>> from our studios in new york city, this is "charlie rose."

>> jack has the distinction of having worked and succeeded in some of the toughest jobs in washington and the private sector. as a congressional staffer in the 1980's, he helped negotiate the deal between tip o'neill- to save social security. under president clinton, he presided over three budget surpluses in a row. so for all the talk out there about deficit reduction, making sure our books are balanced, this is the guy who did it. >> jack lew is here. he is the 76th united states secretary of state ray. he has served in his role since last february. previously he served as director of the office of management and budget for president obama and president clinton. he began as an aide to speaker tip o'neill. yesterday we house of representatives passed the debt ceiling increase, alleviating growing pressure on the treasury to pay its bills. there is still much uncertainty in the u.s. economy after two consecutive months of

disappointing job numbers. i'm pleased to have jack lew back at this table. welcome. i should also say you were chief of staff to the president as well. i assume all those jobs serve you well as secretary of the treasury because of what that job entails. >> i would say that there's nothing i've done that hasn't been helpful in preparing me. there are still great challenges in this job. the combination of the familiarity with the details of federal government that you learn, the managing decisions across complicated organizations, and understanding the political frame in which it happens is all very good training. treasury is a special place and it has been a great honor to be secretary the past year. >> do you believe budgets reflect values? >> i do. when you make decisions with constrained resources, you're fundamentally deciding if you

cannot have everything, what is most important. i believe the hardest decision in budgeting is not choosing between good and bad things. the hard thing in budgeting is when you cannot have all the things you want, which ones are most important? it is making those decisions correctly in a way that reflects your values and builds a foundation for the future that is really the challenge. >> do you believe the present budget have reflects the values that you and the president have? >> i think that in a constrained world, we are making progress. in unconstrained world, i would just point out that in the newest appropriations bill that passed a few weeks ago, tucked in there were some important things. some money to get early childhood educations programs going, to get to manufacturing going, higher education, there was funding for transportation

department for the economy of the future. are there more things we need to do? absolutely. there's so much we could do if we were able to reach more political consensus on things like infrastructure, like early childhood education, skills training. you have to work on reaching a compromise where you can. in the last couple of months there has been an encouraging turn in a more positive direction. congress passed a budget in december. you saw congress passed an appropriations bill in january. >> we just saw the house passed the debt ceiling limit. >> in between had a farm bill that had been locked up for years in disagreement, and just yesterday the debt ceiling past house and that takes away the threat of a self-inflicted wound, which would have only hurt our economy. so i am an optimist.

i think that you have a couple of months where you see the benefit of making decisions, working to get things done. there is more we can do. in almost four years, working on these issues, i think it is fair to say that republicans and democrats alike want to build a better country and invest more, and have a conversation about how to do it. >> someone said it is a time to invest in our future, but we're not doing it way we should. >> i agree that we're not investing as much as we should. i think this would be a time where we would be wise to be putting resources into the things we're going to need to be a vibrant economy for the rest of the 21st century. when i talk to ceo's as i go around the country, the two things i hear from them, the questions they ask when they decide whether to invest in the

united states is will there be infrastructure to get what we need in and out of our factories, and will we have the workforce we need, not just today but 5, 10, 20 years from today, to fill the jobs that we need to be filled? i think the answer to both those questions is yes in many cases. we have abundant energy resources that are making the cost of living cheaper. we have to make sure the answer is five years from now and 10 years from now. we know we don't have the infrastructure, the roads and the ports and airports that were going to need. we know that we could use good jobs to build those things now. we're very much going to try to get more investment in those areas. on skills training, it is the human capital side of the equation. particularly in an economy that is increasingly defined by technology driving things very fast and very hard. we know that you need people with the skills in order to grow the economy, and you need the

skills to advance in this economy. which is why everything from early childhood education to graduate education, skills training at community college and four-year colleges in the middle, is critical to our future. so yes, we have more to do. these are areas where we ought to be able to still make more progress. >> larry fink was here last night, manages more money than anyone else, up to $4 trillion black rock. he said there are the energy discoveries that we have, america's private sector is sitting on a lot of money to invest in their own cash accounts. we now seem to have a regulatory structure in place that will allow banks to really play a significant role. do you agree with that? >> i would add a couple of items, but let me speak to those three and maybe add one or two.

