'm very embrarsed >> that's donnie and marie osmond. here's john king in for anderson cooper. good evening. i'm eliot spitzer. twin suicide attacks targeting a military academy leave dozens of young cadets dead. first, a look at the other stories we'll be drilling down on tonight. >> i am a candidate for the presidency in the republican party primary. >> ron paul is running for president again. if he had won the last time, guess what he wouldn't have done

about bin laden? then, remember japan. >> this is a ticking time bomb. >> i'll ask him if the japanese government has learned from its mistakes. how bad in libya? 30,000 refugees crammed into leaking boats. a terrifying trip toll safety. some have made it. many have not. more on the way. body parts scattered across the street. that's how witnesses describe the gruesome scene in northwest pakistan after the taliban followed through on it's promise to exact revenge for osama bin laden's death. they waited until military recruits gathered outside the fort after just completing a nine-month training program. they were heading back home to their villages. then the back-to-back explosions hit. cnn's stan grand visited the scene earlier today and joins us from islamabad. it must have been gruesome.

>> reporter: it certainly was a gruesome scene. one that people in pakistan have sadly grown all too used to. they have seen these attacks in the past and they are certainly ferocious when the taliban unleashes its might in such a way. there have been a lot of fear about this since the death of osama bin laden. a lot of trepidation just when would the militants strike, where would they strike? we saw today in a spectacular violent fashion. the taliban did this? that one word enough to strike terror into people here. the militants claiming responsibility for this carnage. revenge for the killing of osama bin laden, they say, and a warning of what is to come. both men were taliban. one came on a motorcycle. the other was walking, this man says. we shot him and then he ran and exploded the bomb. all around debris. a testament to the the attack. you have the strewn wreckage and this is the badge of the bike

itself. the scores of wounded rushed to the nearby hospital. a scene of grief and chaos. the number of dead counted in the dozens in the hours after the attack rising throughout the day. witnesses tell of the moments when dual suicide bombers shattered the morning's peace. i heard an explosion and i rushed to the road. four minutes later there was another one. this man says i saw people dead and injured. even hours after this attack you can see the military is still very edgy. there's a line of them here. they've been pushing back any of the onlookers who were trying to come down to the scene and especially keeping a very close eye on these buildings along here. the attack has targeted this military training center.

members of the frontier military police just finished a nine-month program. these vehicles lined up to collect them. this vehicle carrying a prayer that god would make their journey safe. a journey some would never take. almost all of the dead young recruits. victims of what some say is pakistan's double game. killed by the taliban to avenge osama bin laden at the very time the military here is denying claims it was hiding him. this goes to the very heart of the pakistan paradox. they deal with the militants on one hand to provide strategic debt that they feel they need to fend off attack from india but on the other hand going after other insurgent groups. if that sounds complicated, it is. at the same time people caught in the cross fire.

>> in the wake of this horrific attack in pakistan, i got a chance to speak to imran khan. i spoke to him a short time ago and asked him how his government plans to target terrorists on its soil. thank you for joining me. >> pleasure. >> do you believe that your military and intelligence leadership is doing everything it can to root out every terrorist who resides in the nation of pakistan? >> put this this way. more pakistani soldiers have died than nato soldiers put together in iraq and afghanistan. the pakistan has been attached by terrorists. generals have died. the security agency has been attacked. the commando center has been attacked. so would pakistan army be patronizing terrorists who are attacking them?

to me as a pakistani, i'm bewildered by all this. after the osama incident, we don't know what to believe anymore. that's why i believe it has to be now homegrown policy. pakistan should own up the war and not behave as a set of fighting america's war because america is giving pakistan the money because as i said, it is impeding our efforts in this war. it is increasing radicalization and pakistan is in a nutcracker situation. on one hand you have extremists hitting us and u.s. is pressure pakistan to do more in tribal areas where blowback is on the cities with more bombings and more suicide attacks. i don't think pakistan can last much longer. i don't think the country can take this much longer. >> mr. khan, we have spoken many times in the past. i'm sympathetic to some arguments. i think you did not answer my question directly and i hate to push you on this.

