a discussion that in 24-hour news cycle doesn't have everybody announcing it everything is unsustainable. i actually think the fact that a treaty on both sides say was a terrible thing is something to advance the discussion. and there's just an awful lot of things we don't know what the implication is, and we need to have information structured in a way people can process it and decisions that matter.

and one more point in this opportunity in the budget process the functional categories which served as a proxy for what we used to call the national needs are the goal of the process would be one way to think about looking at all the different ways we do things. you don't want to just look at the appropriate programs that go toward the goal x or the mandatory programs, what about credit programs? what about tax expenditures in gold something? if you want to know how much we support different parts of energy you have to look at all of them because we have different tools for each mode and that is a hard call but i am encouraged but the atmospherics and hope maybe we can make progress. anyway i think on behalf of all of us we would like to thank you all for being one of the few groups and thomas it still for a discussion on the budget process. [laughter] [applause] if you are a student watching on

c-span right now or in the room right now and say you don't have a dissertation topic or your next independent research project from this discussion right here, i would suggest you turn your volume on because they are all right there. they are ready to happen. microphones in the center. happy to take questions. anyone like to have the first one? if not while you're thinking about it we talked before him about transparency and we heard it here again today to become routinely advocated. we saw one version with the recovery act. what does transparency mean in the context of federal budgeting? what is or should the goal of transparency be as it applies to the federal budget process? liben open it to the panel and look forward to your questions. >> well, i am someone who thinks that sometimes something like transparency that gets loaded becomes a universal good. you have to worry about the sort of information overload issue.

to me but transparency and the budget process means is that things we talked about, which is the action you're about to take, the policy or about to enact looks like x today. does it move on a straight line or the next 40 years has enacted does it grow with gdp, does it explode? does it grow with demographics? what drives it and what are you looking at? and there are some areas you can see very concretely every time we commissioned a nuclear submarine we commit the federal government to the waste cleanup. we don't show that. i'm not suggesting we score that in the budget but it's a relevant point if you are going to do better it is closing fiscal disclosure. every time we did an insurance program and loan programs. every time you create a tax provision or direct spending program that gross with some other indicators you don't have to prove how it grows. so why the need to think about

that. >> when i hear the word tester enzi i think of other words like clarity, understandable the come under the code accurate cost which others have talked about. i think it's important and there are conflicts between some of these. credit reform is an example. credit reform is complicated and some of the estimates turn out to be wrong from an economic point of view it does a better job of telling us what a credit program is, but it's not as simple or easy to understand as a simple cash flow number. the recovery act information. the website shows jobs created in various places by spending accounts for one-fifth of the budgetary impact. so that information and it's

useful information within the context it is presented, but then there's the other 4/5 of the act, various tax cuts for businesses, for people, benefit payments, a whole variety of things that aren't showing up there. so we have presented information but it's modeled the information. sometimes you wind up in a situation we have good information about the tip of the iceberg, but we don't have much information about the rest of the iceberg, and various people have the estimates -- cbo has some estimates. there's disagreement about what the rest of the iceberg looks like. we have to be careful about mistaking the tip of the iceberg for the whole iceberg when we are presenting information. that's a little bit of transparency but it doesn't tell the whole story. >> and bingham was at omb, and

in fact i followed him to the housing branch at omb, and when i first got there i tried to cover up his mistakes but failed miserably. [laughter] in particular, we look at programs in the federal housing administration and had to do with middle and low-income housing. and after i was there for a short time, i realized that basically no matter what changes we made it didn't really have much impact, and it was at that time -- i think i can still remember i first came across the concept of tax expenditures that basically what was running these programs was at that time called syndication of the accelerated depreciation, and so i convinced a small firm those very popular in selling these things, lean and ed singh, in fact if you are in montgomery county there is

something called edsin lurleen but to give me a free course and syndication, and i started learning how tax expenditures, these tax lwas really dominated programs, and what is the one -- of the bridge change dramatically in 1986, but at least you could have an impact on it. i see that now because that was 20 and 30 years ago. we've come a long way on tax expenditures. thank goodness with respect to transparency we really have gone so far that now these proposals that i mentioned before now they are explicitly targeting tax expenditures, which really, really need to be done. i would mention another broad view of transparency, and that is in domenici room when they talk about a payroll tax holiday for the year.

thank goodness, because with respect to the social security trust fund don't have any trust in it. by that, i mean it is not a trust fund in the same sense that private individuals, you and i might classify as a trust fund. of least they are being transparent saying okay you guys won't have to pay fica tax. they think it will create 2.5 to 7 million jobs or something like that but more important to me is they say look, don't worry about getting your benefits because we will have the general fund make up for what's not in the trust fund. while of course the general fund is going to make up for it because there really isn't a trust fund, and all they are trying to do is paper over what has been an unfortunate myths and budgeting for 60 or 70 years now. so i am very optimistic of the trend toward transparency building on what both xu and

bald have said. >> one thing we haven't done i don't think is thought about the policies broadly in the sense of lumping together and treating of between the tax expenditures and spending. when we think about the policy, we often -- the government often things of spending programs and thinks about them over here and the mortgage interest deduction and thinks about them over here, and we don't often leave them up against each other and say how they interact and how we make the trade-off between them, but the same with health policy we have the employer paid health insurance and we sort of still have them in separate silos we have a spending program and tax expenditure so i think we are doing better at identifying and the tax expenditures and measuring them, we still -- and has to do even in congress with committee jurisdictions in the same committee's jurisdiction.

>> those are the two big ones but there's a lot of smaller ones that will be made this if you think about is a regulation requiring a certain amount of ethanol then you get one tax provision for doing it. there are other things where there is both you think about the educational provisions for higher education in tax provisions and some grant provisions and loan provisions so that even in areas sort of genetic as housing the question is could you at least start recognizing this as when you're looking at removing the education act could you bring into the discussion with the tax and grant provisions and direct spending provisions that sort of interactive with that because sometimes a review some colleagues did it was so

confusing families weren't even making the choice most to their of advantage because there's no way to look to the tax provisions and the grant provisions together. >> on the agree with what you're saying, but sue had mentioned national needs and i can see kenneth kelly even predates me at omb. we used to be much better job or omb used to be better job of presenting tax expenditures, mandatory programs, appropriated programs in a section on functions in the national needs, and that was we think we got rid of my memory serves 1990 when we changed the problem. but you're point is still valid if we go back to the better way we presented the information and tie it with performance which we never did, you know, some kind of performance measure, still

the congress is not organized in that way and the political process is not organized to consider them for trade-offs. >> i would just like to add that transparency is a complicated matter. there's a young man at indiana university named neil buckwalter marty a dissertation entitled "transparency and budgeting a search for clarity," and he makes it pretty clear it's not just open access you're looking for but rather to whom you are exposing the information and the kind of information, the kind of decisions that information supports. one final word, i hope that recovery.com won't be the template for what we mean by a transparency. i mean i know a lot has been made about the millions of hits compared to more informative web sites run by the federal government, but if you want to know why people, with

400 million people into the website it seems to me they went to find out either how much it checks their neighbors got from the stimulus or how much the competitors did in terms of contracts. while as bald points out there is a limited disclosure of part of the stimulus package, there's hardly anything there that would enable you to evaluate the value of the spending and certainly there is no indication how we might pay for it now or in the future. >> thank you very much. any questions from the audience? time for about two more real quick. >> nope, we put them to sleep peace demint should we call on some of the? we can call one somebody if you like. [laughter] >> [inaudible] what decisions will be made by december 31st? >> the question was if you have a crystal ball what decisions will be made by december 31st?

>> i was asked this question by a hedge fund. [laughter] two months ago and i will tell you what i told them. i said what the the outcome of the election because this was before the election, whatever the outcome, republicans are going to gain a lot of strength. they certainly have. this will give the obama administration a rationale to compromise. they will compromise with respect to a one-year extension of both the top and below 250,000 tax cuts. that will be unacceptable to the republicans. they will fight for of least two years and i think the republicans will win so sometime in the next five weeks, we will get a two year, not longer than that but a two year extension of

the tax cut. that will be the last budget action of any significance until 2013. [laughter] nothing will happen until -- >> we have to do something on the debt bill and they will be appropriations passed, and maybe settle a civil servants will not only have a pay freeze but have to take a cut or something, but there isn't the dynamic to do anything of real between now and then. >> it doesn't mitigate the prey is i gave for the commission's the because you have to lay the groundwork for this and in 2013, we not only will have the greeks to think to show us what can go wrong but also the irish and by than a few more countries, too, probably. >> i suspect we are hoping one of the actions will be either the omnibus appropriations bill

employed by the federal government. [laughter] >> thank you very much. i would like to think the panelists for their insight and discussion today. [applause]

now an update on diplomatic efforts in the middle east. a delegation from the washington institute for near east policy that recently traveled to israel, palestine, jordan and egypt reports on its trip during this hour-and-a-half discussion. >> good afternoon. welcome to the washington institute. i am the director of the institute. thank you all for coming today. it's a but daunting because some the people interested in a trip

report that david -- from a trip that david, scott, and on and 47 of our closest friends took to the middle east a few days ago, returning just a few days ago. but over the course of the next hour and a half we are going to have a chance to discuss our observations and findings from this trip and to discuss with you your questions about what we discovered and where we think individually u.s. interests and policy are going in the arena of the we visited. just a few words of background about the trip that we took. this is the institute's 25th anniversary and to mark this important milestone, a broad range of trustees of the washington institute joined the three of us to travel from cairo

to amon to jerusalem and ramallah. i would first like to express our gratitude to the government of egypt and jordan, israel and the palestinian authority, all of whom been over backward to welcome and accommodate us throughout our trip. this was and is a very busy time in the middle east in many different respects, and we really were treated warmly, royally as it were, with great hospitality in everything you that we visited and we express our gratitude to the leaders and their advisers and all of those places. i would also like to especially thank the u.s. embassies and consulates in every place we

visited. they were across-the-board helpful and considered it with their time, with their personnel, often running interference for us and trying to make arrangements and confer meetings and hosting us and providing the news for us to meet with a broad array of political diplomatic and cultural figures in those countries. so i'm quite grateful to define american diplomats that represent us in this part of the world. as i said at the outset, i traveled and led the group along with my two colleagues who are here. david on my right who is the distinguished fellow and john rector is our project on the middle east peace process, and scott carpenter, on my left. scott is the director of our project ficra, arabic for idea, devoted to amplify invoices of

mainstream muslims in the context against radical extremism. we were joined in various parts of our trip by a rahman band of washington institute scholars who happen to be in the middle east for various reasons. quite proud that when we were in the iman we were joined by dena and david who had been in iman and jordan as official election observers. dena with the national democratic institute and david with the international republican destitute observing jordan's parliamentary e. elections, which was two weeks ago today. as we have the benefit of their on the ground insight into the experience. and then in israel, we were joined by two other senior fellows in the institute, david