i think the transformation of energy resources in this country over the last five years, 10 years, is nothing short of a revolution in both the availability of domestic resources that are cheap and make us more competitive in the world. so we have security and competitive advantage. i think the challenge in the future is to make sure we continue to use those resources and do it in an environmentally conscious way, to use them to keep growing our economy. i think on the regulatory side, we work very hard to get to clarity and finality, that some of the issues coming out of the financial crisis, we finalize the volcker rule at the end of last year and we have rules that are about to be final in some very important areas, which leaves you with financial institutions that have more security and stability. they have more capital so they are responsible and able to bear their own risk.

they have plans that if they had hard times it will not be the taxpayer who bears responsibility. we have done things like the volcker rule that reduce the amount of risk. there are challenges in the future and we should focus on them, but i do think we have a great more deal of certainty than we had even a year ago. whatrtainty is corporations need before they make investments that would bring out more jobs and plant capacity and that kind of thing. >> i would add to that list, we have a resilient economy and workforce. we responded to the financial crisis of 2008-2009 with the kind of determination with things like the recovery act that have put people to work and build things that we need for this country. some of the infrastructure we were talking about. we responded with the dodd-frank act. we got a head start over

the rest of the world in getting our financial institutions straightened out. are people never give up. it was important this week and -- in passing through the votes on the debt limit with very little drama, we are seeing government not putting a burden on the economy that makes it harder for the american people. the self-inflicted wounds of the last few years have slowed down some of the economic recovery just as it was taking off. i am pleased we are not seeing that. >> what do you think changed? >> i think first of all, you go through an experience like the government shutdown and the crisis over the debt limit in october -- >> do you think speaker boehner took lessons from that? >> i took to heart that there were no leaders who minimized the importance of resolving it in a way to did not have a lot of drama and anxiety for the

u.s. and the global economy. it is politically challenging and difficult to do. that is not new. working for government often requires doing things that are politically challenging and hard to do. i think getting there in a way that leaves the economy in a place that continues to gain momentum, we have had some economic statistics that go one way or the other, but the trajectory over the last six months has undeniably been in a positive direction. >> including jobs? >> if you look at the jobs numbers, there have been some confusing cross signals, but the trend 8.5 million private sector , jobs in the country. since the beginning of the administration. just last month we have seen manufacturing and construction strong. i would love to see consistently high jobs numbers every month, but the trend is still in the right direction. we still have a lot more to do. until we have an economy where everyone who wants to work and get a job and a full-time job, we will keep at it. but we are making progress.

the important thing about not having self-inflicted wounds is, the economy needs to build up some momentum and needs to have a head of steam. we ended the year with tailwinds. we started the year with tailwinds. we have had some economic statistics that people are asking questions about, but we have a consensus that the economy is still growing at a healthy rate. >> there is also this. people look at the economy and where it's going. what is your assumption in terms of growth rates for 2013-2014? >> obviously 2013, we know the fourth quarter ended strong. the second half of the year ended strong, and that is where we begin 2014. whether we see consistent growth rates in each month and each quarter is not really the question. but what is the trajectory over the year? we will put out a budget in just a few weeks with specific assumptions. but i think it is fair to say

that when we look at things like blue chip economics and things are hovering at a rate that shows hitting or going just beyond 3%, those are the kinds of numbers we are looking at. i think the challenge is going to be to make sure we do everything we can to encourage that growth to continue. making sure that we do the regular business the way this week appears we are showing is important. if we could make some of those investments it would be very much helpful. it would be a good shot in the arm to the economy and it would help in building the future. the economy, if you look at manufacturing construction, in , housing we have seen values come back in a lot of housing markets. we have seen construction growing, but not as rapidly as

