8:00 a.m. in silicon valley, 11:00 a.m. here on wall street. "squawk alley" is live. welcome to "squawk alley." interesting day shaping up this morning on the show.

john steinberg, jon fortt and kayla tausche with the dow. about 114 points away from. firms saying that a lack of competitive momentum from android rivals should translate into further gains this quarter. >> those are really high levels. if you go presplit. so multiply this times seven we're getting into thousand dollar plus territory and remember it tanked just after it hit 700 a couple years back. all that to say i think you got to be really, really optimistic to see iphone momentum continuing from here. yes, they expanded the weeks of inventory from four to six to five to seven. so that means it is going to appear to ship more over the next couple quarters because of

that. but beyond that you have to be counting on amazing features in the 6 s for this to continue. >> this is not just a price call on the iphone the report also takes pains to say they did channel checks on the ipad air 2. called best buys around the country. 90% of those best buys were sold out. >> this is a contrarian call on the i-pad. they show it basically flat a year ago and show it returning to growth. 21,000 units instead of 16,000. so that is a unique call there. i was an apple store over the weekend. i said do you have iphone 6s in. he said we had some in. >> kramer's argument this morning, you assume nine bucks. it is still not --. the notion they are never going to have a competitive threat

ever again seems a little naive. >> samsung had the larger screen phone category. to themselves for a while. for a couple years but still didn't manage to build a mote. because as soon as apple's got that they are taking share. and i agree the ipad is likely to have a very strong season. i think the call is wrong they are going to shrink again. but so much of the margin in apple. so much of the profit is wrapped up in iphone and if that slows down ipad would have to go krooiz to make up for that. >> you are 16 times calendar year earnings. and with that growth it is not that expensive. the question is how high. >> although 18 has been historically a ceiling in terms of a multiple. >> that's to get to 175. 150 is easier to get too. >> 150 means $880 billion market cap. not even getting to the 1 trillion level which has been the high water mark where

everyone is sort of counting up to that moment. but still 880 billion dollars. >> we'll see. microsoft's annual shareholder meeting kicking off moments ago. this is if first time nadella attends as ceo. since he took over in february microsoft shares have popped more than 14%. here is what he had to say about the future of microsoft. >> i feel good about what i'm seeing in the traditional markets where we've been strong. i would say the emerging markets have been a little more challengings for us and that's a place we're also trying new models. i spent two weeks in china recently. two weeks in asia recently. and learned a lot about what it takes to succeed in these markets is probably not the same that worked for us traditionally. new business models. what does it mean to monetize

post sale, cloud, because these markets will probably bypass entire generations of technology and come to something new. so it is going to require a lot more diversity in the approach that we take. both in terms of product and business model. and things as you said are fast--moving. and the ability to really learn from that. and that is why one of the key things that we've changed in our own metrics, is usage, usage, usage. wherever we're seeing something getting used that to us is an early indicator that might be something people want and then figure how to get that great and then go the with monetization. >> are investors going to give him a passing grade? bethany mcclain profiled him for the november issue of vanity fair. the stock is up. but it is still very early days.

what are the key moments that you use to grade him up to this point? and how has he done? >> i think it is still the honeymoon period but that said he's done incredibly well. one of the key moments although you have to remember this was under way when ballmer was ceo was rolling out office for ipad and making office products available across platform. that is a huge switch and signifies something very different in microsoft's approach. and satya has also set a different tone for the culture. he's a very different than previous ceos. >> well, the take away i had from your articles was the financials are great but the future might not be there. the head line was sorry microsoft, a bunch of teenagers just talked about doing school

work and none of them use word. what do you take away from that? >> i think that's really frightening and i was listening before we started this and you were discussing apple and android. you were certainly not discussing the surface phone or window's line of tablets. i think as well as satya nadella has done he has not addressed and it would be krooiz to expect him to the solve the central conundrum which is what is the future of windows? and how do you possibly maintain profits in world moving away from the centrality of the window's platform. and it's something steve ballmer couldn't solve and as much credit as nadella deserves there is no solution in sight yet. >> to that point in your interview with satya nadella he was saying the way he's going to measure his success as ceo is by microsoft's relevance, not