pollack is doing some important opinion polling work in the west bank, and andrew tabler who joined us after joining leaving lebanon and ended up his trip in israel and i think that he went off while i think one can still go off to parts and he did that at a land of the trip. now, that's all by word, by way of background to what we did. we traveled for eight days. of course this is not the first time either institutionally and personally members of the group traveled so we were well versed with the people and the sites we visited we met with very high political figures in every site. i would like to say that we met with one king, two presidents, for foreign ministers and one

military and army navy football game and then we tried to spread our wings beyond officials and we created settings for us to meet with political activists, liberal activists, thinkers, writers, cultural leaders, journalists, scholars. we did this in egypt on a couple of occasions. we had a chance to do this with palestinians and then we had a chance to do this quite extensively with the israelis so we tried to go beyond just the official line as it were. let me offer a series of my own brief observations and then turn to scott and david for their own more specific observations about egypt and the israeli

palestinians arena. there were of course many surprises. i won't go into many of those in my opening comments, surprises like the extent to which the e egyptians viewed the situation in sudan as being at the very top of the national security agenda, an issue that doesn't get nearly enough attention here in washington over the next couple of months is going to get a lot more ensure. the most important impression that we came away with is the sense from both arabs and israelis, and it's important to know the arabs we met with our arab who were committed to the peace process, that are firmly on as it were to america's team in the least. we didn't go to damascus or the root. we didn't go to other middle eastern, we were in tehran, we are in cairo and iman and

ramallah. and what is clear is these arabs and israelis are longing for a clear bold american leadership to confront regional threats especially but not solely iran. everyone, arabs and israelis are asking the same questions. where is america had it? what is america's objectives? is a withdrawal from iraq may withdraw from the start of the world? what is america's real goal in iran? is it containment or is it prevention clacks we got this sometimes with a tinker's wagging such as the speaker of the egyptian parliament who set 30 years ago americans were carelessly lost and today if you are careless again you will lose

egypt. by the way you may or may not be acting in the part of the world and sometimes we got any more friendly warm embrace such as from the king of jordan who eagerly almost plaintively wanted to know where america is really going in this part of the world. it was clear to the arabs and israelis that sanctions were unexpectedly strong and fighting against iran and they welcome the that that was also clear there is no sign that sanctions are having their ultimate goal which is triggering any change or rethinking of iran's nuclear policy and even short of the entire iran nuclear issue we heard from arabs and israelis alike about the growing iranian

influence and presence in the arena and with it be in hamas, gaza, lebanon, subterranean role in west bank want to target and even beyond the discussion of the nuclear issue dominated discussions with every leader with whom we met. secondly, we were impressed by the fact there seems to be the foundation for real politics in this part of the world. i am referring specifically to the visits and egypt and jordan and egypt which is holding parliamentary elections later this month we met with courageous reformers who offered a message as liberal change.

in jordan when we arrived two days after the parliamentary election which was reasonably successful in voter turnout this was a positive note. in jordan especially positive because the jordanians permitted international elections observers to monitor the election. we have quite an exchange with the egyptian political leaders about the importance of their agreeing to universal standards for e elections including the role of international monitors in these elections. the pushback card. have continued to push back if you have been following this closely in the last few days, pushback on everything from of religious freedom report to further requests from international monitors. but beneath the official level we were pleased in the sort of emboldened by the idea that there is real politics beyond

what you hear in the newspapers, that there are many, many people eager to engage in politics in these countries and this is a positive sign and something that we ought to be encouraging. third, when you travel in israel and the west bank there is an erie calm. despite the reality is release face before than 100,000 different rockets and missiles looking down at them from syria, lebanon and gaza and the reality that there is still considerable hamas activity on the ground in the west bank, there is a remarkable calm. israel is experiencing the lowest level of terrorism ever in the west bank for all the

international condemnation of israel suffered from its war in lebanon and gaza in 2006 and 2009 with the passage of time is certainly appears to have succeeded in the touring from hamas and hezbollah, and if perhaps when the war comes again on those fronts today the idea projects a level of confidence that it is today prepared to deliver a crushing blows that is either was not capable or chose not to in those earlier conflicts, and perhaps it is that level of confidence combined with the after effects of the previous conflicts which one hesitates to say has kept peace but at least has yet to be turns operating. fourth, the sense of tranquillity is felt especially in the west bank as i said

earlier to the result of several key factors. the security is operating in the works. one candidate different aspects of it but it clearly works. the continue idea of presence is much less today than it has been in the past. the idea has taken a sizable numbers of troops out of the west bank but there is still an idea of presence, and parts of the west bank still periodically the idea operates at my time with various centers less so than before, but it still performs with a consider to be important missions. third, there's a remarkable improvement on the palestinian economy. i'm sure david will talk more about this. and fourth, the development of professionally trained palestinian security forces working cooperatively with

israel in a way that even goes beyond the level of cooperation that we had in the old days. there's much more sober levels of cooperation, the training first under general détente and now general mueller has clearly had a major impact and even had a higher level at a political strategic level, on this point there is clear black-and-white decisions that have been taken by palestinian leaders about the inviolability of violence and terrorism against israel and the israeli targets and this has filtered down and it is a very positive -- three positive and heartening aspect of this trip. yes, there are problems and

obstacles remain, not least of which is the need for peace, diplomacy to catch up with on the ground progress and i don't think anybody on the group left with the impression that can be -- that there can be no linkage whatsoever between eventually between the peace diplomacy and the improvements in security. but it is important to note that this improvement in the security occurs over and 18 months, to your period in which there were zero diplomacy's. we are talking about the total absence of the israeli-palestinian diplomacy for now 20 months exit for the two week period at the beginning of september. and even with that, they're has been remarkable improvement and cooperation on the ground.

so, my observation here is yes, diplomacy eventually has to catch up, but we should not underestimate, in my view, the depth to which both israelis and palestinians have internalized the wisdom of maintaining security and security cooperation in the west bank. fifth, compared to all recent trips in the region i think everyone in our group came away with a very positive impression across-the-board on our meetings with palestinian leaders, who mediated optimism or the released did not radiate a traditional sort of come planning, demanding what have you done for me lately sort of move. it was much more positive in terms of self-reliance, in terms

of internal development, in terms of the entire ambiance across the board. i'm talking of the high political level, presidents, his of pfizer's, the prime minister, just generally a very great eating composite up be to move. it's not as though anybody signaled a diplomatic concessions because there wasn't any. nobody on the palestinian side could no diplomatic concessions on any of the core issues discussing. so despite that, despite the fact that there are no negotiations currently under way, despite the fact that it's been 20 months with any serious engagement you had this rather upbeat mood to.

that's remarkable. this is nothing to take lightly and suggests the process with institution building has taken hold, that there is a lot more now that palestinians have in their line of credit that they are proud of that they want to build upon, and this is something all of us thought was a very tangible plus. sixth, our trip concluded with meetings with israeli political leaders, the prime minister, other members of the cabin at, just at the moment when it appeared the united states and israel were on the verge of resolving at least ten early the

settlement issue in a way that should clear the path for the resumption of peace talks. in our meeting with the pri minister, the prime minister netanyahu we went over the detail of the substance this understanding which is still not yet finalized. and it was clear that his hope was that this will finally put to rest of the issue that has reared its head now four times at least until 18 months and prevented any diplomacy, any negotiations. he made an important distinction about how the u.s. israel agreement is different than the previous moratorium. first they made a point merely to say the agreement is finalized and they're remain

important, i's to dot and t's to cross about with the united states is proposing we can get into greater detail about where the vagaries of our he made a point to say that this is not an extension of the previous moratorium because the previous moratorium was unilateral. this moratorium should have come to pass is the direct result of bilateral u.s. is really agreements and an inherent part of that agreement is that at the end of this moratorium the united states will not ask for an extension of further extension of moratorium. at the same time, he specifically dampened expectations that during the 90 days envisioned for this moratorium anybody should expect historic breakthroughs but suddenly an agreement on borders, agreement on territory and agreement on security is

going to emerge during this 90 days. he underscored his view which is this a lot of ground work that needs to be done on the security issue which would be israel's first order of priority and we in gauging the palestinians and would be a mistake to believe before the 91 our lives to be a historic breakthrough on these issues. i believe enough progress can be made to keep the parties engage the table and the light at the end of the tunnel will be bright enough that will maintain their commitment to these negotiations. but he was very clear in trying

to lower expectations about what is possible. on balance, with this i will conclude my remarks. on balance i will conclude my remarks and turn over to my colleagues. overall, there are some very positive trends which deserve greater attention here in washington and trends that deserve greater support and nurturing. the dominant message, however, remains come back to washington and please, ask your leadership where are they going? we are to a great extent dependent variables, dependent on american leadership, and

while the middle east has been a high priority issue for your administration, arabs and israelis say to us from the very beginning, and while you're president has made very important speeches and statements, we still do not know on the fundamental issues of war and peace of security and stability. we still are not clear about where your government is going. and so that is the message we will be bringing that to our leaders in washington. scott? [applause] thank you. i would like to welcome you all again. thank you for being here. it was a great privilege to travel with both robb and david. their experience in the region is much longer than mine, so why, too, learned a great deal from them. you get to learn a lot about people when you travel with them. i have to say their abilities

are beyond 24/7 over very long period of time was impressive. i wanted to start out by just sharing a couple of tidbits from my rationales and thinking about why it was we visited cairo first because we did choose to go to cairo first. and i think that the rationale was obviously egypt has the most populous nation in the region has the most populous in terms of and a growing population. the challenges it faces in terms of its economy, the role that has played in the middle east peace process to strictly. it was the best place to start given the 25th anniversary and the commemoration really of the celebrated peace between israel

and egypt. so we knew where we were going first. we didn't know what context exactly we were going to arrive in egypt. we had been planning this trip for every long time and the dates kept shifting around as you can expect they would to conform to everyone's schedules, so we arrived in egypt right after our elections and right before the egyptian elections and precisely the time in egypt where the ruling national democratic party is struggling with its candidates election process. and, as if that weren't good enough, at the precise moment where the obama administration is trying to rejuvenate, reinvigorate the peace process, and for that reason we were unable to meet with gates because at precisely the moment we arrived, they left to come

here. the one quick take away that i will start with is that of the countries we visited and my impression was that the egyptian leadership is the least confident. it projected the least confidence in itself both at a level of participation in foreign affairs, but also domestically. they seem intent on conveying a sense of normalcy and stability in all of our meetings, but by what they failed to touch on the word to discuss the presentations instead projected in my view weakness and lack of confidence. i think this is centered fundamentally on the degree to which all of egypt is focused on

this transition period that is coming up there is in my view a level of attention and concern related to the transition on the part of official egypt that is creating an insularity and worry about how to affect this. after all what is going to be the first transition and 30 some years in this country and there's a great deal of lack of certainty as to how things are going to work out and so that is the context when we arrived and we want to talk about we want to hear from them about where egypt is going of course and we also want to get their impression on fi obama peace process and the initiative that the administration was taking. but mostly, we want to get a

sense of where egypt is going and what is going on the economic sphere and the political sphere. what are the aspirations of the government and where do they hope to take? in stead we heard almost exclusively about the peace process. so i just want to talk about two things. one is the impression i had the there is a weakness in terms of their ability to project in foreign affairs, and second, about the insecurity that they are feeling at home, and clearly demonstrating at home. s rauf touched on, we met with -- we met with parliamentary folks, speakers of parliament, we met with people in the ministry of foreign affairs, we met with representatives from other institutions and the e egyptian elite, we met with egyptian business people.