we would like. that is an opportunity to do better yet. we have not seen the limit of how much improvement we can get. i think there are going to be ups and downs in the numbers. i spent the better part of three decades advising other policymakers not to react to o dramatically to weekly or monthly statistics. look at the trend. >> there are also people who look at the u.s. economy, and i know you are aware of this, and even before the recession of 2008, and say there were some fundamental issues there that were problems that may prevent this economy unless it changes to go back to that kind of full employment that we had. >> i think it is very fair to say that going into the financial crisis there were challenges in our economy in terms of technological change, structural weaknesses. then we had this once in a generation financial crisis where it's the worst economic

period of my lifetime, which exaggerated how bad it was. we have to separate the economy from the long-term problems. it is a little hard to do. sometimes you go through an economic crisis and the question is do you completely catch up? do you make up for the lost ground? >> will we? >> i think we need to make sure that we do what we have to to make sure that workers, young people have the skills they need in the modern economy. if we do our part, if we make sure rebuilding the infrastructure, training workers, we're running our economic policy in a way that gives people confidence that there is stable and predictable certainty, i think we can pull through this and make up for the lost ground. with the't do it just

kind of executive orders the president talked about in the state of the union speech, when he talked about the kind of action he could take. that is not sufficient to do the things necessary to correct problems with the economy. >> there's no doubt that a large policy decision that our country major legislation, that is our system and that is why the president has proposals for legislative programs in a lot of these areas. take infrastructure, there is a great deal we need to do. in the omnibus appropriation bill that passed, there is $700 million for infrastructure spending. not the same as several billion dollars, but we are now in a position to make what are called tiger grants that will really create jobs and more of a foundation for economic growth in communities around the country. there is money in the appropriation bill to build manufacturing centers. we have a couple of them already set up. i visited 12 weeks ago. it's quite exciting to see ceos of companies and educators coming together to help make the

breakthroughs to do better manufacturing and train the workers to have skills for the jobs, and then to attract investment to the area. if we are able to get a political consensus to do more, it would be better. i'm not challenging the thesis. >> is there any reason to believe the political consensus is possible now, based on indications we have seen so far in the last several months? >> i tend to be an optimist, charlie, as you know. if you look at the last couple of months, it gives a reason to be optimistic. having had a budget agreement, a farm bill, passed to get through the debt limit in a way that is more businesslike and without a lot of disruption, in my experience, infrastructure is not traditionally a partisan issue. it doesn't matter if your democrat or republican.

>> what you see is infrastructure some might see as spending. >> i think there is broad bipartisan support for making sure that we have the roads in the ports that we need in this country. if you look at the water resources bill that passed the house with over 400 votes, the challenge is putting the consensus together. if we can break through the gridlock that makes it challenging to have conversations, regular order actually matters. congress worked through, and i'm not going to say it was the biggest budget agreement of all time, but it was very important to be able to do the business of governing. so i do take optimism from a series of actions which showed that, looking at an issue like immigration reform, that is good for our economy and there is a path forward. >> you think there is a path forward on immigration reform in this congress? >> i actually do. >> even though speaker boehner said it is impossible, and he blamed the president as the reason it's impossible?

>> if you look at the substance of immigration reform, there is broad agreement that there are policy areas where there could be consensus. there is broad agreement on both sides. >> the republicans don't seem to want to work on immigration when they are getting ready to get into midterm elections. that is the political reality. >> i leave it for others to make their own political decisions. i would personally argued this is a case where good policies and politics ultimately come together, which is one of the reasons why i'm more optimistic. the conversation is by no means over. the challenge of doing hard things is to keep at it. you cannot take every momentary setback as being a reason to stop. that creates a certainty that nothing happens. you have to keep pushing forward. that is with the president will do on these important issues. >> how much damage do you think was done because of what the president said about if you want the health care plan you have now come you will not have to

