çççççççççççççççç çwçwçwçwçwçwçwçwçwçwçwçwçwçwçwç çwçwçwçwçwçwçwçwçwçwçwçwçwçwçwç çwçwçwçwçwçwçwçwçwçwçwçwçwçwçwçw çwçwçwçwçwçwçwçwçwçwçwçwçwçwçwç çwçwçwçwçwçwçwçwçwçwçwçwçwçwçwçñ çwçwçwçwçwçwçwçwçwçwçwçwçwçwçwçw oñoñoñoñoñoñoñ

>> i delivered pizzas on christmas eve where the tips was good but the business was slow and on new year's where business was good and tips were good, too. i helped pay my parents to go to this great school for me to be able to grow and live the american dream. now i have lived the american dream. my mother and father were working people. i grew up in a five-room apartment. they never owned a home. they never took vacations. they just worked hard all the time and gave me a chance to go a great school like this and it

was this education that opened doors for me. gave me a chance to go on to law school. i applied to the northwestern law school on monday and i got my letter of rejection back on a tuesday. [laughter] >> so i didn't go to northwestern but i went to pepperdine in malibu, california. anyone familiar for pepperdine. for you college democrats the president of pepperdine law school is kenneth starr. but i went to pepperdine and if the federal prosecutors want those records, feel free to do it. and if they look at my grades in law school and see what those grades were, they'll see i obviously never cheated on an exam. [laughter] >> now, the topic here is ethics in government. now i know based on what's been said about me and the false

accusations that have been leveled against me that many of you think it's ironic that i would accept an opportunity to come here and talk to you about ethics in government. and i have to confession i believe one of the great virtues in life that one of the great virtues that anybody could have is to have the virtue of courage. i got in trouble when i said it i was governor but i'm not governor anymore so i'll say it now. testicular virility. i believe in life you ought to have test tickler virility. -- testicular virility. [applause] >> if i did the things they said i did and i did wrong things like they want you to believe i did, i'd be nowhere near this event tonight. i'd be 100 miles away. i wouldn't have the chutzpah or temerity and be out of my mind to talk about ethics in government. i have been lied to and you have

been lied to and the media has been lied to. and an ethical question is where have you been and why are you not bringing that healthy skepticism to look into what's happened here? now, i know what it's like to get my college records subpoenaed by the federal government by prosecutors. and i know there are some of the students here on this campus at the medill institute in essence project that have been working to help those who have been wrongly convicted of crimes. get their innocence in dna and other evidence. i can't help but draw a parallel between them and me because that's me pointed out to me. pointed out to me that the cook county state's attorney has subpoenaed the records of those kids who are out there trying to do what they think is right to actually find the truth. at the end of the day when you stop and think about what ethics and what morality is? and i'm here to talk about

ethics in government and i'm fighting back against these forces, fighting back against these powerful forces who have lied about me not just because it's about protecting my family and my children, myself, my good name. and prove to the people of illinois who elected me twice as their governor that i didn't let them down. but also because this great country of ours is a country that attracted people like my father here because it's a free country, a place where you're free to talk and say where you want. a place where the sanctity of your home should be recognized. a place where the presumption of innocence actually matters. and yet with the super sensationalism and the unethical behavior of a prosecutor who lied to the people on the day he had a sitting governor arrested where he said he was, quote-unquote, stopping a crime spree before it happened. and the truth of the matter is, just the opposite. and that will be shown when the

full story is told and all of the tapes are heard. the fact of the matter is, when you open up a can of worms like that and create a super sensational story, it's foreseeable that politicians will run. and it's foreseeable that what happened later on with regard to the illinois state senate throwing out a governor that was elected by the people in a process, you should know, a process that would not allow me to call witnesses unless they approved them. we submit it to the illinois state senate 40 witnesses we wanted to call including the president's chief of staff rahm emanuel and harry reid, including united states senate bob menendez including congressman danny davis and i can go on and on. and do you know what the illinois state senate did? they said i can't call them as witnesses. we implored the state senate to play all the tapes and i hadn't heard except by a few snippets and they played a couple to

create an environment but they didn't play the full context and allow you or the people to hear what the whole story was. so i say without knowing what was on those tapes 'cause i know me and i know that i don't break the law and i know that i'm going to operate honestly and i know that i'm going to ask questions especially -- especially with my top advisors and my lawyers, i know that i did nothing wrong. in fact, my only concern was some of the profanity i may have used in those private conversations. [laughter] >> that, unfortunately, i'm guilty. i said some bad words. i didn't know anybody was listening. they were conversations that were, i thought, private and i was expressing some of my frustrations and some of my views. and even though i went to a great school like northwestern sometimes you can take the kid out of the neighborhood but you can't get the neighborhood out of the kid. and some of those words that you use -- or i use anyway, i should find some adjectives to replace them.

i should say baseball trune and instead of m.f. cowered but that happens to be part of the full story is. but the last i checked that is legal conversation and that's just legal talk but back in the senate proceeding i wanted those tapes played and they said no. this is before we even heard them and then we advocated releasing these tapes just recently. i directed my lawyers, directed my lawyers to petition the court, petition the court and have an agreement with the government that at the trial both sides agree that either side can play anything they want on those tapes. i have a constitutional right to try to suppress the evidence and try to challenge the existence of those tapes. they secretly taped my phone conversations in my home and in other places. but i'm more than happy to waive that constitutional right. in fact, i directed my lawyers to waive that. play all the tapes. play the whole story. and nothing but the whole story.

and i challenge the government, my accusers, if they are on the side of truth and justice, which they say they are, and if, in fact, this was the crime spree they claimed it was, then they shouldn't hide behind technicalities either. they should agree to play all the tapes. that's where the truth is. and do you know what their answer was so far? no comment. no comment. this story is upside down and i would implore the journalists who are teaching here at the medill school of journalism. does it really make sense that you would arrest a sitting governor and claim there was a crime spree and you're stopping it before it happened? now, i was a former prosecutor and i know enough to know that when you do surveillance and you're hearing two people talking or three people talking or whatever the case may be and there's the possibility that a crime is going to be committed, law enforcement and prosecutors don't jump in and stop it before it happens. they follow it.

their appetites whetted and then they pounce on that event then they do what they're supposed to do and they've got the two caught right there. if this was the sale of a senate seat which has been alleged for personal gain, then don't you wait for me and the senator to do it. and then if you want to grandstand and have a big, big press conference to get your name out there, don't you then wait for the two of us to announce it and then you get both of us? isn't that how it's supposed to work? and yet that is not what happened because that's not the truth of what happened in this case. and when all the tapes are heard, you will see i have been lied about. you have been lied to and a governor was ripped away from the people who was twice elected by the people. and i miss being the governor of illinois. when i was elected in 2002, i was the first democratic governor elected in 26 years. i ran on a platform to change things. and i respect dan rockoff for

his opening comments but the premise is wrong and what he said is wrong. the fact is we brought landmark ethical changes in illinois for the first time under me. we passed a law in november 2003 that created an independent inspector general to police the governor, the governor's office and to police the system in springfield. an independent inspector general and an ethics commission. never done before in illinois politics. when i promised to change business as usual and let me tell you with a it's like when you're the governor. you ask yourself a question. what's your obligation to the people? what is your ethical and moral obligation to the people? when you get elected to a job like governor. i've been a congressman for six years. legislator, a state rep for two years before that, a legislator. but i never had an executive office. and when you're elected governor of the fifth biggest state in america and you're the chief executive, you're in a position where for once you can actually move an agenda. you can drive an agenda and you can get of things done for people and then the question is from a moral standpoint, do you

try to make pals with everybody and kiss and become part of a buddy system which exists in springfield today? has existed for more than a generation, a corrupt status quo that benefits itself on the backs of the people? today you have an illinois house speaker, young andrew madigan used to be president of the college here. and his dad -- while he has a power not to call legislation at the same time he presides over a system with glaring conflicts of interest. he's become a millionaire attorney. and representing several millions. the "chicago tribune" fortunately has now started into what he does. and when he saves money for his big downtown clients he shifts the tax burden onto homeowners because mike madigan is taking care of the big wealthy clients he's representing on those clients downtown. and when the assessor wants to pass legislation that would provide property tax relief and

increase some of the caps and the exemptions for the assessments that would help homeowners and shift that burden off the homeowner onto those big clients of madigan's what does madigan do? he single-handedly doesn't call the bill and lawmakers don't have a chance to vote yes or no. and why? because that would hurt his clients and he collides his private interest with his public responsibility but i'm here and he's not. something is upside down. the current senate president who happens to be young andrew madigan's godfather's mike madigan's son is the god son of the senate president. it's a family affair. it's a family affair. as was rightfully pointed out just the other day is the illinois state senate president and what does he moonlight as? not just a lawyer who also has a real estate tax business like madigan representing those clients downtown but how about registered lobbyists? now something is upside down here.