we hosted a dinner is where we were able to talk with lots of crosscutting folks, but mostly from within the e egyptian elite and then we did we meet with liberal reformers and i will touch on that in a second. but the most impressive thing for me, one key indicator is we met with the speaker of parliament. we didn't only meet with the speaker of parliament, we met with four or five committee chairs of the serious committees in the parliament including education committee chair, investment committee chair, privatization and a number of others. and here you're meeting with the people's assembly, and on the eve of an election, and we could not talk at all about anything related to domestic affairs. it was all about peace process. and not only that, but as rob was saying about the american

lack of leadership generally, this notion that somehow the united states is contributing to the marginalization of egypt in the region. in particular, the sense that we had in our policy contributed to the rise of iran. and what is interesting is i was thinking it would be the normal rhetoric about utech of saddam hussein, it was a rifle and taliban. we told the shah to leave iran. so going well, well back in history, the rise of iran was our responsibility telling the shah to leave and as robb noted, the implicit take away from that was we had better be careful that we not lose egypt in the

same way. so, on the peace process was interesting to me as to take away was leadership in egypt, again, seemed to lack a bit of creativity and dynamism on this issue. when we met with the ministry of foreign affairs there was an explicit statement that looked if there was in progress they were going to pursue the arab league initiative which would be to help the palestinians go to the security council to seek recognition from the security council. that didn't work in the u.s. would go to the general assembly and asked for recognition there. but knowing full well this would create a great deal of embarrassment for the administration wouldn't get

anywhere at all. so the defense of this approach in public and disavowal of the process and private which struck me again as an example where the leadership and creativity of egypt was lacking a sense that because the president in their view seemed to be a week after the of the elections here that somehow they could pressure the obama administration to twist netanyahu's farms and do more on the summit issues while fully recognizing that was not going to happen. sudan, another example on the one hand the united states is not doing anything but then sudan is please come a paramount

concern to egypt, the united states should and must intervene to stop the referendum from taking place. so one the one hand, the notion that the united states was powerless and absent in the case of sudan asking the united states intervene specifically to do something about the growing problem not in the north but in the south from their perspective. so on hole in the area of foreign affairs, i since the e egyptian establishment was looking to lay the blame for the egyptian marginalization at washington's doorstep. what was striking was official egypt was even in our quiet time with various eletes you couldn't have any conversation about domestic issues whether it was

labor unrest, whether it was ndp candidate process. no one wanted to talk about the sensitive issues. this is a large departure from previous trips i made to egypt where you could talk about anything at any time with anyone, but there was a great deal of circumspection, and again, a great deal of concern about how the transition is going to unfold at home. so what about the sensitivity at home? and all of our discussions we try to talk of domestic issues. we would return again to the process. was used in my view as a way to deflect from any serious discussions of domestic developments, and as i mentioned it proved nearly impossible to get anything on this issue. in fact, the dinner i personally

attended was organized specifically so we would only talk about the peace process, which was educational, but having set out to learn more of egypt that proved a bit of a disappointment. again, in our meeting with the parliament i was most struck by the person who spoke the longest on the issue of the peace process was actually one of the chairman of the investment committees of the assembly, and given the fact our delegation consisted largely new york investment bankers and venture capitalists it seemed to me to be a bit of a missed opportunity , but again, just wanting to not get into issues and the electoral process or what was happening in egypt to his credit rall tried to get the speaker to talking about

domestic observers, but that discussion was stiff arm unfortunately. thankfully, we were able to meet with a good many members of the egyptian civil society and a member of political activists who expressed a couple of different sentiments. one was with the national democratic party was doing in the of the elections was its own affair there was a sense the competition was happening there and not within the broad egyptian society. they were trying to take it vantage of the space that they had to be able to advance some critical ideas and they wanted to observe the process or to make it better, but they were not hopeful of their ability to

read in that -- do even that. we also heard interestingly -- and this is the only thing in which the government and civil society seem to agree -- was american leadership was not particularly evident in an area they had seen before which was on this whole question and dialogue with the egyptians on where they are going in terms of political domestic reform. another message of was clear is coming and i took away as being positive is the egyptian civil society isn't looking to the united states to lead in any way. they are saying look whether you are here or not, we are worried about the future of our country and we need to do what we can to change things, which again i think is something that in our own way we should seek to

nurture. so my overall impression in closing is that officially egypt is entirely and internally focused and worried about how to ensure the transition which seems to them to be just around the corner and may be even closer than that. in the meantime, a restless population is looking for change. expectations are rising and the ability to deliver service isn't keeping pace. everyone that we talked to official and unofficial seem to be holding their breath and that is not a recipe for confidence in international affairs. i think without a successful resolution of these internal the negative to see egypt its ability to be a creative energetic partner of the united

states will be sharply limited in any endeavor we choose to partner with egypt on in the coming months and years ahead. thank you. [applause] >> thank you rob and scott. i also want to thank i ron in the back of the room who was i think the guiding spirit in bringing this trip for word to fruition, without her and her team and the developmental department, we couldn't have done it so i want to thank her and -- [applause] and my colleagues. look, i come in keeping with what rauf said, the israelis and palestinians, i'm sure that rall wants to talk about jordan and the clintonion blair talk we got

which was very upbeat. for me i'm going to focus on the israeli-palestinian issue. rob mentioned some of the people we met. president abbas was gracious to the lunch for the group and the prime minister fyiad and the members of the palestinian security service i asked them to a briefing and they graciously agreed. also on the israeli side of the primm and mr. netanyahu, defense minister barak and the leader of the opposition and the cabinet minister, leaders of the idf and securities establishment, and we try to meet people who are not officials as rot pointed out, so i would like to see my main impressions if i can to talk about two main themes and maybe say a word at the end on the different points. on the ground i like to give

data and for people to feel when they come away from here they've got hard facts. i hope we don't throw too many numbers that you but i would like to talk about what is going on on the ground and also the 90 days because that is an issue that is very much on people's mind and cannot certainly as rot pointed out with primm minister netanyahu. i see if driven the efforts on the ground by a few factors. one is clearly a converging interest between israel and palestinian authority when it comes to hamas and limiting them from acting in the west bank when we were sitting there was the chief got a call the there was a bomb factory. it wasn't done for or benefit because i checked on the israeli side and they said it's true, and on the pa site cooperation

is fantastic. so i think there's an overarching converging of interest. .. but i think i was very much the minority opinion. i think the majority view is people do this more likely to be sustainable over time.

the government ought to build a two state solution just because it wants to be altruistic for the palestinians. clearly, israel sees the demographic, the threat of radicalization is something that is an interest in wants to avert that. so, i thought that much in a positive light. i just want to go very quickly on the bullet points of where you thought in terms of services, economic security. services they think we seem to send the state hoping. 1700 new projects have been completed. each is over $250,000 each. 120 new schools have been built in this important americans have a hard time because we don't know this idea of double shifts. but this is a big issue for palestinians, with the kids only studied half day for kids in the morning the kids in the afternoon. with 120 new schools, there's no more double shifts and kids in a

full day of school. 1400 kilometers of water network display. fifty new house facilities, three hospitals, 1700 kilometers of roads paved. court said a sharply increased the workload, which i think the p. series worked a lot on this issue. this is a big issue because if you drive down the backlog and yet if there's confidence in the course come you can imagine more civil court cases coming, too. so a big focus on the courts. 50% tax revenue collection has come out. 50% increase in the time of a recession. and it is something that the institutions are starting to work. on economics, a drop in dependency foreign aid, pa budgetary support in 2008 was $1.8 billion in foreign aid. i mean, 1.84 billion went to the budgetary support not for development or right into the

budget. of course they have infrastructure in the budget, too. but that was 2008 in this year's 1.2 billion. the next or the projection is a billion. they briefly say they will phase out for date by 2013. i don't see how people think these things out so fast, but they really think this is a case they can make for even a republican congress that they've acted responsibly. poverty has been decreased by a third in three years. unemployment is trending down in the west bank. gmp is a percent to 9% growth according to the imf at the time of global recession. what does it mean that security? there a 72% of palestinians say the security services work for the palestinian people. the graduation exercises attended lately by families. this is something that is god more and more body and of the public.

63% say they feel secure in their own count. according to the idf commander 2007 from the west bank, there were 700 shooting incidents in 2007. in 2009, with 700 down to 19. this number was even lower although there was that fatal killing of those four settlers on the eve of the peace talks starting. and the most important to me is the cooperation set is a constant. thanks to the u.s. funding, palestinian security services, 3600 people the training is done by jordanian session we pointed out in the armani area appeared 3600 security troops have been trained in the dayton program or lower program, however you want to call it. or even lifting a stereo or any corruption issues. and i think that's important. it is embedded in all science.

300 is the association has been closed down under hamas and have been reopened under a non-hamas management. you heard me before. i don't want to go on at length about the mosque initiative, which is meant to preachers who are agitating for suicide bombs have been removed from mosques. this is a had a huge impact in the start reforming the sharia college where the training amount. so this is an important mosque initiative that doesn't get much media attention here, but you think is one of the most important projects going on. the israelis because of the security cooperation has cut its number of times in the west bank from a furious sickos a 40 is now a 21. just in the last few years, the last is really personal is devoted the west bank because there was this cooperation. israel's checkpoints from the west bank for 4211. israel has reduced rates as

robert pointed out. if i could get the numbers to zero because of this cooperation and so, there are statistics on an average 24 hour. if there were 12 nls 3.6. of course the palestinians want the missouri. the israelis when you have to both fight for share our rentals as much as he can, but there's some methods they can't share and that's why they feel like they have to go in at a certain point. and on gaza, when we have the leadership their view about hamas in gaza, i felt it was a very emphatic view of what they call the security doctrine. no security pluralism. that means no malicious. you know, there's some elements of the quartet conditions, which they might feel more willing to compromise on, but that one was certainly not. and rob is right that they are coming and no, the wars in israel in 2006, 2009 may be

deterred hezbollah and hamas on firing. a as i'm trying to arm themselves in a church know how one determines what work going forward as one idf commander said to us epicurean tel aviv that you could look at it going back. now that's just in terms of data, kind of on the ground. where we now in the 90 days issue? i know it's a very knowledgeable audience and it falls and news very carefully. what can we say we know? i think at the middle of the last week, the parties have finalized the text for a better coming up in the u.s. there were four part points to the tax cut somewhere between minor points that have been worked out. and now it's waiting in american signature pending security cabinet's approval. but there are some issues not in the text that could kind of cast a shadow in the tax cut i think if they're not done quickly have