something that the company seems to have quite yet. but how does a company get graded on relevance? what do you look for to say they are or are not relevant at this point. >> i think it is user driven but perhaps not in a way that's apparent to all of us. most of microsoft profits come from corporate customers. we all tend to talk about the world in consumer driven technology and that is not really the world microsoft is in anymore. so there are a couple ways to think about it. do they need to be relevant to consumers in order to stay relevant to corporations? what is the line between those two things? perhaps not as clear as it might seem. things have a way of moving from the consumer world to the corporate. but is microsoft staying relevant with corporations and they were certainly doing their darnedest to stay that way. and corporations tend to move a little more slowly than consumers do. >> we are a couple minutes into a conversation about microsoft

and satya nadella and not once have his comments about women and racist come up. does that mean that microsoft and nadella himself handled that issue well? you give him high marks for his first year. that was certainly an important moment. >> you know it was. i tend to have a bit of a controversial take on this. i guess in the sense that i feel like there was a bit too much of a reaction to that. the guy after all was at a conference that supports women because he supports women in technology. he gave the advice that had worked for him. and speaking of cultural sensitivity, there should be some cultural sensitivity to him as well. that said i had a big fight with a friend of mine at a dinner part about this. she said he should have known better. i do think the company has moved on from those remarks and he certainly seemed to take the criticism to heart. >> one thing we may have lost

sight of the throughout the course of this year and the conversation about microsoft is they are still an activist in this stock. value act has still been ratcheting up position. mason mor fit still has a board seat. do you think if they get into the situation where there are doubts about growth going forward that we would see some of that pressure ratchet up again? >> we might. and i don't think value act is alone. i think there is pressure from other significant shareholders as well. namely capital group and that points to another issue microsoft hasn't addressed. i think some of the pressure has been that microsoft should be pure lay slimmed down business-oriented company. and that has not been the way nadella has moved and certainly with the acquisition of mine craft there's no sign he's moving if that direction. but if microsoft doesn't start to become more relevant on the consumer front you could see that pressure again getting turned up. shouldn't microsoft just slim

down, get rid of the money -- and focus on selling to business. >> we'll see how that xbox one sell this is holiday season. that will be a big role. >> finally this morning, all morning along we've had a list of all star ceos join us. one was walmart ceo who had interesting things too say about moment r mobile sales. >> 10% of the mobile orders we're receiving are coming while someone is in the store. so they are in the store either we're out of stock or there is something they want and they buy it right then and get it delivered. it's still small but really growing. >> interesting take. >> that comment doesn't make any sense to me. if they are in the store and the item is out of stock then you would buy it from walmart.com.

--. that obfuscating the fact that mobile is more bad for big box than it is good. >> there might be inventory problem. >> or something else they won't we don't have. >> i think people are still figuring out how this whole thing works. i see what they say the sale is. is it better online? is it worse? can i stay home next time and get the same deal? i think people are actually able to actively figure that out now. >> they have figured it out. you go to the store. see what the price is. see what it comes to and look on amazon and see if it's cheaper and you get it in two days. >> they are price matching amazon now so you don't have to wait two days. you can get it there in walmart. i think they are checking walmart against walmart. >> price matching needs to be a lot more frictionless than it is now. have you ever tried to actually

execute a price match. basically like filing out your taxes. if there is an app to do that. >> and not every consumer is going to want to learn how to do that exercise. >> it's scary for kids. i'm in the store with my kids all the time. we look at something they want. i say we'll get it on amazon and i hear other parents say oh i tell my kids that too. we have an entire generation that is learning to showroom. and it is serious. >> in a good way i suppose. >> hence the upgrade for fedex and ups in the past few days. >> hopefully not a repeat of last year where we saw some of these companies when they saw the heightened increase in online sales they couldn't get the packages to you at the end of the year because they didn't have the infrastructure. >> and end of last year we saw the regulation coming up around shipping sizes. we're seeing resurgence in the move now to make sure all the