change it. how much damage do you think that did to the president's credibility and to the country's attitude about health care, once they saw the reality of that and once they saw the obvious technical issues that were taking place at healthcare.gov? >> a think the president has been clear that there were problems in the rollout of healthcare.gov. >> that is content. >> we're getting beyond the technical problems of the rollout. people are seeing the choices they have clearly and i think they are going to like the choices they have as they understand them. that will ultimately be the test, not what people said two or four years ago. ♪ >> there's clearly a partisan

difference. the republicans think they can go to the country on health care and win and they didn't want it to be clouded by immigration discussions. >> i think i'm comfortable making the case to a family that already benefiting from the kinds of security the affordable

care act provides. if anyone suffered a childhood disease in their family, the notion that they would not have health insurance in the future is a tragedy. that is a big deal. >> what do you make of the senate refusal to extend unemployment benefits? >> i hope we're not done with this debate. unemployment benefits are very important. if you look at the unemployment statistics, we have seen the kind of splitting of the roads where the short-term unemployment rate is approaching historical levels in the -- and the long-term unemployment rate is staying quite high. it is not because people don't want to work. there are all kinds of complicated reasons that once you are out of the work force for more than a couple of weeks or a couple of months, it's harder to get back in. people are trying to find a job in an economy where it is still challenging for them to find a job. they need to have extended benefits. >> do you believe we can get

back to full employment that existed before 2008? >> i think we're still -- >> can we get there, and how long? >> i'm going to have to resist trying to predict how long, but i think we are going to see the kind of recovery that gets us back to a place where people who are looking for work can find work. i think it's going to require that extra effort, both in terms of giving people chances, but also making sure they have the skills we need. if the job you had is a job that's no longer available, we need to make sure you can get the skills for the jobs that are available in >> that takes an investment in the future. and that takes a new political debate in washington. >> some of it requires new and some of it requires -- i just told you the story about manufacturing. we have a lot of resources in this country to match people together. if you have a community college and i have a factory, if i can

-- you are doing certificates in a field that doesn't have the skills i need, i can talk to you where you understand what i need. work where we do it that way. i saw it in virginia just two weeks ago. i think we can make progress there. there is no doubt that there will be challenges in the economy going forward. we get great benefits from technology in terms of services and information that are available. we see economic growth coming from it. but we also see a change in the nature of what jobs the economy has. >> it was interesting that francois hollande had a state dinner in washington which i think you attended, and now he is out in silicon valley. every leader who comes here wants to go to silicon valley. will we be able to maintain the kind of lead in technology when we see what's happening around the world?

>> when you look at what the strength of our economy has been over our history, it has been entrepreneurship, it has been breakthrough discoveries. >> can other countries achieve that? it should not necessarily be not in our interest for them to be able to do that, because a growing global economy provides opportunities for american companies to meet the demand of a growing economy. >> i don't think we have a monopoly, but i think we have a distinct advantage. we have the best universities in the world. we have a history of risk-taking which is what you need to have in order to make these breakthroughs. i think that is reason to be very hopeful about the american economy. we have to do our part and make sure we continue to advance. >> what worries you about where we are now? when you look at some of the oecd rankings of education, we are not at the top of the list.

>> when you look at higher education, people come here for -- >> but we have immigration rules that make them go back to their country of origin after they have gotten their american education. >> i think we need to do immigration reforms. i'm not going to argue with you on that principle. we need to do immigration reform because it is in our interest. >> there is a different issue than the issue having to do with borders and all that -- >> i think it is connected. when we deal with immigration reform we deal with multiple issues. i think it's very difficult to break them apart and deal just with the high skilled worker issue and not see border issue. the truth is even a border issues have to do with how we continue to be a strong and vibrant economy. when i look at the technology sector, i see a lot of innovation still in this country, startups able to get capital, ideas that are able to take hold and spread around the world. so i am optimistic there will