cast a shadow on the tax cut i think if they're not done quickly have cast a shadow on the tax cut i think if they're not done quickly fear, to unravel. what are those i think if they're not done quickly fear, to unravel. what are those non-textual items that israel would play? and netanyahu for my understanding, and i've had this for more than two people, i think it's clear that he may have given secretary hillary clinton a verbal assurance that during the 90 days, they would he meaningful progress on the territorial issue. now, what is new here is a little bit of the security issue is now going to be kind of -- kind of item with the password is, but will be done in parallel between the u.s. and israel. i don't think it will give israeli is something the palestinians can't accept, but it will be a parallel set of agreements. i think prime minister met

matthew that halliburton was in the u.s.-israel relationship as you can imagine, no surprises there. but i think the u.s. has a clear, verbal commitment on netanyahu that there'll be progress. as rob pointed out to my site to others of you, i don't think anyone believes the 90 day -- no one believes the 90 day material issue, even though these have been out there. but i think there's a commitment on meaningful progress. why? i think the night he believes -- the administration believes that without -- that this progress is critical to looking at the settlement issue differently. rob called it the light at the end of the tunnel will shine bright. and i think that's accurate. i think that's where the administration thinks that the israelis could be fake to them to the palestinians for what they believe their netanyahu was that, deeply the settlement issue will look different and therefore they won't be asking

for another extension. so what are these non-textual issues that you could see related to the text? one is to clearly see care a shot of penchant for something like seven, six, two. so to keep the 206 will be defeated 87, but rather passed with 62, the ministers clearly have conveyed in the last 10 days the diary to what i would call the ramp up, housing and east jerusalem. east jerusalem is not a contextual issue in the sense that they don't have to be mentioned in terms of the moratorium are like the last moratorium, east jerusalem's excluded. they're arguing is that parallel to the text, that they try to ramp it up. second issue is that the u.s. coming in now, our system -- the

united states administration could only recommend to congress about the past 35 planes. it could not mandated. and netanyahu understands how the congressional system works here. but clearly he would like some sort of patching that if it didn't work, i don't know if it's the equivalent airplanes or the equivalent amount of money for those planes would come from somewhere else in the budget i assumed that part is not exactly clear, but that they would be kind of a fallback cause -- a fallback understanding i should say on this so he can present us with a cabinet that is hell or high water he's got those points. the third element is -- is that, you know, they've been your report cited israel that netanyahu is not as much focusing on the security and territorial issue in some of his comments. i don't see it as walking it back. i think it's very hard for washington audience to

understand this, so i myself but i need to drill down and understand what exactly was the concern. israel believes its main aspect is its border -- is its territorial aspect. that's where its chips are highest. so clearly, if they focus on security and borders, will those chips be useful on jerusalem and refugees? therefore you're hearing netanyahu talk about progress, which everyone wants progress on offense. everybody in this room is progress on all fronts. the question is what is doable and all fronts of 90 days? and that's where you get into some people within the coalition trying to get them not to use that phrase. now is this a semantic point where does this go beyond semantic? of its semantic the administration will live with it. if it's not semantic and it's dropping off from the verbal commitments made from secretary of state clinton it's different. so those are the issues i think.

people will say david, you wrote about this and i busted the part about the jordan valley in this round. but does that mean the issue is gone, off the table? i personally believe will come up again. at a private view. it will come up the royals israel talks, but there's one area the palestinians are concerned about. that has been my understanding to sound of u.s.-israeli troops will be based in perpetuity. as of the transitional arrangement they are in the jordan valley would be more expensive. that was that no mention of troops, but you could try and read between the lines. how does netanyahu play this politically? i think the papers say that 14 of the 27 member sanction signed a petition against the 90 days. my team here with shelley capon and art gomer came up with 10 names that we see a sign on to this petition, but whether it's 10 or 14 out of try seven is sizable. so what do they do? i think that that lair efforts on the ground could escalate.

it was a sign of the times that the settlers didn't believe that olmert could reach an agreement and they didn't even bother demonstrating against him in 2008 although i must say his speech to the group brought a standing ovation and he clearly has a future as a public beaker. but who knows in israel about the politics, so they tend to come back. i would not rule that out. but the other opposition could escalate. simply they started against gaza because engagement was today. and you could see a situation that within 90 days, that sort of round demonstration will percolate in the way we haven't seen for several years. so what is not in yahoo! done? he's done something that's useful for him, which is that he is called in tzipi livni for a round of talks a bunch of time. but it's done on a tactical level is kept for more

calcitriol elements of his coalition in mind. there's no threat. you know, sometimes the news over there is what doesn't happen. i remember being a journalist way back in ireland that was one of the biggest lessons is to find out what didn't happen. what didn't happen is he did not threaten to quit the government. i don't think that's a coincidence because i think he knows he's got tzipi livni for the kadima party right in the wings. so there's no threats against netanyahu this way. but you could say 90 days the territorial conversations could that have materialize, anything could happen. if netanyahu try to square that circle the 90 days, juggling both the united states and israel, you might say i'm not going to unfurl an amount, but maybe it could have a conceptual understanding with abu mohsen, giving israel will be designed by blocks. that'll be a huge milk because

frankly it would tell people that company no, really about the contours of which block of venom which block of south. so how netanyahu juggles united states and the coalition is something we're going to see, assuming they can work this out. listening and my conversations with the group, it's clear she has been offered something -- or there's been hints of her joining, but it seems right now more of the fifth wheel. in other words, got the existing coalition. if you want to join, fine. her comment is zero businesspeople in the washington institute trade. when a few bite minority shares of government come he really couldn't contact the management. so what she wants is not to tax and see where it goes, but to have an understanding that the driver about a common destination and how to get there. so that we'll have to see, but that's going to be interesting. so i must point i would say --

two final points but that i will end. all land unto points a little provocative. i sat on the iran issue and i agree with rob that, you know, that will always be the number one issue. but i sense the terms of this new phrase i didn't hear redundancy, that the iranians seem to be sacrificing speed in their programs for spreading it out more around the country. is it because of this famous for them but people keep talking about -- no one has been talking about that we don't ask the source of operational questions we didn't get much of an answer except some smile. clearly the issue of cyberwar with big hair but were told 80% of a cyberwar about defense and this is something two can play this game and israel is focused on it. the clear what the u.s. focuses on iran is crucial.

but i didn't sense the same sense of urgency. i think like rob said, the sanctions are working on all three presently surprised the final point is such a provocative way to end for the discussion, which was just in terms of israel's role with the new republican conference, which i felt that the news really hadn't reached all the corners of the middle east where we were. it wasn't really people were asking us those questions. we didn't raise it. sometimes it's a full group, sometimes quietly. and that's a fun little provocative than you think i'm on drugs, but i tend to think that what could have been is that netanyahu may emerge as a lobbyist for proceeding and the new republican congress, that he will -- at a time that they want to cut fiala, cut egypt, cut

jordan, kuwait israel, that he may emerge as someone who will try to work with republicans who met with majority leader canter has said he would meet with the majority, but he met with a very early right after that victory when he was in new york. he may say, you know, let's be careful for cutting all these arab countries. and he might show this is giving him a new chip in the kind of peace process negotiating context that he didn't have before. you could say it was other people's money. it is easier for him to do it, but i think he might do it. you could say any foreign leader is not decisive and netanyahu is viewed as someone whose voice they may listen to. but that to me with an idea that i could kind of bounce around with people when i was over there. i didn't feel the fullness of our midterm elections really permeate. but i think that is just a little peace depend on and i welcome your questions. thank you all very much.

[applause] >> france, open the floor for questions and comments. you can use the microphone in the metal. press the button, identify yourself, be clearly for the millions who will be watching this on c-span. >> i must say those are all very good -- i thought those were all three very good and important. thank you for a comprehensive look at the situation. i'd like to pick you up on some of what you said about this general feeling of kernel on both sides, palestinians and israelis. did you get into any discussions about how long that column could be expect they'd do continue

without any real progress on the peace front? >> well, this was a common discussion we had with israelis at the political level and the military level. we had with palestinians, both the political level and the military level. nobody would offer, you know, how many months, how many weeks. so i think i tried to really -- the general consensus that nobody suggested that these two trends were totally independent of each other and that there is some linkage out there and it is not necessarily august 2011 when the prime minister by god has indicated that there has to be some palestinian declaration, which he has now said well, you

know, we'll do what the situation as it is. we're not going to be rigid about these sorts of things. the most positive assessment is the one i gave you, which is it is quite remarkable that this has been achieved in a period when there was fear of diplomatic engagement. and so, the arguments you need, diplomacy even to get this started is not true. at the same time, it is a falsehood and accept that it is a falsehood to assume this can go open-ended, especially if the perception is that whatever narrow door might be open will be slammed shut. what does that mean in terms of timetables? it means that we certainly have a period of time in front of us, when the parties can engage diplomatically without fear that

on any given day this is going to collapse. that's certainly the case. will it take us to the end of this administration? i can't give you a more specific timeframe than that. there's time up there. we don't know when. it will be a function of the perception of the possibility of diplomatic engagement. they clearly haven't reached that low point now, even though one could argue they may have good reason to reach the point of assuming that there is no diplomatic progress, but they haven't reached it. and so there's clearly a long way for them to go. and so, that is a hopeful assessment that i come away with. barbara? >> david, to you, you are a seasoned observer of particularly the israeli politics. do you think that netanyahu actually has a map in his pocket

that he is going to be willing to put down in the next 90 days? and on the understanding within the u.s., is there any sense that put the israelis are looking for is some kind of security treaty that would actually be formalized, perhaps approved by the senate? thanks. >> good question. look, i don't know if he is a map in his pocket. i mean, i think you have to look at where the solomon log files, which is i think any way you count it at most around 8% of the land. you know, it is roughly converges not exactly what the israeli security barrier, were 92% insomnia decide for certain parts of the blocks for the fence is not finished. i can get into this for hours, but i want to do. so i think coming in now, you have to assume that i looked in

the voting records, like where do the people vote? and the settlers have voted for netanyahu to do one. anyone who lives in a settlement outside the block, outside the barrier, they vote against them. it is a hopeless liberal. netanyahu, they just can't do with them. they vote for this party called the national union party. if you want to drill down, i could do it with you on my report. i mean, basically i think it's most people would say if he could get a book, he could get 80% of the settlers. but the remaining 20% are scattered all over the west. so then the question will be what they fight over reo? we can get into that, but i think it's too soon to know. i don't know if he knows, frankly. he may try -- he doesn't know. but i think that he may have a problem when she opens the mouth but that could become like a code word for the settler

opposition now he's gone too far. they're looking for certain red lines. makes me believe the best hope frankly of this process would be to have like a back channel that would enable them to actually make a lot of progress without a lot of visibility. i tend to believe him. and when he told president obama embodies told king abdullah and his apparently told others that he sees the change in the region of radicalization. he doesn't want the moderates to be discredited. he's concerned about the demographic. he thinks that the clock is not necessarily ticking for israel, but yet the same time tells people within his coalition that the palestinians will probably blow it again like they've blogged in the past. so whether he can can pay for songs that start to call, whether he conveys what is strategic, even if you say that he really believes deeply in the subjective, a lot of people believe him, including arabs,

