carolina.

you are watching live coverage on c-span2. >> there is an emerging consensus around the future of

free enterprise here in washington dc in essence, is a free enterprise to have the future or at least not much of one. the free-market orthodoxy can be found in the left and right and increasingly in the halls of power. if the biden administration the core animating conviction the agent neoliberalism is nomex re in which thoughtful industrial planning will build the economy of the future. and stringently regulated politically client private enterprise will have the privilege of playing a supporting role in meeting. needless to say, by demonic because it resonated with the wider public. largely avoid the term these days. and for good reason. in recent echelon and site survey do not% of voters cited the cost of living as a biggest challenge facing the country. 85% of respondents told ap that inflation and rising crisis will be "strong motivator" vote in november. only 31% of registered voters

believe the economy is on the right track. of course, none of this would suggest voters are suddenly becomes all government ideologues. even but among republicans 52% of voters in the most recent ey rich households should pay a greater share of their income in taxes. that's not exactly encouraging news for who are hardened tax cutters. doesn't that suggest things are very different than they were in the reagan era? not quite. in 1987 the tail end of the reagan presidency 63% of voters felt the rich weren't paying enough. that's the height of the reagan era republican voters were more critical populace than they are today. we see a similar pattern when it comes to entitlement reform 1980 415% republican voters felt the federal government spent too much on social security. not exactly bringing endorsement. today the number has fallen but fallen to 8%. somewhat lower than what you

expect in the age of the electric this is exactly a revolutionary shift. the truth is whether we are talking about the reagan era or biotin era most voters aren't especially ideological. indeed this is one way to make sense of the political rise no one seriously believes trenton is a committed ideologue rather it works in the defse of consistency. as we look to the future of free enterprise the real question is not whether voters will explicitly embrace the economic prescriptions it's about which policymakers they will trust to get the economy moving ahead. to break left behind communities in stagnation and decline the argument partisans of free-market policies to make the argument most compelling is not that their approach is the most philosophically sound it's that they are calling for sustainable flexible policies that actually work to combat sclerosis and stagnation. what we need is free-market

realism not free-market ideology. many of today's most profound political economy challenges including housing affordability energy abundance biomedical progress and rising geopolitical tension call for renewed focus on unlocking the supply side of the economy. this is some of what we are discussing today and with that, i'm honored and delighted to introduce our first speaker, genuine leader on the hill representative patrick henry of north carolina during congressman henry office he served a number of leadership r position as chairman of house financial services committee. drawing on his wide-ranging experience includes student and executive branch and the north calina house of representatives, chairman mchenry has played a central role in efforts to modernize america's approach to financial relation. please join me in welcoming chairman mchenry. [applause] it's been almost 16

years global financial crisis devastated the american economy. how concerned are you about the prospect for another financial crisis. >> there is always a concern whenever you are in one of these seats overseeing the financial system of the next crisis. or that you don't have enough data or the proper data to measure what will become evident after the crisis. what i do know is that through a massive amount of resources at preventing the next financial crisis including financial stability oversight council which moves the balance sheet with the systemic banking crisis that took down three banks but only three banks less

systemic in the aftermath the oversight council didn't see this coming. no matter how much money you throw at it no matter how many government words you have your going to miss what will become evident afterwards. what we can do is build resiliency to the financial system. and make sure there's a clear understanding of banba sheets so investors can see and see clearly that's what happened in march. investors in december called out what became evident to the broader public in march. the regulators didn't catch it. clarity to the public in third and final, make sure you have no bank can fail and the bank can fail without causing contagion in the financial system.crisis can do that impr

regulation. changing significantly what that's like. you've taken all of our banks and we now have a banking system that rates billion and t billion, two types of institutions. in terms of regulation, regulatory practical regulation they treat them all the same. you don't really have a diversity of lending option in the marketplace which has given us that vibrancy. imagine a large entrepreneur i have these three contracts i

would like to buy my fourth piece of equipment. the large banks as we don't have time for this type of ■@ lending it's a little too risky for the fact checking exercise and used to be pre-financial crisis you go to a small bank and they would say tell me about the contract. it's right on the street we know these institutions we know you have a two-year run for the contracts. we verified it with these ■ folks. we will take a risk and they walk with you it's more adventurous style lending pr■vivate equity style investme banks used to do. they cannot do because of regulatory overreach. the public markets large adapt structure. it does have a large macro effect for thlanding. but they can adapt to a few more lawyers.