online retailers get taxed. amazon is already paying tax. so increasingly people are trying to level the playing field from a regulatory standpoint. but the margins are lower online and amazon has a lot of heft and ability to do is that. >> the president is getting ready to address all the ceos a few momentsal we'll take you as soon as he starts speaking. in the meantime john, thank you. >> thanks. >> let's look at the markets. hovering near the flat line. up earlier but right now the dow just up about 5 points. s&p 500 up 4 points. nasdaq up 6 points. all just about a fraction of one percent. largely on the back of the data. isbm came in better than expected and the jobs number was slightly weaker than economists hoped. shares of abercrombie & fitch in

the green. sales are improving but conditions still remain difficult. that stock up 5% despite those comments. jc penney slipping after getting downgraded to neutral. competitive changes may prevent them from achieving its multiyear goals. that stock down about 5 and a third percent. >> when we come back. cnbc has had an all-star list of ceos at the business round table. any moment the president will speak to some of those business leaders in washington. plus apple's phil shiller, eddy q and steve jobs testifying in court for apple today. and call it the internet of moving things. wifi networks that can follow you on the road for your entire drive. how that works a little later on this hour. with the dough down about 115 from 18,000. back in a minute. you total your brand new car.

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testimony in apple's antidrus trial is starting today. >> it is day two of this apple antitrust trial here in oakland, california. and sparks could fly on the

witness stand today. this case is about apple fending off allegations of the antitrust in 2006, 2009. the question is was an ipad update a legitimate product improvement? apple says it was. it meant movies as well as album art became available on the ipod for the first time. also a range of security upgrades. plaintiffs lawyers say no way. they say it was all about stifling competition. after that upgrade music from competitors no longer worked on apple devices. so apple executives plaintiffs argue were just trying to expand their monopoly here. we're talking about the ipod, it is no longer the critical device for apple it was. and it accounted for less than 1% of the total revenue in last quarter. still real money on the line

here. if antitrust violations are proven, apple is potentially on the hook for $1 billion. now today apple's eddie cue, the man who oversees itunes is scheduled to take the stand. can he convince the jury that that update was legitimate and genuine upgrade and not an attempt to expand power. and we're going to bed in the courtroom all day and bringing you head lines asset happens. >> thanks so much josh. in the meantime a all-star list of ceos join us lye at the business round table. and any moment president obama is expected to speak. i was thinking of all the policy on the table right now, whether it's rates, taxes, immigration, energy policy, that is all going to be part of the discussion today. >> it is. i don't expect the president to focus on a single topic.

doesn't have a one single news-making message to deliver. i expect him to talk broadly how to work with business to achieve mutual economic goals. the u.s. economy globally has been doing very well. but the president still wants to strike trade deals with our european and pacific allies. that's one priority he shares with business. he still has a long shot hope of a grand bargain that would involve some tax reform as well as entitle changes. that is probably a bridge too far over the next two years. but those are also goals that he shares with these corporate leaders so they will have things to talk about. the business round table is among the more moderate of the major business groups. the white gloves business lobby. so he's got some friends in this room as well as people who funded the republican campaigns

that just took over the senate. >> historically have these conversations born any fruit? >> i don't know how you measure the fruits of that easy things. you are talking about the personal relationships and that is a particular thing. he's had some business round table member, the former owner of the ge was a ally. and so you nurture relationships like that but in terms of actually obtaining concrete action we've seen the business lobbies in general when they have sided with the administration haven't been all that effective in getting republicans, who they share a lot of ideological views with, to go along with them. so i think mostly this is about individual relationships and not likely about pushing any particular objectives over the finish line. >> well it certainly looks like an intimate setting.

we'll come back to you. thanks a lot. in the meantime europe is about to close. >> well the government of sweden has collapsed after just two months and there's been a bit of data in europe. but the big news of course that tomorrow you have the european central bank meeting. ubs announced there will be sovereign qe but not until march. they also say it could boost earnings per share by 10% in europe next year. that would be the biggest in around 17 years. and they believe it will push the europe down to 115. we hit a fresh two year low today as a result of speculation. 123. the other thing is you are continuing to get the rally on the bond markets the yield now

on the italian ten year falling 2% as you can see. downgrades on the russian exposure of certain firms. metro and adidas. russian sanctions become important towards the end of the month with the european summit. if finally in the u.k. the finance minister delivered what they call his autumn statement. they are going to pay off the last of the day owed from world war i. previous governments have found it up economic to do that. he's not balanced his budget which he said he could do in 2010 and people are focused on the stamp duty which is the tax you pay when you sole sell your own home. they don't pay capital gains tax