the point is you need to have a strategy to get to the objective. and my concern is that he has what they call it a one-point decision-making style, which is he wants to expose himself wants, wants to preserve all his political capital into the final moment 12 months from now that he can say i got a of paper and he can fracture the right. but he fears lieberman will eat his breakfast on his lunch and dinner and a few fractures to send, a lot of it will go with him. and he is traumatized by the river agreement of 1998, where he bought the rights abandoned him and the centerleft and pick up the start and he lost power. his one-point decision-making is don't decide yet. but you get the package and then decide. i think each argues for a strong back channel. you could say it argues for a

summit i think are very high-risk propositions we've learned in the middle east. or the paradox is that it actually creates the very scenario he doesn't want, which is an american peace plan. if you say, give me one piece of paper so i can put myself on, to make one big decision that someone says i've got that piece of paper for you, mr. prime minister. even that will be presented as a solution, that's the way he feels it will be perceived. that doesn't mean he can't cut the bridging proposal, but if you heard me or joker river, not over ocean. so i think he's got to make -- this is a big. this thing starts in earnest. he's at a crossroads and will be interesting to see which way it goes for him. your second point about the security treaty is interesting because there's a kind of a zionist ss of self-reliance traditionally, which is to say

israel is the same security will be bounded won't have the ability to make decisions. but another say that will be a hop, skip and a jump to an extended deterrence policy, which as you could do with a knife and, abbas, because you're the security treaty. others will say no, not necessarily. they could all work together and that would support a security treaty. i don't think were there that, but i think he was a very interesting question. and says get going, there's a very interesting question of those but by its own thought on this, but i think this issue could reemerge. >> just on this last point, i do think that as we see every engagement diplomacy, we may very well see more u.s.-israeli discussions on the entire range of topics that one way to get

around the decision point question is the old idea of deposits with the united states, which are not necessarily deposits to the other side in negotiating positions you have to put on the table. the ways that you can clarify your position and confidence. and it is important to know that despite israel's well-earned reputation for leaking, the conversations between the president and the prime minister has been extremely close hold and have been, you know, very well-kept between them. so there is, for whatever levels of disagreement there may be between the two leaderships, they have kept their level of confidence on the types of conversations they can have with each other very well over their

entire relationship. yes, sir. >> hi, thank you that. god, i'm interested in your conversations with the chin chins and jordanians as activist. how and in what way has the iranian democracy movement -- is that on their radar at all? has it impacted the way they're working in their countries? same things for officials who spoke to in jordan, is that entry in their at all about how possibly to do with iran? >> in short, no. i did not see that there was any positive interrelation one way or the other with the green movement are what had been seen by either the government or the civil society movement. i do think that there is more of a sense within -- within, for

instance, official egypt that were not going to let a green movement emerge and how that scope. but of course, there's much more -- there's still more space in many respects in egypt than there was before, including still on the internet, the ability to organize on some levels there are some still outlets of independent media however circumscribed that do exist. so it's not, as rob noted, there is something there. what i don't think that what's happening in iran is that all playing in the domestic, political debates in either country. >> john, upfront. >> thank you. in your conversations with arab leaders, teachers get a sense of what specific expectations they

have about u.s. leadership because if you consider the president of the previous administration, the bush administration wasn't engaging, this administration has done their fair share of engagement with syria, with other countries and so forth. be my first of all, if you're looking for consistency, you're in the wrong business. so, for example, on iraq by regardless of what people thought about the invasion of 2003, everyone was concerned about what the message of america's withdrawal from iraq is meant to say. does this mean that america is decreasing its sad in the persian gulf? does this mean for america is its access vis-à-vis iran? does it mean that america is decreasing its ability to ensure

stability and security in iraq and thereby give iran greater opportunities to spread its influence? we heard that across the board. we heard, you know, especially from egyptians, you know, the cairo speech was excellent, but where was the implementation? where the senate in that was following? we heard a great amount of concern about lebanon, about the prospect that could be hezbollah floors and the ruby government to resign and perhaps even formalized a hezbollah takeover of the lebanese government. where is the united states? this is a government that you support. this is a government whose election you hope bring about.

where's the united states preventing this? you know, if you're sitting nnn, for example, the region is not moving in a very positive direction. you know, on the east you see that the athenian influence in iraq has grown considerably in the north. you see the theory and have escaped the isolation strategy of previous years and i countries and outside the region are now making their pilgrimages to damascus. d.c. has both been more and more active. and you don't see an israeli-palestinian peace to validate your own -- your own commitment to this. said egypt has its own questions about american leadership. jordan has its own fears and worries. but not exactly the same, but there is a commonality of purpose here, which is for better or worse, this is our team. this is our team in the middle

east. moderate, sunni arabs, israel, this is our team. and our team is wondering where the captain is going. yes, please. >> ron campos from gta. david, i was interested in what she said about the efforts to tamper down, because i have reported about those. and this is the very question if you get mainstream jewish organizations, still complaining about insights and i have to report that, too, but there have been made efforts. but as huge influence in the world that cover and that we both live in. are you going to try and get that message out? >> i speak across the country. i'll be in los angeles next week. i said that everywhere i go. they say that whether an east

coast, west coast, i see the same thing. i don't want anyone to say there's no issues out there. i just take -- i'll give you an example. i thought there was some report -- i am able to verify the pa group saying that the western wall was no connection. you don't exactly influence people by delegitimizing somebody's holy site. i think it's outrageous. so i have issues, too, you know, and i think if i was naming a martyr after some square, but what i think, you know, i think that there's, you know, modern quotes. you know, i think you get to say it is the out. counsel or something in ramallah. i do think these are issues people need to be vigilant about. but i would respectfully differ with others as i think it's one metric. but i think there's 30 metrics

we've got to look at to give us a better picture. if we only look at one metric, then i think were missing a lot of the good news that's going on. as i think you could talk about all the good news while saying that this metric of the schoolbooks -- i mean, b-bravo was on her lunch and he said we now have a law stating no violence against israelis or anybody is permitted. in the hope is they reconvene the committee because we have our list, you know, so that comes across to some people as a bureaucratic and other. but i think this is an important question because people tend to focus on symbolisms more than they focus on the substance. i'll still go across the country and someone will say you know, there wasn't a photographer at a meeting between president obama and netanyahu in march and now will get more attention than 100 memos at the washington institute for certain people. it doesn't matter.

it's the symbolism is important. and we shouldn't shouldn't be blind to that and we should focus on it, but we shouldn't pretend it's the only match her. i think it's right to focus on these issues. so i see it in a broad context. and i've written about the mosques issue in the the "washington post" op-ed page is. and i'm going to keep speaking out across the country and get the assessment i can. here's all the progress inures the area for more progress is needed. >> yeah, i think that's exactly right. this is an evolutionary process. right after we heard some very positive reports about changes in mosque supervision and imam sermonizing, we been given tour bus and drive down that -- boulevard in central ramallah. both of these things occurred at the same time. and we need to identify what needs to be improved.

and we need to recognize and praise the progress that has been achieved. and it's not black-and-white. and that's precisely why you need good analytical work on these issues and stay away from hysteria are what is the opposite of hysteria? whitewashing. guess. we'll come over here and then go over here. [inaudible] you've got to press the matter. >> what about the role of the muslim brotherhood in egypt? >> well, what was striking to me and has been striking to me over the course of this political season is that the government, even well before the elections has been cracking down very, very heavily on the muslim brotherhood. i mean, within the election

season, i think the number is only 1200 at the local provincial level of any act to best. they disbarred a number of muslim brotherhood candidates, et cetera. in terms of the muslim brotherhood as a threat to the political regime, it is small. and i think one of the attempts in the selections as for the government to be able to show that the success quote unquote that the muslim brotherhood had in 2005, when it went 88 seats that the public support for the muslim brotherhood has dropped significantly in these elections, where it will get only a handful of seats. i think that is one of the narratives that will come out from these elections. we had a session here yesterday where we focus specifically on egypt in the elections and the combined wisdom of the panelists

here and their answer to that question was that the muslim brotherhood voters are perhaps the most hard-core. they're the ones who strive the hardest to get to the poster had some impact. the vast majority of egyptians are demobilized, depoliticized and apathetic. and if you look at the 2005 election then you conclude that the muslim brotherhood did reach its peak in its ability to produce results, it only succeeded in getting less than 20% of the seats in the egyptian parliament. so i think there are two things that will likely flow from these elections. one is to be able to say the muslim brotherhood as well and had, which will create the challenge for the government to explain why you said that you can't allow other liberal and other voices to emerge in

competition with the national democratic party. but the muslim brotherhood for now does not seem to be a political threat to the egyptian regime. >> thank you. mike? he just turned it off. >> this question may be for scott. scott, was there any question of arafat and egyptian approach of the gaza strip when you were there? and for david, did you ever meet with lieberman's group, et cetera, how wide of the spectrum was there? >> amir, can you ask your question, to? >> thanks. i'm here with americans for peace now. my question to you david particularly as what is your reason of why it is that

netanyahu is not taken the initiative and leading towards these. he is speaking about that he is serious. by this and he actually act on it and i'd seriously? >> okay, scott. >> well, i'll leave my colleagues to correct me on this if i'm wrong. but now that i think about it, and all of our meetings with the official egypt i don't remember gaza featuring particularly heavily in the discussions or hamas. it was much more focused on what the united states can do to get the palestinians and israelis back to the table. so i don't remember anything specifically on efforts to do more on the panels or to promote palestinian reconciliation between the posh to authority and hamas or any serious

discussion of gaza in particular, do you? >> might've been in the third area of the speech. >> that was a highlight watch and an egyptian diplomat at the height of his power to produce sleep. [laughter] >> we want to be clear that we are grateful -- [inaudible] >> some people want to call it diplomatic waterboarding. anyway, okay. now about lieberman, no, we didn't meet them this time. on the previous trips i met with lieberman. i tend to talk to the people in hebrew. not too many of them speak english and we were crushed for time so we didn't meet them. but i will continue to do so. on the acting for peace

question, it's a very fair question in terms of creating a public climate i would say. and no, like i said, netanyahu i think is -- it seems to me he agrees on the objective. like i said, you also need a strategy to get to the objective. it could be the 90 day approach that will help them with this coalition and avoid any sort of head-on collisions between his coalition in the united states. and he knows his politics best. i just hope frankly on both side for mock mode and a boss that there is mari conditioning of the societal landscape, because i feel that is really missing. and you know, i feel that this is -- i had a lengthy back-and-forth with president abbas on the issue of the jewish state issue. i said to him, i said i met you many times and i know your