here's the senate president who's also a lobbyist paid by clients who lobbies the senate president. now, that's a short conversation, isn't it? he could probably charge a lot of money to his clients because look i know the president of the senate. i can probably get you a good result. and yet i'm here and they are there. i fought that system. they passed phony baloney ethics trying to band fundraising from contractors that only limited to the governor of illinois. that was a good first step and what i did i rewrote a bill to apply that to all of them, me and them. and while i was at it, i wrote a provision in there that said you have to disclose who your clients are. mike madigan, we have a right to know who your clients are we the people. john cullerton, we have a right to know who your clients are we the people. one minute. and yet the reality is they overrode my veto and took care of my system. we passed healthcare reform in illinois. every child got healthcare under me because i pushed and prodded

that system and wouldn't take no for an answer. we gave senior citizens free public transportation in illinois. i couldn't get the legislature to do it. so i went around them. and when they raised sales taxes on people i rode in a provision as a amendatory veto to give free citizens transportation. i promised not to raise taxes on the people and these politicians in springfield thought it was baloney and when you break that promise and raise taxes you get more money into a system that feeds the insiders and does it on the backs of the people and i wouldn't do it. preschool for all in illinois. $8 billion in public school education. but not by raising taxes. instead, taking the people's money, 53 to $60 billion of it and moving it around. that's the morality of what you're supposed to do as governor. state government is not exciting. it's mostly about the money. who pays it? and where does it go? and it's about your priorities. a book was written about budgets

being moral documents. it's a moral document. it tells you what you believe in. it's an expression of what you think is right and more important it's something else. my investments were for children. my investments were for families who needed healthcare. my investments were for education and to help senior citizen and see a lot of times i had to work around gridlock to get it done but i wasn't going to do it on the backs of people. we closed corporate loopholes and reduced the size of government, in short we made the lobbyists and the special interest angry but we did more for people by changing the priorities of the state. >> thank you for joining us. >> on the ethics of my years as governor. thank you. >> thank you. [applause] >> will you join us on the panel? >> oh, yeah? are we taking the questions here. >> yeah. >> are we on? can you hear me? >> yes. >> first, i want to thank you,

governor, for accepting our invitation for being here this evening. some student comments posted online thought it was a terrible idea bringing on you campus because they thought having a conversation with you about ethics was akin to bringing tiger woods here to talk about fidelity. [laughter] >> i'll take a moment -- i'll take a moment to correct that notion. as i see it this evening is meant to be a learning experience for the students, to show an example of what happens when citizens take their hands off the wheel of democracy. and while the people that we elect to hijack that democracy for their own ends. our preamble states we the people not we the politicians. citizens confer legitimacy on government not elected officials and only when all citizens vote and are engaged in democracy can we retain control of the various governments that we the people created. we really do get the government we deserve. unfortunately, at times it's not always the government we want.

so my first question to you revolves around that. first of all, let me state that obviously you are innocent until proven guilty in a court of law. so what i would like to get a sense of innocent or guilty is a question that i pose to etch aof my students and that is what's your definition of political corruption? >> well, that's a good question. the strict interpretation and the strict definition would be doing anything that is against the law and illegal. there is a broader term, though, from an ethical and moral standard and that's what i call the corruption test. and while things may not be strictly illegal and some of the things that mike madigan and john cullerton and john quinn my successor doing in government is not illegal. people are paying higher taxes and they are not getting as good a government because some of these acts are ethically bankrupt and ethically corrupt.

and the reason it's legal, for example, for mike madigan to operate and john cullerton to operate as lawyers representing clients where their public duties collide with their public interest is because these are the guys who make the rules and so when they make the rules, you know, they make it so that they can legally have clients who have that -- those kinds of conflicts. but i believe that is a form of corruption. not illegal strictly but ethically and morally corrupt and morally bankrupt. and it was those sorts of things in that system that i fought. and again what's so ironic about it, professor, is that this whole story is upside down. and when i'm vindicated in court, you'll not only see that that system was corrupt but these allegations and some of the dynamics behind that will be also, i think, subject to review and the ethics and the case.

>> the common thread of my student responses are to act in one's personal interest at the expense of the public interest. what we talk about is that corruption comes in many flavors but it's also at times legal which is sort of like perfecting the art of operating within the boundaries just inside the boundaries of the law. my second question is in regard to that because this goes back to 2002, just before you ran for the first time. in the illinois campaign for political reform at that time had uncovered roughly $650,000 in donations from just four construction companies. all of them controlled by a close friend of yours, chris kelly. cindy canary who's the executive director of icpr said it demonstrated a pattern of multiple large and coordinated

contributions from companies doing business with the state. and she wondered why a candidate, that would be you, was promising to root out political corruption raised such huge sums of money from those who did business with the state. so given your previous response about dancing just inside the law, is this the kind of behavior we should expect from a reform canada? and do you really need a law to tell you that maybe, just maybe this wasn't quite ethical behavior? >> that's a great question and there's an ethical issue here. obviously, a legal issue and there's a larger moral issue. this is a very important point. and let me start out, professor, you'll agree that that allegation is legal. it is legal to raise money from contractors under state law. and it was until somewhere around the fall of 2008 and then it was banned for the governor but it was allowed for the legislative leaders, the lawmakers and other elected officials. i mandatoritorily vetoed that including all of them and me.

so i was prepared to change the law. having said that that's the law and those are the rules and it's a very competitive business in politics. when president obama, for example, makes loose assessment the ambassador and lou sussman was a big contributor to barack obama and he raised me money and the president makes this guy the ambassador, that's within the rules and the law. now, when you're fighting an entrenched system with cynical politicians like mike madigan and cullerton who like it the way it is and these guys have been there. governors come and go but these lawmakers stay but if you're committed to keep your promises to the people to push and prod and fight that system by changing where all the money goes. remember, this is a fight over money. you're talking about billions of dollars and when you're starting to move money around, the people who like it the way who was who is representing by lobbyists and special interests, they don't want you to touch the money and there's consensus in springfield certainly among the democrats, my party to raise taxes on

people, they want more of the people's money. and you're determined to keep your promise not to do that, but at the same time professor, you feel you have a moral obligation but move forward so you want healthcare for every child which we got. you want to give preschool to 2 and 3 years old which we expanded and money in public education. i went to public schools but you don't want to do it on backs of taxpayers. you got to figure out -- you have the law that requires constitutional law which requires balancing the budgets, now you're going to be in there and your decision is you want to play ball with them and do what they tell you to do or raise taxes on people or fight the special interest. so we took on the trucking industry and we raised fees on them to pay some of this because the fees on the trucking industry were lower than comparative state. close corporate tax loopholes. i found 700 checking accounts in illinois government that still exists with $3 billion in surplus but they're protected by special interest groups. we took those on. and found the money. for six years i didn't raise taxes on people.

but i put a record amount of money in education, gave more people healthcare in illinois than any governor in history than the united states of america but protected taxpayers and what gave me the ability morally to fight that fight, professor, was that you take the political hits. they criticize you for fundraising but as long as you do it legally then our position to fight these people and not take your marching orders from mike madigan or mayor daly and the political powers in illinois that have beening the shots. -- calling the shots. those who study the classics may recommend those who wrote the history and i apply this to politics. it's about power. power is in question only among equals. the weak will do the bidding of the strong while the strong will forever exact their wills. i knew what they were going to try to make me do to the people and i wouldn't do it. and i wouldn't settle for it and i raised a lot of money legally, legally to be in a position to

be able to be independent and fight them. and we have healthcare for all of our kids because part of the political deal was i had to offend some of my biggest fundraising supports the trial lawyers association because that was the deal with madigan and emil jones because if we pass caps on damages they would pass all my kid healthcare. if you're doing things for families and helping a small child be able to see a doctor and you're following the law in fundraising is that the moral thing you're darn right and those who talk about ethics but don't do anything in people and call them in and ask them about their ethics and their morality. >> i want to clarify this -- [laughter] >> at that time then -- [applause] >> getting back to the original question, so at that time then, the -- what you're saying is that what happened in terms of taking those funds in terms of moving the funds around with the democratic congressional committee and going back and

forth with that -- since it was operating within the law, right, then operating just inside the law is okay if the end result is that you're going to end up doing good things. so that to me is part of your definition of what that means in terms of ethical behavior? >> you guys got a second in history. >> maybe we'll have a chance to be able -- >> okay. but let me tell you one thing. you have to understand the great accomplishments in american history have happened because you recognize that unfortunately the politics is the means to do good government. we have the nation's exam in washington, d.c., today. do you know why? because thomas jefferson and alexander hamilton and they hated each other like madigan and i did, they cut a political deal. hamilton got jefferson to put democratic votes on. an assumption the federal government assuming state debts in exchange for those votes.

hamilton put federalist votes and jefferson in the capital in washington, d.c. the end result was a political deal but the end result was good for the people of washington, d.c. i'll give you more examples. >> i've got two questions where i want to go with this is in bracketing your rise to power from very earliest time to law school to just recently. your actions over the years to some extent contradict the characteristics of a reformer and i would like to understand a little bit of the profile of someone who's been what i call deep in the belly of the beast of illinois politics for over 20 years because actions tell us more about someone than words. your career appears to get a jumpstart back in the early '80s when you clerked for the infamous alderman eddy known even then as fast eddy. and your first job out of law school was working in his law firm in 1983 if i'm correct. just when harold washington was becoming mayor and for those of

you who aren't familiar with haro>k1ñ washington, harold was chicago's reform mayor. and you were going -- and you were going to work with one of the most corrupt gray wolves in the city council. a man censured twice by the illinois war and the anti-washington bloc. and in 1987 when it was obvious that a washington was a reform candidate you chose instead to work as a campaign aid in the run for mayor against harold. my question, please, give these students here a little career advice and tell them how you an nu grad and fresh out of law school pepperdine came to make the choice to associate yourself with verdoliac who was even was part of corruption would be a better mayor than washington? >> that's a great question. when you have the perspective of hindsight and again, more when

you're older and you have experience to learn more about how government works, you know, obviously if i was given that choice today, i would support these are the things harold washington would have applaud it. i don't know vrdolyak would have agreed to it. he probably wouldn't have supported it. let me explain the vrdolyak. his name is fast eddy. >> still is. >> my mother was a ticket agent and my dad was a factory worker. we didn't know anybody and through a mutual relationship with a yugoslavian committee and i'm serbian, he asked me to work

in his office after law school and i was flattered to that. when fast eddy pulled a fast one on me because there was no job. i thought he did me that favor in the corporation counsel's office and he was running and i felt -- if i could i could help him out and what i did was i represented a minister in an african-american church on the south side and i was able to get him a chance to speak there. >> you had no sense at that time that he was tainted, that he was corrupt? >> he wasn't corrupt until just now until he pled guilty. >> no. he's been corrupt for a long time. it's a conclusion a lot of people in this city think. again, professor, with all due respect you're going to call him corrupt because he's got a certain reputation and i'm not saying he was the kind of guy, you know,mpt that was reforming doing the right sorts of things. he was an inside guy quintessentially so and he was very much at home in the system that i fought.