when you sell your own property. >> tomorrow an important day for the european markets. market participant also watching very closely the price of oil today. >> we are higher on both sides of the atlantic. wdi trading up about 90 cent right now. 67.78. also head lines from dow jones that saudi arabia expects oil to stabilize around $60. not really seeing an impact on the prices here. but gains on brent are slimming and trimming a little bit on the session right now. i want to bring your attention to a couple stealth movers. all the attention has been on oil prices but check out gold today over the 1200 mark. that is because of that weak adp we got this morning.

a stronger dollar capping the gains but significant we're over 1200. nat gas hanging around 3.80. down 12% in one week and that is just because the weather patterns just haven't been as extreme as people were expecting but still it's hard to get short right now just as we're inches away from the winter. lost but not least, copper, trending around 2.87. weakness in asia, the string of information we've ben getting, copper down 8% in one month. >> as we said we are still expecting president obama to address the leaders of the business round table any moment. right now we'll take you to that live in washington. dow is up just a point and a half. and "squawk alley" will be back. how do you beat the number one seed? you just have to win 70% of your points at net. and keep unforced errors under 10%.

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president obama about to deliver some remarks and take am q and a at the business round table in washington dc. and the lineup they had today gives you a sense to just how powerful the conversation will be and how important the topics they will be discovering are. >> frontier communications, talked about net neutrality and what they are hoping to hear will be a measured response to comments out of the industry as a whole. fcc having said they are basically going against the president on this one. the president earlier this year saying that he wanted a stronger policy than many had expected. >> there is labor secretary perez by the way speaking with jack lou, valerie jarrett. we'll watch that very closely. we think the president is just a few moments away. fan favorites like netflix's

orange is the new black have americans seemingly moving away from traditional tv viewing to online streaming. tv viewing has dropped nearly 4% but online video streaming up 60% in the last quarter that. decrease reflects a drop from 14 to 141 hours a month --. >> very important. there is this question out there on comments that netflix ceo made recently. by 2030 will broadcast be dead? will everything be coming over the internet? we'll see. >> let's head to washington d.c. and the president. >> good morning everybody. happy holidays. hope sales are good. i want to spend most of my time, as i usually do taking questions. i want to thank randall and the

rest of the executive committee for the opportunity to speak with you here today. let me just give you a sense of where i think our economy current li is, what's happening around the world and where i think it should be. and the chances for us here in washington to accelerate rather than impede some of the progress that we've made. around this time six years ago america's businesses were shedding about 800,000 jobs per month. today our businesses, including some of the most important businesses in the world that are represented here today have created over 10.6 million new jobs, 56 months of uninterrupted job growth. which is the longest private sector job growth in our his. we just saw the best six month period of economic growth in over a decade. for the first time in six years

the unemployment rate is under 6%. all told the united states of america over the last six years have put more people back to work than europe, japan and the rest of the advanced world combined. and that is a record for us to build b on. at the same time what we've been doing is working on restructuring and rebuilding our economy for sustained long-term growth. manufacture's grown. the auto industry has strongest sales since 2007. our deficits have shrunk by about two-thirds. something that very few people i suspect in the brt would have anticipated in some of our conversations three or four years ago. when it comes to healthcare costs, premiums have gone up at the lowest pace on record, which means that a lot of the businesses here are saving money, as are a lot of consumers. on the education front, high school graduations are up. college enrollments are up.

math and reading scores have improved. internationally our exports continue to hit record levels. on energy, we have seen a revolution that is changing not just the economy, but are also changing geopolitics. not only is oil and natural gas production up in part because of the technological changes that have taken place. but we've also doubled our production of clean energy. and solar energy is up about tenfold. wind energy is up threefold. unit costs for the production of clean energy are dropping down to where they are getting close to being competitive to fossil fuels. and as a consequence we've also been able to reduce carbon emissions that cause climate change faster than most of the other industrialized countries.