you are correct. the pakistani army has been attacked. the isi has been attacked. pakistani people have suffered terribly. if not the case that there are elements within both the military and the intelligence services who are favorable and who have helped and assisted certain of the taliban and even al qaeda elements within pakistan for very subtle and important reasons in terms of your dynamic with india? >> let me just say one thing. i mean, i'm speculating here because i'm an outsider. i'm not in the government. but don't forget that not very long ago the same osama bin laden, al qaeda, were closely affiliated to the cia when they were fighting the soviets. and so when pakistan changed after 9/11, pakistan recognized the taliban government so suddenly after 9/11 pakistan reversed this policy. it's possible that there are members of the security forces who would have still kept connections with them. just because the government

that within security forces there would be elements that might not have changed. the fact of the matter is the country is going down. we cannot sustain this much longer. >> mr. khan, i am sympathetic to your argument that something must change. we believe it's almost a certainty that there are elements of isi and military that have been helping and assisting al qaeda and the taliban. in that context was it not reasonable for president obama to act as he did to get rid of osama bin laden to get rid of a terrorist who we now know was continuing to plot attacks against the united states? >> looking at it from the pakistani point of view.

surely here's a country which has sacrificed far more than americans. remember 34,000 dead here. now should this after all these sacrifices should not pakistan have taken him out. if the ally for which pakistan is fighting this war, if it does not trust pakistan, where does that leave us? i'm talking now as a citizen of pakistan. where does that leave pakistanis? what are we? are we friends or enemies? who are we giving these sacrifices for? we did not have any suicide attacks in pakistan before 2004. we had no militant taliban in pakistan. and here is a country which had 500 bomb blasts last year. where do we go from here? i as a citizen of the country ask myself the question can the country take this much longer? your point is that you think pakistan is not a trustworthy ally.

i'm saying that it's about time pakistan had a government which told the americans we don't want any aid. we'll deal with it ourselves. we will ensure there's no terrorism from pakistani soil. we have a much better chance of dealing with the terrorism if it's a sovereign credible pakistani government rather than a puppet government which is a government that's not sovereign and doesn't have any credibility with the u.s. or militants. it doesn't have a chance of engaging with certain elements amongst the terrorists who it can disassociate from and al qaeda. most of the people who are fighting today, 95% of the people who are fighting are own tribal people who are neither terrorists nor religious fundamentalists and finding as a result of pakistani military operations in the tribal area. they should have peace talks with them and then isolate al qaeda.

>> as you know, i'm sympathetic as i've said to certain of your arguments about how this is imposing enormous costs upon the pakistani government and pakistani people and a change in strategy is necessary. i did not say pakistani government could not be trusted. i said there are elements within the isi and military as you almost conceded earlier that could not be trusted and hence what the president did was absolutely right and justified. i think we'll have to continue this conversation down the road. clearly we need a new strategy. we need a way to confront terrorism. we need a way to confront the militancy that is rising and the cost upon the pakistani people. why do you not want $21 billion of u.s. aid? i think we could agree that rebuilding the pakistani economy, bringing it into the modern era, spreading education and all of the things you can do with foreign aid will only assist the pakistani population.

why do you not want this money? >> the people of pakistan are dying under this war on terror. this aid is being given to us to fight this war. unfortunately if pakistan is considered a hired gun of the u.s., it reduces its capability to win this war on terror. if this becomes pakistan's war, i think pakistan will win the war. if it's perceived that pakistan army is a mercenary army of the u.s., we have no chance of winning. >> i agree the scale of human tragedy is beyond words. we all share the concerns about that. something you just said i am troubled by. you said if it is the pakistani war against terror, you will win. at the same time the leader of your military is refusing to pursue the leaders of al qaeda and some of the most violent terrorist groups in pakistan. why should we in the united states have confidence that the