i don't disagree with that. corrupt in a moral sense you might be right but in a legal sense until he just recently did some things admitted to his -- >> let's jump forward a little bit here. in 1980 you had your picture taken with a politician who had intrigued you, richard nixon. most saw nixon through the actions of the people he surrounded himself with and brought his presidency down, mitchell, halderman and others. he was corrupt in the evidence of the people he surrounded himself with. the irony is this is that your political career had some similarity to nixon's is that you chose to surround yourself with people who have since been indicted and convicted. and we know a lot of familiar names. 13 were indicted in operation board games.

so my question is whether you're found innocent or guilty how do you explain your association with so many people who in the end were corrupt? >> that's a valid question. that's a fair question. [applause] >> but it's not a lot of people. it's not a lot of people. you mentioned tony resco. you're right about tony. i misunderstood tony resco and so did president obama and when you talk my brief association with him. president obama and i saw resco and i thought he was an honest businessman. and he assured me he had no business interest with the state of illinois. i never knew he was the person he turned out to be. nor did president obama, i'm sure. in fact, you know, there was a highly publicized situation where he helped president obama buy a lot of land next to his house in hyde park. i'm sure the president didn't know just i didn't know it. so yeah we make some misjudgments. the question is what do you do when you learn about those things and when we learned there was some issues we made the appropriate adjustments and

everything we did was under the advice of lawyers to make sure i acted appropriately. with regard to some others who were close to me, how are you supposed to know that someone is working for you is doing some things that, for example -- i can't talk about the facts of the case but how do you know when you have somebody who's taking bribes and when you take bribes by definition taking cash that's a secretive kind of things. you don't disclose those kinds of things and you appropriately act and make adjustments. if you look at any administration in any kind of high place unfortunately and james madison wrote this in the tenth federalist papers if mens were angels there would be no need for governance. >> or governors. >> you do the best you can and put in systems to protect that. i put an independent inspector general in place to monitor my own administration and when i learned there were some issues with tony rezko i directed my chief of staff to take him to the inspector general's office. >> i have some questions but i

just wanted to make a comment. there's no others beyond rezko but i'm not sure i buy all this but let's pass this on. [applause] >> before i get to my question i've been asked to give a very brief view from a legal perspective obviously a legal perspective that has nothing to do with the case against governor blagojevich but just having actually sort of read through the 100 pages plus of the indictment and some of the and some of the relevant legislation i just want to point out a few things. so the indictment is over 100 pages but it's not because there are over 100 pages of allegations, though, there are a lot of very specific allegations. what we have is a lot of -- a bunch of allegations repeated about five times throughout the

indictment because they're being charged a whole bunch of different pieces of legislation. so that there won't be any technicality defense essentially. so that any specific legislation with any problem so you might have heard about, for example, the honest services fraud law that's under constitutional challenge for being too vague. the prosecutor came back out and reindicted so as not to have to rely on that sort of law. and if the allegations are true, then certainly we won't need a law like that because we're so far beyond that if the allegations are true because the charges are essentially a bribery, extortion, racketeering and then a cover-up of lying to federal agents. so the allegations are in terms of the bribes, in terms of what was offered there's appointments to boards and commissions, awards of state funds, which is, of course, if it is true and given the budgetary state of

illinois it's particularly unfortunate. and enactment of executive orders and, of course, the appointment of the united states senate position. and then in return, the allegation is that there was -- what was thought was straight up monetary gain, campaign contributions and then employment for friends and families such as the governor's wife and brother. so we really got a situation where there's -- on the facts as they're alleged in the indictment a direct quid pro quo so not just a denial of honest services, something a little bit amorphous but actually you give me money, and i'll give you an appointment. and now there's been a lot of focus on the senate seat, obviously, 'cause it's a senate seat and particularly it's president obama's previous position. but it's actually -- that would actually be the hardest part of the allegation to establish because it was stopped prior to this sale, the alleged sale actually going ahead. but in contrast, if the facts as

fitzgerald presented them are true, i think that things like extorting a children's hospital for $50,000 in order to release $8 million from funds is actually a lot more shocking and is actually that's going to be -- that's going to be easier to proof. -- prove. so how would we go about proving it. we've all read about the excerpts from the tapes and some of the statements it's a bleeping valuable thing. we're not going to give something. if i don't get something of value i'm going to take it for myself and i'm not just going to give it up for nothing. living in australia i don't care of the language used. i'm used to it. [inaudible] >> but any lawyer worth their salt should be able to come up with an innocent explanation for this. and i think the governor previously had said well, i

could have been referring to -- to helping people to get me to pass public works programs and jobs programs and so on. and jurors -- well, a, they can apply their commonsense and say, yes, there's a possible innocence explanation for what we think is likely given other evidence from coconspirators and we'll have targets and the people who were targeted according to the allegation will actually help exonerate him. but then other things like, okay, so the governor knew he was being taped at this point. he explicit acknowledged it in 2008 and yet this is what he's saying on the phone, you know, what might he actually have been saying on the phone. is there just so much corruption endemic in illinois that these things are something that he thought was okay to say on the telephone that was being bugged. so jurors can sort of apply that kind of commonsense. all right. in terms of the questions i want

to get to, what i want to do is ascertain where exactly we can draw the line between what is legitimate for a governor or someone in a another official position to ask for in return for something, say, like an appointment? and what's illegitimate? so vote-trading, for example, i mean, we saw in the recent healthcare debate ben nelson say, i want pork for my state or i'm not going to sign on to healthcare. you might think that's legitimate particularly given your comments depending on whether you're doing policy good but can we draw a clear line and how do we draw the line between that and something like actually money for a campaign and then maybe another line between that and money in a brown paper bag. >> right. that's good. i can answer that. how much time do i have. and with all respect, professor, there's a couple of misstatements. not once in any of these allegations have they said there's an expressed quid pro quo not once. and the law is very clear on fundraising the mccormick case

says you can't say give me $50,000 in exchange for that i'll do x public work. they're not even alleging an expressed quid pro quo so that's not accurate. >> okay. can i ask you about a specific allegation that's made because i think they do explicitly say quid pro quo. >> not when it comes to the fundraiser. >> not through tony rezko but there's specific allegations saying that, for example, there were multiple cash payments made to your wife in return for -- >> that is not true and that is not an allegation. my wife worked for tony rezko and i'm not supposed to talk about the case. let me point out, everything we earned was disclosed.go( and these allegations again -- let me say something, okay? these same people that are saying these things -- one of our earliest court appearances they said -- they acknowledged i was indigent in open court the prosecutor told the judge he's indigent. now, if i'm on some crime spree and if you're to believe some of these phony allegations that are

being made, you really think i'm so stupid that i don't have any money? i mean, i went to northwestern if they're saying about me what are they saying about you? the fact is these are preposterous allegations. >> the point is you have $2.7 million in campaign funds. >> hold it. campaign funds is different. >> $25,000 in cash plus $25,000 -- >> no one is alleging that. >> and there's another allegation, refinancing billions of dollars in the illinois pension funds that tony rezko is supposed to have arranged at your request. so lots of things that are explicit quid pro quos and there are actual financial numbers on them. some of them are cash and some of them are for your campaign. so whether the allegations is true but certainly in the indictment is quid pro quo. >> they are not saying expressed quid pro quo for financing and that's a requirement in the law. beyond that let me simply say the best evidence when you have people saying things is what did they really say?

and there are hundreds of hours of secretly taped conversations. my telephones were taped. my home phones for six weeks. my cell phones, my campaign office phones, the phones of advisors and staff and others were taped. now, i have said play all the tapes. i've instructed my lawyers to go into court and attention the court and have an agreement with the government that we agree to play all the tapes so the full story is here. the irony here is just so you know who's lying, the accusers who took some of those conversations off the tapes and took snippets off them have gone to court and have a court order preventing those tapes from being heard by the public or being heard or allowing me to tell you exactly what's on those tapes. so i can tell you f-ing golden they don't tell you what the next sentence is and the context of that conversation. they misled the public and i want to read from you a case. 1934 united states supreme court governing the ethics. this is the case that governs what prosecutors are supposed to do. i'm a former prosecutor.