so the bottom line is that america continues to lead. i was -- we were talking and i was with his people in bribon australia. and the key point was the optimism that the world felt about america's company. an optimism that is greater sometimes than how americans feel about the american economy. i think what you saw around world leaders was consistent. which was when you ask people now where is the number one place to invest, it is the united states of america. it was china for quite some time. now folks want to put money back into this country. and a lot of that has to do with the fact that we've got the best workers in the world. we got the best university system and the research and development and innovation in the world. and we've got the best businesses in the world.

and so a lot of you can i think take great credit for the kind of bounceback that we've seen. having said that i think we've got a lot more progress to make. and i put nit a couple of categories. there are some common sense things that we should be doing that we're not doing. and the reason primarily is because of politics and ideological gridgridlock. but i suspect if we surveyed people here regardless of your party affiliation that you would say let's get this done. infrastructure is one area we need to make significant investments. anybody who travels around the world and looks at what airports outside the united states now look like and roads and trains and ports and airports now look like, recognize that it makes no

sense for us to have a first class economy but second class infrastructure. and that would not only help accelerate growth right now, it would also lay foundation for growth in the future. tax reform, an area which i know is of great titrate to the business round table. i have consistently said that for us to have a system in which we have on paper one of the two or three highest tax rates in the world when it comes to corporate taxation but in practice there are so many loopholes that you get huge variations between what companies pay doesn't make sense. and we should be able to smooth the system out, streamline it in such a way that allows us to lower rates, close loopholes and make for a much more efficient system where folks aren't wasting a lot of time trying to hire accountants and lawyers

trying to get out of paying taxes but have some certainty and we're able to raise just as much money on a much simpler system. that is something i think we should be doing. trade. in asia there is a great hunger for engagement with the united states of america and the transit pacific partnership is moving forward. michael froman has been working non stop. i've promised his family that he will be home some time soon. we are optimistic about getting a deal done and we are reinvigorating the negotiations with the europeans on a transit pacific deal. if we can get that done it's good for american businesses, good for american jobs and actually good for labor and environmental interests around the world. what we're trying to do is raise standards so that everybody is on a higher but level playing field. and i think that your help on

that process could make an enormous difference. immigration reform, i recognize there's been controversy about the executive actions that i've taken. on the other hand i think the brt has been extraordinarily helpful in getting the country to recognize that this is the right thing to do for our economy. we know it will grow the economy faster. we know it will help us reduce the defense. we know it gives us the capacity to bring in high skill folks who we should want to gravitate towards the united states to start businesses and to create new products and new services and innovate and to continue the tradition of economic dynamism that is the hallmark of the united states of america. i'm still hopeful that we can get legislation done because if get it done it supplants a lot of the legislative actions that i've already taken.

which i'll acknowledge they are incomplete and allow some progress. and it would be a lot better if we actually get legislation done. so the good news, despite the fact that obviously the midterm elections did not turn out exactly as i had hoped, is that their remains enormous areas of potential bipartisan action and progress. and i've already spoken to speaker boehner and senator mitch mcconnell and what i have said to them is that i am prepared to work with them on areas where we agree, recognizing there are going to be some areas where where he just don't agree. and i think one of the habits that this town has to break is this notion that if you disagree on one thing, then suddenly everybody takes their ball home and they don't play. i think that there's got to be the capacity for us to say here

is an area where we're going to have vigorous disagreement. but here are some areas where we have a common vision. let's go ahead and get that done and build some momentum. start working those muscles to actually legislate, sign only legislation and give the american people some confidence that those of us who have this extraordinary privilege of being placed in leadership are able to actually deliver for the american people. one final point that i'll make. i started off by talking about how generally optimistic i am about the economic trends. there are some concerns on the horizon. japan being weak, europe being weak, means that the united states, even as we chug along, could be pulled back by global weakness. not only in europe and japan but also the emerging markets.