answers before you're going to say them, but you should know when you don't give a justification of why on this issue, in my view, the right wing in israel fills in the blanks for you. and they will interpret your lack of a rationale has mean you don't think they have rights. mostly i don't do it because it's got to be worthy in the way of equal rights for citizens to you're not discriminating or so that the caveats of the final set of issues so it's not a backdoor way to do with the refugee issue. he might say it's a bargaining chip that has to be kept for the end. all those are things people can relate to and six. when you don't have any reason, people who came all at the right wing people in america and the right wing people in israel who interpreted. and your sense, frankly, i said to him i think will serve you a. that is something he needs to affix and at least 90 days to

start coming up with more, you know, even that these are historical claims, legitimate claims on both sides. you know, there's some way to get it people's bank speared netanyahu also has to create a public climate and get people to believe this is an historic effort. he's afraid to unleash forces that can undermine his coalition. but there has to be a way to get people to do what i think he is capable of, which is not just to discern dangers, but to seize opportunities and finding a balance between these two ideas. i think we need that to get people to believe again after what happened in the 90s, the collapse with the intifada. each side has reason to feel jaded. we on other reasons on each side why feel jaded. but without support of the middle of the societies, these leaders can't do it on their own. what is missing to synchronize political messaging from both

sides. each one feel as if i do at the other chai doesn't do it. and then i'm a. or they feel if i acknowledge that the other one does, then it puts pressure on me to reciprocate. however you phrase it, that's what's missing. that's what i would call it missing piece. >> just let me close with them, to comments by two other people whom we've met which in come up so far today, but i thought were very important in a broader spectrum. one was by israel's -- one of israel's top chiefs of intelligence, who after giving his briefing about intelligence threats, many people in this room have heard israeli senior leaders get intelligence israeli senior leaders get intelligence israeli senior leaders get intelligence israeli senior leaders get intelligence right up there with iran having nukes and 100,000 missiles, the process of delegitimization of israel as a strategic threat to

israel's well-being, right up there with iran nukes and thousands of missiles and rockets. and then in a different way, that same idea back a by the prime minister of egypt, a very erudite middle of the road moderate man who said really struck everybody by his comments where he said the arab-israeli conflict if were not very careful, is in the process of morphing into a jewish muslim conflict. and if that's the case, then it is beyond all of our power to control and resolve. and this is from someone who has no interest in having civilizational clash dominate the way people in his country or

people in the region view regional politics because he and what he represents is on the wrong side of that clash. so i thought it was important for all of the -- certainly some of the up beat messages become back it is important to underscore these two, i thought, very powerful messages, one from israel. thank you very much for joining us today. [applause] [inaudible conversations] [inaudible conversations]

>> in a few moments, a discussion on the future of social security.

>> in 1983, president reagan signed a law to reform social security based on recommendations of the so-called greenspan commission. next, a form on the effect of

may 293 of us in ways to improve social security. the nonpartisan national academy of social insurance host this hour-long discussion. [inaudible conversations] >> hi, good afternoon, everyone. welcome. you are here for the national academy of social insurance is panel on strengthening social security for the long run with insights from 1983. i like to welcome you. and they said mets outcome of the executive director of the initiative on financial security at the aspen institute. and i also serve as the chair of the board of the national academy of social insurance. so welcome. we are thrilled to have you here the day before a big national holiday, before almost everybody leaves for the holiday, to really talk about one of the things that we are truly grateful for, our social

security system. and today we have an exciting panel and a very interesting exercise, which is to look back a bit in history. my job is to introduce our panel and to also tell you why we can see that this event the way we did and then to get out of the way of the panel starts and also to come back when it's time for your questions and answers. so let me tell you a little bit about my panelists here. you are really treated today. while 1983 was busy typing my senior thesis on an ibm check typewriter, which none of you know what that is any more, this team is all involved with the social security greenspan commission. so you had a real set of experience people. to my left is janice gregory.

janice is the president of the national academy of social insurance. she is a founding member of the academy. and she retired as a senior vice president at the u.s. industries committee. you see we have that letter retire and we keep her very busy. and particularly relevant for today's event, in 1979 and 1983 she was coordinating the activities of the subcommittee on social security in the house for its chairman, the honorable jj pickle of texas. she was on the ways and means committee on the landmark social security legislation of 1983 was an act it. so janice, welcome. we are looking for your insight. thanks to janice's virginia reno. virginia is nasi as workers compensation, disability insurance and related program. and if you don't know it, virginia is truly our capital stretcher in all things about these programs. she has worked for four major

commissions on social security, including the 1983 greenspan commission and is published research on social security, private pensions, retirement policy and more recently public opinions on social security. are discussing today is wendell primus. wendell is a senior publicity policy to nancy pelosi and he too was instrumental in 1983, serving on the staff of the house ways and means committee and also six years as the committee's chief economist. wendell, we are thankful to have you here today and to give us another dave on the paper we are doing. you should have received, when he walked in, a paper that has been issued, and a brief called strengthening social security for the long run. that's very much -- you didn't get it, it's available on the nasi website. also today, this is the month we released an important book by

tom mandel -- excuse me, robert ball, called what really happened. the story of the greenspan commission. so that's available, too. i think tom, you are the audience as our editor today. thank you, tom. so we have an exciting panel, create new materials and a real new take. i meant to say a few words about my work here and why were looking back in the sears in 2010. in part, we are here because this is a story that's not being taught about a lot. today's headlines are all about the potential cuts but could make in our public budget. but the story of 1983 as a story about cuts that were made at that time of the social security program and still being phased in. it's not well understood and we want to put the record straight about the kind of balance that was achieved in 1983. in fact, much heavier on cuts,

cuts that are still being phased in and give you a picture of what a different approach to strengthening social security for the long run would be. so that's our task today. and i want to welcome up janice. thank you. >> good afternoon and thank you for being here. and as lisa said, we hope to give you some new thoughts to chew on as you head off to the great meal, although i don't expect you to think about this while you're enjoying thanksgiving dinner. but we do want to -- our job at the academy is to broaden people's viewpoints and to talk about things that are being talked about. so that is policy makers and those legislators and those of you who must help legislators, you comment each problem with these problems with the broadest

possible groundwork in the information. so, what we want to talk about today and compare it to 1983. in 1983, it's important to remember we had to act immediately in order to continue to pay benefits on time. it was as though today we are really 2037 instead of 2010, a quarter of a century earlier. ..

faster than revenues so in 1977 we had to go back and correct flaw. under correction the increase in the economy and after benefits are started, the increase by inflation and that's the basics that we have today. the problem was after 77 we walked into a period of low wage increases and high inflation which meant that revenue based on wages slowed down while benefits depended on cpi sped up.

in fact from 79 to 82 prices increased faster than wages at that time and then as an economic event and that set the stage for you heard to labels like stagflation and we combined with high unemployment we have a thing called the misery index it just was not only was it that time but it again meant revenues were not keeping up with the benefits. meanwhile our subcommittee on the house ways and means committee was watching. we already were holding hearings and were looking worried as early as 1979 and when i say we i mean a bipartisan effort. it was a somewhat different time than what we face today. people still have strong views on each side with everyone

stayed in the room and we talked to each other nonstop which i think is important to keep in mind. our game plan as a subcommittee was to act if dahuk occurs in early '81 to have new things in place but surprise came the 9080e elections. ronald reagan was elected president of the united states in the senate flicked to republican control. the reagan administration view when they came in was they would enact a large tax cuts and everything including social security was going to be fine. as the democratic leadership are sitting there on the subcommittee worrying about our numbers but they wouldn't let us introduce a bill because that would put us out in front of the president. so instead we published something called a draft

committee print and it looked like this, it was essentially a bill in negative form printed on i trust not mimeographed something we had back then, and was an narrative form of what we would have done if we had introduced a bill. we have subcommittee meetings, we took votes and as each topic came up the subcommittee chair, my boss, jake pickle would ask the administration person in the front row with the position was on whenever topic weaver discussing and of course the didn't have a physicians and after what all this began to look a bit strange. in april 1981 jake pickle introduced the bill based of the subcommittee discussions of himself, no co-sponsors and and made a ring in a demonstration proposed the reagan proposal.

theirs was without excessive secretion from comments from any side of the aisle a disaster. among other things it cut early retirement benefits from 9% the following year and decimated the disability program. the senate voted 96 to zero to reject the proposal to be the speaker o'neill seize the moment as this was the first in the reagan armored and politics was off and running so the was the climate in which in the fall of 81 ronald reagan appointed a commission headed by alan greenspan to come up with a solution. the deadline was after the att elections remember 83 is the deadline did agree they needed about $185 billion to give

social security safely through the 1980's which was the focus of their work and it's important to understand the focus was on the 1980's and 1990's the was a tax increase already scheduled and in 1990 the baby boom would be the peak of the earning power so to get to 1990 other things would have happen and we would be good. while the agree on is the science of the problem the couldn't agree how to solve it. the commission didn't come together. ronald reagan extended deadlines a few weeks and secret meetings and speaker o'neill and president reagan and these titans who were out blasting each other in the public day-by-day work behind the scenes and came up with an

agreement to get the program through the 80's and the was endorsed by most of the condition to become members and sent to congress in january of 1983. now, it's important, again, in your brief you have a detailed outline of what was in the greenspan commission and the short term on page three but also notice it was fairly balanced. it had a 16% getting through the 80's and at 16% from new coverage, it had about 39% from reductions that affected and 44% from increases from contributors s. con. res. 70 adopted the short term plan. we just ran with it because we have only weeks to spare. the commission's short-term proposals solved about two-thirds of the long-term problems facing the program at

that time. but they didn't address the gap. on the commission most of the democrats favor a tax increase, most of the republicans favored increasing the foliage for benefits. in congress to have a slightly different mix. some believe we should address the long-term leader. jake pickle and van wanted to close the long term gap and they went the route of raising the age. they brought along with them a number but not most, a liberal, most of the democrats but not most of the democrats on the floor and a one. congress enacted the increase is a huge and added that to the greenspan package. not to things to notice. one, simple factual matter it is important to understand any time

you increase the full benefit age is lower as the benefit of any age that you collect them so if you leave until 67 to teach your benefits, your benefit at 67 is lower than it would have been without the change so it affects people all up and down the line. the second thing is to notice what this does to the balance of the 83 amendment. of the long-term savings and again there's a charge in your brief i did it on page five. it details what up with a 70% was from reductions for beneficiaries, 10% was from those who contribute to the program and 20% was from coverage extensions so the

balance shifts dramatically to a long-term reduction in benefits and the cuts for beneficiaries are still being phased in. it's also important to remember a couple of things, one, the package worked. i remember i wouldn't let my boss claim any more than 30 years we had done something the last 30 years. indeed its lasting well over 50. the second thing is to remember that in 1983 erisa was less than 10-years-old, we thought pensions were going to blossom in the future, housing was on the upswing, interest rates provided a good returns and health care was really cheap. it is mind-boggling, but it was. so there was a lot of reason back then to think that

individuals who have resources of good and social security. now we know today the first four quintiles of beneficiaries are have a little dependent -- heavily dependent and we need to look to future affordability so we are going to take a look at that. here's a chart showing the cost of social security as a percentage of gdp. it goes from about 5% today up to about 6% at the levels of. this isn't a major primary source of artifice and mentor spending problem. it just isn't. the next chart shows that the number of folks receiving benefits is going a considerably more than the increase that use all the prior page.

a total beneficiaries are going up from 17 to 25% over 65 retirees from 13 to 22% of the population. so when you put these together it means benefits per person already are going down in the future and i'm going to skip one chart and come to this one. here's what it looks like. if you look at today we are getting about 39% and average earner gets at age 65 after they pay their medicare premiums they get about a 39% replacement of their lifetime average earnings. by 2013 that's already going to go down to about 32%. this doesn't count taxing social security benefits because more and more are going to be taxed going forward. so it's important to think about

as we go forward the benefits are modest. they're about $14 but they are the main source of income for most beneficiaries replacement rates are declining in the future and all those other things that we were counting on, cheap health care, pensions, home values, even jobs are much less secure than they were in 1983. so what we want to do is now looked as some policy options that you might not otherwise see so that you have them in your bag as you continue to work on this issue with us and the rest of the country. for that i'm going to turn over to virginia.