the government's role in a criminal prosecution not that it shall win the case but that justice shall be done individual prosecutors role is the servant of the law with a twofold aim. guilt shall not escape nor in essence suffer. the prosecutor may strike hard blows but he's not at liberty to strike foul ones. >> but we haven't had the case yet. >> but you're buying into it and you're stripping from me the presumption of innocence. >> you denied whether there's an allegation of quid pro quo in the indictment. i have no idea if it's true or not. i'm not privy to the private information that you are but i can tell you what i read in the indictment. i have -- >> the indictment does not say expressed quid pro quo -- >> i mean, i can give some more examples from the indictment if you would prefer. >> go ahead. >> but what i really prefer is that you answer the original question. what is legitimate for a governor and an official to ask

for? is it okay to ask for votes to go a particular way and i'll give an appointment in return? can we draw a distinction between that and asking for money for yourself? is one okay and the other is not? >> let me ask you if you take a public act and you're going to benefit financially and take financial gain for a public act i mean, the laws are pretty clear about that. and, unfortunately, all too often in politics today, you can see examples of political officials who have public acts that they do. in the cases i gave you and yet they benefit personally because they make the rules. >> does personally include campaign finance payments? >> campaign finance payments. let me give you an example. i'm pro-choice. i fought hard to protect the reproductive rights of women. because of that position, including going around the legislature and using the executive powers of the governor to stop pharmacists to

dispensing birth control. i support reasonable gun control laws and are you to get that the police association contributes money to me because they like my position i'm on gun control that's perfectly legal. >> if the correlation spousal maintenance way around. >> as well as there's not an expressed qu-- quid pro quo you have then broken the law. >> okay. so if they give you money because they like your position that's one thing. the positions change because of money given then that's the wrong -- okay. good. >> that's moral what you're saying but -- you probably indict the senator and the congress and the president. here's an approach that's normal and routine. hillary clinton and barack obama are fighting it out for the democratic nominee for president and on the eve of the convention the democrats -- obama is ahead so there's a political deal. he agrees to make her secretary of state. now, hillary clinton is qualified.

but he's not henry kissinger or brzezinski when it comes to become secretary of state and he agrees, obama to raise her $10 million to retire her campaign debt that the clintons personally, personally lent to their campaign. that's typical routine politics at the highest level and you should ask them whether or not they think that's appropriate or not. >> so does the fact that something is common in politics make it okay that the fact that we live in an incredibly corrupt state? >> yeah. >> does that make -- if you actually change your vote on a piece of legislation or on an executive enactment in return for campaign funds does that make it any more ethical or legal? >> you're asking me the law is what the law is. the law is legal. that makes it legal. does it from a moral standpoint what the right point is. if you believe in your heart in raising campaign funds to fight for people and get things done for people and if i wasn't good at it every child wouldn't get healthcare and kids with cancer

wouldn't be ableb4 to see a docr but i was in a position to get that done. >> so you're saying the ends justify the means? >> no. as long as you follow the law -- >> that's against the law. if you're going to say it will not change my position on this vote if you change -- >> no that's an expressed quid pro quo. i didn't understand her question. >> what about if the governor agreed to -- he promised to look after someone's business interests if they donated money to the campaign? if they used state powers to look after someone's business interest? would that be -- would that be ethical? >> let me say that -- so if you're saying is it -- is it ethical for the president -- president bush and the congress to vote in a bipartisan way to bail out the big investment banking firms who caused the economic collapse, i don't think that's the right decision. i think that's the wrong decision. but $700 billion of our money

went to bail out goldman sachs, and some of these big investment firms and now they're paying themselves big bonus and the promise was they would lend money to homeowners on home equity loans. i don't think that's right. i think it's the wrong decision. the new decision did the same thing. they are not lending money for small business. they are using government and they're using billions of dollars of our taxpayer money to actually help industries and several businesses individually so evidently it's legal because they're doing it. >> i have one question i've been told you have to give a short answer to. is that you're appearing on reality shows and you've tried to appear on other reality shows. and some people criticize this as trivializing the office of the governor as an ex-governor. and i'm wondering is this part of a deliberate legal strategy to perhaps appear a little trivial so that the charges against you don't seem so serious? >> no. let me answer that. i would have never imagined ever that i would be a celebrity tv person.

in fact, when i was governor i never watched them. but here's what happens when the government abuses what it does to try to get somebody who's innocent. they not only break the cannons of ethics as prosecutors and strip away a presumption of in essence set in motion, false accusation in a sensational way that the media will buy into and create a dynamic that it's impossible to fight against. that then leads to your removal from office and by the way i was offered -- and you should know this. i wrote this in my book. before i was thrown out of office before before i was thrown out of office i was offered by legislative leaders an option if i voluntarily incapacitated myself i became the nonacting governor they would pay me my full salary as governor and allow me to keep the security detail that protected me and my family for six years. that's $170,000 for two years of taxpayer money. all i had to do to agree was step aside and not be governor acting. let quinn become the acting governor and don't appoint a

senator. now, if i'd done that that would be admission of wrongdoing not to mention the fact and i felt that was unethical how could i be incapacity of government taking taxpayer money and i turned it down and it was implied you don't take this we're throwing you out of office and then if you send a senator to washington, which by the way i had a constitutional duty to do, to not make a senator after i did nothing wrong and i'm not going to be thrown out -- chased out of office on false accusations to a witch hunt to me not doing it with a duty of my governor. now, you got the government bringing these cases and what they try to do is squeeze you financially. and that political dynamic then cost my wife her job where she was working to epi. the homeless so she lost her income. i lost mine. and now suddenly we have no income. we have two little children. 6 and 13. they were 5 and 12 then. they're in a private school where they like it. we have a home like most people. we owe a lot of money on it and so now we have nothing. we have nothing.

and like the prosecutor said, this great crime spree i'm indigent. and then when you have this in your life and people just jump to conclusions when they write things a certain way and people don't scratch the surface and the media isn't doing its job is to ask some reasonable questions like could it be possible and the friends who knew you the day before well, they don't know you the day after. they don't want what they have in your lives and so you can't make a living and we were fortunate -- unlike most americans who lost their jobs and are facing hard times who are struggling and we're not alone. we have a lot of company unfortunately unlike them these unique opportunity came. -- opportunities came. one was to go in the jungle to eat bugs and i couldn't do it but my wife did it. not something we would choose but necessity compelled they know i had this opportunity on the trump show. and one of the benefits is you get to raise money for charities you care about and both pattie

and i were active in helping the children's cancer center. it's not at all a strategy. it's a necessity. they strip your job and they try to screw you financially so you can't fight back 'cause they try to compel you to admit the things you didn't do. and if we have more time on this panel i want to read another case -- >> no. my turn now. >> okay. >> thank you, governor. >> my turn. [applause] >> so i was going to ask you a question about what you're doing for support but i think i need to defend the media a bit first. the first thing i want to do is just on behalf of the students for the innocence project, some of whom -- well, all of them were medill students they're trying to right a wrongful conviction and they're working very hard to do that. and i think they might take umbrage at being put in the same situation in saying their situation is analogous to yours

with all due respect, while they are, in fact, looking for transcripts apparently from both of you, this is the first i've heard that the prosecution cares about your performance here at northwestern. i'll take your word for that. >> right. >> but these students are not being accused of any crime. and they don't stand indicted so i don't think the two situations really are analogous. [applause] >> i just wanted -- i just wanted to put that on the record. >> hold on. i did not draw that comparison. the comparison was their records were subpoenaed like mine. that's all. >> okay. >> the college records. >> thank you. >> right. >> having gotten that out of the way, okay. so you keep accusing the media of being unfair and sort of -- i guess i want to ask you this question. do you think that you're in the situation you're in today facing this indictment, this federal indictment, multicount because of media unfairness or because of something that you might have done or some conspiracy or -- i

mean, what is it -- what is it that you're really saying? do you think the media put you in this position? >> of course not. the media was lied to. and you were lied to and you have an obligation and i was lied about and you have an obligation to find out the truth. unfortunately today's media and i could lecture on this ain't what it used to be. >> that's what i do. >> yeah. [laughter] >> where's woodward and bernstein. i'm advocating all the tapes be heard. do you know who my first choice mike madigan's daughter. ? rahm emanuel, dick durbin and a lot of senators and people i talked to about this, in exchange for that i could put 500,000 people to work and expand healthcare for 300,000 families and have a guarantee by her father not to raise taxes on people. i also thought i might get a law that would cover preexisting medical conditions because he was blocking that and a law to keep people getting kicked out of their homes too and make sure -- >> so -- >> so what happened was on the morning before i was arrested i directed my chief of staff to do it.

and those people heard that and funny next morning at 6:00 am i was arrested. the true story behind this and someone is lying where they stop at a crime spree or a senate seat was being sold for money or was a super political deal that would do a lot of good for a lot of people stop before it happened by accusers who were lying. the tapes, the tapes tell what the truth is. i say you should hear all the tapes. my accusers went to court and are blocking those tapes from being heard and where are you in the media with all due respect to push and prod and get those tapes heard? when richard nixon in watergate -- and i'm the anti-nixon. i met nixon. he's a historical figure but i'm the anti-nixon. nixon did everything he could to block those tapes from being heard and right until the end, professor, remember the united states court ruled unanimously release the tapes, okay? and then he realized he did something wrong and he resigned. i'm the opposite. play the tapes. they will prove me innocent. >> so you're saying if we hear those tapes we're going to find out that lisa madigan would have been the senator of illinois if

you hadn't been arrested? >> you're going to find out that that was the decision and the direction i gave. i can't talk about the specifics on the tapes but i recall that i know it. i know what i was doing. and i believe if -- if i was given a few more days and we got that going, that would have happened and none of this would have happened. i do believe that. >> that's interesting because i just you will not -- she chose not to run for senate. >> she knows not to runny wonder why. why don't you look into that? where's the ethical obligation of the media to look into the truth. now, you talk about government -- >> you don't think that the media have been looking into this? you don't think they've expended an enormous number of resources? >> no, why are you not looking at the accusers. well, me, sure buff what about the accusers. someone is lying here. the tapes tell the truth. why are you not advocating that you get to hear all those tapes? what happened to woodward and bernstein? >> i think the -- i actually think the media would be delighted to hear all those tapes. we might run out of time but i think we'd be delighted to hear all the tapes.