pakistani military is going to do everything it can do to pursue terrorists? >> well, this is why i'm saying the fact u.s. thinks pakistan military is playing a double game can only be because they want the u.s. money and at the same time they are patronizing terrorists. i guess that's what the pakistan army is being accused of. if we don't take any aid, if we have a credible government, the interest is there should be no terrorism from pakistani soil. a credible government should say this is your concern. we'll make sure there's no terrorism from our soil. we don't need your aid because the moment we get your aid we are perceived as agents of america and they target pakistan because pakistan is perceived as u.s. agents. america and its agents. that's why you see the carnage

that is taking place today. that's why 34,000 pakistanis are dying and extremism and radicalization is increasing in our society. if a credible government gives u.s. undertaking, there won't be any terrorism from our soil. u.s. should be happy with that. and then pakistan should isolate the real terrorists. that's the ones who threaten u.s. or al qaeda. not the tribal people of pakistan. >> all right. thank you for fascinating conversation. >> thank you. >> coming up, how would presidential candidate ron paul handle the bin laden raid differently if he were president. the answer might shock you. stay with us.

ron paul's presidential campaign in 2008 was a grassroots phenomenon that turned him from a curiosity into a serious political figure. today as he announces candidacy for the 2012 republican nomination, some views may startle you. he joins me now. welcome back, congressman. >> thank you.

good to be with you. >> first, congratulations on your announcement. good luck. i want to say that to everybody who gets into the fray of politics. i wish you all the best. >> okay. thank you. >> i want to begin by quoting back to something you said about the raid that captured and killed osama bin laden and this is a direct quote from what you said. you said i don't think it was necessary. no. it absolutely was not necessary. i would suggest the way they got khalid shaikh mohammed we went and cooperated with pakistan. are you really suggesting, sir, that we should have just said to the pakistanis, work with us. we now know that bin laden was sitting there plotting additional attacks and you don't think this was the right thing to do? >> no. i think -- you know, we don't know all of the details. from the information i have i think it could have been done better. we cooperated before and if you don't recognize that a sovereign nation is important, then all you do is build enemies so today

there was retaliation and a lot of people were killed. hatred is being built up. i think we're working toward a stage that the resentment will be so strong that we'll be invading and occupying pakistan. last thing in the world we need. it isn't like pakistan has refused to help us. they have cooperated with us before. we've captured quite a few who have been brought here. the people involved in the first bombing of the towers. they were brought to trial. some were executed. i don't know what's so wrong with that. what would be so terribly wrong with saying that maybe we ought to interrogate bin laden. is that such a horrible suggestion? >> congressman, i want to make it clear. if you had been sitting there in the oval office with the situation room with the same evidence that was presented to osama bin laden, would you not have ordered the raid that he ordered? >> i would have said what i got done telling you. i would have worked with the

government of pakistan. >> i want to switch gears. i'll quote you directly. i'm on the gulf coast. i have a house on the beach or had one recently. i don't think someone in new york or new hampshire or iowa has to pay for my flood on the gulf coast. you then went on to say you don't think fema should be there to help out folks who suffer in the tornados, the floods, these natural disasters that wreak havoc and have wreaked havoc along the mississippi and southeast? >> there's no authority for it. >> no authority where? >> there's no constitutional authority. it's bad economics especially. >> no constitutional authority. just so we understand, we'll get to economics in a seconds. no constitutional authority to set up fema is what you're saying? >> that's what i'm saying. let me answer my question. there's no constitution to set up an authority that you take money from one state and give it to somebody else because they've been injured.