>> you see the banking sector right now is excessively consolidated and you want to see new entry? >> what i would like to see is real competition.if you're denied the loan at $100 billion bank you probably can be denied same loan at a $10 billion bank. and $1 billion bank before you go back those three institutions may have different risk profiles and the adaptability to take different types of risk-bas kpractical un. that's less of the case today. while we have a significant number of banks in this country, it's been grossly consolidated over the last 40 years, born heavily out of washington regulation of a disproportionate set of consolidations occur because of regulatory cost. then you have the recurrent financial regulators that look at competition law very artful in a new way. in a new way i think math i

think gross concoction somebody is trying to sell you because they have an overage of celery in the kitchen. so they're trying foist on the body politics it does not want. stop my point here is that we need to get back to traditional understanding of competition law not the administration novel approach to competition whereby no one wins. no one wins and their, they've had this very artful look of what they don't like in the e n law. if the administration wants to oppose consolidaoninstitution o technology companies, they can do that through policy they

don't need to mask it and competition law. the traditional economics of the competition. >> part of it is a question of excessive consolidation but you want to use the right tool to also another issue with differentiation making sure we have financial institutions to the wide breadth. >> some reasonable consolidations for banking could make sense. so you actually have more competition right now after the households in america half the households in america have an account with one yes. the direct results of those large financial institutions being fitted by dodd frank and drivinconsolidation is the elite highest level in

even consolidate to compete up with the largest financial institutions stop. >> you been a champion of innovation in the financial sector one area where there have b innovations and considerable controversy is the dig can you walk us through what you are trying to accomplish with the financial innovation technology for the 21st century app. >> right now we have this thing called crypto. i will try to put it into building blocks so you see where i'm going to stop crypto, crypto think that client, in the key to the block chain infrastructure to see information protect the data

that's a key your key had some ? value. that key we now call crypto. that would be bitcoin you have the infrastructure and a key to the infrastructure of the key has some value a number of people trading that is a financial instrument because the key does have value to a larger network. what is crypto and what is a digital asset has no real definition stop we have over 10,000 coins being offered in novel concepts. much of which is definition of . no legal %zframe for establishi property right or ownership right. no means of exchange. so what are trying to establish with legislation working with

congressman french hell who helped me and we designed this bill together with glenn thompson and dusty johnson on the agate committee we established what is the securities and exchange route commission proper role on market what is the futures trading commission. what is digital commodity what is digital security and we have this dividing line. this is what happened in 1933 with the establishment of securities act and securities exchange act 33 and 34 this is what we need for this new architecture around digital assets. definition means of exchange, clarity underwater. what we are trying to do with this legislation which got bipartisan out of the house, two thirds of the house of representatives with somebody one of my deborah knapp colleagues almost all republicans. what we establish is a clear

set of rules and not just similar to what the europeans established. not similar to what they established in japan singapore and even hong kong. we are trying to catch up to where europeans are in the new cutting edge technology. when was the last time we try to catch up with europe on technology not this. it's been a very long time we were behind europe but this is one area we are because we don't have clarity of law. i think given how wide this vote was in the house it establishes two things. post financial crisis politics are not the same. this is not been big bank little bank policy with the progressive left populist progressive left is trying to do with financial policy so the

politics are gone. number one number two crypto is here to stay and it's bipartisan. with those two things that gives us an opportunity to legislate not just in the house but through the senate and get signed. >> what you see is potential implication of rising rays of digital assets for financial stability? do you see it as potentially a tool eater stability? i think there is a widely held view that it's not. to call it crypto currency to call it a curr■ency i don't think has the right moniker. this is the underpinning of the next internet technology we will see the benefits of digital assets and crypto for the next 20 to 30 years. in many ways the concerns of ai and deep faith can be answered

through digital ■'assets and tokenization. those things we can establish digital identity is very resilient way. and award against ai defects. the pairing of those technologies will bring us a level of tability these were

because i governmental public companies and the united institutions very special treatments. they ignited the financial crisis in 2008 2009 stop we have not fixed the problem. these are not because i public sector fully public sector institutions with privileges. and over $1 trillion of assets this is the great work left undone and public policy. for my chairmanship i had three

terms to lead to the committee. limits and benefit house republicans ■lgreatly. a number of great ■orepublicans mice competing for my seat in the congress and that's a very good thing. i think the term limits policy perhaps has been a great benefit. in this circumstance it doesn't benefit ■me i knew the rules going in that'cowhere ever tired for congress. if i had time it would be a top agenda item. but it will take time.