the media are not blocking the tapes. >> aren't you supposed to find the truth and get the facts? isn't that an ethical obligation of the media? >> can you tell me one single story that was specifically inaccurate and what those inacare the -- inaccuraties? >> i'll tell you what -- >> my question with all due respect is, governor, if there have been inaccuracies in the media by particular reporters or particular outlets, you know, particular media, the tribune, the "sun-times," the "new york times," the, you know, television, msnbc, cnn, cbs, tell me what those stories were? give me a detail that's inaccurate. >> again, if you remember, professor, i said that what the media has failed to do is to

bring that necessary skepticism that the fourth estate must bring for we the people in a democracy to live in a free country. and that you're simply accepting what the government, the prosecutors are saying and you're not raising questions. even though i've said over and over again you should hear the tapes. and i'm shocked that you guys are not pressing the powers that be that get the evidence and hear the tapes. you have really want the sensational story? when you find out what happened in this case you'll have your sensational story. so go after it. the problem is it's all now driven by, you know, the 24-hour news cycle and you can't be trumped by the other tv station or the other newspaper. and so you guys all follow the same story line. you got a story line here. i'm saying someone is lying. the tapes tell what the truth is. >> actually i think in your case the media did not all follow the same story line at all. i mean, the tribune went on a crusade really. and part of that crusade was trying to get a law passed in the legislature that would law

for a recall of the governor? >> where are they now on recall. they're not pushing it? >> oh, i think they still favor it. >> they do one editorial. they leave it alone. that's not going to make these politicians pass a recall bill but if they stay with pat quinn who says he was for it and press them over and over for recall he might do it because he's up for election. press the issue. >> would you favor a recall vote? >> yes, yes and i favored the recall when they were trying to recall me. i wanted it applied to everybody. they had a recall law that the tribune supported but it made it impossible to recall almost anybody except the governor. so you should recall everybody. i believe in recall. i also believe it's necessary to break up that gridlock -- that status quo in springfield that's incestuous that has been in business for the past generation or more not doing the job of the people. ..

>> as a junior congressman, and i sat there in classified briefings, and the top brass of the military came to us. colin powell came in, and under oath they are saying in iraq has weapons iraq there's weapons of mass destruction, and we want to start a war with that country.

i'm asking myself, why do we want to fight a war in iraq? iraq? how does that serve the american people? how would the kitchen southside of chicago have to fight that war? but they said the intelligence reports were, weapons of mass destruction. well, based on that in my view the government can't be lying to us like that. i took their word on it. and i like a lot of other people voted for that were. had i been more skeptical i would've voted a different way because they lied. they didn't have weapons of mass destruction. and we fought a war and thousands and thousands of young men and women have lost their lives because of the. the government doesn't always tell the truth. and when you have a nuclear go dynamic with over zealous prosecutors like the grandstand and make nicknames for themselves. you need immediate to rightfully ask the right questions and bring that. specs for backing up. >> family. [laughter] >> because i just heard you analogize -- i assure you

analogize the iraq war to your prosecution. >> you're twisting that. no, no. the government line. the government line. [applause] >> no, no, no. i'm analogizing the government lied. they lie to us about the iraq war. they're lying about this. >> let's do your family. this'll be the last question. >> this is not something i would wish on anybody. for those of you who think going into politics, i would urge you based on my experience, as much as you want to help people, as much as i did, as much as you're sick and tired of the old should in politics and these phony politician to talk a big game but they don't do anything, they get nothing done, the same old politics, both parties controlled by special interest. the young people, you did, you elected a new president. i know you see through some of the baloney. i know to do. i'm telling you it exists, but i'm also telling of i'm real. what happened to be a true. having said that, having said

that, it's a hard thing. it's hard on the family, hard on our kids and my daughters and my wife. but i take solace into things. one, this is a life lesson for our children. when you're being pushed around from some powerful forces, to uncheck unquestioned and the user to destroy you like to do, and when they lie like they do, that you can fight back. you don't just have to take it. you can fight back. when you have the truth on your side, and the tapes, you can fight back. you can fight back. and i want to say one more thing if i could. [applause] >> okay, if i could you're going to learn as you get on in life sometimes he to you can never imagine. terrible things happen to families and people. thunderbolts come out of nowhere. sometimes in life -- [laughter] >> sometimes in life you get your kicked. the question is to just sit back and cry and whine and be filled with self-pity, or do you have

what it takes to fight back, especially know you're right. i look at stories of ordinary people, not just rhetorical figures, but ordinary people of gaza worst things that us. i write this in my book. a young mom at halloween, she was in her house, the governor's house to agree with their kids, three young kids, hispanic month. the little three year old, a blue halloween costume. and she wanted to take pictures of the governor. she has her little boy there. pretty young mom and she's all happy and cheerful. i knows the boy has a scar. his head had been shaved. his little black hairs were going back, and i said he is your boy, okay? she said he has cancer, governor. and i said how should insurance? he's going to be fine. you have people there tomorrow but he will be fine. she says let's take a picture. she was cheerful and stoic and fighting for our problems. and i thought about what she was

facing. i thought about her with her of the kids, not just her second child but her other kids. as use putting on a brave face to help those kids. and now she's going about her business. they're not going to name schools our roads after her, but she is among the millions and millions of ordinary people who deal with those thunderbolts, those bad breaks, those wrong things with courage and heroism. and it's inspiring to me to hear her story. and the situation with us is, if nothing else i hope my little see that you don't have to take it either. you can fight back. when something is wrong to fight against it and that's what we're doing as a family. >> and on that note let's take audience questions. [applause] >> can i say one thing? >> if it's really fast. >> first of all, hopefully, you'll be able to stay a little bit longer than was originally planned because we got started

late. but i just want to mention something in following up for what i had asked you. i'm particularly disturbed by the fact that there's so much corruption in the state of illinois over the years, but that doesn't absolve you from the fact that you, too, may be part of that corruption. so we can turn the focus to the others, and they may indeed be corrupt, but that still doesn't take away from the fact for which you may be implicit. [applause] >> hold on. but i'm innocent, and i presumed innocent. with all due respect, professor, white achilles give me a chance and benefit of the doubt to prove my innocence and a court of law before you tag me with something like that? >> i agree. is because they may be guilty -- >> lets the audience questions. these are from students in the audience. what advice and ethics would you give someone looking to take offers for the first time? what advice on ethics would you

give someone looking to take offers for the first time? >> i'm going to say this. you will laugh at it is too. surround yourself with good lawyers. [laughter] >> yasser. and when the full story is told, i did that. and i acted always with the advice of lawyers and council. but you want to do that, especially in this in front of gotcha politics and trying to get politicians and political figures. you need to make sure you are extra careful. you follow the rules and follow the laws. >> next question. in the world of special interests and lobbyists, is a truly ethical politician exist? >> that's a real good question. ethics is -- what does ethics mean? it's a system, a prince was of morals, right, morals of right and wrong, right? and so much of what politics is an governments is you have to make decisions. the responsibility i believe the

highest ethical moral responsibility of any elected official is to do what's right for the people first and foremost, make the right decisions for the people. for both the common good, general welfare and that comes first. and to those people exist today in politics? few and far between. >> thank you, governor. daniel weber asks what you think about the blurring of lines between politicians and celebrity in recent times? i.e., obama, palin, and you on the apprentice. maybe only time those savings will be in the same sentence. [laughter] >> well, you should know by the way not just their palin, can i get a quick anecdote? i misread that as at the governors conference at independence hall just days before everything changed for me. and i hope you guys can probably understand after, i kind of wanted to meet her.

[laughter] [applause] >> nothing unethical about that. >> maybe the college democrats. >> i don't agree with her politics but i kind of wanted to meet her. [laughter] >> and i've met her and i told her that i spent a couple of years, two summers, working on the alaskan pipeline. i had some a jobs up there to help pay for northwestern and law school. two summers on the alaska pipeline. than i had a law school roommate who was from alaska and she has to wear, and i said he was from palmer. i has to how close i was to her hometown, and she said is right next-door. i said what's his name. i said okay, and then she matter of fact said he's my attorney general. i put him attorney general of the state of alaska. how funny is that? and what a small world. [laughter] >> okay, so your question is -- celebrity? is that what it is?

[laughter] >> yes, about celebrity. >> look, i mean, schwarzenegger in california, by the way, great guy, fascinating guy, arnold. [laughter] >> when i was governor he was my second favorite governor. i was in nam with weightlifting and all of that. but obama, i think a lot of obama successfully to was he became sort of a celebrity kind of figure and was a little bit different from other politicians. we're a society that values celebrity, and i think it's part of what challenges are with today's modern media. it is a 30-second soundbite we live in, television if you're on tv somehow, that somehow make you somebody and sometimes it is deserved and maybe sometimes not. but there is some truth to that, and ronald reagan was the first one to kind cut through all that celebrity. in previous years in history, it wasn't the movie star trek tv stars are the celebrities. it was the generals who were

able to transcend the ordinary kind of rank-and-file politicians. today now we're more celebrity driven. i think there is obvious truth to that. >> thank you. what was governor pat quinn's involvement through the entire episode, and i present the question means the episode with your impeachment and so forth? and how do you feel now that he's the current governor? >> very disappointed. pat quinn ramaswamy and his my running mate, and he gets elected. and he simply states him because the governor does all the campaigning. he was free to campaign but he basically stated him and i did all the campaigning. then he became lieutenant governor. both of us promised not to raise taxes on people and i predicted among the reasons what i was being railroaded out of office was that he was going to do what madigan daily and what the democratic, special interest and a lot of the republicans want but they don't want to vote for what they want to happen is get more of the people's money for the budget. he broke that promise within six