let me make the important economic point. if you want -- if i want to build my house on the beach and i can't get insurance, why should i get subsidized insurance to build my house in dangerous area. when you can't get private insurance because it's so expensive, it's telling you something. why should people build there and pass on the penalty to somebody else who don't get to live on the beach? that makes no sense whatsoever. this idea that we have this moral obligation, what about the moral obligation to allow people to keep what they earn and assume responsibility for themselves. this is precisely a program that is very similar to so many others that has gotten us into this mess. >> let me read to you something else that you said. you said that government they have nothing. everything they get and they want to give to someone else they have to steal it from somebody. that's called taxation. is taxation theft in your mind? >> yes, it is. you steal from a productive individual and give it to somebody else. >> it is theft -- i want to understand this. we've had lots of conversations

in the past. i always enjoy them. i just want folks to understand your notion that taxation that is there to pay for things such as national defense or environmental cleanups or fema, that is theft in your view. >> when you take the income from other people it is. the founders didn't believe in it. it was not an income tax. that's a recent event. not even 100 years old. hasn't served us well. all it has done is give us a government out of control. a government that has an entitlement system that there is no way they'll pay for it. it's based on an immoral principal that government takes and they can't produce anything and they take it from somebody else and that's a moral issue. >> taxation was embedded in the very foundation of the constitution. >> not income tax. >> income tax related to whether it would be apportioned on a per capita basis or vary on the magnitude of one's income. it is part of the constitution. why is that now theft?

>> because you are taking money unfairly in the way we enforce the income tax is highly abusive because we don't honor and respect -- >> why? >> you are guilty until proven innocent. you have to keep records and testify against yourself. you are a lawyer. you should understand that. >> you're not guilty until proven innocent. >> you have to prove your innocence -- >> wait a minute. i'm no fan of the irs more than anybody else. i pay my taxes and pay them with pride because it pays for education and national defense and things that we do around the world. that's what being a citizen and being part of a community is about, isn't it? >> you're a good volunteer. >> as i said at the top. congratulations. even though my income tax what you view as theft are used to pay your salary, i'm proud to pay them. i got to tell you. >> once it was said that taxes were what we pay for civilization and look at our economy and what we're doing today. i don't think we've gotten a

very good deal. not a good deal. >> all right. congressman paul, thank you for your time. good luck. coming up, japan's nuclear crisis turns out to be worse than we originally thought. the details when we return. stay with us.

a new report out of japan says damage to reactor number one was much worse than originally thought and it was leaking water most likely leaving those dangerous fuel rods exposed. yet some residents were recently allowed back in to the evacuation area to gather

personal belongings. this is the latest in a string of what seemed to be conflicting information and actions out of japan. to help us cut through this double talk, famous physicist and author of "physics of the future," professor, thank you for joining us. >> glad to be on the show. >> let's begin with where things are. you still think this is a dangerous and unstable situation. >> this is a ticking time bomb. it is stable but only until we have another earthquake or another pipe break. at that point water levels could drop exposing the core and accidents start up all over again. the nightmare is not over yet. >> what does it mean that when they went in recently they found water was lower than they expected, possibly meaning that the rods in reactor one have been exposed. what does that mean in terms of radiation leakage and how close we were to a meltdown? >> the problem is we have firemen and brave workers putting water on top of the cores.

there's damage to the containment structure. if water keeps coming out, it means more contaminated water that's building up thousands of tons of water being stored in tanks. some of that as you know was released into the ocean causing an international scandal and incident with korea and china. >> do we know what the perimeters are and how far has that water gone? is it going into tanks or is it contained in some way? >> so far it's contained. they brought in extra tanks and they had to bleed some of the radioactive water into the ocean to make room for more water. think of it. every time they put water in, it's coming out. there's a leak which means damage to the containment may be more severe than originally thought. >> how about the rods themselves? the fact that the rods have been exposed, does that mean they are hotter than they would have been since the water is not absorbing heat or energy? >> tops of reactors are permanently uncovered. we're not talking about water being many feet above the core. we're talking about water levels dropping below the top of the

core themselves causing damage and that's dangerous because we don't know the amount of melting that is taking place. a huge question mark. there are debates exactly how much melting has taken place. >> one thing i saw is they'll put polyester tents over the reactor. i've heard they are polyester suits and polyester in toys, does that stop radiation? >> it does not it gamma rays will go right through radiation and through plastic. all it does is keep some of the particulates in. we hope that some of the particles don't escape. that gets into the food chain and then we have the problems with milk. the problems with sushi being contaminated. that's why they hope to contain the particulates and dust from getting into the environment. >> one of the things notable, is the japanese leadership has not been forthright with the public. you accuse of them of not being honest of what they're telling the public. have they gotten better over the course of this crisis?