continue to be leaders in the area. that is one of the reasons you see things like the trip president hollande is making to silicon valley. >> i want to get to china. you have spent some time with xi jinping. let me just stay with financial reform in this country and dodd-frank, we mentioned that at the beginning. does this mean that too big to fail is no longer a problem in america, as it was in the 2008 crisis? >> charlie, if you look at our financial regulatory system and the condition of our financial institutions and compare 2008 to now, there is a world of difference. we have taken decisive action, we have a better capitalized set of financial institutions. we have rules in place that govern what happens if an institution fails. we actually have visibility into the largest financial institutions. they have living wills that say this is what happens if we fail. the burden is borne by the

shareholders and not by the public. we have resolution rules with something called a single point of entry, which now the world is copying to figure out how to do it. >> but the challenges remain. >> the question you have that i'm frequently asked, the -- can only be answered in a financial crisis. the question is, have we made dramatic changes, we dramatically stronger? the answer to that is unequivocally yes. are there no other threats? we still have challenges out there. shadow banking and cross-border resolution. we have regulated institutions in the u.s. and around the world are becoming more closely supervised. there has been a shift to resources in institutions that are outside of traditional banking world. which isn't a bad thing in and

of itself. unless the risk there grows to the point that if -- it in itself creates the risk of a systemic problem. we have work to do in the united states and internationally. cross-border resolution. when lehman failed, one of the things we saw was it wasn't enough to say can we resolve an institution in the united states, but what happens overseas? we have made progress on both of those issues but we have more to do. >> so there is a sense of standard around the world. a high standard so there is not capital shopping. >> you don't want arbitrage where you see the highly -- lightly-regulated markets putting the rest of the world at risk. i think we have made great progress. we have way more progress to make an international space. we have seen progress on issues

like capital and leverage rules. the world met just a few weeks ago and adopted standards similar to the one our regulators wrote. we are seeing our regulators providing standards to conform to an international standard that meets our standards. that is a good thing. we want to harmonize rules at a high level. weeki go to the g-20 this high on my agenda for this year , at the g 20 is to bring these issues to the table and for discussion in places like the g 20 where countries come together to reach agreement on high standards. >> are you more optimistic for the global economy today, taking into account europe and china and brazil and latin america? >> certainly we will see more growth. the most recent global economic review shows we will see more growth than in recent years. i see pockets where policy could

actually increase the growth and that is something we are very much focused on. that's one of the things we do when we come to these meetings, we urge our friends around the world to do things to help drive global growth. if you look at the world economy, the u.s. cannot grow at a rate fast enough to pull the whole world along. the difference between 3% and 3.5% makes a world of difference in the united states, but it's not enough to make up for losing a percent in europe or china or japan. you have to look at these major parts of the world economy and say what can they do to grow more? we have been clear that we think in europe the countries that have surpluses could do more to stimulate growth and demand. europe needs demand. the world needs more demand. in japan we have seen for the first time in almost two decades, policies that have brought the economy out of deflation and it's growing, but

they need to make the kinds of reforms that can make that the future of growth. they have a lot more to deal with. china has to reform its growth -- it's economy. i think they know they have to reform their economy. >> in what way? clearly they want to make it more market-oriented. clearly they say they want to have more competition with the public sector, with state capitalism. >> i was in china a couple of times last year and i was there just days after their plenum completed deliberations. so i had a chance to talk to them before any other world figure came through in a one-on-one conversation. with xi jinping and my counterpart, the vice premier, and the economic team. they understand that the signals of the need for market reform are all around.

they have inventory that isn't being sold for state owned enterprise. they have excess capacity in real estate. all of the obvious signs that they need more market forces in order for the economy to grow. they know they need more consumer demand and a stronger safety net so people don't feel like they have to save so much, that demand is out of their reach. how fast they make those changes is a separate question. >> they have been committed to the idea of turning from an export economy to a consumer demand economy within their own country for several years. >> i think you have seen a change, though, even in the last year. you look at the statements that xi jinping has made, that li k eqiang has made. it has been a level of detail in terms of the need to have competition in financial markets, the need to move toward market determined exchange