weeks. and now he has essentially become the lackey for those established forces in springfield. vatican. and you want a 50% increase on people in illinois. hard economic times that he wants them to pay more. but when i try to close corporate loopholes and try to put it to the small tax on multinational do corporations like the bank of america and these corporations, that on average pay $151 in corporate taxes into one where working people pay 1500, pat quinn oppose the taxes on the corporation but he was a 50% increase on taxes on people. so very disappointed. he was a interest in working on solutions what i was governor or help us get those things done. here's an interesting ethical question for you, professor, pat quinn to this day has a fund-raising account called pat quinn for the united states senate. did you catch this? he said that since 1996. he raises money in his campaign fund. pat quinn for u.s. senate but he is not running for the u.s. senate. he was the lieutenant governor. after the credit to i think your

newspaper, i think your newspaper wrote this. they point out he held a fundraiser for the united states senate for himself in april of last year while he was the governor. why is he raising money for a senate campaign? because he's got a scheme with that fund where he lends money to his campaign. you can use campaign funds for personal use. that's prohibited, okay. so he found away around it. he loans money to the campaign, pat quinn for u.s. senate and then he pays himself back every so often. but he doesn't just take it for face value. he charges his campaign fund 10% interest. now your money in the bank today or your parents money and banking or my money to buy today while i have, is getting about one, 1.5% interest. but quinn is paying himself 10 percent from his campaign fund. how he gets away with that is beyond me. but that's a fact and if you're asking me to i think is a good governor? no. he's been a master but madigan

and coding. he does the bidding and he wants more of your taxes. >> we can accuse you of not answering the question. of john murphy, is it appropriate for a sitting governor to attempt to leverage the media by asking for firings in exchange for favors? does your behavior towards the tribune company constitute this? >> that's a false accusation and with full truth comes out you'll be shocked, you will be shocked to see how upside down that accusation is. shocked. >> okay. [laughter] >> you're going to love this question. it's one thing to commit these crimes and expressed remorse is in fact you are, but why would you participate in the publicity circus, friends, reality tv shows, et cetera, gathering more attention, not necessarily good? if you have any respect for the state of illinois, why would you deliberately tried to attract more attention in the wake of

these allegations? [applause] >> him if i did things wrong, if i broke the law, i would be doing none of that. but i'm an innocent man and i've been falsely accused, and therefore, as i explain, to the best i can to try to work through this in earnest much of a living as weekend as we do with his extremely hard hard situation. again, that question, the premise of it is, that he's already made up his mind, he's heard no evidence and doesn't know what the real facts are. the reality is i did not do these things, and i'm acting and doing the best i can to make a living to help my family who is to work our way through something like this. what would be a laughingstock for illinois? if i simply allowed them to lie about the governor of the people elected. let me tell you something that's actually important to me and it's what i can't wait to finally get moving so we can get the truth out. i never lost an election.

not for congress, not for governor twice, not for state representative. never lost an election. among the reasons why is because the people place their trust in me, and i trusted them. and it kills me to think that a lot of people out there or some people out there might think i may have let them down and i violated their trust. i didn't. and i go out there publicly as often as i can because when you've been wrongfully accused and you want people to know it ain't so because it means something to you, you do the best you can, you find as many places as you can, you look for the highest amount you can fight for you can shout out, it ain't so, i didn't do it. and by the way, play all the tapes. [applause] >> okay. from eric who is a sophomore, the shutdown of multiple state parks, bishop hill and other parts give your to name a few, was executed under your watch and repeal any of my current

governor quinn. is this removal of jobs and the a raising of historical landmarks really an ethical way to cut spending and increase the budget request yet, the answer is that's what governing is, choices. here's what the choices were. and again i hate to keep going back but these are the facts. check the facts. in 2008, the democrats controlled in the house by madigan passed a budget that was $2.5 billion over balance. that senate democrats, the republicrepublicans are minorities, they pass a budget 2.5 billion overbalance. the senate democrats passed the revenue to pay for it. the house democrats did not. the constitution requires a balanced budget. so then they sent it to make. i had no choice but to have to put that budget into balance, or shut the government down over budget impasse, and i had to make those hard decisions, the hard cuts that those cuts came as a result of that.

is it ethical? yes, because as hard as those were, what was the choice, take health care away from an uninsured woman? by the way, every woman in delegates routine mammograms and pap smears 261,000 uninsured because i would around the legislature, the moral thing to do, they wouldn't pass it, and gave that to women. do i cut those programs and pay for that or do you cut some of these other things? it's about choices. if budgets are moral documents which i believe they are, you've got to put your morality when you ask these questions and you got to be willing to take the heat to do it. so the answer is not only ethical, but i believe in that particular case hard to do. but i think i made the moral decisions because i spent those programs for people who really needed the help. >> okay. from carol lee, a freshman. do you feel any responsibility for the recent report by "forbes" magazine in which illinois is rated 50th, she put in parentheses, blast, -- [laughter] -- and its rating on the health

of state economies and then she points out that questionable actions have consume tax dollars, she sang yours as well as plenty of time in the illinois general assembly. >> look, i don't know the specifics of that report. let me say, and is now was written during the tenure of governor quinn, right? when i left office we had a balanced budget. now there's an 11 billion-dollar budget. never had a deficit that big before in illinois history. in other billion dollars. the way i balanced the budget was we increased spending for programs like health care, record amount in education from $8 billion in education. preschool, programs to help you, raise the minimum wage twice for working people. the way we balanced it was i reduce the size of government 15,000 fewer state employees. we did early retirements, encouraging state employees to take early retirement so we would be able to do more with less. raised these on some businesses that were paying lower fees

relative to the surrounding states and i found was a surplus of $3 billion in special purpose funds still exist today that protected by special interest groups who tapped in and fought every year. it would be wrong and this is proof why quinn is so wrong and want to raise taxes on people and small businesses. if the economy in illinois is doing so poorly, the worst thing you can do now is raise taxes on people and small business. here's a fact you should know. 80 percent of the taxes, businesses by intel that are paid by small businesses that create most of the jobs. your mom and dad's businesses. mom-and-pop stores. the little businesses and small manufacturing copies. the big corporations that don't pay any taxes in illinois. your paper the chicago tribune in 2004, bunkers, bunkers in state taxes. they have loopholes and they have conference and all the rest that he is not only hurting

individuals, less money to buy goods and services to the businesses that will employ people but he's also going to help her to small businesses. if he gets away with that we'll be 75 when it comes to our states. >> okay. one last question that by the way to clarify, i don't work for the chicago tribune. that was a freelance piece. >> i stand corrected. >> not that i wouldn't be proud to be a part that i'm a full-time professor, that's my job. that's my day job. [laughter] >> so we have early talk to the senator burris, but both tone and i have questions about that. so i thought we were thich with one last question, which is what did you think made burrus qualified to the senator and kind of looking back, are you embarrassed by his perceived incompetence, or do you think he has performed well? how would you kind of rate your choice to? well, there were two levels that

was before the arrest and everything change, and then after. before, as i said, and i can't wait for the truth to come out, my first choice was mike madigan's daughter. and i put aside personal considerations because both of them were blocking progress for people. lisa madigan, my choice for senator, joined her father in a lawsuit that supported president bush taking 35,000 poor people off of healthy. media never covers of these things. we bought them in court. i help those people get their health care back. madigan has his lawyers bring a lawsuit by republican interests to sue me but the madigan people drafted the suit. she joins it to hurt those poor people. they came to my campaign office in january 14, 2006, the attorney general lisa madigan investigating me and her father, the democratic speaker and chairman of the party, asking me for about $396,000 in campaign funds that they wanted. she's investigating me. she is in my office, part of an

effort to get me to contribute that money. questioned the ethics of that. it's legal but you question the ethics. and i knew i wouldn't give them the money because they wanted it to use against julius. so that was i think, i believe the motivation. i might be wrong about that. i said no. i read about this in my book that they're going to block some of my programs once i get reelected. in spite of the, and a lot of other stories i can tell you about, in spite of it my dilemma morally was can i hold my nose come and one of the people of illinois enough where i can negotiate to make his daughter the senator, and i know politics is all about himself, power and family, not about the people. a guy has no principles except self and his family and so therefore, he's a practical guide that he will make a practical deal with you. he will stop blocking a jobs bill. he will stop blocking the expansion of health care. he will give you a written promise to protect your parents of higher taxes. i might get some of those other things.

i will make a do with his daughter. we don't have a good relationship plus negotiating you want third parties involved so you can get it done. rahm emanuel was one of the key guys to make that deal happen. that's what i envision. that was my first choice. when i was top from doing that, the next morning after i direct my chief of staff to work on that do, everything change. and then if you look at the record you will seek the democratic lawmakers and republican said we got to have a special election. they were trying to force me to step aside and get paid or saying i should resign or threatened to impeach me and all of that. what they also were doing was trying to pass a bill they claimed that would allow the people to elect the next senator. i said that's what ought to happen. there are to be a special election, let's vote, but the people vote and pick the next and do. that was blown. had no intention of passing that because the democrats, my fellow democrats were afraid a republican might win. so when they saw that i wasn't going to quit all the pressure and the threats and the care of

two years of getting paid as governor or six months of getting pay as governor, incapacity for a while, all of that, when i rejected all that, and i had an obligation constitutionally to protect illinois. and i had to pick a senator. the lisa madigan deal was out because of all this. now go to my first preference. and my heart i always felt i should a point an african-american to the united states and because two things, none after obama leads the senate, zero, after african-americans. i can justify not putting an african-american their if i can get jobs and health care and by the way a billion dollars in a jobs bill would've been for the inner-city and for low income areas to redevelop. i can justify having a lot more people by putting lisa madigan there. but once that the part i went back to my first instinct was, you know, what i always wanted down pick an african-american. considering all the options after all that happened, i felt roland burris being 71 years old, the first african-american

known in history elected in statewide office, a man from a generation that actually blaze a trail for obama election to president, i guy who was not allowed to go to african-american law schools and what do i think howard university or something, a historic figure it's only ways, and elder statesman and everybody liked him. i thought he was the right pick. than the great irony of course is in the age of obama, my fellow democrats and your senator dick durbin, harry reid are keeping him out of the u.s. senate like they were some segregationist governors in mississippi and arkansas for previous era. wouldn't let him in. wouldn't let him in. and then when they saw, when they saw that there is going to be some backlash, the party of opportunity was keeping out an african-american they let him and. and interestingly enough, that evening dick durbin who's blocking of hosted a reception for roland burris. so under the factors and considerations, i thought that was the best decision i could make. you don't like burst?