>> i don't think so. those reactors cannot be salvaged. they are pieces of junk right now. the workers -- i have ultimate respect for workers. managers incompetence and people have lost faith in them. you get mental image of homer simpson operating a nuclear power plant. >> does the public have any confidence remaining in the government? >> it's dropping like a rock. people are saying that they will evacuate us and take us back and it goes back and forth and government and utility are fighting. we had a situation where there is no united front. people are losing faith and people are saying who is in charge here? who really knows what's happening? in fact, american engineers have contradicted the statements of the japanese government making the japanese government look like foolish. >> how long will it be until the people who live in the area surrounding these plants will be able to go back and live in those houses?

>> well, at chernobyl there's a dead zone that 25 years later is still off-limits. the reactor will take 30 years to clean up. >> 30 years? >> 30 years. that's the estimate of the hitachi corporation. the major estimate is 30 years to clean up that operation. three-mile island took 14 years and there was no breach of containment at three-mile island and it was only one unit. here we have three reactors. one spent fuel pond. possible breach of containment. 30 years is about accurate. >> wow. wow. thank you for that report. thanks for being here. not good news i'm afraid to say. up next 300 nautical miles the distance from tripoli to a tiny italian island. the difference between life and death. the story of a desperate journey when we come back.

as the war rages on in libya, thousands of refugees are forced to resort for treacherous and dangerous ways to escape. ivan watson joins us from libya. why are they so desperate to leave? >> these aren't libyans. these are for the most part africans and others that are desperate to escape fighting in libya and resorting to a dangerous journey across the mediterranean sea to escape that grinding conflict. they come by sea in leaky wooden fishing boats jammed full.

some women and children all desperate to escape north africa. all willing to risk their lives to get to this tiny island. >> the sea is very difficult. some people are just happy they're not here. >> reporter: for years most of the boat people were african migrants fleeing poverty and unemployment. now there's a new driver. the grinding war in libya. >> it's very dangerous. i can't say. i have to escape. >> reporter: it's only noon and this is already the third fishing boat crammed with migrants and refugees to land here in just one morning.

on friday more than 1,200 refugees from libya landed in a single day. >> we've experienced this reality everywhere in the world. every time you have a war, you have civilians trying to escape. >> more than 30,000 migrants and refugees have landed here in just the last three months. >> this is russian roulette. you really don't know at this point if you can reach the other side of the mediterranean. it's terribly risky. >> reporter: look at what happened last sunday. one of the overloaded boats hit the rocks off the coast. italian rescue workers struggled to save hundreds of people but not all made it. italian villagers held a funeral service for three passengers from that doomed boat. no one even knows their names. in the past few months the u.s. estimates hundreds of boat people died attempting this journey across the mediterranean.

faceless victims of a dangerous voyage who never got a funeral. just today more than 1,270 people landed on this tiny island here in southern italy. if you can only imagine the population and total population of this island. a little bit less than 6,000 and tens of thousands of people like this have been flooding this place over the course of the last three months and a consequence of the arab spring revolts that we've seen that have rippled across north africa and brought down governments and challenged governments and brought down border controls that stem the tide of illegal migration across the sea. >> what is going to happen now with these tens of thousands of refugees on the small island. clearly it cannot accommodate them. where do they go and who will take them?