and will take administration as interested in doing something and fixing the problem. and fixing the problem in a way that sustainable for the american economy or long-term. which means you have to have a balanced approach and with interest from both parties in order to legislate here. i think it's possible but the administration deeply engaged it's gonna be a hopeless task. but it needs to be done. especially with fannie and freddie having abortions into new product offerings that get away from safe and sound practices and get down to the pre-financial crisis. >> you referring to the advent of the proposal for homequity product from freddie. >> yes. >> i'm curious if you think the private credit markets are to be impacted by the advent of such. >> and shirley what if you have a government agency competing with private sector decisions a

public sector decisions with money don't have the same level of resiliency. i think it's problematic i also think it's highly risky fannie and freddie to get into the offerings most of the prpositio. in the first loss position it's not in place. >> it does seem akin to sweeping socialization of swath of the housing market which has all sorts of implications. >> of the further socialization of the housing market.

any more than that will be a great risk to the taxpayer. >> if you describe next year's you have all the ramp up of the biden large-scale vending programs. the first 18 months in office. much of that expires. the healthcare stuff, some of

the provisions that biden put in place our tax policy. tax code. those expire at the end of 25. we also have the individual rate all business rates. united states corporate rate the small business rate and the personal income rates. and the personal rates expire you have a confluence of a fiscal clef unlike anything

we've seen. in american history. the dollar amount is going to be extraordinary. the first thing congress has to do is separate the two issues. you can deal with the tax policy first and you can deal with the additional fiscal items second it will be more difficult to deal with the trade-offs necessary in the fiscal question that it will be in the tax questions. and the tax question the hottest issue then from tax cuts and jobs act today is the discretion of the we have a $10,000 cap is not sufficient clearly is not ■■■ósufficient ã don't answer and municipalities within those certain states. >> i can't imagine

>> i don't want to be too specific. [laughter] the reason why we were able to pass the tax cuts and jobs, everyone hates to hear this. i care deeply about policy but i make policy in the midst of politics. i want 100% of my willing to tr get things passed and that means i don't always get, i never have gotten for the tax cuts and jobs act the only way we are able to do this out of action the we did it because of the vote to do it. in the next congress we will not have the vote to do it the way we did and jobs democrats h

more significant problem on salt than do republicans but republicans if you have a problem let's say you have the practical thing in the house 400-3502 218 vote for republican to 17 for democrat. well but we only have five people who care about salt. that's 500% more than we need. to address the problem. i believe we will have to address salt in a much more way for members of our party who represent very sohernpiece of a very important state. that's not even the best example of this because you have illinois you have california you have certain

municipalities across the country that are republican represented that have a salt issue and that probably quite differently. to deal with the tax bill you should be able to get that going quickly in 2025 with a republican house republican senate and republican white house that would unlock tax collection without having to address the fiscal question which will be much the linear and much more challenging given each of the subsidies and how they affect different districts and states. >> are there pay for as you can imagine conservative and moderate in the house coalescing around in order to accommodate let's say somewhat more generous approach to salt? republicans in the house and talked about the idea of rolling back many of the green energy subsidies and the inflation reduction act.

i'm curious where you see some ing for reelection. >> i'm liberated here. i would tell you we tried to address some of the clean energy tax provisions subsidy provisions biden put in aplace. last year early 2023. my republican leadership in the house sounded a very challenging thing. >> how to unify? >> yes because we are representatives. if you're going back and telling your them, they don't like it. you talking about clean energy, let's talk solar, wind, the largest solar states in the country are republican-led

states. the investment in solar is disproportionately and republican districts in those republican states so the idea you're going to do a full sweeping reassessment green energy tax policy and be able to do it like this it's going to be quite a challenge. >> you can imagine that being shave but not wholesale reversal. >> correct. i think there are other more interesting pay for as you can . the question is whether or not the vote will be there to bear that. that's why i think you have to separate the two things tax policy from fiscal policy in the subsidy question. because you can do tax extension through the tax codes and jobs act without getting into some of the thorny issues around green tax credits. >> this past octob uspeaker dur