so we're monitoring that and working internationally to try to get europe in particular to see stronger growth. but domestically the area where i have the deepest concern is the fact that although corporate profits are at the highest levels in 60 years, stock market is up 150%, wages and income still haven't gone up significantly. and certainly have not picked up the way they did in earlier generations. that is part of what's causing this quiet in the general public even though the aggregate numbers look good. and one thing i'd like to work with the brt on is to ask some tricky questions but important questions about how we can make sure that prosperity is broad

based. i actually think when you look at the history of this country, when wages are good and consumers feel like they got some monies in their pocket, this ends up being good for business, not bad for business. i think most of you would agree to that. and we got a lot of good corporate citizens in this room. unfortunately the overall trend lines though have been even as productivity and profits go up, wages and incomes as a share of overall gdp have shrunk. and that is part of what is creating an undertow of pessimism despite generally good economic news. i think there are concrete things we can do to address that and i'm going to be looking forward to working with the brt to see if we can can make progress on those fronts as well. with that let's open up for questions. randall do you want to call on folks? >> if i could. >> go ahead. >> your comments have been

consistent as it relates to tax reform. we have been over the last couple days talking a lot about what are those things that are most critical for driving job growth, middle income job growth? and it always for us comes back to investment. the more we investment, the more we hire, the more middle income wages growth. and as we think about the things that drive it, you have touched on it and have been consistent. tax reform. to us there is no single factor that could be more important. and the question is do you think it would be useful to have somebody with your administration, within your administration that you appoint and say this is a priority to me. we will work with the individual and congress and just see if this is a priority if we could drive this through. there is a time frame it seems like to us where there is something that could be done. both sides of congress seem to be receptive. so we'd be really interesting to work with someone to help drive

this drew. >> well jack is here. i'm thinking maybe we need to put him to work. let me get a little more detailed about the prospects or tax reform. we put out a white paper, a general concept on corporate tax reform. several years ago when tim geithner was still treasury secretary i think the brt has had opportunity to look at what our basic principles have been. they have been consistent. close loophole, lower rates. we have discussed had possibility of being able to bring in some of the dollars that are trappedout of t outsid country right now. and in a one time transaction potentially use that to pay for infrastructure improvements. i think there is some openness to that.

and when you what we put forward with what dave camp, the current house ways and means chairman put out, his principles for tax reform, there is a lot of overlay. there are some differences but overall conceptually, he also believes lower rates, close loop holes. a minimum tax global that ensures that folks aren't gaming the system but also allows you to be competitive with folks based in other countries that are operating on a territorial basis. so there is definitely a deal to be done. i think too big hurdles that we are going to have to get over. the first is the classic problem, which is people are in favor of tax reform in the

abstra abstract. and sometimes more concerned with tax reform in the specifics. if we are in fact going to accomplish revenue-neutral corporate tax reform is that substantially lowers the corporate rate, then we have to go after some deductions that people are very comfortable with. and there are going to be some winners and there are going to be some losers in the short-term. over long-term there is going to be less distortion in the economy and capital will be allocated more sensibly. but in the serm there are going to be some winners and losers, including in this room. the question then becomes are folks willing and ready to go ahead and make that move for the sake of a simpler more streamlined more sensible tax system? >> because if not it is not

going happen. all of you represented in the room have employees and businesses and plants all across the country in every congressional district. and if we don't have consistency and unity coming out of our top companies then we're going to have -- i this i the likelihood of us being able to get something done is low. the second problem is one that is solvable but is tricky. and that is paul ryan at least in the past has stated that -- and i think that boehner has echoed this. that they don't want to just do corporate tax reform. they are interested in also combining that with individual tax reform in part because they are concerned about pass through corporations not being able to benefit the way larger companies do. and we are actually committed to

provide providing simpler and lower tax rates for small businesses as well. but what we're not willing to do is to structure a tax deal in which either it blows up the deficit -- essentially we can't pay for the revenue that is lost -- or alternatively that you get tax shifting from businesses to middle class and working families. and so when you start introducing the individual side it gets more complicated in terms of who's benefitting, what are the rates, how is it restructured. my view is, is that if we start with the corporate side, it is a

more discrete problem. fewer variable, fewer moving pa parts. we we may be able to get to that done and then we can have a conversation about broader tax reform. they may not be how the republicans view the situation. and that could end up being a hang up. one last point i would make, and this relates to the issue of individual tax reform but it also relates to one of the debates that was taking place during this lame duck period and that is about tax extenders. as a general rule we are open to short-term extensions of many of those provisions to make sure that all of you are able to engage in basic tax planning at least for the next couple years and are not having to scramble during tax time figuring out what exactly the rules are. but more broadly we'd like to see if some of those tax