>> reporter: the island was overwhelmed by migrants. thousands of them sleeping on the streets here along the beach fronts and there was a big crisis for italy. now they are putting a system in place and moving them to basically a processing center here and then they are moved on. more than 100 minors, under 17 year olds, were taken on a commercial ship to other centers around italy. some tunisians have been supported by others back home. it's creating friction between italy and neighbor states in the european union. italy saying it needs more help to deal with this crush of humanity coming up through southern borders. >> i can only imagine this will be a dicey political matter within the eu as you mentioned. immigration a tough issue there. increasingly tense because of

migration from east africa in particular. what pot is being stirred in this in terms of politics of immigration? >> reporter: the island is a symbol for right wing parties that campaign on the immigration issue. what you actually have had is some european governments at least partially trying to suspend a fundamental rule of the european union which is be able to cross borders here in your a citizen without a passport check. just this week denmark saying that it wants to impose some border restrictions and many of these politicians say to the crisis that unfolded here as an excuse for trying to stem the movement particularly of illegal immigrants around the european union. this is a big challenge for this continent right now. >> indeed it is. interesting to watch to see how this plays out. ivan watson, thank you for that report. health care is called the third

rail of american politics. why do so many republicans keep electrocuting themselves? i'll ask james carville and rick lazo when we come back.

they call it the third rail of american politics. i'm referring of course to health care. it's an issue that can bring a campaign or a presidency to the brink of disaster. obama care as republicans like to call it has divided washington and indeed the whole country. in the last few days republican

mitt romney and others have come out with health care plans that sound suspiciously like president obama's. huh? a short time ago i sat down and tried to untangle the whole mess with cnn political contributor james carville and former gop congressman rick lazio. gentlemen, welcome. thank you for joining us. >> thank you. >> thanks, eliot. great to be on. >> rick, i got to start with you. i listened to governor mitt romney's speech in which he tried to run as far away as he could from obama care and what you guys call obama care and all i heard was him make the best defense of the individual mandate i ever heard. the piece of the health care plan you republicans pretend to hate. he made a perfect defense of everyone in the plan. did you hear what i did? >> i know what he believes in. he's getting ahead of this issue. he's explaining that he was involved hands on in

massachusetts overwhelmingly a democratic legislature and brings people together and solves a problem and things he learned from this. things he would do again and some corrections he would make. a fundamental difference between what president obama signed into law, which is a washington based health care program, and one which prizes individual responsibility, individual choice, and state control where there will be more innovation and experimentation. another fundamental difference i would say is that there is no new taxes with the plan that mitt romney is advancing right now as opposed to under the bill and the law now that president obama signed you have a massive new increase. >> the public doesn't care whether washington tells them to buy it or state capitol tells them to buy it. governor romney said everyone

has to buy insurance or be subject to a penalty because that was individual responsibility and that is exactly what obama care, your word for it does. am i right? isn't the white house hang this around the neck of mitt romney? >> i don't think they have to do anything. the other republicans are. former speaker newt gingrich came out for an individual mandate in 2005. it must be -- maybe we are stealing a republican idea. maybe the republicans ought to take credit like the bailout for autos and what they did on t.a.r.p. and we saved the financial system. >> james, i want to put you on the hot seat. right now the president is enjoying what i would call the bin laden bump. clearly up in the polls. he's enjoying a real good ride here. how long will that last? back in '92 somebody you may know said it's the economy stupid.

when does the economy come back to drive this thing? >> first of all, i don't know yet but the job growth seems to be picking up. if that continues, the bump will last longer. and by the way, you know, look at the gm thing working better than anybody thought. looks like the libya thing might be working better than i thought. certainly the bin laden thing is a big part of it. he demonstrated a lot of leadership and courage. if it goes back to creating 50,000 jobs a month, it's not going to last long. >> your candidate who has the single best idea to get jobs going? >> who do i think has the plan? mitt romney given his experience as ceo of turning the winter olympics around and a disastrous situation and someone that understand the real economy and someone who has strong advisers and someone who understands we have to be more competitive. as a nation, i don't care who

the president is and which party are major struggle will be to become competitive with asia which is a growing competitor in almost every area and the fact that if we think that we have an entitlement to innovation and growth and into leading a value added economy globally, we're sadly mistaken. we need a fundamental change. >> the reality is there are more jobs created under president obama and we're seeing more jobs per month now than under president bush. this is now -- >> but you lost so many jobs. we're growing at half the rate of what we need to add net new jobs eliot. half the rate. 1.8%. we need to increase growth by 3.5% in order to add net new jobs. when reagan was turning around the economy -- >> am i a potted plant here? >> you never looked like a potted plant. you jump in here. >> excuse me but let me just say a simple thing so you can