rates, the need to have the allocation of capital be a market-determined decision. you also hear that they worry that comes when you move from a controlled economy to a more market-driven economy. as you look at the rate of growth in china, some of the reforms may mean sacrificing a little bit of short-term growth as they go through the adjustment. they need to have the adjustment, but the disruption may cause some friction. so the pace of change is something we will have to keep pressing on. we have good conversations on this. >> so there are two questions that come out of that. in your judgment, is there a sense that to truly have the kind of economic reform they have, they may need political reform? >> i think they have the ability to make decisions in their system. it is one of the things that for they can make decisions

more easily. i think that as you look at the changes in china, they are not all towards more openness and freedom. there are some areas you see them close down in terms of security. i think on the economic issues, they know that they have a population that's moving into the cities, that needs employment, that is starved for demand, and is going to retire and needs some security. i think they know they need to start making decisions and maybe -- open their markets to competition. that is what we are hoping to continue -- >> clearly cyber security is a big issue and there are conversations with china, i'm sure you are talking about that. >> we talked extensively about cybersecurity and, security and cyber theft are somewhat different issues. it's important to distinguish them. the issue we have raised the is the protection

of intellectual property. policies where there is a theft of intellectual property are just unacceptable for a country that wants to sit at the table and make the rules for the world. china sees it self as a country appropriately that should have a voice in making the rules for the next generation. they can't have it both ways. >> that was put together by former deputy secretary of the treasury, saying if you want to be part of the global committee, you have to take responsibility to be part of the global community. have they accepted that, in your judgment? >> i think they have a clear understanding that's going to be necessary. and i think we will continue to press on the issue. i think they very much want to have that kind of voice in the world economy and in making the rules. >> but you don't seem convinced they have the -- accepted the idea that with responsibility comes a sense of commitment to

certain kinds of international codes. >> i think there is an understanding. the sequencet seen of events that will give us confidence it's happening. that is why we need to stay engaged and keep pressing. >> how long was your meeting? >> about one hour or so. >> was there something that you wondered immediately when he callthe meeting, you would the president and say, you wouldn't believe what i just heard. was there anything that made you say wow, this adds to, changes, alters, confirms my expectation of new leadership in china? >> this was not my first meeting with him. i developed a little of a -- >> but this was the first one after the plenum. which was a big deal to them. >> i suspect that what he said as all of us prepare for something that's a big deal, we are thinking about what we said at that meeting.

i think i got something similar to what was said at the plenum. >> what did you think he wanted to -- >> i heard kind of a narrative of chinese history. it was really interesting. >> what is the narrative? meaning you have to understand our history to understand where we are and where we might want to go? >> more that we have to make change in a way that we understand our history. we are still a country that is a communist country that is excepting market conditions for the future of the economy, and to reconcile the two, and the changes going to be to frame where the two can be harmonious as opposed to we will just move from our past to a new future. it's going to be an arc, not jumping over. i thought it was an interesting way to bring together economic and political philosophy ideas in a way that probably deeply

reflects the context of chinese thought. >> what is their assessment of the relationship with the united states today? >> i think they very much value the high-level contact with the united states. i was really struck when i went there soon after becoming secretary and then again after the plenum that on relatively short notice, they open the doors to meetings with the president and vice premier, the major leaders in the country. it's important to them to have a relationship and a conversation. i came in with a long list of things we are concerned about. it's not like my half of the conversation is just listening. they are interested to hear us. i think it helps them to hear us. i believe they want to learn from our experience and adopt what works in the context of their economy and their society.

>> i assume cyber was at the top of your list. i assume currency was in the top of your list, too. has there been a change? >> i think we have seen progress in terms of the exchange rate gap closing. we pressed and pressed and pressed that they need to make more progress. until it is a market-determined exchange rate we are going to keep pressing. >> there should be a change in the dollar as the world reserve currency? >> i'm not sure i heard that exactly. i think they have a positive to be- desire for the rmb world currency. it goes with one to sit at the table. >> what do we think that? >> you can't be a true world currency if you don't have a market-determined exchange rate. i think they know that. i think they are on a path of making progress. we put out a currency report