>> thank you, janice and all of you for being here. we are delighted you're able to be year when the turkey dinners are calling all across the country. i'm delighted to tell you about our particular policy options that we talk about in our brief. we have to modest options improving the adequacy of benefits, one affects families, the other effects elders, and we have a free part financing plan that's illustrative of how we can pay for social security without a great deal of pain and without reducing benefits. first, on the option to improve security for families -- by the way, all of these options have president of history. they are things that have been fought about in the past and our

willful through. between 1965 and 1981, social security paid benefits for children of retired, disabled and deceased workers and to all those children completed college or reached age 22. this turned out to have been a great balloon for those young adults but in 1980 when the benefits were eliminated out of concern for not being able to afford social security. what we found in research since those benefits were ended is that really did make an important and positive difference to the chance of young adults to attend college, particularly for children of blue-collar workers, for low-income families and for minority young adults. it's also -- to reinstate those benefits, targeting children of disabled and deceased workers has a very modest cost and would

be .07% of taxable payroll which is the way we think of how financing for social security. translating that into dollars i think it's about $35 a year or 70 cents a week for a worker making $54,000 a year. it's not a huge amount of money. that's the cost assuming no improvement in young adults but if more young people go to college they will learn more and that could help finance a stronger social security system in the future. the second improvement is for vulnerable elders to simply list the floor of benefits for those who have long careers of low pay. such a benefit was enacted in 1972, but because the entry level of the benefits didn't keep up with wage growth it gradually became less and less effective in listing the benefits of the long service

located workers. so to update the benefits and ensure a worker retiring at 62 could retire and have the benefit of the poverty level would cost about .13% of payroll, again, a fairly modest cost. in our report we discuss other ways to improve the adequacy the these are to be talking about in this brief. in terms of financing plans, it has two parts that would broaden the base on which social security taxes are levied. the 6.2% workers and employes years each. and first part would list the cap on wages to cover 90% of their aggregate wages of covered employment. the last time congress thought about what the cap should be was in 1977 they set a goal of 90% and a gradually adjusted it to get to 90% by 1981.

in the provided should be adjusted every year by the change in average wages with the idea that it would remain covering about 90% of the aggregate wages. about 6% of workers earned more than the cat, 94% earned less the the 6% who earned more had bigger wage growth and everyone else and so we now no longer covers more than 90% it only covers about 83% of all wages. santa fe's in the cat to get back to covering 90% of wages would eliminate about 59% of the long-term shortfall in the social security system. a second change would treat all salary reduction plans like 401k in 1983 the greenspan commission thought about how we should treat 401k contributions for social security purposes. these 401k is our brand new

and contributions were definitely is exempt from income taxes but they ask should they be exempt from social security and medicare taxes? the greenspan commission said no the should be covered and part of what social security replaces and workers and employers should pay taxes on the contributions. so the greenspan commission recommended congress adopted it and that is the mall today. with this proposal would do is apply the same concept to similar kind so-called salary reduction plans that have grown more common since 401k is adopted and to subject those to treat those like 401k is pretty limited another 13% of the long-term shortfall in social security. so these two things together, broadening the base would eliminate about half of the long-term shortfall. the third piece of the financing plan is also based on history

and that is to gradually schedule allowed in the future small increases in the rate of 6.2%. through as of the history the social security program there have been great increase is scheduled out in future and certainly when we anticipate a larger beneficiary population it would seem to make eminent sense to plan revenues to match that need to read to do this policy makers of options about how to schedule that. certainly you wouldn't have it go into effect now. social security doesn't need the money now and our economy doesn't need a tax increase on all workers right now. but if policymakers get it now and schedules to see 15 years out into the future we could avoid rolling down their reserves and social security trust fund, keep the reserves up the totals a love interest income on the reserves to be a

continuing source of income for the social security system. right no interest is about 15% of the income to the social security system so would be to maintain that instead of just deflating the trust fund would be good policy since. now there are concerns the social security tax falls heavily on low-paid workers but we do have the earned income-tax credit that was first designed beckham the mid-1970s to offset the cost of social security and medicare if you will for low-paid workers, and so that could be adjusted to offset the impact of the rate increase for the lower paid workers. now you may wonder why are we talking about tax increases when no one else is. part of the reason we are talking about it because no one else is. but another reason we are

talking about is when the american people are asked the city don't mind paying social security tax because they see its value. in the survey we did with the rockefeller foundation about a year ago, we asked whether people agree or disagree on the statement i don't mind paying social security taxes because and they fill in the blank. most people agree the reason is the expect to get something from the program. a larger number said they agree because were it not for the benefits they would and of having to support or help support their own aging families. finally the largest group agreed 87% that they don't mind paying for the benefits because it provides security and stability to millions of retired americans, the disabled and children and spouses of deceased workers. what is striking about the high level of agreement that they are

willing to pay as it cuts across party lines as well as for the whole population. it was 87% of all americans, 93% of democrats, 85% as independents, 81% of republicans in a similar question, we asked whether in the time of economic turmoil should we be thinking about shrinking government commitments including to social security, or should we be investing more in strengthening these programs? and again, the overwhelming majority said it's more important than ever to strengthen social security to make sure we tie uraeus, the disabled and families can count on secure benefits for generations to come. again, overwhelming majorities among the total group of democrats, independents, among republicans it was more or less evenly divided but overall it

was a strong level of support. and finally, when asked -- excuse me -- is it important to preserve social security even if we have to pay more, and again 70% said yes we are willing to pay more if all the workers have to do that. a similar proportion agrees when the question focused only on the upper income americans. other organizations have also had a similar polling results including america speaks which held town hall meetings around the country this summer and in their final analysis their focus on the deficit over all that they did have the session on social security but no benefit cut provision had support of a majority of the participants. 50% did support raising the social secure the tax rate and

60% to support lifting the cap on earnings. the aarp has done surveys more recently and found that most adults under 50, the majority, would rather pay more today to preserve future benefits than the same amount today but get less in the future. so to recap, social security is affordable and as the 1983 cuts state, and adequate benefits become a growing problem. so targeting improvements and a 75 year revenue plan seems to reflect what americans say they want. i will turn it back to lease -- lisa tree >> we are going to bring output wendell to get a reaction to the statements that were made.

>> good afternoon. i'm glad to be here and comment on this peter. the paper comes a point in time we had to deficit commissions issue a report about how social security's solvency could be restored primarily on the benefits side. the speaker takes a different tact and medical students of social security ought to read it because it contains very important insight. i would like to make four important points. the first is the insight from the speaker and one kind of gets what the -- distortion. you think the 1983 social security amendment being a balance which it once in the short run but in the long run it was primarily on the benefit side, and the amendment that congress did to the greenspan commission role on the benefits light. that's the important insight.

one can make as the deficit commission reports that suggested the case for raising the retirement age or reducing benefits somewhat but longevity increases the benefits become more generous because people are living longer but i think this chart, more than any other, really defeats that argument. and from 39 to 35 what does this chart show? it shows between to those in the fight for someone retiring at age 65 after medicare part b premiums taken into account, social security replaces 39% of those wages. 25 years later, the same benefits replaces 32% of an average worker's wages so that is an 18% decline. it goes from 39 to 35 because we

raise the normal retirement age from 65 to 67. we go from 35 to 32 because medicare premiums are growing a lot faster than inflation. and i would quibble with this chart with one important sense and that is also the part of the 1983 amendment more and more of the social security benefit is taxed 25,032,000, 25,000 personnel, 32,000 for a couple or not indexed for inflation, they were held constant and normal dollars comes over time more and more benefits are being taxed to the and one can quibble about the assumption the what to cut 32% down to 29%. so we've gone essentially from the replacement rate for an average worker of 39% and when you take into account the 83

amendments to 29% over that period, 26% decline and as janice showed in an earlier chart that's the reason social security benefits as a percentage of gdp are flat it's that 26% benefit decline that is offsetting almost completely the fact that there are more elderly in this country and the baby boom generation is about to retire. i wish they had taken it one step further and looked at this intersection between medicare and social security more. as probably most of the elderly know they haven't got any social security benefit increase for two years. in january of 2012, the economists tell us we probably are going to get about a 1% increase in the cola given the

current inflation trends. that means for someone with a thousand dollar benefit, the benefits increase by $10 a month. however, because also medicare part b premiums haven't gone at any time there's a frozen cola we will probably see at least a 20-dollar increase in the part b premiums from january 2012. therefore for a typical elderly person, it is going to go up and its plan to completely be taken away by the other hand of government by medicare part b premium increases and this is a problem which could go on for a couple of years. it depends upon inflation. democrats a couple of years ago introduced a bill that tackled this problem and basically would guarantee to the elderly at least 75 or 80% so again taking

that same person he would protect at least $7.50 sense. so that is an important phenomena of the two deficit commissions, the obama administration have to think about as we enter this period plea very well inflation but the interaction between social security and medicare. my second point is i think there was an important context and virginia deluded to it, but the point i want to stress is it worked. social security was made solvent for 58 years before we have the great recession and now it's 54 years the basically use a short-term crisis to make the

program solvent and the long run. it's the opposite problem we have today. we have no short-run social security's solvency problem but we could use our deficit problems to make social security better but they ought to be done on social security terms, not on budgetary terms. and i think it was the right decision at that time one, because it has stood the test of time, and just prior to the 83 amendments there have been quite a few benefit increases in fact there was 20% increase in '92 and there had been a lot of short-term increases in the payroll tax and there was no eitc in the tax code to offset the payroll tax increases. we are in a different world today. we haven't had any tax increases. there's been a 6.2% dedicated to social security for the last 30 or 40 years and it's not going

to go up. we now have the eitc at least protecting workers with children and there is one other thing i want to illustrate going back to this that one thing the 83 amendments did is we basically gave a choice to all workers, if their choice of when to retire to retire at age 62 or 70. obviously retired 62 you have eight more years of benefits. then someone who retires at age 70. but except rarely fair, so in essence if you look at the 83 amendments this chart is making a different point which is the correct point that increasing the age will worse the benefits tall levels but if you just look at the 83 amendments,

individuals got more of the retire at age 69 borat 870 than they did under the prior law so the 83 amendments really made it possible for the american worker to show that any point at that age span from each the two to 71 want to retire and it was a truly fair decision and i think the thing to stress is the two political leaders of the time, reagan and o'neill were able to reach an agreement and that unlike most conservatives in the town could deprive the conservative trust fund motion it really is a conservative device. forced the 77 amendments and the 83 amendment and every american that studies this issue knows exactly how salt and social security is the cost of the concept of the trust funds.