understand this. sometimes people get confused obama created more jobs in two years than bush created to date. what's there to argue about? under clinton 22 million jobs were created. under bush a million. we're not going to really argue that republicans know anything about the economy because there's no fact to base that on. >> unemployment rate is 9%. it was never anywhere near -- it was 4% and 5% under george bush. it was half. there's more people. the population is growing. >> let me explain it to you. you all don't know anything about the economy. what you know is how to run it in the ditch and deregulate it and undertax it and run it in the ditch. get out of the way. let obama bring us out of it. it's what democrats do is get the country out of republicans messes. >> you just met the real james carville. that's why he wins elections. thanks for participating. >> thank you.

>> we'll be right back.

president obama is experiencing what i've called a bin laden bump but americans are still facing the reality of a weak economy, high unemployment and record budget deficits. we've gotten economists in the arena to help us with what that reality is and what if anything we can do about it. harvard professor is joining us. >> nice to be with you.

>> you literally wrote the book on economics. i don't think there's a college kid in america who doesn't use your case book. you are teaching us how to understand the world of economics. i'll turn it back at you. unemployment at 9%. long-term unemployment it's a crisis. monetary policy ran its course because interest rates are so low. fiscal policy ran its course. what's the answer? what's your prescription to get this economy going? >> there's no simple answer. the sad truth is that economists don't always have a magic bullet to solve the problems. any pundit that tells you so is pull the wool over your eyes. we have positive growth and creating jobs at a much slower pace than a normal recovery and much slower pace than obama administration predicted when they came into office in 2009. and the evidence is far is we're not going to see something much better going forward. growth of 3.5% range but nothing dramatic. i could be wrong.

economists are not forecasting and i'm no better than the typical economists. >> here's the problem. are we defining a new normal in our economy where we see very slow job growth. unemployment used to be down in 4% range now we'll have to be comfortable with it in the 7% range. is that what the economy looks like because of globalization. >> i'm not sure it's because of globalization but there is a question as to whether the new normal level of unemployment may be different from the past. if you look at data on the average duration of unemployment and how many weeks people have been unemployed, of those who are, the average duration now is about twice what it has been other recessions recently. data we have goes back to after world war ii. more than half a century of data. unprecedented levels of long-term unemployment. the question is what does that mean long-term? to what extent are those long-term unemployed losing job skills, losing attachment to the labor force and becoming unemployable. that's probably the case.

that will leave permanent scars in the economy and new normal may not be 5% we saw a few years ago but might be higher. we don't know the answer to that because we're in uncharted water here. >> how we get our arms around this is monumental issues facing our economy. if you could craft the policy that congress would pass, would you have revenue enhancements and raise revenue? >> i would raise revenue along the way that they did by raising tax expenditures rather than income tax rates. you can raise revenue that way if you are willing to do it. tax expenditures are popular. mortgage interest deduction, deduction of state and local taxes, exclusion of health insurance. hard things to get rid of. you can raise revenue.

>> you are exactly right. every time i raise the issue with elected officials they embrace it and say lower marginal rates and get rid of loopholes and name loopholes you want to eliminate and when i suggest those individual loopholes, we can't do that. would you actually eliminate the loopholes you mentioned and as a matter of economics that would be good policy? >> let's look at the mortgage deduction. i have a big mortgage subsidized by the government. if you look at it from the standpoint of fairness, typical poor persons are renters so it's a subsidy to middle and higher income taxpayers. from standpoint of equity, it's not equitable and from the standpoint of efficiency, not smart either. too much of the capital goes in the form of housing and not enough in the form of corporate capital creating jobs and productivity. it's a loophole there for a long time because it's politically popular. think about it from standpoint of equality or economic effici