twice a year and are direct in pointing out interventions that we think are problematic. they are aware of how sensitive an issue it is, both to united states and other countries of the world. i think they are making progress, but we need to keep pressing on them to make more progress. >> so you left the meeting thinking what is the biggest gap between china and the united states? >> on the economic issues, not to be overly optimistic, i think we are pushing on an open door in terms of the direction we are encouraging them to go. they have a different view of time than we do. we're going to find it frustrating how slow the progress is. they need to understand that in order for this relationship to stay strong in the context of both the u.s. economy and public opinion, they are going to need to show their progress in terms that are a little faster. >> many people will say that we have two per pair for that. in other words, it's important

on the part of the leaders of this country to look at changing dynamics in china, not in terms of -- >> depending on whether you look at europe as a group, china is third-largest. country by country, it is the second-largest. we will be the two largest economies in the world. maybe our growth will determine the health of the world economy along with europe and japan. which is why we all have to look at ways to increase demand and growth on the work together and lower the barriers for trade and raise the standards so we are doing business in a way that raises standards of living and improves the environment instead of the opposite. >> thinking of brazil and emerging nations, what is the future of their economy in the near term? >> you look at the emerging economies -- >> you look at turkey, brazil, india -- >> it is important not to look at them as a group. you have to look at them individually. what we have seen in the last months is a little

differentiation between countries that have taken tough policy decisions and have fiscal policies and structural reforms in their markets. >> who would that be? >> i would rather not name names. if you look at the performance of currency and performance in the market, there is a real differentiation in the countries that have taken tough decisions and countries that maybe haven't -- >> >> would you put us on one of those that have taken the tough decisions in terms of financial regulation? >> in terms of our fiscal consolidation, if anything we have done more in the short run than we should have. i think we have done well in terms of our banking reforms. we have been at the aggressive end of the world to get our financial house in order. we continue to be a leader in the world on important issues. if you look at the emerging markets, there are a number of idiosyncratic things that are creating local problems.

it is not at the moment that something looks to be systemic. but we have to keep our eye on it. i'm mindful of the fact that in past financial crises, things started where people did not expect it. there is a lot of energy spent at treasury and institutions like it around the world. i talked to my counterparts in emerging economies and developed countries and the imf. people are watching it carefully. what i am expressing reflects a broadly held view. >> has the economic recovery from the 2008 recession has it as much as you expected it to by this time around the world? >> i actually thought about this a lot in 2008-2009. and i thought at the time there would be a long, slow recovery because of the nature of the recession, the history of

financial recessions is that they are long, slow recoveries. i think what we didn't know then is exactly how deep it was. we only found out when the statistics got revised a couple of years later that the whole -- hole was even deeper. >> and how fragile the economy was. >> given how bad things were in 2008-2009, it was worse than we knew at the time. so it is probably disappointing it has taken as long. to compare where we were then to now, we have made enormous progress. if somebody sat down in 2009 and told you that are on implement rate, as tough as -- unemployment rate, as tough as it is, would be down to that, they would have thought that was an aggressive projection. looking at growth rates, we are struggling to get to 3%, but hopeful of crossing 3%. it is not enough, but it is substantial.

>> what is your commitment to entitlement reform in this administration? >> the president has spoken to that clearly over a number of years. he has put forward several times the idea that we need to do social security reform and a -- in a balanced, fair way. there hasn't been an environment to have that conversation. look at his budgets over the last two years, he has made it clear that tax reform and entitlement reform need to move together. i wish we were in a moment -- >> what is he doing about tax reform? >> tax reform, if you separate business tax reform from individual tax reform, they are very different. individual tax reform is intrinsically tied to a larger question. business tax reform, what the president has put forward, what he called a grand bargain, was to say let's do business tax reform, lower our statutory rate, use the one-time revenue