my third point in another important sense having said the social security amendments work, for it didn't work because the politicians were doing in the rest of the budget. when president bush took office in january, 2000, the citadel was $5.6 trillion surplus. he didn't use the surplus to make social security more solvent nor did he use the surplus to put on the national debt and lower interest payments so that this country would be in better place for the baby boom generation which we have known for 55 years of coming and we didn't use the decade just before the baby boom generation retired to get ready for the retirement of the baby boom generation, and i would say that

is one of the greatest failures of the bush at a demonstration which has gotten very little attention in the press. if you follow the money the biggest problem we had a 1970, in 2000 is rich were paying too much money, too much taxes because that is where we spent the money. my third -- my fourth point i think the paper could have looked at other things. they saw the complete social security's solvency on the tax side unlike the other commissions, and i applaud them for putting this paper out there for the very purpose. but i do think there are other places one could look at non-disabled benefits. but not understand why a male or

also could be a female are more likely to be male because if you have children late in life you get a higher benefit, i don't quite understand why we had that notion. also since most now can make the case for lowering among disabled still spend another place besides the to benefits the increase make a lot of sense raising benefits in an 85-year-old backend college benefits for children of parents who have tight. there's very little survivor protection if you to a male and female with identical earnings one of them dies first thing the benefits of the family are cut

in half. expenses for the family just because one person donato not cut in half and i think the survivor benefit particularly for a couple with identical earnings were nearly identical earnings could be improved and there's a case to be made for moving toward universal coverage so those are my four points. if you remember nothing else of this comment that we have already had 26% decline in benefits we need to take into account the interaction between social security and medicare and the politicians need to take a lesson from the 1983 amendments and work together to solve our problems today. >> thank you very much. it's tough to put all the paper and then ask what qualifies for

a professor to give us some feedback and you have done that very nicely attuned your message as well heard we would be staring at this chart. i like it you did the calculation and gave it 26% decline and replacement rates on what has already been scheduled and i think if you have given work for the future to talk about the interaction of medicare and social security. that is a point well taken and it's nice to hear things work in this town once in awhile for all of you who come to work everyday house staffers here and try to move that. i think the briefing was to take us back to the question of revenue and benefits adequacies. paris much talk about the cuts that we try to give a picture today of the revenue side and

try to dispel the notion we have this balanced package and 83 and it wasn't that bounced on the long haul it was predominantly cut and the still being phased in and it's not the wrong time to ask about the adequacy and when we ask the american people about adequacy they are quite interested in paying more for adequate benefits. that is a different story. we wanted to leave time for questions today. i will now open the floor and my job is to try to repeat the questions since we are being taped today. cooperhead, yes.

>> would you support the idea [inaudible] >> about medicare and social security would you advise recalculating the way the cost-of-living adjustments are calculated in particular to take into account the cost of medicare part d. >> we should take into account the class of d and guarantee the elderly at least receive a percentage the part b premium which we have 1% inflation for the next several years the part

b and d premiums are going to eat up almost all of that cola free typical elderly person and i don't think that's what we intended or congress intended in 72 when we installed the inflation index. if you throw to be serious consideration and other forms of doing the cola. degette quite technical and some economists argue the change is better but i think all of them could stand to use this concept of the protection against part b and d. d right now has no hold harmless whatsoever. >> any other reactions on the panel to the question? yes?

>> [inaudible] very provocative. why are we so unbalanced on the revenue side and so many people are asking for cuts. reactions? janice? >> am i on? malae mauney. -- now on diman. one of the things we are trying to look at is over the long term where is it we want to wind up and how are we going to get their and when you look what is happening with benefit adequacy over the long term, but doesn't speak well for more reductions in benefits. looking at what we did in the past we were cutting benefits in 1983 the long term and we knew it, to go back and do it again i

think on the assumption we are coming from a balanced package would be a mistake if people decide they want to cut again we certainly can do that but we shouldn't come from the mistaken assumption we are starting from a balanced place, we are not. >> of virginia, anything to add? >> i would add to that i think we are talking of something that is more balanced than other proposals for benefit cuts because we've already had major benefit cuts and they aren't even fully phased in so we are seeing the benefits shrink at the same time the 1983 change asked nothing more in the way of the contributors from employees and employers beyond 1990. the tax rates we now have was scheduled in 1967 to take effect in 1990 and under the current

law is going to be 2085 unless policymakers intervene and schedule with a news that more closely match the remaining obligations of the program. finally people say they are willing to pay for it, so let's allow them to do it. >> let me emphasize i think lost in the shuffle is the fact that in the past we have had revenue increases in the long-term future the 72 amendments to the revenue increase that went in in 2010 or 11i can't remember, somewhere in there which would be time to come when the baby boom retired because the shocker first figured out this was when to happen, the baby boom. as we ran into trouble in the 70's and the peace the increases were pulled back and an absence the tax rate we have today, 6.2% were set in 1977 and have not

gone up, so it's not like people have been hit over the head with a tax increase every year in the social security program. i think that gets lost in a lot of discussions. >> let me add one other thing and that is they were looking at the social security program in this paper the other side of the coin of the premium increases are that medicare costs have gone up a lot over time and one could try to reduce the increases we see in the medicare program. now the affordable care act which just got enacted did reduce the growth rate in medicare by about 1.3 percentage points per beneficiary per year. while medicare benefits for improved the expenditure were

reduced and a lot of the elderly still do not understand the rhetoric that was in the campaign trail about cutting medicare, but it does point of perhaps social security ought to be strengthened and the same time, we work to reduce medicare expenditures while increasing the quality of benefits the elderly receive from the medicare program. >> yes. >> [inaudible] i'm glad you pointed out. the committee [inaudible] can you talk about what the program is [inaudible]

>> this is the question, i'm going to repeat it and i would love -- the question was about disability benefits and that many in the context of increasing the retirement age have talked about ending more people to the disability program getting more people through the system. what is the reaction to that? can we talk about what happened? >> certainly the disability program is there to provide benefits to people who are not people to work if they have a condition that is expected to last a year and precludes them from working but it is the most difficult part of the social security program to read ministered backlogs i don't have the latest data but the backlogs are huge. you may know better than i, so to say that well just with the disability program take care of

those people [inaudible] assessments are hard to do. i studied the program in the past. the academy study to the past. there is no magic bullet to make that program easier to administer. from the beneficiary perspectives, they often get denied once, get denied twice, finally get approved on appeal. it's a very difficult and arduous process with long waiting times. so that doesn't sound like a solution to making a high your retirement age more appealing. christa haven't seen an answer that deals with that. there might be one out there but i haven't seen it. >> it's also important to remember the definition of disability under social security it's not like an occupational disability or short term, it's a very strict definition so i

think we also have to take into account. also the longevity increases are not uniform. higher income people are living longer. lower income people have not enjoyed the same increase in their longevity. there of longevity has gone up not even enough to cover the two years of retirement age already is going. the various reports out there do have these increases starting way out in the hour years, but personally i have a concern we really don't know what we did yet in 83. we know what we did but we don't know the full impact of it. will people really wait a whole year? will they withhold two years? how many are going to be just

living on less? and the simpson commission also if i have a correct increases the age of early retirement so the ability to retire at age 62 could simply go away. there's arguments about that because the 62 benefit would be so small you may not want people taking it, but it doesn't solve the problem of a nurse who's lived in a lot of heavy weights every day for a janitor or somebody else who is a very hard job and probably isn't in the longevity. it's a difficult issue and i think we have a lot to look at before we jumped on the road. >> i'm going to come back to you as well because he made some points on this chart here about

-- >> this might be but wendell was alluding to but when janice said we are not sure the impact of what we did in 831 of the things they did is increase the reward for the delay of retirement. it used to be you get a 3% increment for reading beyond the benefit age. congress gradually raised that amount 8% per year. it is a hefty increase and i think people don't really understand the yet. but we've recently put out a brief on this topic of you do get a big increase in your benefit if you wait until 72 can. not everybody kim but the point is the people who probably have greater longevity and job prospects are the ones who can wait until 70 so we may not need to use compulsion to say

everyone has to go without social security benefits of these early ages if we do a better job of helping people understand the of vintages of waiting if you can under current law. >> you're arguing not only have kutz been made but incentives have already -- >> incentives for delete retirement are there and people understood then that we might have -- we already have more people working at older ages but that could be even better if people understood the incentives better. >> virginia, in some ways to the student of social security it is a slightly odd concept that the cut of age is the cost of benefits. it sounds slightly odd, and i think your table was trying to show is the difference between blue and red are the cuts that are already made because of the

83 amendment. can you talk us through one more time what are we seeing in this charge by the difference between 62 and 70 and what has already been made? >> essentially this is comparing the benefit that you would receive if the full benefit age for 65 versus a for 72 the 65 is the red bar, raising the full benefit age to 70 is the blue bar so people still have a choice of claiming benefits, the illicit backwards? [inaudible] sixty-seven. some people still have a trace of claiming benefits at any age between 62 and 70 but when we get to the blue bar stage which is for people born in 1960 and later reaching age 62 and 2022 and later at any age they claim benefits it's going to be

roughly 12 to 14% less than it otherwise would have been without the change in the law. okay we have time for another question. >> all right we have achieved something rare in washington, a perfect one hour briefing. i want to thank the panelists, janice gregory, virginia reno and wendell and to you all. thank you very much. [applause] we will stick around if anybody has any questions they want to ask. in of all conversations

now from the annual meeting of the republican governors association, sitting governors offer advice to their newly elective counterparts. over the next hour we'll hear from mississippi governor haley barbour, chris christie of new jersey and minnesota governor tim pawlenty. this is one hour. >> that would be worth applauding. [applause]

now as you can see to my left we have a distinguished panel of governors, governor haley barbour of mississippi and governor tim pawlenty of minnesota, governor mitch daniels indiana, governor bobby jindal of louisiana and governor chris kristen of new jersey and governor bob macdonald from virginia. and in the midst of that is somebody that probably doesn't need an introduction to you, but i will, and bill is probably one of known as a great communicator and especially on our side of the aisle. he has been an author, communicators, hosts his own television show, was secretary of education under ronald reagan and we're thrilled bill has taken the time to be here with us. would you welcome our moderator, dr. bill bennett.

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