extenders provisions, including things i strongly support like research and development, are incorporated into a broader comprehensive tax reform package. in order to do that though i also want to make sure that some provisions that benefit working families are included in that package. the children's -- the child tax credit. hugely important for a lot of working families. the eitc, earned income tax credit, hugely important for a lot of working families. something that's historically been supported on a bipartisan basis because it encourages work but it says we're going to do everything we can to ensure you are not in poverty if you are working full-time. there is a college tuition tax credit that benefits a lot of families. sometimes families who get

caught. they are not quite poor enough to qualify for pell grants but they don't have enough money to really manage college costs. so there are going to be some working class and middle class working family provisions that have to be incorporated if we are to extend some of these other tax deductions and tax breaks as well. but hopefully gives you a sense of optimism on my part but cautious optimism. i think that there are going to be some real challenges. but we are absolutely committed to working with speaker boehner and mitch mcconnell as well as the brt and other interests seeing if we can get this done. i think the time is right and you are right randall that the window is not going to be open too wide and is going to start narrowing the closer bewee get

into the next presidential election. which always seems to start the day after the last election. >> mr. president, thank you for being with us. and thank you also for explaining a little bit more what you are thinking about for tax reform. i also want to just underline that the tax extenders until there is some reform that takes place is really important to all of us in this room. as randall mentioned it is about capital investment that really drives income growth for middle class families. our company serves 30,000 communities in rural america so that is important to us. one of the other things important to us is the continuing resolution to keep the government doing. >> me too. >> yes. can you talk little bit about how we make sure we don't have fits and starts again on that subject? >> i've been encouraged by recent statements by speaker

boehner and leader mcconnell about their interest in preventing another government shutdown. and i take them at their word. look, the federal government budgeting process generally is -- how should it put it -- not ideal. ideally, we would have longer time frames, greater certainty. we could be able to distinguish between capital investments that are going to have long-term payoffs and short-term operating expenses. historically that's just not how the budget process has been structured. and since the plane is constantly flying it is hard to get in there. maybe jim has advice how to switch up engines while plane is in the air. so the tendency is just to kick the can down the road with a

series of continuing resolutions. there's been an effort to try to get back to regular procedures and so systematically look through these budgets. there's talk of an omnibus bill rather than a continuing resolution. and i think it will be useful for you to get directly from the speaker what their intentions are at this point. but the one thing i can say for certain is that no one benefits by the government shutting down. and it is entirely unacceptable for us not to maintain the full faith and credit of the united states government. and we just cannot afford to engage in that kind of brinksmanship we've seen. each time that happened consumer

sentiment plunged. it was a self-inflicted wound and we had to dig ourselves back out of a hole despite all the efforts that have been made because people's confidence in the system overall was shaken. so my strong hope is that we don't repeat that. and part of the -- part of the principle that can prevent that is what i already articulated. we have to be able to disagree on some things while going ahead and managing the people's business. and working on the things where we do agree. democracy is messy but it doesn't have to be chooaos. and i've been encouraged by what i've heard so far by statements of republican leadership. and if in fact we can get some certainty on the budget at least for the next year, that then gives us the window to work on

tax reform. the good news in all this is the incredible progress we've made on our short-term deficits. nobody talks about them anymore. i will say that is one of the frustrating things about washington is, you know, people are really good about hollering about problems and then when we solve them, nobody talks about them. we have made extraordinary progress in reducing our short-term deficits. we still have some long-term liabilities that we got to worry about. and some of those problems though have been addressed -- are being addressed by changes in the healthcare delivery system which has been a huge driver of long-term federal d t debt. i think i mentioned earlier that healthcare inflation has gone up at the slowest rate in 50 years. far slower than had been

projected by cbo or by the actuaries for medicare. as a consequence we've already been able to book about $188 billion in savings over the next ten years in reduced healthcare outlays. and i actually think that we can get more done as some of the delivery system reforms that we talked about are initiating through the affordable care act are put in place. so there's good news on the budget. but now what we've got to do is to create a framework in which not only do we keep our deficits low and we're able to start driving down our debt but we're also able to make some core investments that i mentioned earlier. in infrastructure, in education and particularly early childhood education is an area where i think we can make a lot of progress. in basic researcan