you get when you have a transition to a new tax code to finance infrastructure spending and things like skills training. i still think that is something we should push hard on. the president spoke to it at the state of the union. when i talk to republicans, i'm encouraged to keep talking about it. i think there is potential there. it is obviously something that is not ready to happen today or tomorrow but it is an idea we , will keep pushing. >> he worked with tip o'neill. you worked on wall street. you worked with bill clinton, and now you work with and for barack obama. how is he different? >> i have had the privilege to work with some of the really great leaders of my lifetime. each one is their own person and has their own style. so i've always been reluctant to compare them. i look at the strengths that each brings. all there not only things i suggested, right at the center of everything, when the

argument is made that we are making progress in relationships between republicans and democrats, some progress, if the president, is he committed to doing more because he believes somehow this is the right opportunity to try to do what he wanted to do when he came to washington, achieve bipartisanship? or is it too late? >> i think the president has tried really from the beginning to reach out and work on both sides. look, even in health care reform, there are ideas that started out as republican ideas that he incorporated into the way he approached it. throughout his presidency, he has been open to good ideas from wherever they come. he brings an enormous intellect and intellectual curiosity to every issue he addresses. he really doesn't care where the good idea comes from.

and is willing to make compromises to do the right thing. we have obviously been in a challenged global involvement. it hasn't been the ripest moment for the kind of direct negotiations that worked in the 80's and 90's. a little bit better than they work right now. i'm not going to cast blame, but i will just say -- it is not because the president -- >> you have suggested the biggest problem facing the country was washington. bob gates said the same thing. the issues having to do within the two-mile area there in washington dc, with the conflict between republicans and democrats is the heart of our global position. >> the president tried to engage directly on many occasions through budget negotiations, where he was willing to do hards that would have been to come back and convince democrats to go along with.

you need to have a negotiating partner with the comparable ability to go back and negotiate and make things happen. >> and you didn't have that? >> i don't think we have that. maybe it just wasn't the right time for it. but it was never in his interest or will. one of the things people talent stories about whether there is outreach or not, who talks to people -- >> you would know that, because you were chief. >> on a regular basis. >> that's not the issue. >> you can spend all day on the phone, and if the environment is not ready, is not going to produce a different result. >> you also acknowledge that human relations make a difference in whether democrats in the senate or republicans in the house, they are in fact people who are subject to the same kind of ego and other issues that might affect how they perceive issues. >> one thing i think is true is people are people where ever they are, whether in the legislature or the white house

or the business world or university or in media. i think when people deal with the president, they see that he listens to them. he shows it not just by his interaction but with the highest form of flattery, but by taking their ideas and moving forward with them. the record shows we have done quite a bit working with congress over the last five years. we have three years left to do quite a lot more. one of the things i've learned in 3.5 decades in this world is the times you live in always feel like the most partisan times ever. then when you look back, you see the things you accomplished and the kind of jump out of the noise of the day. in the 80's it didn't feel like the spirit of bipartisanship. in the 1990's, it didn't feel like it. >> tip o'neill and ronald reagan and all that, the spirit of

bipartisanship? >> there is a lot of romanticism remembering the 1980's. i remember when losing a few dozen democrats, lost control of the house floor and the reagan program went through congress. what was different was that speaker o'neill did not tie the congress up in knots. he didn't win, but he let the process go forward with the confidence that in the end it would come back to his benefit, as it did just a couple years later when they were able to start negotiating. there were some tough words going back and forth between the white house and congress in those days. certainly in the 1990's. when you look at this, we have done a lot already, and we will do more. we have come out of the worst recession since the great depression. changing policy in a that affects every american's life, and everyday we are doing more.

i am bullish in our opportunity. people will look back and say, they got a lot done. >> secretary, thank you very much. you're welcome anytime. >> always a pleasure. >> jack lew, secretary of the treasury. and you for joining us. see you next time. ♪ ♪

>> live from pier 3 in san francisco, welcome to "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i am emily chang. our focus is on innovation, technology, and the future of business. we are following a few big stories today. motorola mobility ceo dennis woodside is joining dropbox, the online storage company as coo. after lenovo agreed to by motorola mobility. we will see what it means for dropbox.