that's okay. [laughter] [applause] >> my friend, i've got nothing but love in my heart for you. >> on that note,. [laughter] >> i thank you all for coming, and i think governor blagojevich and i thank our panel. [applause] >> what we say when i put this right? what would you say? [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> and next the counsel of the national association for business economics hears from the chairman of the president's council of economic advisers, christina romer. live coverage here on c-span2. it should get underway shortly. meanwhile, at the white house president obama welcomes greek prime minister george papandreou to the white house today. and later on at the white house, a meeting on energy legislation with a bipartisan group of senators, cabinet secretaries and the epa administrator.

[inaudible conversations] [inaudible conversations] . .

>> later on we'll bring you live coverage of the u.s. senate. they gavel in this morning alt 10:00 am eastern for continued work on a bill extending several expired tax provisions, unemployment benefits and cobra health insurance. >> i'd like to welcome all of you to the cea breakfast. my name is richard. i'm the vice president of nabe. i'm a professor at the university of colorado boulder. i have two brief tasks this morning. the first one is -- one more time remind you of the professional development seminar that we're holding in april. the brochures are available at the front desk but also you can sign up and we put together a wonderful pds thanks to the very hard work of jack and maureen and rosemary. we have a fantastic program. and if you've been there before, this will be a new experience

this time. we have two tracks and we have a track that's really designed for repeat attendees so we would love to have you come to the pds in april. my second very distinct pleasure is to introduce today's speaker. christina romer is the class of 1957 professor of economics at the university of california berkeley. and chair of the council of economic advisors. she joined the berkeley faculty in 1988 and was prompted -- promoted to full professor in 1993. she received her ph.d. from mit in 1985. after her nomination as chair and before the obama administration took office, dr. romer was tasked with co-authoring the administration's plan to recover from the 2008 recession. she's a highly accomplished academic.

she's researched the causes of the great depression in the united states and how the u.s. recovered from that depression. she has done extensive work on fiscal and monetary policy from the great depression to the present using notes from the meetings of the federal open market committee and other fed-written documents. her recent work with her husband david romer has focused on the impact of tax policy on government and general economic growth. and if all the academic and other skill sets aren't impressive enough, i will add that she is the former vice president of the american economic association, a fellow of the academy of the arts and sciences and the winner of the berkeley distinguished teaching award. she's also received a john simon guggenheim memorial fellow and the presidential young investigator award and an alfred p. sloan research fellowship. she was codirector of the program of monetary economics at the national bureau of economic

research as well as a member of the business cycle dating committee. she had to resign both of those positions when she took her current position. most of all i will say those of you who were here last year you will recall that she addressed us last march at one of the most turbulent times in u.s. economic history. she was new to the job and dealing with one of the worst crises ever. she provided us insights into the recovery plan and listened very carefully and thoughtfully from the comments from the nabe audience. she's a great spokesperson in our view for the obama administration. in these times someone with this educational background, this experience, this level of academic research in this particular topic and great communication skills, i think there really are very few if any people better suited for this job. please welcome christina romer. [applause]

>> well, thank you very much. it is lovely to be back with you again this march as we were -- as was just mentioned. i was here last march. yep. we'll give a minute for technical. well, i'll tell you what, let me go ahead and we'll see if they actually manage to get the powerpoint again. you know, when i spoke at this gathering a year ago, as was just mentioned, the country was in some of the very darkest days of the recession. we had lost a million and a half jobs in the first two months of 2009. industrial production had fallen by more than 2% in january of that year. and almost another 1% in february.

fear was rampant and stock prices were plummeting. and my topic last year was the american recovery and reinvestment act which had passed just a few weeks earlier. i discussed its key features and my reasons for thinking that it would be effective at helping to end the worst recession in post-war history. well, one year later, i think that the evidence has bourne out my predictions. the recovery act has helped to change the direction of the economy dramatically. the decline and fear of a year ago have been replaced by growth and hope of continued progress. we are unquestionably still in a very difficult situation but the trajectory has vastly improved. in my talk this morning, i want to discuss where we have been over the last year, where the economy is now and some additional policy actions that i think are needed to put us more firmly on the road to recovery.

all right. well, let me start by talking about the contribution of the recovery act. you know, the act was the largest countercyclical policy action in american history. of the $787 billion of total budget impact, roughly one-third was tax cuts for individuals and businesses. another third was payments to help those directly harmed by the recession. and to state and local governments struggling to maintain employment and services. and the final one-third was direct government investment. in everything from conventional infrastructure to health information technology, to a smarter electrical grid. i think the most basic evidence that the recovery act and the other measures taken to heal the economy have been effective is that the trajectory of the economy has changed fundamentally. and if we had the powerpoint, i'd show you a picture of a real gdp growth over the last three

years. we went from gdp falling at a rate of more than 6% in the first quarter of 2009 to rising at almost that same rate in the last quarter of the year. most analysts including the administration and the members of the federal open market committee expect gdp to grow steadily this year and for growth to increase in 2011. this change in trajectory during the past three-quarters is both much faster and much stronger than one would have predicted based on the behavior of the economy up through the passage of the recovery act. now, a number of analysts including both private forecasters and the nonpartisan congressional budget office have investigated the impact of the recovery act on employment. and these estimates suggest that the act raised employment in the last quarter of 2009 relative to what it otherwise would have been by between 1.5 and 2

million. this estimate is consistent with the reports filed by recipients of recovery act funds. only about one-third of the funds expended through the recovery act are subject to recipient reporting. yet, as of the third quarter of 2009, recipients had identified over 600,000 jobs that they believe would not have existed but for the recovery act. well, because of the recovery act and the numerous other policy actions taken by the federal reserve, the administration and congress -- you know what -- oh, fabulous! life is good. well, almost. [laughter] >> it's not showing on the screen, however. >> we'll all crowd around you. >> you know what?

i'm really fine without it. why don't we not bother. that's really fine. but thank you. all right. let me -- let's see. because of the recovery act as i stated, as i've stated, numerous other policy actions taken by the federal reserve, the administration and congress, the american economy is growing again. but i think as last friday's employment report made3c÷ clear the labor market remains severely distressed. most obviously the unemployment rate is 9.7%. a terrible number by absolutely any metric. consistent with this total output is still far below the normal trend path. moreover we have yet to see gdp growth translate into employment growth. instead productivity has risen at a roughly 7% annual rate for the last three-quarters.

the largest rate in three-quarters in more than 50 years. now, the reason jobs report did contain signs that employment growth could commence in the next few months. as most analysts have noted, february snowstorms in washington and along the atlantic seaboard likely artificially reduced the february payroll figures. workers who missed a paycheck because of the snow do not show up in the statistics. and based on the number of workers in the household survey that said they had a job but could not work because of bad weather, the cea and others have estimated that the impact may have been substantial. as a result, february's headline number of relatively modest job loss is an encouraging sign of gradual labor market healing. but it is essential that job growth, not just turn positive but that it be as robust as possible. it takes employment growth of roughly 100,000 per month just

to keep up with normal labor force growth and to hold the unemployment rate steady. to bring the unemployment rate down quickly much faster job growth is needed. most forecasts, however, project relatively modest gdp employment growth over the next year. some analysts are slightly more optimistic. others somewhat less. but virtually no one is predicting the kind of strong rebound that would fill the employment gap quickly. it's for this reason that job creation remains the president's top priority. and he's proposed a number of targeted members designed to have the maximum impact on accelerating job creation at the minimum necessary cost. indeed, the fiscal 2011 budget that was submitted in early february set aside $100 billion for new job creation initiatives. and in the week since the president has been offering more details on the high impact proposals that he wants to see enacted into law.

the budget also included more than $150 billion of continued relief measures to maintain demand and provide essential support for those most directly hurt by the recession. the president has also proposed important additional steps to increase lending to small businesses. now, many of these proposed measures are being debated in congress right now. and i thought i would take some of my time this morning to highlight the case for three particular measures. let me start with a large tax credit. firms will get a fixed amount for each additional worker hired in 2010 and an extra credit for a fraction of the increase in their payrolls. now, both the house and the senate have passed a somewhat different jobs credit proposed by schumer and hatch. their proposal waives the employer side of the payroll tax

for newly hired employees who'd previously been unemployed and they would provide employers with a $1,000 bonus for workers retained for more than a year. for a new worker earning $60,000 a year, the benefit for a firm that retain the worker for a full year would be about $4,000. now, at its most basic level a highering tax credit if you want to increase the consumption of something, lower its price. in this case we want to encourage firms to hire more workers and to do this the government is proposing to absorb part of the cost of the new worker in the first year. now, of course, when one lowers the price of something, to attract extra consumers, some people who would have purchased the good anyway at the old price get the benefit. this is true of a highering tax credit and all other tax incentives. what matters are the relative costs and benefits.