tumultuous time in the house. by all accounts he did a masterful job of dealing with an exceedingly difficult situation. is your sense of the divides in the house gop conference driven by ideological differences or is it crashing personalities. >> those are two of the three reasons. the third reason is you have a narrow publican majority of the house and democrats in crghouse senate. you have a razor thin majority in a democrat washington. it's a tough environment. it's a tough environment for a group of seasoned veterans to deal with much less house majority that's a majority, a majority of the current republicans in the house had not served in the previous reblican so that muscle memory for what you do and expectation setting

is not there. this was the challenge in 2011, situation. expectations were sky high what we can do with one half and one third of government. i thought we had a better set of expectations and congress and we still have excessive expectations for what we can achieve this summer, in particular, passing all 12 appropriations bills when the senate has no plan to do that. regardless in the house the presidential election and dictate whether or not we have a spending bill and the rest of the fiscal year done, whether or not we really appropriate fully congress. the expectations were not

should abandon the expectations that are. we work intently to set the k[ expectations of what we are aiming for with the fiscal associations for the debt ceiling how we are going to operate the house with the investigator priorities and all those things passed out the first week of january and a very public way. speaker mccarthy like a great dynamic participants bringing them together and saying here is how we are going to operate.all the and computing the negotiat and appropriations how the weaponization of government operated with judiciary committee would focus on the oversight committee. the speaker honored every bit of those commitments had success. success with the debt ceiling negotiation success with all

the legislative proposals that came through house conference whether immigration reform tackling energy policy a number of key priorities in the conference. and was undone bypassing continued resolution that was not what i expected for the year as a risk set i thought through by the way, the risks that didn't include what would happen to me that was not on the bingo card. but the risk set i had set in december there was three things the debt ceiling, finds a full year government running those of the big3 risks for speakership. he succeeded with the debt ceiling negotiations, congressman graves and i tasked us with negotiating with white house. we brought back a proposal and he managed it so very well

stating early on let's negotie d the white house final caving when they said they would not negotiate with us they caved. speaker had the upper hand in than the president the president ããwe got negotiated agreement to raise the debt ceiling with the largest spending cuts in american history attached to the debt ceiling increase. got two thirds vote of the house republicans two thirds vote of house democrats have never had a debt ceiling increase in my 20 years in congress it was like that. the spending cuts we can get to this about the debt deficit will be a pebble dropped in the ocean comparison to the problem we have. yet still rates as the largest deficit reduction package

congress has ever raised in history. then to september the speaker has continued resolution we passed it with two thirds majority and the majority of republicans voting for that. that's pgwhat went to the speak with of as a political suicide event the

idea was something bad happened we were in a bunker somewhere and reminisce congress we quickly make the decision on who the speaker ypis it was not thought of it would take 23 days to resolve the issue please the nine-year-old was a little embarrassed.

the 23 days were a huge challenge for house republicans it really showed our divides getting to the decision was rough. absolute rough. we authorized buys,

passive supplemental, all these ends has two thirds support in the house and two thirds to the house. >> often times with the particular bipartisan coalition you also mention another bipartisan coalition he built around digital assets when you are thinking particularly with the question of free enterprise. do you see as you leave the house the possibility there

will be innovation forward market friendly coalition that could be public couple together with folks from both political parties. or is that just a pipe dream? >> i think those are on the market structure :ynbuilt. 71 democrats voted for 21. they touch every caucus the democrats have.

including showing you can be firmmidst of your party and innovation forward. including speaker pelosi. understands the value of technology and innovation being the congresswoman from san francisco. so to see that mix it doesn't break down in terms of ideology. it doesn't even neatly break down based on age. the longer-term democrat colleagues is innovation forward as the newer members of the caucus. but it shows they are interested iam its edge and we have to foster that and make sure that for us to compete against the great adversaries globally we have to be better versions of ourselves. with double down on who we are open society, rule of law, speech rights, all those things

capacity over the long-term free economy to develop the best products and find the fit. we are going to outcompete everyone over the last century based of those principles. with the double down on the efforts not try to be pale comparison to the ccp. that's a really bad idea. but to be better versions of who we are historically, that's how we win in the next century. >> please join me in thanking chairman mchenry. [applause] next we will have a led by my colleague judge locke we will begin shortly.