will a hiring tax credit to jumpstart judicial creation. and here i believe the answer is unquestionably yes. based on that, analysis by the cea suggestx$ that the costs p new net job of a hiring credit such as we proposed is lower than for other available job creation strategies. it's also the finding of a recent study by the congressional budget office. and what the cbo found is that a payroll tax reduction for firms increasing payrolls is one of the most cost-effective job creation measures. now, such a hiring tax credit has only been tried on a large scale in this country once before.ñzç that was the new jobs tax credit of 1977 and '78. and, quite frankly, the research on this program's impact is quite limited.>k" but i think the few available studies that exist shows that it

did have beneficial effects and just a i'd has suggest that the likely effects of a hiring credit may be particularly large in the current situation. because the economy is growing again, most firms are surely planning to hire in the next year or two as demand for their products increases.

in this situation firms may be particularly responsive to a hiring tax incentive. because the reduced cost of employment they may bring forward hiring to start gearing up for future production and to get the best workers. by hiring sooner than they otherwise would have, firms will create jobs at a time when the economy needs the most. importantly because the economy is on the road to recovery, those jobs remain long after the temporary credit expires. simply put, a hiring tax credit is a sensible, responsible policy uniquely well suited, i think, to the current situation. and it's been endorsed by a long list of distinguished economists including allen blinder, lawrence katz, laura tyson and joe stiglitz. mark zandi has advocated such a credit. and estimated that the schumer-hatch proposal will

generate 250,000 jobs for the $13 billion price tag. the second recovery measure that i wanted to highlight is additional fiscal relief to the states. you know, the recession has had just a devastating impact on state and local tax revenues. state and local income tax receipts have fallen by almost 20% in real terms since the recession began. sales tax revenues have fallen by almost 10%. because almost every state has a balanced budget requirement, states have no choice but to respond to their budget shortfalls. for this reason fiscal support has strong and rapid effects on their decisions about spending and taxes and thus on the economy. one key contribution of the recovery act is that it is filling about one-third of state's budget gaps. now, several types of evidence confirm that the fiscal relief

to the states has been highly effective. first despite the sharp declines in revenues, state government employment has fallen much less than private employment and much less than one would have predicted given their privilege shortfalls. the same is true of employment by local governments which receive most of their revenues from the states. second, one important of the state fiscal stabilization fund is subject to the direct reporting requirements of the reporting act and the direct reporting data that the $12.2 billion of relief provided by this fund through september supported 318,000 jobs. these figures suggest that relief is a particularly powerful tool for job creation. finally, the other major component of the state fiscal relief, the temporary increase in the federal medical assistance percentages or fmap transferred different amounts to

different states based on the specifics of their medicaid programs. analysis by the cea has found employment performance has been better in states that received more funds through this channel. unfortunately states continue to face large budget shortfalls. the center on budget and policy priorities estimates that even after the injection of the recovery act funds, states faced a combined fiscal shortfall of some $125 billion in fiscal 2010, $142 billion in fiscal 2011. and $118 billion in fiscal 2012. because of these continuing shortfalls additional fiscal relief to the states is likely to be both particularly valuable and particularly effective. it's particularly valuable because states are now at the point where the steps they would have to take to balance their budgets would involve cutting service on vital services or raising taxes on families who are already struggling.

relief is particularly effective because it will alter states' budget decisions quickly. states were able to meet very little of their shortfalls in fiscal 2009 by dipping into rainy day funds and almost none at all in fiscal 2010. the vast majority of the adjustment is coming from changes in spending and taxes. indeed because states are looking at multiyear shortfalls commitments of additional federal support could lead to some changes in states' budgets even before the relief is provided. by preventing tax increases and spending cuts state fiscal relief raises income and employment relative to what otherwise would have been. for all these reasons, the administration has proposed additional fiscal relief to the states over the coming year. the cea simulation model indicates that each $10 billion of additional state fiscal relief would support roughly an additional 100,000 jobs.

the direct recipient reporting data suggest the effects could be even larger. well, the third measure that i want to highlight is providing capital to small banks. you know, a key feature of this recession is the central role played by disruptions and credit markets and lending. we are all too aware of the tremendous rises in credit spreads at the peak of the crisis. the seizing up of key financial markets and the many crucial interventions that were needed just to keep lending going. despite these actions, lending remains severely restricted. for example, nonmortgage consumer credit outstanding is now 5% below the peak. commercial and industrial loans have fallen by almost 20% and commercial paper outstanding has fallen almost in half. one particularly valuable indicator of credit availability is the federal reserve's senior loan officer opinion survey. for all types of loans the survey shows dramatic and

unprecedented tightening in lending standards over late 2008 and early 2009. and continued tightening over the remainder of last year. the survey shows severe tightening and availability of loans to both small firms and large businesses. well, a key fact is that credit availability is simply critical to the health of the economy. numerous studies have demonstrated this link at the microeconomic level. one recent study, for example, looks at japan where a unique data set makes it possible to link firms with the main banks that they rely on for credit. and the study found that when a bank's financial condition weakens, the sales of the firms that depend on it for credit fall. and the firm's exports for which credit is particularly important are hit especially hard. studies have also confirmed that these microeconomic links mean that lending is important for the overall performance of the economy.

there's a substantial correlation between lending growth and gdp growth. studies that try to disentangle whether it's lending causing gdp, gdp causing lending or some third factor causing both find an important causal role for lending. in a paper that david romer and i wrote many years ago, we looked at episodes when the federal reserve intervened directly in credit markets to restrain lending such as its imposition of credit controls in 1980. we found that within about nine months of such an intervention, industrial production had fallen by about 5% below its previous path. because of the crucial role that renewed lending can play in the recovery, the administration is proposing concrete steps to help restart credit flows. one important measure would be to create a $30 billion small business lending fund to provide capital to small and community banks which are a key source of

lending to the small businesses that will obviously be critical to the recovery. the various restrictions accompanying the t.a.r.p. funds that went to the large financial institutions are not appropriate for smaller banks. these banks like so many american firms and families were simply innocent bystanders in the crisis. thus the administration is proposing that the fund be created outside of t.a.r.p. so that community banks across the country will face no barriers to participating. the government investments in these banks would include incentives to increase small business lending and making for my their impact. the program would complement other steps the administration has taken to support credit-worthy small businesses seeking to expand and create jobs. now, although there's considerable uncertainty about the precise relationships we estimate that this $30 billion of capital will translate into several times that amount of additional lending and could create -- help to create hundreds of thousands of new jobs.

and crucially because the government will be getting a capital stake that will lead to future repayments this will be accompanied by little long-run cost to taxpayers. now, the three recovery measures that i've discussed are only part of what the administration thinks needs to be done. the house has already passed a bill that includes an additional $50 billion of infrastructure investment that's consistent with the president's call for increased investments and repairing roads and bridges and waterways. last week the president discussed the importance of another proposal. the home star program. this program is designed to encourage homeowners to understake energy retrofits right now when the economy and the construction industry in particular have excess capacity. and in another key initiative that i didn't discuss simply because it is so obviously important is extending the unemployment insurance provisions from the recovery act.

nearly every analyst classifies insurance payments as one of the most cost-effective jobs programs. continuing the recovery act provisions is essential both to help families struggling with unemployment and to sustain the recovery. well, before i close, i think it's important to mention one other topic, and that's the budget deficit. you know, last june the congressional budget office reduced -- released their long-run budget outlook. and if the graph of the budget situation over the next 30 years using plausible policy assumptions is certainly disturbing. no one can look at these numbers and not be concerned. the deficit is unquestionably large today primarily because of the recession. it's expected to decline noticeable as the economy recovers but over the long haul it is predicted to grow tremendously. largely due to the effect of rising healthcare costs on government health expenditures.

by 2040, given the current path the federal budget deficit will be 17% of gdp. a level that is obviously unacceptable and unsustainable. now, i won't take you through the history of how we got on this terrible path though i will recommend chapter 5 of the economic report of the president which i think does a good job of that. other than to say that the budget problem was years in the making. it is not as some have suggested due to the actions taken this past year. as large as it was, the recovery act contributes less than a quarter of a percentage point to the budget deficit in 2020. but regardless of its source, the deficit is the challenge that simply must be addressed. now, the sensible way to address the deficit is with a long-run plan. it would be penny wise but pound foolish to deal with our long-run budget problem by

tightening fiscal policy immediately or foregoing additional emergency spending to reduce unemployment. immediate fiscal contraction would inevitably nip the nascent recovery in the bud just as fiscal and monetary contraction in 1936 and 1937 led to a second severe recession before the recovery from the great depression was complete. failure to take additional targeted actions to jumpstart job creation would lead to a slower recovery and higher unemployment for an extended period. high unemployment is not just bad for people. it's bad for the budget deficit. it is virtually impossible to get the deficit under control when the unemployment rate remains near 10%. rather than tightening the budget in the short run, we should focus on the sources of the exploding deficit in the longer run. the single most important source is growing healthcare costs. so it's essential to focus on doing healthcare reform well.

only by slowing the break neck pace of rising government healthcare expenditures can we hope to get the long run budget deficit under control. now, according to the congressional budget office, the senate version of healthcare reform legislation lowers the deficit in the first 10 years and reduces it even more in the second decade. the cea's analysis finds that the senate bill will likely slow the growth rate of healthcare costs by about 1 percentage point per year. a number that may sound small but which is hugely important especially when maintained for two decades or more. because the key cost containment features are maintained in the president's proposal we expect it to reduce cost growth by roughly the same amount. another useful and immediate budget strategy is to focus on the long run amount and quality of spending. at the same time that the president has called for more emergency spending to help put